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AirAsia plans to open a Gulf hub this year and extend its flight network to a host of European destinations, including London’s Gatwick airport, as the Malaysian budget airline tries to bounce back from pandemic-era financial troubles.
Chief executive Tony Fernandes said he had held talks with government officials from Gulf states at the recent Paris Air Show about setting up a regional hub and was unfazed by the threat of war in the region following the recent conflict between Israel, the US and Iran.
“From there, Europe is [a shorter] distance away,” he told the Financial Times in an interview. “We can then start looking at those kinds of exciting, longer-haul fares, and start taking people around the world through a one-stop and multi-hop strategy.”
Several airlines cancelled flights into the Middle East in the wake of US air strikes on Iranian nuclear sites this month, before the sides agreed a fragile truce.
AirAsia is emerging from a bruising pandemic, when the Kuala Lumpur-headquartered airline was forced to pull out of several markets and was classified as a distressed company by the Malaysian government.
Asia’s budget carriers are enduring a period of intense competition and rising costs, which could be exacerbated by increased fuel prices resulting from the conflict between Israel and Iran.
Last week, the closure was announced of Qantas-owned Jetstar Asia — which has served south-east Asia out of Singapore — with the blame being attributed to an “unsustainable” rise in costs associated with the development of Changi Airport.
Fernandes said increased costs were affecting all airlines and that Jetstar’s closure was also to do with some airports deciding they did not want to receive low-cost carriers.
“I think destinations that decide that they’re premium are missing out on a big market,” he said. “We’re going back to the Ryanair strategy of looking at alternative airports to serve those markets.”
As AirAsia’s primary hub, Kuala Lumpur International Airport sits at the centre of more than 160 destinations served by the airline and its subsidiaries. Fernandes said about 8 per cent of its passengers made connecting flights in its network, a figure he would look to grow.
“Airlines such as ours have just been point to point, but a shift [to a network strategy] could be a very, very profitable part of the business for us,” he said.
AirAsia has not decided which Gulf airport it will use as a hub, but it has been expanding its connections to the region in recent years. Last month, it announced it would add new routes, connecting Kuala Lumpur to Riyadh and Dammam, as well as increasing flights to Jeddah.
Through its long-haul AirAsia X brand, the group briefly operated flights to Gatwick and Stansted in the UK more than a decade ago, along with Paris’s Orly airport, but terminated the routes in 2012.
Under the new strategy, Fernandes said AirAsia would utilise the Middle Eastern hub later this year to fly to cities across Europe, particularly in eastern Europe, as well as secondary cities such as Cologne, Manchester, Glasgow, and Dublin.
He added that a London flight would be AirAsia’s “only big glamour destination” in Europe.
“Gatwick would be my first choice,” he said. “One of the things we’re trying to do is offer customers a chance to use other low-cost carriers when they arrive, and there’s a lot of connectivity at Gatwick.”
Since the pandemic, Fernandes has sought to diversify AirAsia’s operations with a range of businesses, including a fintech super app, an aviation consultancy arm, a logistics business and airline engineering and maintenance services.
Plans to list the non-aviation businesses in New York through a blank-cheque company have stalled, but Fernandes said he was reviving the move, without giving further details.
