Board of Directors Report
As of 31 December 2022, The Company operates 16 fleets with 180 seats per fleet out of a total of 24 fleets. In addition, the Company also operates a total of 33 routes comprising of 17 domestic routes and 16 international routes accompanied by an increased occupancy rate of 79% compared to November 2021.
To start this this report, allow us to express our gratitude to God Almighty for His abundance of blessings and grace upon all of us in enabling AirAsia Indonesia is able to go through 2022 with positive performance achievements. On this occasion, we as the Board of Directors would like to submit a report on the implementation of the Company's management for the financial year ending on 31 December 2022. This report presents information on the analysis of the Company's performance, analysis of business outlook, and developments in the good corporate governance implementation during 2022.
Macroeconomic and Industry Overview
The International Monetary report Foundation (IMF) in July 2022 projected global growth at 3.2% (yoy), realised with a difference of 0.4% compared to the report in April 2022. Meanwhile, inflation is projected at 6.6% in the developed economies and 9.5% in the emerging economies, or an increase of 0.9% and 0.8% points compared to the IMF's projection in April 2022.
Rising commodity prices and supply chain disruptions amid rising demand have fuelled inflation in a number of developed and emerging economies. In general, this has also triggered a tightening of global liquidity, especially at central banks in developed economies. The Fed has raised interest rates six times in 2022 to reduce the inflation rate. This resulted in interest rates rising faster than market expectations.
In the midst of a global economic slowdown that continues, Indonesia's economy continues to grow strongly by 5.01% in Q4-2022. At the end of 2022, Indonesia recorded solid growth of 5.31%. Globally, according to Statistics Indonesia, Indonesia benefitted from the high prices of leading export commodities in the global market which have resulted in windfalls and boosted export performance as well as a surplus in the trade balance. However, the price of Indonesia's leading commodities on the global market has started to show a downward trend.
In the business field sector, the highest growth was recorded by the transportation and warehousing sector as well as accommodation and food and beverage. This was triggered by an increase in visits by foreign tourists and local tourists. With this positive signal, the aviation sector is recovering and able to operate normally similar to pre-COVID-19 pandemic conditions. The INACA White Paper study stated that the recovery in the aviation sector is predicted to start improving in 2022 for domestic flights and return to optimal condition in 2024.
Meanwhile, international flights are predicted to improve in 2023 and will return to optimal condition in 2026. Various policies, strategies, and collaboration with various parties are expected to encourage the aviation sector to recover and rise. The rise of the aviation sector indicates a rise in the Indonesian economy.
Analisis Kinerja Perseroan
The Company always prioritizes adequate services and facilities to all customers with innovation and optimal performance. In an effort to realise all the targets that have been set, the Company implements a number of strategic policies that focus on expanding the coverage area, increasing customer confidence, and acquiring new market segments to efficiency in operational costs including aircraft utilization and fuel efficiency.
AirAsia strives to dominate international routes and maintain existing domestic routes. By implementing an integrated network strategy, the Company will push back the acceleration international route recovery to realise another great opportunity for AirAsia to stimulate demand by using its promotional methods and marketing assets. In addition, the Company seeks to maximize the use of access and capabilities from networks owned by AirAsia Indonesia outside Indonesia.
Furthermore, the Company will continue to increase credibility by enhancing AirAsia's Indonesia superior and experienced image for customers can feel safe and comfortable with AirAsia. In this regard, our operational excellence is realzied by implementing a timely strategy with high integrity so that schedules and On Time Performance (OTP) can be maintained optimally. We also have a robust refund and customer service (AVA) system.
Another strategic policy in 2022 is carried out by supporting multi-channel strategy and reaching new market segments. We provide pricing plans with superior routes and services using new service modes and network mixes. Thus, we can develop new market segments that can be tailored to customer needs.
In terms of operations, the Company also strives to reduce operational expenses by leasing to add new fleets. In addition, the Company always monitor the efficiency of the fuel use. Our cost efficiency efforts also include continuously reviewing business processes and resources. We will also utilize Artificial Intelligence (AI) based technology which will have a greater role in the aviation industry.
