KUALA LUMPUR (May 4): AirAsia Bhd said it is terminating its Bali-Kota Kinabalu route from June 23 due to “stagnant market growth”.

“We worked hard to make the route connecting Kota Kinabalu [KK] and Bali a success, offering continuous low fares in addition to substantial marketing and advertising initiatives.

“However, stagnant market growth has unfortunately impacted the operation of this route and revenues are insufficient to offset the costs,” said chief executive officer Aireen Omar.

She added that AirAsia’s operational costs have also increased “quite substantially” at the Kota Kinabalu International Airport’s Terminal 1.

The budget airline had been forced to move its operation from the airport’s Terminal 2 to Terminal 1 in December last year.

Aireen stressed that a dedicated low-cost carriers’ (LCC) facility in Kota Kinabalu “is inevitable”.

“It is our ambition to make Kota Kinabalu into a regional hub where we can further grow our connectivity and continue to increase our fleet as we forecast 12 million passenger arrivals and departures into Kota Kinabalu per annum by year 2021.

“We can do this successfully, with a dedicated LCC terminal at Kota Kinabalu,” she said.   

AirAsia shares gained four sen or 2.09% to RM1.95 in late afternoon trading, valuing the company at RM5.4 billion. The counter has advanced more than 51% year-to-date.