Annual Report 2019

AIRASIA INDONESIA It was an exceptionally good year for AirAsia Indonesia, which achieved its much awaited turnaround. With four additional aircraft delivered during the year making up a fleet of 28, AirAsia Indonesia launched 14 new routes and established Lombok as its fifth hub to accelerate the recovery of tourism to the island following the 2018 earthquakes. AirAsia’s strategic contribution to developing Lombok was rewarded with a formal acknowledgement from the Governor of West Nusa Tenggara. AirAsia Indonesia’s total capacity increased by 49% in 2019 to 9.5 million seats which was more than matched by a 52% increase in number of guests carried, totalling 8.0 million. Significant capacity expansion, following years of route rationalisation, contributed to a 60% increase in revenue to IDR6.7 trillion. Revenue was further boosted by driving greater traffic to AirAsia.com which resulted in increased ancillary sales. The airline’s online sales contribution to total revenue grew from 45% in 2018 to 70% in 2019 while ancillary revenue increased by 33% year-on-year. AirAsia as a group has established itself as the leading airline bringing in international traffic to Indonesia. To create a more balanced domestic/international portfolio, our associate launched nine domestic destinations out of the 14 new routes in 2019, resulting in 41% of its routes currently being domestic, as compared to 30% in 2018. AirAsia Indonesia also moved all international flights from Terminal 3 to Terminal 2 of Soekarno-Hatta International Airport in Jakarta, where its domestic operations were already based. This helped to facilitate movement of Allstars as well as guests, contributing to an eight percentage point increase in on-time performance (OTP) to 82%. In addition to operational achievements, AirAsia Indonesia marked two significant milestones in 2019. The first saw its leadership transition from Dendy Kurniawan to Veranita Yosephine Sinaga as CEO. The other milestone was the launch of AirAsia’s community-based tourism programme, Journey D (Journey of Development) together with the West Nusa Tenggara government in support of Bonjeruk Village, an ecotourism village at the foot of Mount Rinjani in Central Lombok. AIRASIA PHILIPPINES Although it was a challenging year in the face of stiff competition and price dumping, exacerbated by softer economies in its target international markets, our associate in the Philippines performed extremely well. Revenue for the year increased by 31% to PHP27.3 billion while, from a loss-making position at end 2018, it achieved a highly commendable net operating profit of PHP421 million, marking growth in excess of 122%. AirAsia Philippines’ remarkable turnaround was the result of a confluence of factors, not least of which was intense focus on its core markets, namely China, Korea, Taiwan and Japan, where it invested heavily in brand-building campaigns. These helped to increase load factors on existing routes while ensuring healthy numbers on new launches. The airline also welcomed Ricardo P Isla to lead operations growth as its new CEO. Of a total of 11 new routes introduced during the year, 10 were international and all serve North Asia. From Kalibo, AirAsia Philippines is now flying to Hangzhou, Chengdu and Kunming (in China), as well as Macau and Taipei (Taiwan). From Clark, guests can fly to Incheon (South Korea) and Kaohsiung (Taiwan). Cebu is now connected to Macau and Kaohsiung, while guests can take a jaunt to Kansai (Japan) from Manila. A new Manila—Bacolod route was also launched, marking the only new domestic connection. The new routes led to a 20% increase in capacity to 9.7 million seats and a 25% increase in number of guests carried to 8.6 million, resulting in a three-percentage point increase in load factor to 88%. Most encouragingly, enhanced efficiencies resulted in a 3% increase in RASK year-on-year to PHP2.42 while CASK decreased by 4% to PHP2.46. NEW ROUTES 14 REVENUE PHP27.3 billion TOTAL CAPACITY 9.5 million seats TOTAL CAPACITY 9.7 million seats AIRASIA INDONESIA AIRASIA PHILIPPINES AIRASIA GROUP BERHAD ANNUAL REPORT 2019 99 BUSINESS REVIEW