UKEC First Annual Students Leaders
Summit
4th August 2007
CONFIDENTIAL
Now Everyone Can Fly
Introduction on AirAsia:
The ‘it’ LCC
Low Fare Airlines in Asia?
Here’s one opinion:(Excerpt from the Speech By Mr. Richard Stirland, Director General of Association of Asia
Pacific Airlines at the ING Low Cost Airlines in Asia Conference 2003)
….. low cost airlines will be something we read about
rather than worry about. This might sound extremely
complacent, but my view is based on a close examination of the
facts, and I regret to say that many of those who, in the fashion
of St. John the Baptist, announce the imminent arrival of a
saviour in the form of Richard Branson or even Tony
Fernandes, appear either not to have considered the facts, all of
them, or to have formed a judgment and worked backwards to
use facts selectively to support their arbitrary conclusion …
2
Why he thought it won’t work…
 Tour packages still remains supreme – internet booking remains an exotic curiosity
 Travel agents’ loyalty to major airlines due to wide spread of services, destinations,
preferential rates to selected agents etc.
 Unsophisticated Traveler seeks sophistication of travel – cheap tickets but still expect frills
 Domestic market – taking passengers from trains, ferries & self drive whilst International
market – against established incumbents
 Geography – great distances fewer frequencies
 No critical mass to negotiate for lower prices
 Pay scale
 Lack of aircrew – forced to employ expensive expatriate
 Impossible for low cost operators to compete using service, simplicity, fares & summary
 Traffic rights – regulated environment
 …. And more
3
We’ve come a long way………………….
 Over 5 years of hard work, we have made LCC a way of life in Asia
 Huge barriers overcome and most hard work is now behind us
 Despite the obstacles, PEOPLE support AirAsia
4
Achieving a Genuine ASEAN Brand
 AirAsia Berhad Headquarters - Kuala Lumpur
 Hubs - Johor Bahru, Kuching and Kota Kinabalu
 AirAsia Thailand - Bangkok (Feb 3, 2004)
- First JV of a foreign airline having a local AOC in history
- First foreign LCC to fly into China
 AirAsia Indonesia - Jakarta (Dec 8, 2004)
- Carried more than 1 million guests to date
Creating an Asian Brand with participation from each ASEAN country
5
Build #1 Route Network
Period
Destinations
Served
Jan 2002
6
Jun 2003
11
Jun 2004
26
Jun 2005
52
Jun 2006
65
NOW
75
Latest Routes
KL – Shenzhen
Bangkok – Shenzhen
Upcoming Routes
KL – Krabi
JB – Macau
The Airline Revolution
Now Everyone Can Fly
Key Achievements
July 2006
Launched KK
Dec 2004
 Launched
sister
company
Indonesia
AirAsia
Nov 2004
Successfully
Feb 2004
Launched
sister
company
Thai
AirAsia
Apr 2002
Dec 2001
 Tune Air
officially
takes over
AirAsia
and begins
conversion
to a LCC
 Ticketless
system
Dec 2003
May 2002
 Online
reservation
 Launched
Johor hub
Aug 2006
Domestic
Rationalis
ation
1250
1100
& Kuching hub
Dec 2005
First Airbus
A320 aircraft
Feb 07
930
Made IPO
621
390
430
415
336
203
154
36
68
77
July 2002
Dec 2001
 Inherited
RM40mn of
liabilities
 Birdstrike
one plane
Forced move
from Subang
to KLIA
88
Aug 2002
MAS
SuperSaver
#1 program
129
148
Feb 2003
SARS hits
Dec 2003
MAS
SuperSaver
#2 program
Aug 2004
MAS
SuperSaver
#3 program
Dec 2004
Tsunami
Mar 2005
Bali Bombing
July 2006
Jet Fuel
at historical
record $93
Mar 2003
Iraq war
Monthly Passengers ‘000s
Key Challenges
Track record of success in the face of unprecedented shocks to the industry
8
We’re Growing.. And Growing
60
Passengers
(million)
15%
25%
50
52
25%
40
45
15%
25%
30
39
40%
20
31
60%
27
21
10
9
15
0
FY2006
(Actual)
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
9
AirAsia against other LCC
Pax per year (million)
80
60
40
78
20
35
33
17
15
15
13
AirAsia
(FY2007F)
JetBlue
GOL
9
9
WestJet
Virgin
0
SouthWest
Ryanair
EasyJet
AirTran
10
AirAsia in 2013..Way Ahead than SIA
Now Everyone Can Fly
Pax per year (million)
80
2013
Current
60
6
7
40
12
37
17
58
50
4
20
6
10
18
17
Thai
SIA
34
23
22
EVA
Korean Air
15
0
JAL
ANA
AirAsia
Qantas
11
Robust Growth and Capturing Market Share
AirAsia Market Share - passengers
Domestic Market Share
Year
60%
MAS
3%
97%
2002
12%
88%
2003
20%
80%
2004
25%
75%
2005
28%
72%
2006
41%
59%
2007
51%
49%
51%
2001
50%
41%
40%
25%
30%
28%
20%
20%
10%
AirAsia
12%
3%
0%
2001 2002 2003 2004 2005 2006 2007
Source: MAB
Lower Fare Every Year!
