Jan 04 2007
The Government of Malaysia has given approval to FlyAsianXpress (FAX), a domestic airline controlled by the major owners of low-cost carrier AirAsia Bhd, to run a long-haul budget service to Asia, Australia and Europe – Transport Minister Datuk Seri Chan Kong Choy said today, 4-Jan-2007, according to state agency Bernama.
The report comes a day before a media briefing which AirAsia has scheduled in the Malaysian capital, during which it is expected to announce a new service. Fernandes has scheduled a press conference on Jan 5 to announce “a revolutionary service that will change the face of aviation travel forever”. Sir Richard Branson, the owner of the Virgin Group is expected to attend the event.
Earlier it was reported that AirAsia (KLSE : AIRASIA, stock-code 5099) had agreed to double an existing order of 100 Airbus SAS A320 planes to meet the low-cost carrier’s expansion plans. Existing, AirAsia has a fleet of 50 aircraft, comprising 15 A320s and 35 Boeing 737-300s. Bernama said FAX is 50 percent owned by AirAsia chief and co-founder Tony Fernandes, while Kamarudin Meranun, another co-founder and AirAsia director, owns 30 percent. Raja Mohd Azmi, a former AirAsia chief financial officer and FAX chief, owns the remaining 20 percent.
AirAsia reportedly has conducted a study to launch the long-haul and found it to be viable and will offer premium and economy class with a maximum of up to 400 passengers on each flight. But Raymond Yap, CIMB Research’s analyst said AirAsia should remain on its short-haul routes stating operation complexity, regulatory issues and slow turnaround in long-haul business.
But AirAsia cannot remains within its current network flight map – it need to expand to continue create value and profit to the bottom-line. And with the in-efficiency of Malaysia Airline System, it’s the right timing to wrest some of the routes to AirAsia’s new destination with the lower fare advantage. With Branson’s attendance tomorrow, Fernandes could announce the partnership with Virgin Group on the long-haul routes.
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January 4th, 2007 by financetwitter
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