Monday, June 16, 2008

How AirAsia keeps its fares low

AirAsia is able to retain its low fares despite the rising cost of fuel by reducing other costs, its director Conor McCarthy said.

“We’ve adopted various measures to offset our costs, such as charging for checked-in luggage, and promoting more merchandise and food sales on flights.

“We also have to rely on our tour packages and insurance to help alleviate costs,” said McCarthy, adding that low fares were a “need” to stimulate demand.

McCarthy, who is also adviser to AirAsia, was responding to public queries on whether price increases were in store following the recent rise in fuel prices after subsidies were restructured last week.

He added that AirAsia’s fleet of Airbus A320 aircraft also reduced fuel costs by 25% per seat.

However, even with such measures in place, McCarthy said AirAsia was being bogged down by the Government.

“Malaysia, and South-East Asia for that matter, is ripe for development and one method would be to liberalise the airways, especially the Kuala Lumpur-Singapore route, of which AirAsia is now accorded only two flights per day.

“In addition, AirAsia has requested to partially move its operations to Subang airport due to the congestion in the Low-Cost Carrier Terminal (LCCT), and that too has not been allowed.

“There is no harm in encouraging competition among airlines, because it is Malaysians that stand to gain whilst the airlines improve themselves over time,” added McCarthy, who is also managing director, an international aviation consultation company.

Source : STAR
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