AirAsia Aviation CEO Bo Lingam predicts that high airfares, driven by strong post-pandemic travel demand, will persist. Although jet fuel prices may decrease next year and flight capacity increases, pre-pandemic fare levels are unlikely to return soon. AirAsia aims to establish the world’s first low-cost carrier network by 2030.
They plan on adding routes like Almaty (Kazakhstan) and Nairobi (Kenya). They’ll use Airbus A321 LR models for long-range flights, benefiting from cost efficiency. Despite founder Tony Fernandes’ advisory role shift, Bo plans to transfer knowledge to deputy CEOs.
Is AirAsia’s strategy suitable for the long term?
The growing demand for air travel post-pandemic benefits the airline, as does its cost-efficient use of Airbus A321 LR models for long-range flights. Expanding their network by adding new routes can attract more passengers.
However, challenges include the pressure of high airfares due to demand, supply chain constraints (such as aircraft delivery delays), and competition from other airlines. Ultimately, AirAsia’s long-term sustainability hinges on effective execution, adaptability, and market conditions.
Currently, in Malaysia, Malaysia Airlines is not a simple competitor as they too have a stronghold in the Malaysian domestic sector. Malaysia Airlines has also made a profit for the year 2023, a sharp contrast of their positioning in comparison to the previous decade.
But, for routes that are generally not travelled by conventional airlines, AirAsia may succeed as there is a demand for these routes.
Regardless, there are a number of airlines in Europe and America that have made a simple version of this model successful. Examples are Southwest Airlines, Ryan Air, Wizz Air and Indigo Air. For the most part, these low-cost carriers are focused on routes that are less travelled by the masses.
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