Year
Average Fare (RM)
2002
183
2003
147
2004
131
2005
143
2006
137
13
Profitability
RM (million)
1H-2006
1H-2007
Change (%)
REVENUE
443
694
57%
EBITDAR
122
247
102%
Pretax Profit
61
105
72%
EBITDAR Margin
27%
36%
Pretax Profit Margin
14%
15%
 Unprecedented profitability growth and a market capital
of RM 1 to RM 4.6 BILLION in just 5 years!
14
CONFIDENTIAL
Now Everyone Can Fly
How Did We Do It
Key Ingredients of a Successful LCC
CONFIDENTIAL
Now Everyone Can Fly
i. Amazing Cost
Cost Management
Cost / ASK (US cents)
Cost / ASK (ex fuel surcharge)
Cost / ASK
Non Fuel Cost
3 .4 0
2 .9 0
2 .8 3
2 .6 3
2 .4 7
2 .3 5
2 .3 3
2 .19
2 .2 0
1.9 6
1.7 2
1.3 2
1.11
2002
Malaysian Operations
2003
2004
2005
2006
1.17
Q1-2007
High Profitability and Returns
Company
EBITDAR
EBIT
Net Income
Ryanair
35%
25%
20%
15%
7.9%
EasyJet
17%
7%
6%
10%
3.9%
VirginBlue
22%
10%
6%
16%
n/a
JetBlue
16%
5%
0%
0%
0%
SouthWest
18%
10%
6%
8%
5.4%
GOL
28%
18%
15%
26%
10.5%
WestJet
25%
15%
7%
14%
4.2%
AirAsia
31%
16%
19%
19%
5.7%
LCC Average
23%
13%
8%
13%
5.2%
SIA
21%
10%
9%
10%
8%
Cathay
n/a
8%
7%
10%
7%
Qantas
n/a
5%
4%
8%
5%
MAS
16%
-2%
-1%
-1%
-0.1%
(1)
(2)
(3)
ROE
(2)
Adjusted
ROIC (3)
FY 2006 for JetBlue, SouthWest, GOL, WestJet, EasyJet and Ryanair. 9-months financial for
VirginBlue. Latest 12 months for AirAsia under IFRS. Others: Bloomberg
Net Income / Total Equity
Net Income / (Total Equity + Total Debt + (Aircraft Lease x 7))
20
CONFIDENTIAL
Now Everyone Can Fly
ii. Amazing People
Our people are Our Greatest Assets
Aircraft dedicated to our
Cabin Crew
Aircraft dedicated to our Staff
Aircraft hangar dedicated to
our Engineers
22
Our people are Our Greatest Assets
23
Our people are Our Greatest Assets
24
Our people are Our Greatest Assets
25
Our people are Our Greatest Assets
From Cabin Crew to Cadet Pilot to Miss Thailand/Universe 2005
AirAsia allowing people with great attitude and multi talents to thrive….
26
The Sky’s The Limit……
From cadet pilot to Miss
Thailand/ Universe
27
Investing in the future: AirAsia Cadet
Pilot Program
 Creating opportunities in aviation industry
 1st batch of cadets include AirAsia’s staff from various departments
- Check-in, Cabin Crew, Purchasing, Engineering
Mark Santana Raj
(Purchasing Asst)
Mohammad Farin
bin Ibrahim
Andy Teguh Imansyah
Farid
(sales agent)
(Accounts Supervisor)
Azmir bin Hashim
Muhammad Fauwaz bin
Zamzam
(guest services asst)
(Aircraft Mechanic)
Mohd Noor Ezanie
(Cabin Crew) 28
Investing in the future: AirAsia Cadet Pilot
Program
 22 April 2006 – His Majesty SPB Yang Di-Pertuan Agong presented
graduation certificates to the graduates during his LCT visit
29
Our New Home:
Low Cost Carrier Terminal @ Red Fort
 Malaysia unveils Low Cost Terminal
– launched at 23 March 2006
– design capacity 10 million, upgradeable to 15 million
– Low cost terminals to be built at Kota Kinabalu and Kuching
– Other cities joining the LCC phenomenon (Singapore, Bangkok – potentially)
30
Our New Home:
Low Cost Carrier Terminal @ Red Fort
 Call Centre
 Guest Services
 Flight Ops
 Marketing
 Finance
 In Flight Services
31
Our Culture: Everyone’s Equal
Open concept promotes harmonious
working environment
CEO’s Palace.
