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Sunday, October 31, 2010

Why AirAsia is unbeatable among budget airlines

In terms of hurdles, AirAsia has battled government protectionism and political efficiency better than David and Goliath, for the umpteenth time. Using old Subang Airport. Not allowed. New routes such as Sydney. Not allowed. Forced to use higher fee airport. Delays in LCCT. Singapore - KL route protectionist policy. Lucrative Japan and Korea routes - many many hurdles. Even battling oil prices on their own. SARS. Earthquakes and tsunami crisis in Indonesia. Political crises in Thailand.

Today, AirAsia's investors could be really proud. If you hold it that long. I held my shares over 3 years seeing it go from $1.70 down to $1.00 to 90 sen, then up, then down. And finally the last 3 - 4 months, a glorious rally back and over the top of $2.00 to a high of over $2.60. AND beating MAS (Malaysia Airlines) price as well to boot. I could see some parallel to Genting Singapore. Being beaten down to below 90 cents, then now riding over $2.00.

Are there budget airlines to challenge this supremacy? No. Tiger Airlines is plagued with bad service reputation on Australia and now in home turf Singapore as well. JetStar perhaps is powerful from Australia standpoint. It can never grow much further in Asia, where the numbers are. I actually enjoyed flying Jetstar and Virgin Blue in Australia. So I wish them the best too and hope they will operate in years to come. Imagine I had flights from Melbourne to Sydney for $50 AUD. The bus or train cost more plus travel time.

There is a relatively unknown player called Cebu Air. It is supposed to be the second largest budget carrier in Asia.

AirAsia has made very strong roots and foothold in essential markets across the continent. The biggest country in Asean - yes over 10 cities in Indonesia is connected. Big populous country in the world - China and India. The traditional trade partners of a land before airplanes circa the 15th century. Meeting in the middle port of Malacca. And today, the ancient trade routes is meeting centrally again, in KLIA (Kuala Lumpur International Airport) - or more aptly LCCT (Low Cost Carrier Terminal) Malaysia.

And remarkably, the host which is MAHB (Malaysia Airports Holding Berhad) wasn't so thankful to AirAsia for years. Even now. What an irony. Because if AirAsia, the historical price of MAHB had increased from $2.00 to over $4.00 doubling up in 2 years. Just like the middle-man report I wrote on SGX or in general the stock exchange firm, the middle man which is the airport will always gain when there are passengers coming in. When AirAsia introduces more and more flights. From more and more diverse Asian countries.

Practically the whole of ASEAN is connected now because of AirAsia. What a feat.

And looking at China and India - the limitless flow of passengers is a given now.

Rich Asian nations - Korea and Japan, Taiwan and Singapore all connected.

Powerful mining and closest Western First World Country - Australia with 3 destinations. What if Sydney is added? And northern small sized airports in Cairns and Darwin are added? Beautiful. Unbeatable.

Far reaching to smaller airports and boutique destinations, such as Nepal, Maldives, Bhutan.

The whole of Asia soon will have a little red dot connected. And this red dot is not Singapore. But AirAsia.

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