AirAsia X put Europe routes off agenda with A330neo order; drops 10 of 29 routes since 2007 launch
In the months after AirAsia X’s IPO in mid-2013, the airline went through a period of rapid growth. Having operated around 70-90 weekly departures from its Kuala Lumpur base between August 2010 and June 2013, the carrier then expanded its flights by over 50% in the space of just six months. While new routes to Adelaide, Busan, Colombo and Malé accounted for an additional 13 weekly departures, an additional 36 weekly departures were operated on existing routes. Perth and Sydney each went from daily flights to double-daily, while Melbourne went from nine weekly flights to 14.
With new routes to Jeddah and Shanghai having started earlier in 2013, last year saw AirAsia X start six new routes, equalling the number started in 2010. Since launching operations in November 2007, the airline has started service to 29 destinations across Asia, Australia, the Middle East and Europe. However, only 19 of these are still operating. The airline’s three routes to Europe (London Gatwick, London Stansted and Paris Orly) were operated by four-engined A340s which the airline considered uneconomic. The two Indian routes (Delhi and Mumbai) were dropped as a result of significant increases in airport charges, while demand for Christchurch services suffered after a major earthquake in the New Zealand city. This year AirAsia X has started two new services; Nagoya in Japan on 17 March and Xi’an in China on 2 July.
|Year||Routes started (Code, WF)||Routes dropped|
|2007||Gold Coast (OOL, 4)|
|2008||Hangzhou (HGH, 5), Melbourne (MEL, 4), Perth (PER, 6)|
|2009||Abu Dhabi (AUH, 5), Chengdu (CTU, 4), London (STN, 5), Taipei (TPE, 5), Tianjin (TSN, 5)|
|2010||Delhi (DEL, 7), Mumbai (BOM, 4), Osaka Kansai (KIX, 4), Seoul (ICN, 7), Tehran (IKA, 2), Tokyo (HND, 3)||Abu Dhabi (AUH)|
|2011||Christchurch (CHC, 4), London (LGW, 5), Paris (ORY, 4)||London (STN)|
|2012||Beijing (PEK, 4), Kathmandu (KTM, 2), Sydney (SYD, 7)||Christchurch (CHC), Delhi (DEL), London (LGW), Mumbai (BOM), Paris (ORY), Tehran (IKA), Tianjin (TSN)|
|2013||Adelaide (ADL, 4), Busan (PUS, 4), Colombo (CMB, 2), Jeddah (JED, 3), Malé (MLE, 2), Shanghai (PVG, 6)|
|2014||Nagoya (NGO, 4), Xi’an (XIY, 4)||Malé (MLE)|
|Source: anna.aero’s New Route Database. WF: Weekly frequency when launched.|
Competes with Malaysia Airlines on 12 of 19 routes
Of the 19 routes currently operated from Kuala Lumpur, five are to destinations in Australia, 13 are in Asia, while just one (Jeddah) is in the Middle East. Seven of the routes face no direct competition (Busan, Chengdu, Gold Coast, Hangzhou, Nagoya, Tokyo Haneda and Xi’an). On the other 12 routes, the airline faces competition from Malaysia Airlines, and on seven of these there is additional competition from other carriers such as EVA Air, Korean Air, SriLankan Airlines and Saudi Arabian Airlines.
When measured by ASKs (Available Seat Kilometres) the five Australian routes account for almost 45% of the airline’s weekly capacity, well ahead of China (17%), Japan (13%) and South Korea (10%). The remaining four country markets (Nepal, Saudi Arabia, Sri Lanka and Taiwan) account for 15% of weekly ASKs. Melbourne, Perth, Sydney and Taipei are currently the only destinations served with as many as two daily flights, every day of the week. It is worth noting that Qantas does not serve Kuala Lumpur.
Growing fleet of A330s; order for 50 A330neos
According to the airline’s latest press releases AirAsia X’s fleet comprises 22 aircraft. In the first quarter of 2014, the carrier took delivery of one A330-300 on finance lease and two A330-300s on operating lease, bringing its total number of A330-300s to 19, including one A330-300 for Thai AirAsia X. It also still has two A340-300s and one A330-200 for wet lease and charter operations in its fleet.
The A330-300s are configured with 12 premium flatbed seats and 365 economy seats. This is considerably more than most other carriers operating the same aircraft. Lufthansa’s have a mere 221 seats, but Iberia (277), Malaysia Airlines (283), Singapore Airlines (285), Turkish Airlines (289), US Airways (291), Air China (301) and Cathay Pacific (307) all have between 275 and 310 seats. However, by operating an all-economy configuration Cebu Pacific Air manages to squeeze in a total of 436 seats into its A330-300s according to its website.
Earlier this month it was announced that AirAsia X had entered into a Memorandum of Understanding with Airbus to purchase fifty A330-900neo aircraft that will be delivered from 2018 to 2024. Whether this will enable the airline to resume flights to Europe remains to be seen, as the newer aircraft will have a better range (around 750 kilometres) and lower fuel consumption than the existing aircraft. Jeddah is currently the airline’s longest sector at just over 7,000 kilometres. Flights to London and Paris clock in at around 10,500 kilometres.
Rapid growth in 2013 impacts profitability
According to the airline’s latest annual report, almost 3.2 million passengers were transported on AirAsia X flights in 2013, at an average load factor of just over 82%. However, the airline’s post-IPO expansion in late 2013 took its toll on profitability, and the carrier reported a loss in 2013, something it also experienced in 2011. On a positive note, aircraft utilisation of 16.3 hours per day set a new record for the carrier.
|Load factor (%)||76.5%||80.1%||83.8%||82.1%|
|Aircraft utilisation (hours per day)||15.7||15.8||16.2||16.3|
|Average stage length (km)||5,518||5,664||5,306||5,002|
|Average fare (RM)||517.5||575.9||554.8||525.2|
|Ancillary revenue per passenger (RM)||125.3||122.7||142.4||145.0|
|Revenue per ASK (USc)||2.98||3.46||3.88||3.83|
|Cost per ASK (USc)||2.80||3.58||3.74||3.80|
|Average fuel price (USD/barrel)||$92.5||$127.8||$129.6||$131.4|
|Net profit/(loss) margin||11.4%||-5.2%||1.7%||-3.8%|
|Source: AirAsia X Annual Report 2013.|
Figures for the first quarter of 2014 show that passenger numbers are up 67% to 1.08 million, while load factor has also improved from 84.2% in 2013 Q1 to 85.8% in 2014 Q1. The average sector length has fallen by 2% to 4,947 kilometres.