Airbus Clinches $12.5 bn Order from Air Asia

Malaysian budget carrier AirAsia Berhad has announced a $12.5-billion firm order to buy 100 A321neo aircraft from Airbus on a rainy second day of the 2016 Farnborough air show. The airline co-owns AirAsia India, the Bengaluru-based airline which operates domestic flights to 10 destinations in India.

Addressing a press conference, Tony Fernandes, CEO, AirAsia Group, said that it was the first time that AirAsia has ordered this aircraft. “Low-cost airlines generally operate around 180-seat aircraft. AirAsia’s A320s are 180 seaters, but now we have moved in a new direction. The A321 aircraft can accommodate 240 seats, but AirAsia A321s will have 236 seats for passenger comfort,” said Fernandes.

The A321 induction begins only in 2019.

This happened in the midst of Farnborough air show participants reporting a lower level of deal making than in recent years. Trade experts expect turbulence ahead. They are analysing growing risks to the global economy – from slowing economic growth in China to Britain’s decision to leave the EU. This could dry up orders or even result in some cancellations.

AirAsia Berhad is the largest A320 operator in the world. The budget airline operated 199 Airbus planes as of the end of March 2016 in India, Malaysia, Thailand, Indonesia and the Philippines and is poised to start in Japan. This purchase brings AirAsia’s total orders for A320-series planes from Airbus to 575 aircraft.

It is now under speculation whether the A321s will be brought into the Indian market.

Amar Abrol, CEO, AirAsia India, said: “The option is there to draw on the parent. However, every decision will be evaluated commercially.” For now, AirAsia will concentrate on growing its aircraft fleet to 20 so as to begin international operations. “I already have a board-approved target to get to 20 aircraft. I don’t need to wait for A321 to get to 20 aircraft. In the next 24 months, we will certainly get to 20 aircraft,” said Abrol.

Asian budget carriers, following the growth of AirAsia, have purchased hundreds of jet airplanes from Europe’s Airbus Group SE and its US rival Boeing Co.

  • In 2013, Indonesia’s PT Lion Mentari Airlines ordered 234 planes from Airbus, the carrier’s second purchase contract for more than 200 aircraft.
  • India’s Go Airlines India Pvt. ordered 72 A321neos from Airbus, doubling its total purchases of the model. 
  • In 2015, Indian budget airline IndiGo ordered 250 Airbus planes for $27 billion.
  • India’s Spicejet, too, is poised to place orders for 100 planes in an attempt to catch up with its competitors.

Budget airlines in the Asia-Pacific region are expanding amid a burgeoning travel demand underscoring their ambitious growth plans. The 10-year old budget carrier, IndiGo has become the largest airline in India by market share surpassing everybody. China Southern Airlines Corp. is Asia’s biggest carrier by fleet size, with more than 600 planes.

Air Asia doesn’t want to lag behind and is anticipating that economic growth from India, China and Vietnam will encourage millions of new fliers in Asia – the world’s most populous continent. AirAsia has become a pan-Asian budget airline that has grabbed significant market share from other full-service airlines like Singapore Airlines Ltd. and Malaysia Airlines Ltd.

As per Simon Elsegood, an analyst at CAPA Centre for Aviation in Sydney, the Asia-Pacific is going to account for at least a third of all aircraft demand over the next 20 years based on planemakers’ forecasts. There’s particularly strong demand for intra-regional connectivity in Southeast Asia and North Asia, and then there’s very, very strong demand within China itself for domestic flights.



Curious Flyer Staring at Problem of Plenty

Airfares have become cheaper because of low fuel prices and competition between domestic airlines.

Intense competition among airlines has now become the flyer’s gain; the customer now has plenty of options to chose from.

Travelers become the big winners as battle for the skies heats up.

In 2015, last minute air tickets were nearly 50% costlier as compared to those in 2016. Today, there is an intense competition amidst airlines, excess capacity and lower fuel prices.

Yatra analysed the fares and came out with a conclusion that average fares for travel on all dates between June 29, 2016 and July 4, 2016, when booked on June 28, 2016, were cheaper by up to 50% as compared to fares booked during the same time last year.

“We are seeing a significant drop in airfares across sectors and this can be attributed to a reduction in oil prices by over 20% on a year-on-year basis, as well as a 7-8% increase in passenger capacity by the airlines. The drop in airfares has resulted in strong passenger demand which is up by 22% this year, resulting in increased passenger load factors and improved financial health of the sector as a whole,” Yatra president Sharat Dhall.

Typically, the monsoon season in India is a lean period for airlines as schools open after summer break. To beat the lean season, June to September, and attract more flyers, Indian budget carriers, including GoAir, IndiGo and AirAsia have come up with attractive discounted airfare offers beginning July to September. They have no other option to fill their excess capacity. It may be noted that the break-even point for an airline requires 70-80% passenger load factor. An aircraft flying with its seats just 70% full becomes a big liability for the airline. Not flying is a bigger liability, since even a grounded aircraft demands maintenance expenditure, lease rentals, and finance costs.

