Airbus loses another A350XWB customer
Malaysian low-cost carrier AirAsia X has announced that they have no intention to receive the 10 Airbus A350-900 they have ordered as the price offered by Airbus is “too expensive” when compared to their rivals.
"The A350 is not an aircraft we will buy," AirAsia X co-group CEO said in a Facebook Live chat from London. When compared to the $294.6 million listed price for an A330neo, the A350-900 has a sticker price of $317.2 million, which is 7 percent more expensive. The airline also hinted that they are in talks with Boeing for their 787-10 Dreamliner, which has a list price of US$325.8 million. The final decision will be announced
AirAsia X is not the only airline complaining about the high expense for the Airbus A350s. Malaysia Airlines has recently dropped plans to utilize their A350-900 on flights to Asia-Pacific and Auckland, saying that the A350 is too expensive to operate on medium-haul routes to be profitable. Unlike AirAsia X which plans to use their wide-body jets on flights between 4 to 8 hours, Malaysia Airlines previously predicted that their A350 operations can only be profitable if the fleet is used entirely for long-haul routes.
(photo by Airbus)
While AirAsia X has no intention to re-enter European market, Malaysia Airlines plans to resume European services which are phased out due to the retirement of Boeing 777 fleet 3 years ago. This includes the Kuala Lumpur to Frankfurt and Istanbul routes. “We've got the A350, it’s an expensive aircraft and we have to find something meaty and significant to do with it,” the CEO of Malaysia Airlines claimed.
Malaysia Airlines is also suffering from the high capital costs for A330-900neo. The CEO of Malaysia Airlines once claimed prices offered by Airbus and Boeing “are still too expensive” and that Airbus and Boeing “are not being realistic about their prices”. The carrier expects aircraft prices will come down in near future, enabling Malaysia Airlines to place an order. “We keep holding out. There will be a collapse in the pricing of new planes,” their spokesman predicted. “I think there will be an opportunity to do a good deal in the next six to nine months. There are very few people out there buying at the moment.” In the end, Malaysia Airlines decided to order Boeing 787-9 instead of the A330neo.
AirAsia group currently operates an all-Airbus fleet, and if the carrier chooses to introduce Boeing aircraft into its fleet it would mean a major failure for Airbus. Introducing Boeing 787-10 Dreamliner into the fleet means that the carrier will train Boeing technicians and pilots. This means that AirAsia may further purchase Boeing jetliners in the long run (e.g. the 737MAX).
Norwegian and Jetstar are low-cost carriers using the 787 as their mainline fleet and has proved that the Dreamliner is a suitable aircraft for LCC long-haul operations. There are currently no low-cost carriers operating the A350XWB. AirAsia X is also successful with its 22 A330-300s. The cheap capital costs allow the carrier to expand its network rapidly, hence winning over its direct competitors. The operating costs of the 787 and A330neo are close over typical long-haul sectors of 3000-6000nm. Where the 787 has the slightest advantage on the fuel side, the A330neo will be cheaper on capital costs.
The announcement to cancel orders for A350s is rather surprising to the aviation community, as the airline has currently expressed interest to convert A330-900neo orders for larger A350-900s. "If we went A350, we wouldn’t use the A330neo anymore, we’d go all A350,” their CEO once claimed. The Kuala Lumpur based airline has previously planned to opt for larger A350s instead of A330neos in order to boost capacity for high demand routes.
Apart from AirAsia X, American Airlines has also canceled its order for 22 Airbus A350s in early April. The Dallas based carrier instead ordered 22 additional 787-8s and 25 787-9s to supplement its existing orders for 42 Dreamliners.
Unlike AirAsia X, the A350 order cancelation for American Airlines has long been expected. The deal was struck by US Airways before its merger with American. Since the merger, the A350 deal no longer fits into AA's fleet simplification plan. A common fleet type creates less friction in airlines operation when aircraft swaps are necessary, reducing inventory needs, and creating a more consistent service for customers and team members.
AirAsia X has long been a large customer of Airbus. Besides from wide-body jets, the budget airline is also exploring the need of Airbus A321LRs to serve routes to India and China that might not support bigger planes.
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