First hand view of
our aircraft &
operations
Chairman’s premise.
Everyone’s equal, no borders.
Everybody’s accessible.
32
CONFIDENTIAL
Now Everyone Can Fly
Investing in the Future:
AirAsia Academy
AirAsia Academy
34
AirAsia Academy – Growing Our People
 Invested >$20 million for this state
of the art training facility
 Currently building phase 2
Most modern and sophisticated
facilities that is available on the
market
AirAsia Academy
“… a testament of AirAsia’s dedication to provide quality
training and people development.”
PHASE 1
-
8 classrooms and 2 computer-based training rooms
6 briefing rooms
2 units A320 full flight simulators
1 units B737 full flight simulator
2 units Maintenance Flight Training Device
1 Cabin mock-up
1 Airbus door trainer
36
Practical Training
Fire Drill
A320 Door Trainer
A320 Slide Drill
Cabin Mock up 38
MFTD, Maintenance Flight Training Device
MFTD
40
AirAsia Academy – Phase 2
 15 Classrooms and 2 computer-based training rooms
 E-library
 Swimming Pool – to conduct wet drill training
 Check-in counter / Gate Management
 EET, Emergency Evacuation Training
 Multi Purpose Hall – for various activities
 Facilities for Employees
– clinic
– gymnasium
41
CONFIDENTIAL
Now Everyone Can Fly
iii. Amazing Brand
Brand Strategy
 Creative use of PR, our people and planes to sell the sizzle and
build a buzz around AirAsia brand.
 Exploit ‘Airbus’ effect to heighten AirAsia brand to next level.
 Strategic tie-ups with major global brands to elevate and enhance
AirAsia brand appeal.
44
Building a Global Brand:
Manchester United Sponsorship
Enhances AirAsia brand appeal and connects deep emotional
value to 70million Manchester United fans worldwide
To be a global brand, associate with a global brand
45
Building a Global Brand:
Manchester United Sponsorship
 Manchester United sponsorship
has elevated AirAsia’s brand
 Aided into penetrating new market
(Cambodia, Vietnam, China)
46
Building a Global Brand:
Manchester United Sponsorship
 Sponsorship has increased awareness about
AirAsia (especially amongst the 75 million football
fans worldwide!!)
Extended sponsorship to 2006/07
 Brought Tourism Malaysia as another partner in
this exclusive sponsorship (2006/07)
47
Leveraging Our Brand Sponsorship
Official Airline Partner of the first The Amazing Race Asia
generated immense regional media coverage.
Great brands think alike. We are exciting, current and cutting edge, so are
our brand associations
48
Leveraging Our Brand Sponsorship
Now Everyone Can Fly
The Official Low Fare Airline for the prestigious Monsoon Cup 2006.
Brand exposure to connect Asia’s affluent and elite market.
49
Building a Global Brand:
AT&T Williams Sponsorship
 Sponsorship: $2 million
 Bringing ‘Malaysia AirAsia’ to the F1 world
50
Build Asia’s #1 Loyalty Programme
With a potential 2 million card base, AirAsia Credit Card is poised to be
the #1 co-brand card in Asia.
51
Build a Global Brand: The Official Partner of
Premier League Match Officials
Taking a major step in building AirAsia brand in the football world
52
#1 Airline Brand in Asia
Asia Pacific Brand Excellence Award
2006/07 for Best Airline Category
53
International media presence
Extensive coverage by regional and international media
54
Taking on the Big Brands
55
CONFIDENTIAL
Now Everyone Can Fly
iv. Amazing Assets
Our Website





Airasia.com is No. 1 Travel Website in Asia - Google
Biggest e-commerce website in Asia (AC Nielsen)
Records an impressive monthly 90million page impression.
Over 200 countries surf www.airasia.com
Generates an enviable 10% response rate to every online promotion
vs industry rate of 1%
Top 10 Breakdown by Countries - 2006
1.
Malaysia
2.
6.
Australia
Indonesia
7.
USA
3.
Thailand
8.
Brunei
4.
Singapore
9.
United Kingdom
5.
China
10.
Hong Kong
57
www.airasia.com: Our Virtual Retail Outlet
 Available in 5 languages
 The first airline in Asia to implement online, ticketless
booking system (The most searched website: Study by Google)
 Other travel services:







Go Holiday (Create your own holiday!!)
