The global COVID-19 pandemic turned 2020 into a tough year, if not the toughest, year for all businesses in all industry sectors: Principles of Management Case Study, NUI, Ireland

The global COVID-19 pandemic turned 2020 into a tough year, if not the toughest, year for all businesses in all industry sectors. The human-to-human transmission nature of the virus meant that people’s mobility and activities had to be restricted to only the most essential level in order to lower the transmission rate.

AirAsia Indonesia certainly felt the impacts of last year’s situation, as we will describe in this report. However, it was also during this time that we learned to be more adaptive, innovative, determined in connecting travelers throughout the archipelago and the world. On behalf of the Board of Directors, allow me to take you through our performance in 2020.

2020 Economic Overview As people’s mobility around the world was restricted, the global economy had also been upended. The global growth was projected to contract between 4% and 4.3%, with a slowdown was also experienced by developed countries such as the United States, the European Union region, and Japan. According to Statistics Indonesia (BPS), Indonesia grew by minus 2.07% throughout 2020. Year on year, the growth in quarter IV of 2020 stood at minus 2.19%.

This reflected a direct impact of restrictions of activities in all aspects of life, be it work, school, daily household activities, or leisure activities. Nevertheless, Indonesia has shown signs of improvement. The National Economic Recovery Program (PEN) received substantial funding from the state budget to help the recovery of the most affected sectors. Under PEN, the government among others imposed credit relaxation and increased the realization of state spending, which in the fourth quarter of 2020 reached Rp732.74 trillion, up from the same quarter of the previous year at Rp704.22 trillion.

Thanks to government stimulus, household consumption growth improved in the fourth quarter of 2020, at -3.61% (YoY) from -4.05% (YoY) in the previous quarter. Industry and Business Overview Industry performance data showed similar impacts. Within the country, BPS showed that the transportation and warehousing sectors experienced the largest growth contraction compared to other industrial sectors, especially in the second quarter of 2020 when growth stood at minus 30.80%, which then improved to minus 13.42% in the fourth quarter.

By mode of transportation, air transportation experienced the highest growth contraction to minus 53.81% year-on-year in the fourth quarter of 2020. Globally, industry data also showed a sharp decline. According to a recent report from the International Air Transport Association (IATA), demand for aviation in the world fell by 65.9% in 2020 compared to 2019. Regionally, the largest decline was recorded in the Asia Pacific region with a contraction of 80.3%. In line with this, the International Civil Aviation Organization (ICAO) also reported a 60% drop in international passenger traffic by 2020, a significant setback that returned demand to the 2003 level.