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Tag: flying

  • Vietjet launches new service to Indonesia with Ho Chi Minh City-Bali route

    Vietjet launches new service to Indonesia with Ho Chi Minh City-Bali route

    New-age airline Vietjet is giving people more reason to travel with the announcement and addition of its newest international route connecting the biggest city of Vietnam, Ho Chi Minh City with Bali (Indonesia). The first and only airline to operate this service, the Ho Chi Minh City – Bali route will serve as a crucial link between the two cultural centers, meeting the increasing travel demands of locals and tourists as well as boost regional trade and integration.

    The Ho Chi Minh City – Bali route will operate five return flights per week on Mondays, Wednesdays, Thursdays, Fridays and Sundays starting 29 May 2019. The flight duration is approximately four hours per leg. The flight will depart from Ho Chi Minh City at 08:05 and arrive in Bali at 13:05. The return flight takes off from Bali at 14:05 and lands in Ho Chi Minh City at 17:05 (All in local time).

    Vietjet Vice President Nguyen Thanh Son said: “Vietjet has the advantage of an ever-expanding flight network and professional aviation services; therefore, I believe not only does this new route create ease and increased opportunities for both locals and tourists to travel conveniently by safe, modern air transportation, it will also contribute to promoting tourism and economic integration in the region, all while introducing the beauty of Vietnam to the world.”

    Ticket sales for the new route are now open and available on all channels. Those hungry for promotional deals should be sure to check out Vietjet’s daily golden hour promotion which runs from 1.00pm to 3.00pm (Malaysian time) on the airline’s website.

    Vietjet operates its domestic and international routes with a dynamic and friendly flight crew, serving its passengers with fresh and hot meals, while its aircraft is equipped with comfortable leather seats with a technical reliability rate of 99.64% — the highest rate in the Asia Pacific region. As a fully-fledged member of International Air Transport Association (IATA), Vietjet has obtained the IATA Operational Safety Audit (IOSA) certificate and has been awarded a 7-star ranking, the world’s highest rate for safety, by AirlineRatings.

  • Thai Airways revamps Royal Orchid Plus frequent flyer program

    Thai Airways revamps Royal Orchid Plus frequent flyer program

    Thai Airways is making significant changes to its Royal Orchid Plus frequent flyer program from October 1 2019, affecting how miles are both earned and redeemed on Thai Airways and Star Alliance flights across the globe.

    On the one hand, business class and first class passengers travelling with Thai Airways stand to earn more miles from the same flights – as do Silver, Gold and Platinum Royal Orchid Plus members – but in turn, the number of miles needed to book a flight or secure an upgrade is increasing dramatically: more than doubled in some cases.

    Here’s an outline of what’s changing, and how it affects you, the traveller.

    Earn extra Royal Orchid Plus miles on first class, business class travel

    Passengers travelling with Thai Airways on all paid first class fares, some business class tickets and the highest-priced flexible economy fares will earn more miles when they fly from October 1.

    Of the fare types that will award more miles, here’s a look at today’s earn rate – given as a percentage of the number of actual miles flown in the sky – compared to the earn rate coming into place for flights taken on and from October 1:

    Class of service
    		 Fare letter
    		 Today’s earn rate
    		 Earn from October 1
    First class
    		 F 150% 250%
    First class
    		 A, P 150% 200%
    Business class
    		 C, D 125% 150%
    Flexible economy
    		 Y, B 100% 110%

    For example, a non-stop flight from Sydney to Bangkok measures up at 4,679 miles, which today would provide first class travellers booked onto an ‘F’ fare approximately 7,018 Royal Orchid Plus miles at the 150% rate, being the distance flown (4,679 miles) multiplied by the 150% earning rate.

    Fast forward to October, and that same one-way journey would instead generate a higher 11,697 miles, when the earning rate climbs from 150% to 250% on the same fares.

    All other fare types, including J- and Z-class business class tickets, will continue earning miles at the same rate as today.

    Silver, Gold and Platinum Royal Orchid Plus status gets easier to earn

    Thai Airways uses ‘qualifying miles’ to determine which travellers have earned Silver, Gold and Platinum status in Royal Orchid Plus: and as travellers earn ‘qualifying miles’ at the same rate as spendable miles above, passengers booked on those higher-end fare types will reach the lofty heights of status faster than before.

    For instance, Royal Orchid Plus Silver status – equivalent to Star Alliance Silver – is awarded after earning 10,000 qualifying miles in a rolling 12-month period, or 15,000 qualifying miles over a rolling 24-month time frame.

    Using the same example above, that would be achievable with a single first class flight from Sydney to Bangkok, while the airline’s Royal Orchid Plus Gold level (Star Alliance Gold) would be unlocked after a single return first class flight from Sydney to London via Bangkok with Thai Airways.

    Royal Orchid Plus Platinum – a level that provides access to Thai Airways’ first class lounge in Bangkok regardless of fare type, complimentary flight upgrades and more – would also be achievable from two return treks between Sydney and London, flying first class (F class) on one trip and business class (C or D class) on the other.

