Thai AirAsia is committed to climate responsibility and works with the Civil Aviation Authority of Thailand (CAAT) in support of ICAO’s 2050 net-zero CO2 goal for international aviation. At the same time, the airline participates in the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which enacts carbon offsetting and reduction measures in accordance with ICAO policy towards a main objective of limiting carbon emissions to within the ICAO baseline (85% of CO2 emissions by the aviation industry in 2019 from 2024 onwards). Through new technologies and proper management, Thai AirAsia is managing its carbon emissions as stated while still maintaining the utmost in safety.

Net Zero Strategy

As air travel recovery gains momentum, the aviation industry finds itself in a more purposeful setting of managing the restoration of flight networks while adapting to a new regulatory environment that seeks to minimise the industry’s impact on the climate. This was underscored by the conclusions of the 41st ICAO General Assembly in October 2022 which reiterated its call for airlines to implement climate change strategies to achieve ICAO’s Long Term Aspirational Goal of net zero emissions by 2050.

Responding to this call to action, Thai AirAsia developedits climate strategy to meet industry aspirations to decarbonise by 2050 in alignment with the net zero targets of the AirAsia Aviation Group Limited (AAAGL). In 2022, we identified our net zero pathway based on existing technologies as shown in the chart below.

Figure: Thai AirAsia’s pathway to net zero by 2050. CO2 emissions for years 2018-2022 are based on actual data. Figures for 2023 onwards are based on AirAsia Aviation Group Limited’s projections.

Our decarbonisation strategy leverages on four main approaches, namely, the effective management of our fleet, expanding our operational eco-efficiency programme, and progressively, the utilisation of sustainable aviation fuels (SAF) and purchase of carbon offsets. Below are the activities undertaken in 2022 in the four above-mentioned areas.

Fleet Management

Thai AirAsia maintains a relatively young fleet with an average age of 9.0 years, comprising three models of the Airbus A320 family-the A320ceo, A320neo and A321neo-which are acknowledged to be among the most fuel-efficient narrow body commercial jet aircraft. In addition, our fleet of 54 aircraft are compliant with the latest ICAO CAEP/8 NOx emissions standards.

Our fleet renewal plan will see the replacement of all existing A320 aircraft with the A321neo model by 2035. In keeping with AirAsia’s practice of maintaining a single-class seating layout, each A321neo will be fitted with 236 seats, thereby increasing capacity while lowering per seat costs and emissions by up to 20%, alongside reduced NOx, and noise levels. The delivery of our next A321neo will resume in 2024, to add to the current two A321neo aircraft currently in service in Thai AirAsia. This year, we also upgraded the software of 12 aircraft as part of our efforts to continuously improve the performance of the fleet.

As part of AAAGL, we are also closely monitoring developments in zero emission aircraft technology to take our decarbonisation efforts beyond 2035. In 2022, AAAGL was briefed on Airbus’ plans to develop a hydrogen-powered commercial jet aircraft by 2035. AAAGL has also signed a letter of support with ZeAero, a UK-based company invested in developing zero-emission aircraft.

Operational Eco-Efficiency

Thai AirAsia’s fuel efficiency programme underpins our emissions reduction efforts. We maintain some of the lowest carbon intensity measures in the industry through continuous efforts to reduce fuel consumption,both to lower our operational costs and carbon footprint.

In 2022, Thai AirAsia’s CO2 emissions per available seat kilometre dropped by 5.6%, both as a result of high compliance rates in applying fuel-efficiency measures and an increase in average flight length due to the recovery of our international flight network. Our CO2 emissions per revenue passenger kilometre (Carbon Intensity Ratio) measure also saw a sharp reversal of the upward trend of the last few years to a level approaching that of 2019 as a result of improving load factors.

CO2 emissions per revenue passenger kilometre (Carbon Intensity Ratio)

Furthermore, the main fuel and emissions savings were delivered by the following green operating procedures:

These measures collectively are the Green Operating Procedure. Apart from reducing the amount of fuel needed for each flight, the procedure also mitigates CO2 emissions into the atmosphere and reduces noise pollution for residents in areas surrounding airports. In 2022, the six dimensions of the Green Operating Procedure allowed Thai AirAsia to reduce its CO2 emissions by 7,066 tons, equivalent to planting 513,890 mangrove trees (Reference from Thailand Greenhouse Gas Management Organization).

On top of the measures Thai AirAsia has been employingover the past years, in the fourth quarter of 2022, the Company adopted a new technology to further enhance its flight efficiency. Descent Profile Optimisation,or DPO reduces fuel usage by an average 32 kg per flight (101 kg of CO2). The technology is expected to be installed in all Thai AirAsia A320 NEO aircraft by the end of 2022, reducing the carrier’s CO2 emissions by 2,070 tonnes/year.

While the number of Thai AirAsia flights in 2022 wasstill only one third of 2019, the year prior to the COVID-19pandemic, resulting in fuel usage and CO2 emissions being 65 percent less than normal circumstances, alleviation of the COVID-19 situation, relaxed governmentrestrictions, improved confidence in air travel and higher passenger numbers since the start of the year initiated a normalisation of Thai AirAsia’s Load Factor. This resulted in a significant fall in the Company’s Carbon Intensity Ratio (gCO2/RPK) from 2021 and Thai AirAsia being able to reduce its Carbon Intensity Ratio as targeted to 3gCO2/RPK/year.

State Action Plan on Energy Conservation and the Reduction of Carbon Emissions by the Aviation Sector

In addition to its internal targets, Thai AirAsia joined in discussions with CAAT and other relevant agencies to draft the State Action Plan for Thailand to achieve Net Zero Carbon by 2050. In support of this plan, CAAT issued a variety of policy and practical measures, including supporting the adoption of Sustainable Aviation Fuels in Thailand and a domestic carbon credit system for offsetting through sale or exchange in accommodation of airlines participating in CORSIA.

