Benyamin Ismail (CEO, AirAsia X Berhad): “Strong demand for Mauritius from our China an d Australia routes”

AirAsia X expects its entry into Mauritius to impact positively on socio-economic growth. Benyamin Ismail says the airline will complement other operating full service carriers.

BUSINESSMAG. AirAsia X is the first low-cost airline flying to Mauritius. Was it easy to convince local authorities?

Mauritius government has been very supportive in facilitating the entry of AirAsia X into Mauritius and we have worked very closely with all relevant authorities.

Our past record of contributing to economic development and growth, and in creating jobs in all the countries we fly to, was recognized by the Mauritian authorities.

The approval obtained for the route clearly showed the confidence that the local authorities entrusted in our business model and our aim to contribute to the economy of Mauritius. We would like to thank all the local authorities in Mauritius for their support towards us.

We believe that AirAsia X brings much value to all Mauritians as we can connect them to Asia, Australia and beyond through our very established flight network in these regions with our very affordable low fares. At the same time, we can also bring in visitors from these regions to the world-class holiday destination Mauritius which will be sure to stimulate local tourism and economy.

We have already seen strong demand from our China and Australia route into Mauritius, and we will invest more in marketing to accelerate the demand even further.

Besides that, our entry into Mauritius also means creating more local jobs as we set up our local team, the ground service and ramp personnel, the sales team and many more which will create positive impact to local socio-economic growth.

BUSINESSMAG. Why Mauritius when you already have a big playground in Asia?

As the pioneer in long-haul, low-cost carrier, we have a very established flight network across Asia and Australia. We are currently operating 23 destinations across Asia (Tokyo, Osaka, Sapporo, Seoul, Busan, Taipei, Xi’an, Beijing, Hangzhou, Chengdu, Shanghai, Chongqing, New Delhi, Kathmandu), Australia (Sydney, Melbourne, Perth, Gold Coast), New Zealand (Auckland), the Middle East (Jeddah, Tehran, Muscat) and Africa (Mauritius).

Together with our short-haul affiliate AirAsia, we cover over 120 destinations across 25 countries, forming one of the biggest flight network in the world.

We are constantly looking to expand our flight network beyond these regions and we see Mauritius as a destination with great potential that will appeal to our guests. Now that we have established a foothold in Mauritius, we are committed to continue our marketing effort to grow this destination to ensure long-term sustainability, just like the carnival in Bagatelle and our participation in the Salon Prêt à Partir, we want to introduce ourselves to the local community in Mauritius.

BUSINESSMAG. What about the fears that AirAsia X will eat up Air Mauritius’ market share?

We believe that our entry into Mauritius will only complement other operating full service carriers in the country as we target very different market segments.

As a low-cost carrier, we operate at a very lean cost with no frills but empower our guests to make their own choice and only pay for what they need, such as baggage allowance, inflight meals, seats selection and many more. Mauritians who wish to travel with minimal basics, such as their seat with only a small bag to bring onboard, will be able to enjoy low fare to fly with us.

Besides, with our network of 120 destinations in Asia and Pacific, we are the only airline able to bring new travellers to Mauritius from fast-emerging Asia, and be part of the next generation of Mauritius growth.

BUSINESSMAG. Are you interested in the newly launched Africa-Asia air corridor?

We view the launch of the Africa-Asia air corridor in March 2016 as a great initiative by the Government of Mauritius in boosting the connectivity between both continents.

The air corridor will definitely encourage traffic flows between Asia and Africa through Mauritius. We believe our main hub in Kuala Lumpur will also be a great low-cost hub to enable travellers to connect from Australia and Asia to Africa Mauritius, where they can then continue to Africa.

BUSINESSMAG. Where do you see growth on this route?

Although we have only started operating this route for a month, we have seen tremendous potential and growing demand for Mauritius, especially from our China, Singapore, Malaysia and Australia routes.

Demand locally from Mauritians to fly with us is also on the rise as they get to know our airline better, especially after the two events that we held and which were both great successes.

We look forward to maximising our existing capacity into and out of Mauritius by investing substantially in our marketing effort for all markets.

BUSINESSMAG. A lot have been said about the level of service on low-cost carriers. What can we expect from AirAsia X?

We have a unique organisational structure and capability, balancing rigorous cost focus and discipline aimed at delivering lowest unit operating cost, industry reliability, on-time performance standards and customer satisfaction levels comparable to the ratings achieved by Asia Pacific Full Service Carriers.

As part of the biggest airline groups in the region, we have been named the World’s Best Low Cost Airline Premium Cabin and Best Low Cost Airline Premium Seat for four consecutive years at the Skytrax World Airline Awards; while our short-haul affiliate AirAsia has been named the World’s Best Low Cost Airline for eight consecutive years.

