The head of the Malaysia-based long-haul LCC talks about Asia’s surging demand for air travel and his focus points with Air Transport World Editor-in-Chief Karen Walker.
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Rush Transcript:
Karen Walker: Hello everyone and welcome to Window Seat, the Aviation Week Network Air Transport podcast. I'm ATW and Group Editor-in-Chief Karen Walker, and it's great to have you on board. This week it's my great pleasure to be joined by Benyamin Ismail, the CEO at AirAsia X. Ben, thank you so much for joining me today. And we're meeting actually, in Kuala Lumpur where Ben is a speaker at the CAPA Asia & Sustainability Summit. Now, AirAsia X is a long-haul low-cost airline based right here in Malaysia, part of the AirAsia Group. It started operations in 2007 and has a fleet of Airbus A330s. Ben, this has been a really good year for AirAsia X, financially and operationally. Can you just talk through some of the highlights for me, please?
Benyamin Ismail: Hi, sure. First of all, thanks for having me on this podcast. Yeah, I think coming into 2023, it's been a very relaxing, and more progress in terms of the airline. I think in the last three years it hasn't been easy during COVID and coming out of COVID. But the good thing is I think in terms of demand we are seeing in terms of Southeast Asia where generally we're kindly slightly behind in terms of a year in terms of market opening, we've seen that the demand has come back in generally most of Asian region and some of the countries that fly into Asia.
Benyamin Ismail: But I think the good thing about me for the last three quarters, actually four quarters, we've made profitability in terms of the company. And I think in terms of load factor. We're pretty much close to pre-pandemic levels where we're sitting at about 83, 84% load factor. And on the positive side, in terms of average fares, we're up about 80%, which is good. It is good for the airline, it is about time the airlines do make money, but for consumers, it's something that it's a bit more harder now. But I think generally the whole industry in terms of aviation, you can see that fares is trending up.
Karen Walker: And yeah, talk about some of the trends within that. You just mentioned higher load factors, demand coming back. Obviously, in AirAsia that took a little longer to come back because restrictions post-COVID were longer to lift. But we've seen the same trend here that we've seen in other areas like Europe and America of as soon as those restrictions lifted, people wanted to fly. Have you seen any shifts, where are the hot markets? Where do people want to travel and how is that business versus leisure?
Benyamin Ismail: Yeah. I think inside of this region I've been more, I would say Asia-Pac. I think Europe and US was probably one of the first markets to open up and when they opened up, it was more of a continent. While in Asia-Pac it's country-specific. So I think for us, India was probably one of the first people to open up, then some of the Asian regions, then Malaysia, then Australia, then of course Japan, and Korea. So massively I think of all that, but it all didn't happen in the span of one month. It was over a process of about six to eight months.
Benyamin Ismail: So really I think it also ties up perfectly in terms of bringing aircraft back into the system because you can't bring so many aircraft in one go. But the good side is, I think this, markets are hot markets in terms of where we are flying now. Some of the hot markets are of course, India. I mean that really filled the gap for China who hasn't really fully opened up terms of travel. Then of course, the Australians, the Japanese, the Koreans, all these markets are massive. And let alone Asian as a market, Indonesia, Thailand is massive. So I think they coming through Kuala Lumpur and connecting to our flights to go into the more longer flights, so we've seen that. So really I think those are really the hot markets for us at the moment.
Karen Walker: And as other areas where we saw demand coming back, we also saw a lot of operational problems, labor shortages, air traffic control. I haven't really seen many headlines about that in Asia. Can you just talk to me a little bit from your airline perspective in terms of as you ramped everything back up, operationally, did it work okay?
Benyamin Ismail: Yeah. I mean, I think, I would say that it is been smooth so far, but I think the key thing is really, I think when COVID started, as everybody thought it would probably be a two or three-month kind of bug, but of course that expanded to about two and a half years, to three. But in an airline business, you can't just not do anything. So we had a numerous backroom of teams and management where we had close to a hundred business plans, where, when are we going to start? What happens when this opens, that opens? So we really had all kinds of options. So really that also involved manpower cutbacks.
