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AirAsia X expects to be profitable within 12 months
Last Updated(Beijing Time):2007-11-05 11:49
AirAsia X Sdn, the Malaysian long-haul budget airline that made its maiden flight on Friday, expects to be profitable in a year as economic growth boosts demand for leisure travel.

The carrier, which offers tickets at about half the fares charged by so-called full-service airlines for similar routes, aims to fly about 1.1 million passengers in the next 12 months as it adds planes and routes, Azran Osman Rani, AirAsia X's chief executive officer, said on a flight to Gold Coast, Australia, according to Bloomberg News.

"By offering cheaper rates, we are targeting people who never flew before," Azran said. "We'll break even within the first 12 months, on a cash basis" on the assumption the airline will fill 75 percent of its seats.

AirAsia X, backed by Richard Branson's Virgin Group Ltd and AirAsia Bhd founder Tony Fernandes, plans to add routes to Avalon, Australia, and Hangzhou and Tianjin in China, as Asia's economic growth makes holidays affordable to more people. The region's airline passenger traffic growth will likely outpace the global average until 2010, according to the International Air Transport Association.

"Rising incomes and liberalization of the air industry will boost travel demand in Asia," Yeoh Yung Juen, an analyst at TA Securities Holdings Bhd in Kuala Lumpur, Malaysia, said on Friday.

Surging crude oil and jet fuel prices may curb AirAsia X's ability to keep a steep discount, Yeoh said.

"Pricing is very important" for low-cost airlines, he said. "They may offer big discounts at first, but how sustainable are the discounts?"

Jet fuel prices have risen 53 percent this year to a record US$110.95 a barrel in Singapore, according to data compiled by Bloomberg.

The carrier will exercise an option to buy 10 Airbus SAS A330-300 planes in the first half of next year, raising its firm order to 25, Azran said. AirAsia X in June placed an order for 15 Airbus SAS A330-300 airliners worth US$2.9 billion at list prices.
Source:Shanghai Daily 
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