KUALA LUMPUR (Aug 11): AirAsia X Bhd (AAX), the long-haul, low-cost affiliate of AirAsia Bhd, carried 20% fewer passengers and filled a smaller proportion of its seats in the second quarter of this year (2Q15) compared with the year-ago period.

AAX carried 810,944 passengers in the April-June 2015 period, down from 1.02 million a year ago. The airline's passenger load factor dropped 12 percentage points to 68% in 2Q15 from 80% in 2Q14.

Revenue-passenger-kilometres (RPK) for 2Q15 fell 23% to 3.89 billion from 5.04 billion in 2Q14, more than its capacity which fell 4% to 1.21 million from 1.26 million. RPK is a measure of sales volume for passenger traffic.

Available seat kilometers (ASK), which measures a flight's passenger carrying capacity, also dropped by 9% year-on-year to 5.69 billion from 6.27 billion as a result of frequency reduction to Australia as well as the termination of Adelaide and Nagoya services in 1Q15.

In a statement today, AAX said the passenger traffic setback in 2Q15 was in line with the airline’s expectation, as it had stopped its marketing efforts in the first half of 2015 following AirAsia flight QZ8501 incident and the service disruptions  between Melbourne and Bali due to the Bali volcano eruption.

The airline also blamed the "continuous irrational competition" posted by national carrier Malaysia Airlines (MAS) with "beyond cost level fares".

"(This was) further amplified by a series of unforeseen external factors such as the Middle East Respiratory Syndrome (MERS) in South Korea and the massive earthquake in Kathmandu.

"However, impacts from these extraordinary one-off events are expected to diminish very soon," said AAX.

AAX also said the second quarter is traditionally the weakest quarter of the year for passenger traffic and thus, it recorded lower load factor in 2Q15 although it improved its average base fare.

Nevertheless, the airline sees a return of business from 3Q15 onwards as MAS rationalised its aggressive pricing and positive brand image has been reinstated in Australia.

"This is evidenced by promising advance bookings especially from the Australian market and the trend is in line with expectations to override the setbacks of the first half of 2015," it said.

AAX added that it has intensified marketing activities in early April and taken initiatives to restore positive brand image in Australia which are expecting to bear fruit by the second half of the year.

"Meanwhile, excess capacity from this quarter (2Q15), resultant from network consolidation, were deployed to short-term wet lease and charter operations, to maximise revenue in US dollar," it added.

In terms of fleet movement, AAX took delivery of one A330-300 on operating lease in 2Q15, bringing its total number of A330-300s to 26, with four based in Thai AirAsia X and two in Indonesia AirAsia X.

AAX’s share price, which now trades far below its initial public offering price of RM1.25, has fallen 63.2% year-to-date from 54.3 sen on Jan 2, 2015. It closed unchanged at 20 sen today, bringing a market capitalisation of RM829.63 million.

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