IMPORTANT NOTICE

NOT FOR DISTRIBUTION TO ANY PERSON OR ADDRESS IN THE U.S.

IMPORTANT: You must read the following before continuing. The following applies to the offeringmemorandum following this page (the “Offering Memorandum”), and you are therefore advised to read thiscarefully before reading, accessing or making any other use of the Offering Memorandum. In accessing theOffering Memorandum, you agree to be bound by the following terms and conditions, including anymodifications to them any time you receive any information from us as a result of such access.

NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIESFOR SALE IN THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TODO SO. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE U.S.SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR THE SECURITIESLAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND THE SECURITIESMAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES, EXCEPT PURSUANT TO ANEXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATIONREQUIREMENTS OF THE U.S. SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIESLAWS.

THE FOLLOWING OFFERING MEMORANDUM MAY NOT BE FORWARDED OR DISTRIBUTEDTO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER, ANDIN PARTICULAR, MAY NOT BE FORWARDED TO ANY PERSON IN THE UNITED STATES. ANYFORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PARTIS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATIONOF THE U.S. SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.

Confirmation of your Representation: In order to be eligible to view this Offering Memorandum ormake an investment decision with respect to the Securities, investors must be outside the United States. ThisOffering Memorandum is being sent at your request and by accepting the e-mail and accessing this OfferingMemorandum, you shall be deemed to have represented to us that you are outside the United States and that youconsent to delivery of such Offering Memorandum by electronic transmission.

You are reminded that this Offering Memorandum has been delivered to you on the basis that you are aperson into whose possession this Offering Memorandum may lawfully be delivered in accordance with the lawsof the jurisdiction in which you are located and you may not, nor are you authorized to, deliver this OfferingMemorandum to any other person.

The materials relating to the offering do not constitute, and may not be used in connection with, an offer orsolicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that theoffering be made by a licensed broker or dealer and the underwriters or any affiliate of the underwriters is alicensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by the underwriters or suchaffiliate on behalf of the Company in such jurisdiction.

This Offering Memorandum has been sent to you in an electronic form. You are reminded that documentstransmitted via this medium may be altered or changed during the process of electronic transmission andconsequently neither Credit Suisse (Singapore) Limited, CIMB Bank (L) Limited nor any person who controls it,nor any director, officer, employee nor agent of it, or affiliate of any such person accepts any liability orresponsibility whatsoever in respect of any difference between the Offering Memorandum distributed to you inelectronic format and the hard copy version available to you on request from Credit Suisse (Singapore) Limitedor CIMB Bank (L) Limited.

OFFERING MEMORANDUM

(registered in the Kingdom of Thailand as a public company with limited liability)

1,940,000,000 Ordinary Shares

(par value Baht 0.10 per share)

This is the initial public offering of our ordinary shares of par value Baht 0.10 each (the “Shares”). This offeringmemorandum (the “Offering Memorandum”) has been prepared by us in connection with the offering of 1,940,000,000Shares (the “Offering Shares”), consisting of (a) a primary offering (the “Primary Offering”) of 1,212,500,000 Shares (the“Primary Shares”) (consisting of 750,000,000 Shares to be issued by us (the “New Shares”) and 462,500,000 Shares (the“Vendor Tranche A Shares”) to be offered by Mr. Tassapon Bijleveld, Mr. Pornanan Gerdprasert, Mr. Tanapat Ngamplang,Mr. Preechaya Rasametanin, M. L. Bovornovadep Devakula and Mr. Santisuk Klongchaiya (collectively, the “SellingShareholders”)), and (b) a secondary offering in Thailand (the “Secondary Offering”) of 727,500,000 Shares (the “VendorTranche B Shares” or the “Secondary Shares” and, together with the Vendor Tranche A Shares, the “Vendor Shares”) by theSelling Shareholders.

The Primary Shares being offered consist of (i) 400,000,000 New Shares (the “International Shares”) being offered toinvestors outside the United States and Thailand (the “International Offer”) in reliance on Regulation S under the UnitedStates Securities Act of 1933, as amended (the “U.S. Securities Act”), through Credit Suisse (Singapore) Limited and CIMBBank (L) Limited (the “International Managers”) and (ii) 812,500,000 Shares (the “Domestic Shares”) to investors inThailand (the “Domestic Offer”) through CIMB Securities (Thailand) Co., Ltd. and Thanachart Securities Public CompanyLimited (the “Joint Thai Lead Underwriters”) in a concurrent domestic public offering. The Domestic Offer comprises anoffer of 412,500,000 Domestic Shares in a public retail offer and 400,000,000 Domestic Shares to institutional investors inThailand. Completion of the International Offer and completion of the Domestic Offer are each conditional on the completionof the other. The New Shares offered in the Combined Offering may be reallocated between the International Offer and theDomestic Offer. The Vendor Tranche B Shares are being offered on a private placement basis through the big lot board of theStock Exchange of Thailand (“SET”) on the first day on which our Shares are listed on the SET, as described in this OfferingMemorandum. Completion of the Secondary Offering is conditional on the completion of the Primary Offering and the listingof our Shares on the SET. The Primary Offering and the Secondary Offering are referred to as the “Combined Offering”.

This Offering Memorandum relates to the International Offer only. The Domestic Offer is being made pursuant to aseparate prospectus in the Thai language. For information on the methods of sale, see “Plan of Distribution”.

The transfer of our shares to non-Thai persons is subject to certain foreign ownership restrictions under the laws ofThailand and our Articles of Association. As a result, investors purchasing the International Shares in the International Offerwill be required to purchase and receive Non-Voting Depositary Receipts (“NVDRs” and, together with the Shares, the“Securities”) in lieu of the International Shares. NVDRs are a separate security issued by Thai NVDR Company Limited (the“NVDR Issuer”), a wholly-owned subsidiary of the SET. The terms and conditions of the NVDRs and other informationrelating to the NVDRs are set out in “Annex A — Issuance of Non-Voting Depositary Receipts — Prospectus”. In addition,you should also read the section “Special Note Regarding NVDRs”, “Risk Factors — Risks Relating to the NVDRs”, “Plan ofDistribution” and “Transfer Restrictions” for further information relating to the NVDRs.

There is currently no public market for our Securities. We have applied to have our Shares, including the Shares offered in theCombined Offering, approved for listing and trading on the SET. For a description of the SET, see “The Thai Securities Market”.

Investing in our Securities involves certain risks. See “Risk Factors” beginning on page 18.

Offer Price: Baht 3.70 per Share or per NVDR.

In addition to the Offer Price, international investors will be required to pay a brokerage fee in connection with theirpurchase of Securities purchased in the International Offer. For a description of this brokerage fee, see “Plan of Distribution”.

THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACTAND, SUBJECT TO CERTAIN EXCEPTIONS, MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES. THESECURITIES ARE BEING OFFERED AND SOLD IN OFFSHORE TRANSACTIONS SOLELY OUTSIDE THEUNITED STATES IN RELIANCE ON REGULATION S. OUR SHARES ARE NOT TRANSFERABLE EXCEPT INACCORDANCE WITH THE RESTRICTIONS DESCRIBED UNDER “TRANSFER RESTRICTIONS”.

The International Managers are offering the International Shares subject to receipt and acceptance of orders by them andsubject to their right to reject any order in whole or in part. Payment for the International Shares is expected to be made on orabout May 29, 2012, in immediately available funds, and we expect that delivery of the International Shares will be made tothe NVDR Issuer approximately five business days after payment and that our Shares will be approved for listing on the SETno later than seven days after delivery of the Primary Shares.

Joint Global Coordinators and Bookrunners

Credit Suisse CIMB Thanachart Securities Plc.

The date of this Offering Memorandum is May 22, 2012.

TABLE OF CONTENTS

Page

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 36Dividend Policy . . . . . . . . . . . . . . . . . . . . . . . . 37Exchange Rate Information . . . . . . . . . . . . . . . 38Capitalization and Indebtedness . . . . . . . . . . . . 39Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40Selected Consolidated Financial and Operating

Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41History and Corporate Structure . . . . . . . . . . . . 47Management’s Discussion and Analysis of

Financial Condition and Results ofOperations . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84Related Party Transactions . . . . . . . . . . . . . . . . 112Regulation of the Airline Industry in

Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125Management and Corporate Governance . . . . . 130

Page

Principal and Selling Shareholders . . . . . . . . . . 136Description of Shares . . . . . . . . . . . . . . . . . . . . 137Description of the NVDR Issuer and the

NVDRs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140The Thai Securities Market . . . . . . . . . . . . . . . 141Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148Thai Foreign Exchange Regulations . . . . . . . . . 150Plan of Distribution . . . . . . . . . . . . . . . . . . . . . 152Transfer Restrictions . . . . . . . . . . . . . . . . . . . . . 158Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 159Independent Accountants . . . . . . . . . . . . . . . . . 159Summary of Significant Differences between

Thai GAAP and IFRS . . . . . . . . . . . . . . . . . 160Annex A — Issuance of Non-Voting

Depositary Receipts Prospectus . . . . . . . . . . A-1Annex B — Report of the Aviation

Consultant: Thai AirAsia Co., Ltd. DatedJanuary 16, 2012 . . . . . . . . . . . . . . . . . . . . . B-1

Index to Financial Statements . . . . . . . . . . . . . . F-1

You should rely only on the information contained in this Offering Memorandum in making an investmentdecision with respect to the Securities. Neither we, the Selling Shareholders nor the International Managers haveauthorized anyone to provide you with any additional or different information. This Offering Memorandum mayonly be used where it is legal to offer and sell the Securities. The information in this Offering Memorandum mayonly be accurate as of the date of this Offering Memorandum. You should be aware that since the date of thisOffering Memorandum there may have been changes in our business, financial condition, results of operations,prospects or otherwise that could affect the accuracy or completeness of the information set out in this OfferingMemorandum.

We are furnishing this Offering Memorandum on a confidential basis in connection with an offering exemptfrom registration under the U.S. Securities Act and applicable state securities laws solely for the purpose ofenabling prospective investors to consider the purchase of the Securities. We are not authorizing the use of thisOffering Memorandum for any other purpose. The information contained in this Offering Memorandum has beenprovided by us and other sources identified in this Offering Memorandum. No representation or warranty,express or implied, is made by the International Managers as to the accuracy or completeness of suchinformation, and nothing contained in this Offering Memorandum is, or shall be relied upon as, a promise orrepresentation by the International Managers. Any reproduction or distribution of this Offering Memorandum, inwhole or in part, and any disclosure of its contents or use of any information herein is prohibited, except to theextent such information is otherwise publicly available.

The Securities are subject to restrictions on transferability and resale; the Securities may not be transferredor resold in the United States, except as permitted under the U.S. Securities Act and applicable state securitieslaws pursuant to registration or an exemption from registration under the U.S. Securities Act. You should beaware that you may be required to bear the risk of an investment in the Securities for an indefinite period of time.See “Transfer Restrictions” for more information on these restrictions.

The distribution of this Offering Memorandum and the offer and sale of the Securities offered hereby arerestricted by law in certain jurisdictions. You should inform yourselves about and comply with all applicablelaws and regulations in force in any jurisdiction in connection with the distribution of this Offering Memorandumand the offer and sale of the Securities. None of us, the Selling Shareholders, the International Managers, theJoint Thai Lead Underwriters nor any of our or their respective affiliates, directors, officers, employees, agents oradvisors are making any representation or undertaking to any investor regarding the legality of an investment inthe Securities.

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In making an investment decision, you should rely on your own examination of the Company and the termsof the International Offer including the merits and risks involved. You should not construe the contents of thisOffering Memorandum or its appendices as legal, business, financial or tax advice. You should consult your ownattorney, business advisor, tax advisor or other professional advisor.

We are entitled to withdraw the Primary Offering at any time before closing, subject to compliance withcertain conditions set out in the purchase agreement relating to the International Offer, the underwritingagreement relating to the Domestic Offer. We are making the Primary Offering subject to the terms described inthis Offering Memorandum, the purchase agreement and the underwriting agreement relating to our Sharesdescribed in “Plan of Distribution”.

This Offering Memorandum is not a prospectus within the meaning of the Securities and Exchange ActB.E. 2535 of Thailand, as amended (the “SEC Act”). In connection with the Thai offering, a prospectus, written inthe Thai language, was filed with the office of the Securities and Exchange Commission of Thailand (the “ThaiSEC”) on February 27, 2012 and became effective on May 22, 2012. Thai law requires the distribution of aprospectus that has become effective under the SEC Act in connection with any public offering of shares inThailand. This Offering Memorandum may not be used in lieu of a prospectus in connection with any publicoffering of our Securities in Thailand.

The Securities which we are offering have not been approved or disapproved by the United States Securitiesand Exchange Commission or any state or foreign securities commission or regulatory authority. The foregoingauthorities have not confirmed the accuracy or determined the adequacy of this Offering Memorandum, nor havethey passed upon or endorsed the merits of the Combined Offering. Any representation to the contrary is acriminal offense in the United States.

We, the Selling Shareholders and the International Managers are not offering to sell the Securities in anyjurisdiction where the offer or sale is not permitted. This Offering Memorandum does not constitute an offer of,or an invitation to purchase, any of the Securities in any jurisdiction in which such offer or invitation would beunlawful.

In this Offering Memorandum, all references to:

• the “Company” or “Asia Aviation” refers to Asia Aviation Public Company Limited, a public companywith limited liability registered in the Kingdom of Thailand;

• “Thai AirAsia” refers to Thai AirAsia Company Limited;

• “we”, “our”, “ourselves” and “us” refers to the Company and/or, where the context requires, ThaiAirAsia;

• the “Group” refers to the Company, Thai AirAsia and their respective subsidiaries, joint ventures andassociate companies taken as a whole;

• the “AirAsia Group” refers to AirAsia Berhad, its subsidiaries, joint ventures and associate companiestaken as a whole;

• “Indonesia AirAsia” refers to PT Indonesia AirAsia;

• “AirAsia Investment” refers to AirAsia Investment Ltd.;

• “you” or “your” refers to potential investors or purchasers of our ordinary shares;

• “LCC” refers to a low cost carrier;

• “Baht” or “Bt” refers to the legal currency of Thailand, “U.S. Dollar” or “US$” refer to the legal currencyof the United States of America, “Ringgit” or “RM” refer to the legal currency of Malaysia;

• “PLCA” refers to the Public Limited Company Act of Thailand B.E. 2535 (1992), as amended;

• “Shares” refer to our ordinary shares of par value Baht 0.10 each;

• “Thailand” or “Thai” refers to the Kingdom of Thailand, “Government” refers to the Government ofThailand and “Cabinet” refer to the Thai cabinet;

• “DCA” refers to the Thai Department of Civil Aviation;

• “Non-Voting Depositary Receipts” or “NVDRs” refer to separate securities issued by the NVDR Issuerand sold by the NVDR Issuer to investors against the deposit of underlying shares with the TSD for theaccount of the NVDR Issuer; and

• “NVDR Issuer” refers to Thai NVDR Company Limited, a private company with limited liabilityregistered in the Kingdom of Thailand.

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ENFORCEABILITY OF CIVIL LIABILITIES

We are incorporated in Thailand. A substantial majority of our Selling Shareholders, directors and executiveofficers and the experts named in this Offering Memorandum are residents of Thailand. Also, substantially all theassets of our Selling Shareholders, directors and executive officers are located in Thailand. As a result, you maynot be able to:

• effect service of process upon us or these other persons outside Thailand; or

• enforce against us in Thai courts judgments obtained in courts outside of Thailand, including judgmentsbased on the securities laws of other countries.

Thai courts will not enforce any judgment or order obtained outside Thailand, but a judgment or order from a foreigncourt may, in the discretion of a court in Thailand, be admitted as evidence of an obligation in a new proceeding institutedin that court, which would consider the issue on the evidence before it. Thus, to the extent investors are entitled to bringlegal action against the Company or these persons, investors may be limited in their remedies and any recovery in anyThai proceedings may be limited at the relevant court’s discretion. See “Risk Factors — Risks Relating to Thailand”.

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SPECIAL NOTE REGARDING NVDRS

The sale of the Shares to non-Thai persons is subject to certain foreign ownership restrictions under the lawsof Thailand. See “Risk Factors — Risks Relating to the NVDRs — You may not be able to register theownership of the Shares underlying the NVDRs if you exchange your NVDRs for the Shares”. For purposes ofthe International Offer, non-Thai investors will be required to purchase and receive NVDRs issued in respect ofShares, rather than Shares. NVDRs are separate securities issued by the NVDR Issuer, a wholly-ownedsubsidiary of the SET which is not in any way related the Company, and are sold by the NVDR Issuer toinvestors against the issue of underlying Shares by us to the NVDR Issuer. An investment in NVDRs involvesspecial risks that are described in “Risk Factors — Risks Relating to the NVDRs” and “Annex A — Issuance ofNon-Voting Depositary Receipts — Prospectus”.

Each investor that purchases and receives NVDRs, by its acceptance thereof, will be deemed to haveacknowledged, represented to and agreed with us, the International Managers and the NVDR Issuer that: (i) it isacquiring the NVDRs outside the United States in an offshore transaction meeting the requirements of RegulationS under the U.S. Securities Act; (ii) it agrees to comply with the terms and conditions of the NVDRs set forth in“Annex A — Issuance of Non-Voting Depositary Receipts — Prospectus”, as the same may be revised from timeto time by the NVDR Issuer in accordance with the procedures set forth therein; (iii) it acknowledges that theissuance of the NVDRs is conditional upon the issuance of underlying Shares to the NVDR Issuer; (iv) itacknowledges that the subscription of the NVDRs will be void if the NVDR subscription letter is not submittedto the NVDR Issuer; (v) it agrees that, to the extent that the NVDR Issuer is not able to hold the underlyingShares for any reason whatsoever, it will return the NVDRs to the NVDR Issuer for cancellation (uponconfirmation that the NVDR Issuer has sold the underlying Shares and arranged for the payment to the investorfor the underlying Shares sold); and (vi) it agrees not to make any claim against the NVDR Issuer for anydamages that may have been incurred by the investor in connection with the subscription of the NVDRs by theinvestor.

We have been informed by the NVDR Issuer that the terms and conditions of the NVDRs are set forth in“Annex A — Issuance of Non-Voting Depositary Receipts — Prospectus”, a document prepared and madeavailable by the NVDR Issuer to prospective purchasers of NVDRs. We have been informed by the NVDR Issuerthat this document contains the terms and conditions that are currently in effect, but that the terms and conditionsand other information set forth therein are subject to further alteration or modification from time to time inaccordance with the provisions thereof. For the convenience of prospective purchasers of NVDRs, we haveattached as Annex A to this Offering Memorandum a copy of this document. We have neither prepared thisdocument nor independently confirmed the statements set forth therein, and we take no responsibility for itscontents. Prospective investors are urged to carefully read the “Annex A — Issuance of Non-Voting DepositaryReceipts — Prospectus” in its entirety and to consult with their own financial, legal, accounting and tax advisorswith regard to any proposed investment in NVDRs. In addition, see “Risk Factors — Risks Relating to theNVDRs”.

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PRESENTATION OF FINANCIAL AND STATISTICAL DATA

This Offering Memorandum contains the audited proportionate consolidated and company financialstatements as of and for the years ended December 31, 2009, 2010 and 2011 and the unaudited proportionateconsolidated and company interim financial information as of and for the three months ended March 31, 2011and 2012 of the Company and the audited financial statements as of and for the years ended December 31, 2009,2010 and 2011 and the unaudited interim financial information as of and for the three months ended March 31,2011 and 2012 of Thai AirAsia, each of which has been prepared and presented in accordance with generallyaccepted accounting principles in Thailand (“Thai GAAP”). The audited proportionate consolidated andcompany financial statements of the Company as of and for the years ended December 31, 2009, 2010 and 2011and the audited financial statements of Thai AirAsia as of and for the years ended December 31, 2009, 2010 and2011, have been audited by PricewaterhouseCoopers ABAS Ltd. (“PwC Thailand”), a member firm ofPricewaterhouseCoopers International Limited. The unaudited proportionate consolidated and company interimfinancial information of the Company as of and for the three months ended March 31, 2011 and 2012 and theunaudited interim financial information of Thai AirAsia as of and for the three months ended March 31, 2011 and2012, have been reviewed by PwC Thailand, who did not express an audit opinion on this financial information.

The audited financial statements of Thai AirAsia as of and for the years ended December 31, 2009, 2010and 2011 contain an explanatory paragraph that states that, as of December 31, 2009, 2010 and 2011, ThaiAirAsia’s total current liabilities exceeded its total current assets by Baht 5,220.7 million, Baht 3,310.0 millionand Baht 1,394.3 million, respectively, but that the financial statements have been prepared on a going concernbasis as the financial information of Thai AirAsia for the year ended December 31, 2011 revealed a significantimprovement in operating results.

Thai GAAP differs in certain material respects from International Financial Reporting Standards (“IFRS”).For a description of significant accounting differences between Thai GAAP and IFRS that are relevant to theCompany’s proportionate consolidated and company financial statements as of and for the years endedDecember 31, 2009, 2010 and 2011 and unaudited proportionate consolidated and company interim financialinformation as of and for the three months ended March 31, 2011 and 2012 as well as Thai AirAsia’s financialstatements as of and for the years ended December 31, 2009, 2010 and 2011 and unaudited interim financialinformation as of and for the three months ended March 31, 2011 and 2012, see “Summary of SignificantDifferences Between Thai GAAP and IFRS”.

Solely for the convenience of the reader, unless otherwise indicated, certain Baht amounts in this OfferingMemorandum have been translated to U.S. Dollars, and certain U.S. Dollar amounts have been translated toBaht, in each case based on the average buying (telex transfer) and selling exchange rate of commercial banks inBangkok announced by The Bank of Thailand (the “BOT”) as of December 31, 2011, which was Baht 31.69 =US$1.00. On May 9, 2012, such rate was Baht 31.03 = US$1.00. No representation is made that the Baht orU.S. Dollar amounts referred to in this Offering Memorandum could have been or could be converted into U.S.Dollars or Baht, as the case may be, at any particular rate or at all. See “Exchange Rates and Exchange Controls”for certain historical information on the reference rate between the Baht and the U.S. Dollar.

Any discrepancies in the tables included in this Offering Memorandum between the amounts listed and thetotals are due to rounding.

