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 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.
Kuala Lumpur International traffic surges another 16% in 1Q2014. Is the growth sustainable?
Malaysia continues to record some of the world’s fastest passenger growth rates, driven by rapid capacity expansion by Malaysia Airlines (MAS) and AirAsia along with the launch of Malindo Air.
Malaysia Airports has recorded 18% passenger growth for 1Q2014, including 16% at Kuala Lumpur International Airport (KLIA). This follows growth of 18% for the full year in 2013, including 19% growth at KLIA, making it the fastest growing major airport in Asia.
The rate of growth is expected to slow down for the remainder of 2014 but remain in the double digits for the full year. The growth over the last year has been spectacular but has come at the expense of airline yields and hence profitability.