AirAsia X CEO: Fight will now be on service quality and destinations

13 May 2009

SEPANG: Malaysia’s only low-cost long-haul airline, AirAsia X, wants to raise its service levels to gain a bigger market share of the routes that it now plies.

Ultimately, it wants to take on full service carriers on service quality as competition for air fares has intensified. The fight would now be on service quality and the next on destinations, said chief executive officer Azran Osman Rani.

“While they (the full service carriers) are downgrading, we are going to change our game plan by improving on our service. We want to beat them (full service carriers) on the service game and we can do it since our costs is low,” Azran told StarBiz in an interview recently.

Since AirAsia X began plying several long-haul sectors, its rivals, mostly full service carriers, have dropped fares to match those offered by the low-cost carrier.

AirAsia X, which is 20% owned by AirAsia, now flies from the low-cost carrier terminal at KL International Airport to Perth, Melbourne, Gold Coast, Hangzhou, Tianjin and London.

These days, a traveller can fly to Melbourne or even Perth for RM299 one-way, something unimaginable before AirAsia X began plying those routes.

AirAsia X, which is 20% owned by AirAsia, now flies from the low-cost carrier terminal at the KL International Airport to Perth, Melbourne, Gold Coast, Hangzhou, Tianjin and London.

It will begin daily flights to London on July 1 and launch flights to Taipei on the same date.

“They can cut their fares but they have a higher cost base, so it will be difficult for them to match us as our cost base is very low,” Azran added.

As part of its service offerings, the airline will offer new fare classes, have greater flexibility for passengers changing flights, reliability on timings and smooth check-ins.

Azran Osman Rani

“We are looking at interesting ways to make the customer experience better. All this will help us get more customers while the full service carriers are cutting on service quality which will erode their brand experience. We just want to do the opposite,” he added.

First and business classes are on a downtrend and more companies are now warming up to low-cost travel as they trim travel budgets amid the economic slowdown.

Corporate travellers now make over 35% of the traffic on low-cost carriers (LCCs), up from 10% a year ago, according to The Centre for Asia Aviation – an aviation consultancy.

Azran said corporate sales were on the rise for the airline and it was now flying executives from some big banks, oil and gas companies, global telecommunications firms and business travellers.

With service levels raised, the airline hopes to capture a bigger business traveller market.

The airline also wants to introduce flat beds for its long-haul flights at a more reasonable rate than full service carriers.

“We will even offer flat beds at US$1,000 one-way for our London flights and that is how we will shake the world,” he said. The airline is looking at doing that next year. As for destinations, AirAsia X has a whole list of points it wants.

They range from Australia to Asia, Middle East, Russia, Europe, Africa and even the transatlantic routes.

All this will be done as the airline gets delivery of newer planes this and next year.

“We are going to beat them with our newer planes, our flat beds and attractive fare pricing. It is going to be a very interesting landscape, going forward, and we do not think there is any LCC in this region that can emulate us,” he said.