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AIRASIA Promotional Strategies AirAsia continued to launch a series of promotional campaigns with thousands of deeply discounted or even free tickets sold to major destinations throughout 2008. These campaigns played a vital role in increasing the air traffic, promoting tourism, boosting trade and stimulating the growth of the traveling market. AirAsia’s slogan, “Now everyone can fly”,1 became a signature brand of the airline. These promotions included:2 March 2008 promotional campaigns: 

AirAsia establishes the Northern gateway with new direct daily international flights from Penang. This new service became AirAsia’s second and third international route from Penang after Bangkok. 30,000 free promotional seats were given away during 5 -16th March 2008 to celebrate this event. In less than five (5) months in operations, AirAsia X, the pioneer of low-cost, long-haul air travel has exceeded its expectations by reaching a milestone of 100,000 seats sold valued at approximately RM100 million. To commemorate the 100,000 milestone, 5,000 free seats were offered to the customers between March 13 - 16, 2008 18 – 21 March 2008 AirAsia launched 50,000 free seats for all domestic destinations

May 2008 - AirAsia donated 100 free seats to Hainan provincial Red Cross (China) to raise relief funds for earthquake victims. June 2008 – AirAsia, signed a Memorandum of Understanding (MoU) with Bumiputra Travel and Tours Association of Malaysia (Bumitra), establishing partnership to offer a discounted rates (between 20-30 per cent of the published fares from other carriers) to government officials to fly with AirAsia. 25-29 June 2008 - AirAsia gave away 15,000 seats to its guests to celebrate the opening of first International flight to Makassar (Ujung Pandang), Indonesia from Kuala Lumpur. AirAsia became the first international airline to service this route. 30 June - 6 July 2008 - AirAsia launched its BIG BIG SALE in conjunction with the carrier's recent 50 Millionth Guest Celebration. AirAsia offered attractive deals with all fares in the domination of numerical 5 starting from as low as 5 sen, RM5 and RM50 from all its hubs in the ASEAN region. 28 July - 5 August 2008 – AirAsia, launched the ZOOM promotion, offering fares from as low as RM9* to selected domestic destinations, in conjunction with Tourism Malaysia’s ZOOM Malaysia tourism campaign. AirAsia’s positioned itself as a supporter of government’s effort to strengthen and stimulate domestic tourism. 1 2

Airasia.com AirAsia Press Releases, http://www.airasia.com/site/en/pressReleases.jsp

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26 – 31 August 2008 - AirAsia launched 1 MILLION FREE SEATS regional campaign via 7 hubs for all domestic and international destinations. 26 September – 3 October 2008 - AirAsia gave away 51,000 free seats to its guests to celebrate Malaysia’s recent 51 years of nationhood. 11 – 27 October 2008 - “Absolute” low fare campaign to celebrate 100% Airbus fleet in Malaysia. Fares offered from as low as RM1 to RM199 to international and domestic destinations. 17 – 19 December 2008 - AirAsia offered 100,000 free seats to various points in Thailand as a part of its regional campaign in support of Thailand's tourism. Prior to this, the Thailand tourism sector has been severely affected evident with the declining number of visitors attributed to the recent political upheaval. Thus this proactive campaign initiated by the ‘People’s Airline’, was a joint collaboration between AirAsia and Tourism Authority of Thailand (TAT) aimed to bring back tourists and businessmen by reinstating the core message that it is now safe to travel back to the ‘Land of Smiles’. At that point AirAsia Group was operating over 400 international weekly flights that directly connected Thailand to the rest of Southeast Asia and China. 6 – 18 January 2009 - AirAsia welcomes 2009 with a Big Regional Sale offering unbeatable low fares from as low as *RM9 for domestic and international routes 10 - 15 February, 2009 - 500,000 free seats offered to favorite holiday destinations in Southeast Asia, China and Australia as a boost for tourism despite slowing economy. 11 February 2009 –AirAsia sold an astonishing 279,000 seats in just one single day. Industry experts admitted that this was probably a largest single-day sales record in aviation history 2 March 2009 – Over 50,000 seats on AirAsia’s new routes between Singapore and Indonesia were sold during the 6-day promotional period. Expansion Despite Economic Downturn Despite the global recession, AirAsia announced its intention to expand service through 2009. AirAsia announced it would launch four new routes between Singapore and destinations in Indonesia beginning in early 2009. The carrier would operate daily flights from Singapore to Bali, Bandung, Jakarta and Yogyakarta starting from March 2009.3 AirAsia has become the largest low-cost carrier in Asia with some 114 routes covering over 64 destinations. 4 Within the grasp of 7 years of operation, AirAsia has carried over 55 million passengers and grown its fleet from just two aircraft in 2001.5 In 2002, it flew 200,000 passengers; whereas in 2008 there were 3

