AirAsia's Fernandes in it for long haul with new carrier
If anyone can make budget airline travel profitable on long-haul routes, it is Malaysian aviation pioneer Tony Fernandes, analysts say.
The man who brought cheap flights to Southeast Asia five years ago with his low-cost carrier AirAsia has surprised the industry again by announcing a new budget airline for long-haul routes.
Fernandes said AirAsia X would take off in July with flights to Britain for as little as 9.99 ringgit ($2.80).
"If anyone can do it, I suppose Tony will have a go at it, because he's proven a lot of people wrong since he started AirAsia," said Shukor Yusof, aviation analyst with Standard and Poor's equity research.
But Yusof said he remained skeptical that Fernandes' successful business model could work in the long-haul sector.
Tom Ballantyne, chief correspondent for the industry magazine Orient Aviation, was more optimistic.
"Personally I think it will work," Ballantyne said. "He's shown the ability at starting off at a certain level and growing."
AirAsia X will service other European destinations besides Britain as well as China and India, Fernandes said.
The airline will be operated by Malaysian carrier Fly Asian Express (FAX), also founded by Fernandes. It currently provides rural air services on Borneo island.
Fernandes said he expected AirAsia X to carry 500,000 passengers in its first year of operation, and was looking to acquire 20 new aircraft either the Boeing 777-300 or Airbus A330-300, both of which are twin-aisle jets.
"I find it peculiar that he would depart from his extremely successful low-cost model to go into something which could make or break the company," Yusof said.
Fernandes launched AirAsia as a budget carrier in December 2001 with two aircraft.
It now has 50 planes flying to Malaysia, Thailand, Indonesia, Singapore, Cambodia, Vietnam and the Philippines.
Ballantyne expressed surprise at Fernandes' new venture, as the tycoon had often said he did not think the low-cost model would work on longer routes.
"He obviously now sees an opportunity," Ballantyne said from Sydney.
Fernandes is not the first to try budget long-haul air travel but it nevertheless remains a new concept.
"It still has to be proven," Ballantyne said.
Hong Kong's Oasis claimed to be the world's first long-haul budget carrier in October when it began flying with one aircraft between Hong Kong and London.
Jetstar, a budget offshoot of Australian flag carrier Qantas, has begun budget flights to Hawaii.
AFP
(China Daily 01/10/2007 page16)
