Low-cost win over legacy air carriers

The demand for air travel in Vietnam is growing by leaps and bounds. The country is ranked seventh among the fastest growing markets for aviation industry in the period of 2013 to 2017 by the International Air Transport Association [IAIA], with the international passengers carriage rate reaches 6.9 and international shipping rate up to 6.6 per cent. Following the liberalisation of air transport among ASEAN countries, the air travel demand is expected to bloom since 2015.

The number of air traveling tourists nearly doubled over the past five years, equivalent to 96 per cent. In 2013 alone, the number of inbound passengers increased 21.5 per cent and the first quarter of 2014 saw a 21.5 per cent growth. The socio-economy of Vietnam certainly benefits from this strong growth, as during the same period, aviation industry contributed $6 billion into GDP and created more than 230,000 jobs.

However, compared to other ASEAN countries, Vietnam ranked third in terms of national population, but only ranked fifth in terms of inbound transportation, with an average supply of air seat of 5.4 people per seat, much lower than the Philippines with 3.2 people per seat.

With regard to commercial airlines, Vietnam saw a momentum development within this sector. According to the Ministry of Transport, the average annual growth rates of aviation industry in Vietnam in general is about 20 per cent; while low-cost carriers have seen their market share in recent years grow around 30 to 40 per cent nationally.

The domestic demand for air travel will continue to rise, with more private airlines entering the low-cost sector. At present, there are 51 international carriers and four local airlines exploiting 54 international routes and more than 40 domestic routes, in which low-cost carriers account for 10 per cent. The air seat utilisation rates at commercial airlines remain high as well, with an average of 80 per cent, signaling the development potential for this sector in the long run.

The Vietnamese government also aims to develop sufficient air travel infrastructure to catch the growing demand, and focus on developing the low-cost sector due to its affordable fares compared to other traditional airlines. According to the National Transport Development Strategy, until 2020 Vietnam will have 26 airports to catch the soaring demands in air travel. Furthermore, the Vietnamese government is currently planning to expand the capacity of the two base airports in Hanoi and Ho Chi Minh City, in line with the construction of the $8 billion Long Thanh international airport which is intended to become operational in 2020.

Air Asia’s Low Cost Model

In succession to the Vietnamese government planning to further develop low-cost sector, AirAsia, with its advanced cost optimisation operations, has the opportunity to serve Vietnamese passengers with seamless travel experience.

Being awarded as the World’s Best Low Cost Airline in the annual World Airline Survey by Skytrax for six consecutive years since 2009, AirAsia is the first Malaysian airline that has rapidly established itself as the largest low-cost carrier in Asia. Modeled after successful commercial airlines such as the US-based Southwest Airlines and Dublin-based Ryanair, AirAsia has successfully revolutionised air travel in Asia by offering exciting flying experience at incredibly low fares.

"We believes that no-frills and hassle-free airline model that can significantly lower cost requires high efficiency in every part of the business. The efficiency will create savings which are then passed on to our passengers so that affordable air travel can turn into reality", said TassaponBijleveld, CEO of Thai AirAsia, noticing the airline’s philosophy of "Now Everyone Can Fly".

The airline has optimised costs by operating a faster turnaround time (25 minutes], improving aircraft utilisation and crew efficiency, providing a "no frills" service, using one type of aircraft to save training costs, all contributing to AirAsia's mission to deliver world class service at lowest price as possible.

Together with the total of 476 narrow-bodied aircrafts on order with Airbus, the carrier is also the world’s first airline to receive an Airbus A320 equipped with the fuel-saving sharklets wingtip devices in 2012. The newly designed devices will enhance the overall efficiency, save fuel and emissions by improving the aerodynamics of the aircraft. Cutting fuel consumption by around four per cent, sharklets wingtip devices allows the carrier to add 100 notice miles in range or increase payload capacity of up to 450 kilograms.

Furthermore, instead of offering complimentary drinks and meals, AirAsia introduced "Hot Meals", which is a range of delicious snacks and drinks available on board at very affordable prices and prepared exclusively for AirAsia’s guests. Besides, passengers can pre-book their favorite meals online to receive discounts up to 20 per cent on ticket purchasing.

Despite AirAsia’s cost optimisation philosophy, airlines safety remains the preeminent priority in operations. The airline’s fleet of modern Airbus aircrafts fully complies with the conditions of the International Aviation Safety, and is regulated by the internationally renowned Malaysian Department of Civil Aviation. AirAsia also co-operated with leading engineering services in aviation industry for maintenance activities, such as the 20-year agreement with GE Engineering Services that is worth apprixi- mately $1.1 billion.

Also, the World’s best low cost airline also recognised by Malay-sia Book of Records as "First Airline to offer on-board Wi-Fi in Malaysia" by the officially launching of on-board Wi-Fi service with very attractive introductory price. Beside, Starting mid-January 2015, travellers on AirAsia will be able to utilise pre-purchased credits to book their flights through the AirAsia Asean Pass, which acts as a single currency system where the routes are valued according to a credit system, as per 137 routes within the AirAsia network.

Within 13 years of operation, AirAsia has carried over 250 million passengers and grown its fleet from two to over 180 aircrafts that flies to more than 88 destinations from 16 hubs in Malaysia, Thailand, Indonesia, the Philippines and India, serving a network stretching across all ASEAN countries, China and Australia. With more and more people around the region choosing AirAsia as their preferred choice of transportation, AirAsia endeavors to promote low-fares air travelling with exciting flying experience through range of innovative and personalised services. As a nice closing of 2014, The 2014 World Branding Awards gave special recognition to Tony Fernandes, AirAsia Group CEO, naming him "Brand Builder of the Year" for his outstanding work in building the low cost airline brand.

AirAsia proudly claimed the coveted title of ‘World’s Leading Low Cost Airline’ for the second year in a row at the prestigious World Travel Awards 2014 Grand Final Gala Ceremony, which was held in Anguilla, 07 December, 2014.