Malaysian State Government has offered land to AirAsia for the construction of an LCCT in Sarawak (Bernama, 05-Mar-2011). Deputy Chief Minister Datuk Patinggi Tan Sri Dr George Chan stated: “They [AirAsia and state government] are talking seriously,” about the project and justified construction of the LCCT as the airport tax of USD17 (MYR51) imposed at nearby Kuching Airport is considered too high by travellers. Dr Chan also urged Malaysia Airport Berhad to consider reducing the airport tax and charges at the LCCT to develop new traffic and further promote tourism.
AirAsia's Sarawak LCCT under serious consideration
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Malaysia’s AirAsia: resuming domestic expansion and eyeing MASwings routes
AirAsia is resuming domestic expansion in the Malaysian market with a focus on connecting more dots within its network of 15 domestic destinations. The LCC is launching or resuming three domestic routes from Johor Bahru in late Apr-2017 and has lodged applications for four more new domestic point-to-point routes.
By the end of 2017 AirAsia is also aiming to take over a few domestic routes within east Malaysia that are now exclusively operated by the Malaysia Airlines Group turboprop subsidiary MASwings. The routes are part of the Malaysian government’s subsidised rural air services (RAS) programme, but are potentially big enough to support larger aircraft on a commercial basis. The Malaysia Airlines Group is preparing to reduce its ATR 72 turboprop fleet further following anticipated changes to the RAS programme, which is coming up for renewal this year.
AirAsia is the leading domestic airline in Malaysia and has 50% of its total seat capacity allocated to the domestic market. However, AirAsia’s domestic capacity has been flat the last three years as it has focused entirely on international expansion.
AENA: Spain's airport operator must cut charges, but airline yields are already falling
After much delay, in late Jan-2017 the Spanish Council of Ministers approved the airport regulation document setting AENA's airport charges for the next five years. The headline numbers include a 2.2% annual decline in charges from 2017 to 2021, equivalent to an overall cut of 11% through the period.
The legal framework prevents tariff increases before 2025, but the outcome was in contrast with the Spanish airport group's own proposal to freeze charges. Strong traffic growth of 11% to an all time high level of 230 million passengers in 2016 may have influenced the regulator's decision.
In response, AENA has decided to remove an incentive mechanism which rewards airlines for traffic growth with airport charge discounts. The removal of discounts is estimated to offset the 11% reduction by one third.
In fact, this discount scheme has been quite effective in stimulating traffic growth in recent years. However, traffic growth in Spain was also boosted in 2016 by high airline capacity growth switched from other (risk) markets. Airline yield declines are probably noticeably heavier than AENA's regulated price reduction.