Monday, July 7, 2014

How Airasia actually make money

1. By promoting their fly-thru service. Airasia charge by sum of sector instead of origin - destination fare. What it means is you are incurring two times the fare + fly-thru fees. SIN - KUL - PER = SIN-KUL + KUL -PER + Flythru instead of SIN - PER with a transit at KUL. If you were to cancel your flight you will be charge twice the cancellation fees because of SIN- KUL and KUL - PER are two separate flights instead of SIN- PER one time cancellation fees. This is a major difference of LCC vs FSC.

2. By forex exchange. Case in point a RM 72 KUL- SIN flight will be charged SGD 35. Easily making extra RM 20 for doing nothing. Why let bank earn the rate when Airasia can earn the forex? Airasia will also round up each and every fee to the nearest SGD when converting from RM to SGD. By right RM 72 if markup once should be around SGD 29 to 30. But Airasia will break the fare into 4 components and from there the markup could give an additional SGD 5. If you dont believe, try it yourself to prove it.

3. Auxiliary services like food on board. Actually they are still more value for money compared to Tiger or Jetstar. For the same food tiger/ Jetstar will charge SGD 10 but Airasia will charge RM 15. By the way I never consumed any Jetstar or Tiger food and beverage since I started taking LCC.