Our Dreams and
Aspirations
To be the largest low cost airline in Asia
serving the 3 billion people who currently
are underserved with poor connectivity and
high fares.
● To be the best company to work for
where employees are treated as part of a
big family
● Create a globally recognised ASEAN
brand
● To strive for the lowest cost so that all of
the 3 billion people can fly with AirAsia
● Maintain the highest quality product
using the best technology to reduce cost
and enhance service level
C O N T E N T S
● Our Dreams and Aspirations
2 Corporate Profile
4 Five Year Financial Highlights
7 Share Performance
8 Chairman’s Statement
12 Group Chief Executive Officer’s Report
20 AirAsia’s Strategy for Success
22 Route Network
24 Safety
26 Product Development
30 Go Holiday
32 The Sky is Your Limit
34 Champion of Low Fares
36 AirAsia Roars Into Formula One
40 One AirAsia
42 Our People, Our Pride
43 Investing In Our Future
44 Major Milestones
46 Serving You Better from
Our 2nd LCC Terminal
47 Awards & Accolades
48 AirAsia Cares
52 AirAsia Group
53 Corporate Information
54 Board of Directors
56 Directors’ Profile
60 Senior Management
62 Senior Management Profile
66 Managing Risk to Maximise Returns
68 AirAsia Financial Snapshots
72 Statement on Corporate Governance
76 Audit Committee Report
81 Statement on Internal Control
82 Additional Compliance Information
83 Financial Statement
152 Analysis of Shareholdings
156 List of Properties Held
157 Notice of Annual General Meeting
● Proxy Form
AirAsia Berhad | annual report 2007
AirA sia – Asia’s low cost leader
COUNTRY OF OPERATIONS
AirAsia flies to over 86 routes
across 11 countries in ASIA.
Malaysia AirAsia was incorporated on 20 December 1993.
Currently Malaysia has a staff stength of
2,924.
Thai AirAsia was launched on 3 February 2004 as our first joint venture.
Currently Thailand has a staff stength of
1,381.
Indonesia AirAsia was launched on 8 December 2004. This is our second
associate in the region. Currently Indonesia has a staff strength of 745.
MALAYSIA
THAILAND
INDONESIA
M
alaysia
T
hailand
I
ndonesia
Singapore Philippines Cambodia
Brunei Vietnam Myanmar
L
aos
M
acau
C
hina
Vietnam
Cambodia
Laos
Thailand
Myanmar
Malaysia
Singapore
Indonesia
Philipines
Macau
China
2 > AIRASIA BERHAD > annual report 2007
AirAsia Berhad (“AirAsia” or “the Company”)
is a name synonymous with low fares,
quality service and dependability. With over
86 routes across 11 countries, AirAsia is truly
Asia’s leading airline with the widest route
connectivity and largest customer base.
With the unmistakable tagline, “Now
Everyone Can Fly”, AirAsia has made flying
affordable for more than 40 million guests.
Against All Odds
In 2001, Dato’ Tony Fernandes along with Dato’ Pahamin Ab.
Rajab (Chairman, AirAsia), Dato’ Kamarudin bin Meranun
(Deputy Group Chief Executive Officer, AirAsia) and Abdul
Aziz bin Abu Bakar (Director, AirAsia) formed a partnership
to set up Tune Air Sdn Bhd and bought AirAsia for a token
sum of RM1.00. With the help of Conor Mc Carthy (Director,
AirAsia; Director, former Director of Tune Air Sdn Bhd and
former Director of Group Operations, Ryanair), AirAsia was
remodeled into a low cost carrier and by January 2002,
their vision to make air travel more affordable for
Malaysians took flight.
Valued at RM4.5 billion, AirAsia is today an award winning
and the largest low cost carrier in Asia. From a two aircraft
operation of Boeing 737-300, AirAsia currently boasts a fleet
of 60 aircraft that flies to over 50 domestic and
international destinations and operates over 400 domestic
and international flights daily from six hubs located at Low
Cost Carrier Terminal (KLIA), Johor Bahru, Kota Kinabalu,
Kuching, Bangkok (Thailand) and Jakarta (Indonesia). AirAsia
is fast spreading its wings to create a bigger and more
extensive route network through its associate companies,
Thai AirAsia and Indonesia AirAsia. The airline has carried,
thus far, over 40 million guests since its first day of
operation.
Bringing Asia Closer
At AirAsia, we are bringing people closer by bridging
boundaries through our philosophy of offering low fares. It
has sparked a revolution in travel, as more and more
people from all walks of life are now able to fly for the first
time, while many others have made air travel with AirAsia
their preferred choice of transport even within Malaysia. We
are consistently adding new routes, which include city pairs
that never existed before, in our relentless efforts to create
a seamless bridge of unity across ASIA. It is something very
close to our hearts as we continuously strive to promote air
travel and create excitement amongst our guests with our
range of innovative products and personalised services.
