Long-haul, low cost, high aspirations

BI: I take care of the medium to long-haul kind of model – we fly generally about four to 11 hours. We work together symbiotically with the A320 operations: there’s AirAsia Malaysia, Thailand, Philippines, Cambodia, and, of course, there’s AirAsia X in Thailand and Malaysia, where we operate A330-300s, so basically it’s just connecting between each other.

I think if you are a passenger flying on AirAsia, you won’t feel the difference other than the fact, if you’re an airline buff, you’ll know that you’ll be flying in an A330 or an A320, the wide-body and the narrow-body. But generally, I think that the key things that we have is the branding is the same, cabin crew is the same, food’s the same, whatever we sell online, is the same. Basically we’re just getting you from A to B – generally, if you’re flying from, for example, Sydney, and going to Labuan Bajo in Indonesia, you hop on in Kuala Lumpur, connect onto an A320 seamlessly, with your bags through straight away.

AA: And this is part of your “fly-thru” model – can you tell us about that?

BI Well, the fly-thru is basically just connecting traffic like any airlines do. Generally the rule of thumb in the low-cost carriers, back in the day, you would potentially have to take your bags out and basically then move to another airline or whatever. But for us, our interlining generally is just within the group – we have close to 200 aircraft. For example, Singapore, from Kuala Lumpur, we fly 15 times a day. Jakarta, 10 times a day. Or other countries, Bangkok, 15 times a day. As it is, we connect about 30 per cent of traffic on long-haul to short-haul and vice versa, so basically, people flying on a short-haul flight domestically could be connecting to my flight, and 30 per cent of that traffic goes onwards to either Australia or vice versa.

AA: What’s the current market landscape like in the Asia-Pacific?

BI: The thing about Asia is everything’s pretty much surrounded by ocean, so connectivity through land is not easy. I mean, you can’t imagine driving from Singapore to Thailand in a car. But airfare is quite reasonable. It’s affordable. Generally, with AirAsia being there, our motto, basically, is trying to stimulate new markets. We’ve carried close to a billion people over 25 years, and generally 20 to 25 per cent of those are people have never flown before, people that can never imagine paying for a ticket from Kuala Lumpur to Singapore, or Kuala Lumpur to Bali, or Kuala Lumpur to everywhere else, or Australia in the past.

Our fares are generally 30 to 40 per cent cheaper. It doesn’t mean that safety is compromised, it’s just the fact that we run an efficient operation in terms of cost. Generally for us, what we want to do is to make sure that we stimulate new markets, give the people the ability to fly – rather than saving to fly every four years, to instead fly four times a year, and that’s what we try to do. That’s the landscape in the Asia-Pacific in general.

AA: What about Australia specifically?

BI: Australia’s a big market for us. It’s our second biggest revenue generator. But as a group we fly, potentially, on certain days, twice a day to Sydney, we fly to Melbourne, we fly to Perth. Gold Coast was probably the first destination for AirAsia X, we pulled out just last year, but that’s something that we want to go back potentially next year. Also within the group, from Bali as well, we fly into Perth, we fly into Darwin, we fly into Cairns, Adelaide, and this kind of market. So generally, AirAsia branding, in terms of here, it’s quite big for us.

AA: What’s the competition like for you in such a heavily populated region?

BI: I think it’s healthy. I think in different markets, they have their own strong competitors. In Malaysia, we’re the biggest in terms of low cost. In Asia, we’re the biggest in terms of low cost. But obviously, if you go to the Philippines, Cebu Pacific is quite strong. You go to Indonesia, that’s Lion. These are pretty much the three big guys, but we are probably more international. If you can see, in terms of the market share, we’re generally about 40 to 50 per cent market share international versus them. But at the end of the day, we’re not there to compete – we’re just there to help bring diversity to the economy, bring more people into destinations, having more options and more opportunities. This is what we want to do. So that’s what we do best.

AA: How has the recovery been from COVID-19?

BI: COVID was probably the darkest period of my life. From having 24 aircraft, we ended up having nine. I had a workforce of about 3600 people, and I ended up with 700 or so. It was a very tough decision for me to furlough some. I had to let go some people, but as a leader, what I did is, when I did these town halls, I committed to them that “when I come back with aircraft, you’ll be the first that are hired back”.

So generally we are now, I think, from 2022 where COVID kind of tapered out, from nine aircraft, aggressively, we’ve grown back to 19 planes. We now have close to about 2,200 staff, and I would say 80 per cent of those staff that rejoined back are people that I let go last time. COVID was a reset for us, because at that time, nobody wanted aircraft, nobody wanted assets. I think I took the risk in taking a lot of aircraft during COVID, and I had the benefit of having those aircraft at a very low price. So therefore, potentially now, if you look at the market pricing of a lease of an aircraft, it’s generally about 50 per cent higher from where it was then.

