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AirAsia wants to be the 'Emirates' of low cost carriers

Publication Date : 23-12-2013

 

AirAsia X Bhd hopes to be the Emirates of Southeast Asia, return to Europe in 2016 and possibly spread its wings to the United States, according to co-founder and director Tony Fernandes.

He envisioned the carrier would become the equivalent of Emirates in the low-cost airline segment, saying Emirates had been very successful in carrying passengers between continents from Dubai.

“It’s time to really take that next step and build the equivalent of an Emirates in the low cost.

“Emirates is amazing. They are flying everywhere. They’ve got a geographical advantage that it is in the middle of the world, half way between Asia and Europe,” Fernandes told Malaysian media after a signing ceremony between AirAsia X and Airbus for the firm order of 25 more A330-300s valued at US$6 billion last week.

This latest accord increases AirAsia X’s order to 51 from Airbus supplemented by an order for six A330-300s leased from the International Lease Finance Corp, bringing AirAsia X’s total confirmed fleet deliveries to 57 by 2019.

“We have bases and hubs in many countries and potentially we can do much more,” Fernandes said.

AirAsia X has also set its sights on restarting European flights and the possibility of a one-stop service to the United States. AirAsia X used to fly to Paris and London, but suspended the flights in 2012.

“We need to come back to Europe and this aircraft (A330-300) is the right aircraft for us to come back,” Fernandes said.

He explained that margins were very thin on these routes.

“We don’t want to start and pull out again. We want to do it for the long term. Yes, we want to do it. As to when we want to do it, I can’t give you an exact date because there are a lot of factors to consider.

“I can definitely say in 2016 we will do it because then the A330 can reach Europe,” Fernandes said.

He also said there was also possibility of AirAsia X going to the United States.

“That A330 can do a lot of things. Azran had previously negotiated a fifth freedom from the UK government. We can stop here then go on to New York.”

Azran Osman-Rani is the chief executive officer of AirAsia X.

Asked if the positive news would excite the market, Fernandes said: “Our share prices are in the toilet. But it has been in the toilet before.”

He said there was a mass over-reaction to the competition in the industry but its share price went as low as 80 sen and bounced back to RM4.

“I’m not there to manage the share price. I’m in for the long term. I would love to give my shareholders great value. If we continue to deliver good results it will come. I cannot see an airline that’s anywhere close to us,” he said.

Fernandes reckons that if investors were in for long-term growth, AirAsia would be able to deliver capital and dividend growth.

AirAsia shares closed at 2.20 ringgit (US$0.67) on Friday while AirAsia X closed at 1.01 ringgit ($0.31).

“I’m an old fashioned guy. If we continue to deliver good results, people will come back to us.

“We’re not the hot girl in town at the moment but we will be,” Fernandes quipped.

Going forward, Fernandes said that 2014 would be a big year for the AirAsia group and it would be introducing new duty-free business like a mall in the sky to boost its ancillary income.

He added that the outlook for the industry looked “positive”, while competition would be more rational next year.

He said there was rising demand for air travel as well as positive economic growth.

“I think if competition is rational, which I believe it will be, the industry’s outlook will be positive. I think 2014 has huge benefits for Malaysia because AirAsia X’s growth,” he said.

Fernandes said the opening of KLIA2 next year would give a massive boost to the industry.

“As long as we keep fares low, people will fly. There are three billion people in Asia,” he said.

 

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