Sustainable Aviation Fuels (SAF)

While ICAO supports an appropriate proportion of Jet A-1 fossil fuels being replaced by Sustainable Aviation Fuels (SAF) by 2050, as SAF reduces carbon emissions by 80 percent compared to JET A-1 fuel. At present, the main obstacles to SAF utilisation by Thai AirAsia is its high price and non-availability at Thai airports. The 2-3-fold cost of SAF compared to JET A-1 fuel at present has deterred carriers across the globe from switching to SAF for commercial usage. However, as part of AAAGL, Thai AirAsia will leverage on group economies of scale as purchase volume is one of key factors determining SAF pricing. Thai AirAsia also participated in multiple engagements with the AAAGL regional team and civil aviation authorities to gain a broader overview of SAF production and distribution plans in ASEAN. This exercise enabled Thai AirAsia to identify airports where SAF may be purchased should our management team decide to commence SAF utilisation or should national policies be introduced to advance the use of biofuels in the aviation industry in Thailand. In addition, several Thai private organisations began investing in the production of SAF in 2022 to meet growing demand. This has made Thai AirAsia see SAF adoption for commercial use as a possibility. The carrier began preparations for adoption by reviewing information provided by the manufacturer of its fleet’s main aircraft, the Airbus A320, discerning that a 50:50 SAF to jet fuel ratio would be feasible for the model.

Carbon Offsetting

In 2016, Thailand was among an initial group of States which signed up to voluntarily participate in ICAO’s CORSIA thereby mandating all Thai-registered airlines to comply with CORSIA timelines and targets. Since the scheme came into force in 2019, Thai AirAsia is required to meet two key targets.

The first is to measure our CO2 emissions from internationalflights and submit verified annual reports to the CAAT for onward submission to the ICAO Central Registry. From 2021 onwards, Thai AirAsia, like all Thai-registeredcarriers, are required to offset any carbon emissions generated above a baseline set at the 2019 level of emissions.

Since 2019, Thai AirAsia has fully complied with CORSIA requirements to submit verified reports of our annual carbon emissions from international flights to the CAAT. As global emissions level from international aviation is not expected to recover to 2019 levels before 2024, we are not likely to face mandatory offsettingobligations before the 2024-2027 period.

Another important development that took place in 2022 was the decision of 41st ICAO General Assembly to lower the CORSIA offsetting baseline to 85% of 2019 emissions for the reporting period starting 2024. In our impact assessment, we established that while these regulatory developments do not have an immediate impact on Thai AirAsia, the lowering of the CORSIA baselineis likely to result in higher offsetting requirements starting 2024. We identified at least one CORSIA-eligiblecarbon offsetting programme in Thailand.

As a next step to our preparation for a future of carbonoffsetting, Thai AirAsia, as part of AAAGL, is developinga programme to enable voluntary offsetting by guestswhen booking AirAsia flights. This programme is scheduledto be launched in 2023. The implementation of the voluntary offsetting programme will provide us with the resources to build internal capacity to navigate carbon markets and purchase CORSIA-eligible credits.

A final point to note is that although the industry is encouraged to apply in-sector approaches that aim at emissions avoidance, until SAF becomes commerciallyviable at lower prices and larger volumes, Thai AirAsia’s decarbonisation efforts will strongly feature purchase of carbon offsets. Carbon offsetting is expected to deliver a higher proportion of our emissions reduction at the early stages of our net zero journey before tapering down as in-sector solutions become more readily available.

For more detailed information on the AirAsia Aviation Group’s net zero approaches, please refer to Capital A’s Berhad’s Sustainability Statement in its Annual Report 2022.

GHG Emission Data

Scope 1 Emissions

Thai AirAsia’s disclosure of Scope 1 emissions does not include ground operations. Fuel usage for flight operations is calculated using the CORSIA Block-On, Block-Off methodology. The Company evaluates GHG emissions in accordance with Thailand Greenhouse Gas Management Organization standards and calculates emissions by referencing the ICAO standard Emission Factor. In the future, Thai AirAsia plans to upgrade its transport vehicles and parking devices to electrical operation to further reduce carbon emissions. The Company is studying the feasibility of this aspiration and consulting with future stakeholders.

Scope 2 Emissions

Thai AirAsia’s Scope 2 disclosures cover emissions associated with energy consumption of main base facilities (Don Mueang) (Other hubs and stations are not included.) Thai AirAsia evaluates and estimates greenhouse gas emission in accordance with Thailand Greenhouse Gas Management Organisation (TGO) standards.

Scope 3 Emissions

Thai AirAsia’s Scope 3 partially disclosures Scope 3 emissions for the following categories: Scope 3 - Category 3 Fuel and energy not included in Scope 1 and 2 Scope 3 - Category 6 Category 6 Indirect carbon emissions from business travel and the business travel of employees and executives in relation to company affairs

Thai AirAsia has started monitoring and tracking its Scope 3 emissions. At present, Scope 3 emissions comprise of our upstream jet fuel production from fuel suppliers and employee business travel. In 2022, Scope 3 emissions was 143,190.8 tonnes of CO2. The Company expects to include additional categories as highlighted in the GHG Protocol in the future.

Future Plans

Looking to the future, Thai AirAsia plans to continue seeking out new innovations and operational methods to reduce fuel consumption and maintain its carbon emissions under the baseline of 85 percent of 2019 rates in accordance with CORSIA requirements while also pursuing a Carbon Intensity Ratio of 3 gCO2/RPK/year.