Benyamin Ismail: So really at the point where we thought that COVID was going to be on the longer side, we cut a bit of the manforce. And really, what happened then, and we also kind of predicted how many people do we need at this current time, and how many people that we have that room to let go. But the key thing as well is the communication we have with these people. One of the key things that we did was when we said to them, whenever we do come back when the market do open, you'll be the first people we call up. So when that happened, I would say that about 70 to 80% of cabin crews and pilots did come back. So I think on that side, in those operations, we don't see any constraints at the moment.
Karen Walker: The A330 works well for you on your network?
Benyamin Ismail: It's great. I mean that's the only aircraft I have. But I think as in the AirAsia realm of things, the aviation side operates A320s, they go up to four hours and while us the A330s, we go at anything four hours and beyond. But of course, there are routes that we complement AirAsia where those markets, it require big A330s to come in as well to support the likes of Bangkok, the likes of Bali, and Hong Kong where we come in as well. But generally, yeah, to answer your question, yes, we are just a pure A330 operator.
Karen Walker: Just on the, like I said, there's a lot of good news there. And can you just talk maybe on some of the challenges side, particularly you're a carrier, so costs are very important, even when you've got great load factors, et cetera? Particularly we're seeing oil prices high at this stage. What are the things that you're most keeping an eye on?
Benyamin Ismail: Yeah. I think in terms of the DNA of the low-cost carrier, for any low-cost I think cost is very important. We've always been looking at avenues to reduce costs, but of course, fuel and currency is something that is beyond our control. But there's ways of trying to maneuver that as well. I mean in terms of fuel, you can do a lot of operational efficiencies, for example, you do one, Taxi, push-backs, you do tankering through flights where you go to a market where you upload more fuel in the cheaper markets, the way the pilots fly, the routings and all that, that saves a lot of fuel.
Benyamin Ismail: Secondly, as well, in terms of operational, in terms of ancillary, for example, food, we're trying to encourage people to pre-book kind of food. Trying to encourage people to buy their baggage up front because that kind of gives you the ability, one is food wastage that reduces costs. Secondly as well is you can upfront predict your fuel requirements if you what kind of baggage coming in. But generally, I think throughout the whole organization, I think for us it's always about cost and we just came out restructuring as well. So company's pretty lean, so we just have to make sure that we maintain that kind of levels.
Karen Walker: And then looking ahead to '24, where were your key priorities and focus areas, B, are you looking, is there more restoration of the network or growth into new areas? Where's your focus for the next year?
Benyamin Ismail: Yeah, I think for this year, and I think a bit of last year, the strategy was just to get at least one foot in into most of the markets that we used to operate. I can safely say that now we've pretty much gone into most markets, most countries, regions. And I think now it's just trying to ramp our capacity as we bring more planes in to give it more optionalities for passengers to choose whether because we have one or two flights a day will be great. By the moment, we have minimal flights in some of the destinations. So I think the key thing is to create more growth, then that equals to connectivity for the group. So the next year, potentially once we fulfill that strategy in terms of critical mass, then we can start opening new routes where we feel that it's a lack of demand.
Karen Walker: Excellent. Well, Ben, I wish you and the AirAsia X team, and in fact all of AirAsia, a very successful '24. It's really great to be here in Asia and see just how dynamic everything is. Again, great to see, and really great to meet you, and thank you for your time today.
Benyamin Ismail: All right. Thank you very much for having me. And I'll see you around.
Karen Walker: Absolutely. So thank you also very much to our producers, Andrea Copley-Smith, Cory Hitt, and Guy Ferneyhough. And of course a big thank you to our listeners. Make sure you don't miss any of our weekly programs by signing on at Apple Podcasts or wherever you listen. This is Karen Walker, disembarking from Windows Seat.
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