AirAsia X has yet to receive rights to operate Sydney and Beijing routes despite four months and four updates on the Economic Transformation Programme (ETP) (Business Times, 09-Mar-2011). Malaysia's Performance Management and Delivery Unit (Pemandu) outlined such routes as immediate action routes at the launch of the ETP roadmap in Oct-2010. The manual on the ETP stated: "Specifically, the Ministry of Transport will identify immediate action steps to enhance connectivity for Malaysia to Sydney and Osaka as well as other priority medium-haul cities namely Shanghai, Beijing, Mumbai, Delhi, Melbourne, Seoul, Tokyo and Taipei that have already been given approval by the ministry for operations by both MAS [Malayia Airlines] and AirAsia X". National Economic Council member Datuk Seri Dr Chua Soi Lek recently stated that the paper on the initiative has yet to reach the consideration of the council.
AirAsia X awaiting rights signal
You may also be interested in the following articles...
Air Canada continues its strategy of higher capacity growth to fuel rapid international growth
Air Canada’s yield and passenger unit revenues during 3Q2016 remained broadly in line with those of the previous quarter, which is a different outcome from the results posted by many of its North American peers. However its top line revenues grew nearly 11%, and its costs fell at a lower rate than those of many other North American airlines.
The airline’s yields and passenger unit revenues began falling earlier than those of most other airlines based in North America, and Air Canada’s recurring explanation is that lower yields and unit revenues are an expected byproduct of changes in its business model – the creation of its low cost unit rouge, a higher mix of lower-yielding leisure travellers, and longer average stage lengths. As yields and unit revenues continue to decline, Air Canada continues to deliver on its own established financial goals for EBITDAR, ROIC and leverage ratios.
Air Canada’s focus has been on international expansion during the past few years, and that trend will continue for the foreseeable future. In 2017 the airline is expecting nine Boeing 787s scheduled for delivery and its capacity is likely to mirror 2016’s double-digit growth – given that the company will accept delivery of nine new widebodies this year. The bulk of its growth will again be directed to international routes as several new long haul markets are scheduled to come online in 2017.
Air Canada Part 1: low cost rouge is a pillar of growth; but further expansion might be constrained
During the past year Air Canada has found itself defending its double-digit capacity growth, stressing that 90% of its capacity in 2015, 2016 and 2017 is being deployed to its international network – an entity the company believes is far from reaching maturity. Recently the airline has outlined plans to introduce a raft of new long haul flights to Europe and Asia operated by Air Canada mainline and its low cost arm – Air Canada rouge.
Air Canada stresses the pillars of its international expansion – Boeing 787 widebodies and the establishment of its low cost subsidiary rouge – enable the company to enter international markets it once considered unviable due to higher costs. During the summer of 2018 rouge will nearly reach its 50 aircraft cap, and Air Canada needs to start determining if there are further opportunities to grow its low cost unit. Those evaluations will partially dictate Air Canada’s overall growth levels beyond 2018.
In the short term Air Canada is not seeing any broad changes in consumer behaviour, reflected in its solid booking curves. Weaker markets in Western Canada, hit by the downturn in the oil sector, are stabilising as capacity cuts have resulted in a rational supply-demand scenario.
This is Part 1 in a two part series on Air Canada. The second instalment will focus on the airline’s costs and balance sheet management.