The travel news is full of service cuts here, airline bankruptcies there, airlines folding completely elsewhere, and surcharges and extra fees all over the map. So it came as a surprise (to me anyway) to read a piece called "Strong Expansion is the Best Way to Cope with High Fuel Prices, AirAsia Exeuctive Says" on a travel trade site called eTurboNews. Tony Fernandes, CEO of AirAsia, described as Asia's largest low-cost airline with a 60-city route network that includes Southeast Asia, China and Australia, spoke to eTurboNews Stephan Hanot:
Q: How fuel is affecting your strategy?Can AirAsia keep it up? I don't know, but it operates on an aggressive model. Founded only in 2001 as a no-frills, low-fare, fequent-flight carrier that currently flies to 60 destinations, it was named named 2007 CAPA Airline of the Year. AirAsia managed an on-time record of 89 percent in May, and even in challenging times, seems to be continuing various promotions and fare sales to fill seats.
A: Fuel is becoming a massive problem as it went up from US$36 in 2003 to
over US$170 for jet fuel today. And they are only two ways to deal with this
burden to cut costs. The first, chosen by many airlines, is to reduce the
network and adapt capacities. It works but it will also affect considerably
travel patterns and could lead to a cycle of further route network’s adjustment…
The other way is still to grow up. This is the way AirAsia choose. We have to
fill up aircraft as more passengers are the best way to compensate for the
burden of high fuel prices. We will also continue to look at ways to reduce our
costs.
Q.This means: no cut in your network, including domestic routes?
A. That is correct. More revenues can make up for the deficit we could
record because of the fuel crisis. In fact, I speed up the opening of new
routes. We will out of Malaysia open between June and July up to four new lines
[routes]...
Q. Does it then mean that AirAsia low cost model turn its back from
traditional point-to-point markets?
A. We have seen indeed an increasing number of passengers in transit at our
main bases...I anticipate a further development of our transfer activity in the
future.
Q. Will you increase fuel surcharges?
A. We try not to pass the burden to consumers with additional fuel
surcharges. We rather look at other ways such as paying a minimal fee to use our
various services. We recently introduced fees for check-in luggage for
example...
Q. How about your environmental credential? AirAsia seems to be far behind other airlines in terms of initiatives such as carbon footprint compensation.
A. Asia is generally behind developed nations in Europe, America or
the Pacific...Our fleet is one of the youngest in the world and is extremely fuel-efficient as we put more seat per aircraft than most or our competitors. We also try to accelerate the replacement of our ageing Boeing 737-300 by more fuel-efficient Airbus A320. However, we are looking now to introduce a scheme for carbon dioxide (CO²) footprint compensation. We look at ways to see how this CO² credit would be at best used. I expect that we could come up with some program by early
2009....
Contrast this to a front page story in today's Denver Post called "Fares Adding Fuel to the Flier," which reported that base fares for domestic flights from Denver are up 7.5 percent since June 2007 -- plus the add-on fees that did not exist a year ago. Competition does put the reins on increases a bit, with the greatest fare increases on routes with the least service. The phrase," The airlines have those passengers over a barrel" comes to mine -- a barrel of oil, perhaps.
AirAsia's slogan: "Now everyone can fly." What a contrast to many US carriers -- Southwest seemingly being an exception -- that seem to being instituting the slogan, "Now no one can fly anymore."
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