AirAsia transfers some Kuala Lumpur-Singapore slots to long-haul service

(Reuters) – Malaysian budget carrier AirAsia Group Bhd (KL:) said on Monday it would transfer two slots on its Kuala Lumpur-Singapore route, its most profitable, to long-haul sister airline AirAsia X Bhd (KL:), which has been struggling financially.

The two daily return flights will help AirAsia X deploy its Airbus SE (PA:) A330s for more hours of the day, allowing it to boost revenue, the carriers said. The services will also give passengers from China, India, Japan and Korea better connections from its Kuala Lumpur hub to Singapore.

Using the widebodies rather than AirAsia’s narrowbody Airbus A320s also doubles capacity in those slots on the Kuala Lumpur-Singapore route, the world’s busiest international route by frequency of services, according to aviation data provider OAG.

AirAsia and AirAsia X said they would share the operating profits from the slots on a 50-50 basis, with 2.42 million ringgit ($584,823.59) expected in the first year taking into account operational costs. The low-cost carrier will continue to operate several other daily flights on the route using its A320s.

The deal comes after AirAsia rivals Malaysia Airlines and Singapore Airlines Ltd (SI:) signed an expanded codeshare agreement.

AirAsia X in August posted a 207.6 million ringgit loss for the quarter ended June 30, its largest since 2015, due to aircraft disposals and a weak ringgit.

AirAsia X shares are down nearly 30% year-to-date, compared with a 5.5% fall at AirAsia and a 1.5% decline at Singapore Airlines.

AirAsia X also in August confirmed an order for 12 more A330neos and said it would order 30 of the smaller, long-range A321XLRs to help it open longer niche routes without the need to fill a widebody.

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