AirAsia, the Malaysian Low-Cost Carrier (LCC) will not operate flights to India and China from Singapore, following a strategic review of its operations, as per a asiaone.com report. Tony Fernandes, CEO, AirAsia said that although Singapore is considered its virtual hub, the "outbound overcapacity" at Changi offers the best yield prospect for regional flights of below three hours. "Routes originating out of Singapore to larger-population countries like China and India tend to be more than five hours. Hence, AirAsia's decision not to proceed with any venture there in the foreseeable future," he stated.
He added, "In terms of new ventures, AirAsia is not shy from exploring new opportunities in new countries, (but) based on our strategic review, the management believes that Singapore is best served as a virtual hub as most of the routes served are from established hubs in the AirAsia network and believes there is an excess of capacity already out of Singapore."
He said that routes less than three hours allowed better revenue returns due to more sectors flown. But, Fernandes observed that being an ASEAN carrier with China and India next door, AirAsia has a market with a population of 3.2 billion people. "We are in an exciting market to be in to build our brand, as penetration of LCCs is very low," he said. "We see the potential of these markets and hence why I am confident our huge aircraft orders will easily meet our capacity needs in the future. Larger passenger demand from these markets will translate to not just passenger revenues but also ancillary revenues," he added.
He pointed out, "In terms of non-ASEAN countries, India is an exciting market and I have been overwhelmed with the developments of the country recently in terms of promoting air travel. We will continue to explore opportunities there but I believe this market offers the most growth potential in terms of travel".