According to AirAsia and AirAsia X founder Tony Fernandes, Bali is not just good for a holiday, but also for a low cost longer haul airliner hub.

However, the airlines management have not exactly been running around Australia shouting the news from all of the usual places.

Never draw attention to strategically crucial plans, and never bray in public like Qantas CEO Alan Joyce did,  when he apparently mislead shareholders more than two years ago about the offshore low cost premium product puppet carriers he was going to set up in Kuala Lumpur, Singapore, China and anywhere, but apparently not where AirAsia X is quietly going about its business, on our doorstep, in Bali.

However, AirAsia X’s modesty, and determination, has been ‘exposed’ by CAPA.

The CAPA dossier on the Bali strategy has profound implications for Australia’s carriers, and Singapore’s for that matter, as well as Singapore’s airport.  AirAsia, the group, is doing what Jetstar was clearly intending to do for Qantas, by setting up offshore ventures to fly to and from Australia from a lower cost base, rather than serve the market by flying from a higher cost base in Australia and then coming back.

Air Asia X biggest competition at this stage in these endeavours from Indonesia is clearly, Lion Air of Indonesia.

And it does necessitate some ‘huge’ changes at the Denpasar Airport, in facilities and attitudes.

But one of the structural advantages of AirAsia X, apart from the quality of its management, is its singular purpose. AirAsia isn’t distracted by any supposed or declared policy of balancing its ambitions against the needs of a full service carrier investor, as is the case of Jetstar in relation to Qantas, or Tigerair to Singapore Airlines or Virgin Australia, or the yum named duo of Peach and Vanilla in relation to All Nippon Airways.

It’s just a case of (lets just do it) when it comes to developing the low fare model, although it must be acknowledged, this requires a longer term investment in Indonesia in terms of partners and regulatory engagement. AirAsia has time and clarity of purpose working for it.  Qantas has neither, and may even try to sell off all of its amazing business in Asia, which in aggregate at this stage is a black hole swallowing money.

If AirAsia X and AirAsia successfully grow Bali into a longer and shorter haul hub, with high linkages to Australian cities, Qantas/Jetstar and Virgin Australia and ALL will be forced to advance or retreat.

 

Comments are closed.