AirAsia outlines cost measures, says minimal impact on staff of lower-income

AirAsia Group has put in place a range of cost containment measures across all its business operations, in light of the COVID-19 outbreak. According to AirAsia, the measures place emphasis on minimising impact on its employees, while ensuring business continuity with a priority on flight operations safety and security.

Acting CEO and president (Airlines) of AirAsia Group, Bo Lingam, said the cost containment measures would have zero or minimal impact on most AirAsia employees especially those in the lower-income bracket. He added that the airline continues to monitor the developments and "employ aggressive marketing and education strategies" to instill the confidence of flying back in the travelling community.

"To further spur local and regional tourism, capacity is now being redeployed to domestic and intra-ASEAN flights. We are also continuously engaging industry stakeholders and tourism authorities for incentives as well as marketing and promotional collaborations," Lingam explained.

According to him, containing and managing costs has always been in the group's DNA as a low-cost carrier and this is one quality that sets it apart from peers. "AirAsia as an airline has definitely been impacted by the sharp slowdown in the past few months, as like many other carriers we have been forced to cancel many flights due to poor demand, not only for China routes but also other destinations," Lingam said.

Although the airline remains cash flow positive and can count on a working ancillary model, he said that it has to be bold in finding ways to reduce cost, conserve funds and protect the future of the business. A+M has reached out to AirAsia about the details of the cost containment measures.

Meanwhile, the New Straits Times reported that the cost containment measures include pay cuts, suspension of free munch and external training, as well as duty travel restrictions. Specifically, non-operations managers and above will no longer receive free munch, while the airline's top earners have decided to take a pay cut, NST said quoting an internal memo. Unless absolutely necessary, duty travel has been restricted and employees will be required to use voice or video conferencing. NST added that big social events for 2020 will also be cancelled. AirAsia did not comment on A+M's queries regarding the details of the cost containment measures.

AirAsia's cost-cutting measures come shortly after Malindo Air reportedly requested staff members to take up to a 50% pay cut as well as two weeks of unpaid leave amidst the COVID-19 outbreak. Quoting a memo sent by CEO Mushafiz Mustafa, Reuters reported that Malindo Air has put in place several measures to manage the revenue shortfall. They include getting employees to volunteer for unpaid leave, suspending flights, as well as appealing to suppliers to defer payments.

Malaysia Airlines (MAB) also recently allegedly reduced the salary of its senior management by 10% beginning March. Quoting an internal video, The Edge reported that MAB's senior management will also no longer receive their allowance. According to group CEO Izham Ismail, this is in a bid to address the drastic drop in demand and the airline is reportedly introducing more cost-cutting measures in the coming days. A+M has reached out to MAB for comment.