The Foundation of Our Business
AirAsia’s success has taken flight through the continued
confidence of our guests who prefer a no-frills, hassle-free,
low fare and convenient option in air travel. The key to
delivering low fares is to consistently keep cost low.
Attaining low cost requires high efficiency in every part of
the business and maintaining simplicity. Therefore every
system process must incorporate best industry practices.
We make this possible through the implementation of the
following key strategies:
● Safety First – Safety is the single most important
criteria in every aspect of the operations, an area that
AirAsia will never compromise on. AirAsia complies
with the conditions set by regulators in all the
countries where the airline operates. In addition,
AirAsia partners with the world’s most renowned
maintenance providers to ensure that its fleet is always
in the best condition.
C O R P O R AT E P R O F I L E
● High Aircraft Utilisation – AirAsia’s high frequency
flights have made it more convenient for guests to
travel as the airline implements a quick turnaround of
25 minutes, which is the fastest in the region. This has
resulted in high aircraft utilisation, lower costs and
greater airline and staff productivity.
● Low Fare, No Frills – AirAsia targets guests who are
prepared to do away with frills such as meals, frequent
flyer miles or airport lounges in exchange for fares
lower than those currently offered without comprising
on quality and service. Guests have the choice of
buying exclusively prepared meals, snacks and drinks
from our in-flight service at an affordable price.
● Streamline Operations – Making the process as
simple as possible is the key to AirAsia’s success. We
are working towards a single aircraft fleet; this greatly
reduces duplicating manpower requirements as well as
stocking of maintenance parts. There is only one class
seating, i.e. first class, and passengers are free to sit
where they choose.
● Lean Distribution System – AirAsia offers a wide and
innovative range of distribution channels to make
booking and traveling easier for its guests. AirAsia’s
ticketless service provides a low cost alternative
to issuing printed tickets.
● Point to point network – The LCC model shuns the
hub-and-spoke system and adopts the simple point-
to-point network. Almost all AirAsia flights are short-
haul (3 hour flight or less). The underlying business is
to get a person from point A to B.
Our Commitment
AirAsia has a firm commitment with a purchase order for
200 Airbus A320 aircraft (150 firm + 50 options), thus
securing our growth pipeline up till 2013. We are
committed to be a truly Asian airline that operates an
extensive route network, fosters economic prosperity,
stimulates tourism and promotes stronger cultural
integration. AirAsia is poised to be the largest and youngest
airline in the region.
a revolutionary name in air travel reaches greater heights
www.airasia.com
4> AIRASIA BERHAD > annual report 2007
F I N A N C I A L H I G H L I G H T S
F I V E Y E A R
F
or the year ended
30 J
un
e 2003 2004 2005 2006 2007
(RM million, unless otherwise stated) (restated)
Revenue 330 393 718 1,071 1,603
Total expenses 318 332 596 997 1,322
EBITDAR 95 116 209 154 490
EBIT 12 61 122 74 281
Associates contributions 0.0 (0.1) (5.4) (0.5) (3.9)
Profit before tax 11.5 58.1 114.6 86.2 278.0
Tax 7.4 (9.1) (14.3) 115.5 220.0
Net income * 18.8 49.1 100.8 201.7 498.0
BALANCE SHEET
Cash & cash equivalent 34 66 329 426 595
Total Assets 124 350 1,123 2,574 4,779
Net Debt (Total Debt – Total Cash) (34) 29 (329) 627 1,959
Shareholders' Equity 49 150 953 1,148 1,662
CASH FLOW STATEMENTS
Net cash from operating activities 15 29 (38) 282 595
Cash flow from investing activities (22) (144) (297) (1,249) (1,943)
Cash flow from financing activities 26 141 589 1,067 1,509
Net Cash Flow 19 26 254 100 161
CONSOLIDATED FINANCIAL PERFORMANCE (%)
Return on total assets 15.2 14.0 9.0 7.8 10.4
Return on shareholders' equity 38.4 32.7 10.6 17.6 30.0
R.O.C.E (EBIT/(Net Debt + Equity)) 74.4 33.8 19.6 4.2 7.7
EBITDAR margin 29.7 29.6 29.1 14.4 30.6
EBIT margin 3.5 15.4 17.0 6.9 17.5
Net Income margin 5.7 12.5 14.0 18.8 31.1
CONSOLIDATED OPERATING STATISTICS
Passengers carried 1,481,097 2,838,822 4,414,069 5,719,411 8,737,939
RPK (million) 1,539 2,771 4,881 6,702 9,863
ASK (million) 2,086 3,592 6,525 8,646 12,391
Load factor (%) 74 77 75 78 80
Aircraft utilisation (hours per day) 12.5 12.8 12.1 12.0 12.0
Average fare (RM) 147 131 143 174 171
