Sky-high airfares have peaked, budget airline tycoon says

Airline ticket prices have peaked, at least in the market where budget carrier AirAsia operates, according to its founder Tony Fernandes. 

“We are there or thereabouts,” Fernandes said in an interview on the sidelines of the Qatar Economic Forum in Doha. “We don’t want it to go any higher, we want it to go lower. We want to stimulate more traffic, so I think they’ve peaked.”

Airfares globally remain elevated in the wake of the Covid pandemic, with capacity and staffing unable to match a sharp rebound in demand. Fernandes said there is “phenomenal” growth in Southeast Asia, and places such as the Middle East are also booming. 

AirAsia, part of the wider Capital A Bhd. group, aims to ride this by launching airlines in two more countries in the Asean region, Fernandes told Bloomberg Television. In December, the company announced plans to enter Cambodia.  

“It really is Asia’s time for growth,” Fernandes said, without saying which new markets the airline is considering. Capital A already operates budget airlines out of Malaysia, Indonesia, Thailand and the Philippines. It shut down its operations in Japan and India in recent years.  

With travel rebounding, AirAsia will have all of its 210 aircraft back in service in about two months, Fernandes said. The fleet should grow to 300 planes in the next four to five years, with annual passenger traffic rising to 150 million from about 80 million, he said. 

“This is quite something from two years ago when we were struggling to survive,” he said. 

While supply-chain disruptions and production delays are affecting the industry globally, Fernandes said he was confident that engine manufacturers and Airbus SE would “get their acts together” in the next six months. 

In a separate interview, Fernandes said AirAsia is considering expanding routes in the Middle East.

“Driving around Qatar and looking at Abu Dhabi, Dubai and Oman, we think we can provide affordability to people here to come to Southeast Asia, and for Southeast Asia we can open a whole new market,” Fernandes said. “Coming to the Middle East has opened my eyes.” 

Fernandes said he also looking to secure funding from investors in the Middle East for Capital A’s businesses that are still recovering from the pandemic. 

“Lots of people have been approaching us,” he said, without giving any names.