AIRASIA, the Southeastern Asia region's biggest budget airline, can remain profitable even if world oil prices hit US$200 a barrel, Chief Executive Tony Fernandes said yesterday, allaying concerns that it may be hit by rising fuel costs.
AirAsia has no plans now to raise fares or fuel surcharge, but it will stick with plans to grow its regional route network, expand on-flight sales to boost income and seek lower charges from airports, he said.
"We are comfortable even with oil at US$200 (a barrel). There is a silver lining. We have taken a very different approach in that we will market ourselves out of this problem," Fernandes told reporters on the sidelines of a two-day global economic forum in Kuala Lumpur, Malaysia.
"We think that just putting your head in the sand and crying about oil and cutting routes is not the solution."
After surviving the 2003 SARS epidemic, which he described as "a lot worse" than the current oil crisis, Fernandes said AirAsia can benefit from a consolidation in the airline industry.
"The silver lining is that everyone is going to be in a lot of pain. There will be more rational competition... There will be less people wanting to open a budget airline now," he said. He acknowledged, however, that AirAsia may have to revise fares if oil prices breach US$200 a barrel.
Airlines have been struggling to contain costs this year as oil prices stay above US$130 a barrel. Scores of start-up carriers have gone out of business and several major carriers have raised fuel surcharges, cut capacity and deferred plane orders or shed jobs.
Fernandes said AirAsia will launch four more new routes over the next two months.
To ease the fuel-price burden, he said the company will expand its food menu and sell more in-flight products and services to its 22 million annual passengers.
"You can use your mobile phones on the plane soon, send SMS," he said.
"We are going to sell more things, more duty free (products). We will sell washing machines if we have to. There are many things we haven't done. In a crisis like this, you become more innovative."
AirAsia will also benefit once the lucrative Kuala Lumpur-Singapore route, the fourth-busiest route in the region, is fully liberalized in January, Fernandes said.