AirAsia unveils low-cost global aviation network

KUALA LUMPUR: The founder of leading Southeast Asian budget carrier AirAsia yesterday announced the launch of a new long-haul, low-cost airline which will fly to London for as little as 9.99 ringgit ($2.84). AirAsia X will begin operating in July and service other destinations in Europe as well as China and India, said Malaysian aviation tycoon Tony Fernandes.
"AirAsia X will offer an innovative product ... assuring passengers who will enjoy a level of comfort and convenience suited for long-haul travel," he said. The new airline will be operated by Malaysian carrier Fly Asian Express (FAX), also founded by Fernandes and which currently operates rural air services on Borneo island.
AirAsia X will operate from the low-cost terminal at the Kuala Lumpur International Airport (KLIA) and seats on the flights to Britain will be available on the Internet from February, he said. Fernandes said AirAsia X expected to carry half a million passengers in its first year of operation and was looking at acquiring 20 new aircraft.
"It will be of one type only, either the 777-300 or the Airbus 330-300. We will make an announcement by the end of January," he said, declining to say whether they would be leased or paid for by shareholders or through loans. FAX said that AirAsia X will also tie up with other low-cost carriers "in order to increase connectivity and route network".
Fernandes would not name the partners but The Star newspaper reported this week that it is planning to team up with Richard Branson's Virgin Group and EasyJet to launch "the world's first low-cost global network".
"I have personal relations with both of them; we are always talking but there is nothing to announce," Fernandes said when asked whether there was any role for Virgin and EasyJet in the new venture.
Fernandes said the Malaysian government has given approval for AirAsia X to fly to Australia but that a formal announcement will be made later. The CEO of FAX, Raja Mohamad Azmi, said AirAsia X would fly to Tianjin and Hangzhou in China but he would not reveal the destinations in Britain, India or Europe.
Newspaper reports have said that the new venture is likely to operate out of either Manchester in northern England or Luton outside London. AirAsia deputy chief executive Kamarudin Meranum said that FAX, which holds the AirAsia X brand name, has offered AirAsia a 20 per cent holding with a 10 per cent option and that the board of directors will announce a decision later.
AirAsia may buy an additional 100 Airbus A320 jets to support its rapid growth and hopes to finalize talks by end January, a senior company official said yesterday. A new order will double the existing order for Malaysian-based AirAsia, which has already committed to buy 100 single-aisle A320s from the European jet maker. AirAsia's executive director, Kamarudin Meranun, said the airline is still negotiating with Airbus on pricing and delivery for an additional 100 planes, and declined to say how much the deal might be worth.
Based on list prices, the order would be valued at $6.7 billion (5.6 billion euros), but aircraft suppliers usually give discounts to their customers for large orders. "We are looking at a maximum 200 planes, including the 100 firm orders," Kamarudin told reporters. "We have not finalised as yet. We are still talking...we hope to finalize before the end of the month." Set up in 2001, AirAsia is the region's only publicly listed budget carrier and has about 40 planes now. It is rapidly expanding its regional network, with ambitious growth in India and China.
Kamarudin, who is also AirAsia deputy chief executive, said the carrier is working on the best structure for the deal, which may include firming up a current option to buy 30 more A320 jets under an existing agreement and placing an order for another 70.
AirAsia also wants Airbus to speed up delivery of the 100 planes it has ordered, from 18 planes a year to 24 a year, he said.
The sale underscores the appeal of the A320 for airlines flying short-haul routes and further entrenches Airbus as the preferred supplier for one of Asia's most successful young carriers.
Airbus has aggressively marketed the A320, a head-to-head rival for the Boeing 737, in a bid for market share, and it is producing A320-family jets at record levels.
AirAsia was launched as a budget carrier in December 2001 with just two aircraft. It now offers more than 100 domestic and international flights to Malaysia, Thailand, Indonesia, Singapore, Cambodia, Vietnam and the Philippines.
Malaysian Transport Minister Chan Kong Choy congratulated the AirAsia team on the launch and commended their "continuous drive and innovation to make KLIA the global hub for low-cost travel". - Agencies


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