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How low can the fare go?

Sunday November 23, 2008

EUROFILE, CHOI TUCK WO

AirAsia X is set to launch its London Stansted-Kuala Lumpur route amid rife speculation about how low the fare will be.

WITH 48 hours to the sales launch of AirAsia X’s much-touted London Stansted-Kuala Lumpur route, the burning question has been how much the opening fare would be.

Speculation has been rife of a £300 (RM1,613) return economy fare – or even lower – as against a proposed £350 (RM1,882) following the fall in fuel prices.

What a world away all this is from the hyped-up RM9.99 Kuala Lumpur-Manchester extraordinary deals that got the Malaysian community in Britain all excited last January.

Then again, AirAsia Bhd group CEO Datuk Seri Tony Fernandes is capable of springing a surprise or two during the official announcement of the fare in London on Tuesday.

As the airline’s regional head of commercial Kathleen Tan puts it: “Our opening fare will definitely create a storm."

Declaring that “right now, low air fare is King,” she said their fare would undoubtedly be the most aggressively low, in line with their low fare commitment.

The much-anticipated launch will mark a significant breakthrough for AirAsia X, the long-haul affiliate of AirAsia, as a leading low-cost carrier that serves the most extensive network in South-East Asia./p>

It will also be the first step in realising its European aspirations and strengthening Kuala Lumpur’s position as the biggest low-cost gateway to Asean, Indo-China and Australia.

The London Stansted-Kuala Lumpur sales launch comes hot on the heels of AirAsia X’s inaugural flights to Melbourne and Perth earlier this month.

For the latest route, the airline is expected to procure the Airbus A340-300 that will carry 386 passengers, including 58 in a premium economy cabin to offset the lower-priced economy seats.

Low-Cost Culture

Indeed, AirAsia X’s foray into Europe – long noted for its strong low-cost culture – generated a lot of buzz during last week’s four-day World Travel Market in London.

As expected, there were numerous trade enquiries from European travel agents who were keen to sell the London-KL sector that was expected to kick off in March.

Tan said many of them were anxious to know the targeted sales launch date as well as the type of aircraft and seat configuration.

“Once AirAsia X lands in Stansted, there will be brand recognition when the people see our red planes,” she said of the no-frills airline’s trademark logo “Now Everyone Can Fly Xtra Long”.

The latest route is likely to work in the airline’s favour following MAS’ reduction of its London Heathrow-Kuala Lumpur twice daily flights to once recently.

With the current depressing market, the airline’s debut appearance at the global travel market received an overwhelming response.

“We couldn’t have arrived in London at a better time,” said Tan in reference to many corporate businesses down trading to find alternative air travel.

In fact, Tourism Minister Datuk Seri Azalina Othman Said had recognised that low-cost travel could help to stimulate and open up new market segments, especially during the economic crisis.

She had driven home the message that budget airlines such as AirAsia and Firefly played a crucial role under the government’s efforts to encourage budget travelling.

Brand Recognition

Despite the economic uncertainty, AirAsia appears to be pressing ahead with its expansion plans. It was reportedly close to finalising a deal worth close to RM3.5bil to fund the purchase of 37 new aircraft over the next two years.

A firm believer of long-term brand investments, it has since 2005 signed sponsorship deals with Manchester United, EPL Referees and the AT&T Williams F1 Racing team.

Getting into brand sponsorship of these high-profile sports and brands has enabled the airline to reach millions of fans via sports marketing where football has a huge following in Europe.

Tan remained upbeat about AirAsia X’s branding among Europeans, who had long been attracted to the appeal of exotic Asia.

On the airline’s “See the best of Asia with us from £5” deals that were promoted at the fair, she said the response had been tremendously positive.

She said they were aimed at introducing the airline’s extensive network in Asia to Europe where low-cost travel was a big concept.

“We’re confident of helping to shape the dynamics of travel to Asia, especially among the younger Internet-savvy generation and the hugely new target of baby boomers,” she added.

There’s no doubt the airline’s participation at the fair helped to introduce and promote the airline’s network, product and services to the European travel trade market.

And AirAsia appears to have succeeded not just in reinforcing its brand recognition but also in engaging the travel industry with an alternative choice of air connection to Asean and beyond, China and Australia.

Choi Tuck Wo is Editor, European Union Bureau, based in London

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