Now the big Q, by offering such a low rate, how does AirAsia manage their business? Here are few strategies worth pondering.
1. AirAsia sold tickets for entire one year within 2 weeks.
2. They will earn interest. A ticket sold in February scheduled for November, earns them interest for 9 months. This is additional buck to the pockets.
3. Not only air tickets, they also had cheap hotels to offer. So not only a buyer bought the air tickets, also booked hotels through AirAsia.
4. To add more, you also had cheap offers to other regions. So now a buyer bought air tickets not only for Kuala Lumpur (KL), but from KL to Langkawi.
5. And guess what, who wants to travel alone. So a buyer influenced his/her friends to tag in along as well. So one interested person ended up influencing few more.
6. Did you notice that rates where higher especially on weekends. So AirAsia had a slot, different rates on different days as per demand. Maybe a buyer hoped he/she will be able to buy return tickets for 123 USD, but on his/her chosen day, the total price was 170 USD. Still, why miss the chance just for 3,500 Taka only, the offer still is very cheap. So many such buyers paid little more than the cheapest offer.
7. Other additional services also had a price, like choosing your seat, price for luggage, and bus tickets to the City Central. All these ads up another 20-30 USD.
So just one buyer seeing one discounted offer ended up providing the followings to AirAsia:-
1. Buying return Tickets to KL, either at the cheapest rate or higher.
2. Buying return tickets from KL to other regions (Langkawi).
3. Booking and paying for hotels.
4. Buying additional services
5. And most importantly, influenced others to buy and thus acting as a sales person.
Now the reality, exactly how many people who bought a ticket in February scheduled to travel in November will actually be able to make it? There is a very high chance that many will not make it, and sad but true, if you want to re-schedule your flight, than you almost end up paying a fee equal to your original ticket price. So a customer who misses his flight either ends up paying another 150+ USD to reschedule the flight, or misses the flight completely, no refund by the way. Many such buyers will actually not make it which in return reduces Air weight saving AirAsia’s fuel cost and leaving paid hotel rooms empty which can be resold.
So all in all, many sources of income for AirAsia which makes up for their reduced ticket price. If you are a Bangladeshi businessman having big dreams, why not learn the all round the year discount concept, you not only generate entire one year sales in a week time, you also make your buyers sale for you. In current recession period, discount stores are bound to hit big in the market. Just go grab it.
Mahboob Hossain is working in World’s number one Market research company and is actively involved in writing, teaching and business counseling.