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MANAGEMENT DISCUSSION & ANALYSIS
We also entered into a memorandum
of understanding (MoU) with China
Everbright Group in May to enable us to
start LCC operations in China. Everbright
is a state-owned financial services
conglomerate and a major shareholder in
China Aircraft Leasing Group Holdings.
AirAsia was the first foreign LCC to enter
greater China in 2005 with our inaugural
Bangkok to Macao flight on 5 July. We
have since rapidly deepened our presence
in the country, and are today the top
foreign carrier at 11 Chinese airports
including Chongqing, Wuhan, Changsha,
Shenzhen, Hangzhou, Xi’an, Guangzhou,
Nanning, Kunming, Chengdu and Shantou.
Five of our country operations serve 45
routes to 15 cities in mainland China, with
12 routes unique to AirAsia. In 2017 itself,
we added five new routes: Kuala Lumpur-
Wuhan, Manila-Guangzhou, Langkawi-
Shenzhen, Kuching-Shenzhen and Kalibo-
Shanghai while increasing the frequencies
of four routes, ending the year with no
less than 360 flights a week. Together
with AirAsia X, we have carried more than
40 million guests to the country, earning
ourselves the title of being The Most
Influential Foreign Airline in China.
Supporting our operations in China, we
established a wholly foreign-owned
entity (WFOE) in Guangzhou to serve as a
base for all current Allstars representing
the different AirAsia operations in the
country. Operational as of 1 January 2018,
the WFOE enables us to create greater
efficiencies through shared resources and
economies of scale, further reducing our
distribution and marketing costs.
Indeed, China is one of our strongest
markets, and one that we intend to further
grow via our LCC operations by connecting
more tier 2 and 3 cities with our multiple
hubs. Having already established a
very strong base in southern China, and
particularly Shenzhen and Guangzhou,
we now seek to expand more extensively
into central China while creating links with
northeast China through long-haul routes.
This would not only support the One Belt
One Road initiative but also our own vision
to create bridges between China and
Asean.
ANCILLARY
AirAsia Berhad’s ancillary business has
continued to grow, marking a 16% increase
in revenue from RM1.66 billion in 2016
to RM1.93 billion for the year, which
accounted for 20% of our total revenue.
While maintaining our zeal to introduce
new and exciting products that guests
would find irresistible, a key focus during
the year was to increase their uptake
through a dynamic pricing strategy as
well as more personalised communication
based on data analysis of guests’ past
purchasing behaviour. In the third quarter,
we introduced more tiers in the pricing
mechanisms for check-in baggage and
seat selection, which led to a 21% increase
in baggage fees to RM925.4 million; and
an 18% increase in revenue from seat
selection to RM114.8 million.
“FIVE OF OUR COUNTRY OPERATIONS
SERVE 45 ROUTES TO 15 CITIES IN
MAINLAND CHINA, WITH 12 ROUTES
UNIQUE TO AIRASIA. IN 2017 ITSELF, WE
ADDED FIVE NEW ROUTES.”
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AirAsia Group Berhad
PERSPECTIVE
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