O N E R E P O R T 2 0 2 2 OVERVIEW BUSINESS OVERVIEW AND PERFORMANCE CORPORATE GOVERNANCE FINANCIAL INFORMATION SUSTAINABLE BUSINESS DEVELOPMENT 33 2. FUEL Fuel is a major cost component for airlines, in which Thai AirAsia’s fuel costs in 2020, 2021, and 2022 were Baht 6,398.7 million, 1,406.2 million and 8,277.0 million, accounting for 27 percent, 10 percent and 31 percent of total of cost of sales and services, selling and distribution expenses and administrative expenses, respectively. Thai AirAsia purchases a substantial majority of its fuel from PTT Oil and Retail Business PCL and Shell Thailand Co., Ltd with the benchmark of fuel prices against Mean of Platts Singapore (MOPS). Jet kerosene prices, and therefore fuel prices, are extremely volatile and are subject to many global economic and geopolitical factors. Thus, Thai AirAsia implements various fuel management strategies to manage the risk of rising fuel prices, including fuel hedging conducted together with AAB to combine the hedging contracts in order to mitigate the risk of global fuel price fluctuation. In addition to hedging fuel prices, Thai AirAsia has implemented the following fuel management strategies in order to reduce costs and minimise inherent risks: Fuel procurement: Thai AirAsia controls its fuel supply by uplifting as much fuel as possible within optimal limits and regulatory requirements in destinations where fuel is least expensive to facilitate the use of the least expensive fuel stock. Upfront payment: Upfront payment for all purchases to negotiate better pricing. Fuel consumption: Thai AirAsia attempts to minimise fuel consumption by establishing clear guidelines covering all areas of flight operations to maintain aircraft fuel burn rates at a minimum. This includes our accurate flight planning on each flight to reduce fuel burn, and using Green Operations to reduce greenhouse gas fuel burn by 44 litres per flight. 3. MAJOR CUSTOMERS No customer contributed more than 30 percent of our total revenue in 2020, 2021 and 2022. Customers mainly consist of individuals travelling by air. 4. MAJOR SUPPLIERS No suppliers accounted for 30 percent or more of our total operating costs and expenses in 2020, 2021 and 2022. 5. AIRCRAFT MAINTENANCE AND SPARE PARTS 5.1 AIRCRAFT MAINTENANCE Thai AirAsia provides l ine maintenance, l ight maintenance, and maintenance below a “C” level check including defect rectification by the internal Engineering department. Any maintenance above a “C” level check or structural repair is outsourced to other certified Maintenance and Repair Organisation (MRO) service providers. Those service providers are certified by the CAAT including Thai Airways International and Thai Aviation Industries in Thailand, ST Aerospace (Guangzhou) Aviation Services Co., Ltd. in China, Sepang Aircraft Engineering in Malaysia and FL Technics in Indonesia, to name a few. In addition, through the AirAsia Aircraft Lease Agreements, Thai AirAsia can rely on the manufacturer’s warranties and product support granted to Capital A. 5.2 SPARE PARTS Thai AirAsia maintains an inventory of rotable spare parts in its main base and hubs, with the majority of inventory found in Bangkok which consists of Don Mueang International Airport and Suvarnabhumi International Airport. As at 31 December 2022, Thai AirAsia had Baht 364.1 million of aircraft spares parts (net book value). OTHER OPERATIONS 1. SAFETY AND SECURITY Thai AirAsia is fully committed on all levels of operation to the safety and security of its passengers, employees, contractors, partners, and visitors. This commitment is reflected in its Safety Management System (“SMS”) with respect to the requirements of the International Civil Aviation Organisation (“ICAO”) regarding all areas of the business that are involved with the operation of aircraft. Additionally, the Company is fully committed to compliance with Occupational Safety and Health Management System (OSHA) to comply with Occupational Safety, Health and Environment Act B.E. 2554. Importantly, the Company has continuously maintained and improved its safety management. After the COVID-19 situation in Thailand began to improve at the beginning of the year, employees from all sectors returned to work under Thailand’s COVID-19 Free Setting measures. The Company is able to cope with the situation well by using the Emergency Response Plan (ERP) and Business Continuity Plan (BCP), as well as regular training and rehearsal for employees. As a consequence, the Company has changed its training methods and placed a greater emphasis on safety in order to be compatible with the new normal at work. This resulted in the efficient control of the spread of COVID-19 within the organisation in part of its normal operation and those related to passengers in compliance with the COVID Free Setting measures and safety in line with the SMS. 1.1 SAFETY Safety is a core principle of how we run our business. Thai AirAsia is committed to developing, implementing, maintaining, and constantly improving strategies and processes to ensure that all our aviation activities take place under a balanced allocation of organisational resources, aimed at achieving the highest level of safety performance and meeting national and international standards, while delivering on our customer promise for affordable, reliable, and convenient flight services. Achieving such goals is a significant duty of both management and staff in the entire organisation.
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