    It’s not that the requirements for reaching Silver, Gold and Platinum status are being lowered, of course: it’s simply that the airline’s highest-priced fare types will earn more qualifying miles from October, being the Thai equivalent to status credits, which brings these memberships within easier reach of passengers booking those premium fare types.

    New ‘tier bonus’ for Royal Orchid Plus members on Thai Airways flights

    From October 1, Silver, Gold and Platinum Royal Orchid Plus cardholders will earn even more miles on Thai Airways flights, through the introduction of a ‘tier status bonus’.

    Silver members will earn 5% more miles, Gold members get 10% more miles and Platinum travellers will pocket 20% more miles, year-round.

    This bonus is calculated upon the full overall earning rate from each Thai Airways flight, making it highly rewarding for first and business class flyers, although the extra points awarded via this ‘tier bonus’ aren’t also counted as qualifying miles: merely, extra miles to be spent on flight bookings and upgrades.

    As an example, a return flight from Sydney to Bangkok clocks in at 9,358 miles flown, which would earn a base-level member 14,037 miles from October 1 when flying on a C or D business class fare, given the 150% earning rate applied to those fares.

    The tier bonus is then added on top, giving top-tier Platinum members a further 20% boost on that initial haul of 14,037 miles, for an all-out gain of 16,844 miles.

    More Royal Orchid Plus miles needed to book Thai Airways flights

    Currently, the number of miles needed to book a Thai Airways flight differs, depending on whether you’re making a one-way reservation or flying return, with return-trip points bookings presenting the best value, requiring fewer points than booking the journey as two one-way flights.

    However, that pricing difference is being removed as part of these changes – the cost of a return flight to become twice as many miles as a one-way ticket – with the overall number of miles needed also being amended, for new bookings made from October 1 2019.

    For passengers taking return trips, here’s how that plays out across a range of routes, including flights from Australia (Sydney, Melbourne, Brisbane and Perth) to Bangkok and beyond:

    Route, flying return
    		 First class *
    		 Business class
    		 Economy class
    SYD/MEL/BNE-Bangkok (today)
    		 150,000 miles 98,000 miles 55,000 miles
    SYD/MEL/BNE-Bangkok (1/10-)
    		 180,000 miles (+20%) 130,000 miles (+33%) 55,000 miles (no change)
    Perth-Bangkok (today)
    		 N/A 75,000 miles 45,000 miles
    Perth-Bangkok (1/10-)
    		 N/A 130,000 miles (+73%) 55,000 miles (+22%)
    Australia-Bangkok-Europe (today)
    		 230,000 miles 170,000 miles 90,000 miles
    Australia-Bangkok-Europe (1/10-)
    		 450,000 miles (+96%) 350,000 (+105%) 160,000 miles (+78%)
    Bangkok-Europe (today)
    		 185,000 miles 130,000 miles 70,000 miles
    Bangkok-Europe (1/10-)
    		 250,000 miles (+35%) 180,000 miles (+38%) 85,000 miles (+21%)

    * On Australian routes, first class only available to/from Sydney.

    Curiously, Thai’s new Royal Orchid Plus reward pricing makes it more attractive to plan a stopover in Bangkok than to merely connect through the airport, booking the Australia-Bangkok and Bangkok-Europe legs on separate tickets.

    For example, book a return business class trip from Australia to Europe after October 1 and you’d part with 350,000 Royal Orchid Plus miles – but book a return business trip between Australia and Bangkok (130,000 miles), and separately, a return business class trip between Bangkok and Europe (180,000 miles) and you’d pay only 310,000 miles overall: an easy saving of 40,000 miles, by booking your flights across two reservations instead of one.

    This works best when you’re genuinely breaking the journey in Bangkok, and shouldn’t be used for tight flight connections when you don’t plan to leave the airport, as the airline may not be able to check your bags all the way through, and if the first flight of your journey is delayed, you may not be ‘protected’ should you miss an onward flight, as would be the case when all flights are on a single ticket.

    Notably, the number of miles needed to fly solely between Perth and Bangkok also comes into line with the rates from Sydney, Melbourne and Brisbane as part of these changes.

    Booking Star Alliance flights also requires more miles

    Similarly for passengers using Royal Orchid Plus miles to book flights with Thai Airways’ Star Alliance partners, the number of miles needed is increasing across the board, with some flights requiring more than twice as many miles to book from October 1 as are needed today.

    While the changes impact travel in all classes, here’s how the increases shape up on a range of popular routes for passengers booking business class, based on a return trip for one person:

    From Australia to (return) Business class (today) Business class (1/10-) Increase in miles
    NZ, Fiji, Samoa, Tahiti, Vanuatu
    		 50,000 100,000 50,000 miles (+100%)
    China – Beijing
    		 150,000 210,000 60,000 miles (+40%)
    China – Shanghai 150,000 190,000 40,000 miles (+27%)
    India 127,000 210,000 83,000 miles (+65%)
    Japan, South Korea 150,000 210,000 60,000 miles (+40%)
    Canada, US mainland
    		 150,000 400,000 250,000 miles (+167%)
    Europe + Turkey
    		 170,000 350,000 180,000 miles (+106%)
    Middle East + Egypt
    		 140,000 210,000 70,000 miles (+50%)
    South America 175,000 400,000 225,000 miles (+129%)
    South Africa 180,000 350,000 170,000 miles (+94%)

    Travellers jetting from Australia to the United States and Canada are hardest-hit, requiring an extra 250,000 miles per return business class trip over and above today’s rates, meaning you’ll need a staggering 400,000 frequent flyer points to book a single return business class ticket, even on non-stop flights with the likes of Air Canada and United Airlines direct from Australia.

