AirAsia resumed its scheduled domestic flights today in Malaysia, and will be followed by Thailand (1 May 2020), the Philippines (16 May 2020), and Indonesia (7 May 2020), subject to approval from the authorities. Strict health controls and social distancing protocol are in place, in compliance with the regulations. The resumption of services will initially be for key selected domestic routes, which will increase gradually to include international destinations around the region, once the situation improves and governments lift borders and travel restrictions.
Executive Chairman of AirAsia Group, Datuk Kamarudin Meranun said: “Flexibility remains the key to our business model. Our strong foundation coupled with robust relationships with suppliers and partners have enabled us to return to service stronger amid these unprecedented challenging times. We do not intend to take any new aircraft deliveries this year with the target to end 2020 with 242 aircraft, a net reduction of 1 aircraft from last year. We are relooking at our orderbook with Airbus. The decision to sell and lease our aircraft in late 2018, has provided us greater flexibility to scale back growth than owning aircraft today. We were also able to lock in the best price for those aircraft at prime market conditions while eliminating the residual risk of owning aircraft.
“We have also restructured a major portion of the fuel hedges with our supportive counterparties and are still in process of restructuring the remaining exposure. This will help deal with the excess of hedged volume against expected fuel consumption post-COVID-19 and reduce the hedging losses if fuel price remains at today’s prices. Further measures in managing and containing cost include both the management and senior employees of AirAsia Group volunteering a salary sacrifice, re-negotiating contracts and deferring all non-essential expenditures.
“We expect all these initiatives to result in at least a 30% cost reduction YoY in 2020.”
Commenting of the service resumption, Kamarudin said: “AirAsia works actively with all relevant regulators, local governments, civil aviation and health authorities, and adheres to guidance from the World Health Organisation (WHO) and International Civil Aviation Organisation (ICAO) to ensure the highest standards of compliance and conformance are in place for every single flight we operate in our network. We will require guests to wear a mask and practise universally recommended protective precautionary measures including social distancing and observing high personal hygiene. All our aircraft, which are fitted with hospital-standard High Efficiency Particulate Air (HEPA) filters, will also be sent for a thorough disinfection every night stop.
“We continue with diversification of our revenue base during this tough period, with a more rigorous and market-friendly approach to further expand our digital and ancillary businesses such as Santan, Teleport and BigPay. Other than offering normal takeaways, Santan has launched a drive-thru service to cater to the increasing demands during the restricted movement order and helping small vendors via initiatives such as marketing their food through the Santan website during the Ramadan month. Going forward, we are working on the blueprint to start a franchise for Santan.
“Meanwhile, Teleport is prioritising the transport of medical supplies to frontliners and emergency medical responders and have been operating a number of chartered flights especially for cargo shipment.
“AirAsia also participated in a number of recovery flights initiated by governments and private companies during the period, providing a boost to its charter service.
“To help as many local businesses as possible, we have launched the Save Our Shops (S.O.S) campaign by allowing them onboard our e-commerce platform OURSHOP with last-mile delivery by Teleport. AirAsia Foundation also launched an e-pay donation drive in collaboration with BigPay.
“Despite the unprecedented environment we are currently in, we are continuing to build on our strengths and especially our brand so as to emerge stronger when normalcy returns. We hope to continue to sustain the 1.3 million jobs and counting in the sector in the region, directly and indirectly, and double our economic contribution to ASEAN’s GDP from US$15.3 billion in 2018 to US$35 billion in 2030.”