INDUSTRY AND MARKET DATA

This Offering Memorandum includes market share and industry data and forecasts that we have obtainedfrom industry publications and surveys, including an industry report entitled “Report of the Aviation Consultant:Thai AirAsia Co., Ltd.” dated January 16, 2012 that we have commissioned from Strategic Airport Planning Ltd(“S-A-P”) regarding Thai AirAsia and air travel in Southeast Asia, which is summarized in the section entitled“Industry” and reproduced in Annex B hereto. Industry publications and surveys and forecasts generally statethat the information contained therein has been obtained from sources believed to be reliable, but there can be noassurance as to the accuracy or completeness of included information. While we have taken reasonable actions toensure that the information is extracted accurately and in its proper context, neither we, our Selling Shareholders,the International Managers, the Thai Lead Underwriters nor our or their affiliates, have independently verifiedany of the data from third party sources or ascertained the underlying economic assumptions relied upon therein.As a result, you are cautioned against undue reliance on such information.

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FORWARD-LOOKING STATEMENTS

This Offering Memorandum contains “forward-looking” statements that relate to future events, which are,by their nature, subject to significant risks and uncertainties. All statements, other than statements of historicalfact contained in this Offering Memorandum, including, without limitation, those regarding our future financialposition and results of operations, strategy, plans, objectives, goals and targets, future developments in themarkets where we participate or are seeking to participate and any statements preceded by, followed by or thatinclude the words “believe”, “expect”, “plan”, “aim”, “intend”, “will”, “may”, “project”, “estimate”, “forecast”,“anticipate”, “predict”, “seek”, “should” or similar words or expressions, are forward-looking statements.

These forward-looking statements include, without limitation, statements relating to:

• our overall future business development and economic performance;

• the estimated financial information regarding, and the future development and economic performance of,our business;

• our future earnings and cash flow;

• our business strategy;

• our expected expansion plans;

• regulatory changes; and

• future Government policy relating to the transportation and aviation industries in Thailand.

The future events referred to in these forward-looking statements involve known and unknown risks,uncertainties and other factors, some of which are beyond our control, which may cause the actual results,performance or achievements, or industry results to be materially different from any future results, performanceor achievements expressed or implied by the forward-looking statements. These forward-looking statements arebased on numerous assumptions regarding our present and future business strategies and the environment inwhich we will operate in the future and are not a guarantee of future performance. Important factors that couldcause the actual results, performance or achievements to differ materially from those in the forward-lookingstatements include, among others, the following:

• our competitive environment, including new market entrants;

• changes in the price of aviation fuel and crude oil;

• changes in Government regulation of the Thai transportation and aviation industries, including the AirNavigation Act B.E. 2497 (1954), as amended and the Announcement of the National Executive CouncilNo. 58;

• the outcome of legal and regulatory proceedings in which we are involved or may become involved;

• changes in the value of the Baht against other currencies, including the U.S. Dollar;

• war or political unrest in the Middle East or elsewhere, or acts of international or domestic terrorism;

• changes in interest rates;

• the availability and terms of external funding to finance our investments and expansion plans;

• fluctuations in our operating costs, in particular those that are beyond our control;

• changes in general economic, business, political and regulatory conditions in Thailand;

• changes in the laws, regulations, taxation, accounting standards or practices, or policies of theGovernment which apply to us;

• labor unrest or other similar situations;

• the availability to obtain and retain skilled personnel;

• the availability of insurance coverage at commercially acceptable premiums;

• accidents, public disorder, natural disasters, severe weather or outbreaks of infectious diseases such as theInfluenza A (H1N1) virus; and

• our success at managing the risks of the above factors.

vi

This list of important factors is not exhaustive. Additional factors that could cause the actual results,performance or achievements to differ materially include, but are not limited to, those discussed under “RiskFactors”. When relying on forward-looking statements, you should carefully consider the foregoing factors andother uncertainties and events, especially in light of the political, economic, social and legal environment inwhich we operate. Such forward-looking statements speak only as of the date on which they are made.Accordingly, we do not undertake any obligation to update or revise any of them, whether as a result of newinformation, future events or otherwise. We do not make any representation, warranty or prediction that theresults anticipated by such forward-looking statements will be achieved, and such forward-looking statementsrepresent, in each case, only one of many possible scenarios and should not be viewed as the most likely orstandard scenario. Accordingly, you should not place undue reliance on any forward-looking statements.

Our ability to maintain and grow our revenues, net income and cash flows depends upon continued capitalexpenditure, whether by us or our joint venture. In addition, our capital expenditure and investment plans aresubject to a number of risks, contingencies and other factors, including those listed above, some of which arebeyond our control. We adjust our capital expenditure and investment budgets periodically, based on factorsdeemed relevant by us. Our ability to obtain adequate financing to satisfy our capital expenditure and investmentbudget and debt service requirements may be limited by our financial condition, results of operations, legal andregulatory issues and the liquidity of the international and domestic financial markets. We may make additionalcapital expenditures and investments as opportunities or needs arise. We may increase, reduce or suspend ourplanned capital expenditures or investments or change the timing and use of our capital expenditures from whatis currently planned in response to market conditions, production trends or for other reasons. For the foregoingreasons, our actual future capital expenditures and investments are likely to be different from our currentbudgeted capital expenditure and investment amounts, and those differences may be significant.

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SUMMARY

This summary may not contain all the information that may be important to you in deciding to invest in theShares. You should read the entire Offering Memorandum, including the Company’s proportionate consolidatedand company financial statements and Thai AirAsia’s financial statements and related notes contained elsewherein this Offering Memorandum and the section entitled “Risk Factors” beginning on page 18 of this OfferingMemorandum, before making an investment decision.

Overview

We are the leading Thai LCC in terms of passengers carried at AOT airports, with a market share of 12.7%for the year ended September 30, 2010, according to S-A-P. Our vision is to be the lowest cost airline in everymarket we serve without compromising our level of service. We focus on providing high-frequency services onshort-haul, point-to-point international and domestic routes.

We operate from three hubs in Thailand, namely Bangkok, Phuket and Chiang Mai, and plan to open afourth hub in Hatyai by 2013 and a fifth hub in Udon Thani by 2014. We target markets within a four-hour flighttime from our various hubs, which gives us access to a population of approximately 3,153 million people inSoutheast Asia, India and China as of the end of 2010. We believe that the growing population in Thailand(approximately 64 million people as of the end of 2010) provides an attractive market in which we can stimulateair travel among a population that previously could not afford to travel by air or who live in areas not serviced byother airlines.

Our business model is based on that of AirAsia Berhad, which will own 45.0% of Thai AirAsia after thecompletion of the Combined Offering and after the Company completes the subscription of new shares in theThai AirAsia rights offering, and with whom we have a strategic partnership. We believe our simple single-class,single type fleet configuration, point-to-point operations, high aircraft utilization, scale, distribution channels andextensive route network provide us with a cost advantage over other Thai airlines and one that comparesfavorably with other LCCs around the world. Our cost competitiveness is evidenced by Thai AirAsia’s cost peravailable seat kilometer (“ASK”) of Baht 1.39 (4.61 U.S. cents at an exchange rate of US$1.00 = Baht 30.15) in2010 and Baht 1.58 (4.99 U.S. cents at an exchange rate of US$1.00 = Baht 31.69) in 2011. Our low costs, lowfares, strong brand and marketing and reliable service have enabled us to significantly expand our operationssince we started operations in 2004.

We have achieved strong growth in revenue from passenger seat sales since we started operations in 2004.Thai AirAsia’s passenger revenue increased from Baht 7,582.3 million in 2009 to Baht 10,260.3 million in 2010and to Baht 13,007.5 million (US$410.5 million) in 2011, which represents a compounded annual growth rate(“CAGR”) of 31.0% from 2009 to 2011. Similarly, our fleet size grew from 20 aircraft as of December 31, 2009to 22 aircraft (including one spare) as of December 31, 2011. We took delivery of two additional aircraft inJanuary and February 2012 and we intend to expand our fleet to 48 Airbus A320 aircraft by 2016. Thai AirAsiaalso achieved a strong EBITDAR margin of 31.0% in 2011. Thai AirAsia’s domestic passenger servicescomprised 44.1% of its passenger revenue and 57.9% of its total passengers in 2011. Thai AirAsia’s internationalpassenger services comprised 55.9% of its passenger revenue and 42.1% of its total passengers in 2011.

We have been able to achieve our success despite an extraordinarily difficult period for the airline industrycaused by, among other factors, the adverse effects of the global economic crisis which started in 2007, terroristattacks, and rising fuel prices and insurance premiums. Our success is also notable given that, since we startedoperations in 2004, we have competed against strong incumbent operators, some of whom have significantlygreater financial resources.

Our Competitive Strengths

We operate in one of the largest and fastest growing aviation markets in the world

Thailand is a large aviation market with approximately 64 million passenger movements in 2010. The Thaiaviation market is further supported by a large domestic market with a 2010 gross domestic product (“GDP”) ofUS$319 billion and 16 million annual tourist arrivals in 2010. Thailand’s aviation market also benefits from itslocation in Southeast Asia, which has a collective GDP of approximately US$2 trillion and a population ofapproximately 600 million as of the end of 2010.

Thai AirAsia operates in one of the world’s fastest growing air travel regions by passenger volume,according to S-A-P. Southeast Asia had the world’s second fastest passenger growth rate by revenue passengerkilometer (“RPK”) at 6.9% per annum from 1985 to 2010, behind only China. In addition, Southeast Asia isestimated to continue to be among the fastest growing aviation markets in the world at a CAGR of 7.4% from

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2010 to 2030, along with South Asia and China. Air passenger activity at commercial airports in Thailand alonegrew by 4.4% per annum from 2005 to 2010.

Air travel in Thailand is supported by a number of factors including the country’s GDP growth, per capitaincome growth, tourist arrivals, topography and liberalizing air travel market. Historically, air traffic growth iscorrelated with GDP growth and Thailand’s GDP is expected to continue to grow. Thailand’s GDP grew at aCAGR of 7.3% from 2005 to 2010 and is expected to grow at a CAGR of 6.6% from 2010 to 2015, according toS-A-P. Per capita income also has an effect on air travel and suggests potential for growth in Thailand. In 2010,Thailand’s total RPK per capita stood at 895, while Singapore had much higher RPK per capita of 16,975.Furthermore, we expect the significant LCC penetration in Thailand (51.8% of domestic penetration fromOctober 1 to October 7, 2010) will continue to stimulate demand. S-A-P expects international passengers to growas they have in the past with a CAGR of 4.1% from 2005 to 2010, showing resilience despite extraneous shockssuch as SARS in 2002, a tsunami in 2004 and political unrest and the financial crisis in 2008. Finally, givenThailand’s expansive topography lacks an effective road and rail system between many destinations andseparation from most international destinations by sea, air transport is expected to capture increased traveldemand.

We are the leading low cost carrier in Thailand

Thai AirAsia has the largest market share in Thailand amongst LCCs, serving 63.8% of total LCC domesticand international passengers at AOT airports, and second amongst all carriers, serving 12.7% of total domesticand international passengers at AOT airports for the year ended September 30, 2010, according to S-A-P. ThaiAirAsia has the most comprehensive network among LCCs in Thailand, covering 11 destinations (including threehubs) in Thailand and 14 destinations in eight countries outside of Thailand. In addition, the combined networkof AirAsia Berhad, Indonesia AirAsia and Thai AirAsia covers 68 destinations in 15 countries. It is the onlyairline with hubs outside Bangkok, enabling it to operate flights within Thailand that bypass Bangkok, and it isthe only LCC operating domestic and international flights from Suvarnabhumi Airport.

We have a successful track record of growth

Thai AirAsia has successfully demonstrated a track record of growth in passengers and revenues byexpanding its network and re-fleeting and increasing its capacity while maintaining high load factors. In August2010, Thai AirAsia completed its re-fleeting and expansion from a mix of eight aging 148-seat Boeing 737-300aircraft and 12 180-seat Airbus A320 aircraft at the end of 2009 to a single type fleet of 22 Airbus A320 aircraftwith an average age of two years and four months as of December 31, 2011. We took delivery of two additionalAirbus A320 aircraft in January and February 2012. Despite capacity expansion at a CAGR of 18.9% based onASKs during the period from January 1, 2009 to December 31, 2011, Thai AirAsia maintained its load factors at76% in 2009, 78% in 2010 and 80% in 2011.

As a result, Thai AirAsia has been able to serve a continually growing number of passengers from5.0 million in 2009 to 5.7 million in 2010 and to 6.9 million in 2011, while generating revenues ofBaht 9,281.2 million in 2009, Baht 12,098.7 million in 2010 and Baht 16,157.6 million (US$509.9 million) in2011.

We have successfully established a competitive cost structure and are well positioned to expand marginsfurther

Thai AirAsia is able to operate with a competitive cost structure by minimizing costs and maximizingutilization. Thai AirAsia’s total costs per ASK were 4.51 US cents, 4.61 US cents and 4.99 US cents in 2009,2010 and 2011, respectively.

Thai AirAsia minimizes costs through numerous ways, including:

• Modern, fuel efficient single aircraft type fleet. In August 2010, Thai AirAsia completed is re-fleetingfrom 148-seat Boeing 737-300 aircraft to 180-seat Airbus A320 aircraft. The younger fleet helps tominimize maintenance expenses and leads to higher fuel efficiency while the single aircraft type results inincreased cost savings as maintenance is simplified, spare part inventory requirements are reduced,scheduling is more efficient and training costs are lower.

• Low cost internet ticket sales. In 2011, 75% of Thai AirAsia’s tickets were sold through low costdistribution channels such as AirAsia’s website.

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• High aircraft utilization and efficient operations. Thai AirAsia’s aircraft were operated at an average of11.5 block hours a day and its average turnaround time was approximately 30 minutes in 2011. ThaiAirAsia optimizes aircraft utilization with simple point-to-point operations, a single fleet type and fastturnaround times. Thai AirAsia also provides incentives for pilots to conserve fuel and operate aircraftmore efficiently.

In addition, Thai AirAsia has improved margins by optimizing high margin ancillary income. Thai AirAsiacan operate profitably with low base fares because of high load factors that drive passenger volume, which onaverage generated Baht 383 of ancillary income per passenger in 2011. Thai AirAsia generates ancillary incomefrom a number of sources, including baggage fees, convenience fees, seat selection fees, in-flight meals, andmerchandise. Ancillary income has very little incremental cost and as a result generates higher margins thanpassenger revenues.

We have a strong partnership with, and unique ability to leverage upon, our relationship with the AirAsiaGroup

The AirAsia Group is one of the largest LCCs in the world and is expected to continue growing as itrecently ordered 200 Airbus A320 New Engine Option (“A320neo”) aircraft in a deal valued at approximatelyUS$18.2 billion, based on the list price. The AirAsia Group is also a pioneer of the joint venture business model.As a result, Thai AirAsia, along with other companies in the AirAsia Group, benefit from the broader AirAsiaGroup network, including increased bargaining power and cross-selling opportunities. For example, ThaiAirAsia’s partnerships with AirAsia Berhad and Indonesia AirAsia allow its customers to connect to 68destinations in 15 countries in their combined route network.

AirAsia is also one of the most recognized brands in the aviation industry. It has won numerous awards,including Skytrax’s World’S Best Low Cost Airline in 2009, 2010 and 2011, and TTG Travel Awards 2009 BestAsian Low-Cost Carrier, and AirAsia Berhad’s CEO won the Malaysia Business Leadership Masterclass GlobalCEO of the Year in 2010. It advertises actively in major sporting events, such as Formula 1 racing, EnglishPremier League football, and the ASEAN Basketball League. AirAsia also actively promotes itself in socialmedia networks, such as Facebook and Twitter.

Thai AirAsia believes that its strong partnership with, and ability to leverage upon its relationship with, theAirAsia Group has given it access to unique, profitable opportunities. In addition, AirAsia’s strong brand equityhas allowed Thai AirAsia to capture market share in existing routes and attract passengers in new routes.

We have a capital structure that gives us flexibility to generate strong free cash flows in the future

Following the Combined Offering and Thai AirAsia’s rights offering, Thai AirAsia believes that itsstrengthened capital structure will enable it to continue to take advantage of growth opportunities, effectivelycompete, and provide a certain extent of financial protection against any temporary deterioration in businessconditions. In addition, Thai AirAsia has total debt with financial institutions (which includes finance leases) ofBaht 513.2 million (US$16.2 million) as of December 31, 2011 and could increase borrowings, if desired, to ownrather than lease aircraft. In addition, Thai AirAsia has generated strong operating cashflows as evidenced byEBITDA of Baht 2,275.3 million (US$71.8 million) in 2011.

We have an experienced management team with a proven track record

Thai AirAsia’s key management team, led by Mr. Tassapon Bijleveld, has extensive managerial experienceand technical knowledge, particularly in Thailand’s aviation market. Thai AirAsia’s key management teamcomprises six officers who have an average experience of approximately seven years in Thai AirAsia. A majorityof the key management team members have been with Thai AirAsia since commencement of operations in 2004.

Thai AirAsia believes that its management team have, over the years, demonstrated their ability to expandthe business, establish brand identity, nurture customer loyalty, achieve cost efficiencies, turn around negativeearnings and steadily navigate through various political, economic, health and environmental shocks.

Our Strategy

Our goal is to establish ourselves as a leading low-cost carrier in every market that we serve by offeringpassengers a safe, reliable and enjoyable flying experience at an affordable price.

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The principal components of our strategy are as follows:

Continue to grow the LCC business

To continue growing the LCC business in Thailand, Thai AirAsia plans to:

• Stimulate growth in Thailand’s air travel market. Thai AirAsia intends to continue stimulating growth inThailand’s air travel market by tapping into Thailand’s growing population, strong tourism dynamics, andgeographic configuration. Thai AirAsia intends to continually offer fares that are, on average,substantially lower than the published fares of its full-service competitors, and competitively pricedrelative to the published fares of its low-cost competitors and alternate modes of transport. Thai AirAsiaalso intends to offer tickets at promotional prices to generate interest in new or immature markets.

• Expand route network. Thai AirAsia intends to expand its route network by using its hubs in Thailand asplatforms to operate high-volume, short-haul routes to cities within a four-hour flight time. Opening hubscloser to the north and south of Thailand allows Thai AirAsia to tap into potential markets in SouthernChina and Eastern India, respectively. Thai AirAsia also focuses on routes that are under-served or notserved by other airlines, including routes that bypass Bangkok. Thai AirAsia continually assesses potentialroutes based on a clear set of criteria that include, amongst others, airport and runway infrastructure,minimum accessible population and existing competition.

• Increase flight frequencies. Thai AirAsia intends to increase flight frequencies in established markets aswell as markets with expected high growth potential. Thai AirAsia continuously monitors its existingroute network and an increase in-flight frequency is generally considered for routes where the load factoris consistently higher than 80% for a certain period of time.

• Increase aircraft fleet and open new hubs. To support the growing demand for LCC business, ThaiAirAsia plans to procure 24 additional aircraft over the next five years and open additional hubs to createnew routes to support passenger demand.

Maximize profitability

To maximize profitability, Thai AirAsia plans to:

• Maximize route profitability. Thai AirAsia intends to develop and optimize revenue streams by focusingon route profitability through the use of a revenue management system. Thai AirAsia maximizes routeprofitability by developing a portfolio of routes which have the potential to deliver consistently highpassenger load factors at attractive yields. Thai AirAsia continually reevaluates its route network toincrease frequencies in profitable routes and eliminate unprofitable ones. In addition, Thai AirAsiaemploys a revenue management system that allows Thai AirAsia to maximize its revenue from passengerseat sales while still offering fares that are, on average, lower than those of its competitors on the sameroutes.

• Maximize existing and introduce new streams of ancillary income. Thai AirAsia currently generatesancillary income through fees including, but not limited to, baggage handling fees, excess baggage fees,seat selection fees, and in-flight sales of meals and beverages. In 2011, ancillary services revenue perpassenger increased 29.5% to Baht 383 compared to Baht 296 in 2010. Thai AirAsia intends to expand itsancillary revenue base by restructuring fees relating to existing ancillary services, such as baggagehandling fee rates which were revised in 2009.

• Improve operating efficiency. Thai AirAsia intends to continue improving operating efficiency tominimize operating costs. Measures include maintaining a relatively young average fleet age whichtranslates into higher fuel efficiency, maximizing aircraft utilization by decreasing aircraft turnaroundtime and maximizing on-time performance. This results in reduction of cost per ASK (non-fuel).Furthermore, Thai AirAsia has a policy that pilots are to save fuel on flights by cruising at optimal speedsto consume the least amount of fuel for a given distance. Finally, Thai AirAsia also minimizes operatingcosts by offering its lowest fares through the Internet to encourage travelers to make Internet bookings, byemploying a full ticketless system, which saves administrative costs and related expenses, and by usingthe bargaining power of the AirAsia Group to negotiate for lower charges, including charges relating toaircraft lease, fuel, fuel hedging and maintenance services.

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Continue to strengthen the AirAsia brand

To continue strengthening AirAsia’s brand equity, Thai AirAsia plans to:

• Invest in and enhance AirAsia’s brand. Thai AirAsia intends to generate publicity and conductmarketing and public relations activities to maintain a high level of brand awareness. Thai AirAsia alsointends to continue developing the AirAsia brand and brand awareness in the country, as well as the newmarkets it intends to serve, by using its traditional marketing channels and social media and digitalnetworks on a more frequent basis. Finally, Thai AirAsia intends to continue developing a strongrelationship with the other members of the AirAsia Group for business partnership and brandmanagement.

• Focus on customer service. Thai AirAsia intends to emphasize high-quality, friendly and personalservice, despite charging low fares and employing an LCC model. As part of its efforts to attract businesspassengers, Thai AirAsia introduced a “hot seat” service, where passengers may choose seats atemergency exit rows (which have more legroom) or at the first five rows of the aircraft. In order toprovide quality services, Thai AirAsia also selects and trains employees to provide services consistentwith Thai AirAsia’s goals. Lastly, Thai AirAsia is also committed to improving the quality of its servicesthrough initiatives to speed up reservations and check-in through the introduction of new technology,improving baggage handling services and providing rapid and effective responses to guest feedback.

• Maintain high safety standards. Thai AirAsia complies with the highest international aviation safetystandards and practices and keeps its operations simple and transparent. Thai AirAsia maintains highsafety standards to enable it to procure favorable rates on insurance policies. It is also Thai AirAsia’spolicy to maintain a low average fleet age to minimize the possibility of mechanical malfunctions.

Corporate Information

Our registered office is at 60/1 Monririn Building B, 3rd Floor, Soi Sailom, Phahol Yothin Road, SamsenNai, Phayathai, Bangkok, Thailand. Our telephone number is +66 (2) 315 9800.

Corporate Structure

The following chart shows our shareholding structure before the Combined Offering.

