AirAsia’s Subang homecoming – new flights take off to Kota Kinabalu and Kuching
This Friday, 30-Aug-2024, marks the return of AirAsia to Sultan Abdul Aziz Shah Airport (Subang Airport/SZB) as part of the first phase in the transformation of Kuala Lumpur's old city airport.
It is an ironic homecoming, given that this is where AirAsia - following its rebirth in Dec-2001 as the region's first low-cost carrier - started and fought hard to stay at 22 years ago.
In 2002 AirAsia lost its appeal to overturn the Malaysia government's decision to consolidate all commercial passenger jet flights at Kuala Lumpur International Airport (KLIA).
AirAsia CEO Tan Sri Tony Fernandes said at the time, "We are disappointed", and the upholding of the policy to end all jet flights at Subang was "a big blow to AirAsia[,] but we have to carry on".
This analysis was written by our former chief analyst Brendan Sobie, who has covered the Southeast Asian LCC sector for over two decades, including nine years working at CAPA - Centre for Aviation.
- AirAsia is to launch new flights from Sultan Abdul Aziz Shah Airport (Subang Airport) to Kota Kinabalu and Kuching.
- The LCC originally flew from the Kuala Lumpur airport, before a government decision to consolidate commercial passenger jet flights at Kuala Lumpur International Airport (KLIA).
- Kota Kinabalu and Kuching are the largest of AirAsia's over 90 routes at KLIA.
- AirAsia had a 50% market share of the Kuala Lumpur market in 2019. In the first seven months of 2024, its share had slipped to 42%.
A setback, but AirAsia has subsequently grown at KLIA
AirAsia quickly overcame the setback, and by any metric it has succeeded at KLIA, where it has operated since Dec-2002.
There have been many highly publicised battles with Malaysia Airports Holdings Bhd (MAHB) over the years, but this did not stop AirAsia from becoming KLIA's dominant player.
In 2019 the airline group carried 32 of the 62 million passengers that were handled at KLIA. This includes 23.8 million for AirAsia Malaysia, and 5.6 million for the long haul affiliate AirAsia X Malaysia, as well as almost 3 million for the foreign affiliates (AirAsia Indonesia, AirAsia Philippines and AirAsia Thailand).
AirAsia has helped grow the overall Kuala Lumpur market...
In the overall Kuala Lumpur market there were 64.6 million passengers in 2019, including 62.3 million for KLIA and 2.3 million for Subang, according to MAHB data.
In the first 18 years with competition from AirAsia, the Kuala Lumpur market nearly quadrupled in size, from 16.5 million passengers in 2001 to 64.6 million passengers in 2019; and AirAsia accounted for an astonishing two thirds of the additional passengers (32 million of the 48 million).
The rest of the growth has between split between Batik Air Malaysia and foreign airlines, since the traffic of the flag carrier Malaysia Airlines Group (MAG) was relatively flat over this period.
...but both are still rebuilding since the COVID pandemic
AirAsia is still in the process of rebuilding its operation following the pandemic, and KLIA is also not yet back to pre-COVID levels, with passenger traffic over the first seven months of 2024 sitting at 9% below the same period of 2019.
It will be some time before AirAsia gets back to carrying 32 million passengers per annum in the Kuala Lumpur market. However, the ability to again access to Subang after 22 years provides an important and historically significant boost.
'New' AirAsia Subang flights will complement existing routes from KLIA
On 30-Aug-2024 AirAsia is relaunching flights from Subang to Kota Kinabalu and Kuching, with two daily flights on each route.
It is no coincidence these are the same two routes that AirAsia operated after Mr Fernandes and Tune Air Sbn Bhd took over AirAsia from DRB-HICOM on 8-Dec-2001.
At the time, AirAsia had only two aircraft.
In the first year the fleet and network expanded modestly to a handful of routes, and a handful of aircraft, before the move to KLIA.
Kota Kinabalu and Kuching are the largest of AirAsia's over 90 routes at KLIA, and both will continue to operate, with more than 10 flights per day following the Subang resumption, according to data from CAPA - Centre for Aviation and OAG.
Subang return made possible by new narrowbody jet policy
Subang was only open to turboprops from Dec-2002 until the beginning of Aug-2024, when the new narrowbody jet policy for Subang (initially announced in 2023) permitting limited jet flights was implemented.
Batik Air Malaysia and Firefly have already launched two daily jet flights each to Subang earlier in Aug-2024 under the new policy. Indonesia's TransNusa also has already launched one daily flight to Subang, with Singapore's Scoot launching one daily flight on 1-Sep-2024.
Subang traffic peaked at 15.8 million passengers back in 1997, the year before KLIA opened. Its passenger traffic declined to 1.1 million in 2002, which was the last year some jets (including the AirAsia flights) were still permitted.
Subang's annual traffic dropped further, to less than 100,000 passengers per year from 2003 to 2007 - the first five years only turboprops were permitted.
Subang traffic increased again following the launch of Firefly in 2007 and Batik Air Malaysia in 2013. Both new airlines rapidly grew their fleet of Subang-based ATR 72 turboprops, resulting in Subang turboprop traffic peaking at 3.06 million passengers in 2015.
At the time, Subang was the largest ATR airport in the world.
Firefly has since reduced its ATR fleet; Batik Air Malaysia initially cut, and eventually phased out, its ATR fleet earlier in 2024.
In 2023 Subang had only 1.4 million passengers.
A reduction in turboprop operations opens space for the return of jets
The reduction in the turboprop operation essentially leaves space for the return of jets, with Subang's capacity currently at 3 million passengers per year.
The jet operation will fill about half this capacity until it increases to 8 million following the opening of a new terminal, which is planned for 2027 and will support the launch of more jet flights.
Subang to be 'important' but 'small part' of the Kuala Lumpur aviation market
Subang will become an important, but still relatively small, part of Kuala Lumpur's aviation market for AirAsia, as well as its two main competitors: Batik Air and MAG.
Combined capacity for KLIA and Subang will increase to 83 million passengers per annum with the opening of the new terminal at Subang. Further increases in capacity for KLIA beyond the current 75 million passengers per annum are anticipated - but not yet decided on - after 2030.
Kuala Lumpur annual traffic:
When KLIA initially opened in 1998 it had capacity for 25 million passengers, which seemed sufficient at the time.
KLIA had only 17.5 million passengers in 2003, which was the first year all jet flights were moved from Subang.
But traffic growth subsequently accelerated, driven by AirAsia's rapid expansion. In 2004, 20 million passengers was exceeded for the first time.
In 2005 KLIA was already operating at close to capacity with 23.2 million passengers, leading to the opening of the low-cost carrier terminal (LCCT). The LCCT was AirAsia's home from Mar-2006 until KLIA2 opened in May-2014, resulting in KLIA's capacity increasing to 75 million (including 45 million for KLIA2 and an expanded 30 million for KLIA1).
AirAsia is growing in Kuala Lumpur but market share has declined
Back in 2005, the last year KLIA that had just one terminal, AirAsia carried only 4 million passengers and had a 17% share of the Kuala Lumpur market.
That year MAG carried about 14 million passengers in the Kuala Lumpur market, representing nearly a 60% share. In 2019 MAG carried about 15 million passengers in the Kuala Lumpur market, for a 23% share, while Batik Air carried slightly over 6 million, for about a 10% share.
It will take a few years before AirAsia again reaches the 50% market share it captured in 2019. In the first seven months of 2024 its share of the Kuala Lumpur market had slipped to 42%, with slightly more than 14 million passengers carried, based on MAHB data.
However, the return to Subang starts a new chapter in what has been a remarkable story.