AirAsia X reportedly suspended plans to launch Kuala Lumpur-Manchester service due to the UK Government’s plans to increase its Air Passenger Duty (APD) (Airwise, 25-Oct-2010). Manchester Airport's Head of Government and Industry Affairs, Brian Conway, stated the carrier had been in talks with the airport for “many months” but chose to launch services to Paris Orly Airport instead due to the government tax being too high. UK Transport Secretary Philip Hammond responded stating the government is aware it is making UK airports and airlines more highly taxed than competitors, but it needs to meet its twin goals of cutting the deficit and meeting aviation growth while also meeting climate change targets. He added the government has started developing a new national aviation policy, to be introduced by the end of 2012. Mr Hammond said the new policy would encourage growth at regional airports.
AirAsia X drops plans for Manchester due to tax
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AirAsia Part 4: AirAsia X pursues turnaround. Delhi to add to Honolulu & Sapporo as new routes
Long-haul low-cost airline group AirAsia X is optimistic it can complete a turnaround and return to profitability after seven consecutive quarters of losses. Conditions in most of its main markets are improving, including Australia and China.
AirAsia X has slowed growth significantly and is now planning to add only two aircraft over the next three years, both of which will be allocated to its Thai affiliate. But the group will consider reaccelerating expansion by sourcing additional A330-300s if market conditions continue to improve.
The Malaysian carrier will still be able to launch several new markets, starting with Honolulu and Delhi, without expanding its fleet as AirAsia X optimises its network and pursues fewer charter or wet lease commitments. Services to Europe could also potentially be resumed in the medium-term.
AirAsia X slows fleet expansion, seeking a 2H2015 turnaround. Could AirAsia buy its half-sister?
AirAsia X is further slowing growth as the long-haul low-cost group battles challenging market conditions. AirAsia X’s fleet is now slated to only grow by three aircraft over the next three years, leading to a much slower than anticipated build up for its new affiliates in Indonesia and Thailand.
AirAsia X has now been in the red for seven consecutive quarters, accumulating net losses of USD270 million including USD36 million in 2Q2015. The group has been in restructuring mode since late 2014, leading to a 20% drop in passenger traffic in 2Q2015.
Unfavourable market conditions and unexpected external factors have delayed a hoped for turnaround. But AirAsia X is confident it will be back in the black in 2H2015, boosted by capacity cuts at Malaysia Airlines; any new unforeseen external factors could however be painful.