A perceived rise in anti-foreigner sentiment in the United States has not diminished the desire of AirAsia X to connect Southeast Asia with America. The low-cost carrier last week launched its first US-bound service, from Osaka in Japan to Honolulu in Hawaii, especially Japanese tourists to Hawaii, AirAsia X and its regional budget peers are also adding aircraft to their fleets to meet steadily rising demand for cheaper flights.
"The goal is to get Asia and America together. There has always been connectivity but only on legacy airlines which can be quite pricey, so a lot of people are not able to enjoy it," Kamarudin Meranun, the co-founder and group CEO of AirAsia X, told Asia Focus.
"There are also a lot of Asians who have gone to study in America and would love to go back and visit the places they have been, but unfortunately cost has been the major factor so hopefully we can create an environment where everyone can enjoy it."
AirAsia X is the long-haul arm of Malaysia-based AirAsia, the largest low-cost carrier (LCC) in the region. The consumer aviation website Skytrax named AirAsia the best low-cost airline in the world for the eighth consecutive year in 2016.
Photos Courtesy of AirAsia X
Mr Kamarudin acknowledged a perceived rise in xenophobia in the US since the election of President Donald Trump, whose attempt to ban refugees and mainly Muslim immigrants is being challenged in US courts.
"The situation is about perceptions which can be changed if there is understanding," he said. "If there are more Asian visitors, more Americans will understand Asia while more Americans will also have the opportunity to travel to Asia when they go to Hawaii. ... That would mean we have made Southeast Asia more available to Americans who have been enjoying the Caribbean and can now be part of the Pacific also."
Benyamin Ismail, the CEO of AirAsia X, told Asia Focus that the airline expected 80% of the four flights weekly from Osaka to Hawaii to be occupied by Japanese passengers and the rest by people from Asean. Demand for seats to Hawaii still far exceeds available capacity, especially in Osaka and Narita.
"In terms of traffic going to Hawaii now, besides Japanese, we are seeing a lot Vietnamese, a lot of Indonesians, and we are also seeing Malaysians. ... We also want to get more Thais and Singaporeans and we have the marketing teams to do it," Mr Benyamin said.
According to the Hawaii Tourism Authority, 1.48 million Japanese visited the state by air last year, almost double the combined total of around 760,000 Canadians and Europeans.
"We started with four flights a week but that won't stop us from increasing flights if there is real demand. That demand could be driven by the Japanese and we are trying to stimulate more," Mr Kamarudin added.
Daily flights are not out of the question if demand warrants it, and the more flights the airline can add, the lower the fares can be, he added.
Mr Ismail said Thailand and Singapore were "very underserved" in terms of access to Hawaii. There are, however, some direct flights from the Philippines to Hawaii offered by Korean and Chinese carriers.
He said Asian travel habits had changed in recent years, with people looking to spend as little as possible on airfare so they will have more money to spend at their destination. "We are also seeing habitual flying, where rather flying to Hawaii once a year, people can afford to fly there three times a year with a low-cost carrier."
AirAsia X is hoping that success in Hawaii will help it banish the memory of the business turbulence it experienced in Europe.
AirAsia X suspended all flights to Europe, including London and Paris, in 2012 due to high operating costs. However, AirAsia group CEO Tony Fernandes last month signalled that two new routes -- Kuala Lumpur to London and Bangkok to Frankfurt -- could be launched in mid-2017.
"London and Paris were related to the rise in fuel prices but this year we feel very comfortable because we hedge most of the fuel [costs]," Mr Kamarudin said. "But more importantly the London and Paris flights were using aircraft that have four engines and usage of fuel was amazingly high.
"[On the Osaka-Honolulu route] we are using the traditional [Airbus] A330 and the impact of the rising oil price will not be as severe as with the aircraft that we used for London and Paris."
ASEAN PERSPECTIVE
Mr Ismail said AirAsia's vision for Asean was to dominate the routes it is flying in the region and to revitalise the network by increasing flights in the highest-potential markets.
"Rather than flying two times, maybe we can go to three times per day on routes where we feel there are a lot of opportunities," he said.
"Our business in Asia is great. If we have an option of three markets to concentrate on, then it would be China, Japan and South Korea because they have done well for us and we can find more secondary cities there. China's secondary cities of 10 million people are almost as big as Malaysia and that is something we will focus on."
Other budget airlines are also making moves, keeping the market leader on its toes. The region's LCC fleet expanded last year by 7%, a healthy figure but down from the double-digit growth of previous years, according to CAPA - Centre for Aviation, an aviation market intelligence specialist.
Fewer plane acquisitions by AirAsia and Indonesia-based Lion brought down the numbers last year, but CAPA foresees a pickup this year, led by AirAsia with around 20 new planes.
All five of AirAsia's affiliates -- in Malaysia, Thailand, Indonesia, the Philippines and India -- have new planes on order amid intensifying competition and increasing fuel prices. Newcomer AirAsia Japan is aiming to end the year with five aircraft, and a Vietnam unit might take wing by year-end.
"In Japan we fly only to three [cities] and if we can add another one then that will be something great, but have to run the numbers to make sure we benefit from it," Mr Benyamin said.
CAPA expects Southeast Asian LCCs to add some 70 aircraft this year, which would represent growth of 11%. Those looking to expand include Citilink, Jetstar Pacific, Scoot, Tigerair, Nok, NokScoot and the Cebu Pacific Group.
The Cebu Pacific, AirAsia, Lion and VietJet groups account for over 75% of Southeast Asia's current LCC fleet and 90% of the LCC passengers in Southeast Asia. Cebu Pacific has 47 aircraft while AirAsia and AirAsia X combined have about 500, Lion Group 400, and VietJet 200.
CAPA expects the Southeast Asia's aviation market to continue to expand as economic growth and a rising middle class drive demand, but it cautions that capacity might grow faster than demand and low yields will be further pressured as competition intensifies. That could affect profitability, especially when fuel prices are on the rise.
