Annual Report 2019

AirAsia Malaysia ended the year connecting 22 countries to Malaysia including all ASEAN countries, China, Japan, South Korea and Taiwan. With the Fly-Thru service, moreover, guests can connect seamlessly through AirAsia hubs to visit Malaysia. AIRASIA THAILAND A key challenge that faced AirAsia Thailand in 2019 was the strengthening Baht, which dampened tourism, especially in the first half of the year. By the third quarter, however, numbers started picking up again for our associate, spurred by strategic route expansion as well as an extension of the government’s visa-on-arrival (VOA) fees waiver. Tourism from China had been affected by an unfortunate accident involving a Chinese national in Phuket in 2018. Nonetheless, collaboration with the Tourism Authority of Thailand and online travel agents proved beneficial, resulting in a 4.36% recovery of Chinese tourist arrivals compared to the previous year. Committed to continued growth, the airline launched nine new routes, with a particular focus on India, Cambodia, Laos, Vietnam and Myanmar to create a more geographically balanced network. Its expanded network led to a 3% increase in both capacity and the number of guests carried, the latter reaching 22.15 million. Heightened guest numbers, together with resolute efforts to grow its revenue from ancillary services, led to a 3% increase in revenue to THB40.18 billion with 5% growth in ancillary revenue to THB7,511.4 million. However, appreciation of the Baht against the Chinese Yuan and other currencies had a significant impact on its higher-fare international routes. This, together with increased costs related to route expansion, was reflected in a deepening of its loss, which amounted to THB871.5 million. A key highlight for Asia Aviation PCL (AAV), the majority shareholder of AirAsia Thailand, was to be listed on the Thailand Sustainability Investment (THSI) index of the Stock Exchange of Thailand (SET), among firms with market capitalisations between THB10,000 million and THB30,000 million. This affirms our associate’s DNA of innovation to maximise revenue and create efficiencies while enhancing its brand and creating value for all stakeholders. During the year, revenue innovation could be seen in the implementation of dynamic pricing and continuous promotion of pre-booked and inflight combo meals, as well as house-branded merchandise. AirAsia Thailand also collaborated with a celebrity chef to create a special inflight meal. In terms of customer service, on 1 November, our associate transferred its entire call centre services to AVA, our 24/7 AI-powered chatbot, enhancing efficiencies for a better guest experience. BUSINESS REVIEW Airlines 2019 was a very promising year for our airline operations, with all six short-haul AOCs recording notable growth in key parameters. With the addition of 20 aircraft to our fleet, total capacity as measured by number of seats flown expanded by 14% while the number of guests carried increased by 14% year-on-year to reach 83.5 million, enabling us to meet our targeted overall load factor of 85%. Of the new aircraft welcomed, four were the larger, more energy-efficient Airbus A321neo, opening up new horizons for us to explore as we bring more exciting destinations to our guests’ doorsteps. As our AOCs grew, we also continued to enhance the strategic use of data analysis and machine learning (ML) to further increase our Airline Ancillary, while expanding the operations of our ground handling company to include cargo. AIRASIA MALAYSIA AirAsia Malaysia’s focus for the year was to keep its fares affordable and grow its domestic market. This objective was achieved, along with commendable results. The airline’s revenue increased 3% year-on-year while profit came in at RM560.5 million. Profit was 18% lower than in the previous year mainly due to the derivative loss suffered of RM249.8 million and accounting changes for Leases under MFRS 16. Excluding the dividend income received from its wholly owned subsidiary, AirAsia Malaysia reported a loss for the year of RM151.6 million. However, the EBITDA margin for the current year was maintained at 25%. In terms of maintaining low fares, AirAsia Malaysia removed both its processing fee and klia2 fee. The RM3 klia2 fee had been introduced in 2014 to cover additional costs of facilities imposed by Malaysia Airports Holdings Berhad (MAHB) which were absent in the previous Low-Cost Carrier Terminal (LCCT). Together with assistance from the government, AirAsia Malaysia also managed to lower the Passenger Service Charge (PSC) for international flights beyond ASEAN as set by the Malaysian Aviation Commission (MAVCOM). Overall, AirAsia Malaysia’s average fare decreased 2% year-on- year to RM164. This, along with a 9% increase in capacity (as measured by number of seats flown), contributed to 8% growth in number of guests carried, exceeding the industry average. As a result, our airline commanded 61% of the domestic market in 2019, up from 58% in 2018. At Senai International Airport in Johor, it accounted for 80% of the total four million-passenger traffic. A key highlight of the year was to welcome the Group’s first two Airbus A321neo aircraft which enhance fuel efficiencies and guest capacity. Further expanding its network, AirAsia Malaysia launched seven new routes connecting Kota Kinabalu to Bintulu and Sibu; Kuala Lumpur to Can Tho, Quanzhou and Da Lat; and Penang to Melaka and Jakarta. REVENUE RM7,432.4 million REVENUE THB40.18 billion TOTAL CAPACITY 41.6 million seats ANCILLARY THB7,511.4 million AIRASIA MALAYSIA AIRASIA THAILAND 98 MORE THAN JUST AN AIRLINE >