Cheaper AirAsia tickets AGAIN ..... hooray!

AirAsia Bhd stands to lose up to RM400mil a year at the group level with the abolishment of its administration fee from its fare structure but the airline says it will replace lost revenue with income from higher passenger growth and its ancillary business.

“Reducing the cost of fares is the only way to get people to travel. We believe this will help increase our load factor and make us even more competitive,” group chief executive officer Datuk Seri Tony Fernandes said.

There are also other ways of generating income, such as hotel, food (onboard) operations and priority booking, he added.

Speaking at a news conference yesterday to announce the administration fee abolishment – a first for a major airline – Fernandes said scrapping the charges would create savings for passengers who now only have to pay the seat fare and airport taxes.

The administration fees range from RM22.50 to about RM43 per route (one way).

“We scrapped fuel surcharges last year and still managed to make record profits. We feel the same way about this ,” he said

AirAsia Bhd returned to the black with a net profit of RM203.15mil in the first quarter of 2009, after two consecutive quarterly losses previously.

Revenue increased 33% to RM714.2mil due to better ancillary income and stronger passenger growth.

“The past six months were tough for airlines all over and AirAsia has only grown stronger.

“None of our targets have been changed despite the economic conditions and outbreak of the A(H1NI), we are not affected by the recent flu scare; we are doing well and growing our capacity,” Fernandes said.