Yield Revenue per ASK (sen) 11.1 10.9 10.2 12.2 12.9
Cost per ASK (sen) 10.9 9.4 8.3 10.9 11.2
Cost per ASK – excluding fuel (sen) 7.4 6.5 4.2 6.1 5.6
Yield Revenue per ASK (US¢) 2.92 2.87 2.69 3.29 3.64
Cost per ASK (US¢) 2.86 2.47 2.19 2.95 3.16
Cost per ASK – excluding fuel (US¢) 1.96 1.72 1.11 1.63 1.57
Number of Stages 14,461 25,106 40,679 48,339 68,195
Average stage length (km) 975 967 1,024 1,163 1,088
Average fleet size (Malaysia) 5.5 9.5 16.3 20.5 27.1
Size of fleet at year end (Malaysia) 7 13 19 26 34
Size of fleet at year end (Group) 7 17 27 42 54
Number of employees at year end 648 1,382 2,016 2,224 2,924
Percentage revenue via internet (%) 29 4
3 47 60 65
* Net income after minorities
AIRASIA BERHAD > annual report 2007 >5
AIRASIA BERHAD > annual report 2007 >7
S H A R E P E R F O R M A N C E
0
10000
20000
30000
40000
50000
100
150
200
250
July-06
Aug-06
Sept-06
Oct-06
Nov-06
Dec-06
Jan-07
Feb-07
Mar-07
Apr-07
May-07
Jun-07
Volume Traded ('000) Share Price (sen)
NOV 2006
Announcement on 30 November 2006 of the unaudited consolidated first quarter results for the
three months ended 30 September 2006.
DEC 2006
13th Annual General Meeting (AGM) of the Company was held on 28 December 2006.
FEB 2007
Announcement on 28 February 2007 of the unaudited consolidated second quarter results for the
three months ended 31 December 2006.
MAY 2007
Announcement on 23 May 2007 of the unaudited consolidated third quarter results for the three
months ended 31 March 2007.
AUG 2007
Announcement on 30 August 2007 of the unaudited consolidated fourth quarter results for the
three months ended 30 June 2007.
Share Price Volume Traded
AirAsia Share Statistics
Share Price beginning : 150
Share Price end : 190
Year High : 211
Year Low : 127
Volume traded (million) : 2,515
Share turnover : 107%
“AIRASIA TODAY IS A GROUP WITH SALES IN EXCESS
OF RM1.6 BILLION, A PRESENCE IN 11 COUNTRIES
AND MORE THAN 5,000 EMPLOYEES.”
PAHAMIN AB. RAJAB
CHAIRMAN
C H A I R M A N ’ S S TAT E M E N T
Dear Shareholders
AirAsia has just completed its best financial year ever. This is
against a backdrop of exciting opportunities as well as a fair
share of challenges. AirAsia today is a group with sales in
excess of RM1.6 billion, a presence in 11 countries and more
than 5,000 employees. Earnings continued to improve
thanks to robust passenger growth and improved margins
in all business areas. This was despite the slowdown in the
Indonesian aviation industry, lower than expected tourist
arrivals in Thailand and increases in the price of jet fuel to
levels that only two or three years ago would have seemed
impossible. Our business model has weathered these
challenges, and coupled with our sound operational
performance, we have seen the Group produce record
profits.
The domestic rationalisation was the main focus of the
Group for the past year. This progressive decision by the
Malaysian Government has allowed the industry to compete
on the same basis which in turn has clearly defined the
premium and budget segment of the industry. AirAsia is
now the market share leader for domestic Malaysian
operations and a number of regional routes. In addition, the
Government has built a new low cost terminal in Kota
Kinabalu and subsequently reduced the passenger service
charges for travelers using the low cost terminals of Kuala
Lumpur and Kota Kinabalu. These positive developments
highlight that the Government understands and supports
the low cost airline industry.
AirAsia’s business has always had a long stride. As we grow
our Company across the region, we will continue to work as
one collaborative and seamless ASEAN airline, drawing on
local expertise and fully exploiting our Group processes and
knowledge. We will leverage on what is common between
all our markets and combine this with the local edge that
our companies are adept at.
I am pleased that we have met all our key performance
indicators, and in many cases, exceeded our targets. AirAsia
carried 14 million passengers across the Group; this
represents a growth of 50% against the previous year. The
Group has achieved a stellar performance in capacity
management with 80% load factor and 6% increase in
yields. Excluding fuel, our cost was actually lower than
AIRASIA BERHAD > annual report 2007 >9
10 > AIRASIA BERHAD > annual report 2007
budgeted thanks to the Airbus A320, which is delivering
tremendous cost and productivity benefits. This resounding
all round strong performance highlights the successful
execution of our corporate strategy and investments made
in the past.
