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UKEC First Annual Students Leaders Summit4th August 2007
UKEC First Annual Students Leaders Summit4th August 2007
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CONFIDENTIALCONFIDENTIAL
Now Everyone Can Fly
Introduction on AirAsia:The ‘it’ LCC
Introduction on AirAsia:The ‘it’ LCC
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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 …
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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
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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
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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
Achieving a Genuine ASEAN Brand
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Build #1 Route Network
Period Destinations Served
Jan 2002 6
Jun 2003 11
Jun 2004 26
Jun 2005 52
Jun 2006 65
NOW 75
KL – Shenzhen Bangkok – Shenzhen
Latest Routes
Upcoming Routes
KL – KrabiJB – Macau
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Now Everyone Can Fly
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The Airline Revolution
Track record of success in the face of unprecedented shocks to the industryTrack record of success in the face of unprecedented shocks to the industry
3668 77 88
154 129 148203
336390 415 430
621
930
1100
1250
Dec 2004 Dec 2004
Launched Launched sister sister company company Indonesia Indonesia AirAsiaAirAsia
Dec 2005 Dec 2005 First Airbus First Airbus A320 aircraftA320 aircraft
July 2006July 2006
Launched KK Launched KK
& Kuching hub& Kuching hub
July 2002July 2002
Forced move Forced move from Subang from Subang to KLIAto KLIA
Aug 2002Aug 2002
MAS MAS
SuperSaver SuperSaver
#1 program#1 program
Feb 2003Feb 2003
SARS hitsSARS hits
Mar 2003Mar 2003
Iraq war Iraq war
Dec 2003Dec 2003
MAS MAS
SuperSaver SuperSaver
#2 program#2 program
Aug 2004Aug 2004
MAS MAS
SuperSaver SuperSaver
#3 program#3 program
Dec 2004Dec 2004
TsunamiTsunami
Dec 2003Dec 2003
Launched Launched Johor hubJohor hub
Feb 2004Feb 2004Launched Launched
sister sister company company Thai Thai AirAsiaAirAsia
Nov 2004Nov 2004
Successfully Successfully
Made IPO Made IPO
Dec 2001 Dec 2001 Inherited Inherited
RM40mn of RM40mn of liabilitiesliabilities
Birdstrike Birdstrike one planeone plane
Dec 2001Dec 2001
Tune Air Tune Air officially officially takes over takes over AirAsia AirAsia and begins and begins conversion conversion to a LCCto a LCC
Apr 2002 Apr 2002
Ticketless Ticketless systemsystem
Key ChallengesKey Challenges
Key AchievementsKey Achievements
Monthly Passengers ‘000sMonthly Passengers ‘000s
Mar 2005Mar 2005
Bali BombingBali Bombing
July 2006July 2006
Jet Fuel Jet Fuel
at historical at historical
record $93record $93
May 2002 May 2002
Online Online reservation reservation
Aug 2006Aug 2006Domestic Domestic RationalisRationalis
ationation
Feb 07Feb 07
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We’re Growing.. And Growing
915
21
27
31
39
45
52
0
10
20
30
40
50
60
FY2006(Actual)
FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013
Passengers (million)
60%
40%
25%15%
25%
25%
15%
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78
35 33
17 15 15 139 9
0
20
40
60
80
SouthWest Ryanair EasyJet AirTran AirAsia(FY2007F)
JetBlue GOL WestJet Virgin
AirAsia against other LCCPax per year (million)
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Now Everyone Can Fly
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5850
15
34
23 2218 17
6
7
37
12
17
46 10
0
20
40
60
80
JAL ANA AirAsia Qantas EVA Korean Air Thai SIA
2013
Current
AirAsia in 2013..Way Ahead than SIAPax per year (million)
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Robust Growth and Capturing Market Share
Year
Domestic Market Share
AirAsia MAS
20013% 97%
2002 12% 88%
2003 20% 80%
2004 25% 75%
2005 28% 72%
2006 41% 59%
2007 51% 49%
AirAsia Market Share - passengers
3%
12%
20%25% 28%
41%
51%
0%
10%
20%
30%
40%
50%
60%
2001 2002 2003 2004 2005 2006 2007Source: MAB
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Lower Fare Every Year!
