The AirAsia Story
ICAO/CAAC Symposium on Low Cost Carriers
5th November 2013
1
12 year achievement
AirAsia passengers carried
>120
million
aircraft in
2013
44
35
30
23
2
0.3
Largest
ASIA’s LOW
COST
14
6
1
2
PASSENGER
GROWTH
BRAND
26
18
acft in
2001
Fastest
Globally
recognised
9
CARRIER
3
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Malaysia AirAsia
2001
Thailand AirAsia
2003
Indonesia AirAsia
AirAsia Philippines
AirAsia India
2005
2010
2013
2
More than Just an Airline
Ancillary - Leveraging on our strong brand, extensive network, large
number of passengers and the number one travel website in Asia
Building a recognisable consumer brand through the following:
• Minimal cost –
use existing
network, belly
space, existing
infrastructure
• Provides recovery
to spike in oil
prices &
competitive
pressures
3
Disciplined Cost Structure
Airlines’ CASK in 2012
18.95
USD cents
16.08
LCC competitor CASK
FSC competitor CASK
15.08
13.05
9.41 9.45
9.12 9.22 9.22 9.27
9.90 9.93
10.63
10.25 10.51
11.24
7.93 7.94 7.98
7.14 7.26 7.27 7.29
5.68
ANA
JAL
Lufthansa
Air France
EVA
Skymark
Air Canada
SIA
Qantas
Virgin Australia
Cathay
Air China
United
Aer Lingus
MAS
US Airways
Southwest
GOL
Jet Airways
Emirates
EasyJet
JetStar
JetBlue
Cebu
Tiger Airways
SpiceJet
4.67 4.50 4.72
RyanAir
TAA
MAA
4.40
5.36
IAA
5.33
4
6 Ingredients of
AirAsia’s Success
5
1
People – our BIGGEST asset
- Right talent for the right job
Over 10,000 staff
No unions
Equal opportunities
Deep senior
management structure
Experienced, loyal, stresstested management team
Can-do attitude
6
1 People
Invest
in people
– our biggest asset
Development
Kaew
Ramp Boy
IT Supervisor
7
2
Smart Sport Partnerships
- Build brand to maximise reach
3
Simple Business Model
- Consistent execution and delivery
Same aircraft specification
• Single aircraft type A320
• Once class configuration
Repeatable operations processes
Average aircraft age (years)
10.9
3.9
11.4
12.7
lower
maintenance
6.5
AirAsia SIA Cathay Thai
Young fleet
• 25 mins turnaround
• 13-14 hours aircraft
utilisation per day
MAS
9
4
Social Media & Digital Marketing
- Customer engagement at no cost
10
5
Invest in Technology
- Platforms and apps for low-cost distribution
11
6
Continuous Innovation
- New ideas, new ways
New route development
Automation
• First LCC in Bandung
• Previously not well-known
to tourists, now a favourite
for Msians, Thais, Indians
• 52K pax in 2004 to 305K
in 2011
• Alternative to Hong Kong
• Pax carried grew:
‒KUL-MFM: 5K in 2004 to
308K in 2012
‒DMK-MFM: 58K in 2004
to 419K in 2012
askAirAsia one-stop information portal
Self-service
kiosks
for check-in
Future of Air travel
13
Asia will lead air traffic growth in the future
World Traffic
RPK billions
% of 2011
World RPK
20 year
growth
% of 2031
world RPK
28%
5.4%
32%
27%
4.1%
24%
27%
3.3%
20%
7%
7.3%
11%
Latin America
5%
5.9%
6%
CIS
3%
5.4%
4%
3%
5%
3%
Asia-Pacific
Europe
North America
Air traffic will
double in the
next 15 years
Middle East
2011
2031
Africa
0
1000
2000
3000
CIS = Common wealth of independent states. Former Soviet Republics
Source: AirBus Global Market Forecast
4000
5000
14
Asia is a demographic heavy hitter
500m
310m
610m
Half the world’s
population lives
in this circle
15
Majority of Asian aviation markets are in
early stages of development
High growth
>7%
Medium growth
~4-7%
Lower growth
~2–4%
Asian countries
Note growth numbers based on domestic & international forecast passenger growth numbers from IATA
Source: Euromonitor; Lit search
16
LCC penetration is expected to increase
across Asia
DOMESTIC
INTERNATIONAL
LCC will the fastest growing airlines of the future
*Excludes passenger flow to and from the Middle East
Source: OAG; AirBus Global market forecast; Bain analysis
17
LCC success needs low cost airports
Simple terminal design  low operating cost
 reduce airport charges
Simple terminal design
• Basic airport amenities
• No necessity of premium lounges,
multiple class check-ins
• Common waiting area in departure
hall
Airport operations
• No aerobridges; Front and back door
steps to allow quick boarding
• Simple & manual baggage handling
process
Landing & parking charges
• Lower landing and parking charges
translating to lower fares for
passengers
18
18
Low cost airport hub
Airport gains from high traffic growth  higher revenue
KLIA Example
KLIA LCCT airport tax revenue earned by MAHB, 2002 – 2012
USD Million
KLIA PAX movement, 2001 – 2012
Million
Main Terminal Building (MTB)
80
LCCT
CAGR
37.6
LCCT = 26%
39.8
34.1
24.2
MTB = 12%
5
27.5
8
10
15
PSC = USD11
(Eff 26 Mar 06)
PSC = USD8
(Eff 1 Jun 07)
PSC = USD12
(Eff 15 Sep 11)
70
60
29.7
26.4
PSC = USD14
18
19
13
50
40
30
20
MTB = 1%
15
16
18
21
23
20
19
17
17
19
20
21
10
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
1 Jan 04 – 31 May 07
(3.4 yrs)
Revenue: USD32m
LCCT helped create a new segment market that
flies regionally for leisure and visiting friends
and families
Source: MAHB – Malaysia Airport Authority
1 June 07 – 31 Dec 10
(3.6 yrs)
Revenue: USD91m
MAHB earned USD59m more in airport tax
revenue within a similar period after the PSC was
reduced to USD8
19
Thank You
20