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Air Asia to Open Hong Kong Flights to Langkawi
Hong Kong people will soon be able to fly to Bangkok and Kuala Lumpur for around HK$200 one way - but only if they are prepared to set off from Macau.
Malaysian budget airline AirAsia will start flying from Macau to Bangkok on June 15 and to Kuala Lumpur by the end of June, group chief executive Tony Fernandes announced yesterday. ``We believe this will open up a whole new way of travel, not just to Macau, but to Hong Kong and southern China,'' Fernandes said.
The new cut-price service follows news that Singaporean start-up budget airline Valuair will begin selling tickets on Saturday for a Hong Kong-Singapore service beginning May 7.Macau will be the first destination beyond Southeast Asia for AirAsia, which started international flights only last December. ``Macau saw the potential of AirAsia,'' Fernandes said. ``It's earlier than we had planned. They chased us.''
Fernandes said AirAsia had also talked to Hong Kong, but added: ``I haven't seen a lot of interest from Hong Kong airport.'' Macau International Airport offered AirAsia volume discounts and will also give the airline a break for not using air bridges from the terminal gates, but Fernandes declined to give details. AirAsia is negotiating a tie-up with ferry operator Turbojet to allow passengers to bypass Macau immigration and customs.
Once AirAsia is established in Macau, Fernandes hopes to persuade Macau airport to fulfil its plan to build its own ferry pier. Both AirAsia and Valuair promise to beat Cathay Pacific Airways on fares, but will make rather different sales pitches. AirAsia plans to emulate Richard Branson's Virgin carriers and no-frills Southwest Airlines of the United States.
Valuair is taking a middle path with some frills like JetBlue in the United States. AirAsia is betting Hong Kongers will be willing to take a little more time and spend a bit more cash on a ferry to Macau instead of a train to Chek Lap Kok if they can save on the air fare. The airline will offer an introductory price of 999 baht (HK$197) each way for the bangkok-Macau flights and 99 ringgit (HK$203) for Kuala Lumpur-Macau.Fernandes, a former Virgin and Warner executive, said he was confident the new routes will be immediately profitable. AirAsia will only have to fill about half the seats on its flights to break even. It made a profit of 20 million ringgit in 2003. Fernandes said the company plans to hold an IPO to list in Kuala Lumpur in September.
A source familiar with the company's forecasts put estimated profits this year at 70 million ringgit. Fernandes said he expects to add flights from Macau to the Thai island of Phuket as well as Malaysia's Kota Kinabalu, Kuching, Penang, Langkawi and Miri. ``In due course, we can do a million passengers a year out of Macau,'' he said. AirAsia has adopted the strategy of offering services to airports a bit removed, or over a border, from its target markets to take advantage of lower airport charges.
AirAsia will initially operate a once-daily service out of Macau, at midday for Bangkok and late night or early morning for Kuala Lumpur. Much like traditional airlines, AirAsia will offer a range of fares on each flight but maximum will be US$120 (HK$936) each way. Cathay offers discounted tickets from Hong Kong to Bangkok priced from HK$1,850 roundtrip and to Kuala Lumpur from HK$2,250 on its website.
Passengers on AirAsia, which flies Boeing 737-300 jets that average 10 years in age, can carry 15 kg of baggage free. AirAsia offers no free food or drinks on its flights. Valuair, founded by a former Singapore Airlines executive, will offer hot meals and free coffee and tea. Valuair, which first takes to the air on May 5 with Singapore-Bangkok flights, will use new Airbus A320 jets. Tickets will cost S$300 (HK$1,382) for a round trip during May.
Hong Kong 10/9/2004
