AirAsia X goes head to head with Jetstar
Long-haul low-cost flying into and out of will start to gear up early next year when AirAsia X, which currently serves the Malaysian capital Kuala Lumpur twice daily from Melbourne and 12 times a week from Sydney, starts flying non-stop to Bangkok, Thailand.
The long-haul arm of AirAsia is about to begin stage two of its development, where it opens up medium and long-haul services to the hubs of the parent’s short-haul regional affiliates in south-east Asia.
Operationally piggy-backing on top of the AirAsia parent, AirAsiaX now has five Australian A330-300 destinations after beginning an initial four flights a week from Kuala Lumpur to Adelaide last Friday. That is expected rise to daily by the end of next year. AirAsia X also flies to the Gold Coast and Perth.
From Kuala Lumpur, the airline flies to a further 13 cities: Taipei (Taiwan), Jeddah (Saudi Arabia), Male (Maldives), Colombo (Sri Lanka), Kathmandu (Nepal), Tokyo and Osaka (Japan), Seoul and Busan (South Korea) and Chengdu, Beijing, Shanghai and Hangzhou (China).
The strategy now is to begin joining more of the dots. From early 2014, AirAsia X will initially base two 377-seat A330 widebody jets at Bangkok’s Don Mueang airport – the Thai AirAsia base at the Thai capital’s old international airport, which has been superseded by Suvarnabhumi airport.
Thai AirAsia now has about a quarter of the AirAsia group’s fleet of 180-seat A320s flying to domestic and nearby international cities from Don Mueang airport, after switching from Suvarnabhumi a year ago.
AirAsia X boss Azran Osman-Rani is foxing about which of the existing dots will be joined from Bangkok, but he has already told the aviation trade media it will be a total of three destinations – one or two in Australia with one or two in China and north Asia.
As a result, there’s a strong chance that AirAsia X could be flying against Jetstar head-to-head within a year.
Jetstar operates three flights a week from Melbourne to Bangkok Suvarnabhumi; Melbourne and Sydney will probably be the first Australian destinations to get direct flights to Bangkok with AirAsiaX.
That could set up a fascinating battle for hearts and minds. Until now, Jetstar and AirAsia X have avoided direct competition with each other like the plague.
With its Australian bases and crews and their much more comfortable eight-abreast economy configuration versus AirAsia X’s nine-abreast*, Jetstar’s smaller A330-200s are often 10-20 per cent dearer to Bangkok from Melbourne compared with AirAsia to Bangkok via Kuala Lumpur.
New direct services from Melbourne would lower AirAsia X’s costs even more as every en route stop can add up to 25 per cent of the cost of providing the seat end-to-end.
And AirAsia X would have the advantage of a distribution network in Thailand, which Jetstar doesn’t have.
Osman Rani explained the nuts and bolts of the new strategy to me last week after he flew in to launch the Adelaide service.
“The strategy from Bangkok is that we fly to the same cities AirAsia X is flying to today,” he said. “Certainly in the first year, we want to reduce the (financial) risk of opening up new cities in a new country.
“We’re still working out how we increase the Bangkok fleet, but we are taking another 20 (A330-300) aircraft in the next few years. It all depends whether we grow faster in Kuala Lumpur or Bangkok or another international hub.
“We know that the long-haul model works when there’s a very strong short-haul feeder network to anchor itself on. It would make sense for us to go where AirAsia has at least 20-plus narrowbody planes.”
That rules out new AirAsia joint ventures in India and the Philippines for the time being, as well as Japan, where AirAsia recently withdrew from a joint venture.
Within a year or so, apart from new flights to Thailand, AirAsia X will be looking at new services from Australia to AirAsia’s other main regional hub, Jakarta, the capital of Indonesia.