Intense Competition in Budget Airline Sector – AirAsia X CEO Azran: Optimistic About Future Development

Reported and photographed by You Tzu-ju / Taipei

As low-cost carriers enter Taiwan, locally based budget airlines are also set to commence operations in the third quarter of this year. Azran Osman-Rani, Chief Executive Officer of long-haul low-cost carrier AirAsia X, visited Taiwan today (16th) to discuss how to retain customers and explore more possibilities. He stated that from the consumer perspective, AirAsia X is enhancing its hardware facilities and attention to detail on long-haul routes. In the future, there may also be more innovative services, and he welcomes the entry of competitors.


▲ Azran Osman-Rani, Chief Executive Officer of AirAsia X.

Regarding the Taiwanese low-cost airline market, Azran analyzed that the Asian low-cost aviation industry has matured, and "cost control" will become a major challenge for operators. Facing the recently emerging Taiwanese low-cost airline market, AirAsia welcomes its growth and encourages new competitors to join. "Stimulating market expansion and driving overall development of low-cost aviation can attract more consumer interest and curiosity toward various choices, encouraging them to try flying with low-cost carriers. This will certainly benefit the current development."

According to AirAsia X’s 2013 financial report, thanks to increased flight frequency and successful route expansion, available seat kilometres (ASK) rose 19% compared to 2012, while load factor maintained a high level of 82.1%. Additionally, the introduction of innovative add-on services such as the "Quiet Zone" — located between economy and business class seats and exclusively for adult passengers — has led to a significant 24.5% growth in "ancillary revenue," totaling NT$4.25 billion. Looking ahead, Azran said that by 2016, the lie-flat angle in business class will be upgraded from 173 degrees to a fully flat 180 degrees.


▲ AirAsia.

Together, these achievements contributed to AirAsia X’s annual revenue exceeding NT$21.473 billion in 2013, a 17.3% increase over 2012, marking strong operational performance. Azlan explained that on the Taipei–Kuala Lumpur route, AirAsia has become the airline with the highest number of daily flights and seats, showing very stable development. For other regions, AirAsia’s route network is extensive, offering a wide selection of flight times, and it is now the low-cost carrier with the most Asian destinations.

"We continue to invest resources in our core markets, expand our route network, purchase new aircraft, and grow our workforce, which has increased from 1,300 employees in 2012 to 2,011 last year," Azran mentioned. He added that AirAsia’s Fly Thru transit service connects Kuala Lumpur to 85 distinctive destinations across Asia within the AirAsia Group.

Regarding the unpredictable year of 2014, Azran particularly emphasized: "Running a low-cost airline is not easy, and the key to profitability lies in 'cost control.'" For example, fuel costs in Q4 2013 were 52.5% higher than the same period in 2012, and the US dollar has continued to strengthen, increasing operational expenses. Therefore, without compromising service quality, cost control will be more stringent to withstand short-term pressures and ensure AirAsia X’s leading position in the long-haul low-cost airline market.

Commenting on AirAsia X’s observations and strategies for the Taiwanese market, Azran expressed optimism: "The Taipei–Kuala Lumpur route has consistently performed well and is often one of the best-selling routes during AirAsia’s major promotional campaigns, maintaining an average passenger load factor of 77% in 2013." With the rise of the low-cost airline trend, AirAsia X also encourages Taiwanese travelers to explore more long-haul destinations, such as cities in Australia, Southeast Asia, and South Asia, all of which can be reached via Kuala Lumpur with AirAsia X.