Chinese market strategic to AirAsia expansion

Corporate February 26, 2014 00:00

By Sathapat Phaethong
Tianjin, C

4,783 Viewed

Plan for network expansion, extension of AirAsia X's reach

AirAsia believes the Chinese market is an important part of Asia’s largest low-cost carrier’s expansion plans. 
“The huge potential of this market is its population base, and it’s a growing market as well,” chief executive officer Aireen Omar said yesterday during a media trip to Airbus’ final assembly line in Tianjin. 
Close to 20 per cent of the airline’s revenue comes from China, which is a small percentage. The market is served by AirAsia from Malaysia, Thailand, Indonesia and soon from the Philippines. 
The network that the airline has built will improve connectivity to China from the Southeast Asia, she said.
The group’s plan is not only to make AirAsia’s network even bigger in Malaysia, Thailand, Indonesia and the Philippines, but also to extend the reach of AirAsia X, its long-haul affiliate. 
“What we will do is ensure that we leverage and make use of each other’s routes and network and strengthen our hubs in this region and work well together to build the network in order to facilitate affordable low fares for our guests so that they can always afford to fly within the network in Southeast Asia,” she said.
The Airbus A320 is the only aircraft in its fleet as it fits with its business model to fly to destinations of up to four hours. 
“It is really important to have a single type of aircraft to reach a certain commonality across the whole group so that we can improve our unit cost because we’ve reached optimum economies of scale by doing so,” she said. 
Of 475 A320 planes on order, 143 have been delivered, including one from Tianjin. There is a possibility of getting more aircraft from the plant although the big order was based on Airbus’ facilities in Europe. 
Andreas Ockel, general manager of the Tianjin facility, said it was set up to showcase the industry cooperation between Airbus and China, so French aircraft company can increase its profile in the Chinese market. 
“Our production that we have here has very much  [helped] the business to grow. We produced 46 aircraft last year, and that was the contribution to the overall 133 aircraft that we delivered into China,” he said. 
He told The Nation that the Tianjin facility was now supplying 12 Chinese airlines. AirAsia is the first and only international airline to be served from the facility.
Omar said operational liability was 100 per cent, as the aircraft here were assembled and deliver-ed to the same standards as in Europe. 
Tianjin is the third final assembly line for Airbus single-aisle aircraft, after Toulouse in France and Hamburg in Germany. It is therefore also the first outside Europe.