QUESTIONS

Is it clear skies ahead for AirAsia?

KUALA LUMPUR (28 March): One year into the COVID-19 pandemic, AirAsia Group Bhd co-founder and group CEO Tan Sri Tony Fernandes sees "the end" in sight. "We're alive," he exclaims, noting that things are clearer today as countries worldwide roll out COVID19 vaccines and the society is more informed about the virus. In the latest issue of The Edge, we spoke to Fernandes who shared updates on AirAsia's fundraising activities, his commitment towards the airline, and his optimism over the domestic aviation sector recovery. While it was pointed out that some cash-strapped airlines appear to have a headstart on AirAsia in obtaining their funding, the low-cost carrier's chieftain retorted by saying: "I don't have a big shareholder like Khazanah (Nasional Bhd), ok? If you say that MAS is faster, of course it is. Like who else? Singapore Airlines? They also have a big shareholder called Temasek. Name me a private airline that has been faster than AirAsia? It's not easy to raise capital in the aviation business... The reality is, which private airline has received funding quicker than us or done a placement?" "We have done what most of you predicted we couldn't do. We have raised capital from a placement from reputable investors," he remarked, referring to the RM336.46 million raised over two tranches of private placement recently...

" The Edge Market, 28 March 2021

1. According to the above article, Tan Sri Tony Fernandes is upbeat about the aviation sector's future, primarily due to the successful roll-out of the COVID-19 vaccines. Draw a graph to show the potential effect on AirAsia's flight frequencies in the short run.

2. AirAsia relies heavily on the new fleet of Airbus' A330s. Please explain how the economic recovery cause Airbus to increase (or decrease) its output of A330s in the short run.

3. If some airlines decide to enter the aviation market due to the high efficacy rate of COVID-19 vaccines, explain how the remaining airlines' economic profit (or loss) will change.

4. Explain how the increase of high-paying jobs (e.g., flight officers, flight attendants, aircraft maintenance engineers) will affect local convenience stores' short-run economic profit in Sepang (KLIA/ KLIA2). Draw a graph to show the effects of the increase of high-paying jobs on local convenience stores' economic profit in the short run.