AirAsia X repositions

We’re sorry, this feature is currently unavailable. We’re working to restore it. Please try again later.

Advertisement

This was published 12 years ago

AirAsia X repositions

New focus ... AirAsia X's Azran Osman-Rani has eyes for Gatwick.

New focus ... AirAsia X's Azran Osman-Rani has eyes for Gatwick.Credit: Jonathan Drake/Bloomberg

The budget airline is manoeuvring to beat Britain's hated passenger tax, reports Clive Dorman.

The re-establishment of competition between London's major airports has prompted long-haul budget carrier Malaysia's AirAsia X to switch its destination in Britain.

According to the Centre for Asia Pacific Aviation, AirAsia X received an "irresistible" offer to move from Stansted to Gatwick airport after the latter cut its normal airline landing charges to attract what is now south-east Asia's biggest airline group.

Loading

Gatwick is owned by an American infrastructure fund after Britain two years ago began unwinding its disastrous decision to sell London's three major airports - Heathrow, Stansted and Gatwick - to a monopoly eventually controlled by the Spanish construction industry giant Ferrovial plc.

AirAsia X's chief executive, Azran Osman-Rani, says Britain's decision to impose the world's highest taxes on travellers also forced the airline's hand.

Britain's hated air passenger duty (APD) - now as high as $130 a head for travellers from Australia - means it is expensive for travellers to connect to other European destinations via London airports. However, Gatwick is nearly twice as big for passenger traffic, compared with Stansted. It is served by 46 airlines, compared with Stansted's 11, and offers AirAsia X a greater range of target customers.

"Unfortunately we have to look forward to even more taxes next year with the European emissions trading scheme," Osman-Rani says. "With that, I think that Stansted loses a big strategic advantage as a hub. That's why our focus has to be more on serving the actual London market - that is, people who are from London or people who want to go direct to London, rather than using a UK port to connect onwards with other places in Europe."

Osman-Rani confirms the airline industry's warning to the British government that the APD will create a "chicken run" of travellers going out of their way to avoid the tax.

Advertisement

"We're already seeing a material percentage of our passengers on the Paris-KL [Kuala Lumpur] flight are UK nationals," he says. "Because that segment is quite price-sensitive, people are saying, 'You know what? I might just hop on the train and get to Paris or take a cheap flight if I can fly out of Paris and save money on the departure tax.'

"So we're seeing Paris growing faster than London because of the taxation regime. That's the problem when governments impose taxes unilaterally. People have alternate choices and they will find a way."

Osman-Rani says AirAsia X's London and Paris services, which are popular with Australians, are still being affected by the global financial crisis.

"[Europe's] consumer market for leisure spending has been hit hard," he says. "Asia with all the growth is a much bigger priority than adding more flights to London. Ultimately we'd like to get it to a double daily service but, when you've got limited capacity, you've got to make choices. I'd rather put the planes in Asia."

Sign up for the Traveller Deals newsletter

Get exclusive travel deals delivered straight to your inbox. Sign up now.

Most viewed on Traveller

Loading