AirAsia fills gaps in domestic network as it relaunches Ipoh and Kuantan

AirAsia is filling in the last holes in its Malaysian domestic network with the launch of flights to Ipoh and Kuantan.


Summary:

  • AirAsia is resuming services to Ipoh and Kuantan in Oct-2018.
  • Ipoh and Kuantan will expand AirAsia’s domestic network in Malaysia to 17 destinations, including nine in peninsular Malaysia and eight in east Malaysia.
  • Ipoh and Kuantan handled less than 300,000 passengers last year but traffic could reach record levels in 2019 driven by the new AirAsia services.

AirAsia’s Malaysian domestic operation has consisted of the same 15 destinations for several years, although it has continued to grow by launching new point to point routes and adding capacity on trunk routes. From the 15 destinations, AirAsia operates 34 domestic routes in Malaysia and has a leading 59% share of seat capacity in the domestic market.

AirAsia has somewhat surprisingly not served Ipoh or Kuantan in recent years. Ipoh has a population of about 700,000, which makes it the largest city in Malaysia outside the Kuala Lumpur and Penang metropolitan areas. Kuantan has a population of about 400,000, which makes it the fifth largest city outside the Kuala Lumpur and Penang metropolitan areas.

AirAsia recently announced plans to resume services on the Kuala Lumpur International Airport (KLIA)-Kuantan route from 28-Oct-2018. It will initially operate one daily flight using A320s.

In Jun-2018 AirAsia announced plans to start resume Ipoh-Johor Bahru service from 01-Oct-2018. It will initially operate four weekly A320 flights.

AirAsia operated KLIA-Kuantan service from 2008 to 2010 but the route has since only been served by Malaysia Airlines. Malaysia Airlines currently operates two daily 737-800 flights between KLIA and Kuantan and is adding back four frequencies for a total of 18 frequencies in late Oct-2018, possibly in response to AirAsia’s entrance. Malaysia Airlines had three daily flights on the route until mid-2017, when it reduced capacity to Kuantan as part of overall cuts to its domestic operation.

Malaysia Airlines regional subsidiary Firefly also served Kuantan from Kuala Lumpur Subang Airport until 2012. In 2015, Malindo dropped services to Kuantan from Kuala Lumpur Singapore and Johor Bahru. Firefly has not operated any domestic flights from Kuantan since late 2016, when it dropped thrice weekly service from Penang, but continues to operate international flights to Kuantan from Singapore.

Firefly has served the Kuantan-Singapore route since 2009 and currently operates one daily flight using ATR 72s. Scoot began competing on Kuantan-Singapore in early 2018 and currently operates two to four weekly frequencies, depending on the time of year, using A319s and A320s.

AirAsia briefly operated services to Ipoh from Johor Bahru in 2006. When it resumes the route AirAsia will compete against Malindo, which currently operates 11 weekly ATR 72 frequencies. While AirAsia will only have four weekly frequencies it will have almost as much capacity as Malindo on Johor Bahru-Ipoh as it uses much larger aircraft.  Firefly suspended Johor Bahru-Ipoh in Oct-2016.

Ipoh is too close to Kuala Lumpur (less than 200km and two hours by highway) to make an Ipoh-Kuala Lumpur route viable. Johor Bahru is Ipoh’s only current domestic route although Malindo briefly served Ipoh from Kota Bahru in 2015.

Ipoh also has two international routes, compising Medan and Singapore. Malindo operates two to four weekly ATR 72 flights, depending on the time of year, on the Ipoh-Medan route. Singapore is the largest destination from Ipoh and is served with two daily ATR 72 flights from Firefly as well as 11 to 13 weekly A320 flights from Scoot.

Ipoh and Kuantan are popular destinations from Singapore, catering mainly to Malaysians working in Singapore. AirAsia potentially could also link Singapore with Ipoh and Kuantan now that it is resuming domestic services to these destinations.

With the addition of Ipoh and Kuantan, AirAsia will serve every commercial airport in peninsular Malaysia with the exception of Malacca and Kuala Lumpur Subang. Subang is not an option for AirAsia as it is only open to turboprops.

AirAsia has talked about potentially serving Malacca, which is 130km south of KLIA. Malacca is currently only served by Malindo, which operates seven weekly flights to Penang and seven weekly flights to Pekanbaru.

Malacca has never been served by AirAsia although it has previously been served by Indonesian carriers. Malacca is located only about 40km across the Straits of Malacca from the Indonesian island of Sumatra and has a large Indonesian worker population.

Malacca handled 62,000 passengers in 2017, including 32,000 international and 25,000 domestic passengers, according to Malaysia Airports data. Traffic peaked at 70,000 in 2015.

Kuantan handled 241,000 passengers in 2017, including 209,000 domestic and 32,000 international passengers. Kuantan’s traffic peaked in 2001 at 433,000.

Ipoh handled 274,000 passengers in 2017, representing the largest traffic figure for Ipoh in at least 20 years. AirAsia could help Ipoh and Kuantan reach new record levels of traffic in 2019, particularly if it launches additional routes from the two airports.

Ipoh and Kuantan will give AirAsia nine destinations in peninsula Malaysia. AirAsia’s other eight Malaysian domestic destinations served by AirAsia are in east Malaysia (on the island of Borneo).

AirAsia serves already serves all the main airports in east Malaysia but there are several smaller airports that are only served with turboprops operated by Malaysia Airlines regional subsidiary MASwings. These routes are generally subsidised and too small for AirAsia, which has an all-A320 fleet.