AirAsia, a Malaysian based airline has ordered a record number of 200 medium haul Airbus A-320neo aircrafts at the Paris Air Show. The deal which has a value of around $18 billion is a landmark for the Malaysian airline carrier. Tony Fernandes, the chairman of the AirAsia group terms this as a giant step towards the modernization as well as economical airline operations as the new Airbus A-320 aircrafts are fuel efficient as well as more passenger friendly. This deal also cements Airbus’s position in the Paris Air show where the aircraft maker received orders for a record 730 new aircrafts to be made in the coming years.
Thomas Enders, Airbus chairman also acknowledges AirAsia’s trust in the company as after this deal the total number of aircraft orders that Airbus got from AirAsia becomes 375, making it the single biggest airlines using Airbus airplanes. Tony Fernandes told the reporters that AirAsia already has placed an order of 175 A-320 aircrafts since the airline plans to expand its operations in countries like Indonesia, Thailand and Philippines. AirAsia currently operates around 500 flights daily from hubs within Malaysia. The current fleet comprises of 93 airplanes and it serves 160 routes in Asia.
This deal has established a stronghold of Airbus in the Paris Air Show where the airplane maker received the bulk of orders, leaving behind the American plane maker Boeing. According to the market analysts, the main reason why airlines prefer Airbus is the fuel-efficiency. This can be a deciding factor in times when the fuel prices are surging high and airlines have to cut other costs in order to offset the price effect on the overall costs. Furthermore, the medium sized airplane market is the biggest sellable segment of the aircraft industry as more and more airlines are investing into medium sized airplanes with domestic as well as international reach.
According to Boeing, the medium sized airplane market accounts for around half of the overall airplane production. The pace of this market will be up in the coming 20 years and we will see more and more variants and new airplanes being introduced by the top airplane makers.
The AirASia/Airbus deal news has positively affected the stocks of both the companies; with Airbus’ parent company EADS gaining around 2% in trading on the day the deal was signed. The Airbus A-320neo is actually a reply to the famous Boeing 737 which once ruled the narrow body airplane market but now it is under immense pressure to regain its reputation and ever decreasing market share.