Apr 19, 2014, 6:13 pm (BST)
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AirAsia seen riding out unfamiliar rough patch
 
KUALA LUMPUR, March 7 (BSS/AFP) - After a decade of unbroken success, expansion and accolades, recent events have brought budget airline pioneer AirAsia and its flamboyant boss Tony Fernandes down a little closer to earth.

Fernandes, who built AirAsia into one of aviation's biggest
successes, will this month cease unprofitable London and Paris
routes served by long-haul unit AirAsia X in the first step back
for his fast-growing low-cost network.

Malaysia-based AirAsia's 2011 profits were halved to $186
million due to rising fuel costs and global uncertainty,
competitors are proliferating, and the company faces allegations
of poor service and deceptive practices.

But despite the unfamiliar negative news, the route pullback
and a resulting refocusing on Asia could leave Fernandes's empire
even stronger, more focused, and still a step ahead of its
competition, analysts said.

"Their prospects remain very strong," said Shukor Yusof, an
aviation analyst with Standard & Poor's in Singapore, citing
continued healthy forward bookings and effective management.

"It is still the leading low-cost carrier in this part of
the world and will be for some time yet."

Fernandes, 47, took over near-dead AirAsia in 2001 and, with
his motto "Now everyone can fly," built it into Asia's largest
no-frills carrier, tapping into the wanderlust of the region's
emerging middle class.

Routes spread quickly in Southeast Asia and the 2007 launch
of AirAsia X extended the reach to China, India and later Europe.

But the days of global expansion seem over, for now. Besides
London and Paris, Mumbai routes were chopped in January and Delhi
flights stop this month.

Analysts said the group, which currently serves about 80
cities worldwide in more than 20 countries, appeared to have
discovered the limits of the budget airline model.

"What AirAsia X has found out is that once flights get up to
nine, ten hours or more, you struggle to make money with the low-
cost model (due to fuel costs and the need for enhanced passenger
services)," said Brendan Sobie of the Centre for Asia Pacific
Aviation.

The European foray was useful for marketing.

Fernandes, who already owned the Lotus -- now renamed
Caterham -- Formula One team, bought English Premier League team
Queens Park Rangers last year, allowing him to emblazon AirAsia's
logo across player jerseys.
 
 
 
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