Asian budget airline sees delays

By Jonathan Kent
BBC News, Kuala Lumpur

Air Asia wants to offer long-haul tickets from around £40

Travellers keen to use a new long-haul budget carrier linking Europe to Asia will have to wait - following problems at Airbus.

The firm announced that it would start a service between Malaysia and the UK in July, with return tickets costing between $80 and $450 (£41-£231).

But Air Asia X has put the new service on hold - probably until next year, possibly until August 2008.

The reason? A problem described by a spokesman as a "minor technical issue" - no planes.

The airline is hoping to lease wide bodied, high capacity jets for its planned long-haul routes.

"We are looking at the cost structure, the right aircraft," the airline's chief executive Raja Azmi Mohamad told The Edge, a Malaysian business publication.

Unrealistic

But getting the right planes at the right price appears to be proving more problematic that the company thought.

The expectations of being able to start services in July seemed unrealistic given the lack of availability of aircraft Brendan Sobie, deputy editor, Airline Business Magazine

The carrier has been eyeing Boeing's 777 and the A330 model by Airbus.

Mr Azmi lays part of the blame at the door of Airbus.

He believes that delays in the production of the new super jumbo, the A380, has forced airlines to hold onto their 777s and A330s rather than sell them on or lease them out.

But Brendan Sobie, deputy editor of Airline Business Magazine thinks that the problems Airbus has had with the A380 are only a part of the story.

He believes it is also due to a lack of planning on the part of Air Asia X.

"[The delay] is really not surprising at all," said Mr Sobie. "People were asking questions during the January launch."

"The expectations of being able to start services in July seemed unrealistic given the lack of availability of aircraft."

Higher prices

He said airlines are fighting over those planes that are available, particularly in the wide bodied market.

"Demand for wide bodied aircraft has gone up considerably in recent years," he said.

"Boeing and Airbus have not been able to produce enough and there aren't enough aircraft coming 'off-lease' to meet the demand."

The market squeeze has had the almost inevitable effect of pushing up prices.

While full-fare airlines can absorb the extra costs or pass them on to the customer, low cost airlines have less room for manoeuvre.

It appears to have put the skids under Air Asia X, at least for the next few months.

The long-haul airline's older sister Air Asia has managed to avoid such problems.

In the last five years Air Asia has gone from running two planes to 51.

It has received 17 of the 150 Airbus A320s it ordered for its operations around South East Asia and has options to buy another 50.

Big orders like that carry clout and manufacturers tend to give their best customers priority.

But for an airline just starting out, like Air Asia X, it has to queue up with everyone else.