- CAPA Analysis
- Schedule Analysis
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- Fast Fact Report
- Airline Status
- IATA Code
- ICAO Code
- Corporate Address
- Lot 4, Level 2, Stesen Sentral Kuala Lumpur,
50470 Kuala Lumpur
- Main hub
- Kuala Lumpur International Airport
- Business model
- Low Cost Carrier
- Domestic | International
- Airline Group
- Part of AirAsia Group
- Frequent Flyer Programme
- Association Membership
AirAsia is a low cost carrier based at Kuala Lumpur International Airport, Malaysia. The carrier, which was formed out of Tune Air in 2002, is led by CEO Tony Fernandes and pioneered the cross-border joint venture in Asia, establishing Thai and Indonesian units with bases in Bangkok and Jakarta. The airline has also partnered with other airlines and investors to create ventures in the Philippines, India and Japan. AirAsia's extensive domestic and regional network includes services within Malaysia and to China, Southeast Asia and the Subcontinent.
Location of AirAsia main hub (Kuala Lumpur International Airport)
AirAsia share price
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider AirAsia fits the LCC profile and it is included in our reporting on this basis. Please note: when reporting for an airline is changed from or to LCC the historical data is not affected and it can lead to a distortion in the current reported data. Contact us if you have any queries.
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Short haul LCC group AirAsia faces intensifying competition in its original home market of Malaysia. Malaysia AirAsia (MAA) is no stranger to fierce competition and has the cost structure to fight back, but the price might be a dilution of recent yield and load factor improvements.
MAA has benefitted over the last year from the restructuring of Malaysia Airlines and an improvement in overall market conditions. However, the new Malaysia Airlines is starting to emerge as a tougher competitor, with a new, more aggressive pricing strategy. Meanwhile Lion Group’s Malaysian JV Malindo Air is again accelerating expansion, targeting several of AirAsia’s most lucrative routes.
Over the past two months CAPA has published a comprehensive series of reports analysing the new strategy of the Malaysia Airlines Group, Malindo and AirAsia X. In this report CAPA examines the outlook for Malaysia’s largest airline, MAA.
Malaysia’s Malindo Air is focusing on partnerships both within and outside the Lion Group to help support accelerated growth. Malindo now accounts for approximately 8% of traffic at Kuala Lumpur International Airport (KLIA) and will soon link KLIA with over 30 destinations, making it attractive to foreign airlines seeking feed.
Malindo has implemented interlines with Turkish Airlines, Qatar Airways and Etihad Airways over the last four months. It is now in the process of implementing an interline agreement with Oman Air, and aims to have seven interlines in place by the end of 2016.
Malindo is also now working more closely with other airlines in the Lion Group. Malindo recently began selling connections beyond Bangkok on Thai Lion Air, and plans soon to begin selling connections beyond Jakarta on Batik Air.
Asian airlines have long had second brands, often for a regional airline flying to secondary markets. For equally as long airlines have struggled with how to work the brands in sync – somewhere between fully aligned with the flagship parent and full independence. This is starting to change, with the most prominent example being Cathay Pacific's change of Dragonair's branding to Cathay Dragon, effective 21-Nov-2016. Product too has already been largely aligned.
Dragonair has expanded out of its mostly China niche to take over Cathay's Penang service and launch flights to Denpasar Bali and Tokyo Haneda, supplementing Cathay services and giving the two a larger group presence. The boldest move yet is Dragonair taking over the Kuala Lumpur route from Cathay in 2017. Cathay will transfer five A330s to Dragonair, more than what is needed for four daily Kuala Lumpur flights, indicating that more transfers are likely.
AirAsia is doubling down its focus on North Asia with a regional office in Hong Kong overseen by former AirAsia executive Kathleen Tan, who is widely credited for AirAsia's strong Chinese relations and growth in China: AirAsia is the largest non-greater China airline company in the country. Across North Asia the opportunities are large, but the challenges equally big. A China-based AirAsia affiliate would appear to be a long term ambition.
More immediately, AirAsia is regaining a local Northeast Asia presence with the launch of AirAsia Japan Mk II in 2017. Although delayed from initial 2015 start-up projections, AirAsia Japan gives the group relevance in a large domestic market and significantly growing short haul international market.
Elsewhere in Northeast Asia the opportunities are mixed. Korea and Hong Kong are becoming saturated and remain protectionist. Macau and Taiwan are unlikely to be big enough to support a local AirAsia unit.
Malaysian long haul low cost airline AirAsia X is accelerating expansion with several new destinations and more than a 50% increase in capacity. The airline is planning to add at least five new destinations in 2016, including three which have already been launched.
The expansion is driven primarily driven by aircraft utilisation improvements and a reduction in charter operations. AirAsia X is not expanding its fleet in 2H2016 and has no deliveries currently planned for 2017.
However, AirAsia X is looking at options for expanding the Kuala Lumpur-based fleet in 2017, which would drive further capacity growth. Growth is already in the pipeline for 2018 as the airline starts to take delivery of new generation A330-900neos, which will likely be used to launch nonstop flights to Europe.
As airlines have embraced dual brand strategies to reach full service and low cost growth aviation IT has responded, as seen with Amadeus' acquisition of Navitaire, which mostly but not exclusively powered the passenger service systems (PSS) of LCCs. In the first six months since the deal closed Navitaire has added 230m passengers boarded, to Amadeus Altea's 393m. Navitaire passengers account for 37% of Amadeus' total.
Having significantly grown its market share, and with past LCC product forays not having worked out, Amadeus receives a new business stream. Some Navitaire customers (Ryanair, AirAsia, IndiGo) are larger than Altea customers and have high growth ahead of them. A second benefit is the Navitaire acquisition supporting Altea customers. By owning both products Amadeus can improve connectivity between Altea and Navitaire airlines. Most of Altea's large customers – Lufthansa, IAG, AF-KLM, Qantas and JAL – have an LCC operating Navitaire software. Of Navitaire's passengers – 35% are on airlines that are LCC units of full service airlines. Other airlines may be holding out on pursuing partnerships and connectivity until there is a cheaper, simpler and streamlined way.
It may seem that the Amadeus-Navitaire marriage is about full service and low cost segments, but its greatest strength is the role it will have in the hybrid segment. Hybridity is growing, and Amadeus-Navitaire could galvanise further expansion.