WHY AIR ASIA X FAILED IN EUROPE

MALAYSIA’S AIR X was supposed to make air travel between Europe and Southeast Asia affordable. It launched flights to London back in March 2009 with fares starting at US$319 return, a fraction of those charged by its rivals. Like all LCCs, the introductory fares were deliberately pitched low to generate publicity, and prices were quickly hiked after the route launch. When Business Traveller checked prices for the month of June 2009, we were quoted US$1,038.

With hindsight, Air Asia X was using the wrong aircraft for the job. Its A340s were acquired from Air Canada and not only were these four-engined planes fuel-inefficient but they also came with the latter’s spacious seating.

So it’s little wonder that after a year or so in service the A340s were retrofitted. Out went Air Canada’s eight-across (2-4-2) seating and in came the denser LCC configuration of nine-across (3-3-3), along with angled lie-flat seats in business class aimed at generating more revenue.

There was talk of starting flights from Manchester (which, like London, also has a Malaysian community) but that plan was shelved in favour of Paris. Air Asia X blamed the high cost of the UK’s air passenger duty for its decision.

In a final attempt to make the service viable, the carrier switched from Stansted to Gatwick to “improve connectivity”. But as we reported in December 2011, the losses continued. We quoted a report in The Malaysian Insider that claimed Air Asia X was losing RM20 million (US$6.3 million) a year on the London route alone.

The inevitable happened a few months later. At the beginning of April last year, the airline wound down its operations and retreated from Europe. The A340s were grounded and it axed all routes longer than eight hours, which meant Christchurch in New Zealand also disappeared from the network.

Officially, the carrier blamed the failure of its European service on the high price of oil and local taxes. We suspect that is only partly true. The main reason, we believe, is the fierce price competition from the Gulf carriers. They set the market price and prevented Air Asia X from charging higher, more profitable rates. The Gulf airlines also offer many more departure points. If you are based in the north-west, why bother trekking to London when you can fly from Manchester?

Will Air Asia X return? Well, much depends on the success or otherwise of Norwegian. If the Malaysian carrier does restart flights in the next few years, it says it will use A350s. But don’t get too excited – while the A350s are designed for nine-across (3-3-3) seating, Air Asia X has said it would go ten-abreast (3-4-3).