Malaysian long-haul low-cost carrier (LCC) AirAsia X will focus on getting its business model right, rather than on competing with similar carriers that have sprung up in recent months.
The key to succeeding in the long-haul business, is to maintain high aircraft utilisation and load factors to bring down unit costs, said its CEO Azran Osman-Rani at an interview with Flightglobal Pro.
He shared that the airline's unit cost per available seat kilometres (ASK) last year was 3.5 cents, much lower than the 9 cents legacy carriers typically operate at.
"That's a huge unit cost advantage," said Osman-Rani, adding that the airline's load factor was also slightly over 80% in 2011.
"As long as you can beat the load factor of a full-service carrier, that's when it [the advantage] kicks in. And that ability to drive that volume - this is where the critical difference to me is being part of that AirAsia brand and network," he said.
"It's very hard to do that as a stand alone airline with a completely new brand without a feeder network. If we were only to rely on point-to-point traffic, there's no way you can get a 80% load factor."
The carrier also has an advantage over full-service carriers with its 17-hour aircraft utilisation - the average utilisation of legacy carriers flying long-haul stands at around 13 hours - and a higher seat density.
When asked about Singapore Airlines' subsidiary Scoot and the Philippines's LCC Cebu Pacific getting into the long-haul business, Osman-Rani believes the entry of the airlines will not have a huge impact on AirAsia X.
"It's the same argument that people threw at AirAsia when other LCCs came in basing out of Singapore. How has that affected AirAsia? Since then AirAsia has pretty much doubled in size because fundamentally, the demand is there," said Osman-Rani.
The carrier will focus on maintaining low costs, growing its brand and network and having an on-time performance and reliability rate that beats even top Asian full-service carriers.
"There's a lot that went into four years of figuring out how to make this work operationally. It's not something that can be easily replicable. You can copy our flight schedule and seat density but there's a lot more to it that makes the model work," he said.
"I think a lot of people will have to go through a steep learning curve," he added.
Source: Air Transport Intelligence news
