AirAsia to launch Southeast Asian air pass as low cost air travel competition heats up

AirAsia Airbus A320 departing Kuala Lumpur International Airport. Jyi1693 / Wikimedia Commons.

KUALA LUMPUR, Malaysia—Budget carrier AirAsia said Thursday it will launch a regional air pass next year to increase revenue and boost tourism in Southeast Asia, taking competition in low-cost air travel to a more intense level.

Chief Executive Tony Fernandes said the AirAsia ASEAN Pass will allow travellers to fly to 10 different destinations in Southeast Asia in one month for 499 ringgit ($148), excluding airport taxes.

He said it will be the “catalyst” for increased air travel within Southeast Asia and also lure foreign tourists.

The pass will be sold from Jan. 15 and further details will be announced at the time, officials said.

AirAsia, which has dominated cheap travel in the region for years, faces rising competition from the proliferation of discounts airlines in Asia, the world’s biggest and fastest growing air travel market.

Air travel in Asia is expected to grow 6.7 per cent annually in the next 20 years, from 780 million passengers in 2010 to some 2.

2 billion by 2030. Budget aviation now has a quarter of the air travel market in Asia, and growing.

More and more airlines are scrambling to get into the low-cost market, betting on rising incomes in Asia and more open skies after 2015 when the 10 members of the Association of Southeast Asian Nations, or ASEAN, aim to create a common economic community.

AirAsia on Wednesday reported an 85 per cent fall in its net profit to 5.4 million ringgit ($1.6 million) for the quarter through September, citing higher operating and finance costs.

Its long-haul arm, AirAsia X, posted a net loss of 210.9 million ringgit ($63 million) for the same period, its fourth straight quarterly loss. AirAsia X has announced it will delay delivery of new aircraft in the next three years and cut flights to Australia. Fernandes said AirAsia X was hit by slumping demand in China and Australia after two major disasters involving Malaysia Airlines planes.

It was also hurt as the national carrier lowered fares to boost sales after the tragedies, he said.

In March, Flight 370 from Kuala Lumpur to Beijing disappeared with 239 people on board. A search is ongoing in the southern Indian Ocean where It is presumed to have crashed, though no trace has been found.

In July, 298 people were killed when Malaysia Airlines Flight 17 from Amsterdam to Kuala Lumpur was shot down over Ukraine.

Fernandes voiced confidence that the airline will return to profitability next year. He said lower jet fuel prices as well as a rebound in demand will boost revenue.