AirAsia outlook marred by intensifying competition, continued losses at new affiliates

The only three profitable affiliates for the airline currently are AirAsia Malaysia, Thai AirAsia, Indonesia AirAsia

AirAsia faces a potentially challenging 2013 as it accelerates expansion in its three core markets as part of an attempt to fight off intensifying competition within Southeast Asia, says latest report compiled by Centre for Asia Pacific Aviation.

The group will continue to incur losses at the two affiliates it launched during 2012, viz Philippines and Japan, and will incur start-up costs for its new joint venture in India, it says.

The AirAsia Group plans to focus on growth in 2013 at the three affiliates which are profitable – AirAsia Malaysia, Thai AirAsia and Indonesia AirAsia.

This established trio of LCCs, all of which are now at least seven years old, will take a record 25 aircraft in 2013 taking the total to 138 A320s, representing 22% fleet growth.
AirAsia Philippines, AirAsia Japan and AirAsia India are only expected to take about seven A320s in 2013, a surprisingly small figure for the Philippine and Japanese affiliates given they have not yet reached initial economies of scale.

The group is waiting for AirAsia Philippines and AirAsia Japan to move into the black, which could take a few years, before pursuing more ambitious expansions.