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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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AirAsia nears 50 million annual passenger/200 aircraft milestones, having transformed Asian aviation
AirAsia ended 2014 having carried about 50 million annual passengers and with a fleet of nearly 200 aircraft across its portfolio of eight airlines. Nearly 280 million passengers have flown on AirAsia since its launch at the end of 2001.
AirAsia has had perhaps the most remarkable run by any airline in history and almost single-handedly shaken up Asia’s aviation industry. The LCC penetration rate within Southeast Asia is now nearly 60% compared to near zero in 2001.
AirAsia becomes the first airline brand in Asia outside China to carry 50 million passengers in a year. As a yardstick of its global scale, only 10 airline brands globally are currently in the 50 million passenger club.
Malaysia Airlines (MAS) continues to incur large losses as the flag carrier tries to rebuild confidence in the aftermath of the MH370 and MH17 incidences. Yields remain at unsustainable levels due to the combination of challenging market conditions and the lingering impact of MH370 and MH17.
MAS has not yet cut capacity and is instead focusing on trying to woo passengers through promotional fares. While the flag carrier has completed several initial milestones from the recovery plan initially outlined in late Aug-2014 it will take several more months for the main components of the plan to be implemented.
Bigger changes are inevitable starting in 2H2015. But adjustments to capacity levels and the carrier’s fleet could be smaller than anticipated.
AirAsia X joins AirAsia in slowing expansion in challenging Malaysia market; cuts Australia capacity
AirAsia X has joined sister low-cost group AirAsia in slowing its expansion in the Malaysian market by selling aircraft, deferring deliveries and wet-leasing excess capacity. The two Malaysian subsidiaries of the AirAsia/AirAsia X groups combined now only plan to add one aircraft, an A320, in 2015.
The adjustments should help drive improvements in yields and profitability. AirAsia X incurred a loss for the fourth consecutive quarter in the 3Q2014 while AirAsia saw its profits slip again - although remaining among the most profitable in the region.
AirAsia and AirAsia X are wisely not holding out for a restructuring at rival Malaysia Airlines (MAS), which at least for the time being is not pursuing any significant reductions to capacity. AirAsia X, which recorded 42% ASK growth in the first three quarters of 2014, will now only increase ASKs in the Malaysian market by 5% in 2015.
Malaysia’s Malindo Air further expands domestic and Indonesia networks, pressuring Firefly & AirAsia
Malaysian hybrid carrier Malindo Air is doubling its Indonesian network during 4Q2014 with three new routes that leverage its relationship with 49% shareholder Lion Group. Malindo recently launched services to Medan - its fourth destination in Indonesia after Jakarta, Bali and Batam - and will add Pekanbaru in Nov-2014 followed by Bandung in Dec-2014.
Malindo is also expanding its domestic network and will soon serve more airports in peninsular or west Malaysia, 12, than any other carrier. Malindo recently added Ipoh as its 10th destination in peninsular Malaysia and will launch services at Malacca and Kerteh in Nov-2014.
Kerteh will become Malindo’s ninth domestic route from its fast growing turboprop base at Kuala Lumpur Subang. In comparison Malaysia Airlines (MAS) regional subsidiary Firefly currently operates seven domestic routes from Subang although it has a bigger international network and is still the leading airline overall at Subang.
Lion Group Malaysian affiliate Malindo Air is planning to launch services on 3-Nov-2014 to Singapore, which will become the hybrid carrier’s 10th international destination from Kuala Lumpur International Airport (KLIA). Malindo will be the fourth LCC on the KLIA-Singapore route, which will become the largest international LCC route in the world based on seat capacity.
Lion will join Asia’s other three main LCC groups – AirAsia, Jetstar and Tigerair – in competing in the busy Singapore-Kuala Lumpur market. While Malindo may find the local market challenging, particularly from a Singapore point of sales perspective given its unfamiliar brand, the carrier will also offer connections passengers beyond Kuala Lumpur with a focus on South Asia.
Kuala Lumpur-Singapore will be Malindo’s first destination with 162-seat 737-800s. Malindo is taking two 737-800s in 4Q2014, supplementing its existing jet fleet of six 180-seat 737-900ERs. The 737-800s will also be used to launch service to Bandung in Indonesia and to add a second daily flight to Bangkok.
AirAsia should see a surge in transfer traffic over the next several months as it introduces and expands its Fly-Thru transit product at additional hubs. AirAsia is evolving to become more like a network carrier, following other Asian LCC groups which have been promoting and selling connections for several years.
Bangkok Don Mueang in late 2013 became the second hub for AirAsia’s Fly-Thru product, which was initially introduced at Kuala Lumpur in 2010.
AirAsia introduced the transit product at Jakarta in Sep-2014 and is planning to extend Fly-Thru to Bali and Kota Kinabalu by the end of 2014.
The launch of long-haul affiliates in Indonesia and Thailand is driving much of the growth. But there is also growing demand for short-haul to short-haul connections.