AirAsia would not have been able to meet these challenges
without the commitment and dedication of our people, led
by Tony Fernandes and the team he heads. Their
determination, experience and creativity are needed to rise
to the challenges our business faces. I would like to thank
all our staff around the world for their contribution in 2007.
I am proud to recognise the value they have created for our
shareholders.
It is worth repeating, AirAsia is on the right track, as our
results for financial year 2007 clearly show. Our constant
efforts in lowering cost, expanding our route network,
developing innovative products and building a strong
ASEAN brand, will see us moving closer to being the most
profitable airline in the world. I can therefore promise that
the quest to be the best will never rest and we will have yet
another exciting period ahead of us.
Pahamin Ab. Rajab
Chairman
15,000
13,500
12,000
10,500
9,000
7,500
6,000
4,500
3,000
1,500
0
03 04 05 06 07
1,481
2,839
6,289
9,312
13,992
Passengers Flown by
AirAsia Group (‘000)
Load Factor (%)
80
70
60
50
40
30
20
10
0
03 04 05 06 07
73.8
77.1
74.8
77.5
79.6
“THE GROUP HAS ACHIEVED A STELLAR PERFORMANCE IN CAPACITY MANAGEMENT WITH
80% LOAD FACTOR AND 6% INCREASE IN YIELDS.”
12 > AIRASIA BERHAD > annual report 2007
“THE GROUP EXPANDED THE
NETWORK TO 19 NEW
DESTINATIONS AND OPENED UP
NEW BASES IN KOTA KINABALU
AND KUCHING. ”
TONY FERNANDES
GROUP CHIEF EXECUTIVE OFFICER
AIRASIA BERHAD > annual report 2007 > 13
Dear Shareholders
2007 was a fantastic year for AirAsia. The demand for our
low fares and services was never better as we continued to
achieve strong revenue and profit growth. It is all coming
together for AirAsia. We continue to add another layer to
our already strong foundation as we re-organised the
business to create a leaner, more resilient Company. What
we have now is the right structure and the right team.
The Group expanded the network to 19 new destinations
and opened up new bases in Kota Kinabalu and Kuching.
We acquired a net addition of 12 aircraft into the fleet with
the delivery of 14 new Airbus A320 and the return of two
Boeing 737-330 on expiry of their lease within the period.
We ended the year with a total of 54 aircraft, up from 42 in
June 2006. In 2007, the Group carried 14 million people
across our network, which represents a 50% growth from
2006.
The Group’s operating results over the past year underscore
two major highlights. The first is how effectively our people
worked to meet customer needs during the highest
demand for air travel we have ever experienced. The second
highlight was how well the team managed the robust
capacity growth of 41% across the Group. This was the first
time that we achieved a load factor of 80% for the full year.
Even more impressive is the accompanying higher yields.
Furthermore, unit cost excluding fuel items improved by 8%.
I can never say this enough, our success and ability to meet
these challenges are attributed to the dedication and
commitment of the people of AirAsia. Our people’s
commitment and efforts to meet our guests’ expectations
and our own goals are second to none. Not only did this
dedication allow us to withstand this challenging
environment, but it resulted in a number of important
accomplishments that will position AirAsia for our next
phase of growth. It goes without saying that AirAsia’s main
pillar of strength is the 5,000-plus people we have
employed.
Strategic Actions
Let us turn the clock back for a moment to the early days of
AirAsia, when the new management took over and
revamped the airline as a low cost carrier. At that time, the
airline industry was in a grim state due to the aftermath of
the 9/11 terrorist attacks and a depressed global economy.
Overcapacity and low barriers to entry had led to price wars.
To compound matters, we were competing against a state
subsidised airline, the authorities were not familiar with the
low cost concept, airports were hesitant to offer concessions
and our brand recognition was in its infancy. We needed to
take tougher actions to become a major market player –
and we did.
In the past five years, we have maintained unwavering focus
and discipline in the low cost model. In the process, we
have invested significantly to build a solid foundation and to
create a platform for sustainable growth. We have built the
AirAsia Academy develop high quality manpower in
ensuring seamless business growth. We are constantly
expanding our route network, currently the most
comprehensive in South East Asia. We are the largest
domestic airline in Malaysia and we are market leaders in
almost all the routes we serve. We have also secured our
growth pipeline with the purchase order of 200 Airbus A320
aircraft - it is almost impossible for any airline to purchase a
new narrow-body aircraft as the production backlog
stretches to 2012. Our Malaysian operation now has the
youngest fleet of any airline in South East Asia and we will
have the youngest fleet as we induct more Airbus A320 and
phase out the Boeing 737-300.
Every Ringgit we receive from our business comes back to
be used for the future benefit of the business. It begins with
investing in employees, rejuvenating our aircraft fleet and
upgrading infrastructure for continuous and disciplined
growth.
