AirAsia X finally set to start Sydney flights

AFTER four years of lobbying, Malaysia's long-haul budget airline AirAsia X is on the verge of launching flights between Sydney and Kuala Lumpur.

Clearance from Malaysian regulators for AirAsia X, a long-haul offshoot of Asia's largest budget airline, AirAsia, to fly to Sydney came as the airline announced that it would ditch long-haul flights to Europe and India, blaming high jet fuel prices and weakening demand for air travel.

Goldman Sachs analysts downgraded their recommendation on Qantas from "buy" to "hold" yesterday, reflecting a weaker economic outlook, the high fuel prices and lower expectations for premium travel demand.

AirAsia X's chief executive, Azran Osman-Rani, said yesterday he was hopeful of launching flights to Sydney but wanted to ensure all the ground work was done before confirming services.

"Hopefully everything will come together and we will be able to … [launch] it quickly," he said.

Mr Osman-Rani will visit Sydney next week to meet executives from Sydney Airport.

AirAsia X - in which Richard Branson has a 10 per cent stake - has sought for the past four years to fly to Sydney at least twice a day but has been prevented from doing so by the Malaysian government, which has a cornerstone stake in Malaysia Airlines. The latter flies between Sydney and Kuala Lumpur.

But the launch of Scoot, a new budget airline owned by Singapore Airlines, last year put pressure on Malaysian regulators to ease the way for AirAsia X to fly more routes.

"When it came to Sydney, the thing that made a bigger difference was Scoot's announcement [that it will begin daily services between Singapore and Sydney in the middle of this year]," Mr Osman-Rani said.

The arrival of both AirAsia X and Scoot at Australia's biggest airport will intensify pressure on Qantas' budget offshoot, Jetstar. AirAsia X already flies to the Gold Coast, Melbourne and Perth from Kuala Lumpur.

AirAsia X's routes to Australia were profitable in 2010 and last year.