AirAsia X is looking at expansion opportunities in Australia including the potential resumption of services to Adelaide. The airline’s recent expansion in China and India provides new opportunities for growth in Australia as a majority of its Australia traffic transits beyond Kuala Lumpur.
AirAsia Group CEO Tony Fernandes recently stated that AirAsia X will resume service to Australia if the long haul low cost airline can secure the right deal from Adelaide Airport. He added AirAsia X hopes to re-launch the Kuala Lumpur-Adelaide route “in the not too distant future”.
AirAsia X launched services to Adelaide in late 2013, initially with five weekly flights before expanding the route to daily in late 2014. However, Adelaide was suspended in Mar-2015 during a restructuring exercise which also included reducing frequencies to Melbourne, Perth and Sydney.
In 2016 AirAsia X added back capacity to Melbourne, Perth and Sydney and expanded in the Gold Coast, leading to a higher level of overall capacity in the Australian market than prior to the restructuring. However, AirAsia X has not yet resumed services to Adelaide and has not expanded the size of its Australia network beyond four destinations.
AirAsia Group CEO Tony Fernandez recently stated that AirAsia X will resume service to Australia if the long haul low cost airline can secure the right deal from Adelaide Airport.
While Adelaide has several international services, its only international LCC service is a narrowbody link with Bali operated by Jetstar. Adelaide and the South Australia tourism industry is eager to again have a long haul LCC option. AirAsia X would provide that option and attract visitors to South Australia from Southeast Asia, China and India.
As Blue Swan has previously analysed, AirAsia X has been looking over the last year at resuming services to Adelaide and evaluating several potential new destinations in Australia. Additional frequencies to at least some of its four existing Australian destinations are also likely over the next few years.
See related report: AirAsia X achieves phenomenal growth in Australia over the last decade
Increased transfer traffic beyond Kuala Lumpur has been a key driver to AirAsia X’s growth in Australia over the last several years and is a crucial factor in deciding on future expansion in Australia. While AirAsia X recently decided to postpone plans for resuming services to Europe, which would have relied heavily on connections from Australia, the airline is expanding in other growth markets for Australia.
For example, AirAsia X is expanding this year in China and India. In China, AirAsia X has launched Wuhan as its seventh destination and has added capacity to Beijing and Shanghai. AirAsia X CEO Benyamin Ismail told CAPA TV recently that the airline is aiming to launch services to two more Chinese destinations and is currently in the process of securing regulatory approvals.
In India, AirAsia X re-launched services to Mumbai in May-2017. In 2016, it re-launched services to Delhi. Connecting traffic from Australia was a key driver in the decision to resume services to Delhi and Mumbai, which had been suspended in early 2012.
AirAsia X also offers connections to several destinations in southern and eastern India via its short haul sister carrier AirAsia. Connections on AirAsia are available to southern China (as AirAsia X focuses on longer routes to central, eastern and northern China) and throughout Southeast Asia.
Mr Ismail said the focus is on expanding its medium haul operation with more flights of six to eight hours rather than launching longer routes outside Asia Pacific. AirAsia X recently launched service to Hawaii, but Honolulu is served from Osaka rather than Kuala Lumpur, making it an eight to nine-hour route. It also mainly caters to Japanese passengers. Mr Ismail said 80% of its Osaka-Honolulu traffic consists of Japanese heading to Hawaii for holiday although AirAsia X has been able to stimulate demand from Malaysia and other Southeast Asian markets. So far, the Osaka-Honolulu route is performing above expectations.
Hawaii is an exception as it is virtually the only AirAsia X destination that does not plug into its Australia network. For the most part AirAsia X is expanding in markets with growing inbound travel to Australia. AirAsia X now carries more inbound passengers to Australia than outbound Australians. In its earlier years AirAsia X relied mainly on outbound Australia traffic, with connections to Thailand its staple.
As markets such as Australia-India consists mainly of price sensitive leisure travelers, AirAsia X is ideally suited to expand in Australia as overall visitor numbers to Australia continue to grow. AirAsia X has generally grown faster than the overall Australian international market and will be keen to add capacity to Australia to continue this trend. In Apr-2017, the most recent month of available BITRE data, AirAsia X grew its share of Australia’s international market by another 0.8ppts compared to Apr-2016.
AirAsia X now has more than a 4% share of Australia’s international market. It is Australia’s largest foreign LCC – and is the fifth largest foreign airline overall after Emirates, Singapore Airlines, Air New Zealand and Cathay Pacific.