I am happy to say that all our corporate strategy and
strategic investments have yielded positive results. In 2007,
our unit cost is the lowest reported in the world and our
profit margins are among the best. Just imagine what we
can achieve in the future.
80
70
60
50
40
30
20
10
0
03 04 05 06 07
11
26
52
65
75
Destinations Served By
Airasia Group
G R O U P C H I E F E X E C U T I V E
O F F I C E R ’ S R E P O R T
14 > AIRASIA BERHAD > annual report 2007
Low Cost Carrier Terminal
The low cost carrier terminal (LCCT) in Kota Kinabalu was
commissioned on 14 February 2007. This terminal was built
to cater to the robust passenger demand for Kota Kinabalu
and to upgrade it as the major hub for East Malaysia. The
Kota Kinabalu base is growing from strength to strength
and currently houses three aircraft, with 27 daily flights to
10 destinations across the region.
Altogether, there are three LCCTs across the region and the
Malaysian Government has approved a master plan to
develop a new LCCT in Kuala Lumpur with a capacity of 30
million passengers per year – up from the current 10 million
passengers per year. This terminal will be designed to
include a greater number of amenities, with significant retail
component and comprehensive connectivity via rail, bus
and other ground transports. Construction work may start as
early as 2010 and will take about two years to complete.
When completed, this terminal will be the third largest in
the world and should comfortably serve as AirAsia’s
permanent headquarters. This initiative is a testimony of the
Government’s confidence and support for the low cost
carrier industry.
Airbus A320
Undoubtedly, the Airbus replacement programme is the
biggest contributor to our strong performance. The superior
operating economics and reliability of the Airbus A320
aircraft has elevated our customer service delivery to a
higher level and the aircraft is proven popular among our
guests. As the number of Airbus A320 aircraft in our fleet
increases, we will continue to achieve greater reduction in
operational costs and further extend our competitive edge.
Due to the proven success of the Airbus A320 aircraft, we
have increased our aircraft purchase order to 150 firm orders
with options to acquire up to a further 50 aircraft. This
purchase order effectively secures our growth pipeline up
till 2013 while concurrently locking in the benefits of our
original aircraft acquisition agreement.
One Brand
Branding is a vital asset for a consumer driven company
such as AirAsia. We will continue to focus a large share of
our marketing and resources on developing AirAsia as a
strong ASEAN brand with global recognition. Our consumers
should always regard AirAsia as their first choice whenever
they want to fly across the region. A strong brand
commands superior product differentiation, encourages
repeat customers and customer loyalty, and is important for
raising profitability.
We continue to invest significantly in our brand and have
leveraged our brand with the biggest sporting outfits in the
world. We are now an official sponsor of the AT&T Williams
Formula 1 team for the 2007 season. In addition, we are also
an official sponsor for the English Premier League. The
AirAsia brand will be featured on the referees’ uniform for
the entire 2007/2008 football season. We now have covered
almost all of the world’s most popular sports and this has
made us one of the most recognisable ASEAN brands in the
world.
60
50
40
30
20
10
0
03 04 05 06 07
7
19 6 2
26
34 12 8
Number of Aircraft
Malaysia Thailand Indonesia
10
6
13 4
16 > AIRASIA BERHAD > annual report 2007
Future Development
The year 2007 was as exciting as it was challenging. Looking
forward, we are in an excellent position to capitalise on the
growing demand for low cost travel and to register
significant growth. The challenge now is to execute
disciplined growth in capacity that matches the demand
from our new and existing customers. Ultimately, we will
carry in excess of 50 million passengers per year by 2013
with the current fleet growth plan, but it is critical that
growth occurs at a measured pace, driven by returns to our
shareholders and fully supported by market needs.
The competitive landscape and market dynamics will always
be open to new challenges. To be successful, we must not
only stay abreast of developments; we must understand
what people really want and drive the changes ourselves.
Therefore it is important that we remain proactive to be one
step ahead of the competition and embrace changes
whenever necessary.
Finally, I would like to thank our shareholders for your
continued support of the Group. Our view going forward is
that sustainability in all areas should be rooted in
demonstrated capabilities, proven results and solid long-
term strategies. This approach will reward our shareholders
in the years to come.
Yours faithfully,
Tony Fernandes
Group Chief Executive Officer
9.1%
60.2%
9.0%
4.9%
16.7%
5.7%
64.7%
7.0%
9.6%
13.0%
Distribution Mix
2007
2006
“WE WILL CONTINUE TO FOCUS A LARGE
SHARE OF OUR MARKETING AND
RESOURCES ON DEVELOPING AIRASIA AS A
STRONG ASEAN BRAND WITH GLOBAL
RECOGNITION.”
