Leeham News and Analysis
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Leeham News and Analysis
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AirAsia India looks to break-even, international flights
April 24, 2018, © Leeham News: AirAsia India is a newcomer to the Indian commercial aviation scene.
It began service in 2014 and, at Dec. 31, served just 17 cities with 14 Airbus A320s.
It had a 4.5% market share by the end of last year.
AirAsia Berhad holds a 49% stake in the airline. India’s Tata Sons holds 49% and the balance is held by Indian nationals which ties to Tata.
The AirAsia entities are tied to the AirAsia Group of Malaysia, the largest low-cost carrier in Southeast Asia.
Bangalore is AirAsia India’s headquarters.
Growth plans
Three more A320s joined the fleet this year and three are on order. The airline needs 20 airplanes to qualify for international operations under government rules. Officials plan to add about 10 aircraft a year. The airline plans to begin international service in 1Q2019, with flight up to 5-6 hours, officials say.
AirAsia Group has 390 A320 family members on order, some of which may go to its leasing operation but the bulk of which get assigned to various AirAsia ventures like AirAsia India.
The carrier plans to grow to 4,800 employees from 1,600 last year as it enters the international arena. It forecasts doubling passengers carried to 8m this year and nearly double again, to 15m, in 2020.
Financials
AirAsia India is on a path to break even by the end of this year, having narrowed its loss in FY2017 (to March 31) by 23%.
FY2018 results aren’t available yet.
The video is for FY2017 results, but is a detailed presentation of the Group’s financial results and plans.
Maybank Research in Malaysia, in a February 28 research note, has a Hold on AirAsia stock.
Maybank noted that the financials were “riddled with accounting restatements,” making quarterly comparisons “invalid.”
Lower yields and cost spikes hurt group profits, the research bank wrote.
“We believe competitive pressure is escalating and this will negatively impact on yields and loads,” the bank wrote. Although load factors remained stead in 4Q2017, yields were down 3.7% year-over-year.
Still, Maybank notes that management remains positive about the group’s outlook.
I have flown Air Asia frequently (Thai, Malaysian and Indonesian AOCs) and must confess they are way ahead of their LCC competitors in the region.
Although in Kuala Lumpur I would add that the passenger experience at their hub (KLIA) can’t compete with the pax experience of LCC airlines out of the newer and hence nicer KLIA2 (e.g. Malindo).
Overall Air Asia way ahead of Malindo etc.
“Overall Air Asia way ahead of Malindo etc.”
Could you specify how Air Asia is better than Malindo?
Malindo is ahead on these points.
Bagage policy: Malindo economy 25 kg free – Air Asia available for a fee.
Food and drinks: Malindo free (depending on flight length ranging from snack to full meal) – Air Asia available for a fee.
Legroom / seat pitch. Malindo 32 inch – AirAsia 29 inch.
Inflight entertainment: Malindo free – Air Asia not available (I believe they rent out tablets on a few flights).
Presumably somewhere still in this market mix is Qatar and Qatar Airways. They are looking at either a 100 a/c startup, or, possibly, acquiring a majority interest in Air India. I think they still have an application for an operator’s certificate in with India. It could get awfully crowded in the Indian market, adding a 100 a/c startup to the mix!
Qatar has bigger problems related to the ‘illegal’ blockade of the country, its a financial disaster for the airline
True, but as of two months ago, they’re plowing ahead with their AOC app!