AirAsia is executing a transformative consolidation of its short-haul and long-haul operations to establish a more streamlined, efficient airline group under a unified corporate identity. This move is designed to enhance competitiveness across the ASEAN region and reinforce its position as Asia’s leading low-cost carrier.
AirAsia Aviation Group Limited (AAGL) deputy group chief executive officer (corporate), Farouk Kamal, confirmed that the consolidation plan had been in the pipeline prior to the COVID-19 pandemic, but the global crisis significantly accelerated its implementation.
“The idea of integrating AirAsia and AirAsia X is not new. COVID-19 expedited our timeline. By merging short-haul and long-haul networks, we are now able to cross-subsidise routes and enhance profitability on a network-wide scale,” Farouk said in a recent interview with Business Times.
The integration will see AirAsia X Bhd become the listed parent company, enabling the group to manage route planning more strategically. A long-haul flight from Kazakhstan to Kuala Lumpur could, for instance, be synchronised with a short-haul leg to Bali, creating a seamless and commercially viable travel corridor.
Going forward, all short-haul services under the AirAsia brand will fall under the AirAsia X umbrella and be rebranded to reflect the unified group structure.
Earlier this year, Capital A Bhd CEO Tan Sri Tony Fernandes announced the group’s planned renaming to AirAsia Group. Capital A, currently the parent of both AAGL and AirAsia, has agreed to divest its airline operations to AirAsia X for RM6.8 billion. As part of the transaction, Capital A will receive RM3 billion in AirAsia X shares, with AirAsia X also assuming RM3.83 billion in debt from Capital A.
Farouk confirmed that AAGL’s group CEO, Bo Lingam, will continue to lead the consolidated airline business. The current CEOs of the airline’s national affiliates in Malaysia, Thailand, Cambodia and the Philippines will remain in their existing roles.
Bo stated that the integration aligns with the group’s fleet expansion strategy. AirAsia is scheduled to take delivery of 14 new Airbus A321 aircraft this year, with five already received. The remaining nine units are expected to arrive progressively before year-end.
Unlike many global carriers, AirAsia did not cancel aircraft orders during the pandemic, helping the airline avoid major delays. “Some airlines are facing delays of one to two years. We’re only seeing delays of a month or two, which is manageable,” said Bo, citing the efficiency of AAGL’s single-type fleet strategy with Airbus.
The airline remains committed to growth, supported by an existing order book of 358 A320 family aircraft, including the LR (long-range) and XLR (extra long-range) variants capable of operating up to 10-hour sectors. Farouk highlighted that these aircraft reduce the distinction between short and long-haul routes, offering better management of capacity and seasonality than wide-body A330s.
Beyond Airbus, the group is evaluating alternative aircraft options from Embraer and COMAC for regional and secondary markets. The Embraer E2 and Airbus A220, both seating between 130 to 160 passengers, are under active consideration for point-to-point and underserved routes.
Bo noted that these smaller narrow-body aircraft could enable access to markets in Indonesia, the Philippines, Cambodia, and regional hubs such as Kota Kinabalu. Discussions with multiple manufacturers regarding potential new purchases are currently ongoing.
AirAsia is also implementing a network rationalisation programme to focus on profitability and core markets across ASEAN, India, China and key destinations within Asia. “We’re ceasing routes that no longer make commercial sense. The goal is sustainable growth, not presence for the sake of it,” said Bo.
As part of this optimisation strategy, AirAsia aims to strengthen Kuala Lumpur’s position as a key regional hub. “We’re building a network where KL serves as a convenient transit point to neighbouring destinations such as Indonesia, Cambodia and the Philippines,” Bo explained, adding that most of the adjustments will be finalised in time for the winter schedule.
In March, Business Times reported that AirAsia would cease operations on eight international routes and reduce frequency on four others. According to AeroRoutes, the discontinued routes include Ipoh-Singapore, Kota Kinabalu-Kaohsiung, Kota Kinabalu-Kunming, Kota Kinabalu-Manado, Kota Kinabalu-Ningbo, Kota Kinabalu-Wuhan, Kuala Lumpur-Port Blair, and Penang-Hong Kong. The final flights on these routes occurred between 27 March and 5 May 2024.
Also in March, AirAsia announced the relocation of flights to Sabah and Sarawak from Sultan Abdul Aziz Shah Airport (Subang Airport) to Kuala Lumpur International Airport (KLIA) Terminal 2, effective from 7 April.
-NST
