Plenty to smile about ... AirAsia chief executive Tony Fernandes (C) with flight attendants.

AirAsia chief executive Tony Fernandes (C) with flight attendants. Photo: AFP

The days of $800 return fares between Australia and Europe will end in the next 10 weeks as AirAsia X axes its European routes, while Sydney, at long last, will get its first AirAsia X service to Kuala Lumpur at about the same time.

Europe has become hostile territory for the likes of low-cost carriers like AirAsia X, with the introduction of new airline taxes through the European Emissions Trading Scheme (ETS) and increasingly punitive state airport taxes being levied in the name of the environment, but which are, in fact, just a revenue grab by governments trying to dig themselves out of Europe’s increasingly dire economic hole.

However, there is also the emergence of signs that, after its initial flourish, AirAsia X (AirAsia’s long-haul affiliate) is starting to behave like the bloated old-world airline oligopolies it was designed to compete with.

Kuala Lumpur’s Star newspaper reported last week that AirAsia X and Malaysia Airlines (MAS), which last August executed a share swap after being mortal enemies, have agreed on a series of trade-offs not necessarily related primarily to route profitability.

AirAsia X has agreed to exit London and Paris, leaving those routes to Malaysian Airlines, while AirAsia X gets rights resisted until now by the Malaysian government at MAS’s bequest to fly to Sydney and some Chinese destinations.

The Star reported MAS chief executive Ahmad Jauhari Yahya was  “close to finalising a connecting-service that will enable passengers on either airline to seamlessly connect between carriers and non-overlapping routes”.

AirAsia X is also exiting MAS routes to Delhi and Mumbai in India. “Choices and reasonable fares are what a traveller wants,” a Malaysia airline industry source told the Star. “But the biggest fear for travellers over the collaboration is the lack of competition and that is seen by the fare pricing for the Dehli/Mumbai sectors where the fares offered by AirAsia X are somewhat close to that offered by MAS.”

This suggests that, while there will be the usual ultra-cheapies to launch AirAsia X’s new Sydney-Kuala Lumpur services, year-round fares may be only marginally cheaper.

However, AirAsia X’s overriding motivation is to start services to Sydney before the airline it regards as its greatest threat, Singapore Airlines’s new low-cost offshoot Scoot, which will begin flying to Sydney by mid-year. AirAsia X sources suggest the new KUL-SYD flights will begin as early as April 1.

In the meantime, London and Paris will disappear from its network, removing one of the reasons to use it by its existing Australian bargain-hunters flying to KL from Perth, Melbourne and the Gold Coast.

AirAsia X says affected passengers will be emailed a range of options, including a full refund, a rebooking to another AirAsia X destination such as Australia, Japan or Korea or a switch to an alternative carrier where available.

“We intend to concentrate capacity in our core markets of Australasia, China, Taiwan, Japan, and Korea where we have built up stable, profitable routes within an infrastructure that supports low-cost services,” AirAsia X chief executive Azran Osman Rani says. “We intend to open up new routes within these markets, as well as add frequencies on existing routes. Announcements of our future expansion plans will be made soon.

“The continued high jet fuel prices and the weakening demand for air travel from Europe, brought about by the current economic situation together with exorbitant government taxes, have placed cost pressures on operating long-haul low cost flights between Asia and Europe, compromising our ability to offer the low fares AirAsia X is known for.

“The implementation of the Emissions Trading Scheme (ETS) and the escalating Air Passenger Duty taxes in UK, which will rise yet again in April 2012, has forced our decision to withdraw our services to Europe.

“As for Delhi and Mumbai, the continued visa restrictions for travel between India and Malaysia, and the increase in airport and handling charges have resulted in a structure not conducive to the low-cost model.” AirAsia X hopes to resume services to India “once these structural issues can be resolved”.

Indeed, Europe is facing a trade war with the rest of the world over its imposition of its ETS on airlines from January 1, but, in the meantime, European governments are treating travellers like a source of free money. With another rise in the pipeline, Britain’s outrageous Air Passenger Duty already stands at (£85) $A128 per long-haul visitor, including those from Australia – more than $500 for a family of four. Germany’s new “eco-tax” is up to €45 ($55) per head and Austria’s up to €35 ($43), more even that Australia’s world-leading $47 departure tax (now eclipsed by the UK and Germany).

Have you booked a fare to Europe with AirAsia X? Have you been offered an alternative? Has the axing of London and Paris ended your interest in the airline or would you still use it to travel to Asia?