    Interestingly, the table above also mirrors how many miles will be needed to book Thai Airways international connecting flights from October 1 – 350,000 miles for return business class to Europe, for example – so there’s no difference in price whether you choose to fly with Thai Airways or a Star Alliance airline on these tickets, except when flying Thai Airways through Bangkok and breaking the journey, as previously described.

    Star Alliance round-the-world tickets also hiked

    Currently, you can fly round-the-world with Thai Airways and its Star Alliance partners for 480,000 Royal Orchid Plus miles in first class; 340,000 miles in business class or 220,000 miles in economy: but come October 1, those rates also jump astronomically.

    From that date, a round-the-world first class ticket will set you back a whopping 950,000 miles – almost twice as many miles as are needed today – while business class also climbs to 725,000 miles, more than double today’s rates.

    Booking an economy round-the-world ticket is similarly increased to 350,000 miles.

    To put it another way, with 350,000 Royal Orchid Plus miles in your Thai Airways account today, you could comfortably circle the planet in business class: but make that same booking from October 1 and you’d be stuck back in economy, and paying even more miles for the privilege!

    More miles needed to upgrade Thai Airways, Star Alliance flights

    Passengers flying Thai Airways from Sydney to Bangkok on the most common J, C and D business class airfares can currently secure a coveted first class upgrade for 52,000 Royal Orchid Plus miles, pending availability: but from October 1, that climbs to 81,000 miles for the same one-way upgrade.

    On longer legs such as between Bangkok and London, or most other European cities where Thai Airways’ first class service is available, that same first upgrade increases from 58,000 miles today to 112,500 miles from October 1, being almost twice as many miles needed to upgrade the same one-way flight.

    Using Royal Orchid Plus miles to upgrade Star Alliance partner flights will also require more miles from October, with most business-to-first-class upgrades from Asia to Europe bumped from 80,000 to 115,000 miles, such as from Hong Kong to Frankfurt aboard Star Alliance member Lufthansa.

    Similar increases apply when upgrading from economy and premium economy to business class with Thai Airways, and from economy to business class with Star Alliance partners.

    For further information about these and other Royal Orchid Plus changes, visit the Thai Airways website.

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  • Turkish Airlines redesigns travel comfort with “Flow Sleeping Set”

    Turkish Airlines redesigns travel comfort with “Flow Sleeping Set”

    Bringing various innovations to the sky in order to ensure a perfect travel experience for its guests, Turkish Airlines now offers the new “Flow Sleeping Set” to passengers with its wondrous design. Available since 19th February, the new collection offered in Business Class promises sleep as comfortable as your home, only above the clouds.

    Produced with the successful collaboration between Turkish Airlines and Zorlu Tekstil while carrying the signature of expert designers, the collection aims to offer a healthier and higher quality sleep environment.

    Combining elegant lines with comfort, all of the new set’s pieces are developed considering the expectations of passengers who want to enjoy a relaxing sleep to finish their flights in a happy and fit state. The design of the collection reflects Turkish Airline’s “Flow” philosophy that represents the airlines’ dynamic brand identity and continuous service concept. Opting for contemporary and minimalist designs, the materials of the collection were all chosen for their comfort and ability to help sleep. The patterns of the collection are also visually compatible with the designs of the new cabin uniforms and cabin interiors.

    Chief aspects of the “Flow Sleeping Set” are its blanket, sleeping pad and pillow. The “blanket” of the collection features a two-sided design along with a soft texture. Thanks to its ability to support air flow, the product also helps maintain the ideal temperature during all four seasons. In addition to this, the “sleeping pad” provides an orthopedic surface for sleep and with its dense interior filling, it offers extra comfort and ease. In addition, the ‘pillow’, which can be used when sitting down or sleeping, are designed with an ideal size, classical form, and very comfortable materials.

    Sharing his views on this new sleeping set, Turkish Airlines Catering & Inflight Products SVP, Zeki Çukur stated: “With İstanbul Airport, our new home, we continue to add new innovations to the change we are going through. Our passengers will now experience the quality improvement, brought by these innovations, in their sleep with our ‘Flow Sleeping Set’. We prepared our new products after a lengthy R&D and design period as they offer a unique experience with their design and comfort. We are happy to host our Business Class passengers with the comfort of their homes during their intercontinental travels.”

  • Emirates offers summer promotion tickets

    Emirates offers summer promotion tickets

    Emirates offers summer promotion fares for customers from Vietnam who book tickets from now until April 22 and travel from April 15 until November 30, 2019.

