AirAsia X strives to widen the gap with long-haul LCC competitors as IPO enables accelerated growth

AirAsia X is poised to build on its leading position in Asia's emerging medium/long-haul low-cost sector after completing a successful initial public offering. The IPO, which raised MYR741 million (USD232 million), will enable the Malaysia-based company to pursue ambitious fleet and network expansion with a focus on exploiting opportunities in the rapidly growing Asia-Pacific market.

While the LCC penetration rates within Southeast Asia are now above 50%, the medium-haul market connecting Southeast Asia with other parts of the Asia-Pacific region remains relatively unpenetrated. AirAsia X is now focusing on this market, having dropped long-haul services in early 2012 as part of a drastic network restructuring which has already improved its profitability and outlook. Expansion will come as AirAsia X adds capacity in several markets it already serves from its existing hub in Kuala Lumpur and opens new bases in other Southeast Asian countries, starting with Thailand.

AirAsia X is no longer the only widebody low-cost operator targeting Southeast Asia's under-penetrated medium-haul markets. But the three other Asian carriers competing in this sector are smaller and have little or no growth planned for the next 18 months. AirAsia X meanwhile plans to roughly double in size by the end of 2014, which should give it at least a 60% share of Southeast Asia's medium/long-haul low-cost sector.