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AirAsia X remains upbeat despite high fuel costs, airline failures


September 8, 2008

AirAsia X remains upbeat despite high fuel costs, airline failures

Long-haul budget airline AirAsia X said it will not hit the wall like other low-cost carriers, with ticket sales strong despite faltering economies and high fuel costs, reported AFP.

AirAsia X chief executive officer, Azran Osman-Rani, said that while there was an overall "dampening in consumer demand for travel," the carrier's low fares meant it was unscathed by the downturn.

He said the carrier's operating costs are low compared to other airlines, and that it would not meet the fate of UK-Canadian carrier Zoom and Hong Kong-based Oasis, which have gone under in recent months.

"We are a low-fare carrier. There is a big demand for travel at the prices we offer," he told AFP in a recent interview.

Aviation experts have expressed cautious optimism over the business model of AirAsia X, which has fares generally half those offered by full-service carriers.

Azran said the arrival of two brand-new, fuel-efficient A330-300 in October and December will further lower its operating costs.

"A lot of carriers used old planes. Some of the planes are 15 to 20 years old.

Oasis and Zoom went down because they used old planes. With today's high fuel costs, it does not work anymore," he said.

AirAsia X has signed a deal with Airbus to buy a total of 25 of the A330-300 aircraft.

Azran said Airbus will deliver three A330-300 in 2009, and that it was fast-forwarding an aircraft originally scheduled to be handed over in 2011.

"We need the aircraft to cater for our strong passenger demand on existing routes and for our new routes," he said.

An affiliate of regional low-cost carrier AirAsia and Virgin Group, AirAsia X was launched in January 2007.

AirAsia and AirAsia X have common shareholders, including AirAsia founder and CEO Tony Fernandes.

Richard Branson's Virgin Group has also taken a 20 percent stake in the airline, and the British billionaire has vowed to ensure that the project turns a profit.

AirAsia X currently operates with just one A330-300, mounting four return flights a week between Kuala Lumpur and Australia's Gold Coast, and also to China's Hangzhou.

The airline plans to offer six return flights per week between Perth and Kuala Lumpur starting November 2 and to service the Melbourne route from November 12.

"Three months before we fly to Perth, half of the seats have been taken.

We expect 80 percent of the seats to be taken before we mount the flight," Azran said.

He said traffic to the Gold Coast has doubled since the route was launched in November 2007, and AirAsia X was also expected to fly to Britain in the first quarter of 2009.

"We are considering two airports -- to London or Manchester.

We could start our services in the tail end of the first quarter of 2009," he said.

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