Indonesia AirAsia X will end its flights from Sydney and Melbourne to Bali on September 1, in a move that will frustrate travellers but could benefit rival carriers Jetstar, Virgin Australia, Tigerair Australia and Garuda Indonesia.
"The suspension of these services is part of a network restructuring aimed at improving operational efficiencies at Indonesia AirAsia X," the airline said in a statement.
The AirAsia affiliate began non-stop flights from Melbourne to Bali in March 2015, four months later than it had expected, after delays in receiving Australian regulatory approvals that led many upset customers to seek refunds. It launched Sydney-Bali flights in October 2015, meaning it will have lasted less than a year on the route.
Customers who have already booked the low cost carrier's flights to Bali for dates after the flight cancellations are being offered the opportunity to reroute by Kuala Lumpur, move their flights to an earlier date or receive airline credit or a full refund.
Short-haul arm AirAsia Indonesia, which in December 2014 suffered a crash that killed all 162 people on board a flight from Surabaya to Singapore due to a combination of mechanical failures and pilot errors, will continue flying to Bali from Perth and Darwin.
Indonesia AirAsia X had operated A330 aircraft with 377 seats on its five weekly flights from both Sydney and Melbourne to Bali, meaning its exit will result in a significant decline in non-stop capacity to and from the popular holiday destination.
Indonesia AirAsia X's only route apart from Sydney-Bali and Melbourne-Bali is Jakarta-Jeddah. The carrier's parent company, Malaysia's AirAsia X, last month said it was re-evaluating the loss-making Indonesian airline's future as a result of challenging restrictions imposed by Indonesia's aviation regulator.
Indonesia AirAsia X reported a first-quarter loss of $US4.6 million, down from $US9.4 million the prior year, based on its fleet of two aircraft.
Data from the Bureau of Infrastructure, Transport and Regional Economics shows the carrier filled only around 60 per cent of its seats on flights between Australia and Bali in March, whereas Jetstar filled nearly 80 per cent of seats on the routes.
Tigerair, which took over Virgin's daily Melbourne-Bali flights in March, said it would provide a 20 per cent discount on any fare currently available on the Tigerair website to affected Indonesia AirAsiaX customers if they showed proof of their itinerary for travel beyond September 1.