GoInsure Travel Protection
AirAsia Credit Card
AirAsia GoCruise
AirAsia GoHostel
AirAsia GoMedic
AirAsia Go Car
The most comprehensive airline website in Asia
58
International Awards
2003
 Asia Pacific Airline of the Year 2003 by Centre for Asia Pacific Aviation
(CAPA)
 Developing Airline of the Year 2003 by Airfinance Journal
 CIO Top 100 Honoree for excellence in strategic IT deployment
 www.airasia.com voted as the most popular website for online shopping
in the 11th Malaysia Internet User Survey conducted by AC Nielsen
Consult
2004
 Asia Pacific Low Cost Airline of the Year 2004 by Centre for Asia Pacific
Aviation (CAPA)
 Asia Pacific Aviation Executive of the Year 2004 awarded to Dato’ Tony
Fernandes
 Best Managed Company in the Airlines and Aviation Sector by
Euromoney
 Triple A Regional Award for Best Airline IPO for 2004 by The Asset
Magazine
 Market Leadership Award by Air Transport World
59
International Awards
2005
2006
 CAPA Aviation Executive of the Year 2005 awarded to
Dato’ Tony Fernandes
 Regional/Low Cost Leadership Award in Airline
Business Strategy Awards by Airline Business
 Transport Company of Excellence Award in
conjunction with Transport Industry Awards by Ports
World & Chartered Institute of Logistics and Transport
Malaysia
 Asia’s Top 200 “Best Under A Billion” by Forbes
 Regional/Low-Cost Leadership Award in Airline
Business Strategy Awards 2005 by Airline Business
 Merit Award for CAPA Airline of the Year 2006 by
Centre for Asia Pacific Aviation (CAPA)
 Asia’s Best Budget Airline by SmartTravelAsia.com
under the Best In Travel 2006 list
 Winner in four categories including Best Managed
Company, Best Corporate Governance, Best Investor
Relations, and Most Committed to Strong Dividend Policy
under The Annual Investor Poll of FinanceAsia.com
 Malaysia Entrepreneur of The Year 2006 and Master
Entrepreneur of the Year 2006 by Ernst and Young
60
And in 2007…#1 Low Cost Airline in Asia
61
CONFIDENTIAL
Now Everyone Can Fly
v. Amazing Assets
Airbus Campaign
Single largest order of Airbus A320 UPGRADES our brand
positioning.
63
Our Stylish Aircraft
64
Airbus A320 – We Want More!
 200 aircraft on tap: 150 firm orders + 50 options
 Secures aircraft pipeline until 2013
 Received 17 aircraft to date, exceptionally popular by our guests
65
Airbus A320 Delivery Schedule
30
Supplem ental
# of Aircraft
Additional
25
Original
8
20
4
17
15
23
10
14
5
16
15
18
7
18
7
3
0
FY2006
FY2007 FY2008 FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
66
CONFIDENTIAL
Now Everyone Can Fly
The Latest Buzz:
Now Everyone Can Fly Xtra Long
Strategic Link-up with FAX
 Brand name agreement
– FAX will use AirAsia X brand name (royalty payments)
 AirAsia signs MOU to look into taking a stake in FAX
– 20% exposure into FAX at par value via direct equity or debt
instrument in the interim
– options for an additional 10% for a period of 5 years
– FAX and AirAsia will never compete on each others route
71
Why Long-Haul Budget Travel?
 Budget travel is perfect for Malaysia
– budget market is underserved (most airlines focused on premium travel)
– Malaysia is surrounded by premium hubs (Singapore & Bangkok)
– gateway for the region (lowest cost, geographical, political stability)
– Malaysia has liberal relationship with most counties in the World
(no strict visa requirements, transparent application process)
 How is FAX link up beneficial to AirAsia?
– expand client base to long-haul connectivity
– enhance route network
– leverage brand name with other airlines in the world
(Virgin, EasyJet, Air China, Air Arabia)
72
AirAsia X: Proposed Route Map
Berlin
Machester
Stansted
United Kingdom
Moscow
Prague
Sapporo
Shenyang
Dalian
Se
Tianjin Cheongju
oul
Osaka
Hangzhou
Pusan
Fukuoka
Lahore
Cairo Sharjah Karachi
New Delhi
Jeddah
Mumbai Hyderabad
Goa
Bangalore
Xiamen
KUALA
LUMPUR
Brisbane
Perth
Targeted Future Destinations
Targeted July 2007 Rollout
Adelaide
Melbourne
Avalon
Thank You
We will keep Doing The Impossible!
74
“Now everyone can fly”
Believe the Unbelievable
Dream the Impossible
Don’t Take No for An Answer
75
Now Everyone Can Fly
The End
76