Company Performance Achievement
The Company recorded extraordinary growth both with increased revenue and operational performance. As of 31 December 2022, the Company operates 16 fleets with 180 seats per fleet out of a total of 24 fleets. In addition, the Company also operates a total of 33 routes comprising of 17 domestic routes and 16 international routes accompanied by an increased occupancy rate of 79% compared to November 2021 achievements. Available Seat Kilometers (ASK) also increased by 179% on an annual basis to 3,257 miles compared to 2021 which amounted to 1,168 miles.
With the operational achievements in 2022, the Company recorded revenue of 3,78 trillion, an increase of 504,92% from the previous year. Realisation of the Company's total assets on 31 December 2022 was recorded at Rp5.36 trillion, an increase of Rp220 billion or 4.28% compared to the Realisation in 2021 of Rp5.14 trillion. The increase in the Realisation of total assets was due to an increase in the Company's current assets and non-current assets.
Despite still experiencing losses, the Company managed to record a decrease in loss for the year in 2022 at Rp1.65 trillion, a decrease of Rp698,5 billion or 29.78% compared to the loss for the current year in 2021 of Rp2.34 trillion. The decrease in losses was mainly due to the post-COVID-19 pandemic recovery. This had a positive impact on the tourism sector, causing an increase in the number of passengers in mid to late 2022. The decrease in loss for the year reflects the Company's growth momentum with increasing number of passengers and revenue.
Challenges Faced and Strategic Measures Implemented
The pandemic has caused a significant drop in demand for air travel due to the simultaneous closure of international borders around the world and travel restrictions resulting in lost revenue for airlines. In 2022, the Company faced challenges in financial, health, and safety, as well as regulatory challenges caused by the pandemic and post-pandemic conditions of COVID-19.
In the last 3 (three) years, the Company shall carry out efficiency measures and implement a cost containment policy for all departments within the Company. In addition, the Company had experienced an operational shutdown during pandemic which resulted in a decrease in revenue. In 2022, as an effect of the conditions of the previous two years and the complete recovery of the pandemic, the Company has felt the following impact:
- Recovering demand for air travel: Despite the recovery, the aviation industry still faced the challenges in recovering demand for air travel to pre-pandemic levels.
- Operating costs: The pandemic has resulted in significant financial losses for the airline industry, and airlines must find ways to reduce operating costs while maintaining quality of service. The resumption of operational activities results in high maintenance costs that must be incurred to ensure that the aircraft fleet can be used properly.
- Supply chain disruption: The pandemic has disrupted the aviation industry's supply chain with delays in the delivery of aircraft, spare parts and other equipment which hinder airlines to maintain and develop its operations.
pushed the acceleration of international and domestic route recovery. Indonesia AirAsia is a leader in the international segment with great opportunities to stimulate demand with our promotion methods and marketing assets while also utilizing our access and capabilities from networks outside Indonesia. We also ensure sufficient understanding and data from consumers to be developed for personalization of service and personalization of work to drive the Company's overall business recovery.
The Company also focused on the ongoing partnership development intensively. We hope for stronger partnerships with government institutions in relation to tourism development. We also develop partnerships with our customers: travel agents, corporations, community segments, and online travel agencies (OTA) partners. Considering the overall pressures faced by the Company at the beginning of the year, we consider such collaborations as impressive achievement. We are proud and grateful to have realised such achievement after the struggles we faced in the previous period.
Good Corporate Governance Implementation
The Company is committed to implementing the principles of Good or Good Corporate Governance (GCG) consistently and continuously through infrastructure improvements and optimization of the roles of each of the highest levels of management, as well as the implementation of the best GCG practices in all lines of business with reference to applicable regulations and standards, both nationally and internationally.
