AirAsia X drives 43% transit traffic at Kuala Lumpur's KLIA. Can Singapore follow the same recipe?

The long-haul low cost phenomenon in Asia is quickly translating to a more effective competitor for conventional network operations. At the forefront is AirAsia X and its original base of Kuala Lumpur International Airport (KLIA).

On the eve of opening KLIA's new low cost terminal, AirAsia X is rapidly growing its connecting traffic as the medium/long-haul low-cost carrier thickens its schedule and builds out its network. Transit traffic accounted for 43% of AirAsia X total passenger traffic in 2013, up from only 25% in 2011. AirAsia X expects this figure to approach 50% in 2014.

The growth in transit traffic has huge implications for the AirAsia Group and its main hub, KLIA. There are also implications for other Asian carriers and hubs as AirAsia starts to compete on city pairs that previously did not have any LCC options.

The gains in transit traffic at KLIA, which has recorded the fastest passenger growth over the last 15 months among Asia's major airports, come at the expense of rival hubs. For example, neighbouring Singapore Changi has seen growth moderate significantly and risks a further slowdown unless it can attract a surge from the emerging LCC transit sector.