As a result, these airlines are seen competing against each other in offering discount schemes during the lean season. The smile returns on the flyer’s face. His range of choices expands and wonders – which flight, which airline, what price ! 

However, the government has revised the ATF prices by 4.9-5.7%. The revised prices of ATF in Delhi now stand at Rs 49,287/kl from Rs 46,729/kl. With this, ATF price has increased by 23% since January 1, 2016 and is now the highest since July 2015. Low ATF cost helped airlines during most of 2015. Now, this steep increase in 2016 will significantly weigh down their earnings.

This is the time when domestic and international travels are slow and in order to encourage leisure travelers to go on a short vacation, airlines have to offer such fares. The discount normally ranges from 15 to 20%.

Almost all low-cost airlines are presently trying to attract passengers by getting into heavy discounting, and this will most likely continue in the coming few months.

GoAir has announced a monsoon bonanza with ticket prices as low as Rs 849 (base fare plus surcharge). Offer started on June 29 and will last till July 2, 2016, and is applicable for travel between July 1 and September 30, 2016.

India’s biggest airline IndiGo has announced a promotional offer with fares starting as low as Rs 1,106 (all inclusive). Booking period is between July 1 and September 30th and is applicable only on domestic routes.

AirAsia India has also launched a promotional offer. It is the exclusive ‘Fly like a Superstar’ promotion. Booking period June 27 – July 3. Travel period between February 1 and April 30, 2017. Fares starting at Rs 786 (all inclusive) for one-way trip to select domestic locations.

Apart from the promotional fares to all domestic destinations in India, low fares are also available to other international cities such as Auckland, Mauritius, Guangzhou, Krabi, Lombok, Ho Chi Minh City, Siem Reap, Penang and many other cities at Rs 2999 one way.

Amar Abrol, CEO, AirAsia India said, “Now everyone can fly like a superstar in and out of India. The excitement around “Kabali” has enabled us to unveil movie-themed activities and we are pleased to offer special promotional fares that will allow AirAsia guests to ‘Fly like a Superstar’ to their favorite destinations in India & beyond.”

Earlier, IndiGo had launched promotional fares starting at Rs 789, all inclusive. On IndiGo’s website, the lowest fare of Rs 1,106 is for the Srinagar to Jammu route, while Delhi to Mumbai Rs 2,749, tickets on Delhi to Lucknow are available at an all-inclusive fare of Rs 1,500 (all-inclusive), Ticket from Ahmedabad to Mumbai costs Rs 1,200 (all-inclusive). IndiGo has not however disclosed the number of seats on offer under the promotional scheme.

“However, there is also a catch here, the discount is on the basic fare and that at times could be low. Finally, the discounts do get sold out early so it is advisable to book early, John Nair, Head, Business Travel, Cox & Kings Ltd said.

Air Asia Offers More Discounts

AirAsia India anniversary sale:

Book domestic flights starting at Rs 899, international at Rs 3,399 !!

The low-cost Malaysia-based budget airlines on 12th June completed two years of its airasiaIndia operations.

In order to celebrate its two years of operations in India, AirAsia India has announced attractive discounts for both domestic and international flights — tickets starting from Rs 899 one way.

The discount service will cover destinations like Bengaluru, Jaipur, Kochi, New Delhi and Pune

An all-inclusive starting fare of Rs 899 for flights to domestic destinations like Bengaluru, Jaipur, Kochi, New Delhi and Pune.

That will surely make the flier excited. The offer on the international flights is about to make him feel even more excited. The promo all-inclusive fare to popular destinations like Bali, Bangkok, Kuala Lumpur, Melbourne, Perth and Singapore starts at Rs 3,399.airasia-hot-sale-a

Promo offers with low fares are a common technique that airlines adopt to increase sales.

The sale will be valid for bookings done till June 19, for travel dates between January and August 2017. We suggest that you plan and book your trip at the earliest.

For hassle-free bookings, visit NC Airways

AirAsia India currently operates flights from its current base in Bengaluru and Delhi to Chandigarh, Goa, Guwahati, Imphal, Jaipur, Kochi, Pune and Visakhapatnam.

Meanwhile, there are more good news for air travelers, the government has announced a slew of measures aimed at making air travel more convenient. For example, excess baggage of up to 5 kg beyond 15 kg will not to be charged at more than Rs 100/- per kg.

In case of flight cancellations announced within 24 hours of departure, compensation amount will be enhanced to upto Rs 10,000/-. Compensation has been significantly enhanced to up to Rs 20,000/- in case of denied boarding due to over-booking.

“Cancellation amount cannot exceed basic fare and there shall be no additional charge to process the refund. Refunds will be applicable on all fares including promo and special fares,” said Civil Aviation Minister Ashok Gajapathi Raju.