With its confident expansion and bold branding, AirAsia has its sights set on conquering the world.
'Now everyone can fly' is the slogan of upstart airline AirAsia, which, in just 10 years since its founding, has risen to the top of the world’s low cost carriers. Recognized by airline review site Skytrax in each of the last three years as the ‘World’s Best Low-Cost’ airline, AirAsia also holds the distinction as the airline with the world’s lowest operating cost per kilometer flown, and the first airline in Asia to implement fully ticketless air travel.
How have they done it? For context, in much of the Asia-Pacific region, regulatory protections and subsidies for state-supported carriers have reduced competition, keeping prices high, limiting routes and flight options. For example, a roundtrip ticket for the two and half hour flight between Tokyo and Seoul regularly costs at least twice as much as the similar length flight between New York and Chicago. Low cost carriers have started to take advantage, including Australia-based Jetstar, Singapore-based Tiger Airways, and Malaysia-based AirAsia. For AirAsia, their model of low operating costs, a strong brand, and point-to-point route network have moved them a step ahead of both the incumbents and their low-cost peers. The result is dozens of new intra-Asian routes within countries including Thailand, Laos and China that didn’t exist before, with over one hundred million travelers served in 10 years – 60 percent of whom had never flown before.
According to Kathleen Tan, Regional Head of Commercial for AirAsia, the airline’s creative approach began with its route network. “Because a lot of us are not originally from the aviation industry, we don’t have that set way of thinking about how you plan the routes,” she explains. The ‘set way of thinking’ Tan refers to involves having a small number of ‘hubs’ in major cities, through which most flights must travel. In contrast, she says, “We fly to where no one wants to fly, to a lot of second-tier cities. If you’re on an island-hopping holiday and want to travel from Bali to Phuket, why should you have to go through Jakarta or Bangkok first? We link them together directly.”
Tan places a particular emphasis on AirAsia’s impact on Chinese travelers’ ability to travel within their own country – also a priority for the Chinese government as it tries to grow its nascent domestic tourism industry. “We’re changing the way travel is being consumed in China,” says Tan, “and we create new markets wherever we go. We fly to the underserved locations, to the south of China, to the places no one has heard of. In China, we don’t fly to Beijing, we don’t fly to Shanghai, but we fly to the home of the Panda Bear [Chengdu].” AirAsia’s operations have also benefited from China’s new high speed rail system. “In China, the bullet train is so huge, we can link cities,” explains Tan. “And since the bullet train from Hangzhou to Shanghai is less than a couple hours, we can fly to the former at a very low cost and make it a gateway to the latter.”
In branding, which Tan also cites as a creative differentiator, AirAsia places a strong emphasis on giving off a fun, hip vibe. “Ten years ago we started out with two aircraft, and we didn’t have a lot of money to spend on marketing, so we had to think really out of the box. When the opportunity came to sponsor [UK soccer team] Manchester United, we dedicated one plane’s livery to them. We did the same with the [NFL’s] Oakland Raiders. This got us a lot of attention in the press and showed that we think differently when it comes to branding.” This stands in contrast to legacy carriers in Asian markets, often renowned for exceptional, polite service, understated marketing and immaculately refined flight crews.
One of AirAsia’s next initiatives will be a major move into Japan, where regulations have taken a particular toll on air travel. “Although Japan is seen as a modern country, the regulations are still really traditional,” says Tan. “Even domestic travel is very expensive in Japan. But especially in light of what Japan went through last year, there’s a growing willingness to grow tourism, and so the timing is great for AirAsia to launch a low cost airline for the Japanese market. It will bring a lot of tourism.” AirAsia hopes to open up several new Japanese domestic routes – including to Sapporo, Okinawa, and Fukuoka – and offer lower fares on existing routes, as it has done in other markets.
If you like what you’ve heard about AirAsia but don’t visit the continent much, you still might be in luck. When asked if AirAsia might expand its model to become more of an ‘AirWorld,’ Tan responds enthusiastically. “We want to dominate the world. We can bring one brand, one style to joint ventures around the world. We want everyone to fly.”