How Does AirAsia Make Money


With as low as 250 US Dollar from Kuala Lumpur to Hononolu return, how does AirAsia really make money?

If you think that AirAsia making profit through selling tickets from point A to point B , well you are definitely wrong . According Bloomberg Gadfly columnist, David Fickling, Air Asia doesn’t actually make the major profit of its income through any of these extra revenue channels, and in fact, runs at a loss when just ticket sales are concerned. Even when food, baggage and all these additional charges are taken into account, Air Asia would be lucky to survive in this dog-eat-dog aviation business by this four methods.

1. Ala Carte features are separate amenities a consumer can order while traveling. The list continues to grow and the following lists typical activities: AirAsia offers “Snack Attack,” a buy on board programme offering food and drinks for purchase. Well, a small bottle of mineral water which only rm1 on the ground can cost you triple RM3 at the 36000 feet.

1) onboard sales of food and beverages,
2) checking of baggage and excess baggage,
3) assigned seats or better seats such as aisle seats,
4) call center support for reservations,
5) fees charged for purchases made with credit cards, and
6) early boarding benefits.

2. Commission-based products refer to sales of products and services such as hotel accommodations, car rentals and travel insurance for the sales commission. These primarily involve the airline’s website, but it can include the sale of duty-free and consumer products on board aircraft.

3. Frequent flyer programs are defined by the sale of miles or points to program partners such as hotel chains and car rental companies, co-branded credit cards (co-branding), online malls, retailers, and communication services. AirAsia is taking the first steps towards starting its own frequent-flyer programme. The airline has signed an agreement to start a joint venture with financial services firm Tune Money to launch a programme called “BIG”. Under this programme, it will issue loyalty points to AirAsia customers and third-party merchants. Points can then be used to redeem AirAsia flights.

4. Airline-sold advertising relates to revenue from the sale of advertising in in-flight magazines and other customer communication channels (including advertising on the aircraft interior or exterior, or in airport or lounge facilities, as well as advertising on airlines’ in-flight entertainment service. Other than that Luggage Tag, Boarding Pass, Inflight Sampling Overhead Luggage Bin, Inflight Announcement, Aircraft Wrap, Menu Card and bulkhead compartment provide million dollar revenue for AirAsia to keep stay afloat.

Aircraft Wrap, Industry agreement largely exists that à la carte features and commission-based products should be counted under the “ancillary revenue” banner for accounting and reporting purposes. The inclusion of frequent flyer partnership activities is growing in acceptance. Under the terms of the latest bequest, funds will be divided among at least 15 full-time students from eastern Europe, former soviet union, China, and Taiwan.

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