Asia’s Low-Cost Carriers Expanding On Mideast Route Network

Buoyed by rising demand on routes to and from the Middle East, Southeast Asian low-cost carriers are beefing up their route maps in a bid to compete with established full-service carriers and cash in on growing travel activity of tourists, workers and pilgrims.

The Southeast Asian budget carrier with the most destinations in the Middle East is currently the Philippines’ Cebu Pacific which in June this year added a twice-weekly Manila-Doha flight as its fourth Middle East route in addition to Kuwait City, Riyadh and Dubai, saying that the lowest year-round ticket prices available on the Doha route start at around $200 (one way), approximately 60% lower than other airlines.

Cebu Pacific is also the only airline that offers a direct connection between Kuwait City and Manila, as Kuwait Airlines on that route has a one-hour stopover in Bangkok. The airline recently said it wants to step up the number of flights to Qatar — which has the third largest Filipino community in the Gulf — to three or four weekly flights and eventually to daily flights. Cebu Pacific is also the first and only Philippine carrier to serve Qatar as Philippine Airlines does not include Doha in its route map. The only drawback for Cebu Pacific in its Middle East expansion was when it suspended its Manila-Dammam twice-weekly flights in March this year due to unsatisfactory passenger load.

Asia’s low-cost carriers expanding on Mideast route network

A low-cost carrier planning to include the Middle East in its flight schedule is Singapore-based Scoot, a subsidiary of Singapore Airlines. According to Scoot’s CEO Campbell Wilson, the carrier will launch six to eight new destinations in the coming months, has plans to double seat capacity over the next 12 months and is on schedule to complete its 11-strong Boeing 787 fleet by next year’s first quarter and increase staff by 30% to 1,000, including new pilots and cabin crew.
Wilson did not specifically name new destinations in the Middle East, but they could probably be Dubai, Abu Dhabi or Doha, observers assume.

Indonesia’s Lion Air expanded its services to Saudi Arabia earlier this year and increased its Jakarta-Jeddah direct flights from twice weekly to five a week on its Boeing 747-400 aircraft which can carry more than 500 passengers.
“The flight frequency increase is a consequence of a high average load factor, around 80%, since we launched the service last year, and there is still a big potential market to develop on this route,” said Lion Air Managing Director Edward Sirait. Reportedly, Lion Air is also working on getting landing permits from Saudi authorities for Madinah to serve more Indonesian pilgrims.

Competition for Lion Air arouse when Indonesia Air Asia X launched its Jakarta-Jeddah flight on July 1 this year, adding another haj flight to the existing Kuala Lumpur-Jeddah route of Air Asia X, the long-haul subsidiary of Southeast Asia’s largest discount airline Air Asia.

Meanwhile, troubled Malaysia Airlines said it will reduce capacity between Kuala Lumpur and Middle East destinations by 25%. The carrier, which is currently in a massive restructuring phase, has already limited presence in the Middle East with services cut down to only Dubai and Jeddah. Dubai was suspended in early 2012 as part of the last restructuring but reinstated in 2013 and has so far survived the current restructuring initiative. Other destinations such as Dammam, Kuwait City, Beirut, Cairo and Manama have been terminated and replaced with code-share flights with Middle East partner airlines.

Source: Arno Maierbrugger/Gulf Times

World Airline Awards 2015: 10 Best LCCs In Asia

1. Air Asia (Malaysia)

2. Air Asia X (Malaysia)

3. IndiGo (India)

4. Jetstar Asia (Singapore)

5. Scoot (Singapore)

6. Peach (Japan)

7. SpiceJet (India)

8. Tiger Airways (Singapore)

9. Nok Air (Thailand)

10. Spring Airlines (China)

Making Low Cost, Long Haul Flights Work: Migrant Class


LOW-COST long-haul flying has been a notoriously difficult nut to crack ever since Laker Airways, a transatlantic British airline, introduced the concept in 1977. It went bust five years later. Numerous other carriers have since come and gone, but none has managed to combine bargain airfares with long-haul intercontinental flights and survive. Michael O’Leary, the boss of Ryanair, Europe’s largest low-cost carrier, continues to whet appetites with promises of €10 ($14) flights to North America. But bombastic claims are nothing new for Mr O’Leary, who privately admits that the cost of aircraft and high fuel prices mean it is not currently practical.

Air Asia X of Malaysia

Interesting, then, that Asian airlines are having rather more success in the field, albeit with some false starts. In 2009 AirAsia X, the long-haul subsidiary of AirAsia, a Malaysian carrier, began offering £99 ($168) fares from Kuala Lumpur to London. On the day of the inaugural flight, Brent crude oil was trading at $45 per barrel. Three years later, when the route was abandoned, it stood at $125. Today a barrel of the black stuff sets you back $112. Given that fuel typically accounts for about a third of an airline’s costs, flying a widebody plane for 13 hours on the cheap is a decidedly challenging proposition.

