KUALA LUMPUR (March 14): AirAsia X Bhd's initial schedule of two daily flights from Kuala Lumpur will generate 560,000 annual seats for Melbourne's Avalon Airport, says the Centre for Aviation (CAPA).

"Avalon Airport expects the service to generate approximately 500,000 passengers for Avalon in 2019, driving an approximately 60% increase in total passenger traffic," said the aviation news and data provider in a report on its website.

On Feb 8, AirAsia announced a 10-year deal to move its twice daily Kuala Lumpur-Melbourne flights from Tullamarine to Avalon Airport by year end, upon completion of the new international terminal there.

The budget carrier will be the first international airline operating at Avalon, as the airport has only handled domestic passengers since its launch in 2004 and was served by one airline, Jetstar Airways.

CAPA said AirAsia X could eventually surpass Jetstar as the airport's largest tenant. Avalon is Australia's 15th largest airport and handled 800,000 passengers in 2017.

Avalon Airport CEO Justin Giddings told CAPA TV that AirAsia X's commitment to Avalon and the new international terminal "signals a reinvestment by AirAsia into Australia".

"They have had their ups and downs a little bit, but I was able to convince them that coming into Avalon will give them a really high brand profile, which is something I think they needed at this time," said Giddings.

Melbourne is AirAsia X's largest market in Australia.

Giddings said that in the future Avalon could support AirAsia X services from Bali and Bangkok or Phuket, which would be operated by the airline's affiliates in Indonesia and Thailand.

As at 4pm, AirAsia X's share price was up three sen or 6.51% at 42 sen, translating into a market capitalisation of RM1.72 billion.