Pre-Combined Offering Structure

AirAsiaBerhad

SellingShareholders

AirAsiaInvestment

The Company

Thai AirAsia

100% 100%

51% 49%

We intend to use substantially all of the net proceeds to us of the Combined Offering to subscribe for newshares in Thai AirAsia pursuant to Thai AirAsia’s rights offering to its existing shareholders scheduled to takeplace immediately after, but on the same day as, the Primary Offering. AirAsia Investment and the other sevenshareholders holding one share each in Thai AirAsia have each agreed that it will not subscribe to its rightsentitlement in the rights offering. As a result, we expect to increase our shareholding in Thai AirAsia to 55.0%after the completion of Thai AirAsia’s rights offering, which we expect to occur on the same day as the PrimaryOffering.

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The following chart shows our expected shareholding structure after the Combined Offering and ThaiAirAsia’s rights offering.

Post-Combined Offering Structure

AirAsiaBerhad

SellingShareholders

AirAsiaInvestment

The Company

Thai AirAsia

100%

55%

40% 60%

45%

Public

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THE OFFERING

Company . . . . . . . . . . . . . . . . . . . . . . . . . Asia Aviation Public Company Limited.

Selling Shareholders . . . . . . . . . . . . . . . . Mr. Tassapon Bijleveld, Mr. Pornanan Gerdprasert, Mr. TanapatNgamplang, Mr. Preechaya Rasametanin, M. L. BovornovadepDevakula and Mr. Santisuk Klongchaiya.

Combined Offering . . . . . . . . . . . . . . . . . We are offering 750,000,000 New Shares and the SellingShareholders are offering 1,190,000,000 Vendor Shares (in aggregaterepresenting 40.0% of our total issued and outstanding Shares afterthe Combined Offering) in the Company in a Combined Offeringcomprising the Primary Offering and the Secondary Offering.Completion of the Secondary Offering is conditional on thecompletion of the Primary Offering and the listing of our Shares onthe SET.

Primary Offering . . . . . . . . . . . . . . . . . . . We are offering 750,000,000 New Shares and the SellingShareholders are offering 462,500,000 Vendor Tranche A Shares (inaggregate representing 25.0% of our total issued and outstandingShares after the Combined Offering) in the Company in a PrimaryOffering comprising the International Offer and the Domestic Offer.Completion of the International Offer and the Domestic Offer areeach conditional on the completion of the other.

Secondary Offering . . . . . . . . . . . . . . . . . The Selling Shareholders are offering 727,500,000 Vendor Tranche BShares (in aggregate representing 15.0% of our total issued andoutstanding Shares after the Combined Offering) in the Company in aSecondary Offering on a private placement basis through the big lotboard of the SET on the first day on which our Shares are listed onthe SET.

International Offer . . . . . . . . . . . . . . . . . . We are offering 400,000,000 International Shares (in aggregaterepresenting 8.2% of our total issued and outstanding Shares after theCombined Offering) outside the United States and Thailand inreliance on Regulation S under the U.S. Securities Act and otherapplicable laws, concurrently with the Domestic Offer.

NVDRs . . . . . . . . . . . . . . . . . . . . . . . . . . The transfer of our Shares to non-Thai persons is subject to certainforeign ownership restrictions under the laws of Thailand and ourArticles of Association. As a result, investors purchasing theInternational Shares in the International Offer will be required topurchase and receive NVDRs in lieu of the International Shares. TheInternational Shares will be issued to the NVDR Issuer to enable theissuance of NVDRs to the purchasers of the International Shares.

Domestic Offer . . . . . . . . . . . . . . . . . . . . We are offering 350,000,000 Domestic Shares and the SellingShareholders are offering 462,500,000 Domestic Shares (in aggregaterepresenting 16.8% of our total issued and outstanding Shares afterthe Combined Offering) in a public offering in Thailand concurrentlywith the International Offer. The Domestic Offer comprises an offerof 412,500,000 Domestic Shares in a public retail offer and400,000,000 Domestic Shares to institutional investors in Thailand.The offering price for the Domestic Offer will be the same as theoffering price for the International Offer. The Domestic Offer is beingmade pursuant to a prospectus filed with the Thai SEC.

Reallocation . . . . . . . . . . . . . . . . . . . . . . . In the event the Domestic Offer is over-subscribed and there is acorresponding under-subscription in the International Offer, NewShares may be clawed back from the International Offer andreallocated to the Domestic Offer. In the event that the InternationalOffer is over-subscribed and there is a corresponding under-

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subscription in the Domestic Offer, New Shares may be clawed backfrom the Domestic Offer and reallocated to the International Offer.There shall be no reallocation in the event the Domestic Offer and theInternational Offer are both over-subscribed.

Any such reallocation is subject to the agreement of certain parties tothe Thai Underwriting Agreement and the Purchase Agreement, ineach case as defined herein, as applicable.

Offering price per Share in theCombined Offering . . . . . . . . . . . . . . . Baht 3.70 per Share or per NVDR, excluding a brokerage fee

amounting to 1.0% of the offering price which shall be payable bypurchasers of Securities in the International Offer.

Use of proceeds . . . . . . . . . . . . . . . . . . . . We estimate the net proceeds to us of the Combined Offering fromthe sale of New Shares to be Baht 2,746.3 million (US$86.7 million),after deducting underwriting commissions and applicable value addedtaxes in connection with the Combined Offering.

We intend to use the net proceeds to us of the Combined Offering asfollows:

• Baht 2,663.1 million (US$84.0 million) to subscribe for new sharesin Thai AirAsia, which we expect will increase our shareholding inThai AirAsia to 55.0%; and

• the remainder for general corporate purposes.

Thai AirAsia intends to use proceeds of the subscription by us in itsshares as follows:

• approximately Baht 1,500 million (US$47.3 million) for theexpansion of Thai AirAsia’s fleet between 2012 and 2014; and

• the remainder for working capital and general corporate purposes.

See “Use of Proceeds”. We will not receive any of the proceeds fromthe sale of the Vendor Shares by the Selling Shareholders. TheSelling Shareholders have notified us that they intend to use a portionof the proceeds of the Vendor Shares received by each of them toprepay in full all outstanding amounts owed by each of them underthe Credit Suisse Loan Agreement. The Selling Shareholders expectsuch prepayment to be made in two installments, reflecting the timingof receipt of the proceeds from the sale of the Vendor TrancheA Shares and the Vendor Tranche B Shares, respectively.

Dividends . . . . . . . . . . . . . . . . . . . . . . . . Registered owners of our Securities will be entitled to receive anydividends declared from time to time. The Company’s and ThaiAirAsia’s board of directors intend to adopt a dividend policy whichwill take into account the profitability of the business and underlyinggrowth in earnings, as well as each entity’s respective capitalrequirements and cash flows, while maintaining an appropriate levelof dividend cover.

The terms and conditions of the NVDRs provide that the NVDRIssuer is to make payments to holders of NVDRs equal to the amountof dividends that the NVDR Issuer receives as the registered holder ofour Shares in proportion to each NVDR holder’s holdings in theNVDRs. See “Annex A — Issuance of Non-Voting DepositaryReceipts — Prospectus”, “Special Note Regarding NVDRs”, and“Risk Factors — Risks Relating to the NVDRs” for furtherinformation concerning the NVDRs.

Share capital . . . . . . . . . . . . . . . . . . . . . . We have an authorized share capital of Baht 485.0 million, consistingof 4,850,000,000 Shares of par value Baht 0.10 each, of which

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4,100,000,000 Shares were issued and outstanding as of the date ofthe Offering Memorandum.

Market for our Shares; Listing . . . . . . . . We have applied to have our Shares approved for listing and tradingon the SET promptly after the increase of paid-up capital representedby the New Shares we are offering has been registered with the ThaiMinistry of Commerce (the “MOC”). We expect the registration tooccur approximately five business days after the day we receivepayment for the New Shares. The SET granted an approval inprinciple of our listing application on May 22, 2012, and we expectthe listing date to occur on or about May 31, 2012. The SET isentitled to consider a listing application for up to seven daysfollowing the receipt of a complete listing application. As a result, ourShares may not be listed on the SET until June 6, 2012.

Unless and until the SET gives final listing approval, none of ourShares sold in the Combined Offering may be traded on the SET, butbuyers and sellers may be matched in off-exchange transactions. For adescription of risks relating to the trading and delivery of our Shares,see “Risk Factors — Risks Relating to Our Shares — There are risksassociated with the trading and delivery of our Shares on the StockExchange of Thailand”.

Settlement and delivery of our PrimaryShares and the related NVDRs . . . . . . We expect payment for the International Shares and the NVDRs to be

delivered in connection with the International Offer and for thePrimary Shares offered in the Domestic Offer to be made on or aboutMay 29, 2012, which will be prior to the date on which delivery of thePrimary Shares and the NVDRs will be made. We expect thatdelivery of the Primary Shares and the NVDRs offered in the PrimaryOffering will be made through the SET’s depositary facilities with theTSD approximately five business days after payment.

Under Thai law, the status of purchasers of New Shares sold by us inthe period between payment for such New Shares and registration ofthe increase in paid-up capital with the MOC is uncertain. During thisperiod, investors may not be shareholders and instead would likely beconsidered unsecured creditors. We expect registration of the NewShares to occur no later than five business days after the day paymentfor the New Shares is made. See “Risk Factors — Risks Relating toOur Shares — There are risks associated with the trading and deliveryof our Shares on the Stock Exchange of Thailand” for a summary ofcertain delivery and listing-related risks relating to the ownership ofour Shares. For a description of the status of the purchasers ofNVDRs in the period between payment for NVDRs and delivery ofNVDRs, see “Annex A — Issuance of Non-Voting DepositaryReceipts — Prospectus”.

Settlement and delivery of ourSecondary Shares . . . . . . . . . . . . . . . . The completion of the Secondary Offering is conditional upon the

closing of the Primary Offering and the listing of our Shares on theSET. Assuming these conditions are satisfied, the SellingShareholders expect the placing agents to pay for the SecondaryShares on or about June 1, 2012, which will be the second day onwhich our Shares are listed on the SET, and delivery of the SecondaryShares will be made against payment therefor through the SET’sdepositary facilities with the TSD on the same date such payment ismade.

Voting rights . . . . . . . . . . . . . . . . . . . . . . Owners of our Shares will be entitled to full voting rights, asdescribed in the “Description of Shares — Voting Rights”.

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Owners of the NVDRs representing our Shares do not have anyvoting rights except as described in “Description of NVDRs and theNVDR Issuer”. See “Annex A — Issuance of Non-Voting DepositaryReceipts — Prospectus”, “Special Note Regarding NVDRs”, and“Risk Factors — Risks Relating to the NVDRs” for furtherinformation concerning the NVDRs.

Foreign share ownership and transferrestrictions . . . . . . . . . . . . . . . . . . . . . . Our Articles of Association provide for a 0.1% limit on foreign

ownership of the issued and outstanding Shares of the Company.Further, our core asset, Thai AirAsia, is subject to nationalityrestrictions under the Foreign Business Act B.E. 2542 (1999), the AirNavigation Act B.E. 2497 (1954), as amended, and theAnnouncement of the National Executive Council No. 58 requiringthe shares of air service operators and aircraft registrants to be at least51% held by any one or any combination of the following persons:(a) natural persons who hold Thai nationality; (b) ministries,sub-ministries, departments of the Thai Government; and/or(c) limited companies or public limited companies in which not lessthan 51% of the shares are held by a Thai Government entity or Thainatural persons.

In addition, the TSD, as our registrar, may refuse to register transfersof Shares to a non-Thai person, or divestment may otherwise berequired, if as a result of such transfer the percentage of issued andoutstanding Shares registered in the name of non-Thai persons wouldexceed the then applicable limit on foreign ownership of the Shares.Ownership of Shares by non-Thai persons as such is not otherwiserestricted by Thai law.

SET trading symbol for our Shares . . . . . AAV

Timing of the Combined Offering . . . . . The following is a tentative timetable of various events in theCombined Offering (Bangkok time):

Pricing of the Primary Offering . . . . . . . . . . . . . . . . . May 22, 2012Final allocation of Shares under the Primary

Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . May 22, 2012Closing of the Primary Offering . . . . . . . . . . . . . . . . . May 29, 2012Delivery of Primary Shares and NVDRs through the

TSD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .No later than

May 30, 2012Closing of the Secondary Offering . . . . . . . . . . . . . . . June 1, 2012Delivery of Secondary Shares from Secondary

Offering through the TSD . . . . . . . . . . . . . . . . . . . . June 1, 2012

The foregoing schedule may change as a result of, among otherthings, changes in market conditions or the cancellation of theCombined Offering.

Transfer restrictions . . . . . . . . . . . . . . . . The Securities offered in the Combined Offering have not been, andwill not be, registered under the U.S. Securities Act. Therefore,resales by purchasers of all Securities offered in the CombinedOffering will be subject to certain restrictions described in “TransferRestrictions”.

Shares available for future sale . . . . . . . . Under rules issued by the SET, Shares comprising an aggregate of55% of the post-offering Share capital of the Company cannot be soldfor a period of one year (the “SET Lock-Up”) following the date ofcommencement of trading of our Shares on the SET subject to thefollowing: up to 25% of these Shares may be sold after the period ofthe first six months after trading commences on the SET and the

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remaining 75% of these Shares may be sold after the period of thefirst 12 months after trading commences on the SET.

Lock up arrangements . . . . . . . . . . . . . . . We and the Selling Shareholders have each agreed with theInternational Managers that from the date of this OfferingMemorandum until the date that is 180 days after the closing date ofthe Primary Offering, we will not, without the respective writtenconsent of the International Managers, offer, sell or otherwise disposeof any securities of the same class as the Shares offered in theCombined Offering or any securities convertible into or exchangeablefor our Securities of the same class as the Shares offered in theCombined Offering. See “Plan of Distribution”.

In addition, each of the Selling Shareholders has agreed with the otherSelling Shareholders that, for so long as Thai AirAsia is subject tonationality restrictions under applicable Thai laws and regulations,each such Selling Shareholder will not dispose of any of the Sharesthat he owns to any person other than a Thai individual approved byall of the Selling Shareholders. Each Selling Shareholder has alsoagreed to deposit with the TSD, as custodian, a specified number ofShares that he owns, which, when aggregated with the number ofShares deposited by the other Selling Shareholders, comprise 51.0%of our total issued and outstanding Shares after the CombinedOffering. See “Related Party Transactions — Future Related PartyTransactions — Asia Aviation Shareholders’ Agreement” for furtherdetails.

Risk factors . . . . . . . . . . . . . . . . . . . . . . . Investing in the Securities involves certain risks which are describedin “Risk Factors” beginning on page 18.

11

SUMMARY FINANCIAL INFORMATION

You should read the summary financial information presented below in conjunction with the auditedproportionate consolidated and company financial statements as of and for the years ended December 31, 2009,2010 and 2011 of the Company and the audited financial statements as of and for the years ended December 31,2009, 2010 and 2011 of Thai AirAsia and the unaudited proportionate consolidated and company interimfinancial information as of and for the three months ended March 31, 2011 and 2012 of the Company and theunaudited interim financial information as of and for the three months ended March 31, 2011 and 2012 of ThaiAirAsia, in each case contained elsewhere in this Offering Memorandum. You should also see the section of thisOffering Memorandum entitled “Management’s Discussion and Analysis of Financial Condition and Results ofOperations”. The Company and Thai AirAsia have derived the summary Thai GAAP financial data from theaudited proportionate consolidated and company financial statements as of and for the years ended December 31,2009, 2010 and 2011 and the unaudited proportionate consolidated and company interim financial information asof and for the three months ended March 31, 2011 and 2012 of the Company, and the audited financialstatements as of and for the years ended December 31, 2009, 2010 and 2011 and the unaudited interim financialinformation as of and for the three months ended March 31, 2011 and 2012 of Thai AirAsia, prepared andpresented in accordance with Thai GAAP and reporting practices in Thailand, as required under Thai law.

The audited proportionate consolidated and company financial statements of the Company as of and for theyears ended December 31, 2009, 2010 and 2011 and the audited financial statements of Thai AirAsia as of andfor the years ended December 31, 2009, 2010 and 2011, have been audited by PwC Thailand. The unauditedproportionate consolidated and company interim financial information of the Company as of and for the threemonths ended March 31, 2011 and 2012 and the unaudited interim financial information of Thai AirAsia as ofand for the three months ended March 31, 2011 and 2012, have been reviewed by PwC Thailand, who did notexpress an audit opinion on this financial information.

In preparing the proportionate consolidated and company financial statements of the Company, we havetreated our interest in Thai AirAsia as interest in a joint venture, rather than a subsidiary, to reflect the nature ofthe joint control. Accordingly, we have accounted for Thai AirAsia on a proportionate consolidation basis bytaking 50.0%, as of and for the years ended December 31, 2009 and 2010 and as of and for the three monthsended March 31, 2011, and 51.0%, as of and for the year ended December 31, 2011 and as of and for the threemonths ended March 31, 2012, corresponding to the percentage of equity that we own or jointly control at eachperiod end date, of each of the assets, liabilities, revenues and expenses of Thai AirAsia and combining thesewith the assets, liabilities, revenues and expenses of the Company on a line-by-line basis after elimination ofintra-group transactions. In November 2011, we purchased 1.0% of the equity shares of Thai AirAsia from ourChief Executive Officer, Mr. Tassapon Bijleveld, increasing our equity interest in Thai AirAsia to 51.0%.Effective from May 4, 2012, we treated Thai AirAsia as a subsidiary instead of a joint venture, and we beganconsolidating Thai AirAsia’s financial statements on a fully consolidated basis (with a deduction for non-controlling interest). See “Management’s Discussion and Analysis of Financial Condition and Results ofOperations — Basis of Accounting — Accounting for Investment in Joint Venture” and Note 16 of the notes tothe Company’s interim financial information as of and for the three months ended March 31, 2011 and 2012 forfurther details. After the Company completes the subscription of new shares in Thai AirAsia followingcompletion of the Combined Offering, we expect that the Company will own 55.0% of Thai AirAsia’s shares.See “Corporate Structure — Post-Combined Offering Structure”.

The audited financial statements of Thai AirAsia as of and for the years ended December 31, 2009, 2010and 2011 contain an explanatory paragraph that states that, as of December 31, 2009, 2010 and 2011, ThaiAirAsia’s total current liabilities exceeded its total current assets by Baht 5,220.7 million, Baht 3,310.0 millionand Baht 1,394.3 million, respectively, but that the financial statements have been prepared on a going concernbasis. The audited financial statements of the Company contain a similar explanatory paragraph.

Our and Thai AirAsia’s results for the three months ended March 31, 2012 should not be consideredindicative of the actual results we or Thai AirAsia may achieve for the year ending December 31, 2012.

Thai GAAP differs in certain material respects from IFRS. For a discussion of significant accountingdifferences between Thai GAAP and IFRS that are relevant to the Company’s proportionate consolidated andcompany financial statements as of and for the years ended December 31, 2009, 2010 and 2011 and unauditedproportionate consolidated and company interim financial information as of and for the three months endedMarch 31, 2011 and 2012 as well as Thai AirAsia’s financial statements as of and for the years endedDecember 31, 2009, 2010 and 2011 and unaudited interim financial information as of and for the three months

12

ended March 31, 2011 and 2012, you should read the section entitled “Summary of Significant DifferencesBetween Thai GAAP and IFRS”.

The Company

Proportionate Consolidated Statements of Comprehensive Income

Year Ended December 31, Three Months Ended March 31,

Proportionate Consolidated Statements ofComprehensive Income: 2009 2010 2011 2011 2011 2012 2012

Bt Bt Bt US$ Bt Bt US$(unaudited) (unaudited)

(in millions)

Revenues . . . . . . . . . . . . . . . . . . . . . . . . 4,640.6 6,049.4 8,123.2 256.3 2,080.1 2,482.7 78.3Operating costs . . . . . . . . . . . . . . . . . . . (4,658.0) (4,982.6) (6,915.3) (218.2) (1,607.9) (2,055.7) (64.9)

Gross profit (loss) . . . . . . . . . . . . . . . . . (17.4) 1,066.8 1,207.9 38.1 472.2 427.0 13.5Net gain on exchange rates . . . . . . . . . . 64.8 178.4 78.0 2.5 18.0 1.7 0.1Other income . . . . . . . . . . . . . . . . . . . . 109.0 181.5 226.0 7.1 79.2 49.2 1.5

Profit before expenses . . . . . . . . . . . . . 156.4 1,426.7 1,511.9 47.7 569.4 477.8 15.1Selling expenses . . . . . . . . . . . . . . . . . . (121.6) (178.9) (223.9) (7.1) (46.5) (100.6) (3.2)Administrative expenses . . . . . . . . . . . . (120.5) (121.3) (181.9) (5.7) (39.7) (57.7) (1.8)

Profit (loss) before finance costs andincome tax . . . . . . . . . . . . . . . . . . . . . (85.7) 1,126.5 1,106.0 34.9 483.2 319.5 10.1

Finance costs . . . . . . . . . . . . . . . . . . . . . (0.2) (121.6) (91.9) (2.9) (37.6) (3.1) (0.1)

Profit (loss) before income tax . . . . . . . (85.9) 1,004.9 1,014.1 32.0 445.6 316.5 10.0Income tax . . . . . . . . . . . . . . . . . . . . . . — — — — — — —

Net profit (loss) for the year/period . . . (85.9) 1,004.9 1,014.1 32.0 445.6 316.5 10.0

Total comprehensive income (expense)for the year/period . . . . . . . . . . . . . . (85.9) 1,004.9 1,014.1 32.0 445.6 316.5 10.0

Condensed Proportionate Consolidated Statements of Financial Position

As of December 31, As of March 31,

Condensed Proportionate Consolidated Statements ofFinancial Position: 2009 2010 2011 2011 2012 2012

Bt Bt Bt US$ Bt US$(unaudited)

(in millions)

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . 333.6 260.4 694.4 21.9 1,233.1 38.9Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 685.4 2,035.4 1,451.0 45.8 1,798.0 56.7Total non-current assets . . . . . . . . . . . . . . . . . . . . . . . . 640.9 690.4 772.5 24.4 778.3 24.6Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,326.3 2,725.8 2,223.5 70.2 2,576.3 81.3

Total debt(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 101.3 261.7 8.3 6.6 0.2Net debt(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (331.6) (159.1) (432.7) (13.7) (1,226.5) (38.7)Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 3,289.4 3,684.5 2,162.2 68.2 2,202.6 69.5Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,290.6 3,685.2 2,215.9 69.9 2,252.2 71.1Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . (1,964.3) (959.4) 7.7 0.2 324.1 10.2Total liabilities and shareholders’ equity . . . . . . . . . . . 1,326.3 2,725.8 2,223.5 70.2 2,576.3 81.3

(1) Comprises short-term borrowings from a financial institution, current portion of long-term borrowing from a financial institution, currentportion of finance lease liabilities, non-current portion of long-term borrowing from a financial institution and non-current portion offinance lease liabilities.

(2) Comprises total debt net of cash and cash equivalents.