The Company's commitment to implementing GCG is reflected by the completion of International Air Transport Association (IATA), Operational Safety Audit (IOSA) which covers the operational and functional areas of airlines including but not limited to organisation and management systems, flight operations, operational control and flight dispatch, aircraft technical and maintenance, cabin operations, ground operations handling, cargo operations, and management of safety and security.
Commitment to Sustainability Aspect
The adopts the Capital A Group Sustainability Commitment covering the environmental, social and economic sectors, also considers the Company's internal and external conditions. In addition, the Company is fully aware of the importance of strict monitoring of the aviation industry's carbon emissions. In the last two years, due to travel restrictions caused by the worldwide pandemic, carbon emissions have fallen by more than 90%, while waste production has been kept to a minimum.
The Company is committed to making AirAsia as a sustainable airline, but also implementing sustainability principles by referring to the SDGs principles.
However, the situation is reversing as the travel industry recovers making the Company to stay motivated in conducting review of climate change management strategies in implementing mechanisms and processes to realise the airline industry's net zero target by 2050. Considering Capital A’s current status as a diversified group, the Company also started to identify sustainability issues that are relevant to the line of business. The Company is committed to making AirAsia as a sustainable airline, but also implementing sustainability principles by referring to the Sustainable Development Goals (SDGs) principles.
Throughout 2022, the Company has also taken responsibility for human rights, employment, occupational health and safety, fair operations, and consumer rights. In terms of consumer rights, during the pandemic we have facilitated temperature checks by roving technology and implementing strict health protocols to protect the safety and security of consumers while in flight until they arrive at their destination.
Indonesia's economic growth is projected to increase by 4.9%- 3.75% with an inflation rate of 3.25%-3.75%. This value an increase compared to the projected global economic growth recorded by the October 2022 edition of the World Economic Outlook report stating that the global economy in 2023 is expected to be in the range of 2.2%-2.7%. The government is optimistic that the Indonesian economy will grow positively and is expected to be able to withstand the dynamics and challenges of the economy in 2023. Indonesia's economic growth is targeted to continue to grow by around 5.30%.
In the tourism sector, it is predicted that domestic tourists will still be the main driving force for national tourism recovery. The movement of domestic tourists is expected to reach 1.2 to 1.4 billion in 2023 to encourage the availability of 4.4 million jobs in the tourism and creative economy sectors. In addition, the Ministry of Tourism and Creative Economy targets the number of foreign tourist visits in 2023 to be 3.5 million to 7.4 million visits. The main markets targeted to be the biggest contributors to foreign tourists in Indonesia are Australia, Singapore, Malaysia, India and the UK.
The Company seize such opportunity to study a number of strategic innovations. This is expected to be a positive encouragement for the Company to achieve maximum results in the future.
Changes in the Board of Directors Composition
During 2022, the Company underwent a change in the composition of the Board of Directors with the following composition.
Period of 1 January-6 July 2022
|Name||Position||Basis of Appointment||Tenure|
|Dendy Kurniawan||President Director||EGMS on 21 December 2017||21 December 2017 - 6 July 2022|
|Leon Ruben||Director||EGMS on 23 March 2022||23 March 2022 – 23 March 2027|
Period of 6 July -31 December 2022
|Name||Position||Basis of Appointment||Tenure|
|Veranita Yosephine Sinaga||President Director||AGMS on 6 July 2022||6 July 2022 – 6 July 2027|
|Leon Ruben||Director||EGMS on 23 March 2022||23 March 2022 – 23 March 2027|
We, as the Board of Directors would like to express our appreciation the Board of Commissioners for every recommendation, suggestion, and advice given to the Board of Directors. We would also like to convey our gratitude to the management and all employees who have worked hard and cooperated in overcoming challenges throughout 2022.
Our appreciation also goes to all parties related to the Company's business chain for the support, trust and cooperation given, so that the Company was able to carry out operational performance properly.
We hope that the Company can continue to develop its business optimally and sustainably in an effort to provide positive contributions and benefits to all stakeholders and the people of Indonesia.
Jakarta, 12 May 2023
Veranita Yosephine Sinaga