AirAsia resumes Singapore expansion following move to Terminal 4, but high costs remain a challenge

The AirAsia Group is resuming expansion in Singapore over the next few months, with the launch of three routes and capacity increases on two of its 15 existing routes. AirAsia's virtual hub in Singapore will increase from 261 to 289 weekly departures, resulting in the highest level of capacity since 2015.

However, AirAsia's Singapore capacity will still be lower than in 2013 and 2014, when it peaked at more than 300 weekly departures. At one point AirAsia had as much capacity in Singapore as the rival LCC groups Jetstar and Tigerair - despite not having a local affiliate.

AirAsia is keen to regain market share in Singapore and drive a new phase of LCC growth at Changi, which has experienced faster FSC growth over the last three years. AirAsia's recent move to Terminal 4, which has self-service technologies embraced by AirAsia in its digitalisation push, provides a potential platform for faster growth.

However, T4 alone is not a panacea, and AirAsia needs a further reduction in its Singapore cost base in order to really accelerate its rate of growth at Changi Airport.