No Australian subsidiary soon, AirAsia says

AirAsia A320
A fleet of AirAsia Airbus A320s could be on their way to Australia, but not soon. Photograph: AirSpace user commercial aviation


The current woes of Tiger Airways Australia are not enough for competing pan-Asian carrier AirAsia to fast-track its evaluation of launching a subsidiary in Australia.

“Regarding AirAsia Australia, it remains a possibility although not in the short term,” Azran Osman-Rani said. Osman-Rani is the chief executive of AirAsia’s long-haul sister carrier AirAsia X.

Last year Osman-Rani disclosed AirAsia was watching the emerging shift of Virgin Blue, since re-branded as Virgin Australia, forgoing the leisure market for a greater share of the corporate market. That could have reduced competition, paving the way for a new entrant.

“The way it is now, if you’ve got three players competing aggressively for the mass market segment that’s all the industry can take,” Osman-Rani said at the time.

“If the market dynamic changed and suddenly there is space and existing players start to rationalise fights and increase fares, it will be very tempting,” he said of launching an Australian subsidiary operating Airbus A320 aircraft.

Australia and New Zealand are unique in being the only countries in the world to permit majority foreign-owned domestic airlines. Such carriers, however, are prohibited from operating international services.

The Australian market has yet to see a large swing in capacity as a result of Virgin Australia introducing domestic business class, the first time in ten years there is premium competition to Qantas. But it is still early days for Virgin Australia. The carrier’s three-year game change plan, implemented under chief executive John Borghetti, called for the carrier to re-position itself in the 2011 financial year through 30 June. Achieving the rewards of a more balanced revenue mix and improved yields are targeted for the 2012 and 2013 financial years.

The market has, however, seen a short-term capacity reduction as a result of the Civil Aviation Safety Authority grounding Tiger Airways Australia for posing “a serious and imminent risk to air safety.” CASA has applied to Australia’s Federal Court to extend Tiger’s grounding until 1 August. The court is to hear the case next Friday.

CASA’s grounding was immediately provoked by two incidents of Tiger breaching minimum safe altitudes while on approach to land after being issued a show cause notice in March.

AirAsia X was involved in two minimum safe altitude incidents last year at Queensland’s Gold Coast airport, which the Australian Transport Safety Bureau is still investigating and due to complete this year.

Osman-Rani said CASA audited AirAsia X’s operations and renewed the carrier’s air operator’s certificate.

“They also acknowledged that the approaches into OOL [Gold Coast] are challenging,” Osman-Rani said.

AirAsia X also enhanced its operations by including specific modules for Gold Coast approaches in its flight simulator programmes and regularly conducts recurrent training with its pilots, Osman-Rani said.

“It helps when we have our own academy with our own flight simulators and instructors,” Osman-Rani said of the AirAsia Academy, which includes full motion simulators, maintenance training devices, as well as cabin trainers.

Although he did not directly contrast AirAsia’s operations to Tiger Airways Australia, the grounded carrier uses a shared training facility in Melbourne, according to testimony from Tiger director of operations Tim Berry to a senate inquiry on pilot training and aviation safety.

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