AirAsia Hopes Malaysia and India Government’s Agreed to ‘Open Skies’ for India

Malaysian and Indian governments will have a meeting to discuss bilateral cooperation between the two countries. AirAsia hopes bilateral meetings would approve the policy of ‘Open Skies’ for India.

AirAisa senior executives on the sidelines of the launch of Kuala Lumpur-Delhi flight, saying “we support the existence of an agreement between Malaysia and India for the courses ‘Open Skies’ for India, because India is one market that has considerable potential for aviation services.”

Open skies is an international policy concept which calls for the liberalisation of rules and regulations on international aviation industry especially commercial aviation. The policy allows both sides to fly as many flights to each others countries subject to availability of airport capacity. India already has an open skies policy with the US.

At the launch ceremony, AirAsiaX Chief Executive Officer Azran Osman-Rani said they had exhausted the seats available to them. He added that though they did not have any plans to expand now, they would like to increase the number of flights from Mumbai and make it daily from four times a week now.

AirAsia Net Profit Reported Increase to RM198.9mil on Higher Passenger Load

AirAsia Bhd’s net profit jumped 43% to RM198.9mil for the second quarter ended June 30, from RM139.2mil a year ago, on the back of strong growth in passenger volumes, ancillary income and higher average fares.

Its revenue for the quarter was 26% higher at RM940.6mil from RM747.9mil a year ago. It reported earnings per share of 7.2 sen versus 5.9 sen a year ago.

For the six months ended June 30, AirAsia posted a net profit of RM423mil on revenue of RM1.82bil.

While AirAsia posted a record quarter, Malaysia Airlines posted a net loss of RM535mil due mainly to derivative losses from its fuel hedges. MAS’ revenue stood at RM3.2bil for the quarter ended June 30.

In a teleconference yesterday, group CEO Datuk Seri Tony Fernandes was confident of a strong second half for AirAsia. He sees a tremendous upside for its operations in Thailand and Indonesia while its ancillary income registered massive growth.

“Forward bookings are looking very good, The fourth quarter is traditionally our strongest quarter. To head into our strongest season on the back of a soaring first quarter and a record-breaking second quarter puts us in a fantastic position,” he said.

During the second quarter, the group’s core operating profit for the period was RM168.5mil, a 31% increase over RM128.4mil core operating profit achieved a year ago.

The core operating profit margin for the period was at 17.9%, 0.7 percentage point higher than the 17.2% core operating profit margin achieved a year ago.

“There were no unrealised translation gains in the quarter as gains from the slight strengthening of the ringgit were offset by losses from the change in the fair value of currency derivatives,” it said in the notes accompanying AirAsia’s financial results.

Commenting on its ancillary growth, Fernandes said: “We have actually reached our target of RM40 spending per pax that we set for the last quarter. We have unearthed a gushing revenue stream that can boost the bottom line and also serve as a buffer to rising fuel prices.”

He said baggage fees and AirAsia Cargo were significant contributors to ancillary income for the group.

Meanwhile, AirAsia’s associates Thai AirAsia Co and Indonesia AirAsia recorded good performance in the second quarter.

“Indonesia AirAsia has staged a strong turnaround and we expect greater things,” Fernandes said, adding that passenger volume grew by 10% year-on-year to 947,786 from 863,440 last year.

In the second quarter, Thai AirAsia recorded a net profit of RM4.9mil on revenue of RM267.4mil while Indonesia AirAsia’s net profit rose to RM39.6mil on revenue of RM233.2mil.

During the quarter, the group carried a total of 6.07 million passengers while the load factor increased to 77% from 75% in the same period last year.

Fernandes said its cost per average seat per km (ASK) of 3.62 US cents was mainly due to higher average fuel cost. He said the average fuel price in the second quarter was US$100 per barrel against US$60 a barrel in the same period last year.

However, its revenue ASK grew by 26% to 4.88 US cents in the second quarter from 3.87 US cents perviously. “I think we remained prudent with hedging, but it’s very useful too – that we’re not trying to bet where the market’s going, we’re just trying to match our forward sales with our oil hedging,” he said when asked on its hedging status.

