Air Asia and the LCC Sector

Suresh NairRegional Manager, India, Sri Lanka & BangladeshAirAsia Group

World’s Best Low-Cost Airline2009-2010-2011

How LCCs can open up the African Aviation Market

The Air Asia Perspective

World’s Best Low-Cost Airline2009-2010-2011

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How we did it…

…the AirAsia Story

How we did it: The AirAsia story

December 2001 Tony Fernandes takes over AirAsia with two ageing 737-300 & USD 11 mill in debts for a token 1 Ringgit (USD 26 cents).

Today in 9 years AirAsia with 105 Aircraft operates more then 140 routes to 78 destinations in 27 countries.

Vision to be the largest Low-Cost Airline in Asia serving 3 Billion people.

With the Tag line “Now Every One Can Fly” . AirAsia was established with the dream of making flying possible for literally everyone.

50% of AirAsia travelers are first time flyers.

How we did it: The AirAsia story

2004 2 JVs Thai Air Asia based in Bangkok & Indonesia AirAsia based in Jakarta formed leading to exponential growth.

2007 the First Long Haul Low-Cost model is launched with the start of AirAsiaX on long haul routes.

In the pipe line Vietjet AirAsia based in Hanoi & AirAsia Philipines based in Clark.

Success Strategy

Innovative solutions.

Cost efficiencies.

Passionate approach to business.

CAN DO SPIRIT .

TEAM WORK.

Success Strategy

Safety First.

High Aircraft utilization- Turnaround time of 25 min (avg. Aircraft utilization 13 hours a day).

Low Fares no frills-Guest are given choice of customizing services .

Worlds lowest operating cost.

Lean distribution system.

Point to Point Network.

Average volume post-AirAsia entry

* AirAsia commenced service to Phuket in December 2003 Source: Malaysia Airports Holdings Berhad

Market volume pre-AirAsia entry

LOW COST CARRIERS PROVEN TO STIMULATE DEMAND

GROWTH OF PASSENGER TRAFFIC VOLUME (KUALA LUMPUR – PHUKET)

Q4-03

Q1-04

Q2-04

Q3-04

Q4-04

Q1-05

Q2-05

Q3-05

Q4-05

Q1-06

Q2-06

Q3-06

Q4-06

Q1-07

Q2-07

Q3-07

Q4-07

Q1-08

Q2-08

Q3-08

Q4-08

Q1-09

Q2-09

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10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Examples of phenomenal growthKUL – Phuket grown by 172%

Average volume post-AirAsia entry

* AirAsia commenced service to Shenzhen in July 2007 Source: Malaysia Airports Holdings Berhad

Market volume pre-AirAsia entry

LOW COST CARRIERS PROVEN TO STIMULATE DEMAND

Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 -

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Examples of phenomenal growthKUL – Shenzhen grown by 210%

Our Network

This… Time for Africa !!

56 countries.

1.05 billion people, more than half under the age of 25.

2,436 airports.

Approx. 600+ aircraft.

Average economic growth of 5.5%.

Boeing & Airbus predict between 700 – 1270 aircraft requirement till 2028 for Africa.

Of CAPA’s 6 designated ‘Hottest Airlines of 2011’ for Africa, 3 are LCCs.

Exports and related business travel, tourism will be the key drivers for Africa in the next decade.

Opportunity Africa !

Size of market and location of key cities make it a natural market for LCCs.

The fastest growing airlines in Africa are all LCCs (Air Arabia Egypt, Air Arabia Morocco and 1Time).

Why LCC?

The way forward…

Possible hubs in Africa for LCCs

Johannesburg Casablanca Cairo Nairobi Addis Ababa Lagos

LCC – Africa’s need of the hour

AirAsia Berhad

AirAsiaX Sdn Bhd

Thai AirAsia

Indonesia AirAsia

Next stop: Africa?

An example of LCC connectivity

Dakar

Freetown

Abidjan

Douala

Accra

JNB Entebbe

Djibouti

Khartoum

Dubai

Cairo

TripoliAlgiers

Lagos

For short haul/regional LCC

Connect intra-African points

Promote regional tourism, trade

Stimulate demand by ensuring high frequencies between national capitals and key cities

Develop local infrastructure and ancillary businesses such as hotels, surface transportation and entertainment

Provide employment generation opportunities

For long haul LCC

Replication of an AirAsiaX model that connects key gateways and cities with Europe, Far East, Gulf & Middle East and the Americas.

Offer of unbundled services very attractive to the price consicous business traveller.

Highly competitive prices as compared to full service carriers.

Simpler processes and greater distribution reach through greater use of web technology

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Ample opportunity

Open Skies and Liberal bi-lateral agreements between countries in Africa.

Low-Cost Airports.

Trained personnel specially Pilots/Engineers.

Marketing of Africa as one BIG tourist destination.

What we Need

For AfricaSky is the Limit…

Thank You