Indonesia AirAsia X will cease flights to both Melbourne and Sydney from Denpasar, Bali on September 1.
The airline explained in a statement that: “The suspension of these services is part of a network restructuring aimed at improving operational efficiencies at Indonesia AirAsia X.”
Given Indonesia AirAsia X’s only other international destination is currently Jeddah, Saudi Arabia, which the airline serves on an occasional basis, the announcement raises questions about the long-haul low-cost carrier’s future.
A joint-venture between Malaysia-based AirAsia X and Indonesia AirAsia, Indonesia AirAsia X operates just two single-class 377-seat Airbus A330-300s. It continues to make losses but its financial performance did improve in the first quarter of this year.
“Indonesia AirAsia X’s net loss for 1Q16 narrowed by half to USD4.6 million from USD9.4 million in the same period last year as overall operations improved,” Kamarudin Meranun, group CEO of AirAsia X, said in a statement on May 24 detailing AirAsia X’s first quarter results for 2016.
“However, Indonesia’s operational environment remains challenging due to restrictions imposed by Indonesian regulators,” he said.
“Moving forward, we remain [focussed on] exploring strategic initiatives to sustain our earnings momentum for sustainable growth in Malaysia and Thailand,” Meranun explained, referring to AirAsia X’s Malaysian and Thai operations, “while we re-evaluate the operation in Indonesia.”
Indonesia AirAsia X began flying to Melbourne in March 2015 and to Sydney in October 2015. The launch of flights to Melbourne was delayed by several months while the airline awaited CASA approval of its Foreign Aircraft Air Operator’s Certificate.
Passengers booked after September 1 on the airline’s five times weekly services to both Sydney and Melbourne are being offered full refunds, an airline credit or the opportunity to fly to Bali via Kuala Lumpur.
Tigerair Australia was quick to offer affected Melbourne-Bali AirAsia X passengers “a 20 per cent discount on any fare currently available on the Tigerair Australia website … provided they can show proof of their AirAsia itinerary”.
Garuda and Qantas-owned Jetstar also operate between Melbourne and Denpasar, while Virgin Australia, Jetstar and Garuda all operate between Sydney and Denpasar.