We benefited from that, but it hasn’t been easy. We had to rebuild back trust. We had to rebuild back passengers’ ability to fly. So basically, now, with 19 aircraft, we’re pretty much there and still growing, hopefully – fingers crossed.

AA: What are some of the best-performing new markets AirAsia X has developed post-COVID?

BI: Australia, as I said, generally, has been one of the biggest markets for us, pre-COVID. Post-COVID, it’s been a bit more difficult. I think cost of living, generally, for Asia-Pacific and Australia is probably pretty high. I think people have realised that with the currency, in terms of price sensitivity, going to North Asia is much cheaper. Going to Japan is probably the cheapest – back in the day, it was probably the most expensive. So, Japan now, we fly to Sapporo, Tokyo, Osaka, Fukuoka, Okinawa and all that, and generally, that’s probably our bread and butter at the moment. That has really jumped from where it was pre-COVID

Korea is doing very well for us. China is massive, even though there’s still limitations of people coming out of there, but generally we connect to about 24 cities in China, not just first-tier cities, second-tier cities as well. The biggest surprise for us is moving pretty much towards Central Asia. We’ve just started flights last year to Kazakhstan, Almaty. That’s been quite a success. We started with four flights, and now we’re just increasing it to five. December, we’re probably going to ramp it up to daily flights. To ski there in Almaty, which is beautiful, it’s probably a 15-minute drive from downtown. It costs you about 60 per cent less than skiing here in Australia or in Japan. So that’s a benefit for that.

We are starting a new flight to Tashkent in Uzbekistan next month. That’s been massive, and we just announced Istanbul from Kuala Lumpur, that is probably my first long haul flight, which is going to take 11 hours and 15 minutes from Kuala Lumpur. So that’s going to be massive. Why Istanbul? Because I think the opportunity is massive. There is no direct service straight to Australia, and I think the diaspora of Turkish people is Australia is the second biggest. For us to connect via KL, have that ability to connect people from Australia to Turkey and people to go home at a cheaper price, I think it’s a game-winner for us, so we’ll see how that goes.

AA: What was the biggest lesson you learned from the pandemic?

BI: I’m quite hands on. So, I realised from the pandemic, you know who your real friends are, you know who your real clients are. You know who your real vendors are. I’m a very loyal leader in the fact that what I do is for the people who stood by me – I’ll give them that business moving forward. Generally, the airports have been very loyal to us, the ground handlers have been very loyal to us, and everybody else. Tourism has been very supportive of us. For those, I make sure that we come back and we give back whatever investment they lost during COVID. So, that’s one of the lessons I’ve learned: to make sure that we stay loyal to those people that helped us.

AA: What are some of the challenges and blockers when operating a low-cost airline in and out of Australia?

BI: I think Australia is quite easy, actually. I think it’s quite straightforward. The only thing I don’t like about flying into Sydney is, it’s a curfew airport. It closes at 11 and opens at six, while every other airport, Melbourne, Perth, are all 24 hours. Therefore, it limits my ability to connect a lot of flights, so that’s the only thing – I’m trying to push to make sure they’re open. I know they have to protect the birds and the lands and all that in the area, but I think it’s very hard, because if there is a delay of 15 minutes or an hour or two, and you miss the window, you have to pretty much lay over your passengers and get an impact. Other than that, as smooth as usual into Australia. We want to grow more into Australia. I think it’s a big market for me, and it’s very close to my heart as well.

We’re very open to different options in terms of airports. Just before COVID, we took a different turn as well at Melbourne – we moved away from Tullamarine and we went to Avalon because the Foxes supported us in terms of building an international hub there. We lasted about a year, then COVID happened, then we moved back to Tullamarine because we felt that we wanted to build back that brand again. But we are open to any airports as long as they support us. When I say support, in terms of financially or anything, it helps me drive fares down lower. It’s not going to be translated into my profit and loss, but if you offer me rebates, lower landing charges, lower ground handling, then I can charge lower fares and give the ability for people to afford to fly even better.

So, that’s the goal. If Western Sydney has that offer for us, it’s great. I know they’re two different spectrums in terms of airports, but if it’s 24 hours, we will look at that.

AA: What are the plans for AirAsia to better integrate its long-haul and short-haul operations?

BI: I think we work together pretty well, connecting to each other – but at the moment, it’s operated as two AOCs, two different managements. So ideally, one day we’d want to get that into one. That would make it easier, where I can potentially, on the low season, fly an A321XLR into Sydney, rather than a wide-body A330, which would be high density on a lean season. At the moment, it’s very difficult to do that.