Hubs Don't Work All The Time

29 November 2014

Long Haul Low Cost (LHCC) Malaysian carrier AirAsia X Bhd becomes the first airline to blink as it feel the heat on the robust Australian market after its rival in the Philippines, Cebu Pacific enters the fray opening direct flights from Sydney to Manila.

And the results has been abysmal for the Malaysian carrier who relies on connection feeds from its hub in Kuala Lumpur, including those coming from the Philippines.

The shifting passenger preference to direct flights offered by low cost carrier competitor Cebu Pacific led the airline to freeze capacity expansion and cut flights to Australia next year beginning with a reduction of one daily flight out of Sydney.

The airline currently flies up to twice daily, from Sydney, Melbourne, Perth,
and daily from Adelaide and the Gold Coast to Kuala Lumpur.

Cebu Pacific started flying to Sydney in October amidst the already difficult position of AirAsia X to the region racking up net losses of US$108 million for the first nine months of 2014.

AirAsia X has joined Philippine Airlines in tempering its growth projections selling two A330-300 for delivery in 2015 and deferring others.

The airline has revised its capacity projections for next year with planned plane deliveries of six aircraft instead of eight next year, distributed to Thailand and Indonesian subsidiaries. Both subsidiary will also receive four instead of eight A330 in 2016 and five A330 instead of eight in 2017.

Earlier, Jetstar Airways abandons Manila from its hub in Darwin due to poor sales and stiff competition with Philippine Airlines.


  1. I use to fly with air asia x from manila to sydney via kuala lumpur until cebu pacific step in.well, i prefer cebu pacific because its a direct flight.travelling with air asia require back tracking those increases your travel a business man and quick travel time are highly prefered.i am a frequent flyer and travel almost twice a month.

  2. What a presumptuous article! Hubs work and is the holy grail of network carriers. This article makes it sound like Air Asia X exists to serve only the Phil-Australia market. BS! They serve many markets to Australia, including Northeast & Southeast Asia, markets that are way bigger than the Philippines. Cebu Pacific is not the only reason why they are reducing service. There are other issues in the Malaysian airline industry & economy in general, plus the price wars with other airlines, not just Cebu Pacific. Looks to me like this article was written by another one of those amateur bloggers, or even airline enthusiasts but really know nothing about the industry!

    1. Yet you come to read the blog and for that we thank you for your comments. Probably we missed some facts that close to 200 people are carried by AirAsia to Sydney alone every single day from Manila before 5J flew down under. Not that much capacity. Its just almost half to the economy seat capacity of AirAsia X's A330. With the recent PAL expansion, they probably got a few of that seats too and the rest is smiling to Cebu Pacific. Airline economics is not as hard as rocket science to figure. It's like saying CX was not affected by Philippine carriers move to the middle east because their hubs work. "There are other issues in the Hong Kong airline industry & economy in general." Well, its not working for them either. You might want to see their timetables before and after. In case of doubt you can always read CAPA and our disclaimer notice. We value your input and our gratitude for your time.