Yet AirAsia X lives on. The airline today operates intercontinental routes from Kuala Lumpur to Jeddah, Saudi Arabia and several points in Australia. Tony Fernandes, its chief executive, says London flights will eventually return, though not on the same fuel-guzzling four-engine Airbus A340s. “We had the wrong aircraft,” he admitted last year. Orders for 37 new A330s and 10 next-generation A350s—both twin-engine aircraft—should improve his chances next time. Mr Fernandes will also be able to choose from multiple points of origin, with AirAsia X subsidiaries launching in Bangkok, Thailand and Bali, Indonesia.

Cebu Pacific Air of the Philippines

Two other Asian low-cost carriers are exploring the model: Cebu Pacific of the Philippines, and Singapore Airlines’ subsidiary Scoot. Cebu Pacific received its first widebody A330 last summer, and now deploys four of the jets on regional flights plus one long-haul route to Dubai. In September, Kuwait and Sydney will join the network. Unlike AirAsia X, which offers a business-class cabin to entice some premium passengers, Cebu Pacific positions itself as radically low-cost. Its all-economy A330s are crammed with 436 seats (by way of comparison, Etihad seats 231 people on the same aircraft). As well as doing away with frivolities like legroom, baggage and food, Cebu Pacific makes little effort to facilitate onward journeys with partners. “We find that our passengers have learned how to self-connect,” Lance Gokongwei, its chief executive, says. If that means adding several hours to an already lengthy journey, then so be it.

Scoot of Singapore
Scoot of Singapore

This works for Cebu Pacific because the majority of its customers are migrant workers—one in ten Filipinos live abroad—who shoulder the burden stoically. For them, cost is the most critical factor when booking a flight. Hence Mr Gokongwei’s reluctance to sign interline or codeshare deals with local carriers. Although this would make travelling more bearable, it would also undermine the no-frills model by restricting flight times and layering on costs.

Norwegian Air Shuttle
Norwegian Air Shuttle

Would this model work in Europe or America? When AirAsia X pulled out of London in 2012, it blamed taxes for the failure. That was nonsense. Fuel prices alone sounded the death knell, and would probably do so again today even with A330s. There are only three ways for an airline to beat high fuel costs. One is to boost revenue by adding sizeable business-class cabins (at which point your low-cost credentials go out the window); another is to boost revenue by cramming in passengers like sardines (which Filipino workers will tolerate, but others may not); the last is to buy ultra-fuel-efficient planes that reduce your operating costs. Norwegian Air Shuttle hopes to do the latter with its Boeing 787 Dreamliner flights from London to New York. But because modern jets cost the most to lease, the fares are hardly rock bottom. Return flights start at £360—a far cry from Mr O’Leary’s €10 tickets. If Europeans and Americans want genuinely low-cost long-haul flights any time soon, they will have to look to the Philippine model. Many might think that too high a price to pay.

Source: MR, The Economist

No AirAsia X Affiliate In Philippines For Now

Source: Adrian Schofield, AWIN First



AirAsia’s Philippine affiliate is pressing for the group’s long-haul carrier AirAsia X to open a new hub near Manila, but it appears that no such move is on the horizon.

While discussing plans for Zest AirAsia—a joint venture in the Philippines—Chairman Michael Romero said that Zest is trying to convince AirAsia X to establish an affiliate of its own at Clark International Airport. Clark is about 50 mi. from the more central, and crowded, Ninoy Aquino International Airport (NAIA) in Manila.

However, a spokeswoman for Malaysia’s AirAsia X tells Aviation Week that the airline is not looking at the Philippines as a location for a new offshore base. AirAsia X is currently focused on setting up joint venture affiliates in Thailand and Indonesia, she adds.

AirAsia X’s long term strategy is to create joint ventures in locations where the AirAsia group’s short-haul carriers have already established themselves, so they can provide feed for the long-haul carrier.

However, AirAsia X CEO Azran Osman-Rani has previously stated that Thailand and Indonesia are the only AirAsia offshore affiliates that are mature enough to support a long-haul carrier. Thai authorities are processing the certification application for Thai AirAsia X, which is expected to launch in the first quarter 2014.

Another difficulty with an AirAsia X hub at Clark is that it would be separated from the short-haul operation at NAIA, where Zest is based. The smaller AirAsia Philippines until recently was based at Clark, but that airline is moving to NAIA to better align with Zest.