KUALA LUMPUR (Nov 17): Shares of low-cost carrier AirAsia Bhd-related stocks fell victim to the weakening ringgit in morning trades today. 

“The main reason for AirAsia shares' fall is because of the ringgit,” said an aviation analyst from a research house, declining to be named. 

As of 11.40 a.m., the ringgit was trading at RM4.3885 against the U.S. dollar.

For the past one year, this has been the longest losing streak of AirAsia over the last five working days.  

In addition, the revision in passenger service charges (PSC) for domestic airports from RM6 (without MARCS) to RM11, long haul services which will increase from RM32 to RM50, as well as lower PSC rates for competitors who will see ASEAN PSC equalised at RM35, would impact AirAsia, which could also result in higher competition in ASEAN.

Two days ago, Reuters quoted Phoenix-based (U.S.) Indigo Partners LLC co-founder and managing partner Bill Franke as saying that the Asian region had yet to see a truly low-cost carrier, dismissing efforts by traditional players to meet demand for cheap travel.

“There is no really, true low-cost model in India, China ... You have major flag carriers who try to move downstream (and) by and large, they have been unsuccessful. Sooner or later, the inefficiencies of larger airlines bleed down,” Franke was quoted as saying.

Franke said major network carriers were unable to shed deep-seated cost structures needed to support their wider operations, and struggled to compete successfully as budget carriers, Reuters wrote.

Meanwhile yesterday, low-cost carrier AirAsia Bhd group chief executive officer Tan Sri Tony Fernandes in his latest posting over Twitter, said full service airlines are heading for big losses, as they do not have a coherent strategy.

“Many full service airlines are heading for big losses, as they just don’t have a coherent strategy. (One) can’t be low cost and full service.

“That’s full service airlines in Association of South East Nations (ASEAN). Airlines who try to do all will have painful experience(s) and airlines with more brands also will,” he said this morning.

At 11.40 a.m., shares in AirAsia Bhd fell 2.67% or seven sen at RM2.55.

At the same time, shares in AirAsia X Bhd fell 1.27% or 0.5 sen at 39 sen.

Shares in Malaysia Airports Holdings Bhd menwhile, fell 0.65% or 4 sen at RM6.16.