We will continue to provide exceptional services to our guests and our great product mix from the standard to premium range that can cater to all discerning needs of different guests. We are confident that our guests will enjoy flying with us.

BUSINESSMAG. Why should a frequent flyer choose AirAsia X instead of another airline to travel to and from Mauritius?

There are a lot of reasons why a frequent flyer should fly with AirAsia X to and from Mauritius. As the pioneer in long-haul, low-cost carrier means we empower our guests to choose and pay for only what they need, allowing them to customise their flying experience and enjoy our low fares.

Together with our short-haul affiliate, we are currently serving over 120 destinations across Asia, Australia, New Zealand, the Middle East and now Africa through our latest destination – Mauritius. Our guests can easily connect to any of the amazing destination that we serves such as Singapore, Bangkok, Perth, Melbourne, Beijing, Sydney and many more via Kuala Lumpur, Asia’s low-cost hub.

Apart than our extensive network, AirAsia X offers excellent product value with a great mix that caters to all travellers, such as the Premium Flatbed, Premium Red Lounge, Premium Flex, Quiet Zone, on-board gourmet experience and many more to ensure the best flying experience for our guests.

A frequent flyer of AirAsia and AirAsia X flights can also redeem flights through AirAsia BIG Loyalty Programme, which is one-of-a-kind loyalty programme where AirAsia BIG Points can be earned and accumulated through amount spent and not miles flown.

BUSINESSMAG. Mauritius is known as an upmarket tourist destination. Can low fares fuel backpacker arrivals to Mauritius?

We always encourage our guests to plan their trip ahead and book their flights when we have our promo, where the fares are cheap, so that they can spend more when they arrive at their destination. That does not mean it fuels backpacker arrivals.

Just like our extensive product offerings in other upmarket destinations such as Maldives and Sapporo, we see premium travellers flying with us. It is just that they can now do it more often, and bring more members of their friends and family to a destination.

As our first flights have shown, our travellers are flocking to the same five-star resorts that full service carrier guests are going to. In fact, our analysis shows our contribution to the local economy and job growth is higher than what we anticipated.

Other than Fully Independent Traveller (FIT), we believe that our low fares can also appeal to family or friends travelling in group, as the savings will multiply as they travel in group, so that they can spend more on hotel and shopping as they arrive in Mauritius.

Our extensive product mix can also appeal to business traveller who is willing to spend more to fly on our award-winning Premium Flatbed, where they can enjoy greater comfort.

All-in-all, we believe that we cater to a segment of guests who are happy to save more on flights to spend more on ground.

BUSINESSMAG. Tell us more about your plans for Mauritius and the Indian Ocean region.

We will continue to stimulate demand through investing heavily in marketing and maximise our capacity into and out of Mauritius. Once this route has stabilised and matured, we might look into expanding the route to Indian Ocean region.

BUSINESSMAG. The company has been turned into Asia’s biggest discount carrier after it was bought for 1 ringgit. This is already a major achievement. From here, where do you want to go?

We aspire to be the leading long-haul LCC globally.

BUSINESSMAG. Profit at AirAsia X rose 41 per cent in the second quarter. What are the main drivers of growth for the company?

Capitalising on sound business strategy, AirAsia X recorded its first second consecutive quarter of profit since inception earlier this year, boosted by strong re-venue growth of 35% year-on-year (“YoY”) to RM883.2 million on the back of 71% YoY increase in scheduled flights revenue, due to stronger demand as the quarter ended with a 75% load factor, up 7 percentage points YoY. This was despite Available Seat Kilo-meter (“ASK”) surging 17% YoY to 6,682 million from 5,693 million in the same period last year following increased frequencies on high-traffic routes.

We have benefited from the low fuel environment and hedged all our remaining requirements for this year based on planned existing routes, which has certainly allowed us to better manage cost while exploring new strategic routes. As a result, we trimmed CASK by 2%, however, the weakening of Ringgit prevented further cost reductions as most of our costs are denominated in USD.

Our focus is to keep this positive momentum throughout the year but we remain cautious of things beyond our control such as currency volatility, regulatory uncertainty and other external headwinds that are expected to persist. Based on the current forward booking trend, the number of passengers to be carried going into the second half of 2016 looks encouraging. We are also happy to note that forward loads and average fares are also better than the previous year.

BUSINESSMAG. Why are you considering the sale of your leasing arm?

Unfortunately we are not in a position to comment on this.

BUSINESSMAG. What would be your advice to Air Mauritius with regard to its plan to set up a regional African airline?

Unfortunately we are not in a position to comment on this.

BUSINESSMAG. What would it take for AirAsia X and Air Mauritius to team up instead of being rivals?

We are open for any opportunity to work together with any airline provided that the plan will be mutually beneficial and offer added value to our guests.