The AirAsia X Group is wary of true long-haul, low-cost services, with a strong preference for focusing on medium-range regional routes.

“Long-haul Europe is just not in our plans,” says co-chief executive Tony Fernandes. “We are pioneers in the long-haul, low-cost market, but the reality of the model is medium-haul routes of six to eight hours – that is the sweet spot.”

He notes that the carrier will have the legs to reach Europe from Southeast Asia from 2019, when it plans to start receiving its re-engined Airbus A330-900.

“With the A330neo we’ll have an option to go a little further,” he says.

Fernandes sees some potential for long-haul operations with Thai AirAsia X to eastern European countries such as the Czech Republic, or the Nordic countries.

Still, he believes there is little point opening services to major cities, such as London or Paris, “where you’re not going to do anything special with your fares. You go to a place where you can really make a difference.”

AirAsia X operated from Kuala Lumpur to London between 2008 and 2012 with A340-300s, but yield pressure and higher fuel costs forced it to end European services.

His comments also came shortly after Norwegian announced that it would drop its Singapore-London Gatwick service in January 2019, little more than a year after announcing the route.

Fernandes questions how many long-haul, point-to-point markets really exist, pointing out that carriers such as Singapore Airlines, Emirates, and Cathay Pacific carry large numbers of transfer and interline passengers on major city pairs through their respective hubs.

Therefore, the model that the AirAsia X group carriers need to follow is what he refers to as “high frequency, country dominance” routes, that are well connected with sister company AirAsia's networks in Southeast Asia.

Fernandes also touched on plans to temporarily wind down Indonesia AirAsia X, which AirAsia X announced in its second quarter results.

He says the unit, with just five A320s and two A330s, lacked the scale to deal with the periodic shocks that affect Bali-Denpasar, its main base of operations, and which have hurt tourism in recent years.

“We’ve been unlucky. We get them all right and then we have an earthquake or volcano. So, we’re freezing it a few years and letting things stabilise a bit.”

Some of the unit’s aircraft will be wet-leased out, and others will operate charter flights to the Middle East or China. “There is a lot of charter business out there,” says Fernandes.

Source: Cirium Dashboard