13

Condensed Proportionate Consolidated Statements of Cash FlowsYear Ended December 31, Three Months Ended March 31,

Condensed Proportionate Consolidated Statements ofCash Flows: 2009 2010 2011 2011 2011 2012 2012

Bt Bt Bt US$ Bt Bt US$(unaudited) (unaudited)

(in millions)Net cash generated from (used in) operating

activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86.4 (156.9) 262.4 8.3 97.2 816.2 25.8Net cash generated from (used in) investing

activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (144.9) (16.6) 23.8 0.8 (19.9) (31.1) (1.0)Net cash generated from (used in) financing

activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.7) 99.3 126.5 4.0 (50.4) (258.2) (8.1)Cash and cash equivalents at end of

year/period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333.6 260.4 694.4 21.9 293.7 1,233.1 38.9

Thai AirAsiaStatements of Comprehensive Income

Year Ended December 31, Three Months Ended March 31,

Statements of Comprehensive Income: 2009 2010 2011 2011 2011 2012 2012

Bt Bt Bt US$ Bt Bt US$(unaudited) (unaudited)

(in millions)Revenues . . . . . . . . . . . . . . . . . . . . . 9,281.2 12,098.7 16,157.6 509.9 4,160.2 4,868.1 153.6Operating costs . . . . . . . . . . . . . . . . . (9,315.9) (9,965.2) (13,757.6) (434.1) (3,215.8) (4,030.7) (127.2)

Gross profit (loss) . . . . . . . . . . . . . . (34.7) 2,133.5 2,400.0 75.7 944.4 837.4 26.4Net gain on exchange rates . . . . . . . 129.5 356.8 155.3 4.9 36.0 3.3 0.1Other income . . . . . . . . . . . . . . . . . . 217.9 363.0 451.1 14.2 158.4 96.3 3.0

Profit before expenses . . . . . . . . . . . 312.7 2,853.3 3,006.4 94.9 1,138.8 937.0 29.6Selling expenses . . . . . . . . . . . . . . . . (243.0) (357.9) (444.7) (14.0) (92.9) (197.3) (6.2)Administrative expenses . . . . . . . . . (239.8) (241.3) (357.9) (11.3) (79.2) (112.1) (3.5)

Profit (loss) before finance costs andincome tax . . . . . . . . . . . . . . . . . . (170.1) 2,254.1 2,203.8 69.5 966.7 627.6 19.8

Finance costs . . . . . . . . . . . . . . . . . . (0.4) (243.1) (183.7) (5.8) (75.1) (6.0) (0.2)

Profit (loss) before income tax . . . . . (170.5) 2,011.0 2,020.1 63.7 891.6 621.6 19.6Income tax . . . . . . . . . . . . . . . . . . . . — — — — — — —

Net profit (loss) for theyear/period . . . . . . . . . . . . . . . . . . (170.5) 2,011.0 2,020.1 63.7 891.6 621.6 19.6

Total comprehensive income(expense) for the year/period . . . . (170.5) 2,011.0 2,020.1 63.7 891.6 621.6 19.6

Condensed Statements of Financial PositionAs of December 31, As of March 31,

Condensed Statements of Financial Position: 2009 2010 2011 2011 2012 2012

Bt Bt Bt US$ Bt US$(unaudited)

(in millions)Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . 654.1 507.8 1,359.7 42.9 2,407.2 76.0Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,357.9 4,058.3 2,836.3 89.5 3,508.7 110.7Total non-current assets . . . . . . . . . . . . . . . . . . . . . . . 709.3 808.5 953.5 30.1 964.9 30.4Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,067.1 4,866.8 3,789.8 119.6 4,473.6 141.2

Total debt(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 202.5 513.2 16.2 12.9 0.4Net debt(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (650.1) (305.3) (846.5) (26.7) (2,394.3) (75.6)Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . 6,578.6 7,368.4 4,230.7 133.5 4,300.7 135.7Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,581.1 7,369.7 4,335.8 136.8 4,397.9 138.8Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . (4,514.0) (2,503.0) (546.0) (17.2) 75.7 2.4Total liabilities and shareholders’ equity . . . . . . . . . . 2,067.1 4,866.8 3,789.8 119.6 4,473.6 141.2

(1) Comprises short-term borrowings from a financial institution, current portion of long-term borrowing from a financial institution, currentportion of finance lease liabilities, non-current portion of long-term borrowing from a financial institution and non-current portion offinance lease liabilities.

(2) Comprises total debt net of cash and cash equivalents.

14

Condensed Statements of Cash Flows

Year Ended December 31, Three Months Ended March 31,

Condensed Statements of Cash Flows: 2009 2010 2011 2011 2011 2012 2012

Bt Bt Bt US$ Bt Bt US$(unaudited) (unaudited)

(in millions)

Net cash generated from (used in) operatingactivities . . . . . . . . . . . . . . . . . . . . . . . . . . . 173.8 (313.6) 521.4 16.5 194.5 1,591.7 50.2

Net cash generated from (used in) investingactivities . . . . . . . . . . . . . . . . . . . . . . . . . . . (289.9) (33.2) 30.6 1.0 (39.8) (61.1) (1.9)

Net cash generated from (used in) financingactivities . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.4) 198.5 258.1 8.1 (100.7) (506.2) (16.0)

Cash and cash equivalents at end ofyear/period . . . . . . . . . . . . . . . . . . . . . . . . . . 654.1 507.8 1,359.7 42.9 574.5 2,407.2 76.0

Non-GAAP Financial Measures

Year Ended December 31, Three Months Ended March 31,

2009 2010 2011 2011 2011 2012 2012

Bt Bt Bt US$ Bt Bt US$(in millions, except for percentages)

EBITDAR(1)(5) . . . . . . . . . . . . . . . . . . . . 1,674.2 4,577.9 5,003.0 157.9 1,640.3 1,398.4 44.1EBITDAR margin(4)(5) . . . . . . . . . . . . . . 18.0% 37.8% 31.0% 31.0% 39.4% 28.7% 28.7%EBITDA(2)(5) . . . . . . . . . . . . . . . . . . . . . (38.2) 2,377.3 2,275.3 71.8 985.1 645.3 20.4EBITDA margin(4)(5) . . . . . . . . . . . . . . . (0.4)% 19.6 % 14.1% 14.1% 23.7% 13.3% 13.3%EBIT(3)(5) . . . . . . . . . . . . . . . . . . . . . . . . (170.1) 2,254.1 2,203.7 69.5 966.7 627.6 19.8EBIT margin(4)(5) . . . . . . . . . . . . . . . . . . (1.8)% 18.6% 13.6% 13.6% 23.2% 12.9% 12.9%

(1) Represents earnings before interest and taxation after adding depreciation and amortization and operating lease expenses. Because thereare various EBITDAR calculation methods, our presentation of EBITDAR may not be comparable to similarly titled measures used byother companies.

(2) Represents earnings before interest and taxation after adding depreciation and amortization. Because there are various EBITDAcalculation methods, our presentation of EBITDA may not be comparable to similarly titled measures used by other companies.

(3) Represents earnings before interest and taxation. Because there are various EBIT calculation methods, our presentation of EBIT may notbe comparable to similarly titled measures used by other companies.

(4) Represents EBIT, EBITDA or EBITDAR, as the case may be, divided by revenues.

(5) EBIT, EBIT margins, EBITDA, EBITDA margins, EBITDAR or EBITDAR margins are not standard measures, nor measurements offinancial performance or liquidity, under Thai GAAP or IFRS, and should not be considered alternatives to net profit (loss), profit (loss)before finance costs and income tax or any other performance measure derived in accordance with Thai GAAP or IFRS, or as analternative to cash flow from operating activities. EBIT, EBIT margins, EBITDA, EBITDA margins, EBITDAR and EBITDAR marginsare supplemental measures of Thai AirAsia’s performance that are not required by, or presented in accordance with, Thai GAAP or IFRS.See ‘Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures” for areconciliation of Thai AirAsia’s net profit (loss) to its definition of EBIT, EBIT margin, EBITDA, EBITDA margin, EBITDAR andEBITDAR margin.

15

Operating Data

The following table presents Thai AirAsia’s operating information for the periods indicated.

Year Ended December 31,Three Months Ended

March 31,

2009 2010 2011 2011 2012

Capacity (million seats) . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 7.3 8.6 2.2 2.5Passengers carried (million) . . . . . . . . . . . . . . . . . . . . . 5.0 5.7 6.9 1.8 2.1

International (million) . . . . . . . . . . . . . . . . . . . . . . . . 2.1 2.4 2.9 0.8 0.8Domestic (million) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9 3.3 4.0 1.1 1.3

Seat load factor (%)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 76 78 80 84 87International (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 77 79 84 83Domestic (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 79 81 85 89

ASK (million)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,511 7,605 9,199 2,261 2,540International (million) . . . . . . . . . . . . . . . . . . . . . . . . 4,040 4,680 5,696 1,372 1,501Domestic (million) . . . . . . . . . . . . . . . . . . . . . . . . . . 2,470 2,925 3,502 889 1,040

RPK (million)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,921 5,923 7,389 1,906 2,174International (million) . . . . . . . . . . . . . . . . . . . . . . . . 2,974 3,600 4,539 1,144 1,238Domestic (million) . . . . . . . . . . . . . . . . . . . . . . . . . . 1,947 2,323 2,851 763 936

Average fare(4) (Baht) . . . . . . . . . . . . . . . . . . . . . . . . . . 1,520 1,791 1,849 1,850 1,778Revenue per ASK(5) (RASK):

(Baht) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.43 1.59 1.76 1.84 1.92(US cent)(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.27 5.28 5.54 5.68 6.21

Cost per ASK(6) (CASK):(Baht) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.51 1.39 1.58 1.50 1.71(US cent)(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.51 4.61 4.99 4.63 5.54

Cost per ASK (non-fuel)(7):(Baht) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.99 0.87 0.89 0.86 0.97(US cent)(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.96 2.87 2.80 2.66 3.16

Number of aircraft at period end . . . . . . . . . . . . . . . . . . 20 19 22 20 24Boeing 737-300 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 0 0 0 0Airbus A320 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 19 22 20 24

Average number of operating aircraft(9) . . . . . . . . . . . . 15.6 18.0 19.4 19.0 22.7Number of stages flown . . . . . . . . . . . . . . . . . . . . . . . . 39,388 41,823 47,579 11,971 13,662

International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,612 17,577 20,251 4,989 5,440Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,776 24,246 27,328 6,982 8,222

Average stage length (kilometers)(10) . . . . . . . . . . . . . . 979 1,032 1,074 1,049 1,033Aircraft utilization (block hours per day)(11) . . . . . . . . . 9.4 9.9 11.5 11.7 11.5Ancillary services revenue(12) (Baht in millions) . . . . . 893.0 1,686.7 2,627.2 660.8 753.6Ancillary services revenue per passenger (Baht) . . . . . 179 296 383 364 354Fuel consumed (barrels) . . . . . . . . . . . . . . . . . . . . . . . . 1,217,727 1,346,476 1,600,942 399,816 457,426Average fuel price(13) (US$ per barrel) . . . . . . . . . . . . . 68.0 88.3 124.0 111.2 127.3On time performance (%)(14) . . . . . . . . . . . . . . . . . . . . . 89 88 84 76 72

(1) Represents the number of passengers carried as a proportion to capacity, which is the number of seats available for passengers (180seats available for our Airbus A320 aircraft and 148 seats available for our Boeing 737-300 aircraft). Thai AirAsia began switching toAirbus A320 aircraft in October 2007.

(2) Available seat kilometers, which is the total number of seats available on scheduled flights multiplied by the number of kilometers theseseats were flown.

(3) Revenue passenger kilometers, which is the number of paying passengers carried on scheduled flights multiplied by the number ofkilometers those seats were flown.

(4) Calculated as total passenger revenues divided by total number of passenger carried.

(5) Calculated as revenues divided by ASK.

(6) Calculated as the sum of Thai AirAsia’s operating costs, selling expenses, administrative expenses and management remuneration (butexcluding finance costs) divided by ASK.

(7) Calculated as the sum of Thai AirAsia’s operating costs, selling expenses, administrative expenses and management remuneration (butexcluding finance costs) less fuel costs divided by ASK.

16

(8) Based on an exchange rate of US$1.00 = Baht 33.37 in 2009, US$1.00 = Baht 30.15 in 2010, US$1.00 = Baht 31.69 in 2011, US$1.00 =Baht 32.37 in the three months ended March 31, 2011 and US$1.00 = Baht 30.84 in the three months ended March 31, 2012.

(9) Month-end average for the period.

(10) Represents the average number of kilometers flown per flight.

(11) Represents the average block hours per day per aircraft during the relevant period. Block hours is calculated by measuring the durationbetween the time of departure of an aircraft and the time of arrival at its destination.

(12) Comprises revenues relating to baggage handling fees, excess baggage fees, seat selection fees, in-flight sales of meals and beverages,convenience fees, freight, in-flight sales of merchandise and cancellation and documentation fees.

(13) Calculated as average fuel price of Jet kerosene for the period (MOPS price).

(14) A flight is deemed “on time” if the actual departure time is no more than 15 minutes of the scheduled departure time.

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RISK FACTORS

Before investing in the Securities, prospective investors should pay particular attention to the fact that we,and to a large extent our activities, are governed by the legal, regulatory and business environment in Thailandand other countries in Asia, which differs from that which prevails in other countries. Our business is subject to anumber of factors, many of which are outside our control. Prior to making an investment decision, prospectiveinvestors should carefully consider, along with the other matters set forth in this Offering Memorandum, the risksand investment considerations set forth below. The risks and investment considerations set forth below are not anexhaustive list of the challenges which we currently face or that may develop in the future. Additional risks,whether known or unknown, may in the future have a material adverse effect on us or on the value of theSecurities.

Risks Relating to the Company and Thai AirAsia

Our business, financial condition, results of operation and prospects are materially and adversely affectedby the cost or unavailability of sufficient quantities of fuel.

Jet fuel costs represent the largest component of our total operating expenses, comprising 39.9% and 46.6%of our total operating costs in 2010 and 2011, respectively. As a result, our operating results are significantlyaffected by changes in the cost and availability of jet fuel and our fuel hedging program may be insufficient toprotect us against increases in the price of fuel. We are also exposed to potential losses from our hedgingactivities. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Market Risk — Fuel Price Risk” and “Related Party Transactions — Past and Ongoing Related PartyTransactions — Fuel Hedging Arrangements” for a summary of our fuel hedging arrangements. We cannotassure you that we will be able to secure new jet fuel derivative contracts on commercially reasonable terms or atall.

Both the cost and availability of fuel are subject to many economic and political factors and eventsoccurring throughout the world. Since late 2009, fuel prices have risen sharply. Such increases have forced anumber of airlines operating in the Asia Pacific region, including Thai AirAsia, to levy fuel surcharges on itspassengers. The DCA does not allow fuel surcharges or other fees to be imposed separately from the air fare forscheduled domestic passenger services, and our fuel surcharges for our flights do not fully compensate us forsuch increased fuel costs. In addition, we rely mainly on PTT Public Company Limited (“PTT”) and the ShellCompany of Thailand Ltd. (“Shell Thailand”) for our jet fuel requirements. In 2011, 70.2% of our aircraft fuelexpenses were the result of purchases of jet fuel from PTT and 15.1% were from Shell Thailand. Any decline inthe availability of adequate supplies of fuel and/or any increase in the cost of fuel would have a material adverseeffect on our costs and on our business, financial condition, results of operation and prospects. See“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Risk —Fuel Price Risk”, “Business — Our Operations — Fuel” and “Business — Major Suppliers” for further details.

Increased competition in the airline industry along with competition from other forms of transportation andcommunication could materially and adversely affect our business, financial condition, results of operationand prospects.

The airline industry is highly competitive. Our competition can be categorized as follows:

• full-service operators;

• other low-cost carriers in Thailand, Southeast Asia, China and India; and

• other forms of transportation.

We operate out of three hubs in Thailand, namely Bangkok, Phuket and Chiang Mai. Our main competitorsfor our domestic routes are Thai Airways, Nok Air, Bangkok Airways and Orient Thai Airways and for ourinternational routes are Thai Airways, Singapore Airlines, Malaysian Airlines, Air Macau, Vietnam Airlines,Cathay Pacific Airways, Tiger Airways and Jetstar Asia Airways, as well as potential new entrants, such as theThai Smile airline expected to be launched by Thai Airways in 2012. See “Business — Competition”. Theprimary competitive factors include price, schedule, route networks, service levels and type and age of aircraft.Full-service legacy carriers generally have the advantage of being larger and typically state-owned, withsignificantly greater financial and other resources than us. As a result, they may be in a better position towithstand losses on some of their routes for a longer period of time than we are. Since we began operations in2004, full-service carriers reduced their fares on certain routes to compete with fares charged by us. If full-service carriers were to reduce and maintain for an extended period their fares to levels at which we could notmatch while sustaining profitable operations, and were to maintain such reduced fares for an extended period, wecannot assure you that we would be able to maintain such reduced fares for an equivalent period of time.

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We also face competition from regional low-cost carriers which may have greater financial resources thanus. Subject to airport capacity and slot availability, low-cost carrier competitors could rapidly enter marketsserved by us and quickly and heavily discount their fares, which could materially and adversely affect ourbusiness, financial condition, results of operation and prospects. The airline industry is particularly susceptible toprice discounting because airlines incur only small marginal variable costs to provide service to passengersoccupying otherwise unsold seats. In addition to fare competition, an increase in the number of airlines operatingat our various hubs may result in an increase in congestion and delays at those airports, adverse effects on ouroperations as well as future capacity growth, which could have a material adverse effect on our business,financial condition, results of operation and prospects.

In addition, there have been recent changes to the competitive conditions in the local and regional airlinemarkets, including as a result of the ASEAN “Open Skies” policies. See “Regulation of the Airline Industry inThailand”. We cannot assure you that the current policies will not change, and any policy change in the futurecould significantly increase competition and may have a material adverse effect on our business, financialcondition, results of operation and prospects.

Moreover, we face competition from ground and sea transportation alternatives, which are other traditionalmeans of transportation used by a substantial majority of the population in Thailand, including for reasons ofprice and convenience and such competition could have a material adverse effect on our business, financialcondition, results of operation and prospects.

We may not be successful in implementing our growth strategy.

Our growth strategy involves increasing the number of our aircraft, increasing the frequency of our flights todestinations that we currently serve, expanding the number of destinations that we serve and stimulating growthin the markets that we serve. Achieving our growth strategy is critical in order for our overall business to achieveeconomies of scale and increase profitability.

Increasing the number of destinations that we serve depends on our ability to access suitable airports locatedin our targeted markets in a manner that is consistent with our cost strategy. We need to obtain air traffic rightsand airport landing slots before we can commence services to new destinations. In addition, we require the priorapproval of the DCA to add any new domestic routes. We cannot assure you that such air traffic rights, airportlanding slots or approvals will be granted to us in a timely manner, or at all. The failure to obtain these trafficrights, airport landing slots or approvals may have a material adverse effect on our business, financial condition,results of operation and prospects.

We expect that many of the future destinations we intend to serve will be in foreign countries. The operationof our business in these countries may present operating, financial and legal challenges which are different fromthose that we currently encounter in Thailand. Adding service to new destinations may require us to commit asubstantial amount of financial and other resources, even before the new service commences, and we mayinitially experience low load factors and be required to offer promotional fares to new destinations, which willadversely affect the profitability of these new destinations. In addition, we plan to take delivery of additionalAirbus A320 aircraft to increase our fleet size to 48 by December 31, 2016. If we are unable to successfullyimplement our growth strategy, we may have to delay or cancel the scheduled deliveries of these aircraft, whichmay harm our business, financial condition, results of operation and prospects.

Other factors that may have an impact on our growth strategy include:

• the general condition of the Thai, Asian and global economies and the global capital markets, includingthe continuing impact of the debt crisis within the euro zone;

• demand for regional air transportation;

• low barriers to entry into the Thai aviation market;

• our ability to operate and manage a larger operation cost-effectively;

• our ability to hire, train and retain sufficient numbers of pilots, cabin crew and engineers for our aircraft;

• our ability to secure a sufficient number of aircraft on favorable lease or purchase terms;

• our ability to source and take delivery of aircraft on a timely basis; and

• our ability to obtain the financing necessary to pay for expansion at cost-effective rates.

Many of these factors are beyond our control. In addition, difficult conditions in the global capital marketsand the economy generally in 2011, including the debt crisis in the euro zone, have affected and may continue to

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affect our business, financial condition, results of operation and prospects. We cannot assure you that we will beable to successfully expand within our existing markets or establish new markets, and any failure to successfullyimplement our growth strategy may have a material adverse effect on our business, financial condition, results ofoperation and prospects.

There are limitations on the foreign ownership of the Company and of our core asset, Thai AirAsia, andany breach of such limitations could result in a revocation of our air service operator license and our rightto fly our routes.

Foreign ownership of our Shares is limited by our Articles of Association, which provide a 0.1% limit onforeign ownership of the total issued and outstanding Shares of the Company. Further, the Company’s core asset,Thai AirAsia, is subject to nationality restrictions under the Foreign Business Act B.E. 2542 (1999), the AirNavigation Act B.E. 2497 (1954), as amended, and the Announcement of the National Executive Council No. 58requiring the shares of air service operators and aircraft registrants to be at least 51% held by any one or anycombination of the following persons: (a) natural persons who hold Thai nationality; (b) ministries,sub-ministries, departments of the Thai Government; and/or (c) limited companies or public limited companies inwhich not less than 51% of the shares are held by a Thai Government entity or Thai natural persons.See “Regulation of the Airline Industry in Thailand — Domestic Regulatory Framework” and “Description ofShares — Limitation on Foreign Ownership of Shares” for details. The Company holds 51% of Thai AirAsia(55% after the Company completes the subscription of new shares in Thai AirAsia after the completion of theCombined Offering). After completion of the Combined Offering, public shareholders will own 40% of theShares of the Company, with the remaining 60% of the Shares to be held by Thai AirAsia’s management, allThai nationals.

It is not possible to determine whether a subsequent sale of Shares from a Thai shareholder is made to aThai or non-Thai purchaser, or whether a person taking delivery of Shares upon exchange of NVDRs is a Thai ornon-Thai person, until such purchaser or person requests to register the transfer of such Shares to the registrar oruntil a books closure date occurs. A purchaser or a person exchanging NVDRs for Shares is not obligated tomake a request to register the transfer of such Shares after the purchase or exchange occurs, and if such purchaseror person does not do so, the register will not reflect such purchaser’s or person’s name and nationality until asubsequent books closure date occurs, which may be some time after the purchase or exchange occurs. The TSD,as our registrar, may refuse to register transfers of Shares to a non-Thai person, or divestment may otherwise berequired, if as a result of such transfer the percentage of issued and outstanding Shares registered in the name ofnon-Thai persons would exceed the then applicable limit on foreign ownership of the Shares. While Thai lawdoes not recognize the concept of “beneficial ownership” we cannot assure you that the relevant Thai regulator ora Thai court will not interpret such holdings in a manner that could be deemed to be in breach of Thai legislation,which could result in a revocation of our air service operator license, which would materially and adverselyaffect our business, financial condition, results of operation and prospects.