Year Average Fare (RM)
2002 183
2003 147
2004 131
2005 143
2006 137
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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!
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CONFIDENTIALCONFIDENTIAL
Now Everyone Can Fly
How Did We Do ItHow Did We Do It
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Key Ingredients of a Successful LCC
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CONFIDENTIALCONFIDENTIAL
Now Everyone Can Fly
i. Amazing Costi. Amazing Cost
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Cost Management
2.632.83
3.40
2.90
2.47
2.192.33
2.202.35
1.96
1.72
1.111.32
1.17
2002 2003 2004 2005 2006 Q1-2007
Cost / ASK (ex fuel surcharge) Cost / ASK Non Fuel Cost
Cost / ASK (US cents)Cost / ASK (US cents)
Malaysian Operations
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High Profitability and Returns
(1) FY 2006 for JetBlue, SouthWest, GOL, WestJet, EasyJet and Ryanair. 9-months financial for VirginBlue. Latest 12 months for AirAsia under IFRS. Others: Bloomberg
(2) Net Income / Total Equity
(3) Net Income / (Total Equity + Total Debt + (Aircraft Lease x 7))
Company EBITDAR EBIT Net Income ROE (2) Adjusted ROIC (3)
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%
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CONFIDENTIALCONFIDENTIAL
Now Everyone Can Fly
ii. Amazing Peopleii. Amazing People
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Our people are Our Greatest AssetsAircraft dedicated to our Aircraft dedicated to our Cabin CrewCabin Crew
Aircraft hangar dedicated to Aircraft hangar dedicated to our Engineersour Engineers
Aircraft dedicated to our StaffAircraft dedicated to our Staff
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Our people are Our Greatest Assets
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Our people are Our Greatest Assets
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Our people are Our Greatest Assets
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Our people are Our Greatest AssetsFrom Cabin Crew to Cadet Pilot to Miss Thailand/Universe 2005
AirAsia allowing people with great attitude and multi talents to thrive….AirAsia allowing people with great attitude and multi talents to thrive….
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From cadet pilot to Miss From cadet pilot to Miss Thailand/ UniverseThailand/ Universe
The Sky’s The Limit……
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29Azmir bin Hashim
(guest services asst)
Mohammad Farin bin Ibrahim
(sales agent)
Muhammad Fauwaz bin Zamzam
(Aircraft Mechanic)
Andy Teguh Imansyah Farid
(Accounts Supervisor)
Mohd Noor Ezanie (Cabin Crew)
Mark Santana Raj
(Purchasing Asst)
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
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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
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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)
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Call Centre
Flight Ops
Route Revenue
Engineering
Regional
Guest Services
Finance
Legal
Marketing
In Flight Services
GO Holiday
Our New Home: Low Cost Carrier Terminal @ Red Fort
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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.
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CONFIDENTIALCONFIDENTIAL
Now Everyone Can Fly
Investing in the Future:AirAsia Academy
Investing in the Future:AirAsia Academy
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AirAsia Academy
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AirAsia Academy – Growing Our People
Invested >$20 million for this stateof the art training facility
Currently building phase 2
Most modern and sophisticated facilities that is available on the
market
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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
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Practical Training
Fire DrillFire Drill A320 Door TrainerA320 Door Trainer
A320 Slide DrillA320 Slide Drill
Cabin Mock upCabin Mock up
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MFTD, Maintenance Flight Training Device
MFTDMFTD
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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
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CONFIDENTIALCONFIDENTIAL
Now Everyone Can Fly
iii. Amazing Brandiii. Amazing Brand
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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.
