AirAsia X unfazed by Cebu Pacific’s long-haul plans

MANILA, Philippines – The pioneer of low-cost, long-haul flights in Asia is unfazed by plans of local budget carrier Cebu Pacific Air to mount flights beyond the region.

In an interview with global aviation group Flightglobal Pro, AirAsia X chief executive officer Azran Osman-Rani said new entrants to the market they currently serve “will go through a steep learning curve.”

AirAsia X is a unit of Malaysia’s AirAsia International. It has been mounting no-frills flights from Kuala Lumpur to long-haul destinations, or beyond 4-hour flight distance, since 2007.

Recently, aggressive local player Cebu Pacific announced that it is joining the fray, has ordered new aircraft for routes outside of Asia, and squarely focused on tapping the underserved overseas Filipino market.

Aside from AirAsia X and Cebu Pacific, Singapore Airlines’ subsidiary Scoot is also getting into the long-haul business.

Osman-Rani shrugged them off and said these new entrants will not have a huge impact on AirAsia X, citing a growing overall demand and the airline’s 4-year advantage.    

“There’s a lot that went into 4 years of figuring out how to make this work operationally. It’s not something that can be easily replicable,” he stressed.

“You can copy our flight schedule and seat density but there’s a lot more to it that makes the model work,” he said.

Air Asia X prides itself of its efficient operations. Osman-Rani stressed that the airline’s unit cost per available seat kilometers (ASK) in 2011 was 3.5 cents, much lower than the legacy carriers’ 9 cents.

ASK is one of the measures of profitability in the airline business. Other measures include load factor, or how full the plane is, and aircraft utilization. The latter measures how many hours in the day one aircraft is on air, a key factor in low cost operations.

Osman-Rani said AirAsia X’s load factor in 2011 was over 80% and its aircraft utilization was 17 hours.  

He attributed these to AirAsia’s vast operations in Asia. The Malaysian-based budget carrier is the most aggressive and biggest player in low-cost flights within the region.

It’s local unit, AirAsia Philippines, is the fourth in its growing base in the region.

“It’s very hard to do that as a stand alone airline with a completely new brand without a feeder network. If we were only to rely on point-to-point traffic, there’s no way you can get a 80% load factor,” he said.

AirAsia X has itself experienced growing pains. It announced in January that it was stopping services between its Kuala Lumpur base and Europe.

It is retrenching by focusing on Australasia, China, Japan, Korea and Taiwan. – Rappler.com