Malaysian long haul carrier Air Asia X has planned to scrap its unprofitable routes to Europe and India. The carrier that is planning to list itself in the near future independently from its low cost pioneer parent Air Asia, is ceasing operations to Mumbai from January 2012, while services to New Delhi, London and Paris will cease in March 2012.
The airline is citing weak European economy/reduced demand, continued high fuel prices and high airport and government taxes including 1 Jan 2012 carbon tax as the reasons for discontinuation of its services.
London and Paris were the only European destinations that the low carrier was flying and this effectively puts an end to its ambitions to fly to those sectors unless the current European crisis subsides or a decision is taken with regards to the EU carbon tax.
The airline plans to focus back on its core strengths in Australasia,China, Taiwan, Japan and Korea and also introduce new routes in these sectors to build up on its strength with taking on current long haul services from Jetstar and soon to be launched Singapore Airlines subsidiary Scoot.
With regards to India, the airlines strategy was flawed right from the start, In markets like India where low-cost carriers also use agents and travel sites to sell their capacity, Air Asia tried to go solo and bombed big time with poor load factors. The airline tried to tackle the market with its usual strategy but forgot that the Indian markets are not the usual low cost markets with the typical low cost facilities and hence suffered from high airport costs and fuel charges.
The airline plans to continue operating its remaining routes in India but with Indian airlines also moving in these sectors it remains to be seen how does it plan to tackle them.