KUALA LUMPUR: Malaysia’s low-cost carrier (LCC), AirAsia is expected to become Southeast Asia’s largest airline in 2019 based on passenger traffic, its aggressive short-haul expansion and new aircraft additions.
CAPA Centre for Aviation chief analyst and Southeast Asia chief representative Brendan Sobie said AirAsia would continue to expand at a rapid pace, reflecting the airline’s track record of having high double-digit growth in the last couple of years.
AirAsia’s operating in Malaysia is set to record double-digit capacity expansion in 2019, as the airline would add up to six aircraft including its first Airbus A321neo.
Adding to that, Sobie said the short haul LCC is planning to deploy the A321neo on high frequency routes, resulting in a 28 per cent seat capacity increase compared to the A320ceo without having to mount additional flights.
“Assuming that Lion Air will not be expanding next year, AirAsia will continue expanding at a similar pace this year for 2019, while carrying more passengers next year. The growth expansion includes more number of passengers being carried, aircraft delivery, and revenue generation,” he told NST Business.
Sobie said AirAsia Malaysia could overtake the Indonesian LCC to become the largest Southeast Asian airline in 2019, citing that the latter’s capacity has been relatively flat this year and the airline is also not expected to pursue significant expansion for next year.
“Passenger’s traffic at Lion has declined since reaching a peak of 36 million in 2015, whereas AirAsia Malaysia’s passenger traffic has increased by nearly 50 per cent since 2014.
“In recent years, the Lion Group has been focusing expansion at its two overseas joint ventures, Malaysia’s Malindo Air and Thai Lion Air, as well as its full service Indonesian subsidiary, Batik Air,” he said.
Further, the airline has been able to regain market share in Malaysia, while keeping up an average growth rate in the broader SEA market with passenger traffic growing between nine per cent and 11 per cent over the past four years.
“Further market share gains are likely in 2019, since Malaysia AirAsia expects similar passenger growth. Malaysia AirAsia’s market share for 2018 will exceed 40 per cent, although the overall growth in Malaysia has slowed to about three per cent but the airline managed to chalk up 11 per cent passenger growth in the first three quarters of 2018,” he added.
Sobie said the airline has benefited from capacity reductions at Malindo and Malaysia Airlines, noting that AirAsia will account for nearly 55 per cent of all passenger traffic in Malaysia this year.
He said this includes eight per cent market share for Malaysian long haul LCC, AirAsia X and about five per cent share for the group’s overseas affiliates.
Sobie said AirAsia’s Malaysia operation has been enjoying resurgence in its domestic market, driven by its double-digit domestic capacity expansion.
The airline currently secures about 60 per cent market share of domestic capacity in Malaysia.
“It currently operates 37 domestic routes. It has launched four domestic routes including Kuantan and Ipoh this year and increased frequencies on 29 of the 33 existing routes,” he said.
Sobie pointed out that AirAsia’s Malaysia is likely to add new secondary destinations including Silangit and Phu Quoc, but ruled that the airline is disciplined in working with airports, local governments and tourism authorities.
In summary, Sobie said Malaysia AirAsia has expanded its in-service fleet by 10 aircraft this year, enabling the airline to grow seat capacity by more than 15 per cent.
“AirAsia Malaysia has launched 12 new routes and five new destinations (two domestic and three international) this year, while adding frequencies on 45 existing routes,” he said.
Having initially operated two second-hand B737-300s in domestic market, AirAsia Malaysia became Malaysia’s first LCC in SEA in late 2011.
The airline became a group in 2003, when AirAsia Thailand launched its operations, followed by AirAsia Indonesia in 2005, AirAsia Philippines and AirAsia Japan in 2012 and AirAsia India in 2014.
Sobie said AirAsia Malaysia is the largest airline among the eight airlines that currently operating under the AirAsia brand, citing that the airline has consistently been the most profitable of all the airlines in the AirAsia portfolio.
“In third-quarter 2018, AirAsia Malaysia was the only AirAsia-branded airline to post a profit. However, its operating profit fell 48 per cent due to higher fuel costs,” he said.
Sobie said AirAsia Malaysia operates an all A320 fleet consisting of 71 A320ceos (180 seats) and 23 A320neos (186 seats) and this will exceed 30 million annual passengers for the first time this year.
AirAsia Malaysia is the second largest airline in SEA after Lion Air, based on annual passenger numbers and current seat capacity. It is also the fourth largest airline in the region based on fleet size of about 95 aircaft.