AirAsia: Growing, and Out to Change Travel.
By Yeoh Siew Hoon
Monday, 3rd August 2009
Our writer catches up wth Kathleen Tan, head of commercial for the airline group that's out to change even more the way we live, work, play and travel in Asia – and especially the way we buy travel.

Kathleen Tan (second from right) with her AirAsia team. Courtesy of AirAsia

AirAsia is expanding so fast these days that even Kathleen Tan herself has trouble keeping up.

When I arrived for our rendezvous recently, the head of commercial for the AirAsia group was busy scribbling away in her notebook the number of flights the airline now has between Singapore and Malaysia.

Since the two governments opened up the skies between these two neighbours who love and hate each other in the same breath, low cost airlines like AirAsia have been stepping up flights and opening up new points like nobody's business.

Except that it is everybody's business of course because one thing AirAsia has done is changed everybody's lives in Malaysia, and is now out to do the same in Singapore, Indonesia and Thailand where it operates hubs.

As an indication of AirAsia's growing influence in the region – it flew 18.8 million passengers last year and is expecting to reach 24.4 million in 2009.

From a mere two flights a day between Singapore and Kuala Lumpur in February, it is now up to 13 flights a day to Malaysia – Kuala Lumpur, Penang, Kota Kinabalu, Kuching and Langkawi. Recently, it announced two more connections to Miri (Sarawak) and Tawau (Sabah), which it will operate from September.

What I find most exciting about AirAsia are the routes it is opening up – sectors which are already changing the way we work, live, play and travel in Asia and how longhaul travellers will discover Asia.

Just like in Europe, when RyanAir first entered the picture and changed the way Europeans travelled, it is enabling us to work and live the way we want to. Tan, for instance, who is Singaporean is now commuting between Kuala Lumpur and Singapore where she spends weekends.

With low cost flights to my hometown, I too can now commute between Penang and Singapore, and so can my mother and sister. We in Asia can now attend weddings, concerts and plays in each other's cities whenever we feel like it.

Longhaul travellers can fly into any of these hubs and hop around ASEAN for a fraction of the price, just as the savvy Asian traveller is doing in Europe.

"I think it helps that we have four AOCs," says Tan, referring to the four different airlines AirAsia operates under its wing – AirAsia X, Thai Air Asia and Indo AirAsia. "We can feed longhaul passengers into our regional networks and we are really feeling the growth."

It also has a "whole lot of planes" to keep in the air, as she puts it. It recently placed orders for another five A350s, with options for another five. That's on top of the 175 A320s, the 25 A330s for AirAsia X and the 2 A340s it has on lease for its London flights. "Having a lot of planes is good, it can really help us build."

And it is making the most use of this downturn to build, market and innovate. In times like these, Tan says, companies like Courts, Walmart and food courts thrive. "Corporate customers are calling us. In the past, a lot turned their noses up at us. Now they have crossed the hurdle and finding it's not so bad.

"There's a lot of upside for us. We are building our network and frequency so that when the good times come back, it's all there."

As someone who used to have to fly for business all the time, she knows what low cost airlines have done to empower travellers in ASEAN. "I used to pay $12,000 to fly to Barcelona and I wouldn't use all the features. More people now just want to get from A to B.

"The low cost airlines serve a segment of people who want to fly but can't afford to. I come home every week now. I see the same people on the flight."

More than changing people's travel patterns, it's also changing the way people buy travel. In its home base, AirAsia enjoys direct sales of close to 80%. In Singapore, it is seeing the same take-up. In Australia, nearly all its sales come through the Web.

"This is good for tourism. I tell tourism ministers, you need a paradigm shift in the way you market – they do travel fairs and trade shows, all B2B stuff. Travel agents are not able to do a lot to stimulate tourism quickly – a lot of customers are repeats.

"We are empowering people to plan their own itineraries. We are seeing new travellers – youths and retirees. The young are recession-proof, they don't fear viruses, and even the older ones are learning to search the Web for good deals."

In Singapore, it does not sell through travel agents. "Singapore agents are very spoilt, they expect us to pay commissions," she said. "In Malaysia, agents are more resourceful and have changed their business model."

As it expands, the airline continues to innovate. It launched the world's first low cost courier service, "Red Box", powered by DHL recently. Customers can now order food online and it is seeing a pick-up in food orders. It is allowing online and mobile check-in. Business travelers can book "Hot Seats".

"We try to do everything online," says Tan.

It has groups on Facebook (30,000 followers) and Twitter. It tweets about deals and operational matters, including alerting customers to potential flight delays. It also enables staff to keep in touch with each other. "If I didn't use Twitter, I wouldn't know that Tony (Fernandes) has lost 2kg. We tweet to keep up with each other," says Tan.

It has four people in its interactive team to handle blogs, social networks and reviews. "You have to engage these platforms. It's very tedious sometimes. You have to take the good and the bad, but it's necessary.

"The reason why some companies struggle with social media is because the person at the top is a digital dinosaur. It helps that Tony is such a techie."

In his latest blog, Tony writes about his experience on Singapore Airlines' A380 first class suites and shares why he thinks Singapore does things much better than Malaysia, somewhat quite unexpected from someone who is used to slamming Singapore, SIA and any of his competitors.

Perhaps that's why AirAsia is the airline to watch. It dares to do things differently.

Yeoh Siew Hoon, one of Asia's most respected travel editors and commentators, writes a regular column on news, trends and issues in the hospitality industry for 4Hoteliers.com.

Siew Hoon, who has covered the tourism industry in Asia/Pacific for the past 20 years, runs SHY Ventures Pte Ltd. Her other writings can be found at www.thetransitcafe.com

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