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- 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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Southeast Asia’s airline sector experienced a further improvement in profitability in 1Q2016, boosted by lower fuel prices and more favourable conditions in most of the region’s main markets. However, profitability in Southeast Asia remains at a much lower level than in most other regions due to intense competition and overcapacity in some markets.
A sampling of 20 Southeast Asian airlines recorded approximately a 50% increase in operating profits in 1Q2016. Among the 20 airlines, 14 reported year-over-year improvements, including all seven of the AirAsia-branded airlines.
The increase in profits to nearly USD700 million in 1Q2016 follows a significant improvement in profitability in 2015. The same group of 20 Southeast Asian airlines swung from a collective operating loss of over USD800 million in 2014 – when market conditions were extremely challenging – to a profit of more than USD1.2 billion in 2015. With 1Q2016 profits at a level of more than half the 2015 full year profits, the outlook for 2016 is now relatively bright.
Asia’s LCC sector is further evolving by embracing partnerships and a new loose form of alliances. The newly established Value Alliance and the smaller China-based U-FLY Alliance – launched in early 2016 using the same technology platform – represent a new competitive response to Asia’s leading LCC groups.
Partnerships are critical for unlocking a new phase of growth in the relatively crowded and increasingly competitive Asian market. This is particularly important for independent LCCs that are outside the region’s three major groups – AirAsia, Jetstar and Lion. Value and U-FLY members combined account for approximately 19% of LCC capacity in Asia Pacific; this compares with 16% for AirAsia/AirAsia X, 11% for Lion and 9% for Jetstar.
Of the 53 LCCs based in Asia Pacific, nine are members of the Value Alliance and four are members of U-FLY. AirAsia/AirAsia X has eight affiliates or subsidiaries with a ninth to be launched by the end of 2016. The Lion Group consists of three LCCs and includes Asia’s second largest (along with two full service airlines), while the Jetstar Group has four subsidiaries or affiliates.
Southeast Asia’s LCC sector is entering a new phase, after experiencing explosive growth over the last decade. The rate of capacity growth in the short haul segment has slowed, leading to small declines in the LCC penetration rate within the region. Profitability has also remained a concern, with over half the region's LCCs unprofitable during 2015, despite extremely favourable conditions in most markets.
However, growth is accelerating in the less penetrated medium haul segment. Partnership activity is increasing as LCCs seek new growth opportunities outside the point-to-point model, notably culminating in the world's second, but most extensive, LCC alliance – the Value Alliance, with membership across the region and a joint sales platform.
Partnerships are particularly important for LCCs outside the AirAsia and Lion groups. AirAsia and Lion each account for 30% Southeast Asia’s LCC market and have a massive order book, with commitments for nearly 900 aircraft.
AirAsia X achieved revenue growth of 25% year-on-year in 1Q2016, a welcome improvement, as traffic and fares grew strongly.
Through the remainder of 2016, AirAsia X will reduce its wet lease operation and focus on expanding its scheduled services amid stronger demand in its core markets of Australia and China where more than 50% of its capacity by seats is deployed – and where the biggest improvements have been made.
Despite the strong and improving performance at AirAsia X and Thai AirAsia X, the Indonesian arm of the operation has an uncertain future as it falls under review due to restrictions imposed by Indonesian regulators.
The airline's core growth market is facilitating connecting traffic from Australia through to China, India and Iran – reflecting the weakened position of Malaysia Airlines in the ex-Australia transit market. Having returned to a strong growth position, AirAsia X is currently reaping the rewards – but unlike previous excursions, with a much more diligent focus on the commercial side.
Senai International Airport in the southern Malaysian state of Johor is poised for more rapid growth as AirAsia expands its Senai base. Senai was the fastest-growing of Malaysia’s eight largest airports in 2015, recording 11% passenger growth while the overall market expanded by less than 1%.
AirAsia launched services from Johor to Hat Yai at the beginning of Apr-2016 and is launching services from Johor to Guangzhou in May-2016. The new routes expand AirAsia’s international operation at Senai to seven routes and are part of an overall initiative by the LCC group to expand its secondary hubs, with more point-to-point links.
Malindo Air is also pursuing expansion at Johor in May-2016 by resuming services from Johor to Kuala Lumpur International, a route it briefly served in late 2013. Malaysia’s other main airline group, Malaysia Airlines, is considering possible new point-to-point routes from Johor following the recent opening of a crew base at Senai.
VietJet Air is entering a new phase as the fast-growing Vietnamese LCC takes on AirAsia on the Ho Chi Minh-Kuala Lumpur route. Kuala Lumpur will become the sixth international destination for VietJet and only the fourth international market where it faces competition from other LCCs.
Since its late 2011 launch VietJet has focused primarily on the domestic market, where it now serves 17 destinations. However Vietnam’s domestic market is starting to become saturated after four years of rapid growth, and VietJet strategically needs to establish a bigger international presence.
VietJet is also expanding in Taiwan, with planned new services to Kaohsiung and Tainan and a second daily flight on the Ho Chi Minh-Taipei route. But VietJet faces challenges in establishing its brand overseas and has already experienced some setbacks in the international market.