SEPANG: AirAsia Bhd., the world’s top low-cost carrier, is unfazed by the looming fare war among airlines in the second half of this year as it is well prepared to take the fight to Malaysia Airlines Bhd. (MAS) and Malindo Air.
“I think we are always prepared for something like that to happen. Eventually, the most efficient airline would be able to come out from this whole competitive environment… May the best airline win,” AirAsia chief executive officer (CEO) Aireen Omar told NST Business in an interview recently.
She said cost structure was the key to survive the “bloodbath” and AirAsia would continue to be disciplined with its operational costs while finding new ways to improve cost structure.
AirAsia would also leverage on the group’s vast network to drive passenger traffic to Malaysia. This year, AirAsia is targeting a 10 per cent increase in the total number of passengers to 29 million.
This is bigger than the 17 million target for MAS and 10 million for Malindo Air. Aireen said AirAsia would not reduce its airfares even if MAS and Malindo did so.
“Ideally, rational competition would always be something that we embrace. If you have a dumping situation, then it’s irrational competition.
“But we are committed to offering the lowest fares, being a low-cost carrier (LCC) ourselves. Our target market is the mass market. It’s people who prefer to travel by LCCs,” said Aireen.
MAS CEO Peter Bellew had told NST Business last month there would be a “crazy price competition” in the industry from June, with AirAsia and Malindo Air fares going as low as RM10 to RM20. He said MAS would not take part in the fare war.
Moving forward, AirAsia will continue to increase frequencies on several popular routes as well as connecting second and third-tier cities in the region to the main hub at Kuala Lumpur International Airport and other secondary hubs in Malaysia.
AirAsia’s secondary hubs include Langkawi International Airport, Penang International Airport, Senai International Airport in Johor Bahru, Kuching International Airport, Kota Kinabalu International Airport and Sultan Ismail Petra Airport in Kota Bharu.
AirAsia will work with its affiliates in India, Indonesia, Japan, the Philippines and Thailand as well as its sister airline AirAsia X Bhd to strengthen its network and create new routes globally.
“Our model and plan have always been consistent. We work together as a group to build the network. We build the frequency where we feed into each other. We strengthen the existing hubs that the whole group has created,” said Aireen.
Some of the destinations that AirAsia has introduced from the secondary hubs include Kota Kinabalu - Wuhan (China), Langkawi - Guangzhou (China) and Johor Bahru - Tawau.
AirAsia plans to take delivery of eight new Airbus A320neo (new engine option) this year as part of its expansion plans. It received its first A320neo in September last year.
As of January 1, AirAsia has a fleet of 73 A320s and three A320neos. Besides increasing capacity and network expansion, the airline also plans to digitalise its operations to improve efficiency and offer better services.
Aireen said AirAsia would rely more on automation from this year, such as processing passengers’ check-in information, self-baggage tags and transactions.
She said the airline had opted for digitalisation due to the high volume of passengers and transactions.
Aireen said the digitalisation process would help AirAsia gather information about its target customers and understand their travel and spending behaviour better.
“We look at digitalisation in terms of how do we improve the processes of our operations? That will drive the unit cost (down) further and also speed up the whole (operational) process with the kind of volume that we have.”
She said the group had to find ways to use digitalisation to improve the operational process, revenue and efficiency.
“We are looking at bringing this company to a whole new level with digitalisation,” added Aireen.
Source: New Straits Times | Business | 18 Feb. 2017
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