Internet
Travel Agent
Sales Offices
Call Centre
Airport Counters
Petronas Twin Towers , Kuala Lumpur
Every year, AirAsia is
helping millions of guests
discover a nation that is a
melting pot of various races
and religions, cultures and
traditions and yet
bonded by an identity
that is truly, uniquely
Malaysian. A nation that
is hailed as an excellent
model of unity in diversity.
malaysia
A I R A S I A’ S S T R AT E G Y F O R S U C C E S S
Our overall vision and goal is to continue to be the lowest cost
airline in the world and achieve sustainable profitable growth over
the long-term. We plan to accomplish this by implementing a well
thought out strategy and secure a strong foundation for our
business. This strategy is to maintain a solid, long-term customer
relationship, efficient management of operations in order to grow
the business, thereby increasing cash flows from operations. To
implement this, the focus is to minimise costs, utilise existing assets
efficiently and carefully manage market risk while prudently growing
capacity by stimulating new markets.
Strategic priorities for AirAsia include:
● Controlling costs through a strong focus on efficient operations
and technology
● Developing human capital to capitalise on opportunities for
further growth
● Expanding the route network to provide a long-term supply to
the market
● Managing the business through various economic cycles
● Building a strong ASEAN brand that is globally renowned
● Diversifying the customer base to strengthen market position
● Maintaining a strong focus on guest and employee safety
Continue to be the LOWEST cost airline
in every market we serve
ROE 10%
Industry leading profit margins
>
–
Low Cost Efficiency
Brand
Strong
Cashflow
S
A
F
E
T
Y
Vision
Goal
Foundation
Strategy
L
O
W
F
A
R
E
S
S
E
R
V
I
C
E
S
I
M
P
L
I
C
I
T
Y
AIRASIA BERHAD > annual report 2007 > 21
A c h i e v i n g h i g h e r p r o f i t a b i l i t y
AirAsia is constantly striving to improve profitability. Our focus is to further reduce
cost, enhance efficiency, develop new products and continuously strengthen our
brand globally. These are all vital components in our strategy to generate profit
margins that is the best in the industry.
Cost
Efficiency
Brand Growth
Product
Development
Over the past five years, the market for air travel has
converted from being the last option for travel – due to its
high cost nature, to being the most favoured option for
travel. Consumers appreciate the convenience of a fast,
hassle free and economical means of transportation and opt
for air travel whenever it is affordable. AirAsia has evolved
from a small niche airline which is consistently referred to as
“the other airline” to an innovative, market driven
company that builds on consumer insight and needs. Slowly
but surely, AirAsia will be referred to as “the airline”.
The number of new products and services created through
consumer focused product development is increasing
rapidly. This has led to a better product offering, and thus to
an increasing number of more successful launches. Low
costs, innovative products and a strong brand have enabled
AirAsia to create a foundation for higher profitability and
growth.
Improved
Profit
Margins
22 > AIRASIA BERHAD > annual report 2007
R O U T E N E T W O R K
Malaysia
Kuala Lumpur (KUL - LCCT)
● Alor Setar (AOR)
● Penang (PEN)
● Kota Bharu (KBR)
● Terengganu (TGG)
● Langkawi (LGK)
Johor Bahru (JHB)
Kota Kinabalu (BKI - LCCT)
● Sandakan (SDK)
● Tawau (TWU)
Kuching (KCH)
● Miri (MYY)
● Sibu (SBW)
● Labuan (LBU)
● Bintulu (BTU)
Thailand
Bangkok (BKK)
● Surat Thani (URT)
● Udon Thani (UTH)
● Ubon Ratchathani (UBP)
● Krabi (KBV)
● Phuket (HKT)
● Hat Yai (HDY)
● Narathiwat (NAW)
● Chiang Mai (CNX)
● Chiang Rai (CEI)
● Nakhon Si Thammarat (NST)
● Khon Kaen (KKC)
Indonesia
Jakarta (CGK)
● Banda Acheh (BTJ)
● Medan (MES)
● Pekan Baru (PKU)
● Padang (PDG)
● Palembang (PLM)
● Bandung (BDO)
● Solo (Yogyakarta) (SOC)
● Surabaya (SUB)
● Bali (DPS)
● Balikpapan (BPN)
● Batam (BTH)
Kuala Lumpur (LCC Terminal)
Johor Bharu (Senai Airport)
Kuching (Kuching International Airport)
Kota Kinabalu (Terminal 2)
Jakarta (Soekarno Hatta International Airport)
Bangkok (Suvarnabhumi International Airport)
AIRASIA BERHAD > annual report 2007 > 23
China
● Xiamen (XMN)
● Macau (MFM)
● Shenzhen (SZX)
Myanmar
● Yangon (RGN)
Philipines
● Clarke (Manila) (CRK)
Vietnam
● Hanoi (HAN)
Laos
● Vientinne (VTE)
We serve over 86 routes across 11 countries across Asia.
