Home' Asian Aviation : AAV April 2017 Contents 30 AsianAviation | April 2017
Attempts at true long-haul connectivity were made early on in
the Malaysian company ’s history, with London Stansted joining the
network in 2009 (later switched to Gatwick) and Paris Orly in 2011.
High oil prices forced the then-chief executive Azran Osman-Rani
to close both European routes in 2012. And, although Brent Crude
has halved in price since then, Ismail appears in no rush to stage a
comeback on the continent.
“ We are still running the due diligence. We are still looking for
the right aircraft. And we are still running the numbers. So, no, we
are far from it,” he affirms. “London is a trademark destination for
a lot of airlines, and those flights are quite scary. They ’re very, very
rock bottom [prices]. It’s very tough for us to make that decision to
compete with them, so I think we’re going to make sure that at least
the route becomes more normalised, in probably a year...We are
monitoring the yields, but at the moment it still doesn’t look good.”
When the time does come to re-enter Europe, success will hinge
in large part on aircraft selection.
Ismail recognises that the four-engine A340s deployed by his
predecessor were “fuel guzzlers” and “very
operationally inefficient”. However, the A330-
300s currently in the fleet are no more suitable
owing to their limited range.
The obvious solution is to wait until late next
year, when the first of 66 ordered A330-900ne-
os will begin arriving in Kuala Lumpur.
“Once we have the 330neos we are probably going to put two
to three aircraft for London, and then [with] the others we will just
make sure that we grow our network,” Ismail says, predicting two
deliveries of the re-engined type in 2018 and five per year thereafter.
He identifies Milan, Barcelona and Russia as possible future des-
tinations, but says that Paris is “tough” because of its seasonality.
AirAsia X also has 10 orders for A350-900s — Airbus’s answer to
the Boeing 787 Dreamliner, the type deployed by Norwegian, Scoot
and Jetstar. Both next-generation aircraft are considered ideal for
low-cost, long-haul flying because of their low operating costs. But
the A350 order is a long way off being fulfilled. “ We haven’t got to
the level of negotiating when we want them,” Ismail confirms. “ They
are not urgent for us.”
His only alternative is to “scour around” for spare aircraft in the
leasing market. Recent reports by CAPA talked up that possibil-
ity, claiming that AirAsia X will either rent some A350s deferred
by SriLankan Airlines or find some second-hand 777s. However,
while both leasing options were studied by the airline last year,
management no longer feel a need to expedite their return to Lon-
don. “ There were some 350s available, though of course they ’re
not cheap,” Ismail shrugs. “ The 777s are out there as well...But of
course we’re not Boeing experts — we have an Airbus fleet — so
it would be a big sacrifice investment.”
A more pressing concern, he says, is making sure that the Euro-
pean routes — whenever they come — are commercially justifiable:
“ We’ve got to offer fares that make money for us. If the full-service
guys are already offering fares way below their breakeven [point], I
don’t think it would be a very wise decision for us to go even lower
than that and just ruin our profitability.”
The more he talks, the clearer it becomes that staying in the black
is priority number one for AirAsia X.
Ismail was appointed chief executive in January 2015, following
two consecutive years of losses that had led some to question
whether the company ’s low-cost, long-haul dream was unravelling.
Rocky starts for its Thai and Indonesian ventures only heightened
those fears. But while the two overseas affiliates are still struggling,
the Malaysian carrier turned the corner last year with a net profit of
231 million ringgit (US$56 million).
Its recovery plan hinged on freezing recruitment and cutting back
the network. Routes to Adelaide, Australia and Nagoya, Japan were
dropped, while Colombo, Sri Lanka was handed over to short-haul
parent AirAsia. Frequencies to three other Australian points — Mel-
bourne, Sydney and Perth — were also trimmed. “Australia was very
painful for us because that’s our bread and butter,” Ismail recalls.
“Once you cut a bit of capacity you lose the connectivity options
onto the short-haul, because it makes a longer layover in Kuala
Lumpur. But that’s the price we had to pay.”
Having cut losses from 519 million ringgit in 2014 to 350 million
ringgit in 2015 — the third and final year in the red — management
Once we have the 330neos we are probably going to
put two to three aircraft for London, and then [with] the
others we will just make sure that we grow our network
AAV_April 2017.indd 30
30/03/2017 4:20:38 PM
Links Archive AAV March 2017 AAV May 2017 Navigation Previous Page Next Page