KUCHING: AirAsia Bhd’s (AirAsia) is unfazed with the increase in competition and is set to bring in10 new aircraft by end of 2013, boosting the carrier’s capacity by 13 per cent.
According to a research report from OSK Research Sdn Bhd (OSK Research), the entry of Malindo Airways would not pose a threat to AirAsia’s expansion plans as it had been pushing for early delivery of its aircraft orders.
The research house noted that while passenger yield could take a hit as the new entrant chips away some of its market share, it opined that the impact on AirAsia would be fairly minimal.
“Newcomer Malindo’s small fleet, and thus small scale of operation, would give it little room to offer its fares at steep discounts. Meanwhile AirAsia’s will utilise the increased capacity from 10 new aircraft to boost the frequency of existing routes as well as add new routes,” noted the report.
It was highlighted that the group had secured the financing to buy new aircraft for 2013 at an attractive low interest rate of about three per cent per annum. We expect the 10 new aircraft joining the fleet by end-2013 to boost AirAsia’s capacity by 13 per cent. This is premised on an unchanged load factor of 78 per cent,” stated OSK Research.
“We have incorporated our estimated yield contraction of five sen (or 2.7 per cent year on year) following the entry of Malindo, which we think would only make a minimal impact on AirAsia’s yields in view of the former’s small scale of operation.”
All in, although the research house expected a revenue dip due to lower yields, this did not change the latest estimated financial year 2013 (FY13) earnings, thanks to the airline’s improved economies of scale from operating a bigger fleet.