AirAsia X Airlines
Pulls Out Of UK Market Over Emissions Trading Scheme
By Bill Goldston
January 13, 2012 - AirAsia X Airlines, a long haul, low
fare affiliate of AirAsia, announced a realignment of
its network with a focus on its core markets. The move
will see AirAsia X withdrawing services to India (Mumbai
and Delhi) and Europe (Paris, London) from its Kuala
?The continued high jet fuel prices and the weakening
demand for air travel from Europe, brought about by the
current economic situation together with exorbitant
government taxes, have placed cost pressures on
operating long-haul low cost flights between Asia and
Europe, compromising our ability to offer the low fares
AirAsia X is known for.?
?The implementation of the Emissions Trading Scheme and the escalating Air Passenger Duty taxes in UK, which will rise yet again in April 2012 has forced our decision to withdraw our services to Europe.?
is a long-haul, budget airline based in Malaysia. The airline is
operated by AirAsia X Sdn. Bhd.
It commenced operations on 2 November 2007. Its first
service flew from Kuala Lumpur International Airport, Malaysia,
to Gold Coast Airport in Australia. AirAsia X flies to
destinations within Asia, as well as destinations in Oceania and
Europe. The airline operates a fleet of 11 aircraft and has
placed orders for more.
started flights to London in March 2009. At that time, oil
prices were less than US$40/barrel, and have since tripled. With
the Arab Spring unrest of 2011 spilling over to the unrests in
Syria and Iranian oil embargo this year, oil prices are expected
to remain high and crippling the economics of long-haul flights,
where fuel represents over 50% of operating cost.
the European situation is also compounded by a very weak economy
and depressed consumer demand, which has resulted in a reduction
in the number of passengers from Europe on the flights over the
past several months. Flights to Europe have also been burdened
by exorbitant government taxes such as the UK Air Passenger Duty
which will be increased to ?92 per departing economy passenger
and ?184 per departing Premium passenger from 1 April 2012. From
1 January 2012, the European Governments have also imposed an
additional carbon tax under their Emissions Trading Scheme,
which further adds to an already high cost.
The confluence of macro-factors, including high fuel prices, depressed European economy and exorbitant taxes have made it economically impossible to sustain these flights, despite AirAsia X recording load factors of over 80% for its London and Paris flights in 2011. Attempts to increase fares to reflect the higher operating cost recently have shown the price elasticity of travel, with demand falling down adversely.
AirAsia X launched
flights to Mumbai and Delhi in 2010. Structural issues in the Indian
aviation market have made it difficult to operate economically viable
flights. The airport and handling costs in New Delhi and Mumbai are
already more expensive than even airports in Australia, and the
authorities have just approved a massive 280% increase in airport fees
effective April 2012.
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