AirAsia Malaysia Plans More Rapid Expansion For 2019 Despite Infrastructure Challenges

Transcript

Riad Asmat:What are the challenges facing AirAsia Malaysia in 2019? Oh, it's pretty steep. I mean, obviously what I've realized about this industry is that it's probably appreciating towards its complexity, but also its level of regulations. You know, it's a very, very regulated industry. But that being said, I've mentioned this a couple of times and Whoever has asked me, you know, why aviation? I think coming up from where I came to where it is right now, I think this is an industry that is continuously growing still, especially within the region that I'm in right now. But clearly we're getting an extra, if I'm not mistaken, about 50 seats versus the current configurations that we have in the A320s. In terms of the routes right now, we're probably looking at the high-frequency ones. That we currently cater to with the current aircraft and get more seats into those routes. You know, likelihood will be from Peninsula to East Malaysia will be a good example where I'm flying multiple times daily and I can get more efficiencies by utilizing this aircraft. Every year, you know, we plan and then we adjust accordingly. Similarly this year, you know, I believe will end up in the high 90s or mid-90s in terms of my total aircraft. And for next year, I think we're looking at an additional maybe 5 or 6, if I'm not mistaken. But I think we've managed well this year with the numbers that we've got. In fact, I think the number of 94 also is also exceeding a certain level of expectations from our side. But from utilizing it, managing the resources that we currently— and also the challenges, to be honest, about resourcing it with pilots. I mean, this is a challenge in itself in the region right now. There's not enough pilots out there, so I have to manage with what I have currently, but we're doing a pretty good job all the way to December and hopefully right into the first quarter of next year. I'm always hoping to do what is the trend in terms of our growth in AirAsia. Obviously, Malaysia AirAsia is the largest AOC. And I think it's a pinnacle for us to still spearhead the growth, and I think we should be able to achieve what we want to in terms of the numbers. It's been a nice mix, to be honest. You know, domestically, I mentioned the fact that I'm around 40% now, which is slightly higher than last year. But we also have introduced new routes and new destinations. But one thing very noticeable this year is also frequencies. We've increased multiple frequencies in current routes and destinations, again to create more efficiency out of our utilization of our aircraft and so on and so forth. We're learning also from the past experiences, but we're also not going to shy away from what AirAsia is all about. You know, we're always adventurous enough to look at opportunities To a certain degree, yes, we take calculated risks, but when we fly nowadays, we have a clear definition of discipline we put in place to work with the parties, genuinely get them involved. And the parties, what I mean, would be the airports, the government, or the state agencies, or whoever may be that's a participant of this whole project of sorts. Rightly so as well, you know, Selangor, Phuket, they're leisure destinations, but we're finding out that there's a bit more than leisure. We also have business traffic, you know, possible business traffic coming in from there into Malaysia as well. So the balance is quite clear that can be achieved if we all put in the right effort and stamina. We really have to put our resources in place At a level of promise up to a point then to get that level of success. I mean, again, it is dependent on the availability of slots, of course. We cannot deny that fact. Some, some places we want to go to are controlled. So slot availability is one. Then you look at facilities. Obviously, some are ready to take our aircraft, some are not. So we have to wait or work with them further. But yeah, we're always open and very excited to look for new destinations. We are very excited about Phu Quoc. We know it can deliver the numbers. I mentioned during the panel session just now on Ipoh, as simple as that, you know, something that we didn't look at initially or previously or didn't have the time to do so. Now we've done it and we've seen the results of it, but it's also a concerted effort of everyone. And I just had a quick discussion with Changi as well with regards to now Singapore to Ipoh, where we see the load take up because it's on sale now. December, I'm looking at a nice set of passengers flying into for the first time on AirAsia into Ipoh. So I think, yes, we will continuously look for new destinations, exciting destinations, because that's part and parcel of our DNA. We won't focus just— when I mentioned domestic, yes, I mean, yes, I want to grow domestic, have control over domestic, but it also gives me the opportunity of where else from those stations or little hubs, if you want to call them, where else can they go? Focus in KK, for example. You know, we flew to Macau recently because there's that demand both ways, and Macau will bring— because Macau, where it is with the new bridge, for example, Will have enough Chinese mainland traffic into Macau, and from there maybe fly into KK. So things like this we look for. I mean, regardless, it is becoming a hub. I mean, it is the second largest hub outside of KLIA two from from from our operations perspective. So it's something that we we want to encourage in terms of growth. By