Once the foreign ownership limit is reached, Thai shareholders may be restricted from transferring Shares toforeign buyers, which may adversely affect the liquidity and market price of the Shares. As discussed in theparagraph above, it may not be possible for us, our shareholders or potential investors to determine whether theforeign ownership limit has been reached. In such a situation, we cannot assure you that you will not be forced todivest your Shares at short notice or that such divestiture will be completed at the prevailing market price.Moreover, if the foreign ownership limit has been reached, we will need to rely solely on domestic investorsand/or the sale of Thai NVDRs for any additional equity raising. This may affect our ability to obtain the fundingnecessary to expand our business, which in turn may adversely affect our business, financial condition, results ofoperations and prospects.

In addition, as a general principle, to operate international air services, it is necessary for us to remainsubstantially owned and effectively controlled by Thai nationals. See “Regulation of the Airline Industry inThailand” for further details. The governments with whom Thailand has signed bilateral agreements mayrecognize the concept of “beneficial ownership” and there is a risk that the “substantially owned and effectivelycontrolled” test may not be met and the measures that we have adopted to address this issue may be insufficientto maintain the required level of national ownership and control. Failure to comply with these requirements couldresult in Thai AirAsia not being a Thai-designated airline and, consequently, the revocation of our rights to fly oninternational routes.

The Company and our core asset, Thai AirAsia, have in our recent history experienced gross and net losses,negative cash flows from operating activities, total current liabilities exceeding total current assets andnegative shareholders’ equity.

As a result of the financial condition and results of operations of Thai AirAsia, our core asset, we recordedproportionate consolidated gross losses of Baht 17.4 million in 2009, proportionate consolidated net losses of

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Baht 85.9 million in 2009, proportionate consolidated negative cash flows from operating activities ofBaht 156.9 million in 2010, proportionate consolidated total current liabilities exceeding proportionateconsolidated total current assets by Baht 2,604.0 million as of December 31, 2009, Baht 1,649.1 million as ofDecember 31, 2010, and Baht 711.2 million (US$22.4 million) as of December 31, 2011, and proportionateconsolidated negative shareholders’ equity of Baht 1,964.3 million as of December 31, 2009 and Baht959.4 million as of December 31, 2010 and proportionate consolidated positive shareholders’ equity of Baht7.7 million (US$0.2 million) as of December 31, 2011. As a result, our historical financial statements containedin this Offering Memorandum may not be indicative of our future financial condition and results of operations.

In addition, the Company’s and Thai AirAsia’s management prepared the 2009, 2010 and 2011 financialstatements on a going concern basis as described in Note 2 to the Company’s audited proportionate consolidatedand company financial statements and Note 2 to Thai AirAsia’s audited financial statements included elsewherein this Offering Memorandum. We cannot assure you that the Company or Thai AirAsia will not revert to a netliability position or that the Company or Thai AirAsia can continue to rely on the continued existence of thecircumstances justifying the preparation of the financial statements on a going concern basis in the future. If anyof these circumstances changes, our business, financial condition, results of operation and prospects will bematerially and adversely affected.

The Company is a holding company and is dependent on the receipt of dividends from its only investment tomake dividend payments on our Securities.

As a holding company, the Company is dependent on the receipt of dividends from Thai AirAsia, acompany in which the Company holds a 51.0% interest (55.0% after the Company completes the subscription ofnew shares in Thai AirAsia after the completion of the Combined Offering). Our ability to pay dividends to ourshareholders, and the ability of Thai AirAsia to pay dividends to its shareholders, including the Company, issubject to applicable law. Under Thai corporate law, neither the Company nor Thai AirAsia may make anydistribution of dividends otherwise than out of its net profit and neither the Company nor Thai AirAsia can paydividends if its standalone retained earnings are not positive (or if there is a deficit), even if it records a net profitfor that year. As of December 31, 2011, the Company had a proportionate consolidated deficit ofBaht 386.8 million (US$12.2 million) and Thai AirAsia had a deficit of Baht 947.2 million (US$29.9 million).

The payment of dividends from Thai AirAsia will depend on its future financial performance, which in turndepends on Thai AirAsia successfully implementing its strategies and on financial, competitive, regulatory,technical and other factors, general economic conditions, demand and selling prices for its flights, many of whichare beyond its control.

In addition, under the PLCA, dividend payments may only be paid based on the net profit of the Companyderived from its standalone financial statements and not from its proportionate consolidated financial statements.Therefore, the Company is not able to pay any dividend with respect to its net profit derived from itsproportionate consolidated financial statements that is attributable to the net profit of Thai AirAsia. TheCompany’s ability to make dividend payments is dependent on the receipt of dividend income from Thai AirAsiabecause such dividend payments constitute substantially all of the Company’s income.

Our business is heavily dependent on the Thai and regional markets and a reduction in demand for airtravel in these markets may have a material adverse effect on our business, financial condition, results ofoperation and prospects.

Our growth has focused and will continue to focus on adding domestic and international flights to and fromour operations at our hubs in Bangkok, Phuket and Chiang Mai. We are also considering developing more hubsin Thailand. Our business, financial condition, results of operation and prospects would be materially andadversely affected by any circumstances causing a reduction in demand for air transportation in Thailand,including adverse changes in local economic conditions, declining interests in Thailand as a tourist destination,or significant price increases as a result of increases in airport access costs and fees imposed on passengers.

We believe that a substantial majority of our passenger traffic comprises tourists attracted by Thailand’sappeal as a tourist destination. Accordingly, we rely on the health of the Thai tourism industry. We haveexperienced a significant decline in international passenger traffic as a result of the 2009 Influenza A H1N1(“H1N1”) pandemic that affected the number of passengers traveling in and out of countries with H1N1outbreaks. In addition, the protest-related closure of Suvarnabhumi International Airport and Phuket InternationalAirport in November 2008 and the violent protests in central Bangkok in April 2009 and from March to May2010 have adversely affected Thailand’s image abroad and visitor arrivals. The widespread floods affectingThailand between September and December 2011 also adversely affected our passenger volumes. Our business isadversely affected by any circumstances causing a deterioration in Thailand’s appeal as a tourist destination, such

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as continued internal political instability, adverse changes in international economic conditions, a substantialincrease in the value of the Baht relative to other currencies, negative international perceptions of Thailand,significant increases in airport costs and fees imposed on passengers, terrorist attacks, floods or any furtheroutbreaks of H1N1 or similar occurrences in the region.

Our business is influenced by and dependent on our relationship with AirAsia Berhad.

Prior to the Combined Offering, AirAsia Berhad indirectly owns 49.0% of Thai AirAsia and will own45.0% of Thai AirAsia after the completion of the Combined Offering and after the Company completes thesubscription of new shares in the Thai AirAsia rights offering. Therefore, we expect AirAsia Berhad to continueto have the ability to influence the business and operations of Thai AirAsia. The Company entered into anamended and restated shareholders’ agreement with AirAsia Investment (previously known as AA InternationalLtd.), a wholly owned subsidiary of AirAsia Berhad, AirAsia Berhad and Thai AirAsia dated February 14, 2012(as amended and restated, the “Thai AirAsia Shareholders’ Agreement”), pursuant to which the parties set outtheir respective rights and obligations with respect to Thai AirAsia. For example, under the Thai AirAsiaShareholders’ Agreement, the Company has the right to nominate not more than three directors to Thai AirAsia’sboard and AirAsia Investment has the right to nominate not more than two directors. The Thai AirAsiaShareholders’ Agreement has a significant influence on our relationship with AirAsia Berhad. See “Related PartyTransactions — Future Related Party Transactions — Thai AirAsia Shareholders’ Agreement”.

We also depend upon and benefit from the support of AirAsia Berhad in various ways. Our businessdepends upon Thai AirAsia’s brand license agreement with AirAsia Berhad dated January 1, 2012 (the “AirAsiaBrand License Agreement”), pursuant to which AirAsia Berhad provides us with exclusive access to the AirAsiabrand name in Thailand for the purposes of Thai AirAsia’s business operations and AirAsia Berhad’s expertiseregarding marketing, business operations and customer service. An increase in the license fee, as well as otherchanges to the agreement, could affect Thai AirAsia’s results of operations. See “Related Party Transactions —Future Related Party Transactions — AirAsia Brand License Agreement”.

We currently lease all of our aircraft from a subsidiary of AirAsia Berhad, with leases that expire between2019 and 2024. Our ability to renew such leases on similar terms will be dependent on market conditions at thattime. Typically, the longer the tenor of the lease, the more favorable the terms of the lease will be. We cannotassure you that such leases will be renewed on commercially acceptable or similar terms, or at all.

We rely on various information technology used by the wider AirAsia Group. Our key operating softwaresystems (centralized in Kuala Lumpur, Malaysia) include NewSkies 3.2 by Navitaire which we use for inventoryand sales management/reservations, Microsoft’s Axapta Financial Management (Axapta) which we use for ourfinancial operations, the Geneva Optimum Airline Performance (“OAP”) software which we use for flightscheduling and crew rostering, Navtech software which we use for flight planning and Swiss Aviation SoftwareLtd.’s AMOS operating system (“AMOS”), which we use for the management of aircraft maintenanceengineering and logistics.

In addition, we have access to various aircraft spare parts kept by AirAsia Berhad and benefit from airporthandling services provided by other members of the AirAsia Group at certain airports in Malaysia and Indonesia.We also provide services to and obtain services from other members of the AirAsia Group. See “Related PartyTransactions” for a summary of these services.

In addition, members of the AirAsia Group have from time to time received or made payments on behalf ofThai AirAsia for various operating purposes. In 2009, 2010 and 2011, the amounts due to related partiesamounted to Baht 4,218.4 million, Baht 4,161.7 million and Baht 361.1 million (US$11.4 million), respectively.AirAsia Berhad also enters into fuel hedging agreements on behalf of the various airlines within the AirAsiaGroup, including Thai AirAsia, with such hedging dependent on AirAsia’s Berhad’s credit-worthiness. See“Related Party Transactions — Fuel Hedging Arrangements” for more details.

If (i) we are unable to leverage on the brand name, business network, expertise and relationship of AirAsiaBerhad in any material respect for any reason, (ii) there is a material change in business strategy or keymanagement of AirAsia Berhad or (iii) AirAsia Berhad’s actions adversely affect the AirAsia brand name, ourbusiness, financial condition, results of operation and prospects will be materially and adversely affected. Wecannot assure you that AirAsia Berhad will not reduce its shareholding in Thai AirAsia in the future, that AirAsiaBerhad’s actions will not adversely affect our business, that any agreements Thai AirAsia enters into in the futurewill not contain terms that impose a shareholding requirement in Thai AirAsia on AirAsia Berhad, or that we willbe able to ensure that such terms, if any, will not be breached. If any such events occur, our ability to borrow andour business, financial condition, results of operation and prospects may be materially and adversely affected.

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Our maintenance costs will increase as our fleet ages.

The average age of our aircraft was two years and four months as of December 31, 2011. Our fleet willrequire more maintenance as it ages and our maintenance and overhaul expenses will increase on an absolutebasis, on an available seat kilometer basis and as a percentage of our operating expenses. Any significantincrease in maintenance and overhaul expenses could have a material adverse effect on our business, financialcondition, results of operation and prospects. We currently incur low maintenance and overhaul expensesbecause we benefit from AirAsia Berhad’s negotiated rates under their contracts with third parties for aircraftused by the AirAsia Group and we perform our own line and light maintenance. However, we cannot assure youthat AirAsia Berhad’s existing maintenance agreements will be renewed at similar prices or that the DCA willnot revoke its approval to allow us to perform our own line and light maintenance.

Substantially all of our aircraft leases are subordinated to the rights and interests of the lessor undervarious headleases or subleases, or of the beneficiaries under AirAsia Berhad’s installment sale agreementsand related financing documents.

All of the aircraft sub-leased to us by AirAsia (Mauritius) Limited (“AirAsia Mauritius”), a subsidiary ofAirAsia Berhad, were leased or purchased by AirAsia Berhad under headlease agreements or installment saleagreements, respectively, and sub-leased to AirAsia Mauritius under intermediate sub-leases. Our aircraft leasesfor such aircraft, and all of our rights and interests thereunder, are subordinated to the rights and interests of therelevant lessors of the head-leases and intermediate sub-leases, the security trustee under the relevant aircraftmortgage, or the beneficiaries of the installment sale agreements and related financing documents, as the casemay be. If any headlease, intermediate sub-lease, installment sale agreement or related financing document wereto terminate at any time, or if the security trustee forecloses upon the aircraft mortgage, we will be required toredeliver the aircraft in accordance with the terms of the relevant agreement, which would have a materialadverse effect on our business, financial condition, results of operation and prospects.

We may incur a significant amount of debt in the future to finance the acquisition of aircraft, capitalexpenditure or expansion plans.

We have historically leased all of our aircraft pursuant to operating lease arrangements with AirAsiaMauritius, a subsidiary of AirAsia Berhad. However, we are considering purchasing a portion of our aircraftrequirements in the future. If we purchase our own aircraft, we are likely to require financing and incursignificant amounts of debt to fund such acquisition of additional aircraft. We may also obtain debt financing tofinance our operations, other anticipated capital expenditures, working capital requirements and expansion. Wecannot assure you that we will be able to raise such financing on favorable terms or at all, in particular if there isa general deterioration in the credit and capital markets, which could have a material adverse effect on ourbusiness, financial condition, results of operation and prospects. If we are unable to obtain financing for newaircraft on acceptable terms, this may increase the cost of financing, affect our profitability and delay our fleetexpansion plans. Moreover, our future credit facilities may contain covenants that limit our operating andfinancing activities and require the creation of security interests over our assets. Our ability to meet our paymentobligations and to fund planned capital expenditures will depend on the success of our business strategy and ourability to generate sufficient revenues to satisfy our obligations, which are subject to many uncertainties andcontingencies beyond our control.

We rely on third parties to provide our customers with facilities and services that are integral to ourbusiness, including airport facilities. Any inability to lease, acquire or access airport facilities on reasonableterms to support our growth or to maintain our current operations would have a material adverse effect onour business, financial condition, results of operation and prospects.

The availability and cost of terminal space, slots and aircraft parking are critical to our operations andexpansion plans. Ground and maintenance facilities, including hangars and support equipment, will be requiredto operate additional aircraft in line with our expansion plans. These and other required facilities and equipmentmay be unavailable in a timely or economic manner. Our inability to lease, acquire or access airport facilities onreasonable terms or at preferred times to support our growth or to maintain our current operations would have amaterial adverse effect on our business, financial condition, results of operation and prospects.

We have entered into agreements with third party operators to provide certain facilities and servicesrequired for our operations in international airports in which we operate, including ground handling,maintenance, refueling and airport facilities such as aerobridges. We are likely to enter into similar agreements innew markets we decide to enter. The loss or expiration of these contracts or any inability to find suitable alternateproviders or renew or negotiate contracts with those providers at comparable or favorable rates could have amaterial adverse effect on our business, financial condition, results of operation and prospects.

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We rely on a high daily aircraft utilization rate to optimize our revenues, making us especially vulnerable todelays.

One of the key elements of our business strategy is to target a high daily aircraft utilization rate of above12 hours per day. High daily aircraft utilization allows us to generate more revenue from our aircraft and isachieved in part by reducing turnaround times at airports and maintaining on-time performance. However, wecannot assure you that we will achieve this target. Aircraft utilization is reduced by delays caused by variousfactors, many of which are beyond our control, including, among others, adverse weather conditions, security andsafety, other air traffic control related requirements and unscheduled maintenance.

The expansion of our business to include new destinations and more frequent flights on current routes couldincrease the risk of delays to our scheduled flights. Such delays may reduce our daily aircraft utilization andharm our reputation. High aircraft utilization also increases the risk that, in the event that an aircraft falls behindschedule during the day, it could remain behind schedule during the remainder of that day, which can disrupttimely operations and lead to customer dissatisfaction which could in turn have an adverse effect on our business,financial condition, results of operation and prospects.

We rely on automated systems and the Internet to operate our business and any failure or security breachesof these systems may have a material adverse effect on our business, financial condition, results ofoperation and prospects.

We depend on automated systems to operate our business, including our website and online reservation andtelecommunication systems. Our website and online reservation system must be able to accommodate a highvolume of traffic and deliver important flight information. We cannot assure you that system failures or securitybreaches will not occur in the future. While we have disaster recovery and business continuity plans in place, anydisruption in these systems could result in the loss of important data, increase our expenses and harm ourreputation and ticket sales which could in turn have a material adverse effect on our business, financial condition,results of operation and prospects. See “Business — Our Operations — Information Technology”.

We rely heavily on the Internet for bookings. Approximately 69% and 75% of our flight reservations in2010 and 2011, respectively, were made by our passengers directly via our website. Any compromise of Internetsecurity could deter people from using the Internet or from using it to conduct transactions that involvetransmitting confidential information. We may incur significant costs to protect against the threat of securitybreaches, particularly if the perceived risks of terrorist activity and/or third party misappropriation of informationlead to government-imposed increases in Internet security and greater restrictions on ticket purchases maderemotely. Further, alleviating these problems may cause interruptions, delays or cessations in service to ourcustomers, which could cause them to stop using our service or to make claims against us.

We retain personal information received from customers and have put in place security measures to protectagainst unauthorized access to such information. Personal information held both offline and online is highlysensitive and, if third parties were to access such information without the customers’ prior consent or if thirdparties were to misappropriate that information, our reputation could be adversely affected and customers couldpossibly bring legal claims against us, any of which could adversely affect our business, financial condition,results of operation and prospects. In addition, we may be liable to credit card companies should any credit cardinformation be accessed and misused as a result of our failure to implement sufficient security systems.

Our business, financial condition, results of operation and prospects could be materially and adverselyaffected in the event of an emergency, accident or incident involving any of our aircraft or any of theaircraft of any AirAsia Group company.

We are exposed to potential significant losses in the event that any of our aircraft or any of the aircraft ofany AirAsia Group company is lost or subject to an emergency, accident, terrorist incident or other disaster andwe incur significant costs related to passenger claims, repairs or replacement of a damaged aircraft and itstemporary or permanent loss from service. For instance, in October 2008, one of our aircraft experienced a hardlanding at Phuket International Airport, and in September 2009, one of our aircraft was hit by a tow truck whilebeing towed to a parking bay at Kuala Lumpur Low Cost Carrier Terminal. In June 2011, one of our aircraftlanded on a closed runway in Delhi, India. While there were no injuries as a result of these incidents, we cannotassure you that we will not be involved in any similar or other more serious events, including one where injuriesor death occur, in the future. We cannot assure you that the amount of our insurance coverage will be adequate tocover the losses or damages from any future accidents or incidents and any such event could cause a substantialincrease in our insurance premiums. In addition, any future aircraft accidents or incidents, including thoseinvolving aircraft of any AirAsia Group company, irrespective of whether they are covered by our insurance,may create a public perception that we are less safe than other airlines, even in the absence of any injuries or

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deaths. Any negative impact on the public perception of our airline could have a material adverse effect on ourbusiness, financial condition, results of operation and prospects.

Any real or perceived problem with the Airbus A320 aircraft or the CFM56-5 type engine, including theirunavailability, or any decision to operate a new aircraft type or engine type, could have a material adverseeffect on our business, financial condition, results of operation and prospects.

As of December 31, 2011, we operated 22 Airbus A320 aircraft (including one spare) which use theCFM56-5 type engine. Our reliance on a single aircraft type, namely the Airbus A320 aircraft and the CFM56-5type engine, makes us particularly vulnerable to any problems that might be associated with the aircraft and theengine. We would be adversely affected if a design defect or mechanical problem with the Airbus A320 aircraftor the CFM56-5 type engine were discovered, causing our aircraft to be grounded while any such defect orproblem is corrected, assuming it could be corrected at all. Any such defect or problem may also result inaviation authorities in Thailand implementing certain airworthiness directives which may require substantialcompliance costs. Our business, financial condition, results of operation and prospects could be materially andadversely affected if the public avoids flying our aircraft as a result of an adverse perception of the Airbus A320aircraft or the CFM56-5 type engine due to real or perceived safety concerns or other problems.

In addition, if our lessors or vendors are unable to perform their contractual obligations to lease or sellaircraft and supply engines to us, we may have to find alternative suppliers of the aircraft and engines. In such anevent, we cannot assure you that we would be able to lease or purchase aircraft and engines within the time framecurrently expected or at comparable prices. This would require us to obtain and use another type of aircraft andengine. We cannot assure you that any replacement aircraft would have the same operating advantages as theAirbus A320. We also may incur substantial transition costs, including higher costs associated with retaining orhiring pilots, cabin crew and engineers to operate and maintain a different type of aircraft or engine, and mayalso have to compensate passengers affected by delays or cancellations of our flights.

We depend on our personnel, especially our executive officers and key management, and any difficulties inattracting or retaining such personnel or failure to maintain our corporate culture may have a materialadverse effect on our business, financial condition, results of operation and prospects.

Our success depends to a significant extent upon the continued services of our executive officers and otherkey management personnel, and in particular on Mr. Tassapon Bijleveld, our Chief Executive Officer. The lossof any of our executive officers and other key management personnel or failure to recruit suitable or comparablereplacements could have a material adverse effect on our business, financial condition, results of operation andprospects.

Our business model requires us to have highly-skilled, dedicated and efficient pilots, engineers and otherpersonnel. Our growth plans will require us to hire, train and retain a significant number of new employees in thefuture, including an additional 222 pilots by 2016. From time to time, the airline industry has experienced ashortage of skilled personnel, especially pilots and engineers. We compete against full service and other low-costairlines for these highly-skilled personnel. These full service and other low-cost airlines may offer wage andbenefit packages that exceed those offered by us. We may have to increase wages and benefits to attract andretain qualified personnel or risk considerable employee turnover. If we are unable to hire, train and retainqualified employees at a reasonable cost, we may be unable to execute our growth strategy, which would have amaterial adverse effect on our business, financial condition, results of operation and prospects.

In addition, we may find it increasingly challenging to maintain our corporate culture as we hire morepersonnel. We believe that one of our competitive strengths is our service-oriented corporate culture thatemphasizes friendly, helpful, team-oriented and customer-focused employees who strive to increase ourproductivity to help keep our costs low. If we were unable to identify, hire or retain employees who meet thesecriteria, our corporate culture and reputation would be adversely affected.

