Thursday, January 12, 2012

Swapping of shares, it's a win-win situation for Air Asia and MAS

By The Star

AirAsia X (AAX) seems all set to start ticket sales for the much-awaited KL-Sydney route next week and will begin mounting flights to the Australian city by April this year, way ahead of rival Scoot.

The airline is also said to be in the final stages of rationalising its route network where it would cut some routes which it deemed to be unprofitable and add Sydney and some routes to China (provided it can get slots there) to its network.

“We want to do that (Sydney) well ahead of the competition,'' said a senior official of the airline group.

Scoot is Singapore Airlines' long-haul low-cost carrier that has named Sydney as the first city of call out of Singapore and plans to begin flying the route by mid-year.

The official declined to elaborate, but market has it that AAX will begin selling tickets for the sector next Tuesday and a team is planning to launch the sales from Sydney.

The first flight is slated to take off on April 1. However, all is subject to its internal planning, though the airline may be looking at daily flights for the KL-Sydney sector.

This puts an end to the near three-year wait and a bitter fight with Malaysia Airlines (MAS) over the route. MAS had previously lobbied against competition and the national carrier is still the only airline serving the KL-Sydney route after Jetstar withdrew from the sector in 2009.

This sharing of routes has been made possible after a share-swap agreement between AAX's sister company AirAsia and MAS on Aug 8 last year and both will collaborate rather than compete.

Currently, MAS flies twice daily from KL to Sydney and whether MAS will reduce the frequency to once daily and make way for AAX to take on the other slot is unclear.

“Choices and reasonable fares are what a traveller wants. But the biggest fear for travellers over the collaboration is the lack of competition and that is seen by the fare pricing for the Dehli/Mumbai sectors where the fares offered by AAX are somewhat close to that offered by MAS,'' said an industry source.

To be fair, AAX does offer reasonable rates for its Melbourne, Perth and Gold Coast flights and if the booking is made in advance, the savings can be up to 40% of the full-service fares. The airline is currently offering a 20% discount on its base fares for all its routes for a limited period.

Asked on the strategy for the KL-Sydney route, the official said:“We would offer lots of low fares and as we are already well known in Australia it should be (fairly easy to fill up our aircraft).''

Interestingly, those in the know claim that AAX is close to finalising details on whether to exit from the Indian (New Dehli, Mumbai), European (London and Paris) and Christchurch routes.

Sources said both MAS and AAX had had several meetings over the matter so that MAS could take over all the slots from AAX for the routes and carry AAX passengers that have booked seats with the airline.

The date for axing the route is said to be as early as February. AAX has, however, repeatedly said that “no decision on routes, whether to add new ones or cancel new ones'' had been made.

But those in the know claim that “all this adding and axing of routes is part of the understanding under the collaboration.'' Looking from the collaboration perspective, moving out of the European/India/Christchurch routes is seen as a compromise to get Sydney and some China routes.

MAS CEO Ahmad Jauhari Yahya in his executive summary of his business plan said that “we are close to finalising a connecting-service that will enable passengers on either airline to seamlessly connect between carriers and non-overlapping routes.”

Separately on Tuesday, AirAsia boss Tan Sri Tony Fernandes tweeted: “With all that's going on, we will need to get more planes. I will be speaking to the board. The growth in the low-cost arena is very exciting.''

Last Friday he was quoted in Paris as saying: “AirAsia will consider buying up to 25 Airbus A320 aircraft. Our growth will probably exceed the aircraft that we have right now, and the initial public offerings of AirAsia's units in Thailand and Indonesia will give us the ability to probably take more aircraft.''

*MB: Afterall the swapping of share between Air asia and MAS would be a win win situation. Closing some routes and compromising some routes between the two airlines, a total win-win that sets our airline industry even stronger in the international arena. What's the shout all about by the Union previously? Bunch of dumbnuts who cant foreseen the future.