In the last week, the focus has been on Qantas and its financial performance. To many, it’s seen as a legacy carrier struggling to compete in the world of other airlines, both full service and low cost. But Qantas is not the only airline in a world of pain when it comes to financial results. The competition is hurting as well.
While they (AirAsiaX) may keep hitting my inbox with supercheap fares – eg. pretty regularly A$199 from Sydney-Kuala Lumpur, they are losing money hand over fist. A US$40m net loss for the three months April-June 2014. All this from a fleet of ~22 A330s and 2 A340s. Most of the loss (different metric) blamed on Australian routes. Sydney and Perth routes to be trimmed from double daily to 11/12-weekly Interesting over 50% of AirAsia X’s traffic is through traffic (ie. not stopping in KUL)
Air Asia X has for the last few years been in a capacity war with fellow Kuala Lumpur based airline Malaysia Airlines. While other Asian carriers have downsized capacity from Australia as through traffic falls, both Malay carriers have been increasing flights to Australian cities. They have also been adding new destinations. A good example of that is Adelaide, now serviced by both carriers with 12 flights a week. As a result, Kuala Lumpur is now equal with Bali as the most popular destination for international flights ex Adelaide.
With so much capacity on various routes, prices had to fall. If you’re lucky enough to catch a sale, a trip to Malaysia is cheaper than heading interstate, if you can handle the lack of comfort. For some of our members, it is that lack of comfort, especially long haul, which leads to doubts over the long term survivability of a low cost carrier model.
Could this be a telling picture beginning to unfold that the LCC product struggles on long haul sectors. AirasiaX failed on the Kuala Lumpur to London route in just a couple of years & Paris barely made it a year in existence. JQ have made many changes to routes & schedules on long haul in the last 12 months including ditching Auckland to Singapore. Rumours had it 3-4 years ago JQ were going to fly to Munich & Athens from SIN…. That clearly won’t happen any time soon ( or at all) one would think.
Others feel the low cost model only works when a population cannot afford better. As Asia grows and gets wealthier, they may not be as popular as they were.
LCC are a need, people wouldn’t use them if they had more money to spend on travel. I think as Asia becomes richer they don’t want LCC any more than a man from Melbourne, also as they do become richer their wages increase and they start pricing themselves more in line with western prices.
Time will tell if the Low cost Carrier model works well in all sectors of the industry. Have you flown a Low Cost Carrier internationally lately, and would you do it again? Do you think they will be around for the long haul? Have your say HERE.