We may be subject to unionization, work stoppages, slowdowns or increased labor costs.

We have a non-unionized workforce. If our employees unionize, it could result in demands that mayincrease our operating expenses and adversely affect our profitability. Each of our different employee groupscould unionize at any time and require separate collective bargaining agreements. If any group of our employeeswere to unionize and we were unable to reach agreement on the terms of their collective bargaining agreement orwe were to experience widespread employee dissatisfaction, we could be subject to work slowdowns orstoppages. In addition, we may be subject to disruptions by organized labor groups protesting our non-unionstatus. Any of these events would be disruptive to our operations and could harm our business, financialcondition, results of operation and prospects.

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If we are unable to obtain regulatory approvals in the future, we will not be able to operate a scheduledflight.

Our business relies on our maintaining the requisite licenses, permits and approvals necessary to operate ourportfolio of routes. The airline industry is subject to extensive regulation and we have no control over theregulations that apply to us. Changes in the interpretation of current regulations or the introduction of new lawsor regulations may have a material adverse effect on our business, financial condition, results of operation andprospects.

We are required to hold an air operator certificate (an “AOC”) which is granted, and is subject to conditionsimposed, by the Department of Civil Aviation of Thailand (“DCA”). Our AOC is valid for a prescribed periodfollowing which an application for renewal has to be made. Our current AOC was issued on December 26, 2008and amended on October 28, 2010, and is subject to renewal upon expiry on November 5, 2013. To operate eitherscheduled or non-scheduled air transport services in Thailand, we are required to obtain an air service license(“ASL”) from the Minister of Transport. Our current ASL was issued on November 6, 2008, and is subject torenewal upon expiry on November 5, 2013. There can be no assurance that a new AOC and ASL will be grantedto us upon the expiry of each current AOC and ASL, without which we will not be able to operate air services.

For each route we operate, we are required to hold the requisite licenses, permits and approvals from thecountries to and over which we fly. The validity of each license, permit or approval varies by country. If anylicense, permit or approval is revoked or not renewed upon its expiry or if such renewal is on less favorableterms, we may not be able to operate on the affected route or may have to operate at a reduced frequency. Inaddition, the actions of Thai authorities responsible for overseeing Thai airlines and other third parties that wehave no control over may adversely affect us. See “Regulation of the Airline Industry in Thailand” for furtherdetails of the regulations that apply to us.

We and/or AirAsia Berhad may be unable to adequately protect the intellectual property rights over theAirAsia brand or may face intellectual property rights claims that may be costly to resolve or limit the abilityto exploit the intellectual property rights in the future.

We rely on trademarks and domain name registrations to establish and protect the AirAsia brand, tagline,logos and Internet domain name (the “Marks”) in various countries. Pursuant to the terms of the AirAsia BrandLicense Agreement, AirAsia Berhad has licensed the right to the AirAsia trademarks and logo to us. See “RelatedParty Transactions — Future Related Party Transactions — AirAsia Brand License Agreement” for details.

The success of our business depends, in part, on our continued ability to use the Marks in order to increasebrand awareness. Although AirAsia Berhad has registered or is in the process of registering each of the Marks,we cannot assure you that the steps taken by AirAsia Berhad in this regard will adequately protect the Marks andthird parties may challenge the AirAsia Group’s, including the Company’s and Thai AirAsia’s, exclusive right touse the Marks. Our success will also depend on AirAsia Berhad’s awareness and ability to prevent third partiesfrom using the Marks without its consent. Issues relating to intellectual property rights can be complicated andwe cannot assure you that disputes will not arise or that any disputes in relation to our intellectual property willbe resolved in AirAsia Berhad’s favor. In addition, we cannot assure you that AirAsia Berhad will not withdrawsome or all of its Marks, whether as a result of any breach of the AirAsia Brand License Agreement or otherwise,which will prevent us from benefiting from the brand recognition associated with the Marks. In such case, wewill be required to invest significant resources in developing a new brand. Any of these events may have amaterial adverse effect on our business, financial condition, results of operation and prospects.

Our ability to set fares on certain segments of our business is constrained by fare ceilings set by theGovernment.

As an airline company, we are regulated by the Government through, among others, the DCA. The DCA isthe regulatory authority responsible for regulating the Thai aviation sector. The DCA issues operating licensesrequired for our flight operations, sets price caps for airfares on domestic passenger services sold in Thailand,regulates fuel surcharges for scheduled domestic passenger and cargo services and agrees international bilateralair service agreements with other countries. Our domestic fares are subject to fare ceilings prescribed by theDCA. Thai AirAsia’s revenue from domestic passenger services accounted for 47.5%, 46.6% and 44.1% of itsrevenues from airline services in 2009, 2010 and 2011, respectively. Any adverse changes in these policies, inaddition to other regulations and policies governing airline operations, could have a material adverse effect onour business, financial condition, results of operation and prospects.

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Our passenger load factors are subject to seasonality.

Our revenues and load factors are highest in the first and fourth quarters of each calendar year, reflectingThailand’s peak tourist season, and lowest during the third quarter. Any prolonged disruption in our operationsduring such peak periods could materially affect our business, financial condition, results of operation andprospects. In addition, comparisons of our interim results of operations may therefore not be accurate indicatorsof our future performance. The market price of our Securities may fluctuate or decline significantly due tofluctuations in our interim results of operations.

Fluctuations in currency exchange rates may have an adverse impact on our business, financial condition,results of operation and prospects.

Due to the geographic diversity of our business, we receive revenue and incur expenses in a variety ofcurrencies, in particular the Thai Baht, Indonesian Rupiah, Singapore Dollar, U.S. Dollar, Malaysian Ringgit,Indian Rupee and Chinese Renminbi. However, most of our maintenance, aircraft leasing, jet fuel supply,insurance contracts and substantially all of our purchase contracts with respect to aircraft spares are denominatedin U.S. Dollars. A number of currencies, including the U.S. Dollar and certain Asian currencies, haveexperienced significant volatility, appreciation and depreciation, which could be detrimental depending on ThaiAirAsia’s foreign exchange position. We have not entered into hedging contracts with various banks to hedgeagainst fluctuations in exchange rates. See “Management’s Discussion and Analysis of Financial Condition andResults of Operations — Market Risks — Foreign Currency Exchange Rate Risk”. We may, in the future, enterinto derivative contracts to hedge our foreign exchange exposure. However, we cannot assure you that suchhedges will be available or commercially viable or effective to hedge our exposure to foreign currency risks.

Significant volatility between the U.S. Dollar and our other operating currencies, particularly the Thai Baht,may have an adverse impact on our results of operations. Since the Asian financial crisis of 1997, the value of theBaht against the U.S. Dollar has fluctuated from time to time, from a high of Baht 22.20 on June 18, 1997 to alow of Baht 56.45 on January 13, 1998, according to Bloomberg. The average buying (telex transfer) and sellingexchange rate of commercial banks in Bangkok announced by the BOT on May 9, 2012 was Baht 31.03 per U.S.Dollar. We cannot assure you that the value of the Baht will not continue to fluctuate significantly against theU.S. Dollar or other currencies in the future.

We have various commitments denominated in foreign currencies, principally in U.S. Dollars. As ofDecember 31, 2011, we had outstanding foreign currency commitments under lease and insurance agreementsequivalent to Baht 8,047.6 million (US$253.9 million). In addition, we may increase our U.S. Dollar borrowingsin the future, including in relation to future purchases of aircraft. Therefore, any depreciation in the Baht againstthese foreign currencies would increase our obligations. There can be no assurance that we would be able togenerate revenue increases sufficient to offset such increased obligations. As a result, fluctuations in the value ofthe Baht against other foreign currencies may adversely affect our business, financial condition, results ofoperations and prospects.

We may be exposed to interest rate fluctuations.

We may incur a significant amount of debt in the future to finance the acquisition of aircraft, capitalexpenditure or expansion plans. A significant portion or substantially all of our future indebtedness may befloating rate obligations. In recent years, interest rates have been at historically low levels. In addition, we maynot be able to hedge our interest rate exposure at appropriate costs or at all. Any increase in prevailing interestrates could substantially increase our future borrowing costs with respect to any new loans, which couldadversely affect our business, financial condition, results of operations and prospects.

Certain countries in Asia are subject to significant geological risk and the risk of other man-made ornatural disasters which may affect demand for flights to these destinations.

Certain countries in Asia are located in the convergence zone of tectonic plates, and are therefore subject toseismic activity that can lead to destructive earthquakes and tsunamis, or tidal waves. For example, onDecember 26, 2004, an underwater earthquake off the coast of Sumatra triggered a tsunami that devastatedcoastal communities in Thailand, Indonesia and Sri Lanka. Certain countries in Asia are also subject to otherman-made or natural disasters such as forest fires and haze. In addition, Thailand is subject to severe flooding.The widespread flooding between September and December 2011 has adversely affected the number ofpassengers that we carry, and thus, our results of operations, in the fourth quarter of 2011. Any future geologicalor meteorological occurrences or other man-made or natural disasters in the markets that we serve, may weakendemand for our flights to these destinations and this decrease in demand may materially and adversely affect ourbusiness, financial condition, results of operation and prospects.

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We are subject to the risks associated with doing business in Asia.

As our current operations are conducted in Asia, we are subject to special considerations and significantrisks typical for these regions. These include risks associated with, among others, the political, economic andlegal environments and foreign currency exchange. Our results may be adversely affected by changes in thepolitical and social conditions in Asia, and by changes in governmental policies with respect to laws andregulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods oftaxation, among other things. In particular, volatility in social and political conditions in certain countries in Asiamay interrupt, limit or otherwise affect our operations and may result in the closure of airports. In recent years,certain Asian countries and territories have implemented various measures in order to affect economic orpolitical reforms and changes. Some of these measures have led to increased incidents or higher risks of politicalinstability and social unrest. Government-imposed wage and price controls, higher unemployment rates,mandated industry restructuring and trade barriers, such as high tariffs and customs duties that negatively affectdomestic industry are some examples of events causing increased volatility in social and political conditions inAsia. We have no control over these matters and we do not carry political risk or other insurance with respect tolosses caused by these matters.

Risks Relating to the Aviation Industry

The airline industry tends to experience adverse financial performance during general economicdownturns.

We conduct all of our operations, and generate all of our revenue in Asia. We expect to continue focusingour airline business in Asia for the foreseeable future. As a result, our business depends substantially on thegeneral economic conditions in Asia. Since a substantial portion of airline travel, for both business and leisure, isdiscretionary, the airline industry tends to experience adverse financial performance during general economicdownturns. Yields could also decline as airlines offer promotional fare sales in certain markets to stimulatedemand or to fill otherwise empty seats.

It is difficult to predict the effects of a global economic downturn. As the airline industry is generallycharacterized by high fixed costs, primarily related to aircraft operating leases, financing commitments, jet fuelcosts and staff costs, a shortfall in expected revenue levels as a result of slower economic cycles could have anadverse impact on financial performance. If there is a global economic downturn and demand for business andleisure travel decreases in our markets, our business, financial condition, results of operation and prospects maybe adversely affected.

Limitations of Bangkok’s airports and other Thai airports may inhibit our ability to increase our aircraftutilization rates, improve our on-time performance and provide safe and efficient air transportation.

Although Thailand’s commercial aviation infrastructure has improved substantially in recent years with theopening of Suvarnabhumi International Airport in September 2006 and the re-opening of Don MuangInternational Airport to domestic flights in March 2007, the resources of many segments of the commercialairline industry, including airport facilities and air traffic control systems, have been strained by the rapidincrease in air traffic volume. Our ability to increase utilization rates, improve our on-time performance andprovide safe and efficient air transportation in the future depends in part on factors beyond our control, including:

• capacity of landing slots, passenger capacity at terminals and air traffic congestion in major hub airportsthat we serve, particularly our hubs at Suvarnabhumi International Airport in Bangkok and PhuketInternational Airport in Phuket;

• the quality of the management of Thai airports by the relevant operator;

• the quality of national air traffic control;

• the quality of navigational systems and ground control operations at Thai airports;

• limitations on runway length and/or strength which restrict our aircraft payload;

• the quality of infrastructure at regional airports that we serve; and

• any increased security measures.

If any of these factors is inadequate, our ability to expand our route network or to increase the frequency offlights on our existing routes, improve our on-time performance and to provide safe air transportation will becompromised, and our business, financial condition, results of operation and prospects may be materially andadversely affected.

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We are exposed to certain risks against which we do not insure, and may have difficulty obtaininginsurance on commercially acceptable terms or at all.

Insurance is fundamental to airline operations. As a result of terrorist attacks or other world events, certainaviation insurance could become unavailable or available only for reduced amounts of coverage that areinsufficient to comply with the levels of coverage required by our aircraft lessors or applicable governmentregulations. Any inability to obtain insurance, on commercially acceptable terms or at all, for our generaloperations or specific assets would have a material adverse effect on our business, financial condition, results ofoperation and prospects.

We cannot assure you that our coverage will cover actual losses incurred. To the extent that actual lossesincurred by us exceed the amount insured, we could have to bear substantial losses which may have a materialadverse effect on our business, financial condition, results of operation and prospects. In line with industrypractice, we leave some business risks uninsured including business interruptions, loss of profit or revenue andmechanical breakdown. To the extent that uninsured risks materialize, our business, financial condition, results ofoperation and prospects could be materially and adversely affected.

Following the terrorist attacks of September 11, 2001, aviation insurers have increased premiums, appliedinsurance surcharges for each passenger, and significantly reduced coverage for war and allied perils liability tothird parties. In the event of additional terrorist attacks, hijackings, airlines crashes or other events adverselyaffecting the airline industry, there is a risk that aviation insurers will further increase their premiums or reducethe availability of insurance coverage. Significant increases in insurance premiums or reductions in coveragemay have a material adverse effect on our business, financial condition, results of operation and prospects. See“Business — Our Operations — Insurance”.

The airline industry is exposed to extraneous events such as terrorist attacks, outbreak of contagiousdiseases and extreme weather conditions.

Terrorist attacks, such as those on September 11, 2001, and their aftermath had a negative impact on theairline industry. The primary effects experienced by the airline industry include increased security and insurancecosts, increased concerns about future terrorist attacks, airport shutdowns, flight cancellations and delays due tosecurity breaches and perceived safety threats, and significantly reduced passenger traffic and yields due to thesubsequent dramatic drop in demand for air travel globally. Terrorist attacks, or the fear of such attacks, or otherworld events could result in decreased passenger load factors and yields and could also result in increased costs,such as increased jet fuel costs or insurance costs, for the airline industry, including us. If any similar events orcircumstances occur in the future, our business financial condition, results of operation and prospects could beadversely affected.

An outbreak of Severe Acute Respiratory Syndrome (SARS), the Influenza A H1N1 virus, avian flu, oranother contagious disease with the potential to become a pandemic or the measures taken by the governments ofaffected countries against such potential outbreaks could also seriously disrupt our operations, which could havean adverse effect on our business. The perception that an outbreak of another pandemic may occur can also havean adverse effect on the economic conditions of countries in Asia which may also negatively impact ourbusiness, financial condition, results of operation and prospects.

During the typhoon season or periods of other adverse weather conditions, flights may be cancelled orsignificantly delayed. Thailand has experienced a number of major natural catastrophes over the years, includingtsunamis and floods. See “— Risks Relating to the Company and Thai AirAsia — Certain countries in Asia aresubject to significant geological risk and the risk of other man-made or natural disasters which may affectdemand for flights to these destinations”. If we delay or cancel flights for extreme weather conditions, ourrevenues and profits will be reduced and, notwithstanding that these events are beyond our control, passengersmay blame us for such delays and cancellations. We could suffer a loss to our reputation, which could result in aloss of customers and materially and adversely affect our business, financial condition, results of operation andprospects.

Risks Relating to Thailand

The floods experienced in 2011 are likely to have a significant adverse impact on the Thai economy.

The floods that began in September 2011 are expected to have a significant adverse impact on the Thaieconomy as a whole. The full impact of the floods remains uncertain; however, in early December 2011, theBank of Thailand reduced its GDP growth forecast for Thailand for 2011 from 4.1% projected prior to the floodsto 1.8%. The impact of the floods on the growth of the Thai economy in 2012 and beyond depends on a numberof factors, including the rate at which homes, businesses and infrastructure are repaired or replaced, industrial

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parks and factories are reopened and whether manufacturing levels return to levels experienced prior to theflooding. In addition, the rate at which tourism and other key sectors of the Thai economy return to levelsexperienced prior to the flooding will be a key factor affecting the future growth of the Thai economy.

The Government has stated its intention to improve flood protection infrastructure in an effort to preventfuture flooding similar to that experienced in 2011. Government officials have announced plans for theconstruction of floodways, the repair of sluice gates damaged during the recent flooding and the purchase ofadditional pumps to remove future floodwater. The Government has also announced that it is preparing a masterflood management plan. There can be no assurance, however, that these plans will be implemented beforesignificant flooding occurs in Thailand again or at all. No assurance can be given that the Government’s floodprevention measures will be adequate to protect low-lying areas and other parts of Thailand from flooding in thefuture.

Political conditions and continued violence in Thailand may have a direct impact on our business and themarket price of the Securities.

We are subject to a political environment in Thailand that differs in certain significant respects from thatprevailing in countries with more developed economies. Our business, financial condition, results of operationsand prospects may be influenced in part by the political situation in Thailand, which has been unstable from timeto time. In 2006, there was a military coup against the country’s civilian political leadership. The coup leadersdeclared martial law and abrogated the 1997 Constitution. In 2007, the new Constitution came into force and ageneral election was subsequently held. Two new coalition governments took office in February and September2008, respectively. There were a series of anti-government protests in 2008, including an occupation byprotestors of the Government House and the seizure of Thailand’s two key airports.

In December 2008, the Thai Constitutional Court issued a verdict that disbanded certain governmentpolitical parties, which dissolved the then existing coalition government and removed the Prime Minister fromoffice. The leader of the Democrat-led coalition was voted in as the new Prime Minister by the Thai Parliamentin December 2008. There have been a series of protests and demonstrations, including an attack by protesters thatcaused the cancellation of the ASEAN Summit in Pattaya and riots in Bangkok in April 2009, evidencingresistance to the current coalition government.

In March 2010, anti-Government protestors (being supporters of the former Prime Minister ThaksinShinawatra, who was ousted in a military coup in 2006) launched new protests aimed at removing the coalitionGovernment and holding new elections. The protesters first occupied areas around the Ratchadamnoen area andmoved to an encampment in Bangkok’s city centre. Over the course of two months, the demonstrations turnedviolent, causing the Government to declare a state of emergency in Bangkok on April 7, 2010 and later in 23other provinces in central, northern and north-eastern Thailand. In an effort to clear the protest sites, theGovernment imposed curfews and restricted numbers at gatherings. A number of buildings, including a majorshopping centre, Government buildings and the stock exchange, were set on fire by certain demonstrators,causing serious damage. A number of people were also killed and injured.

Following the lifting of the state of emergency in December 2010, in January 2011, close to 30,000opposition supporters descended in the same area as the earlier protestors to demand the investigation of thedeadly governmental crackdown in May and the release of protest leaders who had been held in jail on terrorismcharges. The events in early 2011 were largely peaceful.

In July 2011, the Puea Thai Party won a decisive victory in the elections, making Prime Minister YingluckShinawatra the first female Prime Minister of Thailand. Ms. Yingluck is the sister of former Prime MinisterThaksin Shinawatra. There can be no assurances that any reforms made by the Government will promote growthand stability within Thailand. Moreover, Thaksin Shinawatra may seek to return to Thailand, and it is unclearwhat effect such a return would have or whether further political instability might result. We cannot predict whateffects these recent events will have on Thailand’s political and economic conditions, or whether the newGovernment may seek changes to Thailand’s legal and regulatory environment. Any failure on the part ofMs. Yingluck, or the Puea Thai Party, to bring back potential stability in Thailand could have a material adverseeffect on economic and legal conditions in Thailand, which in turn could have a material adverse effect on ourbusiness, financial condition, results of operations and prospects.

Substantially all of our assets and operations are located in Thailand and we are subject to economic, legaland regulatory uncertainties in Thailand.

Substantially all of our assets and operations, including our headquarters, are located in Thailand.Consequently, we are subject to economic, legal and regulatory conditions in Thailand that differ in certainsignificant respects from those prevailing in other countries with more developed economies. There is no

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assurance that the Thai economy will meet current projections or improve in the future. Any instability andeconomic downturn in the Thai economy could have a material adverse effect on our business, financialcondition, results of operations and prospects and the market price of the Securities. Furthermore, priorGovernments have, in the past, intervened in the Thai economy and occasionally made significant changes inpolicy including, among other things, foreign exchange control, policies concerning wage and price controls,capital controls and limits on imports, at times partially reversing such policies soon after the new policies wereannounced. In particular, any changes in, delays to, or a cancellation of, the Government’s infrastructure policiesor investment plans could materially and adversely affect our business, financial condition, results of operationsand prospects.

Our businesses and operations in Thailand are subject to the changing economic conditions prevailing fromtime to time in Thailand. From 1996 to 1998, Thailand’s GDP growth slowed significantly in relation tohistorical levels and the country entered a recession. Since 1999, Thailand’s economy has been recovering,recording positive GDP growth each year until the global economy began to worsen in 2008 and took effect in2009. According to Thailand’s Office of the National Economic and Social Development Board and FiscalPolicy Office, Thailand’s GDP grew by 5.0% in 2007 and 2.5% in 2008, declined by 2.3% in 2009 and grew by7.8% in 2010.

From 1996 to 1998, international credit rating agencies, including Moody’s and S&P, lowered Thailand’ssovereign rating as well as various Thai corporate debt ratings. With the improved performance of the Thaieconomy in 1999 through 2003, there was corresponding improvement in these credit ratings. Political unrest inlate 2008 and early 2009 again put downward pressure on Thailand’s sovereign ratings. Thailand’s sovereignforeign currency long term ratings are currently rated “Baa1” with a negative outlook by Moody’s and “BBB+”with a negative outlook by S&P. Future lowering of the credit ratings for Thai sovereign debt may make it moreexpensive for us to obtain additional debt financing for our working capital and capital expenditures, which couldhave an adverse effect on our business, financial condition, results of operations and prospects.

Policy changes made by the Government and the BOT have included the imposition (and subsequentreversal) of a one-year 30% unremunerated reserve requirement on foreign exchange inflows, under which anyforeigner buying stock in Thailand had to place an extra non-interest bearing deposit. There is no assurance thatthe Government will not in the future re-impose restrictive foreign exchange controls that may affect the outwardremittance of funds, including dividends payable on the Shares. Our business, financial condition, results ofoperations and prospects and the market price of the Securities may be adversely affected by future changes inGovernment policies.

