AirAsia X

Video: Azran Osman-Rani, CEO of AirAsia X, discusses growth plans

In this video interview with CAPA, AirAsia X CEO Azran Osman-Rani discusses what is next for the low-cost long-haul carrier after finally securing a Kuala Lumpur-Sydney route and withdrawing services from Europe and India.

Mr Osman-Rani outlined the carrier's plans to focus on developing its existing network, with future expansion to centre around increasing frequency to existing Asian destinations with an ultimate aim of double daily frequencies across its network.

Ruling out plans to enter any new countries in the near-future with the potential exception of through partnerships like charter operations, Mr Osman-Rani noted the appeal of operating to destinations with a large catchment area, saying that the benefits of a large catchment outweigh the cost disadvantage of operating to such airports.

AirAsia X route changes spotlight ownership complexity post MAS deal, but also growth opportunities

Doomsayers will be quick to look at a series of route cancellations from Malaysia-based AirAsia X and proclaim the demise of the modern low-cost long-haul model AirAsia X pioneers. The context for the changes – ending service to London Gatwick, Mumbai, New Delhi and Paris Orly – expands beyond fuel costs, rising taxes in Europe and new visa restrictions in Malaysia. AirAsia X was already struggling in Europe and particularly in India. The recent cross-ownership deal between Malaysia Airlines (MAS) and the AirAsia Group was also clearly a big factor.

That is not to suggest AirAsia X's changes are simply a matter of submission to MAS. The biggest advantage, besides brand awareness, of the high profile London and Paris routes was their ability to put passengers on multiple AirAsia short-haul flights as they travelled around southeast Asia. MAS' deployment of the A380 later this year will lower unit costs to London, narrowing the gap with AirAsia X, currently using more fuel-thirsty A340s. With the AirAsia-MAS partnership, and plans for the two to facilitate passenger transfers, the AirAsia group can still gain feed on its short-haul network while AirAsia X will benefit from redeploying capacity in Asia Pacific and, notably, China.

In selecting Sydney as its first route, Scoot favours a low risk market with little competition

Scoot's selection today of Sydney as its first destination from its Singapore hub is a solid move from Singapore Airlines' new low-cost long-haul carrier. Scoot previously said it was looking to initially concentrate on Australia and China. There is no existing low-cost long-haul service from Singapore to Sydney or fifth-freedom rights from Emirates, unlike at Australia's second largest city, Melbourne.

The Singapore Airlines (SIA) group decided earlier this year to launch a low-cost long-haul carrier to re-capture some of the growth the group has lost over the past decade, especially to LCCs. Sydney is still a high O&D market SIA and Scoot can try to keep, unlike at Melbourne or the Gold Coast where AirAsia X and Jetstar have firmly planted themselves. Scoot's entry could be expected to galvanise the Malaysian government to finally let AirAsia X serve Sydney – likely before Scoot – and could cause the Qantas Group to consider unleashing its LCC subsidiary Jetstar in one of its last premium markets.

Qantas and Jetstar change 787 strategy to support Asian growth and unit cost improvement

The continuous high-growth in Asia as well as opportunities to achieve better unit costs are the drivers behind a broad change of strategy for how the Qantas Group will deploy the B787-8 and B787-9 across its Qantas and Jetstar brands. Rather than have B787-9s replace Jetstar’s B787-8s, which would have been sent to Qantas for domestic use, Jetstar will keep the B787-8 and operate it alongside the B787-9. Qantas will further reap the B787’s efficiency by deploying the aircraft almost entirely on international routes, leaving domestic routes to A330s and B737s.

Jetstar will be able to better match capacity with demand by operating the smaller 300-seat B787-8, whereas its low-cost long-haul pan-Asian competitors AirAsia X and Scoot will primarily operate 370-seat aircraft, equivalent to the B787-9. Keeping the B787-8 will allow Jetstar to fit out the aircraft to its specification rather than a common spec Qantas could operate with a simple change in seat covers. This has implications for seating density, type of seat and whether or not to install a bulky and expensive in-flight entertainment (IFE) system, which affects unit costs.

The rationale for Singapore Airlines' Scoot and why it is not a long-haul version of Tiger

Those new to the launch of Singapore Airlines' low-cost long-haul carrier, whose name was announced as "Scoot" on 1-Nov-2011, seem to be confounded by two questions: what is its market rationale, and is it just a long-haul version of embattled Tiger Airways?

In brief, Scoot's launch is fuelled by the rapid rise of potential low-cost travel within, around and to/from Asia. The carrier is anything but a long-haul version of Tiger Airways. Here is a full explanation.

Scoot represents a radical change of pace for SIA but the new long-haul LCC is no pioneer

New Singapore Airlines (SIA) long-haul low-cost subsidiary Scoot is doing everything it can to differentiate itself from its parent company but the carrier will likely end up looking a lot like Asia’s other long-haul LCCs, and for good reason: the success of AirAsia X and Jetstar’s long-haul unit provide ample components that are worth mimicking.

After considering an all-economy configuration, Scoot will follow both AirAsia X and Jetstar in offering a premium cabin upfront. While Scoot contemplated the purest of LCC models, it has decided to follow AirAsia X and Jetstar in offering a connection product. To facilitate potential codeshares Scoot will use Navitaire’s New Skies reservation system, which by no coincidence counts AirAsia X and Jetstar as two of its biggest customers.

Scoot is also following AirAsia X in striving to implement a wireless in-flight entertainment (IFE) solution, although it is unclear if the technology will be available in time for Scoot’s mid-2012 launch.