AirAsia X chief executive Azran Osman-Rani has been on a whirlwind tour in the lead up to the launch of the new long-haul low-cost carrier. Azran was in Europe in late September, where he spoke at the World Low Cost Airline Congress in ?xml:namespace>London and the Route’s Leaders Forum in Stockholm.
After Sweden he jetted to Queensland in Australia, where he sealed a deal with the local government and announced (see picture) AirAsia X’s first route would be to Gold Coast Airport. He then flew all the way back to the UK to attend an event in Manchester to promote AirAsia’s sponsorship of the Manchester United football team. In between Azran had meetings with several airports trying to court AirAsia X and conducted several media interviews to promote the carrier’s 2 November launch.
Somehow Azran also found time to be in Kuala Lumpur to preside over a ceremony on 18 September marking the delivery of its first aircraft, a used Airbus A330 leased from AWAS. He also has found the time to oversee the carrier’s application for an air operators’ certificate, which it secured from Malaysian authorities at the beginning of October, and prepare the carrier for the launch of scheduled services.
Azran acknowledges the long-haul low-cost model in still unproven but is confident AirAsia X can keep its cost base low enough to undercut legacy carriers by 50%. “I think there’s a big opportunity,” says Azran, who joined AirAsia X in July from Malaysian satellite television provider Astro, where was he senior director of business development.
Azran, 36, says it will help to be affiliated with Asia’s largest low-cost carrier, Malaysia-based AirAsia. Other long-haul low cost carriers such as Oasis Hong Kong and Viva Macau may have a much harder time making the long-haul low-cost model work because they are completely independent. “It’s a high barrier to entry to come in and try to replicate that brand,” Azran says. “It will be challenging if you start from scratch completely.”
While AirAsia and AirAsia X will not codeshare because Azran has concluded that would add too much cost and complexity, he expects several passengers will self-connect. Both carriers operate from Kuala Lumpur’s budget terminal and Azran points out many AirAsia passengers already buy second tickets on airlines that use the airport’s main terminal although it is a 20min drive away. “It’s already happening today,” he says.
AirAsia X’s will initially operate four weekly flights from its Kuala Lumpur base to the Gold Coast. It plans to soon after add five weekly flights to a Chinese destination, expected to be Hangzhou. The schedule sounds tight for a single aircraft but Azran says it will ensure its A330 is utilised 17 hours hour per day. Asked what he will do if AirAsia X’s only aircraft is grounded for unexpected maintenance Azran responds: “I’ll give refunds.”?xml:namespace>
AirAsia X’s second A330 will not arrive until the second half of 2008 and be used to launch service to the UK via the Middle East “towards the tail end of next year”. AirAsia is now in talks with several potential UK airports, including Kent, Luton, Manchester and Stansted. “It depends on which airport in the UK gives us the best deal. We haven’t concluded negotiations yet,” Azran says when asked where AirAsia X is most likely to go.
While AirAsia X’s first A330 will be configured with 315 seats, it will squeeze about 400 passengers on its fleet of purchased A330s. This will include an unusual 3-3-3 configuration in economy instead of the normal 2-4-2 configuration used by almost all A330 operators. AirAsia X has 15 A330s on order and the A330 leased from AWAS, which has been appropriately named “Semangat Sir Freddi” in tribute to low-cost carrier pioneer Freddie Laker, will also eventually be reconfigured to match the tighter configuration of the purchased aircraft.
Azran claims a 2-4-2 configuration will not be uncomfortable and says the seats will have a standard 31in pitch. “That is the same as British Airways and frankly we’ll have a better and more smiles service,” he says.
Azran says tickets between Malaysia and the UK will start at $500 roundtrip for economy, or about half the price of legacy carriers. There will be no complimentary food or beverage but Azran says “I don’t think food makes a difference”.
Business class tickets between Malaysia and the UK will start at only $1000 roundtrip, or about a third the price of legacy carriers. Its 28 business class seats will be wider and have more legroom compared to economy but there will be no free meal service, lounge access or frequent flier miles.
“It’s not so much a business class but a premium seat. The product for us is focused a lot more on the seat than the service,” Azran says. “To pay triple for airport lounge you don’t use and for food is it really worthwhile?”
Azran says AirAsia X will stick to routes of at least five hours while AirAsia will operate routes of up to four hours with its A320s. In China, an important market for all AirAsia carriers, the latter will focus on southern and western parts of the country while the latter will open routes to cities in the north and east.
AirAsia X joins Oasis Hong Kong Airlines, Viva Macau and Qantas subsidiary Jetstar as low-cost carriers operating long-haul services in Asia. Jetstar now operates A330s between Australia and Asia, including a Sydney-Kuala Lumpur service; Viva Macau operates Boeing 767s within the region and Oasis flies Boeing 747-400s on intercontinental routes to London and Vancouver.
While AirAsia X is the last of these carriers to launch it has certainly drummed up more publicity than the others. Having the flamboyant founder and chief executive of AirAsia, Tony Fernandes, as a key shareholder helped AirAsia X create waves when it was first conceived in January. Fernandes then persuaded an even more flamboyant and bigger airline industry personality, Sir Richard Branson, to acquire a 20% stake in AirAsia X through the Virgin Group.
AirAsia X is also 20% owned by the publicly-traded AirAsia Group, which includes AirAsia in Malaysia as well as affiliates in Indonesia, Thailand and soon Vietnam. It also plans to sell 10% stakes in the carrier to two institutional investors, Japan’s Orix group and Bahrain’s Perigon Capital.