Budget carrier AirAsia has ordered 100 Airbus A321neo aircraft which are likely to be used for Australian flights shortly after their introduction.
The order was announced by AirAsia Group chief executive Tony Fernandes and AirAsia chief executive Aireen Omar on Day Two of the Farnborough Air Show on Tuesday (European time). It is the largest order yet at the relatively quiet (and remarkably wet, even for the UK) event.
Perth and Darwin were high on Fernandes’ list for the new aircraft, likely from Bali. “Soon. Indonesia needs it more than anyone because they’ve got the current capacity issues. I can’t give you a precise date, but it would be one of the first few aircraft.”
Key to the move were the capacity constraints of numerous ASEAN airports, Fernandes said. “AirAsia Group currently operates close to 1,000 flights per day to more than 120 destinations in 24 countries. We recorded a robust load factor of 85 per cent in the first quarter of 2016, up eight percentage points from the same period last year, and we are confident of maintaining this momentum going forward. The A321neo will help us to meet ongoing strong demand as well as further reduce our cost per available seat kilometre across the group, which will translate to lower air fares for our guests. We would like to congratulate Airbus for producing the state-of-the-art A321neo aircraft that meets our requirements for efficient operations.”
Fernandes noted: “The A321neo will be operated on our most popular routes and especially at airports with infrastructure constraints. It will allow us to bring higher passenger volumes with the same slots, therefore providing immediate benefits to the airports. These include, among others, more efficient operations, higher revenues from passenger service charges, and more airport retail purchases. We will also continue to maintain our 25-minute turnaround with two- or three-step boarding where permitted to ensure on-time performance.”
FERNANDES KEEN TO BUILD NETWORK
The network effect, connecting passengers over the airline’s Kuala Lumpur hub, was also key, Fernandes told Australian Aviation: “One hundred per cent. That’s where we’re heading. You’ll see more and more my discussion on FlyThru, and stuff like that. For instance, we have a lot of people coming from Vietnam to come to KL and using us to go to Australia. We have a lot of Australians of Vietnamese descent coming up to Vietnam. I’m doing something that’s never been done before: a low-cost carrier that has connectivity like Emirates. I’m taking the Emirates or SQ model from many years ago and applying it to low cost. Many people were skeptical of that, but it’s beginning to work.”
“Hopefully we can go and open AirAsia Vietnam one day,” Fernandes said. “I’d love to be in Vietnam. It’s the missing link in AirAsia. We need to be in Vietnam. Vietnam and Cambodia are areas where we can do more. I see now a lot of Malaysians going to Vietnam for shopping, going to Hanoi and Ho Chi Minh. There’s a lot more places to go in Vietnam.” Fernandes also identified Myanmar as a growth market. “Myanmar is growing much quicker than most ASEAN countries, and it’s a much freer country, so we do believe in it, just the airports are a little bit behind.”
The new aircraft are not likely to be used for an AirAsia Australia, Fernandes noted: “no, I don’t think so. Australia’s not a large enough market to have too many airlines. You’ve got Tiger, you’ve got Virgin — though there’s no true low-cost carrier. If I put my energy into Australia, to be frank, versus my energy into India or Vietnam or somewhere, the returns are much bigger, because it’s just a larger population. Australia is well served by quite a few good airlines, so I don’t see that.”
“Adelaide is somewhere we’ve got to go back to. Indonesia or even Malaysia AirAsia. We need to go to every major city in Australia. Adelaide didn’t work last time, but we’ve grown and we’ve got bigger, so Adelaide we should go back to. I think Bali-Adelaide would work.” That is both for the shorthaul AirAsia brands, Fernandes noted, and for the long-haul low-cost AirAsia X airlines.
AirAsia’s A320s were configured with 180 all-economy seats, while the A321neos were expected to be fitted with 236 seats.
LONDON BACK ON AGENDA THANKS TO A330NEO
Once the airline’s A330neo orders start to arrive, Fernandes said, “we’re going to fly to London. We’ll start doing some sexier destinations with the A330[neo]. Obviously Hawaii’s around the corner, from Osaka — KL-Osaka, Osaka-Hawai’i. Africa’s not that far away. I’m a big believer in Africa. I think we could move a lot of Australians down to South Africa and Kenya, etc. Who knows, one day we could go to Latin America. I said I’ll retire when I can play football on Copacabana beach. Then I’ve done everything. People laugh at some of my ideas, but at the end, we should be able to fly to every continent.”
Closer to the present, AirAsia’s A321neo aircraft will be outfitted with seating from small British manufacturer Mirus — well, formerly small, anyway. Mirus is establishing a south-east Asian subsidiary in Malaysia, Mirus Aircraft Seating Malaysia SDN BHD, “following discussions with Malaysia External Trade Development Corporation (MATRADE) and the Malaysian Investment Development Authority (MIDA). This will make Malaysia the company’s launchpad for ASEAN and beyond,” the company said, noting that “The new, wholly-owned subsidiary, Mirus Aircraft Seating Malaysia SDN BHD, will initially act as an After Sales Service Centre, providing technical support to AirAsia as well as other customers in the region and will allow the company to grow in order to maximise its geographical advantage. Looking more long-term, it is envisaged that the Malaysian base will become a duplicate production facility and centre of excellence for projects in South East Asia. This would further improve lead times and lower costs.”
Mirus chief executive Phil Hall said, “I’m really happy we’re able to announce this significant milestone at Farnborough. It’s an exciting new step in the Mirus story and will demonstrate to customers our commitment to providing them with outstanding support”.
Meanwhile, as Fernandes’ interviews were interrupted by the F-35 hovering over the Farnborough Air Show, the chief executive suggested a next step, tongue in typical cheek: “lots of fighter aircraft. Business opportunity to start a low-cost fighting force?”