Continued violence in southern Thailand, terrorist attacks and international and regional instability couldadversely affect our business, financial condition, results of operations and prospects.

In 2004, the Government declared martial law in certain southern provinces. The region has recentlyexperienced increasingly serious and frequent incidents of violence, including bombings of power stations, whichcaused blackouts in the provinces. On July 19, 2005, the Government invoked an emergency decree to declare astate of emergency in the three southernmost provinces of Yala, Narathiwat and Pattani. The state of emergencyimposed further controls in those provinces and allows the authorities to detain suspects without charge, banpublic protests and censor the news media. Since January 2004, there have been a large number of casualties andinjuries arising from violence in the region, including, most recently, bombings of commercial banks in Yalaprovince. On December 31, 2006, several bombs exploded in Bangkok, killing three people, and in February2007 a coordinated series of explosions in Southern Thailand, including in schools, killed at least eight people. Anumber of countries, including the United States, the United Kingdom, Australia and Canada have issued traveladvisories relating to travel to Thailand in recent years. Continued violence could lead to widespread unrest inThailand or a major terrorist incident in Thailand similar to those in other parts of Southeast Asia. If the securitycondition deteriorates and violence worsens, our business, financial condition, results of operations and prospectsmay be materially and adversely affected.

Non-enforceability of non-Thai judgments may limit your ability to recover damages from the Company.

Under Thai law, judgments entered by a non-Thai court, including actions under the civil liability provisionsof the securities laws of foreign jurisdictions, are not enforceable in Thailand. An investor would have to bring aseparate action or claim in Thailand. Although a non-Thai judgment could be introduced as evidence in a courtproceeding in Thailand, a Thai court would be free to examine de novo issues arising in the case. Thus, to theextent investors are entitled to bring a legal action against us, they may be limited in their remedies and anyrecovery and any Thai proceeding may be limited depending on the relevant court’s discretion.

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The Company’s and Thai AirAsia’s financial statements are prepared in accordance with Thai GAAP,which differs from IFRS in certain material respects.

We are subject to financial reporting requirements of publicly listed companies in Thailand that differ insignificant respects from those applicable to companies in certain other countries, including the United States andthe United Kingdom. The Company’s and Thai AirAsia’s financial statements are prepared in accordance withThai GAAP, which differs in certain material respects from IFRS. See “Summary of Significant DifferencesBetween Thai GAAP and IFRS”. In accordance with generally accepted accounting practices in Thailand, neitherthe Company nor Thai AirAsia has (i) performed a reconciliation of the financial statements included in thisOffering Memorandum to IFRS or (ii) quantified the differences between Thai GAAP and IFRS with respect tosuch financial statements. If such a reconciliation or quantification had been performed, other materialdifferences might have been identified and disclosed in the section of the Offering Memorandum entitled“Summary of Significant Differences Between Thai GAAP and IFRS”. Accordingly, there is no assurance thatthe identified differences in the section of the Offering Memorandum entitled “Summary of SignificantDifferences Between Thai GAAP and IFRS” represent all material differences related to the Company or ThaiAirAsia as of and for the years ended December 31, 2009, 2010 and 2011 or as of and for the three months endedMarch 31, 2011 and 2012.

Risks Relating to the Securities

We expect that the price of our Securities will fluctuate significantly and you may not be able to resell ourSecurities at or above the offering price.

The trading price of our Securities is likely to be volatile and subject to wide price fluctuations in responseto various factors, including:

• market conditions in the broader stock market generally or in the Thai or international aviation industry inparticular;

• actual or anticipated fluctuations in our quarterly operating results;

• the issue of new or changed securities analysts’ reports or recommendations;

• additions or departures of key personnel;

• legal and regulatory developments and changes;

• foreign exchange rate fluctuations;

• litigation and governmental investigations; and

• economic and political conditions or events.

These and other factors may cause the market price and demand for our Securities to fluctuate substantially,which may limit or prevent you from readily selling our Securities and may otherwise negatively affect theliquidity of our Securities. In addition, in the past, when the market price of a stock has been volatile, holders ofthat stock have sometimes instituted securities class action litigation against the company that issued the stock. Ifany of the shareholders were to bring a lawsuit against the Company, we could incur substantial costs defendingthe lawsuit or if the lawsuit is ultimately resolved against the Company, we could incur substantial costs indamages. Such a lawsuit could also divert the time and attention of our management from our business.

Future sales of our Shares by our Selling Shareholders, and the availability of large amounts of our Sharesfor sale by our Selling Shareholders, could adversely affect the trading price of the Securities.

Upon completion of the Combined Offering, Thai AirAsia’s management (including the SellingShareholders) will own an aggregate of 60% of the issued and outstanding shares of the Company. The SellingShareholders have each agreed with the International Managers that from the date of this Offering Memorandumuntil the date that is 180 days after the closing date of the Primary Offering, each of the Selling Shareholders willnot, without the respective written consent of the International Managers, offer, sell or otherwise dispose of anysecurities of the same class as the Shares offered in the Combined Offering or any securities convertible into orexchangeable for our Securities of the same class as the Shares offered in the Combined Offering. Subject to theSET provisions described below and the New Asia Aviation Shareholders’ Agreement (as defined andsummarized in “Related Party Transactions — Future Related Party Transactions — Asia Aviation Shareholders’Agreement), under the lock-up provisions agreed with the International Managers, each Selling Shareholder willbe free to sell the Shares he controls any time after November 25, 2012.

In addition, under rules issued by the SET, Shares comprising an aggregate of 55% of the post-offeringshare capital of the Company cannot be sold for a period of one year following the date of commencement of

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trading of our Shares on the SET subject to the following: up to 25% of these Shares may be sold after the periodof the first six months after trading commences on the SET and the remaining 75% of these Shares may be soldafter the period of the first 12 months after trading commences on the SET.

Significant sales of our Shares by the Selling Shareholders, including the sale of the Secondary Shares in theSecondary Offering, or the perception that significant sales may occur, could adversely affect the trading price ofthe Securities. We cannot predict the effect, if any, that future sales, or the availability of Shares for future sale,will have on the market price of the Securities prevailing from time to time. Sales of substantial amounts ofShares in the public market following the Combined Offering, or the perception that such sales may occur, couldadversely affect the market price of the Securities on the SET. These sales may also make it more difficult for usto raise capital through the issue of equity securities at a time and at a price we deem appropriate.

The interests of our controlling shareholders may differ from or conflict with our interests.

After the completion of the Combined Offering, Thai AirAsia’s management (including the SellingShareholders) will own an aggregate of 60% of the issued and outstanding shares of the Company, withsubstantial control over the Company and our affairs and business, including the election of directors, the timingand payment of dividends and the approval of most other actions requiring the approval of our shareholders. Theinterests of our controlling shareholders may differ from and conflict with the interests of the Company and ourother shareholders and our controlling shareholders are free to exercise their votes according to their interests.

We are subject to corporate disclosure and accounting requirements that differ from those in othercountries.

We are subject to reporting and corporate governance requirements in Thailand that differ, in significantrespects, from those applicable to companies in certain other countries. We are required to publish annual auditedand quarterly unaudited financial statements. The SET’s rules and regulations are evolving. The amount ofinformation made publicly available by issuers in Thailand is significantly less than that made publicly availableby comparable companies in certain more developed countries, and certain statistical and financial information ofa type typically published by companies in certain more developed countries may not be available. As a result,shareholders may not have access to the same level and type of disclosure as that available in other countries, andcomparisons with other companies in other countries may not be possible in all respects. In addition, shareholderprotection afforded by, and enforcement of, the rules and regulations of the SET, by the PLCA and other Thailaws may not be as extensive as in other countries.

There are risks associated with the trading and delivery of our Securities on the Stock Exchange ofThailand.

Prior to the Combined Offering there has been no public market for our Securities. The initial offering pricefor our Securities was the result of negotiations between us, the International Managers and the Joint Thai LeadUnderwriters and may differ significantly from the market price for the Securities following the CombinedOffering. Foreign investors may be required to own NVDRs instead of Shares. We cannot assure you that a moreliquid public market for our Securities will develop or, if a liquid trading market develops, that it will besustained. In addition, there may not be any market makers for the NVDRs relating to our Shares, and any personthat makes a market for the NVDRs relating to our Shares does not have any obligation to continue doing so andmay discontinue making a market at any time.

We are required to register both the increase of paid-up capital represented by the New Shares offered in thePrimary Offering and the list of our shareholders with the MOC prior to delivery of the Primary Shares. Weexpect this registration to occur, and delivery of the Primary Shares to be made approximately five business daysafter we receive payment for the Primary Shares in the Primary Offering. Under Thai law, the status of investorsin our Shares in the period between the time investors pay for Shares and the time the increase in our paid-upcapital and list of our shareholders are registered with the MOC is uncertain. During this period, investors maynot be shareholders and instead would likely be considered unsecured creditors.

We have made an application to list our Shares on the SET and have applied for a waiver of the listingqualifications in relation to the minimum shareholding of 75% of the voting shares that listing applicants arerequired to hold in a core company, in our case, Thai AirAsia (in which we expect to hold 55% of the Sharesafter the Combined Offering and Thai AirAsia’s rights offering). We cannot assure you that the SET will grantsuch a waiver or that it will approve of our application to list our Shares. The SET is entitled to consider a listingapplication for up to seven days after we submit a completed application, including the MOC registrationsreferred to above, to the SET. As a result, our Shares may not be listed on the SET until June 6, 2012, if at all.Unless and until listing approval is given for our Shares, none of our Shares sold in the Combined Offering may

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be traded on the SET and holders of our Shares may only be able to sell them, if at all, in matching off-exchangetransactions. See “The Thai Securities Market” for a summary of the listing and trading procedures of the SET.

The Thai securities market is relatively small and may cause the market price of the Securities to be morevolatile.

The SET is relatively small and may be more volatile than stock exchanges in the United States and certainother countries. As of December 31, 2011, there were 472 companies listed and quoted on the SET and theaggregate market capitalization of listed equity securities of these companies listed on the SET was Baht 8,407.7billion. The relatively small market capitalization of, and trading volume on, the SET, compared to certain otherglobal stock exchanges, may cause the market price of securities listed on the SET, including the Securities, tofluctuate more than those listed on larger global stock exchanges. The market price of the Securities may beadversely affected by the lack of liquidity on the SET. In addition, the September 2006 coup and Governmentpolicies promulgated after the coup (including the institution by the BOT of the 30% capital reserve requirementon foreign currency inflows on December 18, 2006 and its subsequent reversals) have adversely affected the Thaisecurities market, which has been characterized by increased volatility since 1997. These market characteristicsmay limit your ability to sell the Securities and may also affect the market price of the Securities.

The net asset value of the New Shares issued in the Combined Offering is significantly less than theOffering Price, and you will incur immediate and substantial dilution in the net asset value per Share.

The Offering Price is substantially higher than our adjusted net asset value per Share after adjusting for theestimated net proceeds from the issue of the New Shares and based on our issued share capital after theCombined Offering. Therefore, you will experience immediate and substantial dilution and our existingshareholders will experience a material increase in the net asset value per Share they own. See “Dilution” for afurther description of the extent to which subscribers and/or purchasers of our Securities will experience dilution.

Fluctuations in the exchange rate of the Baht with respect to the U.S. Dollar or other currencies will affectthe foreign currency equivalent of the value of the Securities and any dividends.

Fluctuations in the exchange rates between the Baht and other currencies will affect the foreign currencyequivalent of the Baht price of the Securities. Such fluctuations will also affect the amount that holders of theSecurities will receive in foreign currency upon conversion of any cash dividends or other distributions paid inBaht by us on the Securities, and any proceeds paid in Baht from any sale of the Securities in the secondarytrading market.

Your ability to participate in future rights offerings may be limited.

Although Thai public companies are not required to offer pre-emptive rights to existing shareholders whenissuing new securities, Thai public companies have from time to time issued new securities through rightsofferings. Compliance with securities laws or other regulatory provisions in some jurisdictions may preventcertain investors from participating in any future rights issuances and thereby result in dilution of their existingshareholdings. We do not have, and do not currently foresee having, any obligation to register our securities inany jurisdiction outside Thailand to permit foreign investors to participate in any future rights offerings we mayundertake.

Risks Relating to the NVDRs

As an NVDR holder, you are not a legal or beneficial owner of, and you will have limited rights in relationto, the Shares underlying the NVDRs.

NVDRs are issued by the NVDR Issuer, a wholly owned subsidiary of the SET. Under the terms andconditions of the NVDRs, the NVDRs constitute a direct, general, unconditional and unsecured obligation of theNVDR Issuer that ranks equally among all NVDRs issued by the NVDR Issuer, including NVDRs relating toshares of other companies. The NVDRs do not convey to the NVDR holder any rights or obligations in relationto the shares (including our Shares) underlying the NVDRs (including the right to attend, and vote at, shareholdermeetings), and the NVDR Issuer is the registered holder and legal owner of the shares underlying the NVDRs(including our Shares). As a result, you will not be the legal owner of the Shares underlying the NVDRs.

Any rights that you will have in relation to the Shares underlying the NVDRs are limited to, among others:

• receiving an amount equivalent to the amount of dividends or other distributions paid or made to, andactually received by, the NVDR Issuer in relation to the Shares underlying the NVDRs; and

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• being able to direct the manner in which the NVDR Issuer votes the Shares underlying the NVDRs solelyin relation to any proposal to de-list the shares from the SET.

In addition, you should note that the NVDR Issuer will not exercise any voting rights that it has as legalowner of the underlying shares (including our Shares) except for any proposal for the de-listing of such sharesfrom the SET. The NVDR is a security separate from the Shares and we cannot give you any assurances as to therelationship of its future trading price or liquidity to that of the Shares.

You may not be able to register the ownership of the Shares underlying the NVDRs if you exchange yourNVDRs for the Shares.

Although the terms of the NVDRs provide holders with the right to exchange an NVDR for a share(including our Shares) underlying the NVDR, non-Thai holders may not be able to register the ownership of theshares (including our Shares) if the foreign shareholding limit has been reached at the time of the registration.See “— Risks Relating to the Company and Thai AirAsia — There are limitations on the foreign ownership ofthe Company and of our core asset, Thai AirAsia, and any breach of such limitations could result in a revocationof our air service operator license and our right to fly our routes” for a discussion of the foreign shareholdinglimits applicable to you. If the Shares are not registered in your name, you will not be entitled to vote, or to anydividend or other distributions on the Shares (any dividends or distributions would only be in relation to the ThaiNVDRs), or be entitled to any rights that our shareholders would have under Thai law. In addition, you may berequired to sell or otherwise dispose of such Shares, and we cannot assure you that any such sales will be atprevailing market price.

If the NVDR Issuer becomes insolvent, you will not be entitled to receive the Shares underlying the NVDRs.

Unlike a typical depository receipt (e.g. a GDR or ADR), which evidences an interest in specific segregatedsecurities of an issuer, NVDRs do not represent an interest in or other specific claim on the Shares deposited withthe NVDR Issuer. NVDRs are instead direct, general, unconditional and unsecured obligations of the NVDRIssuer, and if the NVDR Issuer is declared bankrupt or is liquidated, Thai law does not give NVDR holdersspecial protections or a lien over the shares (including our Shares) underlying the NVDRs. Therefore, as a holderof NVDRs, you will not be entitled to receive the Shares underlying the NVDR, which will be considered part ofthe assets of the NVDR Issuer, but would be considered a general, unsecured creditor of the NVDR Issuer. Basedon the NVDR Prospectus, the NVDR Issuer undertakes to not create any liabilities or indebtedness other thanthose relating to the issuance of the NVDRs and the operation of the NVDR Issuer. In addition, the NVDR Issuerundertakes to neither pledge nor create any lien or encumbrance over the securities underlying the NVDRs.However, we cannot assure you that the Shares underlying the NVDRs, or dividends or other cash, securities, orother property received or receivable by the NVDR Issuer in respect of such Shares, will not be subject to claimsagainst the assets of the NVDR Issuer in an insolvency or similar proceedings or otherwise, including securedclaims or claims otherwise senior in priority to those of the NVDR holders.

As an NVDR holder, any recourse which you may have, which is limited, is against the NVDR Issuer.

Under the terms and conditions of the NVDRs, as a holder of NVDRs, you do not have any right in Thailandto take any action, legal or otherwise, against the NVDR Issuer arising from or in connection with your holdingof NVDRs unless the NVDR Issuer engages in willful misconduct with respect to the distribution of the financialbenefits relating to the NVDRs and you suffer damage as a result. Because you will not be a registered holder orlegal owner of the Shares underlying the NVDRs, you may not have any course of action in Thailand against theNVDR Issuer in relation to the NVDRs.

There is limited publicly available information on the NVDR Issuer.

The NVDRs are issued and offered by the NVDR Issuer by means of the NVDR Prospectus attached as“Annex A — Issuance of Non-Voting Depositary Receipts — Prospectus”. Although the relevant Thai securitiesregulations require the NVDR Issuer to file with the Thai SEC a document that contains information relating tothe shares underlying the NVDRs it offers, the NVDR Prospectus does not include such information. The ThaiSEC has not required the NVDR Issuer to submit anything further other than the balance sheet of the NVDRIssuer to the Thai SEC and amendments to the NVDR Prospectus. In addition, the NVDR Prospectus does notcontain any financial statements or other information in relation to the NVDR Issuer. The NVDR Issuer does notpublicly release its annual financial statements or annual report on its website, and you may not be able to obtainany financial or other information in relation to the NVDR Issuer to determine its solvency.

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USE OF PROCEEDS

We estimate the net proceeds to us of the Combined Offering from the sale of New Shares to beBaht 2,746.3 million (US$86.7) million), based on an offering price of Baht 3.70 per Share, after deductingunderwriting commissions and applicable value added taxes in connection with the Combined Offering (whichare estimated to be Baht 28.7 million (US$0.9 million)).

We intend to use the net proceeds to us of the Combined Offering as follows:

• Baht 2,663.1 million (US$84.0 million) to subscribe for new shares in Thai AirAsia, which we expect willincrease our shareholding in Thai AirAsia to 55.0%; and

• the remainder for general corporate purposes.

Thai AirAsia intends to use the net proceeds of the subscription by us in its shares as follows:

• approximately Baht 1,500 million (US$47.3 million) for the expansion of Thai AirAsia’s fleet between2012 and 2014; and

• the remainder for working capital and general corporate purposes.

The foregoing discussion represents our best estimate of the Company’s and Thai AirAsia’s allocation of thenet proceeds of the Combined Offering based upon the Company’s and Thai AirAsia’s current plans andestimates regarding our anticipated expenditures. The Company’s and Thai AirAsia’s management, however,will have flexibility and discretion as to how we apply the net proceeds as described above. Actual expendituresmay vary from these estimates and the Company and Thai AirAsia may find it necessary or advisable toreallocate the net proceeds within the categories described above or to use portions of our net proceeds for otherpurposes. Pending the application of the net proceeds as described above, we intend to invest the net proceeds inmoney market instruments, certificates of deposit, time deposits or other short-term investments.

We will not receive any proceeds from the sale of the Vendor Shares by the Selling Shareholders. TheSelling Shareholders have notified us that they intend to use a portion of the proceeds of the Vendor Sharesreceived by each of them to prepay in full all outstanding amounts owed by each of them under the Credit SuisseLoan Agreement. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Indebtedness — Bank Loans — Credit Suisse Term Loan” for a summary of the Credit Suisse LoanAgreement. The Selling Shareholders expect such prepayment to be made in two installments, reflecting thetiming of receipt of the proceeds from the sale of the Vendor Tranche A Shares and the Vendor TrancheB Shares.

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DIVIDEND POLICY

Neither the Company nor Thai AirAsia has paid any dividends since incorporation. The respective boards ofdirectors of the Company and Thai AirAsia may recommend annual dividends subject to the approval of theCompany’s and Thai AirAsia’s shareholders at their respective annual general meetings. From time to time, theCompany’s and Thai AirAsia’s boards of directors may declare interim dividends. The Company’s and ThaiAirAsia’s respective board of directors intend to adopt a dividend policy which will take into account theprofitability of the business and underlying growth in earnings, as well as each entity’s respective capitalrequirements and cash flows, while maintaining an appropriate level of dividend cover.

The board of directors of the Company and Thai AirAsia will take the following factors into account whenconsidering dividend payments to the shareholders:

• the Company’s and Thai AirAsia’s performance, liquidity, current cash flow and financial status;

• provisions and conditions regarding dividend payment as provided in the loan agreements, debentures,any contracts which create the Company’s and Thai AirAsia’s liabilities, including agreements orcontracts that the Company and Thai AirAsia are obliged to comply with;

• future business plans and investment capital requirements; and

• other factors as deemed appropriate by the respective board of directors.

In addition, under the PLCA, dividend payments may only be paid based on the net profit of the Companyderived from its standalone financial statements and not from its proportionate consolidated financial statements.Therefore, the Company is not able to pay any dividend with respect to its net profit derived from itsproportionate consolidated financial statements that is attributable to the net profit of Thai AirAsia. TheCompany’s ability to make dividend payments is dependent on the receipt of dividend income from Thai AirAsiabecause such dividend payments constitute substantially all of the Company’s income. Moreover, the Companymust comply with the PLCA, which states that the Company cannot pay dividends if the Company has anaccumulated deficit, even though the Company has a net profit in that particular year. As of March 31, 2012, theCompany and Thai AirAsia had an accumulated deficit (each on a standalone basis) of Baht 6.6 million (US$0.2million) and Baht 325.6 million (US$10.3 million), respectively.

Additionally, the PLCA and the Company’s Articles of Association state that a public company limited isrequired to reserve an amount equal to 5% of the annual net profit after deduction of the accumulated loss (ifany) as legal reserve fund until such legal reserve fund is equal to not less than 10% of the registered capital. Asof March 31, 2012, the Company’s legal reserve was 0% of its registered capital. In addition to the legal reservefund, the board of directors may consider making other types of reserve fund as deemed appropriate. Under theCivil and Commercial Code and Thai AirAsia’s articles of association, each time Thai AirAsia distributesdividends, Thai AirAsia must appropriate at least one-twentieth of the profits to a reserve fund until the reservefund reaches one-tenth of the capital of Thai AirAsia.

Dividends in respect of shares are generally subject to Thai income tax withholding at a rate of 10% whenpaid to either non-resident corporate investors or to non-resident individual investors. See “Taxation — ThaiTaxation — Taxation of Dividends” for a description of Thai taxation on dividends. Cash dividends on ourShares and the NVDRs will be paid in Baht. As a result, the equivalent of any dividends in U.S. Dollar or otherforeign currencies will be affected by changes in the exchange rate between Baht and the U.S. Dollar or suchother foreign currencies.

