AirAsia’s ancillary income up by 89pc

AirAsia Berhad has shared that its ancillary income grew by 89 percent to $27 million in the second quarter.

Published: 13 Aug 2009

AirAsia Berhad has shared that its ancillary income grew by 89 percent to $27 million in the second quarter.

The average ancillary spend per passenger has increased by 52 percent to $7.6. Ancillary income now represents 14.5 percent of total revenue, a six percentage-point increase from the same period last year.

Net profits in the three months to June jumped to $39.4 million. Revenues grew eight percent to 657.4 million.

Revenue for the quarter grew by eight percent to $187 million.

“While major legacy carriers are cutting flights, grounding planes, retrenching staff and reporting massive losses, AirAsia is seeing rising demand, adding more routes, increasing frequency and securing higher profits,” Tony Fernandes, AirAsia’s chief executive, said.

Passenger numbers for the period grew by 24 percent to 3.5 million, largely in response to the three-prong strategy of lowering fares, stimulating travel with marketing and capturing market share.

“Despite lowering fares by an average of 19 percent, we still managed to produce strong profit growth with industry leading margins,” added Fernandes.

Lowest unit cost base

Fernandes said with AirAsia’s lowest unit cost base, the group has the flexibility to reduce its low fares without hurting its bottom line.

“Other airlines are offering aggressive pricing just to try and maintain their existing passenger base but in this intensely competitive market, the only sure winner is the one with the lowest unit cost base,” he said.

On fuel prices, Fernandes said AirAsia continues to purchase fuel on the spot market. “The current fuel price, although higher relative to the first half of 2008, is substantially lower than the US$162 per barrel we paid in the third quarter 2008. Other cost items are expected to remain low as we extract further efficiency gains and benefits of economies of scale,” he said.

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