We are continuously expanding our route network to
include well established destinations as well as pioneer
routes that have never been done before.
Cambodia
● Siem Reap (REP)
● Phnom Penh (PNH)
Brunei
● Bandar Seri Begawan (BWN)
Singapore
● Changi (SIN)
No. of No. of
Guests (mil.) Year Routes
0.6 2002 6
1.5 2003 11
2.8 2004 26
6.3 2005 52
9.3 2006 65
14 2007 75
24 > AIRASIA BERHAD > annual report 2007
Performed on each and every transit stop of a flight. Visual
inspections are conducted on the major components of the
aircraft. While in transit, the pilot performs a test run on the
system to make sure everything is performing as expected. In
the event any irregularities are discovered during the transit
stop, the pilot will engage the engineer to conduct a full
analysis on the aircraft.
Performed at the end of each day. Our engineers and
maintenance crew clean and inspect the aircraft for any visual
defects, and conduct tests of the aircraft systems. This
inspection includes the fuselage, wings, pylons and landing
gears. Each daily check will require at least 2 hours.
Performed on the landing gear and generator and change of
fluid consumables. In addition, the emergency evacuation
systems and cargo compartment are inspected.
Performed every 400 flight hours. Detailed inspections are
performed on the electrical, hydraulics and static inverter
systems.
Performed every 600 flight hours. This workshop visit will
include replacements of consumables and some minor
component changes.
Performed every 6,000 flight hours. This workshop visit will
involve replacement of major components as well as a
comprehensive inspection on the whole aircraft. Depending on
the work required, a ‘C’ check can consume anywhere between
4 days to 8 weeks in the workshop.
S A F E T Y
AirAsia considers safety to be THE single most
important aspect of our operations and it is a criteria
that we will never compromise. AirAsia is stringent
about complying with the highest international
standards and procedures set by the Malaysian Civil
Aviation Regulations. Safety procedures include strict
aircraft maintenance, constant updating and training of
technicians and flight crew.
Transit check
Daily check
Weekly check
‘E’ check
‘C’ check
400 flight
hour check
The List of Checks for Airbus A320
Our aircraft are put to a series of checks every day for its entire operating life. This is
to ensure the safety of our guests and our people. The series of maintenance checks
and inspections are listed below:
E
C
AIRASIA BERHAD > annual report 2007 > 25
26 > AIRASIA BERHAD > annual report 2007
AirAsia has always been in the
forefront to listen to our guests’
feedbacks and respond to the
needs and fast pace change of
market trends . This is important
for us to continuously enhance our
services and cater to the diverse
profile mix of our guests as we
expand our network regionally.
Xpress Boarding
AirAsia practices a free seating policy. This policy has
enabled us to consistently achieve a turnaround time of 25
minutes for all of our flights.
We now offer, as an option, the choice of seats through
Xpress Boarding. Xpress boarding allows guests to board an
aircraft first, and choose a seat of their liking – be it a
window seat, aisle seat, front of aircraft or next to the
lavatory. This service has proven to be exceptionally popular
for time hungry businesspeople, corporate employees on
business trips, and families traveling together.
Web Check-in
For a seamless, quick and convenient check-in, Web Check-
in was introduced to enable those traveling without
luggage. Guests may simply check-in via the webpage from
the comfort of their homes or office, print out their
boarding pass and proceed to the airport at their leisure.
Self Check-in Kiosk
Self Check-in is also available. Our fiery red kiosks are
located at the LCC Terminal, KLIA to enable a self check-in
with a touch of the screen.
E-Gift Voucher
The E-Gift Voucher is an innovative gift for all occasions as
well as being a much-appreciated corporate gift for its high-
perceived value. Since its launch, the E-Gift Voucher has
proven itself to be a popular choice for those who want to
present imaginative gifts.
P R O D U C T D E V E LO P M E N T
28 > AIRASIA BERHAD > annual report 2007
Citibank AirAsia Credit Card
Our partnership with Citibank has brought together two
organisations that are leaders in their respective industries.
Citibank is a highly recognisable brand in banking solutions
with strong regional and global presence. Our partnership,
backed by our extensive network within the Asia region, will
further reaffirm our unwavering commitment towards
becoming a truly global brand. It also allows us to tap into
Citibank’s client database, and broaden our market segment.
The Citibank AirAsia credit card rewards cardmembers with
points which are redeemable for AirAsia flights.
Cardmembers will also enjoy priority booking during
promotional campaigns.
AirAsia’s In-flight Services – Snack Attack!
We pride ourselves in providing the fastest in-flight services
in the region. Within 25 minutes, new carts loaded with
food, beverages and high-quality merchandise are efficiently
stowed on the aircraft, ready for sale after take-off.
