| Carrier: | AirAsia
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| Headquarters: | Malaysia
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| Founded: | 2001
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| Destinations: | 60+
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| Bases: | Kuala Lumpur, Johor Bahru, Kuching, Kota Kina Bahru, Jakarta, Bangkok, Bali
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| Owners: | Air Asia Berhad
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| Listed: | Yes
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| Online Booking: | Yes
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| Website: | www.airasia.com
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| Fleet | A320s 37 175 on order
| Overview - AirAsia AirAsia began life as a budget carrier in 2001 when music industry executive Tony Fernandes took over the name of a failed government-owned carrier. From a two-aircraft beginning, AirAsia Berhad has become Asia’s largest and most profitable LCC, and the world’s lowest cost operator. Serving 49 regional and domestic operations from the main Kuala Lumpur base, Malaysian AirAsia currently operates a 54-strong fleet, comprising 32 B737-300s and 22 A320s, although this is set to more than double in the next five years. It has become the symbol of Asia’s LCC revolution.
Its aggressive approach to expansion has seen it pioneer Asian cross-border joint venture airlines, progressively undermining the basis of the bilateral regulatory system, whose national ownership rules prevent foreign airlines from establishing locally. This has been an important feature in the expansion of LCC operations in Asia and indeed in promoting accelerated liberalisation across the region.
Under the joint venture arrangements, local interests hold 51% of the equity, with AirAsia interests holding the remainder and with the core airline operating all services. This complies technically with the bilateral requirements for “substantial ownership and effective control” by national interests – that is, provided the respective government supports liberalisation.
The interconnected fleet and staffing inherent in this allow the previously nationally-based airline to extend market reach and to extend into new, linked, bases, as the market grows. Here too another innovation was sparked by AirAsia. The separate licensing and oversight regimes of the three base countries, Malaysia, Indonesia and Thailand, promised a nightmare for technical compliance between three cross border airlines.
AirAsia therefore pressed for and achieved coordination and harmonisation between the three national regulatory authorities in such areas as pilot hours and maintenance oversight. Seemingly a minor event, this was an important step forward in eroding differences among the jealously guarded – and usually excessively bureaucratic – national technical regulatory systems.
Throughout the first two years of its operation, AirAsia was strictly a domestic carrier, remaining hamstrung by the highly restrictive bilateral agreements that mark the international regional sector. It has since won rights to operate to regional destinations, although some – notably Singapore – remain off limits from its flagship base, Kuala Lumpur.
Since the early days, the company has used every means possible to overcome the stifling regulatory environment and record the growth it needs to become Asia’s largest carrier.
A key vehicle the airline has used toward achieving this growth has been the formation of subsidiary and joint venture companies, both within Malaysia and in other Southeast Asia countries - namely Thai AirAsia, Indonesia AirAsia, flyasianxpress (FAX), and AirAsia X. AirAsia is also exploring new joint venture opportunities in other ASEAN countries.
Faced with initial wariness, AirAsia, which was listed on Bursa Malaysia in November 2004, has finally won solid relations with the Malaysian Government. The positive nature of their relationship was illustrated by the construction of the region’s first low cost terminal in March 2006, at Kuala Lumpur International Airport, to facilitate the growth and efficiency of the national budget carrier, as well as the designation of FAX as the operator of the subsidised public service routes.
Furthermore, after years of protectionist Government policy towards MAS, the new positive view of AirAsia was further evidenced in January 2007, when the Malaysian Government’s approved and endorsed sister company AirAsia X – a low cost, long-haul airline.
AirAsia X has prioritised Australia and China as its launch destinations, and is expecting to launch services to Australia in Sep-07/Oct-07 with one leased A330. AirAsia X hopes to receive a second A330 aircraft in early-08, and will then commence its India operations (most likely to Amritsar), and services to either Korea or Japan.
The airline is expecting to take delivery of the first of 15 new A330s by late-08, with the aircraft to be delivered in a 396-seat configuration, making it one of the highest-seat-capacity operators of the A330-300. The airline also plans to operate to London when the first aircraft from the A330 order is received, and is also “looking at two to three European cities”, and is “considering another three to four cities each in China and India". In Aug-07, Sir Richard Branson confirmed that the UK’s Virgin Group will take a 20% stake in the long-haul venture.
In Aug-07, AirAsia also announced steps to enter the rapidly growing Vietnam market, signing a Letter of Intent with Vietnam Shipbuilding Industry Group (Vinashin) to establish a LCC in Vietnam. If approved by the government, the JV parties intend the new airline, “Vina AirAsia”, to operate both domestically and internationally, and to be both long and short haul.
AirAsia’s order book of 150 A320s (plus 50 options) and 15 A330s (in its long haul AirAsia X brand) will have it topping the fleet sizes of its regional competitors, as well as passenger numbers, early in the next decade. The Airbus models are helping the carrier phase out the original B737s. The A320s are first replacing (Malaysian) AirAsia's older generation B737 fleet and are destined to do the same at Thai AirAsia and Indonesia AirAsia.
AirAsia is now firmly on track to become the largest airline in the Asian region early in the next decade. The airline forecasts a 29% increase in passengers in FY08 to approximately 18 million, rising to over 75 million passengers by 2013. That would indeed make it the largest carrier in the region. It is already one of the most influential.
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