AirAsia’s global ambitions to take flight with $12.25 billion agreement with Airbus for 70 A321XLRs

AirAsia Berhad—a subsidiary of Capital A Berhad— said on Monday that it has signed a $12.25 billion agreement with Airbus to purchase 50 A321XLR aircraft, with rights for 20 more, in a move poised to disrupt long-haul low-cost travel. This strategic move signals AirAsia’s intent to transform into the world’s first low-cost narrow-body network carrier, radically expanding its reach across Asia, the Middle East, Central Asia, and Europe.

The aircraft, scheduled for delivery between 2028 and 2032, will support AirAsia’s ambition to carry 150 million guests annually by 2030, bringing its cumulative total to 1.5 billion since inception.

The agreement was signed in Paris in the presence of Malaysia’s Prime Minister YAB Dato’ Seri Anwar Ibrahim, with Capital A CEO Tony Fernandes and Airbus Commercial Aircraft CEO Christian Scherer formalising the deal.

“We pioneered low-cost travel in Asia—now we’re taking it global,” said Tony Fernandes. “With the A321XLR, we can connect Kuala Lumpur and Bangkok to the world as never before. This is a bold step in making global travel more democratic and affordable.” Fernandes also shared a picture with Scherer on his Instagram account. “23 years, over 700 planes bought from this man. Take a bow, Christian Schere of Airbus. A 23-year relationship,” read Fernandes’ post.

AirAsia’s vision is to replicate its regional success at a global scale by leveraging the extended range and fuel efficiency of the Airbus A321XLR—a game-changing aircraft capable of flying longer distances while maintaining narrow-body economics.

According to Airbus, the A321XLR offers a 20% lower fuel burn per seat compared to the A321neo, resulting in improved sustainability and operating cost benefits. These next-gen aircraft will seamlessly integrate into AirAsia’s existing all-Airbus fleet, supporting efficient fleet management and route planning.

With operations centred around Kuala Lumpur and Bangkok, AirAsia plans to leverage its multi-hub model to build a global network of point-to-point connections. The addition of the A321XLR will enable the airline to serve previously underserved routes and secondary cities, thereby unlocking new travel corridors and enhancing connectivity.

Christian Scherer of Airbus added, “The A321XLR unlocks new opportunities for AirAsia to launch non-stop flights linking primary and secondary cities all around the globe. It’s a strong statement of confidence in our aircraft and a strategic vote for global connectivity.”

AirAsia’s move also aligns with its broader sustainability and operational efficiency goals. The A321XLR’s enhanced fuel economy will significantly reduce the airline’s carbon footprint while enabling higher aircraft utilisation.

With rising global demand for affordable travel and a renewed post-pandemic push toward leaner, greener aviation, AirAsia’s transformation from a regional budget player to a globally networked low-cost carrier represents a potential paradigm shift in commercial aviation.

AirAsia entered the Indian aviation market in 2014, with a joint venture between Tata Sons and Delhi-based Arun Bhatia’s Telstra Tradeplace. Headquartered in Bengaluru, AirAsia India began operations in June 2014 with a low-cost, domestic-only model. The goal was to replicate AirAsia’s success in Southeast Asia, utilising its core competency of operating a low-cost model in India, with a focus on tier-2 and tier-3 cities.

However, it was unable to replicate the success it had enjoyed in Southeast Asia, and in October 2020, AirAsia Berhad began exiting India operations due to pandemic-induced financial pressures. In 2020–21, Tata Sons increased its stake to 83.67%, making AirAsia India a de facto Tata airline. By November 2022, AirAsia exited completely—with the Tata Group acquiring the remaining 16.33% stake, making it a 100% Tata-owned airline.

In 2023, Tata Group announced the merger of AirAsia India with Air India Express, its low-cost international arm (originally part of Air India). The aim was to create a unified, low-cost carrier under the Air India umbrella, with improved synergies and a broader reach both domestically and internationally. By early 2024, AirAsia India began transitioning fully to operate under Air India Express, retiring the AirAsia India branding.

The joint venture, although it floundered in less than a decade after it was formed, helped both parties reposition strategically—Tata with a full-service and a low-cost aviation portfolio, and AirAsia refocusing on its ASEAN core.