AirAsia to consolidate market growth with fleet expansion

AirAsia is to increase the size of its fleet before the end of the year, with chief executive Tony Fernandes explaining the expansion underlines the airline’s confidence in the Asian market.

Malaysian low-cost airline AirAsia is to add a further 23 planes to its fleet during the second half of 2017 after reporting record quarterly revenues on rising air travel demand.

The move is part of the carrier’s plans to expand to 500 aircraft by 2027, which entails adding 30 new aircraft every year for the next ten years. Chief executive Tony Fernandes said he was confident the airline can reach this target or “even exceed it” as it gears up to launch associate airlines in Vietnam and China in the coming years.

Fernandes added the fleet growth this year would help to solidify its position in intra-ASEAN routes of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, and the domestic markets of Malaysia, Thailand and Philippines.

“This year is the most number of aircraft we have added in four years, demonstrating our confidence in the competitive environment in Asia,” he said. AirAsia will add 16 A320neos and seven A320ceos in the second half of 2017.

According to figures from OAG, AirAsia (AK/AXM) increased total seat capacity by 2 percent to 15,489,370 during the first half of 2017, compared with the same period a year earlier. Current flight schedules show capacity growth is expected to accelerate by 12.6 percent to 17,136,300 in the second half of this year, up from 15,221,684 during the last six months of 2016.

In June, AirAsia signed an agreement for 14 more Airbus A320ceos to support its short-term expansion. The order came a year after the group finalised a deal for 100 A321neo aircraft.

The latest fleet expansion was announced as AirAsia reported second quarter 2017 revenue of RM2.38bn ($558m), up 19 percent on a like-for-like basis from a year ago Revenue growth was supported by a 10 percent increase in passengers carried.

"Despite the tougher operating environment in the seasonally weaker second quarter of the year, we managed to serve more passengers and increase our load factor in almost all the markets we operate in,” said Fernandes.

“What this proves, is that AirAsia and the low-cost carrier model stimulates new traffic in both existing and new markets and generates growth even when operating conditions are less than ideal for other airlines, especially full-service carriers.

“The consolidated accounts combining our Malaysia, Indonesia and Philippine units for the second quarter show we have managed to fight higher fuel costs with strong revenue growth of 19 percent year-on-year, resulting in a 37 percent year-on-year gain in operating profit to RM517m ($121.2m). After booking a RM56m ($13.1m) net forex gain we reported a profit before tax of RM387m ($90.7m).”


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