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- IATA Code
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- 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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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.
Malaysia Airlines, Firefly, MASwings: new domestic strategy – flat capacity, more aggressive pricing
The Malaysia Airlines Group plans to maintain current capacity levels in the Malaysian domestic market but is aiming to recapture market share through load factor improvements. The group’s domestic market share has slipped from 45% to less than 37% since 2013 as its domestic passenger traffic has dropped by more than 10%, due to capacity cuts and load factor declines.
Malaysia’s other two domestic players, AirAsia and Lion JV Malindo Air, have steadily grown their market share since launching in 2001 and 2013 respectively. AirAsia currently has a leading 45% share of domestic capacity in Malaysia – and an even higher share of traffic given its higher average load factors – while Malindo has approximately 14% and the Malaysia Airlines Group 41%.
The Malaysia Airlines Group is introducing a new, more aggressive pricing strategy in both the domestic and international markets in an attempt to boost load factors and regain market share. Malaysia Airlines’ domestic load factor was only 65.6%% in 2015 and slipped to 64.7% in 1Q2016. Firefly’s load factor was also below 70% in 2015, while MASwing’s load factor was below 60%.
Malaysia Airlines' order for at least 25 737 MAX aircraft is one of several components of a new narrowbody strategy that positions the airline for a return to growth and profitability. Malaysia Airlines has initially allocated 10 aircraft from the new order for growth but has the flexibility to accelerate expansion depending on market conditions and its ability to meet cost reduction targets.
The new aircraft are expected to generate further cost reductions in its short and medium haul operation through efficiency improvements and higher seating density. Malaysia Airlines has already significantly cut the cost of its 737-800 operation by renegotiating contracts with leasing companies and other suppliers and increasing crew efficiency.
Further cost reductions in the 737-800 operation are expected in 2017 through higher aircraft utilisation rates, reconfigurations that will result in higher seat counts for approximately 24 aircraft and a new maintenance joint venture. Malaysia Airlines plans to pursue modest capacity increases in 2017 and 2018 using the existing 737-800 fleet and start using the 737 MAX to grow capacity further in 2019. It is also looking at ordering at least 10 A321neoLR aircraft, which would generate further growth and be used on medium haul routes that are not within range of the 737 MAX.
Malaysia Airlines plans to resume network and capacity expansion in 2017, with a focus on medium haul routes to India and North Asia. The airline is considering several new routes – primarily to secondary cities in China and India – and may also add capacity to some existing North Asian destinations.
Capacity is projected to increase by 3.5% to 4% in 2017, generated by aircraft utilisation improvements. Malaysia Airlines expects significant utilisation improvements on the 737 fleet as new crew bases are opened in secondary cities throughout Malaysia.
The rate of capacity growth is relatively modest but follows a period of sharp cuts, and signifies that Malaysia Airlines is entering a new phase in its restructuring. The airline expects to carry approximately 13 million passengers in 2016, compared with a high of 17.2 million in 2013.