AirAsia CEO Fernandes added that Indonesia AirAsia has experienced some rough years in the recent past but the company is now keen on leaving that past behind and focus on further business expansion. The AirAsia CEO presented a five-year business expansion plan to Indonesia AirAsia's crew on Monday (25/04) in Jakarta. At this stage Fernandes is not yet willing to share this business plan with the press and analysts.

The rough period Fernandes referred to involves the Indonesia AirAsia Flight QZ8501 disaster that occurred on Sunday 28 December 2014. An Indonesia AirAsia plane crashed in the Java Sea, en route from Surabaya (East Java) to Singapore, killing all 162 people on board. Results of a study conducted by the Indonesian National Transportation Safety Committee showed that there was a malfunction in the rudder travel limiter causing a 104-degree roll of the aircraft. After this malfunction the two AirAsia pilots had a miscommunication causing the aircraft to stall. They failed to recover from this stall. This crash was AirAsia Group's first fatal accident in its 18-year history.

Moreover, the investigation into the QZ8501 crash uncovered a new scandal: this AirAsia flight was apparently an unauthorized flight as it was not allowed to fly the Surabaya-Singapore route on Sundays (even though the airline had already been flying this route for two months prior to the crash). After some more research it became known that 61 flights (involving five Indonesian airlines) lacked the necessary permits to serve certain routes, signalling massive violations, unprofessionalism or corrupt behavior within Indonesia’s aviation-related civil service.

Furthermore, in mid-2015 Indonesian authorities threatened to suspend the operating license of Indonesia AirAsia because the airline was among 13 Indonesian airlines that were found to have negative equity and therefore were ordered by the Indonesian Transportation Ministry to turn its equity positive before 31 July 2015 in order to maintain operating licenses. Indonesian authorities were eager to see a positive equity balance of airlines in a bid to enhance the safety of passengers. In October 2015 Indonesia AirAsia announced its shareholders had converted the airline's short-term loan to perpetual securities or bonds with no maturity date. This move turned Indonesia AirAsia's equity into a positive position and therefore the airline's operational license was not revoked by Indonesian authorities.

Previously, Indonesia AirAsia President Director Sunu Widyatmoko said the company targets a +80 percent average load factor in full-year 2016, up from 79 percent in 2015. This growth is partly based on the forecast for an accelerating Indonesian economy in 2016 (which should give rise to higher demand for flights in Indonesia). Another factor is that Indonesian consumers have become used to the weaker rupiah exchange rate. Since mid-2013 the rupiah has weakened significantly against the US dollar due to monetary tightening in the world's top economy. Starting from 2016, however, the rupiah rate has stabilized around IDR 13,200 per US dollar and consumers are aware it will not recover to pre-2013 levels (around IDR 9,500 per USD), at least not on the short or middle-long term.

Indonesia AirAsia, based in Tangerang (West Java), was established in December 2004 through the merger of AirAsia International Ltd and Awair International (a local Indonesian airline). Currently, Indonesia AirAsia serves flights through its five hubs in Jakarta, Bandung, Surabaya (all on Java), Bali and Medan (Sumatra). Over the past ten years, the airline has carried more than 40 million passengers. It operates both international and domestic routes.

Discuss