Malaysia Airlines

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.

MAS will achieve its targeted 12% capacity reduction by February, to the delight of Gulf carriers

Gulf carriers and AirAsia will likely emerge as the main beneficiaries of the network restructuring at Malaysia Airlines (MAS). The Malaysian flag carrier has selected several routes to discontinue by early next month, resulting in a 12% reduction in system-wide capacity as it begins implementing its new business plan.

Bankruptcy may save American Airlines, but what will save the US airline industry?

American Airlines (AA) will take the well-trodden bankruptcy protection path: lower labour costs, dispose of old aircraft and reduce or eliminate its pension scheme. By most accounts, bankruptcy protection will help AA return to profitability, just as it did for its counterparts last decade. But there is a larger problem in the US industry, and bankruptcy will not fix it.

Malaysia Airlines new business plan targets premium sector, following strategies of Cathay and SIA

Malaysia Airlines (MAS) has unveiled a new business plan aiming to restore profitability by significantly cutting capacity and increasing focus on the premium sector, which includes the launch of a new regional premium carrier in 1H2012. Several business units including maintenance, cargo and ground handling are to be spun-off, most likely in 2012, as part of a bid to free up capital required to fund rapid fleet renewal and the reinvigoration of MAS’ core business. MAS will swiftly phase out its B747-400 and A330-200 fleets over the next year, leading to a 12% reduction in total capacity.

The decision to draft yet another new business plan at MAS, which has made multiple turnaround attempts over the years, hardly comes as a surprise following the landmark partnership agreement forged in Aug-2011 with long-time rival AirAsia. The agreement, which included an equity swap and the appointment of AirAsia Group CEO Tony Fernandes to the MAS board, inevitably required MAS to downsize and abandon its attempt to compete with AirAsia at the low end of the market.

Frankfurt first destination for Thai Airways A380, which may provide excess capacity

Frankfurt has been selected as the first destination for Thai Airways' Airbus A380, Thai President Piyasvasti Amranand tells CAPA. Thai will take delivery of its first A380 in Sep-2012 and then place the aircraft into service that month on the Bangkok-Frankfurt route. In 2013, as additional A380s are delivered, Thai will expand its A380 network to London Heathrow and Sydney.

Where the Airbus A380 will fly next

Next month marks the fourth anniversary of the Airbus A380's entry into service. Since the maiden commercial flight by Singapore Airlines, A380s have carried more than 20 million passengers on flights with SIA and five other operators: Emirates, Qantas, Lufthansa, Air France and Korean Air. 56 A380s are now in service, with approximately ten more to be delivered by the end of the year. A380 operations are clustered around a handful of key international points. A380s currently serve 25 airports on 38 separate routes. Seven airports account for more than half of all A380 routes.