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Opinion
David Fickling

AirAsia's Long-Haul Model Won't Fly

The economics of low-cost carriers stack up only over shorter distances.

Munching through a $10 egg salad sandwich while crushed into a narrow plastic seat, it's easy to imagine that the business model of low-cost carriers is all about how they save money while aloft. In fact, it's almost the direct opposite: Discount airlines' real secret sauce is what they do when no one's on board.

In theory, one of Ryanair's 737-800s flying the 90-minute hop from Dublin to London could cram in nine plane-loads of passengers between 6 a.m. and midnight if it keeps to the carrier's touted 25-minute turnaround time. Stretch the period on the tarmac to 60 minutes, and the number of plane-loads drops to seven. It doesn't sound like a lot, but spread over 189 seats per plane, 365 days a year and a 10-year operating life, that's about 1.4 million more opportunities to sell a ticket to defray the aircraft's $96 million price tag.

Things look different in Southeast Asia, where geography and the ambitions of local airline executives have spawned a clutch of long-haul low-cost carriers. The big northern hemisphere discounters have few routes longer than 4,000 kilometers (2,500 miles) -- there's a reason it's almost impossible to catch a direct flight between the U.S. East and West Coasts on Southwest Airlines. The big three Asian budget airlines go much farther: