The inaugural AirAsia X flight arriving into Sydney on 02-Apr-2012 is ushering in the era of low-cost, long-haul carriers at Australia's largest airport, which is poised to take the title of offering the most service from low-cost long-haul carriers between Australia and Asia. While Jetstar already links Sydney to long-haul destinations and previous carriers like Viva Macau tried, this new wave is of carriers going beyond point-to-point traffic to offer connections out of large Asian hubs.
AirAsia X will be followed by Scoot, and the presence of a Singapore low-cost long-haul carrier in Sydney makes it likely that Jetstar too will enter the Sydney-Singapore market, although parent company Qantas will have to accept that corporate routes previously in its exclusive domain must now be shared if it wants to remain relevant in a market with increasingly diversifying traffic.
The sudden influx of long-haul LCCs can be attributed to competitive responses but also the new government in New South Wales that is eager to better promote Sydney Airport.
AirAsia X and Scoot help make Sydney Australia's hub for low-cost long-haul carriers
AirAsia X and Scoot will add approximately 11,000 seats in and out of Sydney each week. AirAsia X on 02-Apr-2012 commenced daily Kuala Lumpur-Sydney A330-300 services while Scoot will follow in Jun-2012 with daily 777-200 services. Although AirAsia X was the first of the two to arrive, Scoot was the first to announce services. Its launch in fact was the final nudge AirAsia X needed from the Malaysian Government to allow it to operate to Sydney.
This rash of capacity into Sydney will see the airport, once Scoot commences services, have more low-cost, long-haul service than rival Melbourne, which has been the low-cost long-haul stalwart of the country. Scoot's entrance into the Gold Coast will even see the southern Queensland airport become the second largest in Australia for low-cost, long-haul services into Asia, supplanting Melbourne into third place.
AirAsia X projects Sydney in the medium term will have double daily service, but CEO Azran Osman-Rani declined to say if that would be realised this year. AirAsia X has previously served Melbourne with double daily capacity during peak holiday periods, although will not during school holidays over July. Any additional capacity into Sydney is likely to be replicated into Melbourne either equally or slightly less; after double daily services to Melbourne and Sydney over the Southern Hemisphere summer, China Southern cut its Melbourne frequency to 10 weekly and Sydney to 11 weekly.
Projected East Coast Australia-Asia capacity from low-cost long-haul carriers: 02-Jul-2012 to 08-Jul-2012
Source: CAPA – Centre for Aviation & Innovata
Note: Capacity is measured only for first inbound Australian port and is not counted for tag-on flights
AirAsia X sees strong Australian demand for Sydney services
CEO Azran Osman-Rani, after arriving on the inaugural Kuala Lumpur-Sydney service, which he had been trying to launch for a number of years, reported the route was seeing exceptionally strong local demand. Whereas initial load factors on previous AirAsia X route launches have seen 80% Malaysia-originating traffic and 20% local, AirAsia X's Sydney service is seeing initial uptake of 50% Australians. This is partially a result of the city being exposed to the AirAsia X brand – it was not uncommon to hear of Sydney passengers travelling to the Gold Coast or Melbourne for AirAsia X flights – as well as Sydney being short on low-cost long-haul supply.
Thailand's Bangkok and Phuket are two of AirAsia X's most popular onward points (it offers limited connecting flights on sister short-haul carriers but also measures passengers who self connect). Jetstar has thrice-weekly Sydney-Phuket service but does not serve Bangkok from Sydney, leaving full service parent Qantas as the group's operator on the route. With only Thai Airways also serving the route, Sydney-Bangkok has been starved of LCC options. Melbourne-Bangkok fares better with thrice-weekly Jetstar service, although Melbourne does not see Phuket service. (Melbourne did prior to Air Australia's Feb-2012 collapse.)
AirAsia X also sees strong demand out of Gold Coast for connecting services to Bangkok. Thai Airways' only presence in the region is a five times weekly service out of Brisbane.
AirAsia group is ninth largest airline grouping operating into Australia
AirAsia X's addition of daily services to Sydney makes it the ninth largest airline group operating into Australia. The addition of Scoot's services will boost Singapore Airlines (Scoot is wholly-owned subsidiary of SIA) but not enough to overtake Virgin Australia as the second largest airline group.
Top 10 airline groups serving Australia-Pacific ranked on seats: 02-Apr-2012 to 08-Apr-2012
| Rank | Airline | Total seats | |
|---|---|---|---|
| 1 | QF/JQ | Qantas Group | 1,060,033 |
| 2 | DJ | Virgin Australia | 471,128 |
| 3 | SQ | Singapore Airlines | 62,648 |
| 4 | NZ | Air New Zealand | 55,948 |
| 5 | EK | Emirates | 43,372 |
| 6 | TT | Tiger Airways Australia | 41,400 |
| 7 | CX | Cathay Pacific | 41,388 |
| 8 | ZL | Regional Express | 38,590 |
| 9 | MH | Malaysia Airlines | 29,064 |
| 10 | D7/QZ | AirAsia Group | 28,784 |
AirAsia is also the third largest LCC group serving Australia. Scoot's services will place it in a distant fourth place, although in coming years it will close the gap on AirAsia.
LCC groups serving Australia-Pacific: 02-Apr-2012 to 08-Apr-2012
| Rank | Airline | Total seats | |
|---|---|---|---|
| 1 | JQ/3K | Jetstar | 369,981 |
| 2 | TT/TR | Tiger Airways | 43,920 |
| 3 | D7/AK | AirAsia | 28,784 |
Jetstar likely to enter Sydney-Singapore
Whereas Scoot served as a nudge to AirAsia X, both carriers, and Scoot in particular, are likely to nudge Jetstar to operate Sydney-Singapore service.
While Jetstar operates long-haul services to Singapore from Melbourne, as well as from Sydney to long-haul destinations including Bali and Honolulu, Jetstar has stayed off the Sydney-Singapore route. This, however, is likely to change this year. Jetstar has slowly taken on traditional corporate markets. The biggest change came last decade when Tiger Airways Australia's entry into Melbourne Tullamarine-Sydney saw Jetstar respond with its own services from Melbourne Tullamarine, whereas it previously served Sydney from Melbourne alternative airport Avalon. In Dec-2010 Jetstar entered the Melbourne-Singapore route, having been previously confined to serving primarily leisure long-haul destinations.
The entrance of Jetstar on Melbourne Tullamarine-Sydney and Melbourne-Singapore raised the matter of cannibalisation of parent company Qantas' traffic and yields. The prospective entrance of Jetstar on Sydney-Singapore will raise that issue even more as Sydney-Singapore (and onwards to London) is thought of within Qantas as a sacrosanct market, and indeed one of Qantas' last after recent route reductions. The entrance of Jetstar would effectively leave Qantas with only Los Angeles as a flagship high-profile route. While this is unlikely to irk astute Qantas senior management that has, against much public headwinds, sought to stem its loss-making international operation, lower managers and Qantas' vociferous unions are not likely to respond well.
The addition of Jetstar on Sydney-Singapore could add 4242 weekly seats, further cementing Sydney's position as Australia's low-cost long-haul hub.