Fernandes said its net gearing was expected to improved after the deferment of aircraft in 2011. “We have deferred seven A320s for 2011 to 2015. We are planning to reduce aircraft deliveries to 10-12 from 2012 onwards,” he said. He expected AirAsia’s gearing ratio to be below two times from 2011 onwards.

On aircraft financing, he said the financing for all the aircraft in 2010 was secured. As of June 30, the group has a total of 85 planes. Of the total, 50 planes are for Malaysian operations, while Thailand has 20 and Indonesia 15.

Fernandes was confident that the group’s cash balance would surpassed RM1bil by year-end. It has a current cash balance of RM858mil.

“We’ll easily surpass that by year-end. We will be getting re-payment from our associates in Thailand and Indonesia.” He added that with the listing of associates, the amount due from associates could potentially be converted to new shares to maintain shareholding in Thai AirAsia and Indonesia AirAsia.

“It is very premature for me to comment. We believe we have a very strong brand in Thailand. We are not duly concerned. We are not focusing on our competitor, but ourselves,” Fernandes said when commenting on Tiger Airways’ venture into Thailand.

Analysts contacted said AirAsia’s strong performance was above their expectation.

“They (AirAsia) did superbly despite the significant rise in the fuel bill due to the higher oil prices. And that’s largely thanks to the strong growth in ancillary income which sort of ‘offset’ the higher fuel expenses. The deferment of aircraft significantly reduces the debt burden, and should contribute positively to earnings via lower financing costs and better yields through higher loads,” an analyst said.

Another analyst said AirAsia’s operational numbers look very good and were slightly above his expectations.

Low-cost Carriers Airlines Take Flight in Asia

New low-cost carriers, with ties to the majors, are offering heavily discounted long-distance routes

The expansion of discount carriers like Southwest Airlines and Europe’s Ryanair has redefined air travel. Yet one area where the low-fare model hasn’t clicked is in long-haul international flying. From Sir Freddie Laker’s pioneering Skytrain of the 1970s to London-based Zoom Airlines, which folded in 2008, carriers that offered long-distance service on the cheap have failed. Despite that sobering record, both Qantas Airways and AirAsia are challenging long-haul companies like Singapore Airlines with a low-fare model.
(more…)

Airlines Promotion “Free Seat” : Airasia Offers a Million Free Tickets

Low-cost carrier AirAsia is giving travellers a reason to cheer – the airline is giving away a million free seats starting today.

The booking period for the “Free Seats” promotion begins today until Sunday, for travel between Jan 3 and May 8 next year.

Customers can choose from 130 destinations to 20 countries including India, Thailand, Indonesia, Laos, Singapore, the Philippines, Vietnam and China.

The promotion offers various “all-in fares” which are applicable for one-way travel inclusive of airport tax, with certain terms and conditions.
(more…)

Continental Airlines Provides Service On-Board Purchases Using Credit And Debit Cards

Continental Airlines announced that its flight crews will begin accepting credit and debit cards exclusively for on-board purchases including Duty-free for all Continental Micronesia flights utilizing new hand-held devices that are more convenient for customers effective April 1.

Continental is making the change in response to feedback from customers and flight crews who expressed interest in using card readers for on-board purchases to eliminate the hassle of fumbling for money and making correct change. The hand-held devices read cards for purchases of alcoholic beverages and headsets during flight in addition to providing valuable sales information to help better manage product inventory.
(more…)

Vietnam Aviation Industry: VietJet Air Plans Joint Venture With AirAsia

“Vietnam is developing its airline industry, and policies have been created to attract capital sources, including foreign investment,” Thanh said in an interview published by Lao Dong (Labor) newspaper on Tuesday.

VietJet Air is one of the private airlines in Vietnam. These airlines will be a joint venture with AirAsia airlines.

According to Vietnam Airlines, AirAsia’s acquisition of 30 per cent stake in Air local VietJet last month just moved to help foreign airlines offer domestic flights, foreign companies are currently prohibited by law from doing. National airlines asked the government to prevent the joint-venture between VietJet Air and AirAsia.

However, the Vietnam Civil Aviation Administration deputy head Lai Xuan Thanh said AirAsia’s move was illegal as the government allows foreign investors to buy shares in a local airline.
(more…)