With the launch of AirAsia X’s first regional “satellite” carrier last month, a new wave of long-haul low-cost travel options are just around the corner for Australians.
And, for the first time in 2015, we are likely to see long-haul low-cost-carriers going head-to-head on popular international holiday routes.
Piggybacking on its AirAsia flagship, which runs well-established local airlines in Malaysia, Indonesia and Thailand, AirAsia X last month launched long-haul services from Bangkok under the brand Thai AirAsia X, initially with two 377-seat Airbus A330-300s flying to Seoul, Tokyo and Osaka.
According to chief executive Azran Osman-Rani, who I spoke to last week during a visit to Perth, Thai AirAsia X will get three more planes in 2015, when flights from Bangkok to AirAsia X’s existing Australian destinations, Sydney Melbourne, Gold Coast, Adelaide and Perth, will be on the agenda.
In the meantime, AirAsia X has an A330 in Jakarta undergoing certification for its Indonesian airline licence and, provided that process goes to plan, Indonesian AirAsia X will be launched before the end of 2014.
And, says Osman-Rani, instead of a single-hub strategy, the airline intends to base aircraft in both Jakarta and Denpasar, Bali.
“Bali works well for us,” Osman-Rani says.”It works well with our profile of targeting Australia and north Asia, primarily leisure tourists” in markets that are dominated by full-service carriers.
This is where the competitive landscape becomes very interesting.
Low-cost carriers, including the long-haul variety, were invented to enter markets dominated by high-cost airlines. Their lower costs mean lower fares so more people are able to travel.
But one thing low-cost-carriers have always been reluctant to do is go head-to-head with other low-cost-carriers using the same strategy. In that respect, Australia is unique in the world, hosting two low-cost-carriers (Jetstar and Tigerair) competing for the same bums on seats as subsidiaries of two major competitors (Qantas and Virgin Australia).
But, with its lower costs courtesy of its Asian base, AirAsia X has no such apprehension about putting its A330s up against Jetstar’s Boeing 787 Dreamliners.
When I asked Osman-Rani if he’s interested in going head-to-head with Garuda, Jetstar and Virgin on Australian routes, he says: “The short answer is ‘yes’.”
That means 2015 is shaping up as the start of a bargain era for travel between Australia and Southeast Asia – and even Northeast Asia, as Osman-Rani points out that his airline, like Singapore Airlines and Malaysia Airlines, trans-ships many passengers via Kuala Lumpur between Australia and destinations in China, Japan and Korea.
One of the by-products of setting up new bases in Indonesia is that those one-stop journeys will be more direct.
In the back of the minds of Australians, however, is the possibility of going all the way from Australia to Europe with a low-cost-carrier.
Until 2012, AirAsia X flew to both Paris and London from Kuala Lumpur with return fares from Australia falling to less than $1000 return at some times of the year.
But the airline was losing money on the services, partly due to high taxes and charges at the European end, and decided it would be better to concentrate on more profitable markets in Asia.
AirAsia founder Tony Fernandes put a cat among the pigeons in December last year when he said AirAsia X would return to London this year.
That’s because the new Bangkok base is within range of Europe with its A330s, whereas higher-cost four-engined A340s had to be bought especially to run the flights from Kuala Lumpur to London and Paris.
AirAsia X is playing down the possibility. “Nothing imminent,” says a spokesman for the airline this morning, “and I believe it would be some time off with the next generation aircraft.
“Azran’s never ruled out returning to Europe but it won’t be in the near future.”
In the meantime, put even more competition and a likely price war between the Australian east coast and Bali in your diary for 2015, with the strong likelihood of cheap flights to Bangkok as well.
Of all the options for international travel, low-cost-carriers attract only about 14 per cent of the international travellers to and from Australia. Where do they rate in your book?
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