    Economy Class fares start from VNĐ17,189,000 (US$747) to Dubai, VNĐ19,999,000 ($870) to Paris, VNĐ21,809,000 ($948) to London, VNĐ23,819,000 ($1,035) to Amsterdam, VND25,189,000 ($1,095) to Madrid, and VNĐ27,179,000 ($1,181) to Boston.

    The Early Bird promotion also offers very attractive Business Class fares, only from VNĐ66,079,000 ($2,873). Business Class passengers traveling on the Boeing 777 can enjoy unprecedented levels of comfort with wider and more ergonomic seats that recline into a lie-flat position for a restful sleep.

    In addition, Emirates passengers from Vietnam who purchase Economy Flex or Flex Plus fares can enjoy 30kg and 35kg baggage allowance, respectively. When booking Flex or Flex Plus fares, Skywards members earn more Skywards and Tier Miles, allowing them to earn the next reward or reach the next tier faster.

    Emirates currently operates daily non-stop flights between HCM City and Dubai, and daily non-stop flights between Hà Nội and Dubai. Through its Dubai hub, Emirates offers passengers travelling from Việt Nam convenient connections to an extensive global network in the Middle East, Africa, Europe, the US and South Asia.

     

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  • AirAsia to Launch Flights Between Bangkok and Ahmedabad

    AirAsia to Launch Flights Between Bangkok and Ahmedabad

    AirAsia is to launch flights between Bangkok and Ahmedabad, the capital of Gujarat state and India’s first UNESCO World Heritage City. The airline will operate the route four times per week on Mondays, Wednesdays, Fridays and Sundays, from 31 May 2019.

    AirAsia Thailand CEO, Santisuk Klongchaiya, said, “India is a strategic market that is fast becoming an important contributor of inbound tourists for AirAsia Thailand. To fully leverage on this, we plan to regularly introduce routes connecting the two countries, focusing particularly on India’s burgeoning metros. Thailand’s own worldwide fame for hospitality should attract travellers from Ahmedabad, which is the capital of Gujarat state and India’s fifth most populous city.”

    According to Thailand’s Ministry of Tourism and Sports, Thailand welcomed 1.5 million Indian visitors in 2018, up 12% on the previous year.

    Thai AirAsia has recorded a load factor of up to 87% on its India routes, with passengers travelling between Bangkok and existing destinations in India increasing 7% year-on-year. Indian nationals made up 85% of passengers on those routes.

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  • Flight Centre Looking at Corporate Travellers

    Flight Centre Looking at Corporate Travellers

    Travel retailer Flight Centre has made a 25 per cent investment in The Upside Travel Company, strengthening its presence in the global corporate travel sector.

    Flight Centre, which is now the business’s largest shareholder, will gain access to its technology platform and software development resources, enabling it to fast track growth in the small-to-medium sized corporate sector.

    “Upside is an emerging corporate travel business with an innovative customer offering that has the potential to disrupt traditional offerings in the SME sector in the future,” Graham Turner, Flight Centre’s managing director, said.

    Turner said the business is taking steps to future proof its SME offerings, which it predominantly provides through its Corporate Traveller brand, while also creating a blended on and offline offering for customers.

    Dean Smith, president of Flight Centre’s operations in the Americas, said the company planned to utilise Upside’s technology platform to grow Corporate Traveller’s digital offering.

    “We’ve been impressed by the capability and flexibility of Upside’s technology and team to improve the business traveller experience,” Smith said.

    For Upside, the deal will significant improve the business’s reach by giving it access to Flight Centre’s supplier relationships and global business.

    “Flight Centre is the perfect partner for Upside as we get aggressive in serving small corporate clients,” Jay Walker, CEO of Upside, said.

    “Not only does Flight Centre’s global scale, content and experience immediately make our product more complete and more credible, but its people and expertise also make us smarter, which is key as we accelerate into the future.”

    The investment is the latest in a string of such moves by Flight Centre, which recently invested in Bangkok-based 30SecondsToFly, and the acquisition of travel companion app Sam.

    The enhanced Corporate Traveller option will initially only be available in the Americas, but will be pushed to the United Kingdom in the “medium-term”.

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  • AirAsia adds Quanzhou to its Asian routes

    AirAsia adds Quanzhou to its Asian routes

    AirAsia will be flying direct daily from Kuala Lumpur to Quanzhou in Fujian, China.bOnce, one of the world’s biggest ports and the starting point of the Maritime Silk Road, Quanzhou was known to Arab traders as Zaiton and was praised by Marco Polo as the “one of the two greatest havens in the world for commerce”.

    Thanks to its status as a major trading port for more than three centuries, Quanzhou today remains a melting pot of diverse cultures and religions, and boasts many Buddhist and Hindu temples, mosques and churches, as well as museums celebrating its proud maritime heritage.

    Some of these must-visit sites include the Kaiyuan Temple, the largest Buddhist temple in Fujian, which was built over 1,300 years ago, as well as the Qingjing Mosque, China’s oldest Arab-style mosque, inspired by the Umayyad Mosque in Damascus.

