What have you always wondered about the economy? Tell Us

Virgin Air lands in Asia

Sam Eaton Aug 10, 2007
HTML EMBED:
COPY

Virgin Air lands in Asia

Sam Eaton Aug 10, 2007
HTML EMBED:
COPY

TEXT OF STORY

Scott Jagow: British billionaire Richard Branson launched his new low-cost airline in the U.S. called Virgin America this week. Today, he jetted off to Asia for his next big deal. Sam Eaton reports.


Sam Eaton: The Virgin Group has bought a 20 percent stake in a low-cost, long-haul Malaysian airline.

The new partnership will be called AirAsia X. Its aim is to adapt the budget airline model to longer routes, but that’s a tough combination.

Low-cost airlines are thriving in Asia where demand for short, regional flights between secondary cities is surging, but airline consultant Mike Boyd says once you apply that business model to longer intercontinental flights, profits are harder to come by.

Mike Boyd: You’ve got to put 200-250 people on that airplane to make any money. And if you can do that you’ll be fine. But that means you have to fly out of places where there are a lot of people who have demand to go to Europe, or have demand to go to Sidney or have demand to go to Los Angeles.

In other words hubs like Singapore and Kuala Lumpur where major international carriers already have the upper hand.

AirAsia X plans to begin flights to Australia as early as next month.

I’m Sam Eaton for Marketplace.

Marketplace is on a mission.

We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.

Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?

Your donation is critical to the future of public service journalism. Support our work today – for as little as $5 – and help us keep making people smarter.