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Farnborough: AirAsia Places Massive Order for 100 Airbus A321neo Aircraft

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Farnborough: AirAsia Places Massive Order for 100 Airbus A321neo Aircraft

Farnborough: AirAsia Places Massive Order for 100 Airbus A321neo Aircraft
July 12
14:04 2016

LONDON — AirAsia placed a firm order for 100 Airbus A321neo aircraft at the Farnborough Airshow Tuesday, increasing its order book of Airbus A320 family aircraft (both ceo and neo) to 441.

The A321neo is expected to seat upwards of 230 passengers in AirAsia’s notorious high density configuration with deliveries of the type commencing before the end of the decade.

The Southeast Asian ultra low cost carrier (ULCC) is the largest customer of Airbus A320 family aircraft, with 188 currently in its fleet spread across subsidiaries in Malaysia (the main airline), Thailand, Indonesia, Philippines, India, and Japan.

The group also has 42 outstanding orders for A320ceos and 300 firm orders for the base.

This order for the A321neo will mark the first time that the core AirAsia ULCC brand has diverged from the single-type model that the carrier co-opted from other successful ULCCs worldwide, though AirAsia Group does have its AirAsia X medium-haul, high-density brand in Malaysia, Thailand, and Indonesia that operates the Airbus A330-300.

A321neo is a competitive necessity for AirAsia


At a press conference announcing the order alongside Airbus’ lead salesman John Leahy and CEO Fabrice Brégier, AirAsia Group’s CEO Tony Fernandes was as ebullient as ever in touting the advantages that the A321neo offers for AirAsia’s business model.

First and foremost, the aircraft at say 235 seats is a CASM/CASK (unit cost) powerhouse. It offers by far the lowest operating costs of any aircraft in the single aisle category, as Fernandes puts it, “Cost per ASK is unmatched with this aircraft [the A321neo]”

“The reality of AirAsia is low cost,” added Fernandes. “That’s how we grew from 200,000 to 60 million passengers.” Indeed as regional rivals such as Singapore Airlines-backed Tigerair, Lion Air, and VietJet Air begin to flex their muscles maintaining a CASK advantage is critical for AirAsia.

As an example, VietJet plans to operate the 737 MAX 200 which has a significant (6-8%) CASM advantage over the base A320neo in AirAsia’s planned 186-seat configuration, while Lion Air has a massive order for both the A321neo (65 frames) and 737 MAX 9 (some proportion of the airline’s order for 201 737 MAX aircraft).

Even the 737 MAX 9, which suffers against the A321neo, has a substantial CASK advantage vis-à-vis the A320neo, is a driving factor in AirAsia’s decision. Obviously not every route can fill 235 seats regularly, but in the rapidly developing markets that AirAsia operates in, there will be more than enough room for 100 A321neos on trunk routes.

This order enables AirAsia to retain its cost leadership on the highest volume short haul routes in Southeast Asia.

A321neo solves airport infrastructure concerns 


Perhaps the under-reported story in global aviation right now is the failure by Asian governments to invest properly in air traffic control and other airport infrastructure. On time performance is abysmal across large Asian hubs, and Asian skies are extremely crowded.

As traffic growth in the region continues unabated, it is likely that gates and/or slots (whether capped or not) will become a limiting factor for airlines. Luckily for AirAsia, the A321neo is the perfect antidote.

As Fernandes noted, “The A321neo will be operated on our most popular routes and especially at airports with infrastructure constraints. It will allow us to bring higher passenger volumes with the same slots, therefore providing immediate benefits to the airports.”

One of the big reasons that we believe the Middle of the Market (MoM) space is so critical for Boeing to get right is precisely this element: infrastructure constraints in the world’s largest air travel market.

Airbus and AirAsia have built a fruitful partnership 


During the press conference, the normally flippant Fernandes broke character in describing his company’s relationship with Airbus: “Air Asia has 200 aircraft, and that is thanks to the support of Airbus… Airbus has been fantastic and I really mean that… We went from the 737 to the A320. It was a big step forward, [and] a pioneering decision… Now, we move on to the neo.”

Of course Fernandes couldn’t conclude his presser without getting in a good-natured jab at Airbus’ boisterous lead pitch man: “John. – you are the Alex Ferguson of Americans. But you don’t know who he is because you’re a dumb American!”

While airline CEOs are masters of public spin, and Fernandes is better at that than most, there was a genuine chord in his comments (and even the good natured ribbing). AirAsia is the company that it is today and the world’s largest customer for next-generation single-aisle airplanes because of the bet that Airbus made in selling an upstart ULCC from Malaysia A320s at a reasonable price point.

This has long been a trait that we have admired in Airbus; they make bets on LCCs or ULCCs that could be future powerhouses. It may not always work out (Skybus for example), but today it panned out to the tune of 100 A321neos ordered and consolidation of Airbus’ dominance of the MoM space.

Chris Sloan reported from Farnborough and Vinay Bhaskara from Boston.
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About Author

Chris Sloan

Chris Sloan

Aviation Journalist, TV Producer, Pursuer of First & Last Flights, Proud Miamian, Intrepid Traveler, and Did I Mention Av-Geek? I've Been Sniffing Jet Fuel Since I was 5, and running the predecessor to airwaysmag.com, Airchive, Since 2003. Now, I Sit in the Right Seat as Co-Pilot of Airways Magazine and airwaysmag.com. My favorite Airlines are National and Braniff, and My favorite Airport is Miami, L-1011 Tristar Lover. My Mantra is Lifted From Delta's Ad Campaign from the 1980s "I Love To Fly And It Shows." chris@airwaysmag.com / @airchive

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