    Then there is the Luoyang Bridge, one of the ‘four ancient bridges of China’, which resembles a silver dragon lying above the green waters of the Luoyang River.

    Another site is the largest stone carving of the famous Chinese sage Laozi made during the Song Dynasty, which is found at the foot of Mount Qingyuan.

    Meanwhile, the beautiful port city of Xiamen is only an hour away by high-speed train.

    AirAsia Malaysia CEO Riad Asmat said: “AirAsia has been championing connectivity to secondary cities in China such as Guilin, Shantou, and Nanning.

    “This Kuala Lumpur-Quanzhou service further grows our footprint of unique destinations in China, and will provide greater accessibility to Malaysian and Chinese travellers.

    “We look forward to exploring opportunities to connect our, other secondary hubs in Malaysia to China as well.”

    AirAsia currently is offering promotional all-in fares from RM99 for those who book flights from Kuala Lumpur to Quanzhou from now till Sunday at airasia.com or via the AirAsia mobile app, for travel from May 1 to Oct 26, 2019.

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  • AirAsia to sell tickets of non-competing carriers on website

    AirAsia to sell tickets of non-competing carriers on website

    AirAsia, whose website is used by 65 million customers every month, is considering a plan to sell tickets of non-competing carriers on airasia.com, using its size to give online travel agents a run for their money. The Kuala Lumpur-based carrier, Southeast Asia’s largest airline group, which already sells car rentals, accommodation at half a million hotels and serviced apartments worldwide and holiday packages in five regional destinations, thinks it can do a better job of selling these services than the travel industry because of the volume of data available from frequent travellers on its network.

    “I have a phenomenally strong platform that I [can] open for business to sell other content,” Tony Fernandes, AirAsia’s founder and chief executive, said in an interview with the South China Morning Post during Credit Suisse’s Asia Investment Conference in Hong Kong. “We can be as strong as any online travel agent in terms of selling hotel content. I think we can be stronger than Klook at selling activities.”

    Data is at the heart of the low-cost carrier’s ambitions to grab a bigger share of tourism revenue, which is projected to rise by 53 per cent to US$625 billion (S$847 billion) in Asia in the next five years, according to the Pacific Asia Travel Association (PATA). Airasia.com boasts 65 million unique monthly visitors, as well as data of 50 million repeat customers. Klook, an online tour agency and activities organiser founded in Hong Kong in 2014, had 16 million monthly visits last summer.

    The airline, which prefers to be seen and heard as part of a wider travel technology group, is leveraging data to know its customers better and keep them spending in its ecosystem.

    “Everyone is excited about platform businesses. Everyone is excited by GoJek and Grab and the unlimited potential of who they can reach and what they can sell,” the AirAsia founder added.

    Fernandes pointed out that the first thing people did when they wanted to travel was to buy an airline ticket, not a hotel. AirAsia.com generated US$4 billion in ticket sales last year for the budget carrier.

    “We are going to see the customer first, so we are going to take a large share of the wallet and we’re going to be good at it,” he said. “The first step would be to be as good as anyone selling hotels, selling activities. And then we may start selling [tickets of] airlines who don’t compete with us.”

    The plan may have easyJet or Ryanair selling their European flights to an Asian traveller planning a trip to the continent, he said, adding that AirAsia was currently not engaged in any active discussions with other airlines.

    “He is thinking more about a lifestyle, digital platform than a traditional airline,” said Mohshin Aziz, an analyst at Malaysian lender Maybank in Kuala Lumpur.

    AirAsia has enough user data to “formulate or create an algorithm to predict the buying pattern” of travellers, Mohshin said. “So many airlines are backwards – they don’t have a well-functioning distribution system. So [AirAsia] can easily become the one that is willing to share for some money and intelligence.”

    ​​​​​​​The scope and potential for AirAsia to sell foreign airline tickets was substantial, Mohshin said, particularly for carriers that operate services in Southeast Asia as non-stop flights to Europe or Australia, and did not have the same success in sales as a local airline would.

    Airlines such as KLM, which operates a connecting flight from Kuala Lumpur to Jakarta, or Ethiopian Airlines’ service to Singapore, could also benefit from AirAsia’s data and sales power.

    “For foreign carriers to try and get Singaporean customers, they are not going to put much effort into it. It is better for them to pass it on to AirAsia, to try and sell tickets on their behalf,” Mohshin said.

    AirAsia was well positioned in Southeast Asia, said Raini Hamdi, Asia Editor at travel and technology website Skift, citing a growing population of 650 million people, high mobile and internet use and a shift to online travel booking.

    “If AirAsia puts its energy into this, it will be successful,” she said. “It is a torch-bearer of great value, convenience, ease of use. It has a strong customer base. Add personalisation through data mining, AI, machine learning, ease of payment and ease of earning and burning points for customers, the stickiness of airasia.com will increase rapidly.”

  • CIMB IB Research expects higher operating costs

    CIMB IB Research expects higher operating costs

    CIMB Investment Bank Research (CIMB IB Research) has retained its “reduce” call on AirAsia Group Bhd as it forecasted the company to face higher operating costs and gearing levels until 2021.

