I'm sure Air Asia do make a profit. It's easy to get passengers when the prices are low, but at what cost? Profits are slim and any adverse movement in fixed costs could wipe out the company's stability. Just look at Tiger as a group, in biz for 6 years and yet to turn a profit. Sure they are flying lots and planes and people around the globe but as of yet, no real money out of it. And you really have to wonder, what's the point?
I agree that economy rides these days are not the pick of the bunch, I also agree that I would love to fly in comfort for less. Yet there has to be something in it for the airline at the end of the day. It's a tough proposition really because an aircraft comes with certain fixed costs that levels the playing field and every operator has to try and come up with a package within those fixed costs to draw passengers.
Whats the point of difference? Scheduling, ports, colour of the decor, and crew? All very difficult things to try and make a point of difference with. Square inches on an aircraft all cost the same, at least until some brilliant person manages to design one that has more square inches for less money and doesn't use as much fuel.
The all premium model has been ventured into and as of yet, there just isn't enough demand for it. EOS, Silverjet, Maxjet all tried with a biz class significantly cheaper than their traditional competitors and they all went under on very busy routes. It seems that the majority of people would rather be a sardine if it saves them 50% on the price of the ticket. And I've got to admit for myself that even Air Asia's own economy product canabalises their premium product. If I am looking at $1k for a premium ticket to KL or $300 for an economy I'm tempted to bite the comfort bullet and save $700 on my airfare.
I do hope however that Borghetti finds a new way to sell a better seat. I personally would love to see that too.