One of Asia's most popular budget carriers will spread its wings to the U.S. for the first time later this year, but analysts are skeptical on how profitable the new route will be.
AirAsia X, the long-haul unit of Malaysian low-cost carrier (LCC) AirAsia, announced on Monday that it will commence weekly direct flights from Kuala Lumpur to Honolulu by year-end as it takes advantage of weaker fuel prices. Group CEO Datuk Kamarudin Meranun announced that plans are also underway to resume flights to Europe, a route the airline operated in 2012 but cancelled due to high fuel costs.
The halving of global oil prices since last April has been a boon for airlines following a year of fatal accidents, including the December crash of AirAsia flight QZ8501.
"It's very hard to say whether this [new route] will be successful and lift AirAsia X out of its financial doldrums," Mohshin Aziz, aviation analyst at Maybank Investment Bank, told CNBC. Indeed, the airline's balance sheet has been far from strong. In the fourth quarter of 2014, it recorded a net loss of $46.3 million, wider than the previous year's loss of $36 million.
"Malaysia Airlines (MAS) had a direct Hawaii flight as well about two decades ago, but it didn't last long as there wasn't enough demand. Malaysia and Hawaii don't have a long history of trade. Those same inherent risks may still apply here, so we must wait and see," Aziz added.