Jetstar faces new challenge on key routes

Malaysian long-haul airline AirAsia X intends to boost flights to Sydney and Melbourne faster than originally planned with frequencies to both cities set to double later this year.

Malaysian long-haul airline AirAsia X intends to boost flights to Sydney and Melbourne faster than originally planned with frequencies to both cities set to double later this year.

The increase in flights will be a boon for passengers searching for cheap fares but a further challenge to Jetstar on its home turf. The greater competition threatens to crimp the earnings of budget airlines, which have boosted capacity on flights to Australia significantly in recent years.

AirAsia X plans to increase services later this year from one to two flights a day to both Sydney and Melbourne, and from nine a week to 14 to Perth.

The long-haul offshoot of AirAsia detailed its plans in an initial prospectus filed with Malaysia's Securities Commission last week. AirAsia X has previously targeted operating twice-daily flights to each of the three Australian cities from Kuala Lumpur by the end of 2014.

AirAsia X also disclosed results for the three months to March, which show Australian routes are still its most profitable but that conditions were tougher than the same quarter in 2012.

The airline's pre-tax profits from Australia fell by 65 per cent to 20.4 million Malaysian ringgit ($6.8 million) for the March quarter, the unaudited accounts showed. Despite the tough competition, the airline said it believed it could "profitably increase frequencies" on 12 of the 14 routes it flies within the Asia-Pacific region to twice a day.

AirAsia X said in the filing that it consistently filled more than 80 per cent of seats on core routes, including those to Sydney and Melbourne, which "signals strong demand that can absorb increased capacity". The increase in capacity on routes to Australia has hinged on the delivery of new planes. Its fleet will be bolstered from 10 to 32 aircraft by 2016.

Apart from plans to boost flights to Sydney, Melbourne and Perth this year, AirAsia X also confirmed that Adelaide was a destination "we may be able to expand" to.

The airline also flies five times a week to the Gold Coast but did not give any hint about whether it planned to alter the number of services it operates there. AirAsia X and its parent company, AirAsia, are in a race with Jetstar and Singapore Airlines' budget offshoot, Scoot - which operates to Australia and China - for scale in Asia.

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