"A full plane with low yield is better than a half-empty plane with high yield"

Mumbai: "My whole life has been about changing consumer behaviour," Tony Fernandes, founder and CEO of AirAsia, Malaysia's low-cost airline says when told that Indians are last-minute buyers. He will be in the city this week to launch affiliate carrier AirAsia X's flight to Kuala-Lumpur. "Malaysians did not book early or online when AirAsia launched in 2001. Why should a passenger book early if there is no incentive. Now 85% Malaysians book online." The cheap-ticket bait to book early and online has worked across the price-sensitive Asian markets of Laos, Vietnam, Indonesia, Cambodia, and it will work in Mumbai as well, says the CEO whose company slogan is "Now Everyone Can Fly".
With 30% seats sold at very low fares, how does the airline manage its yields with all the cheap pricing? "We don't think about yields, we think about revenues. A full plane with low yield is better than a half-empty plane with high yield. I think that when a plane takes off and one seat is empty, it's revenue lost forever," Fernandes says.
He won't reveal how he kept red ink off his balance sheet (net profit of $161 million for the year ending December 31, 2009) despite cheap fares and the never-ending fleet acquisition spree (two aircraft in 2001, 92 in 2010 and by 2015, 120 more planes).
How low could Mumbai-Kuala Lumpur fares get? "Between Rs 99 and Rs 200, taxes inclusive. We will sell out for nine months then." The next sale is tentatively scheduled for August. So what should an Indian flyer do to net a cheap ticket? "Register on Redalert on AirAsia website (it has 5 million users) and you will be the first to know about a sale," he says. Currently, the Mumbai-KL route is sold out for the month of May and most of June.
05/05/10 Manju V/Times of India

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Categories: Foreign May 2010, Low Cost General May 2010