AirAsia X may return to Europe in surprise network expansion

Despite making its retreat from the European market back in 2012 due to high fuel costs, airport taxes and weak demand, it has been AirAsia X’s ambition to return to the Continent with more fuel efficient twin engine equipment once market conditions improved.

Low-cost, long-haul specialist, AirAsia X, is set to introduce a daily link between Kuala Lumpur and Istanbul and Barcelona from the final quarter of this year as it continues its recent network expansion with growth into new areas of the world.

This will be the airline’s only flight into Europe: the route, which is scheduled to commence from October 30, 2016, has been given the ‘001/002’ flight number to illustrate this.

News of AirAsia X’s possible plan was revealed on Routesonline by our Airlineroute schedule blog on the morning of August 10, 2016 when the carrier’s website inventory was updated with details of the new route. However, reservations have not yet been opened for the route. The airline has subsequently claimed that the upload of the flights and their display on its website flight map was simply to "test" the GDS.

Despite making its retreat from the European market back in 2012 due to high fuel costs, airport taxes and weak demand, it has been AirAsia X’s ambition to return to the Continent with more fuel efficient twin engine equipment once market conditions improved.

AirAsia X previously operated flights linking Kuala Lumpur with both Paris and London; the latter being the anticipated first destination for the airline’s return into the Continent. In fact, AirAsia’s founder has regularly spoken of his intention to return the regular link to the UK capital during industry interviews and on social media posts.

It is therefore rather a surprise that AirAsia X may have selected the Kuala Lumpur – Istanbul – Barcelona market for its return to Europe, especially given the depressed status of the Istanbul market this year as a result of political unrest in the country. Also, Barcelona is not the strongest of current O&D markets in and out of Malaysia.

However, when AirAsia X first launched flights to London (initially to Stansted Airport from March 2009 and then Gatwick Airport from October 2011) its arrival in the UK resulted in passenger traffic to and from Malaysia increasing by around a third as its low fares stimulating the market and it will hope to see similar returns on this new route.

But, its business model is more than just point-to-point traffic as its wider network and that of its AirAsia affiliates allows considerable penetration across Asia and into Australasia.  This opens up considerable low-cost connection opportunities to and from Barcelona and Istanbul - these may not be as attractive to those already available via the likes of Emirates Airlines, Etihad Airways, Turkish Airlines, Qatar Airways and European and Asian flag carriers, but could sway the price sensitive consumer.

AirAsia X first launched flights to London in March 2009 with a link to Stansted Airport (it latter switched the route to Gatwick Airport in October 2011) and flights to Paris Orly commenced in February 2011.  However, in early January 2012 the carrier revealed its intention to close the route from the start of April 2012 due to soaring taxes and higher jet fuel prices. 

According to AirAsia X the routes to London and Paris had been really popular recording load factors of over 80 per cent, but yields had not been sufficient enough to support the routes with attempts to increase fares simply resulting in a fall in demand due to the price elasticity of low-cost travel.

“The confluence of macro-factors, including high fuel prices, depressed European economy and exorbitant taxes have made it economically impossible to sustain these flights,” said the airline at the time.

The Kuala Lumpur – Istanbul non-stop market is currently served on a twice daily basis by Turkish Airlines and until August 2015 had also been part of the Malaysia Airlines. Turkish Airlines utilises an Airbus A330-300 on its flights, the same aircraft being used AirAsia X, although the new entrant’s equipment will be configured in a denser arrangement seating around 377 passengers versus the 289 seat offer from its competitor, boosting city pair capacity by around two thirds.

Demand data from AirVision Market Intelligence from Sabre Airline Solutions shows an O&D market of an estimated 35,000 two-way passengers during the first six months of this year, approximately 95 passengers per day each way (PPDEW). This is down slightly on the same period last year with demand down 5.4 percent.

But, this route is also about the strong network offering that AirAsia can provide via its Kuala Lumpur International Airport, a market to and from Istanbul that grows to over 500 PPDEW when you consider the wider Southeast Asia (426) and Australasia (81) markets.

The Kuala Lumpur – Barcelona O&D market is much smaller at around 10,000 two-way passengers during the first six months of this year, approximately 28 passengers per day each way (PPDEW). This market is currently dominated by Emirates Airline via its Dubai International Airport base (39.7 percent share) and Qatar Airways via its Hamad International Airport hub in Doha (21.7 percent).

The demand between Barcelona and wider Southeast Asia and Australasia market is similar to Istanbul at 475 PPDEW, according to the data. Emirates transported 141 PPDEW from Barcelona into destinations in these regions during the first half of 2016, while Singapore Airlines and Qatar Airways have a strong presence into both markets and Qantas into the Australasia market.


Share this article

The economic impact of hosting World Routes

Request your copy of the Economic Impact Study to learn more about the long-term growth effects your airport or destination can benefit from by hosting World Routes in 2023, the next available hosting year for World Routes.

Request Economic Impact Study

Comments