AirAsia X 2016 outlook: turnaround predicted as Australia improves, China grows, 5th freedoms launch

Long haul low cost airline group AirAsia X is confident that it will be able to complete a turnaround in 2016, boosted by a more balanced network, improved conditions in its main markets, and lower fuel prices. AirAsia X was highly unprofitable in 2014 and most of 2015, prompting restructuring, along with a spate of aircraft deferrals and cancellations.

In its original home market of Malaysia, AirAsia X restructured its network and cut capacity in 2015. The parent airline is resuming growth in 2016, but a large portion of the additional capacity will be allocated to new fifth freedom routes, which wisely reduces its reliance on the challenging Malaysian market.

The affiliates in Indonesia and Thailand will undergo relatively modest growth as the group's overall fleet expands by only three aircraft. A new, more disciplined approach to capacity expansion at AirAsia X has emerged, with a focus on new routes connecting existing AirAsia destinations and pursuing fifth freedom opportunities in markets underpenetrated by LCCs.