Budget airline AirAsia expands in-flight menu, merchandize to offset higher fuel costs

Kuala Lumpur, Malaysia – Budget carrier AirAsia on Wednesday unveiled plans to boost income with a wider in-flight Asian menu and offering online merchandize to help offset rising fuel costs.

AirAsia, the region’s biggest low-cost airline in fleet size, first introduced a limited menu of hot meals on its flights three years ago, which has proven to be a best seller, said Chief Executive Tony Fernandes.

It will add other popular Malaysian, Indonesian and Thai fare such as chicken rice, yellow glutinous rice and “satay,” or meat on skewers, on regional flights next month, he said. Customers can prebook their meals online and enjoy savings, he said.

“For some airlines, their products have gone downhill. Ours have gone uphill. We don’t have boxed meals, we have hot food, we have choices,” Fernandes told reporters.

“It’s purely another revenue-generating initiative. It will attract new audience, and obviously more sales. More corporations and people who have never thought of flying with us are coming to us now,” he said.

Despite higher jet fuel cost this year, AirAsia has defied the industry trend of cutting capacity, shedding jobs or raising fuel surcharges to contain costs.

It has focused instead on growing new markets and boosting ancillary income — derived mainly from sales of food, merchandize and insurance as well as its express boarding charge.

Fernandes said ancillary income now accounts for about 9 percent of AirAsia’s annual turnover, and is expected to rise to 13 percent in the near term.

“Our group turnover, consolidated, is close to 3 billion ringgit (US$938 million). Twelve percent is 360 million ringgit (US$113 million). That pays for a lot of oil,” he said.

Fernandes, wearing a pair of red sneakers bearing an AirAsia tag, said the shoes will soon be sold on board as the carrier expands its product line.

“Our merchandize will change quite dramatically. Soon we’ll have it online. That’s another way of dealing with high oil price and surviving,” he said.

Earlier this week, Fernandes said AirAsia can remain profitable even if world oil prices hit US$200 a barrel. He said the carrier can benefit from a consolidation in the airline industry, with less competition in the no-frills sector.

AirAsia reported an 86 percent jump in its January-March net profit from a year ago to 162 million ringgit (US$50 million) for its Malaysian operations, buoyed by higher passenger demand and large foreign exchange gains. It has affiliated airlines in Thailand and Indonesia, but all keep separate accounts.

iht.com