AirAsiaX route changes not due to Malaysia Airlines: CEO

“There are no concerns regarding overlapping routes. The proof is in the launch of our KL-Sydney route which is one of Malaysia Airlines’ strongest routes,” said Azran in a phone interview with Campaign.

Moving forward, the AirAsia brand will remain what it always has – targeting a different audience from Malaysia Airlines, which plans to increasingly target premium travellers, he added.

In fact, AirAsiaX has been lobbying to launch the Sydney route since 2007 but has never been granted permission by the Malaysian government, as it would compete with the national carrier, Malaysia Airlines. However the launch of Scoot, SIA’s low-cost carrier, has put pressure on Malaysian authorities to open the route up for AirAsiaX.

The airline will suspend its four times weekly Kuala Lumpur – Mumbai service from January 31, while flights between the Malaysian capital and New Delhi will be reduced from a daily to four times weekly schedule from the start of March and suspended from March 22. The two European routes will close at the end of March, with the four times weekly link between Kuala Lumpur and Paris ending on March 30, and the last of the six weekly flights between the Malaysian capital and London departing on March 31.

The decision to stop flying to London, Mumbai and Paris is purely one of economy, said Frost & Sullivan’s senior consultant for aerospace and defense, Amartya De. “These routes were bleeding on the low-cost model. Part of the network rationalisation process is also to bring passengers from European destinations on MAS up to Kuala Lumpur and then giving them a choice to scout South East Asia and move further to Australia either on Qantas or on a low cost model,” he said.

The potential tie-up between AirAsiaX and Quantas, combined with the SIA-Virgin partnership furthers the rivalry between Kuala Lumpur and Singapore, continued De.

“Malaysia Airlines’ attempts in recent years to compete with emerging low-cost carriers through aggressive fare cutting has not yielded the desired results – which is unsurprising given MAS’ higher cost structure,” noted Bernard Ching, head of research at Alliance Research. A way forward for the national carrier would be to focus on premium long-haul service and, with the delivery of the A380 super jumbo, increase its business class seats.

For all the airlines involved (Malaysia Airlines, AirAsia, Scoot, SIA, Virgin and Quantas) the overall 'grand strategy' is to set up parallel routes from Europe and South Asia through Singapore and Kuala Lumpur, terminating in Australia and New Zealand, with each serving its own market and earmarked segment of passengers and each giving an opportunity to switch to a low cost network, said Amartya.