Air Asia thriving on local routes


  • Nation
  • Thursday, 16 Jan 2003

By LEONG SHEN-LI

KUALA LUMPUR: After a year of impressive performance, the operator of Malaysia's no-frills airlines, Air Asia, will continue to focus on the domestic market by introducing new destinations, increasing the frequency of existing routes as well as improving service in general. 

Its chief executive officer Tony Fernandes said there was still a lot of potential in the domestic market for the company to explore before it went regional. 

“After operating for one year, we have suddenly discovered that there was so much of the local market which we did not know about,” he said during a press conference here in conjunction with the airlines' first year of operations. 

He also said that Air Asia would like to strengthen what it was already doing before expanding outside Malaysia. 

By the end of next month, he said Air Asia would be adding Bintulu, Alor Star and Sandakan to its list of destinations. It would also begin flying between Kota Kinabalu and Kuching. 

“We will also be increasing the frequency of flights on existing routes, such as flying every day to Labuan, and adding one more flight to Penang,” he said, adding that the company might begin regional routes either at the end of this year or by the first quarter next year. 

The current fleet of six planes would be expanded to 15 by the end of the year. The seventh plane would be delivered next month. 

He said Air Asia would also start a travel company, to be called “Go”, by the end of this year. It would market holiday packages together with its flights. 

Fernandes said Air Asia had not eaten into Malaysia Airlines' market, citing growth in domestic passenger loads on the national carrier after his airline began operating . 

Instead, it had expanded the domestic market for air travel. 

On the effect of the current threat of war in West Asia, he said the escalating cost of fuel was hitting the company badly. 

“However, we have hedged our fuel cost for the first quarter of this year, and have contracts up to the second quarter,” he added. 

In terms of financial performance, Air Asia chief financial officer Raja Mohd Azmi Raja Razali said the company managed to turn around a loss of RM19.1mil between April 2001 and November 2001, to a profit of RM19.4mil in the seven months since the new management took over in December 2001. 

He added that liabilities, which amounted to RM40mil at the point of takeover, had also since been repaid. 

Raja Mohd Azmi also said Air Asia recorded 665,440 passengers between July and December last year, compared to 621,899 in the previous 15 months. The load factor had increased to 70% compared to 67% in the financial year ending 2002, even with three new destinations. 

“Despite reducing fares to attract traffic, our yield revenue per kilometre (RPK) grew from 13.6 sen to 15.5 sen for the six months from July to December,” he said. 

The cost per available seat kilometre (ASK) for July to December last year was 10.9 sen, which was one of the lowest in the world.  

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