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a point for every 2 ringgit (US$0.66) they spend.
Long-haul low-cost is perhaps the ultimate
blurring of the low-cost and mainline models
and was a major topic of conversation -- not least
because AirAsia X pulled out of its European routes
from Kuala Lumpur to London Gatwick and Paris
Orly earlier this year.
Azran Osman Rani, CEO of AirAsia X, told
the conference that the carrier s withdrawal from
these routes was triggered by a number of factors,
including the high price of fuel and Europe s
economic woes, alongside the proliferation of
various taxes on carriers ying into the region.
Lessons from Europe
However, he noted that the carrier had learnt a
number of lessons from its experience in Europe.
"One lesson we learnt was the importance of
scalability," Azran said, noting that the European
routes su ered from lack of frequency. Both had
less than daily ser vice - London was operating six
times a week and Paris just four.
He also refuted suggestions that the four-engined
Airbus A340, burning more fuel than twin-engined
competitors, had been a signi cant cause of the
problem, noting that even with A330s the ser vices
would not have been nancially viable.
Azran said he still holds out hope that the airline
could return to Europe. "Hopefully the arrival of
the Airbus A350 and the recovery in the European
economy will coincide," he said, noting the new
twinjet s promised 20 percent fuel-burn saving.
e carrier has ordered ten A350s, which are due
to arrive from 2017. However, Azran also said that
"it may well be the case" that the clout of Middle
East carriers will shut the door to Europe.
Of course, the other part of the equation is
Malaysia Airlines (MAS) -- now e ectively a sister
company to AirAsia, given the cross-shareholding
between the two companies. Azran said that MAS,
given its high cost base, will not be able to compete
In the meantime, Azran said AirAsia X will be
tackling the issue of scalability by focusing on core
markets where it already has a presence, such as
Australia, China and Japan.
ese are markets that are also on the radar of
Scoot. e new long-haul carrier being launched by
Singapore Airlines (SIA) has announced that Gold
Coast, Australia will be its second destination a er
Sydney, but CEO Campbell Wilson is giving little
else away. e carrier will begin operations in the
middle of this year with four Boeing 777-200s.
One thing that Wilson did make clear was that
the carrier would be proactive in its search for
airline partners - and that there could be quite a
few. "We ll be promiscuous. We ll sleep around,"
Also joining the long-haul party is the
Philippines Cebu Paci c Air - Lance Gokongwei,
the carrier s chief executive o cer, said that demand
from 11 million Filipino migrant workers justi es
the launch of a long-haul product. e carrier is
looking to launch ser vices using Airbus A330s in
the third quarter of 2013.
Middle East market
Gokongwei pointed to the Middle East as a key
reason for this decision, pointing to the lack of direct
air links to the region -- as well as Cebu Paci c s
ability to o er short-haul connections between
the many islands within the Philippines. No carrier
presently o ers non-stop ser vice between Saudi
Arabia -- home to some 4 million Filipino workers
-- and Manila. "Sometimes workers are making two
or three changes" during a single journey, he said.
There are a further 800,000 Filipino guest
workers in the United Arab Emirates -- far
outstripping Hong Kong , which has 200,000.
However, Cebu Paci c managers have also made
clear that a high-density route such as Hong Kong
remains an attractive possibility for A330 ser vices.
Financiers and consultants attending the
conference generally felt that the jury is still out on
long-haul low-cost, although the geography of Asia
does lend itself to this type of product.
ere is little doubt, however, where the next
Asian budget 'hotspot will be -- North Asia.
According to Joost Van Der Heijden, Airbus s head
of airline marketing for Africa, India, South-East
Asia and Japan, Asia has a low-cost penetration
of 22 percent, lagging behind North America s 29
percent and Europe with 39 percent, while Japan
has a just 5 percent market penetration.
at looks as if it is about to change. Jetstar
Japan, backed by Japan Airlines (JAL) and Qantas-
owned Jetstar, is launching ser vices later this year, as
is AirAsia Japan, backed by AirAsia and All Nippon
Airways (ANA). Also on the starting blocks is
Kansai Airport-based Peach Aviation -- in which
ANA has a 37.8 percent share.
e carrier s CEO Shinichi Inoue, insists that
there is no con ict of interest with AirAsia Japan,
which is based in Tokyo and will operate out of the
capital s Narita Airport.
Peach will launch in March with four daily
flights from Kansai to Sapporo, Fukuoka and
Nagasaki, adding Kagoshima to its network in
April. International ights will follow soon a er,
with ser vices to Seoul, Hong Kong and Taipei. e
carrier will start with two A320s, with a further
eight on rm order.
Inoue admitted that the LCC concept is new to
Japan, and to entice the Japanese public the carrier
plans to have "very attractive" prices on o er to
build up critical mass.
Tokyo's 'third airport'
Japanese airports are also adapting to the low-cost
model. Ibaraki Airport is marketing itself as a third
Tokyo airport, similar to London Stansted. At the
moment the facility is ser ved by Japanese budget
carrier Skymark Airlines and Shanghai-based
Spring Airlines, but it is looking to attract more
low-cost carriers, including those from South Korea
and the Philippines.
e airport, which is about 80km north of
Tokyo, o ers a downtown bus connection costing
500 yen (US$8.10), compared to 900 yen for
transport to Haneda and 3,000 yen to Narita.
Free parking is a further enticement, while the
airport is also offering assistance to carriers
wanting to y there.
In the end, whatever the model on o er, pricing
is the key. "At the end of the day, it s all about
making money," noted Jazeera s Pichler.
"At the end of the day, it's all
about making money." -- Jazeera
Airways CEO Stefan Pichler
Cebu Pacific Air CEO Lance Gokongwei says
demand from 11 million Filipino migrant workers
justifies the launch of a long-haul product.
CEBU PACIFIC AIR
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