Air Asia X Case Study

The article explains about the current situation and the future plan of Air Asia X (AAX). Currently, AAX is making profit for the financial year of 2017 but making a lower net profit due to unfavourable exchange rates as compared to the previous year. However, they claim that they have been doing well operationally as their CASK (Cost per Available Seat Kilometre) has decreased. The provision for bad debts of AAX is due to the charter and cargo contracts where the customers agreed to pay a certain amount of money for carrying a certain amount of cargo, but then turned out not to be as expected and this caused the dispute over the amount due. AAX aims to optimize the aircraft utilisation from 14 hours a day to 17 hours a day which they have succeeded and the travel bookings appear solid for 2018.

        AAX is making changes by transferring medium–haul routes from AA and this will add new destinations as well as increase their utilisation of the aircraft. With these changes, AA’s problem with slot constraint at congested airport will be eased and at the same time AAX will grow bigger by getting more passenger revenue in a bigger aircraft. This win-win situation is a fair trade-off for both airlines. Where AAX is currently focusing on winning the market share, AA will have their team to focus on more profitable routes by changing the four-hour flight to AAX.

AAX is reported to add three units of A330s to its fleet on 2018 and the all-economy configuration will be deployed on flights with low business class demand or markets with high labour traffic. AAX also plans to buy more aircrafts every year to meet the demand of the markets. Previously, the problem arouse due to unfocused destination decisions. AAX flew everywhere. Realising this situation makes the team to plan better on deciding the right aircraft for the right destination and the right distance. Last but not least, the article mentions about the non-cooperative airports faced by the AAX, such as KLIA2 in giving them higher landing fees and fuel leakage on the aircraft parking bays at the terminal. These situations affect the operations to be delayed thus hinders their growth.

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