69
AirAsia X Berhad • Annual Report 2014
Let me begin by saying that I am humbled to be given this
opportunity to lead AirAsia X, the first and largest long-
haul low-cost carrier (LHLCC) in the region, providing
opportunities to more than 630 million people in Asean to
fly as far north as Beijing in China, as far west as Jeddah
in Saudi Arabia, and as far south as Australia’s Gold Coast.
As a boy, I was fascinated by aircraft and collected over
400 die cast models (I still do!), spending weekends plane-
spotting from airport windows… Never in my wildest
dreams did I imagine that one day I would be the CEO of
an airline.
The honour is all the greater as it comes on the heels of
AirAsia X having emerged from one of the most challenging
years in Malaysian aviation history, hence being entrusted
to build on the strengths of this LHLCC that has gone where
no others in the region have been before, creating new
connections between people and places in ways that were
never thought possible.
This year, the regional aviation industry was faced with
a series of unforeseen setbacks - three airline incidents,
a military coup in Thailand, presidential elections in
Indonesia and tightening credit in China, supplier of
the largest number of tourists within Asean and North
Asia. Compounding the situation, significant capacity
investments in recent years, both by legacy as well as low-
cost airlines across the region, finally came to a head –
with too much supply which was not matched by demand.
The entire industry was affected. But for the team at
AirAsia X it was particularly difficult given that two of our
core markets were impacted. Tourist arrivals from China
dropped 10% according to Tourism Malaysia – while a
number of our routes to Australia during the year became
loss-making.
Continuing on an aggressive expansionary mode the team
had embarked on earlier to capture market share and derive
scale advantages, AirAsia X received seven new aircraft
in 2014, leading to a 31% increase in capacity growth as
measured by available seat kilometre (ASK). This increase
was most pronounced in the first quarter, when it surged
by 60%, subsequently tapering down to 47% in the second
quarter, 24% in the third quarter and, finally, dipping to 8%
in the last quarter of 2014.
It was, naturally, a huge challenge for the team to manage
this capacity in the face of a weakened industry. Adopting
a clear capacity management strategy, beginning from the
first quarter of the year, frequencies of certain flights were
reduced and the aircraft redeployed under wet lease or
charters.
ACTING CEO’S STATEMENT
THE YEAR ALSO SAW THE ESTABLISHMENT OF OUR
TWO NEW REGIONAL ASSOCIATES – THAI AIRASIA X
(TAAX) AND INDONESIA AIRASIA EXTRA (IAAX) – BOTH
OF WHICH ADD SIGNIFICANTLY TO THE CONNECTIVITY
THAT WE ARE ABLE TO OFFER OUR GUESTS, AS WELL
AS GUESTS OF THE WIDER AIRASIA GROUP.
At the same time, marketing and promotional initiatives
were drummed up, with results. The Free Seats campaign
in March saw 19% year-on-year growth in 1Q2014 ticket
sales, breaking all previous campaign records. Attractive
fares blitzed to spur demand for new routes filled up
aircraft. Together, these efforts enabled the airline to
maintain its passenger load factor at a steady 82%, but
at a cost. While it was heartening to see AirAsia X carry
out our brand promise of enabling even more people to fly
– it carried 4.2 million guests in 2014, up 34% from 3.2
million in 2013 – yields were affected. And the cost per
ASK (CASK) of the airline increased 8% to RM12.91.
Yet, there were also many positive aspects to the year as
the team continued to introduce new services to further
enhance the flying experience.
For guests arriving in Malaysia, it was a new dawn to be
welcomed at the brand-new klia2, which became the new
home of both AirAsia X and AirAsia as of 9 May 2014.
Unlike most low-cost carrier terminals, klia2 is spacious,
comfortable and generally very traveller-friendly. Designed
to cater to 45 million passengers a year, it is particularly
convenient for AirAsia X guests as it has more transit
lounges and even a transit hotel. The extensive range
of retail outlets, restaurants and cafes, together with
a positive ambience, has not been lost on our guests,
as evidenced by the volume of positive feedback we’ve
received on what’s expected to be Malaysia’s Next
Generation Hub.
The year also saw the establishment of our two new
regional associates – Thai AirAsia X (TAAX) and Indonesia
AirAsia Extra (IAAX) – both of which add significantly to
the connectivity that we are able to offer our guests, as
well as guests of the wider AirAsia Group.
