Monday, February 01, 2010 Air AsiaX blinks

AirAsia X plans to suspend Kuala Lumpur-Abu Dhabi A340 service from February 21 2010 for “commercial reasons”, citing “underwhelming” demand. The carrier reduced frequency to three times weekly in January 2010. AirAsia X stated it hoped the move was only temporary, with flights up to October 2010 so far canceled, and aims to resume the service with smaller A330 aircraft. "We are not going to be flying, period, to Abu Dhabi until we figure out what’s the right strategy, the right hub, the right aircraft and we’ll probably come back again,” Azran Osman-Rani, CEO.

This move is going to attract all sorts of punditry with one essential message; the Gulf is no place for a long haul LCC. The Gulf is home to airlines with the most grandiose of fleet plans and whose airlines are aimed at offering the industry's highest levels of service. These same airlines do not offer the most transparent financial results and are statelet owned.

The reality is that the UAE used to be the go-go part of the world with Dubai at the top of the pile. Things are rather different now. But those people still living there continue to require low cost labor to do the work of cleaning, building and offering otherwise menial labor. Nations across the Gulf have turned to SE Asia for the low cost labor and flying people between these two regions is going to be the domain of LCCs.

Consequently, we do not count out Air AsiaX yet. The A340 may have been the wrong plane for the task. But their business model is able to provide the market what it needs. The smug smiles at Abu Dhabi with the departure of Air AsiaX may be short lived.

In other news:

• Ryanair looks at Brazil?
  


• Air Seychelles to serve the Falklands?
  


• Qantas trims first class
  


• Asia-Pacific the biggest market - IATA
  

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