Thai AirAsia drops Nay Pyi Taw service

Thai AirAsia (TAA) has pulled out of the route linking the Thai and Myanmar capitals just one month after launch due to subdued travel demand.

The no-frills carrier decided to suspend its daily Bangkok-Nay Pyi Taw service this past Thursday after it became apparent that demand was too sparse to sustain operations, confirming its earlier suspicions about the route’s potential.

TAA saw only its 180-seat A320 jet filled to capacity just ahead of the start of the 27th SEA Games, Southeast Asia’s largest sports event, which was hosted by Myanmar this year.

After that bright start, some flights had only 10 seats occupied, said TAA sources.

Most passengers on the service, which was launched on Nov 28, were Thai athletes, coaches and supporters including the National Olympic Committee of Thailand as well as journalists covering the SEA Games.

TAA executives told the Bangkok Post the airline’s hope that the sports event would act as a catalyst to spur travel demand, especially among leisure travellers, had failed to materialise.

Nay Pyi Taw has so far had little to offer to leisure travellers, the key clientele of low-cost carriers (LCCs) in terms of both tourist attractions and infrastructure, sources said.

Business travellers appear to be the main market for Nay Pyi Taw and the commercial capital Yangon.

TAA’s departure means there is no longer an LCC serving the Bangkok-Nay Pyi Taw route, leaving the full-service airline Bangkok Airways as the sole operator between the two capitals.

Bangkok Airways operates five flights a week between Bangkok and Nay Pyi Taw on an ATR-72 turboprop aircraft with 70 seats.

It offered a supplementary high-capacity service on the route using an Airbus 319 jetliner with 138 seats, all in economy, for the duration of the SEA Games, with four flights a week to cash in on temporary strong demand.

TAA is ramping up its Bangkok-Yangon service from 21 flights a week to 28 from Jan 24.

The budget carrier is also operating a daily flight from its Don Mueang airport base to Mandalay, the other Myanmar city it serves.

Meanwhile, TAA will increase its Bangkok-Siem Reap flight frequency to 14 a week from 10 in response to demand.

It launched a daily service on Oct 1 after Cambodian authorities ended Bangkok Airways’ 16-year monopoly.

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AirAsia X Orders 25 New Airbus Jets

PARIS—Malaysian airline AirAsia 5099. said Wednesday it is buying 25 Airbus A330-300 planes, taking its low-cost model to a new level and stepping up pressure on competitors in southeast Asia.

AirAsia X, the long-haul subsidiary of Kuala Lumpur-based AirAsia, already has 26 A330-300 jets on order and leases another six.

The order, the largest single one to date for this type of aircraft, underscores one of the most aggressive efforts yet to combine long-haul travel with low-cost.

AirAsia’s chief executive, Tony Fernandes, said the combination of AirAsia X and its regional low-cost parent AirAsia will deliver a one-two punch to airlines in the Asia-Pacific region.

The order “puts a flag down in what is uncharted territory,” he said. “It signals our intent to dominate the long-haul, low-cost carrier space.”

Deliveries of the jets will start in 2015 and run through 2019. The extended-range versions of the A330 will allow AirAsia to service nonstop routes to Europe and the U.S.

The order is worth $6 billion, according to the list price of the planes. However, plane manufacturers generally offer discounts on large orders.

Mr. Fernandes said he envisions his group, which started life with just one aircraft six years ago, becoming the equivalent of Dubai-based full-service Emirates Airline, albeit specialized in the low-cost market segment.

“We have bases and hubs in many countries, and potentially we can do much more,” he said.

AirAsia X will be paying for its new A330s with its cash flow plus some debt. It hasn’t decided yet on which engines to use. Mr. Fernandes has said on several occasions that he would like Airbus to equip the A330 with larger engines to deliver greater range.

“I think they are looking at it and evaluating it to see whether it makes sense or not,” he said. AirAsia and AirAsia X operate all-Airbus fleets. It would give Airbus a huge competitive advantage over its U.S. rival, Boeing, he said.

Airbus repeatedly has said it is studying ways to improve its products but isn’t working on any specific project for a larger engine frame.

Airbus is developing a version of its top-selling, single-aisle A320 with a new engine design that airlines are snapping up to take advantage of fuel savings.

Airbus executive Fabrice Brégier said that although AirAsia has well over 600 firm aircraft orders and options outstanding with Airbus, “it will need more.”