Crisis has hit the Asian LCCs very hard

Travel restrictions worldwide forced airlines to ground many of their planes resulting in severe loss of revenue. No airline is immune to this loss, but Asian LCCs seem to be affected badly. AirAsia Group revealed full-year results two months ago that shows how bad the conditions are.

The airline suffered from a net loss of $67.8 million last year and this is not a small number. There are financial troubles and then there is the coronavirus crisis that shows that there are material uncertainties that put the future of the company in doubt. The recent events and conditions have raised questions about the group’s future.

According to group chief Tony Fernandes, the recent crisis is the biggest challenge the company has faced since it was launched 19 years ago. The last few years were really good for the airline when it launched units in the region and started operating in Japan, India, and the Philippines, and ordered a huge number of aircraft. When the coronavirus outbreak happened and travel restrictions were imposed globally, it had to hibernate most of its fleet for the time being. The airline has also decided to not order any new aircraft this year.

The low-cost careers were expected to grow well, but the crisis has hit them hard, some more than others. Their business model that provided cheap and no-frills travel collapsed in no time. Hundreds of aircraft are sitting idle, waiting for the day travel restrictions are lifted.

AirAsia Group is not the only airline in the region to go through a tough time, other LCCs are also facing a hard time. Cebu Pacific halted its operations in March when the virus was spreading rapidly and then resumed the operations gradually in June. This resulted in a good drop in the revenue for that time as compared to last year for the same period.

Thailand’s airline, Nok had to file for business rehabilitation and its joint venture NokScoot also faced serious revenue losses. Indonesia’s Lion Air Group didn’t reveal its financial situation, but it can be assumed that it also suffered from the crisis.

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