    The research house lowered its target price for AirAsia to RM1.50, from RM1.82 previously, as it expects lower core earnings per share and dividend of 13 sen.

    At 11.00am, AirAsia was trading down 1 sen or 0.38% at RM2.64 with 1.55 million shares transacted. Its market capitalisation stood at RM8.86 billion.

    In a note today, CIMB IB Research analyst Raymond Yap pointed out that AirAsia had sold 79 aircraft to lessor BBAM Ltd Partnership in 2018 and is expected to sell a further 25 planes to lessor Castlelake LP by the third quarter of this year.

    Given this, Yap explained that together with other existing operating lease aircraft, AirAsia is expected to capitalise RM11.8 billion worth of borrowings related to the operating leases in financial year 2019, effectively bringing back to the balance sheet what had previously been off-balance sheet.

    “The impact would be to raise reported gross gearing of 19% in FY18 to 198% on a pro forma basis after MFRS 16.

    “The overall impact to P&L (profit and loss) earnings from the above sale and leasebacks (S&LB) is negative because AirAsia would have to pay for the lessors’ profit margin as well as provide for a higher level of maintenance charges based on lessors’ conditions for lease returns, which tend to be strict. The net result would be a squeeze on AirAsia’s profit margins,” he said.

    Yap added that with the squeeze in profitability, AirAsia will experience greater operating leverage from unexpected changes in fuel prices, exchange rates, competitive dynamics, and airport taxes and levies.

  • AirAsia Indonesia Under Pressure From Its Airspace Rivals

    AirAsia Indonesia Under Pressure From Its Airspace Rivals

    Low-cost airline AirAsia appears to be facing increasing pressure from its Indonesian rivals Garuda Indonesia and Lion Air. Skift reporting recently claimed that Indonesia’s largest airline, Lion Air, and Garuda Indonesia had allegedly prevented Indonesia’s largest online travel agencies from listing AirAsia’s cheap Indonesian flights. The two sites were Traveloka and Tiket.com. AirAsia responded by removing its flight listings from Traveloka’s website.

    AirAsia Indonesia President Dendy Kurniawan said:

    We observed through social media messages how customers who enquired about the unavailability of AirAsia flights were recommended by Traveloka to book with other airlines instead.

    Subsequently, AirAsia  met with both Traveloka and Tiket.com but didn’t return comment on the meetings. Skift says an internal source claimed that AirAsia discovered that both travel agencies are under pressure from Lion Air and Garuda to drop AirAsia’s Indonesian routes. And, that the agencies risk losing the flights from the two rivals. A Garuda spokesperson denied the claims.

    High Operating Costs Could be Fuelling the Fight

    Speculation points to AirAsia’s rivals hoping to increase fares to combat high fuel costs. But, AirAsia’s lower prices could prevent them from doing so successfully. Industry experts say the airlines rely on online travel agencies, rather than direct bookings, for custom.

    Domestic flight prices in Indonesia have risen by between 40% and 120%, according to Skift and data from the Indonesia National Air Carrier Association. Skift also says that AirAsia flights don’t seem to be appearing on other websites, and Tiket.com. AirAsia remains committed to its low-price promise and encourages customers to book directly.

    Data from Wonderful Indonesia shows AirAsia carried the most passengers in Indonesia in 2017, at 3.8 million. And, AirAsia carried the most foreign tourists into Indonesia in 2017, at 2.9 million.

    A Political Issue?

    The rising cost of airfare is a campaign issue in Indonesia’s upcoming April general election. One Mile at a Time reported in February that state-owned Garuda was cutting domestic flight prices by 20% at the request of Indonesian Democratic president Joko Widodo. Garuda Indonesia’s CEO said at the time:

    This is in line with the aspirations of Indonesians, a number of national industry associations, and the (wishes of) the president of Indonesia, who wants a reduction in flight prices to support economic growth, especially in the tourism sector.

    In addition, Garuda Indonesia has reported losses over recent years. Political pressure is added to state-owned Garuda to turn a profit and remain competitive.

    AirAsia issued a statement in March reaffirming its low prices, adding that prices include 15kg free baggage and the passenger service charge for domestic Indonesian travelers. AirAsia Group’s head of communications, Audrey Progastama Petriny, says:

    While our withdrawal from Traveloka has not significantly impacted our sales, it does affect the traveling public as there are now fewer options to choose from on the online travel agency.

    Also, Traveloka called the withdrawal of AirAsia flights a “setback” for its value proposition to provide the widest range of offerings.

    To date, the figures point to AirAsia’s low-price strategy allowing it to dominate the market in Indonesia. And so far, the pressure from its Indonesian airspace rivals doesn’t appear to be impacting sales. Savvy consumers could be increasingly booking directly. AirAsia says its website is seeing a 50-60 percent increase in traffic.

    That said, just days ago Indonesia raised its price floor on over 1,000 domestic flights from 30% to 35%.  This in a direct move to protect Indonesia’s national airlines from rising fuel and operating costs.