“AirAsia’s New Indonesia-Singapore Routes Create Rave Amongst Travellers Over 50,000 Seats Snapped up in 6 Days”, AirAsia Press Releases, 2 March 2009, http://www.airasia.com/site/en/pressRelease.jsp?id=d4d96ec0-7f000010-1abfbdc0-459069ca 4 “AirAsia obtains financing for 15 new Airbus A320-200”, 23 February 2009, http://www.aseanaffairs.com/airasia_obtains_financing_for_15_new_airbus_a320_200 5 “AirAsia obtains financing for 15 new Airbus A320-200 Delivery through to early 2010”, AirAsia Press Releases, 23 February 2009, http://www.airasia.com/site/en/pressRelease.jsp?id=a5f8162d-7f000010-4ef63000-c8190b2f

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19 million; the forecast for 2009 is 24 million.6 AirAsia is proud to be a truly Association of South East Asian Nations (ASEAN) airline with established operations based in Malaysia, Indonesia and Thailand, servicing a network stretching across all ASEAN member countries, China, India and Bangladesh. AirAsia's rapid expansion, which includes deliveries of 175 Airbus A320-200 and 25 larger capacity A330 aircraft by 2014, comes at a time when the airline industry is grappling with falling demand in the face of a prolonged global recession.7 The airline, along with long-haul associate Air Asia X, is planning to add 10 to 15 new routes in 2009, including flights from Kuala Lumpur to Sydney, New Delhi and Taipei, and plans to increase the frequency of its newly launched London Stansted flight to a daily service.8 The new budget service connecting Europe and Asia which took off from London to Kuala Lumpur on March 11, 2009, was welcomed with a great optimism in aviation industry. The Airbus A340-300 flight flew off with a full load 286 guests onboard. The demand for a new service to London was fueled by 5,000 promotional tickets at just £99 ($135) each way, and then AirAsia X has sold 50,000 seats at between £149 and £199 due to growing popularity of five times a week low budget flight.9 Plans for AirAsia Airport In the beginning of 2009, AirAsia started developing plans to shift to its own airport outside Kuala Lumpur and abandon its overcrowded terminal next to Kuala Lumpur International Airport. AirAsia expects its passenger traffic to reach 30 million and its fleet to grow to 184 planes by 2013 from 72 currently.10 "We believe in lowering our business costs. It is the key to our success," AirAsia founder Tony Fernandes told during press conference. "The new airport, which will be known as KLIA East, will provide more capacity for aircraft and passengers and enable us to bring down fares," he said, adding that costs could be cut by 30 percent.11 AirAsia’s management understand that discussion with the government should be accelerated on since the existing terminal - located near the main Kuala Lumpur International Airport - can accommodate only up to 15 million people annually and has insufficient aircraft parking bays.12 AirAsia projected that it would exceed its enlarged capacity with some 15.7 million passengers a year by the time current low-cost terminal is completed in March 2009.13 Malaysia Airports Holdings would have to make decision on whether to proceed with proposed new low-cost terminal near KLIA. The projection is that new airport will be exclusively for AirAsia, and 6

Arnott, S., “AirAsia X to fly no frills from London to Kuala Lumpur”, The Independent, 11 March 2009, http://www.independent.co.uk/news/business/news/airasia-x-to-fly-no-frills-from-london-to-kuala-lumpur1642190.html 7 “INTERVIEW-AirAsia sees 2009 expansion despite downturn”, Reuters, 11 March 2009, http://uk.reuters.com/article/tnBasicIndustries-SP/idUKLB95856020090311 8 Reuters, 11 March 2009. 9 The Independent, 11 March 2009. 10 “AirAsia seeks new deal”, The Straits Times, 24 February 2009, http://www.straitstimes.com/Breaking %2BNews/SE%2BAsia/Story/STIStory_342339.html 11 “AirAsia unveils plans for own airport outside Malaysian capital”, Agence France-Presse (AFP), 8 January 2009, http://www.google.com/hostednews/afp/article/ALeqM5gx4Yt4hNBiPN6fv-FaxXhcz-5jWg 12 The Straits Times, 24 February 2009. 13 Agence France-Presse (AFP), 8 January 2009.

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designed to handle up to 30 million passengers annually. Construction could begin within six months with a completion date of March 2011.14 Tony Fernandes signed up Sime Darby Bhd., a large Malaysian palm-oil and development company, as a partner in the proposed airport because it has large tracts of plantation land in the area. At a news conference in January, Mr. Fernandes, estimated the cost of the project at $460 million and announced plans to build a theme park, too.15 However, Malaysia Airports has earlier objected to the Labu terminal on concerns it may threaten growth of main airport. AirAsia already accounts for 16 per cent of international traffic and nearly half of domestic traffic. Some analysts have warned it may be detrimental to split Kuala Lumpur as a destination into two separate airports with Malaysia's annual passenger traffic at only 25 million currently. 16

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Agence France-Presse (AFP), 8 January 2009. Hookway, J., “Deal Is Proposed for New Malaysian Airport�, The Wall Street Journal, 2 February 2009, http://online.wsj.com/article/SB123349552508536809.html 16 The Straits Times, 24 February 2009. 15

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