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30 September 2010

AirAsia’s No Fuel Surcharge Policy

By Kathleen

With cost of living rising every given moment and fuel prices threatening to shoot through the roof, I often get asked by guests who fly AirAsia, personal friends and even business counterparts: “How does AirAsia offer such amazingly low airfares?” Many even go to the extent of assuming it is just a sales gimmick to get people excited over the almost ridiculous airfares. Eventually the prices will go up, they believe, and have often elbowed me asking when we are going to charge full prices and pass the escalating costs of fuel to the passengers.

They are still waiting for this to happen.

Here’s what I say to them, “We scrapped our fuel surcharge in November 2008 and we are not bringing it back now!”

And that’s when the second barrage of questions come tumbling out. It just doesn’t make sense, does it? When other airlines are gleefully hiking overall airfare by increasing fuel surcharge and passing it down to the passengers, why does AirAsia still continue to offer the same affordable prices?

It may sound like a mystery but for me and my colleagues at AirAsia, it is a simple act of honouring the promise that we made. We were dead serious when we first came up with the phrase ‘Now Everyone Can Fly’ and are adamant in keeping our promise. It was also a very passionate long-term commitment to keeping air travel affordable. And the premise was pretty simple; in the past, less than 1% of Malaysians were using air travel because it was too expensive to catch a flight. Surely, more Malaysians and subsequently, Indonesians and Thais deserve to be able to catch a flight to visit their family, travel to study abroad, or visit foreign lands for leisure and work without having to break open their piggy bank and spend all their hard earned savings.

We wanted to change the notion that air travel was only for the well-heeled and can now proudly say that we have done exactly what we had set out to do. The fact that we are about to identify our 100 millionth guest on AirAsia within nine years of operation is clear testimony to our commitment.

But dear readers, you may still be wondering how we manage to thrive with such low fares in these trying times.

Well, we stringently maintain our No Fuel Surcharge (NFS) policy with stronger marketing and the strengthening of our ancillary business. AirAsia has embarked on a variety of methods and measures to offset worldwide rise in fuel price with incredibly strong seat sales leading our arsenal. AirAsia also derives a healthy income from other ancillary businesses such as Baggage Supersize, AirAsia Insure, AirAsia Courier, Pick a Seat and AirAsia Megastore. Last year, ancillary income for the entire AirAsia Group was approximately RM 603.5 million. As of the first half of 2010, the group’s ancillary income was RM 460.9 million. We make our money elsewhere so that you can continue enjoying our fantastically low prices day in day out. It is a win-win situation!

We are also aggressively implementing other cost-efficient measures such as Self Check-in facilities and the newly introduced state-of-the-art New Skies system that allows booking capacity of up to one million seats a day. The use of the latest in technology and a disciplined approach to cost management has worked tremendously well for AirAsia and has earned us the accolade of “World’s Best Low Cost Carrier/Airline” for two years in a row.

To further grow revenue, the airline has been monetizing its website airasia.com, which draws millions of unique visitors from around the world. This year to date alone, airasia.com has drawn more than 33 million unique visitors. The sheer volume of visitors makes the airline’s website a powerful selling platform.

There you have it. We keep our prices fabulously low by introducing innovative and exciting ways to maintain the NFS, so that you can enjoy all the benefits of travelling with us on amazingly low airfares that are not only affordable, they truly give everyone a chance to fly!