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 45 2. Company reputation damaged from Social Media Nowadays, technology has played a crucial role in all activities of life including travelling. Technology has made travelling easier and more convenient. As part of a digital transformation strategy into a full-fledged OTA (Online Travel Agency) platform, Thai AirAsia has integrated travel technology solutions onto Super App and AVA (AirAsia Virtual Allstars), an online chatbot powered by artificial-intelligence (AI), designed and trained to answer simple inquiries about products and services to help companies respond faster to customers anywhere anytime. Since the start of the pandemic, AVA received over 45 million queries, which is more than five times the volume of what AVA received in the same period last year. Regardless, about 80 percent of these queries were resolved by AVA but the remaining requests which required further attention, caused passengers dissatisfied and expressed negative feedback on social media. It has impacted a company’s image, passengers’ trust, possibly leading to losses in revenue. Hence, Thai AirAsia has set up specialised teams to enhance efficient communication in basic information, procedures, and benefits of the automated system for passengers to get familiarised, understand and adjust to AVA. AirAsia Group has a plan to enhance AVA with a new software capable of treating customers better and may also rebrand with a new name next year. To approach and engage more users, AVA so far has joined the popular messaging applications like WhatsApp, Facebook Messenger and Wechat and soon Twitter DM, Line and Viber. 3. Climate change from the aviation business and relevant regulations The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is a global scheme to address emissions from international air travel. Agreed on in 2016 by the International Civil Aviation Organisation (ICAO), it obliges airlines which meet following criterias: 1) operating by aircraft weighs more 5,700 kilogrammes on takeoff, 2) annually emitting 10,000 tonnes of CO2 on international routes, 3) operating for more than three years and 4) flying between both states connecting under the pilot stage of the CORSIA. Airlines must monitor and report their emissions from 2019 and purchase emission reduction units generated by projects in other sectors in order to cover any growth in CO2 emissions above baseline in its attempt to achieve the goal of net zero emissions by 2050. With the increasing global air travel, there is pressure on the aviation industry to reduce carbon emissions. CORSIA aims to help international airlines reduce their environmental impact. Thai AirAsia has been selected by the Civil Aviation Authority of Thailand (CAAT) to participate in CORSIA as a demonstration of the airline’s commitment to following international regulations and reducing its carbon emissions. Airlines will use the emissions levels of the years 2019-2020 as a baseline for measuring emissions and if the emissions levels exceed the baseline, the airline will be required to pay compensation from 2021 onwards. Consequently, the aforementioned policy poses a risk to the aviation industry in terms of its operations. The airline must therefore prepare to manage the release of carbon dioxide and may be liable for costs associated with its emission. This will result in increased operating costs, such as carbon taxes, investment in new technologies to reduce carbon emissions, and higher prices for passengers due to increased costs. In response, the Company has devised a strategy to maximise fuel efficiency in its flight operations while minimising its impact on the environment through four main approaches, namely [1] efficiently managing the fleet achieved through the use of the Airbus A320neo and A321neo, which are widely recognised as some of the most fuel-efficient narrow-body commercial aircraft, [2] establishing a project to enhance environmental sustainability through improved efficiency in fuel conservation and implementation of green operating procedures, such as environmentally-friendly flight operations. This includes the use of appropriate equipment to optimise thrust direction and minimising aircraft engine operation while on the ground, [3] using sustainable aviation fuel or SAF, and [4] purchasing carbon credits. In 2022, the Company carried out activities that followed the aforementioned direction, resulting in a lower level of carbon dioxide emissions compared to the standards of 2020. Thus, there was no obligation to compensate for the amount of carbon released. Operational Risk 1. Operating single fleet type Airbus A320 family with CFM56-5 and LEAP-1A engines Thai AirAsia operates the Airbus A320 family of aircraft, which uses CFM56-5B and LEAP-1A engines. As all of their aircraft are of the Airbus type, this can lead to delays in delivering new Airbus aircraft as per the Company’s procurement orders. In the event of design defects or problems with the Airbus model including the CFM56-5B and LEAP-1A engines, this may affect all aircraft, which may result in [1] Thai AirAsia’s aircraft having to be parked for repairs and fixing these issues, impacting the Company’s operations and passengers’ confidence and [2] the expiration of a lease agreement may also affect the Company’s flight operations and finances due to the fluctuation in prices of operated A320.
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