next year, I'll have ten aircraft there. Sleeping overnight and flying off from there. So what's stopping us from growing that that particular hub? Because we know the accessibility of it to the Australasia side. You know, we could have 330s there as well, not just us. You know, but it's something that we are working towards. And hopefully the the government, the state government also will acknowledge the the required needs in terms of facility growth growth for us to cater to our growth and their growth at the end of the day. At the end of the day, it's a win-win for them because they get tourists. Do you have a fly-through product at KK as well now? Yeah, KK fly-through product, no, not yet. I mean, as you add more destinations, are you going to look into it? We'll definitely look into it. I mean, again, that's the complementary bit that we work with AXS now, you know, India into KL, then KL to Bali, for example, or KL to Singapore, things like that. It's in place, but anytime we have any associated understanding between AXS and AK flying in and out of that particular station or hub, we'll pursue it. They are growing and moving more aircraft. I mean, again, allocation. Penang will get allocation. Johor will get allocation. This year itself, they got allocation. Going forward, obviously, we will still continue that. We have four major hubs in Malaysia outside of KLIA too. We'll continue to grow them. We just require the right facilities to be put in place because most of the facilities available right now are very limited in terms of parking bays, especially overnight parking bays. I think from Langkawi, Langkawi at the moment, we're still evaluating what we can do with it. Going forward, but my focus right now is purely on the four main hubs that I currently have, which is Penang, Johor Bahru, Kuching, and KK. So my my my challenge right now is not putting planes there, not finding routes. It's more actually the basis, the infrastructure that's made available to my my my operations, which is very limited at the moment, and there needs to be a realization of sorts. That they need to help build that aspect so that we can grow and then at the same time tourism grows. Everyone benefits in that sense. Well, to be fair, we're still evaluating it. In fact, my guys are working with everyone right now. Both our teams are on it. We're looking at an evaluation paper internally and then see how the impact will be and then we'll see who we'll need to engage after that fact. But it's yeah, it's it's an announced subject matter, so it's something that we'll need to look at and work with. Well, I I can't say for now because I've not seen the numbers and the facts yet. I mean, what we hear is about you know the announcement is very basic in terms of information availability as well. What's the breakdown of that tax structure that they are trying to implement? At the same time, I'm trying to tackle the PSC subject matter. Is there a duplication? Is this on top? These are the questions that I internally have also, and that's what my team is looking into. And I think we'll come to a point that yes, we'll have to have another engagement with the parties that are involved and see how we can work with it. The honest truth right now, I mean, again, I'm sure that is because all I can reflect on is my passengers are very price sensitive. I remember the day when the government put a holiday tax on the GST. 6%. They were going to zero-rise it until the new tax scheme was to be introduced, which they've recently introduced, to be fair. It was 2 weeks prior to the holiday tax, and everyone kind of like stopped buying for 6% discount. So my tickets don't cost that much. So people were looking at savings of between 5 ringgit to 6 ringgit. Wow. So to put it into perspective, the taxes that people have to pay now, which is higher than previous years and whatnot— in fact, it's been increasing year on year with, my take, not real justification. I am sure the impact is there in terms of passengers not wanting to fly because of the ticket pricing. On top of that, I have to pay extra, which is not conducive when I get a deal for RM70 and I have to pay another RM30. So it's half of the ticket price, for example. So people may shy away and will shy away. So that's something that I keep emphasizing to people in that sense. From our perspective, fuel prices is something that we have to manage, right? But you notice we've not implemented any surcharges. We're working with what we have currently, but there's only so much an organization or operations can take. At the same time also, public, the rakyat or the people also, they will have limitations as well. There will be a breaking point somewhere, but this is something that we want to try and avoid. This is something that we've been engaging with the authorities and regulators and to see how we can work something out that's feasible for everyone in that sense. My outlook is still positive because not just because I'm new in this, but to be fair, maybe that gives me that particular drive as well because I see it in different, different ways. And you know we have a very strong infrastructure. We have a very strong base to work off. The discipline of cost is there. We just need to improve or enhance where we can. So next year's outlook, for sure, I'm looking at it from a positive point of view because Asia is growing, will continue to grow. We are still investing, and if we keep doing what we're doing, I think we should we should do better next year.

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