Our delicious menus are changed quarterly. All-time
favourite items such as Nasi Lemak are retained in the
menu. New merchandise items like the Sports Edition
Watches, Visit Year Malaysia 2007 Luggage Tag and AirAsia
Playing Cards are fast becoming popular items onboard
alongside with our best-selling signature AirAsia Polo T-shirts
and caps. We constantly introduce new products and
refresh our menus whilst maintaining our all-time favourites.
AIRASIA BERHAD > annual report 2007 > 29
go
holiday
O N E S T O P O N L I N E
In line with AirAsia’s mission to make air
travel affordable, simple and easy for
everyone, we launched our online holiday
packages in August 2003. To date, our Do-It-
Yourself (DIY) packages which comprises of
flight and hotel bookings remain the most
popular product. Travelers may also book
online other travel related products such as
tours, transfers, activities, medical services
and car rental.
Hotel Go Holiday now boasts 700 hotel partners in
all the countries that we fly to. Our hotels range from high-
end properties to budget hotels, enabling us to cater to
travelers from all walks of life. Go Holiday’s wide room
selections; tight rate negotiation process that delivers the
best rates to our customers; interesting and user-friendly
web layouts; introduction of multi-currency booking; and
aggressive marketing campaigns, are among the factors
contributing to the popularity of this online service. To
further enhance our services, there will be cooperation plans
with related tourism bodies, telcos and promotions through
credit cards. As we expand our network, we will even
progressively have additional languages to meet the
demands of our multi-racial and multi-lingual guests. We
a
lso take into account the importance of proper database
management with the help of e-CRM marketing tools, we
will be able to understand our customers better by studying
their needs and travel patterns.
Flight + Hotel Package (DIY) is the
convenient way for guests to book any combination of
flights and hotels at one stop and enjoy a more attractive
rate. On top of providing hotel accommodation and flights,
we also offer other services such as:
Tour & Transfer which added in October 2007,
offering a variety of tour packages that cater for all segment
needs, from adventure to luxury travels. In addition, products
such as airport transfers, tours and activities ranging from
Spas to theme parks will be marketed online.
Go Medic is our specially designed online health
package to cater to the growth in health tourism. Currently,
Go Medic has formed a partnership with three diagnostic
centres with potentially more hospitals and diagnostic
centres to be added to the service.
Go Car is our convenient, value-for-money online car
rental service. Currently, Go Car has formed a partnership
with three Car Rental Companies with potentially more local
and international partners to be added to the service.
Objective
To become a renowned one-stop
online travel portal in the region.
T R AV E L P O R TA L
We focus on simplicity,
good value and good
variety
Comprehensive and
simple distribution
system
Do-It-Yourself
How are we lower in cost?
Hotels
Currently 700 hotel partners
Flights & Hotels
Convenience in holiday/travel planning
Car Rental
Fuss-free rental of quality cars for business
and leisure travel
Medic Services
Reassurance of reliable and expert medical care
far from home
Tours & Transfer NEW!
Efficient ground arrangements to maximise your
itinerary during business or holiday trips
What do we offer?
32 > AIRASIA BERHAD > annual report 2007
Airspace Advertising
AirAsia’s AirSpace Advertising generates additional
revenue by giving our advertisers the opportunity
to communicate to a captive audience on board
our aircraft
Our extensive list of established brands as
advertisers is proof of campaign effectiveness
when it comes to reaching a diverse target
audience. Digi, Mastercard, Citibank, Celcom and
TH Properties are just some examples. Airspace
Advertising will continue to contribute
substantially to our ancillary revenue.
AirSpace encompasses the following media:
● Meal tray advertising
● Overhead compartment
● Auto boarding pass
● Flying airboard
● Napkins
● Beverage cups
● Pocket schedule
The AirAsia Magazine
Travel 3Sixty – AirAsia's in-flight magazine – was
launched on 8 August 2007. Two issues have
been published and and the response has been
tremendous. Guests and other readers are drawn
to the magazine for its diverse topic coverage of
subjects from family travel, adventure
destinations and travel tips. With an audience of
over 1.3 million guests on our aircraft every
month, Travel 3Sixty offers advertisers to tap a
wide audience across Asia
airasia.com
With over 90 million impressions and 600,000
unique visitors every month, airasia.com is by far
the biggest e-commerce merchant in ASEAN.
airasia.com is unmatched in terms of
comprehensive information, content and its
ability to cater to six languages covering 11
countries. With an extensive reach of frequent
guests as well as potential new ones, the website
is a powerful one-stop integrated travel portal.
AirAsia’s Internet sales have grown from a mere
15% from on its first day of operations to an
impressive 70% today. As we launch more
innovative products and services online, our web
traffic will continue to rise. With E-Gift Vouchers,
Web check-in, Xpress Boarding and Go-Insure
Travel Insurance, we now offer guests an
integrated online experience at airasia.com.
