AirAsia to shift focus from direct network to hub-and-spoke model

KUALA LUMPUR (Feb 22): AirAsia is planning to transform into a network carrier that operates under the hub-and-spoke model while maintaining its low-cost feature, from its current direct network or point-to-point model that only deals with direct flights between two cities.

AirAsia will leverage on its multi-hub strategy through its presence in Malaysia, Thailand, Indonesia, the Philippines and soon Cambodia, to carry out its low-cost network carrier plan, said the airline’s holding company Capital A Bhd in a statement on Thursday.

In contrast to the direct point-to-point system that budget airlines typically focus on to reduce costs as it involves no stopovers, the hub-and-spoke model is usually adopted by full-service carriers like Emirates, with the main characteristic being centralising flight operations around a major airport hub, with flights scheduled to multiple destinations that act as spokes.

The hub-and-spoke model typically provides increased connectivity as it links smaller cities to a wider choice of destinations through a major hub airport.

AirAsia, meanwhile, plans to resume its Airbus A321neo deliveries this year in line with strong forecast demand. The first post-pandemic delivery is expected in June.

Capital A CEO Tan Sri Tony Fernandes said the airline currently has an orderbook of 647 aircraft with Airbus, comprising 612 aircraft from the A320 family and 35 aircraft from the A330 family.

“With our wide-body Airbus A330 fleet including the introduction of A330neo, we are also looking to expand our medium to long-haul network to the European continent, to cities like London, Paris, Amsterdam, Bratislava, Barcelona, Copenhagen, Africa (Cairo, Nairobi, Cape Town), East Coast North America (New York, Miami, Toronto) via Europe and West Coast North America (San Francisco, Los Angeles, Vancouver) via Japan,” said Fernandes.

Capital A's share price closed unchanged at 71 sen on Thursday, giving it a market capitalisation of RM3.02 billion.