AirAsia Boss Predicts High Airfares to Persist Amid Travel Boom
High airfares are expected to continue as travel demand remains strong post-pandemic. AirAsia’s CEO, Bo Lingam, highlights robust demand and supply chain constraints as key factors while revealing expansion plans and new aircraft orders.
Photo Source: AirAsia
High airfares are likely to remain a fixture of post-pandemic travel as demand continues to soar, according to AirAsia Aviation’s Chief Executive Officer, Bo Lingam. Despite potential relief from declining jet fuel prices and increased flight capacity next year, Lingam believes airfares will not revert to pre-pandemic levels anytime soon.
“My load factor is around 90% — this was unheard of pre-Covid,” Lingam stated during an interview at AirAsia’s headquarters in Sepang, Malaysia.
The aviation industry has been transformed by a surge in pent-up travel demand post-pandemic, leading to ticket prices rising faster than inflation globally. Additionally, supply chain issues, including aircraft delivery delays and unplanned engine maintenance, have hampered airlines’ efforts to expand flight operations.
AirAsia aims to leverage this demand to establish the world’s first low-cost carrier network by 2030, using its Southeast Asia hubs. This year, the airline has added flights to Almaty in Kazakhstan and launched operations in Cambodia, with plans to begin flights to Nairobi, Kenya, in October.
AirAsia’s long-haul routes will be served by Airbus SE’s new long-range A321 models, which offer cost-effective operation. Lingam revealed plans to convert their entire 377-plane orderbook to the A321 LR models and to order an additional 50 XLR models.
“The cost of operating the aircraft is much cheaper — at least 25% to 30% cheaper — because it’s single aisle and you don’t need to worry about filling up 500 seats, as opposed to 240 seats,” Lingam explained.
Despite founder Tony Fernandes transitioning to an advisory role post-merger, Lingam emphasized that there will be no operational changes. Having worked with Fernandes for over three decades, Lingam is preparing to transfer his expertise to deputy CEOs Chester Voo and Farouk Kamal over the next five years.
Lingam also highlighted key financial moves, including raising $400 million in debt financing and 1 billion ringgit ($212 million) through equity post-merger. AirAsia plans to refinance its dollar debts into ringgit and seek lower interest rates after its removal from the financially distressed classification on the Malaysian stock exchange. The airline is also in talks to start a unit in Vietnam, adding to its operations in Malaysia, Thailand, the Philippines, Indonesia, and Cambodia.
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