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May 15, 2017

AirAsia gets to the starting line in quest for China low cost carrier riches

AirAsia may have reached page one of a new chapter in the Asia-Pacific low cost carrier Hunger Games

Zhengzhou: Breath deeply and die sooner

There is nothing more difficult in the airline game than setting up and then defending and growing a transborder low cost airline franchise in Asia, and within that hemisphere, the hardest place to do it may be China.

Today in Beijing however, the AirAsia juggernaut reached the starting line for a venture to be based in Zhengzhou, the capital of Henan province in central China.

AirAsia Berhad signed a memorandum of understanding or MoU with Everbright and Henan Government Working Group to establish a low-cost carrier (LCC) in China.

The deal includes doing things some large western LCCs variously outsource, or avoid getting involved in. AirAsia (China) will invest in aviation infrastructure, including a dedicated LCC terminal at Zhengzhou airport and an aviation academy to train pilots, crew and engineers, as well as maintenance, repair and overhaul (MRO) facilities to service aircraft.

The Malaysia headquartered based low cost brand already has AirAsia entities flying on air operating licences issued in India, Thailand, Indonesia, Japan and the Philippines. (It also has long haul wide-body entities branded AirAsia X flying from Malaysia, Thailand and Indonesia.).

Zhengzhou is a severely environmentally degraded city with some of the worst recorded air quality in China. Those made prosperous by its rise can already escape via high speed rail to Beijing, Shanghai and Wuhan and associated centres on services that are likely to provide major convenience as well as price competition to a low cost carrier. Thus the home market may be a tricky one to win for AirAsia (China), but the carrier and its backers would have much more in mind than city pairs involving only Zhengzhou.

AirAsia’s competitors in the Asia-Pacific are the Qantas controlled Jetstar franchise (Singapore, Japan and Vietnam)  as well as the Jetstar Australia and NZ operations, the Singapore Airlines Scoot and Tigerair networks (as well one day perhaps, the limited operations of the Virgin Australia owned Tigerair division), Indonesia’s Lion group, and Cebu Pacific, in the Philippines.  With hindsight, none have ever come close to realising benefits for their owners in anything like the time frames anticipated by the financial analysts egging them on.

A new chapter in the Asia-Pacific low cost carrier Hunger Games may be about to be written.

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7 comments

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7 thoughts on “AirAsia gets to the starting line in quest for China low cost carrier riches

  1. comet

    The crash of AirAsia Flight 8501 in December 2014 doesn’t seem to have slowed down the AirAsia juggernaut.

    1. Creeper

      Because when that accident occurred they were attempting to shift blame to the weather and the manufacturer. First impressions stick with most people. The CEO was fronting the media and very open/compassionate ‘We will get to the bottom of this’. Most well trained pilots had already got to the bottom of it, poorly trained crew in a bottom feeding operation. It was only a matter of time.

      Then the reports released 2 years later and nobody cares or remembers.

      Still amazed CASA did not ban all operations when they racked up half a dozen investigations in this country. I’d love to know what they have covered up in their own corrupt nations.

      1. Giant Bird

        Casa will not ban foreign airlines, investigate for other than serious breaches or discipline them as the politicians will not let them. According to what I have heard from CASA employees themselves. It has been up to Air Services to put what restrictions they can on how these cow boys can operate in a practical day to day way. Like no visual approaches.

        1. Dan Dair

          Giant Bird,
          “no visual approaches”
          Does that mean they make them close their eyes & hope for the best…….? (“Luke, Luke…… Use the Force, Luke.!!”)
          Seems like business as usual then.?

  2. Tango

    While Air Asia is not an operation I would fly with, there have been a number of recent crashes, most were not LCC or Air Asia types.

    In the famous AF447, MH losses (however you want to characterize those) quite a number of US muck ups including a UPS crash, Asiana which is not noted as a crud outfit.

    And just out of curiosity, the Air in Beijing seems to be as bad as it gets, is that really an escape?

  3. Ben Sandilands

    While both AirAsia and AirAsia X could have been sanctioned or even suspended from flying to Australia for various incidents that were investigated by the ATSB, there were also abundant grounds for similar actions to have been taken against Jetstar.

    In particular, this incident in Singapore.
    https://blogs.crikey.com.au/planetalking/2012/04/19/jetstar-pilot-txting-stuff-up-uncovered-in-atsb-inquiry/

    Note that this is a damaged file, but I think the basic text survived IT ‘improvement’.
    There have been so many things wrong with the conduct of various Jetstar flights in the past it is surprising no action was taken against the airline by other regulators. This is the more so after Tiger when fully owned by Singaporean interests was grounded for a serious safety breach in 2011 that compared to the severity of lapses in Jetstar.
    The EU at one stage banned some Asia based carriers, including for political show, some that didn’t even have jets that could viably fly to European cities. This was despite the atrocious record of Air France, including some incidents in the same time frame as AF447, that were documented by the French safety investigator, the BEA.

    1. Dan Dair

      Ben,
      I agree with your sentiment,
      I thought something similar regarding Giant Bird’s earlier post.?

      Whilst it’s easy to look at everyone else and other nations & point accusing fingers, it can sometimes be difficult to notice the stuff that might be under your own nose.?

      Perhaps that’s actually the real reason behind Giant Bird’s assertion that “Casa will not ban foreign airlines, investigate for other than serious breaches or discipline….”
      Maybe they’ve got a reciprocal arrangement with other regional Aviation Safety Organisations, to scratch eachothers back, or maybe, to not scratch eachother where it hurts.?