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Enhances AirAsia brand appeal and connects deep emotional value to 70million Manchester United fans worldwide
Building a Global Brand:Manchester United Sponsorship
To be a global brand, associate with a global brandTo be a global brand, associate with a global brand
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Building a Global Brand: Manchester United Sponsorship
Manchester United sponsorship has elevated AirAsia’s brand
Aided into penetrating new market (Cambodia, Vietnam, China)
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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)
Building a Global Brand: Manchester United Sponsorship
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Official Airline Partner of the first The Amazing Race Asia generated immense regional media coverage.
Leveraging Our Brand Sponsorship
Great brands think alike. We are exciting, current and cutting edge, so are Great brands think alike. We are exciting, current and cutting edge, so are our brand associationsour brand associations
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Now Everyone Can Fly
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The Official Low Fare Airline for the prestigious Monsoon Cup 2006.
Brand exposure to connect Asia’s affluent and elite market.
Leveraging Our Brand Sponsorship
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Sponsorship: $2 million Bringing ‘Malaysia AirAsia’ to the F1 world
Building a Global Brand: AT&T Williams Sponsorship
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Build Asia’s #1 Loyalty Programme
With a potential 2 million card base, AirAsia Credit Card is poised to be With a potential 2 million card base, AirAsia Credit Card is poised to be the #1 co-brand card in Asia. the #1 co-brand card in Asia.
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Build a Global Brand: The Official Partner of Premier League Match Officials
Taking a major step in building AirAsia brand in the football world
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#1 Airline Brand in Asia
Asia Pacific Brand Excellence Award Asia Pacific Brand Excellence Award 2006/07 for Best Airline Category 2006/07 for Best Airline Category
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International media presence
Extensive coverage by regional and international media
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Taking on the Big Brands
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CONFIDENTIALCONFIDENTIAL
Now Everyone Can Fly
iv. Amazing Assetsiv. Amazing Assets
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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%
1.1. MalaysiaMalaysia
2.2. IndonesiaIndonesia
3.3. ThailandThailand
4. Singapore
5. China
6. Australia
7. USA
8. Brunei
9. United Kingdom
10. Hong Kong
Top 10 Breakdown by Countries - 2006
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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 AsiaThe most comprehensive airline website in Asia
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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
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International Awards
2005 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
2006 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
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And in 2007…#1 Low Cost Airline in Asia
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CONFIDENTIALCONFIDENTIAL
Now Everyone Can Fly
v. Amazing Assetsv. Amazing Assets
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Single largest order of Airbus A320 UPGRADES our brand positioning.
Airbus Campaign
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Our Stylish Aircraft
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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
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Airbus A320 Delivery Schedule
7
14
23
16 1518
7
4
8
17
18
30
5
10
15
20
25
30
FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014
# of AircraftSupplemental
Additional
Original
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CONFIDENTIALCONFIDENTIAL
Now Everyone Can Fly
The Latest Buzz:Now Everyone Can Fly Xtra Long
The Latest Buzz:Now Everyone Can Fly Xtra Long
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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
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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)
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Stansted PragueMoscow
Cairo
Seoul
Pusan
Cheongju
Sapporo
OsakaFukuoka
Dalian
JeddahSharjah
BangaloreGoa
Mumbai Hyderabad
New DelhiKarachi
Lahore
Brisbane
Melbourne
AdelaidePerth
KUALA LUMPUR
ShenyangTianjin
Hangzhou
Xiamen
Targeted July 2007 Rollout
Targeted Future Destinations
Berlin
United Kingdom
Avalon
AirAsia X: Proposed Route Map
Machester
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Thank You
We will keep Doing The Impossible!We will keep Doing The Impossible!74
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““Now everyone can fly”Now everyone can fly”
Believe the UnbelievableBelieve the UnbelievableDream the ImpossibleDream the Impossible
Don’t Take No for An AnswerDon’t Take No for An Answer
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Now Everyone Can Fly
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The EndThe End