AirAsia: Spinning a World Wide Web

AirAsia stole the headlines at the biennial Paris Air Show held in June, inking the largest ever order of Airbus' A320 aircraft, a deal worth US$ 18.2 billion.

The move reflects the strength in the region's tourism industry. According to the World Tourism Organization (UNWTO)'s recently released figures, 2010 saw an 12.7% y-o-y increase of international tourist arrivals to Asia and the Pacific, reaching a historic high of 203.8 million, nearly four-fold that just a decade ago. The double-digit increase is also nearly double that of worldwide tourism growth numbers, confirming the strength of the regional tourism sector.

International arrivals to Thailand grew 12% to reach 15.8 million tourists in 2010. "When you look at the total passenger volume at Bangkok's Suvarnabhumi International Airport last year," said Thai AirAsia CEO Tassapon Bjleveld, "we [Thai AirAsia] accounted for 7% of all international traffic, trailing just behind the national flag carrier Thai Airways, and ahead of other major airlines such as Cathay Pacific, Emirates, and Singapore Airlines. Look at the low cost sector, 56% of all flights in and out of Suvarnabhumi were on our planes".

It's a lead that has undoubtedly caught the attention of other airlines, who are scrambling to get in on the action. Thai Airways is joining forces with Tiger Airways to launch a yet-unnamed LCC to take to the skies in Q2'12, and the Indian LCC IndiGo also placed an 150-plane order for the A320neo at the same air show last month, all undoubtedly to compete on similar intra-regional routes. "I don't see them as a threat," says Bjleveld, "we're competing with ourselves. We already have first mover advantage, so it's more about how we manage ourselves".

One of Thai AirAsia's main advantages is the convenience it offers by setting up domestic hubs, with Bangkok, Phuket, and Chiang Mai already up and running and more in the pipeline. Unlike other airlines that park planes overnight at airports around the country, a hub removes the need to have one main centre. Engineering, cabin crew, spare parts, and manpower are in place at all the bases, which paves the way for more direct routes to various destinations.  "It will be like a spiderweb," explains Bjleveld, "which will be more affordable, and with no transits, less time consuming and more convenient for our passengers". The AirAsia network currently covers 82 cities across 24 countries worldwide - astronomical growth considering the company's inaugural flight in Malaysia was just 9 years ago in November 2002.

One tourism source market to Thailand that's seeing exponential growth is India. With 800,000 visitors in 2010, the Tourism Authority of Thailand has initiated several campaigns to increase this to 1 million visitors by 2012. From its Phuket hub, AirAsia offers direct flights to Mumbai and New Delhi, with plans to introduce a direct flight to Kolkata, a destination already served by the Bangkok hub. The plans were in part due to a survey the airline conducted, which revealed that 45% of its guests from Kolkata transited to Phuket from the capital. "Phuket is a preferred destination for Indian weddings," Bjleveld said, "they want to get married on the beach". Of the several high profiled Indian weddings to have taken place on island, the one that garnered the most attention was for the daughter of an Indian industrialist, a wedding that saw a reported 700 guests being flown in for the 3-day bash. The popularity of Phuket brought in a record 3.5 million international arrivals in 2010, and the spread of Thai AirAsia's wings from its hub will bring in more visitors to enjoy the island's tropical idyll.

Thai AirAsia plans to list on the Thailand Stock Exchange in Q4'11, an IPO that is expected to raise US$ 150 million for further expansion. With ticket fares averaging an affordable THB 1,796 (USD 59) in 2010, the company's slogan of "Now Everyone Can Fly" is not a far cry from reality.

By Tina Hsiao & Jules Kay