Tackling Climate Change

As climate change gains prominence as one of the most important issues on the global agenda, the aviation industry will continue to face increasing scrutiny on actions to mitigate its environmental footprint.

With the return of air travel and as more countries ease restrictions, AirAsia's overall carbon emissions increased by almost five fold compared to 2021 levels.

Our climate change strategy builds on an established track record of efficiency that saw AirAsia ranked among airlines with the lowest carbon intensities in the world. Between 2017 and 2019, we exceeded IATA's recommendation of 1.5% annual reduction in carbon intensity measures. However, carbon intensity rose again as a result of shorter flight lengths due to the pandemic. In 2022, we recorded a promising decrease in carbon intensity by 2.7% from 2021, getting us back on track with IATA's recommendations.

As the industry recovers, we expect our emissions intensity to revert to pre-Covid levels as the pandemic becomes endemic and more countries begin easing international travel restrictions. Taking focus on this, we made important progress in four emission reduction areas to converge to net zero.

In 2022, we undertook two main investments to strengthen our fuel efficiency programme - (1) airspace insights solutions to assess flight efficiency performance and (2) descent profile optimiser to minimise the amount of time spent at an inefficient level off.

3. Carbon Offsetting

AirAsia has met two key requirements under ICAO's Carbon Offset and Reduction Scheme for International Aviation (CORSIA). In April 2023, all our airlines submitted independently verified carbon emissions reports for the year 2022. As global emissions from international aviation remained well below the 2019 CORSIA baseline level, none of our airlines were required to offset our carbon emissions.

The 41st ICAO General Assembly General Assembly in October 2022 announced the amendment of the CORSIA baseline to 85% of 2019 level from 2024 onwards (see graph). In our impact assessment, the lowering of the CORSIA baseline is likely to result in higher offsetting requirements starting 2024. To ensure we stay ahead, we computed our internal carbon price and applied it to determine our exposure under the new CORSIA baseline, as well as under a more ambitious net zero decarbonisation programme to cut our emissions above CORSIA requirements.

We expect carbon offsets to deliver a higher proportion of our emissions reduction at the early stages of our net zero journey before tapering down as in-sector solutions become more accessible.

4. SAF Strategy

The utilisation of SAF is projected to be the key strategic in-sector solution towards AirAsia’s net zero roadmap. We expect that the importance of SAF utilisation will grow in our decarbonisation journey in the long-term as it can cut the lifecycle GHG emissions of jet fuel by up to 80%.

Our main obstacles to SAF utilisation remain its high price and non-availability at airports in the countries our AOCs operate in. To gain a broader overview of SAF production and distribution plans in Asean, we participated in multiple engagements with civil aviation authorities, fuel suppliers, aircraft manufacturers and government authorities in the region.

To assess the operational and financial feasibility of SAF implementation, our SAF Committee was formed and consists of key personnel from the following teams:

The committee confirmed:

• The absence of any technological barriers to SAF utilisation
• A320 family of aircraft are certified to fly with a blend of up to 50% SAF
• No investment in new infrastructure for fuel supply needed

In Malaysia, AirAsia was invited by the Ministry of International Trade and Investment to join the Task Force for the Exploration of Sustainable Aviation Energy Sources in April 2022. The role of the task force to identify gaps and issues relating to the exploration of sustainable energy sources and develop policy recommendations that would address these gaps. We are also a member of the Malaysian National Task Force on SAF initiated by the Civil Aviation Authority of Malaysia. Through these engagements, AirAsia was able to refine its plans for SAF utilisation by identifying airports where SAF will be first available and forecasting SAF volumes that can be prospectively sourced from each of these locations.

Waste Management

Capital A strives to reduce as far as possible all waste generated from our operations. We adopt a circular economy approach in our waste management encompassing the 3R principle to reuse, reduce and recycle resources responsibly.

To improve our greenhouse gas monitoring, we expanded our boundary to include Scope 3 indirect emissions from our jet fuel production, employee commute, business travel and other sources in addition to our Scope 1 and Scope 2 emissions. In 2022, our greenhouse gas inventory amounted to 2,332,100.13 tCO2e where the increase was due to the return of air travel and normal operations.

In addition to greenhouse gas monitoring, we continue to improve efficient management of our resources through various efforts (staggered switching for power intense equipment, scheduled light usage by zone, low-water use facilities) while we return to normal operations. Both water and electricity consumption increased due to the return of Allstars to our offices.