Malaysia's AirAsia will stick to an all-Airbus A320 fleet after deciding against an order for the Bombardier CSeries aircraft.
The low-cost carrier's group chief executive Tony Fernandes says the airline has ended its interest in a high-density 160-seat variant of the CS300. He adds that he does "not want to say any more" because Bombardier is "a good friend".
The decision is a blow for Bombardier, which has been trying to snag a high-profile customer in Asia. It comes a few months after Singapore Airlines subsidiary SilkAir also decided against the CSeries and opted to order Boeing 737NG and 737 Max aircraft.
Fernandes told Flightglobal in July at the Farnborough airshow that the CSeries had an advantage of being able to "get into a lot of airports to which we currently do not have access". He added that the onus was on Bombardier to prove that the operating cost of the CS300 in a high-density configuration "makes sense" for AirAsia.
Industry sources say the airline remains concerned about the financial costs and operational complications that may arise from adding a second, and unproven, aircraft type to its fleet.
Last week, after releasing its financial results, AirAsia reiterated that it is in talks to order another 100 aircraft. These are likely to be A320s that will supplement the growth of AirAsia-branded carriers in Southeast Asia and Japan. It adds that there are 112 A320s spread around the various AirAsia-branded carriers, and that it expects 266 more aircraft to be delivered up to 2026.
AirAsia is also concerned about the rapid growth of Indonesia's Lion Air, which is dominant in its home base and has announced plans to set up an affiliate in Malaysia. Lion is also looking for other bases in Southeast Asia.
Fernandes and his management team are focused on trying to remain competitive with the Boeing 737 operator and feel that an all-A320 fleet may be a better option in the near term, say the sources. The chief executive said after the results that he remains confident AirAsia will "retain its leadership position" in the Association of Southeast Asian Nations (ASEAN) low-cost carrier market despite recent developments.
"The company had overcome many challenges in the past 10 years and saw competitors come and go, while AirAsia continued to grow its capacity and market share," he said.
"We are focused and disciplined in terms of cost and our business model. We have the lowest cost base compared to other airlines in the world and it would be hard for others to replicate that. With that said, AirAsia has always welcomed competition as we believe that the ASEAN market is still underserved."