After a relatively free period of travel during the holiday season at the end of 2020, Indonesia experienced a spike in Covid-19 cases, precipitating the re-imposition of strict travel restrictions to curb the pandemic. The situation worsened in May when the Delta variant surfaced, causing a second wave of infections from June to September 2021. At its peak, in mid-July, the country was recording more than 50,000 new cases a day. In response, the government tightened its rein on domestic travel with new measures under the PPKM programme. Among others, it requires passengers to pass the polymerase chain reaction (PCR) test in order to travel between areas identified as being Covid-19 intense. It also limits international arrivals - for those holding relevant visas or permits (excluding that for tourism) - to Jakarta’s Soekarno-Hatta International Airport and Sam Ratulangi International Airport in Manado. As most of AirAsia Indonesia’s destinations were affected, our associate made the decision to hibernate all scheduled flights from 6 July to 6 September. Aviation A i r A s i a A v i a t i o n G r o u p – A i r A s i a I n d o n e s i a 2021 continued to be very challenging for AirAsia Indonesia, with international borders remaining closed practically the entire year to tourists; and domestic travel heavily curtailed by various restrictions. In response, our associate placed added emphasis on cost containment, adjusted its flight capacity and, most importantly, ensured the safety of guests and Allstars. The year ended on a positive note, however, bringing renewed hope for a better 2022. world. In addition, a Vaccinated Travel Lane (VTL) was established between Singapore and Bangkok on 14 December 2021 on the back of government to government negotiations. When the Omicron variant emerged towards year end, Test & Go was halted. However, this was only a temporary measure as the initiative resumed from 1 February 2022 onwards. The scenario described above translated into AirAsia Thailand seeing a 66% reduction in capacity year on year, with international capacity being more heavily impacted. As a result, out of a total of 2,928,140 guests carried, 99% were on domestic and only 1% on international flights. Among the more popular domestic routes were those to favourite holiday destinations such as Chiang Mai, Phuket and Hat Yai. At the same time, heightened interest in travel to Thailand among international tourists has inspired our associate to collaborate with the Tourism Authority of Thailand (TAT) on a campaign to promote inbound tourism. The initiative also serves to address pain points and complications of entering the country in the near future. In the face of the continued pandemic, it has been critical for all airlines to undertake major financial restructuring, AirAsia Thailand included. In addition to various costmanagement initiatives in 2020, our associate obtained the approval from financial institutions to defer its principal and interest payments until the beginning of 2022. It also successfully restructured its leases with a few partners while continuing to negotiate the same with the remaining lessors. The objective is to obtain a waiver on deferred payments and an extension of tenures with reduced monthly rates. Finally, a fundraising and shareholding restructuring plan worth 14.0 billion Baht was completed on 20 January 2022 which resulted in Asia Aviation Plc, the major shareholder of AirAsia Thailand, acquiring almost all of AirAsia Thailand’s shares while enhancing the operating company’s liquidity to last until air travel picks up again. Despite the rapid spread of Omicron, most authorities agree it is not as severe as previous variants of concern, hence there are reasons to hope for a gradual recovery in travel in 2022. According to TAT, both domestic and international travel will pick up year on year but will not reach pre-pandemic levels until 2023. As demand for domestic travel improves, AirAsia Thailand will resume more routes and increase flight frequencies, keeping a keen eye on capacity to manage its margins. While looking forward to reigniting its international engines, the timing for this will depend largely on the government’s plans. Meanwhile, it will continue to optimise its operating costs and ensure sufficient liquidity to sustain its business. Meanwhile, results of the national vaccination programme, which rolled out in January, began to show by the fourth quarter. Along with a decline in Covid-19 cases, AirAsia Indonesia was able to take to the skies again in mid-October. First, it reinstated Jakarta-Bali flights. These proved so popular that, in December, it increased the frequency of the flights from four times weekly to 28 times a week, and achieved 100% load factors on many of these. It also resumed eight other domestic routes in time for the year-end holiday season. Capitalising on the low-Covid environment, towards year end, the government opened Indonesia’s borders to foreign visitors by introducing visit visas for tourism; but only for those flying directly into Bali or Riau Islands. Jakarta airport, from which AirAsia Indonesia operates, has remained shut to international tourists. Although at least some domestic travel was allowed for most of the year, the number of domestic travellers in total decreased by 7.18% compared to 2020, partly because of the more stringent 0 7 8 C A P I T A L A B E R H A D Business Review (cont’d.)
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