Monday, August 07, 2006

High oil prices won’t dent AirAsia’s ambitious plans

KUALA LUMPUR: High oil prices will not put Asia’s largest budget carrier AirAsia off new routes to Indonesia, China and India as it looks to fly 15 million passengers by the end of 2007, its CEO said.

AirAsia’s Tony Fernandes, however, warned that rising fuel costs could force another round of consolidation among budget carriers in the region such as those in neighbouring Singapore.

“AirAsia has never experienced such strong passenger load. People want to fly and we will continue to offer discount prices,” Fernandes told AFP over the weekend.

“People want to fly to new places in the region. We are not seeing any slowdown in traffic volume,” he said, adding that “we expect passenger numbers to rise to 15 million in the year ending June 2007.”

The profitable carrier flew nine million passengers in the fiscal year ending in June 2006.

Fernandes said the Malaysia-based airline was keen to expand in Indonesia with first flights to Yogyakarta and Palembang, and new routes to Pekanbaru and Solo.

“There is strong demand from passengers in Indonesia” where the number of passengers is expected to soar by 50 per cent next year to three million, he said.

“We have always been bullish about Indonesia. There is also demand for Penang (in northern Malaysia) to Jakarta. I hope to get the routes,” he said.

Fernandes said despite uncertainty over how long oil prices will remain at such high levels, AirAsia would push ahead to open new destinations in China and three routes on the east coast of the Indian continent.

“High oil prices are hurting other people especially the new boys. Our cost is low and we have been around much earlier when costs of assets were low,” he said.

Fernandes said AirAsia was expected to fly to China’s Xiamen and Shenzhen by December 2006 and India early next year.

“We will thrust deep into China,” he added.

World oil prices fell on Friday, but losses were limited by strong demand, tight supplies and geopolitical tensions, analysts said.

New York’s main contract, light sweet crude for delivery in September, dropped 71 cents to 74.75 dollars per barrel in pit trading.

AirAsia has carried over 20 million passengers since it started operating five years ago.

Fernandes said AirAsia did not face any shortage of pilots.

“I am receiving five applications everyday and we have 100 cadet pilots undergoing training now,” he said.

Asked if he expected a new round of consolidation among the budget carrier operators, especially in Singapore, as oil prices rices, he said it could end up with just one budget carrier in the republic.

“It will end up with only one or one of two will become a medium-haul operator,” he said.

The two budget operators in Singapore are Tiger Airways and Jetstar Asia.

Jetstar Asia is a majority Singapore-owned company but is 49 per cent owned by Qantas. It merged with another Singapore low cost carrier, Valuair, last July, and the companies are now held by the main shareholder Orangestar Holdings Pte Ltd.

AirAsia last month said it would order 30 new A320 passenger jets to meet expanding operations, bringing Asia’s most profitable airline’s Airbus fleet to 130.

It has taken up 99 domestic routes from Malaysia Airlines under a government route rationalisation plan effective from August 1.

Courtesy of: New Sabah Times

No comments: