The enduring era of high airfares amidst the global travel resurgence following the pandemic shows no signs of abating, as indicated by the top low-cost carrier in Asia.
Despite expectations of a slight relief for travelers next year due to declining jet fuel prices and increased flight capacity, AirAsia Aviation’s CEO Bo Lingam, who will lead the newly formed AirAsia Group post the merger of the company’s short and long-haul operations in September, foresees that airfares will persist at elevated levels for the foreseeable future given the robust demand.
Lingam, 59, noted that the current load factor of around 90%, which surpasses pre-Covid levels, underscores the unprecedented market dynamics at play.
The surge in travel demand post-pandemic has reshaped the global aviation landscape, propelling ticket prices higher than inflation in many regions. Moreover, airlines have been grappling with supply chain challenges, from aircraft delivery delays to unplanned maintenance, resulting in constraints on flight availability.
AirAsia is capitalizing on this demand surge to realize its vision of establishing the world’s inaugural low-cost carrier network by 2030, leveraging its Southeast Asia hubs. Recent expansions have seen the introduction of flights to Almaty in Kazakhstan and the launch of operations by its Cambodian unit, with plans underway to commence flights to Nairobi, Kenya, starting in October.
To cater to long-haul routes, AirAsia will deploy Airbus SE’s new long-range A321 models, offering extended range at cost-efficient operations. Lingam indicated the company’s intent to transition its entire 377-plane order to A321 LR models while placing a separate order for 50 XLR models, highlighting the operational cost efficiencies of single-aisle aircraft.
Amidst founder Tony Fernandes transitioning to an advisory role post-merger with a focus on non-aviation ventures under Capital A Bhd, Lingam affirmed that there will be continuity in AirAsia’s operational approach.
Looking ahead, AirAsia aims to secure at least US$400 million in debt financing and 1 billion ringgit ($212 million) through equity post-merger completion. The company is strategizing to refinance dollar-denominated debts into ringgit and exploring opportunities for reduced interest rates after being relieved of financial distress classification on the Malaysian stock exchange.
While contemplating the establishment of a new unit in Vietnam to complement its existing footprint in Malaysia, Thailand, the Philippines, Indonesia, and Cambodia, AirAsia has no plans to venture beyond Southeast Asia with additional units.