  • AirAsia receives highest number of air traffic rights from Mavcom

    AirAsia receives highest number of air traffic rights from Mavcom

    Airasia received the highest number of approvals from the Malaysian Aviation Commission (Mavcom) for Air Traffic Rights (ATR) with 26 allocations, followed by Malindo Air with 15 allocations.

    This was revealed in an update release from Mavcom for the Commissions’ allocation of ATR to Malaysia’s local carriers for the period of Jan 1 to march 31, 2019.

    One hundred percent of Air Traffic Rights (ATR) applications by Malaysia’s local carriers for the period of Jan 1 to March 31, 2019 were approved by MAVCOM, with 53 allocations in total. Of these, 52 ATR applications were approved in full while one application was approved partially.

    As reference, for the year 2018, a total of 205 ATR were issued. AirAsia Group was recorded as the highest recipient with 98 ATR allocated, followed by Malindo Air with 52.

    Of the 53 applications, 32.1 per cent were for domestic routes while 67.9 per cent was for international routes. Mavcom approved ATRs for 17 domestic routes, 13 for routes to Asean destinations, 11 for destinations in China, two for destinations in India, five for destinations in Australasia and five for other Asian destinations.

    Breaking down the numbers further, a total of 26 international ATR were issued for flights originating from Kuala Lumpur International Airport, three for Kota Kinabalu International

    Airport, one each for Penang International Airport and Senai International Airport and five for other airports in Malaysia.

    In addition, 20 ATR that were previously approved by Mavcom were not utilised by the ATR recipient and were returned to the Commission during the period of Jan 1 to March 31, 2019.

    The highest number of unused ATR returned to the Commission was from the AirAsia Group with 13, followed by Malindo Air with five.

    “In allocating ATR, the Commission undertakes a thorough analysis, taking into consideration multiple aspects in order to facilitate orderly growth, competition and consumer choice over the long term as well as the prevention of consumer inconvenience,” Mavcom executive chairman Dr. Nungsari Ahmad Radhi said in a statement.

  • Lion Air to reduce Ticket Prices From April

    Lion Air to reduce Ticket Prices From April

    Airlines under the Lion Air group, namely Lion Air, Wings Air and Batik Air, operate with reduced airfares on all routes starting Saturday.

    “The reduction in ticket prices is Lion Air group’s answer to challenges and opportunities in the travel business, and aims to accommodate demand for air travel while improving flight operations,” Lion Air spokesman Danang Mandala Prihantoro said in a release on Saturday.

    He went on to say that Lion Air was striving to provide convenience for passengers while prioritizing safety and comfort.

    Lion Air tickets with the new lower fares can be reserved through all travel agents and Lion Air’s website.

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  • Nam Air to lure millennials with boutique airline

    Nam Air to lure millennials with boutique airline

    Nam Air, a subsidiary of Sriwijaya Group, has announced a plan to apply the boutique airline concept, which mainly focuses on lifestyle branding.

    The carrier aims to make itself more appealing for customers of the millennial generation by delivering what it refers to as a “unique concept that is more masculine”.

    Nam Air director Asa Perkasa said passengers would experience the new concept even prior to their departure, and it would continue until their arrival at an airport. “There will be a number of changes, starting from our style to our products,” said Asa in an official statement. “But it will still have an Indonesian touch.”

    Asa described millennials as a promising target group, as they made up a large portion of the market and medium-service airlines were challenged to cater to their needs.

    Entering its fifth year of operation, Nam Air plans to change its internal operations as well. “We plan to apply the millennial lifestyle to our internal work pattern, from our outfits and offices to our business processes,” said Asa. “We’ll provide training for all of our employees to keep up with market trends.”

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  • AirAsia prepares to fly to Japan starting in July

    AirAsia prepares to fly to Japan starting in July

    Budget carrier AirAsia Philippines is launching its first flights to Japan on July 1 this year. The carrier, a unit of Malaysia’s AirAsia Berhad, said in a statement over the weekend that it would link its Manila hub to Osaka, paving the way for direct flights to Japan.

    “The launch of direct flights between the Philippines and Japan is a milestone occasion, and we’re excited to connect our capital, Manila, with Osaka,” said AirAsia Philippines President and CEO Dexter Comendador.

    “We are also excited to welcome guests from Osaka and its neighboring regions to the Philippines. This international route will contribute to the government’s target of 8.2 million visitors this year,” he added.

    Similar to the launch of other new routes, the budget airline said it would offer promotional fares at P1,990 for a one way ticket.

    For the whole of 2018, AirAsia Philippines carried 6.87 million passengers, a gain of 30 percent.

    Capacity for the year also rose 34 percent as it increased its fleet of Airbus A320s to 22 planes in 2018 versus 17 aircraft the previous year.

    AirAsia Philippines was established in 2012 with a fleet of two A320s operating out of Clark International Airport.

    Since then, it has opened new hubs, including Manila’s Ninoy Aquino International Airport and Mactan Cebu International Airport.

