Airlines in the Asia Pacific region are expected to suffer US$27.8 billion revenue loss in 2020, the bulk of which would be borne by carriers registered in China with $12.8 billion lost due to the coronavirus (Covid-19), said the International Air Transport Association (IATA).
(Update: On 5 March IATA updated its analysis of the financial impact of the coronavirus and now sees 2020 revenue losses in Asia Pacific – Australia, China, Japan, Malaysia, Singapore, South Korea, Thailand, Vietnam – at US$$49.7 billion, and global revenue losses of between US$63 billion and US$113 billion.)
This rather dire forecast has led some airlines in the region to come up with deals to fill seats, as well as to stimulate travel. AirAsia X, the long-hau budget arm of AirAsia, has launched the ‘AirAsia Unlimited Pass’ that offers limitless year-long flights within Asia Pacific for only RM499 (US$119.89 – exchange rate at time of writing).
Passengers who purchase the pass can fly as many times as they want from Kuala Lumpur to Australia, India, China, South Korea and Japan from 2 March 2020 to 2 March 2021 (updated: from 2 March 2020 to 30 June 2021). Flights are on AirAsia X and Thai AirAsia X.
The sale of the pass started on 29 February and will end on 7 March (23.59hrs Malaysian time).
While travel is unlimited, the tantalising deal does come with various terms and conditions. Among them:
• The pass is only available to Malaysia-based AirAsia BIG members (AirAsia loyalty programme)
• Passengers will still have to pay government taxes and fees, adds on and other charges.
• The pass is not available to be purchased by travel agencies or any parties other than individual BIG members.
• Bookings must be made at least 14 days before departure.
• Passengers are allowed up to three no-shows, and if a passenger exceeds that number AirAsia has the right to cancel/forfeit the pass without any liability on its part.
Despite these limitations AirAsia X Malaysia CEO Benyamin Ismail described the promotion as “unprecedented”, adding that “AirAsia has always been known as the disruptor and we want to restore traveller’s confidence amid the current sentiment towards flying.”
He stressed that “travelling is still very safe as long as everyone travels responsibly and is kept updated by World Health Organisation (WHO) or respective government’s travel advice.”
Benyamin said with the travel period spanning a year, pass holders can decide when best to travel, choose to explore any of the available destinations or keep going back to the same location. “The choice is yours.”
The pass, however, does not include short-haul flights on sister carrier AirAsia. The airline declined to comment when WiT asked the reason for this exclusion.
As to how many AirAsia BIG members have taken up the deal AirAsia replied: “We have received an overwhelming response for the AirAsia Unlimited Pass over the internet and on its sale. This is a great product for frequent travellers and we urge all Malaysia-based BIG members to grab this opportunity while it lasts.”
Neither would the airline comment on the revenue expected from sale of the pass. Whatever the amount it will definitely help to boost the company’s bottomline, which is impacted by Covid-19.
Acknowledging challenges, deploying plans to ensure sustainable business model
The company “expects major headwinds for the first half of 2020 amidst the outbreak of novel Covid-19 on top of the persisting global economic slowdown, as well as irrational competition within the local aviation industry,” stated AirAsia X group CEO Nadda Buranasiri when presenting AirAsia X’s 4Q19 and FY2019 financial results late last month.
“A downtrend has been observed on passenger bookings in the forward months, as all tourism-related businesses face the impact of the Covid-19 outbreak. It has impacted AirAsia X particularly as we are one of the largest foreign airlines operating into China, a market that represents 30% of our capacity,” he added.
The carrier reported a revenue of RM1.2 billion during the quarter reviewed, an increase of 4% year-on-year (YoY) from RM1.15 billion in the same period in 2018 on the back of a higher number of passengers carried during the final quarter of 2019. In 4Q19, 1,614,764 passengers were carried, up by 8% YoY as compared to 1,498,618 passengers carried in 4Q18.
For the full year (FY2019) revenue stood at RM4.39 billion, 4% YoY lower against 2018 (FY2018) revenue of RM4.57 billion. The airline attributed the drop to lower number of passengers carried during the year due to the uncertainty surrounding the macroeconomic slowdown across the globe.
CEO Benyamin revealed AirAsia X is deferring the deliveries of 78 Airbus A330neo as part of an ongoing effort to cut costs to combat the effect of Covid-19. The company plans to operate a dual-fleet type strategy with the A321 aircraft to replace the A330s on routes within a six-hour radius of the Kuala Lumpur hub when the market recovers.
“The Company will be aggressively suspending a number of routes to ease cash flow in this current period of low air travel demand, as well as engaging in short-term wet lease arrangements for the aircraft within the Company’s fleet.” (Full financial results here).
Note: If you have purchased the AirAsia Unlimited Pass, the airline has a guide to help you plan your travel.
• All images credit: AirAsia
