Taipei Times (TT): AirAsia X overcame a tumultuous period for the global aviation sector in 2008 and 2009 by tripling its revenue to a total of 750 million Malaysian ringgit [US$239 million] in 2009 from the level of 2008. What were the major factors behind this success?
Azran Osman-Rani: First of all, the global financial tsunami in 2008 made more passengers choose to take budget airlines, like AirAsia X — which may save them an average of 30 percent to 50 percent on a flight ticket for the same route, but with the same quality of on-time schedule rate and flight safety. This further created the company’s growth in revenue.
Second, [as] an associate of AirAsia Berhad, the largest listed low-cost airline in Asia focusing on intra-Asian routes, the service coverage of AirAsia X has widened by the cooperation with AirAsia. This attracts more passengers, as they can get transferred flights more easily on multiple-city travel.
In addition, before the launch of AirAsia X, we realized that creating new demand would be the priority to lead the company’s success. The concept made us set up a more aggressive online marketing strategy than competitors.
TT: Compared with last year, the airlines sector showed declining revenues and profits this year amid rising crude oil prices and concerns over the global economy. How do you view this?
Azran: Indeed, the growing aviation fueling prices have raised the industry’s pressure on costs for this year, but AirAsia X may have a chance here, as fuel costs account for about 50 percent of the company’s cost, relatively lower than that on most of full-service air carriers.
Following the increasing oil prices, full-service airlines may have to raise their ticket prices, potentially leading AirAsia X to attract more passengers who used to take traditional full-service airlines.
Therefore, the company’s revenue is expected to stand at US$641 million this year, a 50 percent growth from a total of US$414 million in revenue last year.
TT: You just mentioned that in terms of the same route, AirAsia X saves passengers an average of 30 percent to 50 percent on a ticket. How does the company maintain a balance between this low-priced strategy and operational costs?
Azran: The most important measure is to get more use from the same aircraft to reduce costs.
For full-service air carriers, they focus more on premium customers that are more time-sensitive, which makes them have more restrictions on departure and landing schedules to match up with different time zones. Also, they would let flights wait for connecting flights to fill an airplane’s seats.
However, for AirAsia X, we only hope to offer the lowest ticket prices for customers. So our passengers would not mind taking a flight departing during daybreak period or arriving at midnight.
This lowered the idle time for our airplanes and substantially reduces our costs. Currently, each aircraft in AirAsia X flies 17 hours a day, more than an average of 12 hours a day for those in traditional airlines.
TT: Could you share more about the company’s marketing strategy?
Azran: Instead of waiting for passengers contacting travel agencies to book a tour or ticket when they have a destination in mind, we offer another choice for them.
Through positive online marketing strategies, AirAsia X has recruited more than 2 million registered users on the company’s Web site, where they can find limited-time sales on specific flight tickets.
Many of our customers said they would check the company’s Web site once they have time to go for a vacation, while choosing the destination depending on the Web site’s special sales. After booking the tickets, they finally search for the map to know more about the destination.
This not only created a new travel mode for our customers, it also helped us successfully create new routes and new destinations.
TT: We know that AirAsia X has been operating a Kuala Lumpur-Taipei route for two years, with one flight a day. Do you have any expansion plans for Taiwan in the near future?
Azran: We start increasing flights to Taipei this month. The total weekly flights to Taipei will be raised to 11, from a regular seven flights, for this month.
As for the following months, we will see the seasonal demand to [determine whether to] increase the flights and may increase the flight to Taipei to two flights a day by 2013.
Furthermore, we hope to launch a new route between Taipei and other cities, but we don’t have a timeline for this as we have to apply for the license first.
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