    At present, it flies to 13 international destinations from Manila in the Philippines, including Kuala Lumpur, Kota Kinabalu, Bangkok, Bali, Seoul, Taipei, Kaohsiung, Shanghai, Guangzhou, Shenzhen, Hong Kong, Macau and Ho Chi Minh City.

     

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  • How founder’s distaste for buying drove AirAsia’s growth

    How founder’s distaste for buying drove AirAsia’s growth

    AirAsia, the region’s biggest budget airline, said it prefers to pursue organic growth instead of expansion through acquisitions, partly explaining why it declined to buy Hong Kong’s sole low-cost carrier Hong Kong Express Airways (HK Express). Cathay Pacific Airways, Hong Kong’s flagship premium carrier, this week offered HK$4.93 billion (S$850 million) to buy its budget competitor from the indebted HNA Group. AirAsia looked at the proposal to buy HK Express and its full-service sibling Hong Kong Airlines, declining to acquire either, said founder Tony Fernandes.

    “My philosophy has been organic growth,” Fernandes said in an interview with South China Morning Post during Credit Suisse’s Asia Investment Conference in Hong Kong. “I generally don’t believe in acquisition because it comes with a lot of inherent issues. When you import through acquisition, it comes at a risk, so it’s not my preference.

    Fernandes’ approach illustrates how he turned the Kuala Lumpur-based airline from a near-bankrupt company into Asia’s largest budget carrier in less than two decades, with more than 140 destinations and flying on 320 routes at the lowest unit cost in the global aviation industry.

    Fernandes, who worked for Warner Music Group before striking out on his own, bought AirAsia in December 2001 for a token 1 ringgit, taking on the carrier’s 40 million ringgit (S$15 million at the time) of debt. Within a year, the carrier reported a profit, qualifying for a listing on the Kuala Lumpur Stock Exchange two years later.

    AirAsia’s 2018 revenue rose 9 per cent to 10.6 billion ringgit (US$2.5 billion), while pre-tax profit rose by the same quantum to a record 1.7 billion ringgit. Low-cost, long-haul AirAsia X notched revenue of 4.5 billion ringgit, flat year-on-year, but the 2017’s profit performance turned into a loss of 312 million ringgit.

    The airline and its affiliates flew 73 million passengers last year, a figure that beat even full-service flag carriers in Southeast Asia. AirAsia had made a single acquisition in 18 years, when it bought 49 per cent of Zest Airways for an undisclosed sum to secure a landing slot in the Philippines in 2013. Elsewhere in the region, AirAsia expands its network through joint ventures in seven countries, including Japan, India and Thailand.

    The airline, operating with 21,000 employees with no union representation, wants to steer clear of importing “inherent issues” and excess baggage from taking on another airline, Fernandes said.

    Now AirAsia has a chance to help revive Malaysia Airlines, the very competitor that the low-cost carrier had beaten into the ground. Malaysia’s Premier Mahathir Mohamad broached the idea of either selling or shutting the nation’s flag carrier two weeks ago.

    Malaysia Airlines, now under the ward of the country’s sovereign wealth fund Khazanah Nasional after a 6 billion ringgit capital infusion, “can definitely be turned around,” Fernandes said.

    Still, AirAsia is in no hurry to revive its 2011 share swap plan with the flag carrier, which was vetoed by the government of then-premier Najib Razak.

    “Many people will say that [AirAsia’s] expertise could be used to hurt Malaysia Airlines and benefit AirAsia. There is a genuine interest to help but in this day and age, not everyone will see it that way, ” Fernandes said. “It’s best that we do our own thing, and we’ve got a lot on out plate.”

    Worldwide aviation is booming, where 8.2 billion passengers could take to the sky by 2037, according to a 20-year forecast made in October by the International Air Transport Association (IATA), with the Asia-Pacific region driving the biggest growth.

    Still, not everything is hale and rosy in the region, as intense competition in a price-sensitive travelling weighed on airlines’ bottom lines. Only six of the 20 publicly traded airlines or affiliates in Southeast Asia were in the black, with 19 of them reporting declines in third-quarter profitability compared with a year earlier, according to CAPA Centre for Aviation.

    AirAsia had been approached for help. It has already evaluated and declined buying a stake in Bangkok-based NokAir. AirAsia’s Indonesia unit was also linked to – and denied – the possible purchase of Citilink, the low-cost brand of Indonesia’s flag carrier Garuda.

    “I never say no to any M&A, but it has to be a sexy opportunity to go down that route,” Fernandes said.

    Turning to India, and the troubles associated with Jet Airways, which was saved from near-bankruptcy at the last minute, the Malaysian-owned budget carrier said it was positioning itself for the opportunity to grow if runways slots relinquished come up for sale.

    “India is a prize, but just like with prizes, nothing comes easy. It’s been a lot of hard work,” Fernandes said.

    Expecting runway slots to be freed up, the AirAsia chief added. “We want to [buy] it in the right way. We’re not vultures. There will be a few airlines hoping Jet goes bust and we don’t want anyone to lose their jobs, we want every airline to survive and grow, but if an opportunity arises to take those slots, then for sure.”

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