The terms and conditions of the NVDRs provide that the NVDR Issuer is to make payments to holders ofNVDRs equal to the amount of dividends that the NVDR Issuer receives as the registered holder of our shares inproportion to each holder’s holdings in the NVDRs. See “Annex A — Issuance of Non-Voting DepositaryReceipts — Prospectus” for further details.

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EXCHANGE RATE INFORMATION

The following table sets forth, for the periods indicated, certain information concerning the average buying(telex transfer) and selling exchange rate of commercial banks in Bangkok announced by the BOT. We areproviding this information solely for your convenience. These are not necessarily the rates that we used in thepreparation of the Company’s or Thai AirAsia’s financial statements. We do not represent that the Baht or U.Sdollar amounts set forth herein and referred to elsewhere in this Offering Memorandum could have been, orcould be, converted into U.S. Dollars or Baht, as the case may be, at the reference rates indicated, at anyparticular rates, or at all.

At Period End Average(1) Low High

2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.09 37.94 40.95 35.192007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.77 34.57 36.10 33.272008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.94 33.38 35.73 31.162009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.37 34.32 36.21 33.122010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.15 31.70 33.30 29.562011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.69 30.50 31.69 29.702011:

July . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.75 30.08 30.48 29.70August . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.02 29.88 30.02 29.73September . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.17 30.42 31.18 29.92October . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.67 30.89 31.28 30.51November . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.22 30.95 31.34 30.66December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.69 31.21 31.69 30.77

2012:January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.04 31.58 31.91 31.04February . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.25 30.73 31.03 30.25March . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.84 30.69 30.84 30.48April . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.73 30.89 31.01 30.73May (through May 9, 2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.03 30.92 31.03 30.77

(1) Averages are based on daily average buying (telex transfer) and selling exchange rate of commercial banks in Bangkok announced by theBOT.

Source: BOT

On May 9, 2012, the average buying (telex transfer) and selling exchange rate of commercial banks inBangkok announced by the BOT was Baht 31.03 = US$1.00.

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CAPITALIZATION AND INDEBTEDNESS

The following table shows our capitalization and indebtedness as of March 31, 2012, which has beenprepared in accordance with Thai GAAP, on an actual and as adjusted basis. The “As Adjusted” data set forthbelow gives effect to the issue of the Shares at an offering price of Baht 3.70 per Share, and the application ofsuch proceeds in the manner described in “Use of Proceeds” after deducting underwriting commissions andapplicable value added taxes in relation to the offering amounting to approximately Baht 28.7 million(US$0.9 million).

We derived this table from our proportionate consolidated and company financial statements contained inthis Offering Memorandum. You should read this information in conjunction with our proportionate consolidatedand company financial statements and the related notes included elsewhere in this Offering Memorandum.

As of March 31, 2012

Actual As Adjusted

Bt US$ Bt US$(in millions)

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,233.1 38.9 3,979.4 125.6

Indebtedness:Amounts due to related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190.7 6.0 190.7 6.0Current portion of long-term borrowing from a financial institution . . . . . . . — — — —Current portion of finance lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 0.1 2.1 0.1Long-term borrowing from a financial institution . . . . . . . . . . . . . . . . . . . . . — — — —Finance lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 0.1 4.5 0.1

Total indebtedness(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197.3 6.2 197.3 6.2

Shareholders’ equity:Share capital(2):

Issued and fully paid — 4,100,000,000 shares (actual) and 4,850,000,000(as adjusted) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410.0 12.9 485.0 15.3

Reserves:Share premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 2,671.3 84.3

Retained earnings:Appropriated — statutory reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — —Effect on additional proportion of investment in a joint venture . . . . . . . . (15.5) (0.5) (15.5) (0.5)Deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (70.3) (2.2) (70.3) (2.2)

Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324.1 10.2 3,070.5 96.9

Total shareholders’ equity and indebtedness . . . . . . . . . . . . . . . . . . . 521.4 16.4 3,267.8 103.1

(1) All such indebtedness is unguaranteed and unsecured. See “Management’s Discussion and Analysis of Financial Condition and Resultsof Operations — Liquidity and Capital Resources — Indebtedness” for a description of our long-term debt.

(2) Actual registered share capital was Baht 485.0 million (US$15.3 million) comprising 4,850,000,000 Shares of par value Baht 0.10 perShare.

Except with respect to the foregoing, and other than as disclosed in this Offering Memorandum, there havebeen no material adverse change in the capitalization and indebtedness of the Company since March 31, 2012.

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DILUTION

Dilution created by the Combined Offering represents the amount by which the offering price paid by thepurchasers of Securities in the Combined Offering exceeds the book value of net assets per Share after theCombined Offering. We have determined book value of net assets per Share by subtracting our total liabilitiesfrom the total book value of our assets and dividing the difference by the number of Shares outstanding as ofMarch 31, 2012.

As of March 31, 2012, our book value of net assets per Share was Baht 0.08 (0.25 US cents) (based on the4,100,000,000 Shares of par value Baht 0.10 issued and outstanding as of that date). After giving effect to thesale of the 750,000,000 New Shares offered in the Combined Offering at the offering price of Baht 3.70 perShare, and after payment of underwriting commissions and applicable value added taxes of the CombinedOffering resulting in net proceeds to us of approximately Baht 2,746.3 million (US$86.7 million), but withouttaking into account any other changes in book value of net assets after March 31, 2012, the book value of netassets per Share would increase to Baht 0.63 per Share. This represents an immediate increase in book value ofnet assets of Baht 0.55 per Share, and an immediate dilution of Baht 3.07 per Share (or 82.9%) to new investorspurchasing Shares at the price of Baht 3.70 per Share.

The following table illustrates the per Share dilution (based on the offering price of Baht 3.70 per Share)described above:

Offering price per Share in the Combined Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Baht 3.70Book value of net assets per Share as of March 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Baht 0.08Increase per Share attributable to the sale of New Shares in the Combined Offering . . . . . . . . . . . . . . Baht 0.55Pro forma book value of net assets per Share after the Combined Offering (4,850,000,000 Shares

outstanding as adjusted) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Baht 0.63Dilution per Share to new investors of Shares in the Combined Offering . . . . . . . . . . . . . . . . . . . . . . . Baht 3.07Percentage dilution to new investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82.9%

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SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

You should read the selected financial information presented below in conjunction with the auditedproportionate consolidated and company financial statements as of and for the years ended December 31, 2009,2010 and 2011 of the Company and the audited financial statements as of and for the years ended December 31,2009, 2010 and 2011 of Thai AirAsia and the unaudited proportionate consolidated and company interimfinancial information as of and for the three months ended March 31, 2011 and 2012 of the Company and theunaudited interim financial information as of and for the three months ended March 31, 2011 and 2012 of ThaiAirAsia, in each case contained elsewhere in this Offering Memorandum. You should also see the section of thisOffering Memorandum entitled “Management’s Discussion and Analysis of Financial Condition and Results ofOperations”. The Company and Thai AirAsia have derived the selected Thai GAAP financial data from theaudited proportionate consolidated and company financial statements as of and for the years ended December 31,2009, 2010 and 2011 and the unaudited proportionate consolidated and company interim financial information asof and for the three months ended March 31, 2011 and 2012 of the Company, and the audited financialstatements as of and for the years ended December 31, 2009, 2010 and 2011 and the unaudited interim financialinformation as of and for the three months ended March 31, 2011 and 2012 of Thai AirAsia, prepared andpresented in accordance with Thai GAAP and reporting practices in Thailand, as required under Thai law.

The audited proportionate consolidated and company financial statements of the Company as of and for theyears ended December 31, 2009, 2010 and 2011 and the audited financial statements of Thai AirAsia as of andfor the years ended December 31, 2009, 2010 and 2011, have been audited by PwC Thailand. The unauditedproportionate consolidated and company interim financial information of the Company as of and for the threemonths ended March 31, 2011 and 2012 and the unaudited interim financial information of Thai AirAsia as ofand for the three months ended March 31, 2011 and 2012, have been reviewed by PwC Thailand, who did notexpress an audit opinion on this financial information.

In preparing the proportionate consolidated and company financial statements of the Company, we havetreated our interest in Thai AirAsia as interest in a joint venture, rather than a subsidiary, to reflect the nature ofthe joint control. Accordingly, we have accounted for Thai AirAsia on a proportionate consolidation basis bytaking 50.0%, as of and for the years ended December 31, 2009 and 2010 and as of and for the three monthsended March 31, 2011, and 51.0%, as of and for the year ended December 31, 2011 and as of and for the threemonths ended March 31, 2012, corresponding to the percentage of equity that we own or jointly control at eachperiod end date, of each of the assets, liabilities, revenues and expenses of Thai AirAsia and combining thesewith the assets, liabilities, revenues and expenses of the Company on a line-by-line basis after elimination ofintra-group transactions. In November 2011, we purchased 1.0% of the equity shares of Thai AirAsia from ourChief Executive Officer, Mr. Tassapon Bijleveld, increasing our equity interest in Thai AirAsia to 51.0%.Effective from May 4, 2012, we treated Thai AirAsia as a subsidiary instead of a joint venture, and we beganconsolidating Thai AirAsia’s financial statements on a fully consolidated basis (with a deduction for non-controlling interest). See “Management’s Discussion and Analysis of Financial Condition and Results ofOperations — Basis of Accounting — Accounting for Investment in Joint Venture” and Note 16 of the notes tothe Company’s interim financial information as of and for the three months ended March 31, 2011 and 2012 forfurther details. After the Company completes the subscription of new shares in Thai AirAsia followingcompletion of the Combined Offering, we expect that the Company will own 55.0% of Thai AirAsia’s shares.See “Corporate Structure — Post-Combined Offering Structure”.

The audited financial statements of Thai AirAsia as of and for the years ended December 31, 2009, 2010and 2011 contain an explanatory paragraph that states that, as of December 31, 2009, 2010 and 2011, ThaiAirAsia’s total current liabilities exceeded its total current assets by Baht 5,220.7 million, Baht 3,310.0 millionand Baht 1,394.3 million, respectively, but that the financial statements have been prepared on a going concernbasis. The audited financial statements of the Company contain a similar paragraph.

Our and Thai AirAsia’s results for the three months ended March 31, 2012 should not be consideredindicative of the actual results we or Thai AirAsia may achieve for the year ending December 31, 2012.

Thai GAAP differs in certain material respects from IFRS. For a discussion of significant accountingdifferences between Thai GAAP and IFRS that are relevant to the Company’s proportionate consolidated andcompany financial statements as of and for the years ended December 31, 2009, 2010 and 2011 and unauditedproportionate consolidated and company interim financial information as of and for the three months endedMarch 31, 2011 and 2012 as well as Thai AirAsia’s financial statements as of and for the years endedDecember 31, 2009, 2010 and 2011 and unaudited interim financial information as of and for the three monthsended March 31, 2011 and 2012, you should read the section entitled “Summary of Significant DifferencesBetween Thai GAAP and IFRS”.

41

The Company

Proportionate Consolidated Statements of Comprehensive Income

Year Ended December 31, Three Months Ended March 31,

Proportionate Consolidated Statements ofComprehensive Income: 2009 2010 2011 2011 2011 2012 2012

Bt Bt Bt US$ Bt Bt US$(unaudited) (unaudited)

(in millions)Revenues . . . . . . . . . . . . . . . . . . . . . . . . 4,640.6 6,049.4 8,123.2 256.3 2,080.1 2,482.7 78.3Operating costs . . . . . . . . . . . . . . . . . . . (4,658.0) (4,982.6) (6,915.3) (218.2) (1,607.9) (2,055.7) (64.9)

Gross profit (loss) . . . . . . . . . . . . . . . . . (17.4) 1,066.8 1,207.9 38.1 472.2 427.0 13.5Net gain on exchange rates . . . . . . . . . . 64.8 178.4 78.0 2.5 18.0 1.7 0.1Other income . . . . . . . . . . . . . . . . . . . . 109.0 181.5 226.0 7.1 79.2 49.2 1.5

Profit before expenses . . . . . . . . . . . . . 156.4 1,426.7 1,511.9 47.7 569.4 477.8 15.1Selling expenses . . . . . . . . . . . . . . . . . . (121.6) (178.9) (223.9) (7.1) (46.5) (100.6) (3.2)Administrative expenses . . . . . . . . . . . . (120.5) (121.3) (181.9) (5.7) (39.7) (57.7) (1.8)

Profit (loss) before finance costs andincome tax . . . . . . . . . . . . . . . . . . . . . (85.7) 1,126.5 1,106.0 34.9 483.2 319.5 10.1

Finance costs . . . . . . . . . . . . . . . . . . . . . (0.2) (121.6) (91.9) (2.9) (37.6) (3.1) (0.1)

Profit (loss) before income tax . . . . . . . (85.9) 1,004.9 1,014.1 32.0 445.6 316.5 10.0Income tax . . . . . . . . . . . . . . . . . . . . . . — — — — — — —

Net profit (loss) for the year/period . . . (85.9) 1,004.9 1,014.1 32.0 445.6 316.5 10.0

Total comprehensive income (expense)for the year/period . . . . . . . . . . . . . . (85.9) 1,004.9 1,014.1 32.0 445.6 316.5 10.0

Condensed Proportionate Consolidated Statements of Financial Position

As of December 31, As of March 31,

Condensed Proportionate Consolidated Statements ofFinancial Position: 2009 2010 2011 2011 2012 2012

Bt Bt Bt US$ Bt US$(unaudited)

(in millions)Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . 333.6 260.4 694.4 21.9 1,233.1 38.9Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 685.4 2,035.4 1,451.0 45.8 1,798.0 56.7Total non-current assets . . . . . . . . . . . . . . . . . . . . . . . . 640.9 690.4 772.5 24.4 778.3 24.6Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,326.3 2,725.8 2,223.5 70.2 2,576.3 81.3

Total debt(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 101.3 261.7 8.3 6.6 0.2Net debt(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (331.6) (159.1) (432.7) (13.7) (1,226.5) (38.7)Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 3,289.4 3,684.5 2,162.2 68.2 2,202.6 69.5Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,290.6 3,685.2 2,215.9 69.9 2,252.2 71.1Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . (1,964.3) (959.4) 7.7 0.2 324.1 10.2Total liabilities and shareholders’ equity . . . . . . . . . . . 1,326.3 2,725.8 2,223.5 70.2 2,576.3 81.3

(1) Comprises short-term borrowings from a financial institution, current portion of long-term borrowing from a financial institution, currentportion of finance lease liabilities, non-current portion of long-term borrowing from a financial institution and non-current portion offinance lease liabilities.

(2) Comprises total debt net of cash and cash equivalents.

Condensed Proportionate Consolidated Statements of Cash Flows

Year Ended December 31, Three Months Ended March 31,

Condensed Proportionate Consolidated Statements ofCash Flows: 2009 2010 2011 2011 2011 2012 2012

Bt Bt Bt US$ Bt Bt US$(unaudited) (unaudited)

(in millions)Net cash generated from (used in) operating

activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86.4 (156.9) 262.4 8.3 97.2 816.2 25.8Net cash generated from (used in) investing

activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (144.9) (16.6) 23.8 0.8 (19.9) (31.1) (1.0)Net cash generated from (used in) financing

activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.7) 99.3 126.5 4.0 (50.4) (258.2) (8.1)Cash and cash equivalents at end of

year/period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333.6 260.4 694.4 21.9 293.7 1,233.1 38.9

42

Thai AirAsiaStatements of Comprehensive Income

Year Ended December 31, Three Months Ended March 31,

Statements of Comprehensive Income: 2009 2010 2011 2011 2011 2012 2012

Bt Bt Bt US$ Bt Bt US$(unaudited) (unaudited)

(in millions)

Revenues . . . . . . . . . . . . . . . . . . . . . 9,281.2 12,098.7 16,157.6 509.9 4,160.2 4,868.1 153.6Operating costs . . . . . . . . . . . . . . . . . (9,315.9) (9,965.2) (13,757.6) (434.1) (3,215.8) (4,030.7) (127.2)

Gross profit (loss) . . . . . . . . . . . . . . (34.7) 2,133.5 2,400.0 75.7 944.4 837.4 26.4Net gain on exchange rates . . . . . . . 129.5 356.8 155.3 4.9 36.0 3.3 0.1Other income . . . . . . . . . . . . . . . . . . 217.9 363.0 451.1 14.2 158.4 96.3 3.0

Profit before expenses . . . . . . . . . . . 312.7 2,853.3 3,006.4 94.9 1,138.8 937.0 29.6Selling expenses . . . . . . . . . . . . . . . . (243.0) (357.9) (444.7) (14.0) (92.9) (197.3) (6.2)Administrative expenses . . . . . . . . . (239.8) (241.3) (357.9) (11.3) (79.2) (112.1) (3.5)

Profit (loss) before finance costs andincome tax . . . . . . . . . . . . . . . . . . (170.1) 2,254.1 2,203.8 69.5 966.7 627.6 19.8

Finance costs . . . . . . . . . . . . . . . . . . (0.4) (243.1) (183.7) (5.8) (75.1) (6.0) (0.2)

Profit (loss) before income tax . . . . . (170.5) 2,011.0 2,020.1 63.7 891.6 621.6 19.6Income tax . . . . . . . . . . . . . . . . . . . . — — — — — — —

Net profit (loss) for theyear/period . . . . . . . . . . . . . . . . . . (170.5) 2,011.0 2,020.1 63.7 891.6 621.6 19.6

Total comprehensive income(expense) for the year/period . . . . (170.5) 2,011.0 2,020.1 63.7 891.6 621.6 19.6

Condensed Statements of Financial PositionAs of December 31, As of March 31,

Condensed Statements of Financial Position: 2009 2010 2011 2011 2012 2012

Bt Bt Bt US$ Bt US$(unaudited)

(in millions)

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . 654.1 507.8 1,359.7 42.9 2,407.2 76.0Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,357.9 4,058.3 2,836.3 89.5 3,508.7 110.7Total non-current assets . . . . . . . . . . . . . . . . . . . . . . . 709.3 808.5 953.5 30.1 964.9 30.4Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,067.1 4,866.8 3,789.8 119.6 4,473.6 141.2

Total debt(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 202.5 513.2 16.2 12.9 0.4Net debt(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (650.1) (305.3) (846.5) (26.7) (2,394.3) (75.6)Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . 6,578.6 7,368.4 4,230.7 133.5 4,300.7 135.7Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,581.1 7,369.7 4,335.8 136.8 4,397.9 138.8Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . (4,514.0) (2,503.0) (546.0) (17.2) 75.7 2.4Total liabilities and shareholders’ equity . . . . . . . . . . 2,067.1 4,866.8 3,789.8 119.6 4,473.6 141.2

(1) Comprises short-term borrowings from a financial institution, current portion of long-term borrowing from a financial institution, currentportion of finance lease liabilities, non-current portion of long-term borrowing from a financial institution and non-current portion offinance lease liabilities.

(2) Comprises total debt net of cash and cash equivalents.

Condensed Statements of Cash FlowsYear Ended December 31, Three Months Ended March 31,

Condensed Statements of Cash Flows: 2009 2010 2011 2011 2011 2012 2012

Bt Bt Bt US$ Bt Bt US$(unaudited) (unaudited)

(in millions)

Net cash generated from (used in) operatingactivities . . . . . . . . . . . . . . . . . . . . . . . . . . . 173.8 (313.6) 521.4 16.5 194.5 1,591.7 50.2

Net cash generated from (used in) investingactivities . . . . . . . . . . . . . . . . . . . . . . . . . . . (289.9) (33.2) 30.6 1.0 (39.8) (61.1) (1.9)

Net cash generated from (used in) financingactivities . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.4) 198.5 258.1 8.1 (100.7) (506.2) (16.0)

Cash and cash equivalents at end ofyear/period . . . . . . . . . . . . . . . . . . . . . . . . . . 654.1 507.8 1,359.7 42.9 574.5 2,407.2 76.0

43

Non-GAAP Financial Measures

Year Ended December 31, Three Months Ended March 31,

2009 2010 2011 2011 2011 2012 2012

Bt Bt Bt US$ Bt Bt US$(in millions, except for percentages)

EBITDAR(1)(5) . . . . . . . . . . . . . . . . . . . . 1,674.2 4,577.9 5,003.0 157.9 1,640.3 1,398.4 44.1EBITDAR margin(4)(5) . . . . . . . . . . . . . . 18.0 % 37.8 % 31.0 % 31.0% 39.4% 28.7% 28.7%EBITDA(2)(5) . . . . . . . . . . . . . . . . . . . . . (38.2) 2,377.3 2,275.3 71.8 985.1 645.3 20.4EBITDA margin(4)(5) . . . . . . . . . . . . . . . (0.4)% 19.6 % 14.1 % 14.1% 23.7% 13.3% 13.3%EBIT(3)(5) . . . . . . . . . . . . . . . . . . . . . . . . (170.1) 2,254.1 2,203.7 69.5 966.7 627.6 19.8EBIT margin(4)(5) . . . . . . . . . . . . . . . . . . (1.8)% 18.6 % 13.6 % 13.6% 23.2% 12.9% 12.9%

(1) Represents earnings before interest and taxation after adding depreciation and amortization and operating lease expenses. Because thereare various EBITDAR calculation methods, our presentation of EBITDAR may not be comparable to similarly titled measures used byother companies.

(2) Represents earnings before interest and taxation after adding depreciation and amortization. Because there are various EBITDAcalculation methods, our presentation of EBITDA may not be comparable to similarly titled measures used by other companies.

(3) Represents earnings before interest and taxation. Because there are various EBIT calculation methods, our presentation of EBIT may notbe comparable to similarly titled measures used by other companies.

(4) Represents EBIT, EBITDA or EBITDAR, as the case may be, divided by revenues.

(5) EBIT, EBIT margins, EBITDA, EBITDA margins, EBITDAR or EBITDAR margins are not standard measures, nor measurements offinancial performance or liquidity, under Thai GAAP or IFRS, and should not be considered alternatives to net profit (loss), profit (loss)before finance costs and income tax or any other performance measure derived in accordance with Thai GAAP or IFRS, or as analternative to cash flow from operating activities. EBIT, EBIT margins, EBITDA, EBITDA margins, EBITDAR and EBITDAR marginsare supplemental measures of Thai AirAsia’s performance that are not required by, or presented in accordance with, Thai GAAP or IFRS.See ‘Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures” for areconciliation of Thai AirAsia’s net profit (loss) to its definition of EBIT, EBIT margin, EBITDA, EBITDA margin, EBITDAR andEBITDAR margin.

44

Operating Data

The following table presents Thai AirAsia’s operating information for the periods indicated.

Year Ended December 31,Three Months Ended

March 31,

2009 2010 2011 2011 2012

Capacity (million seats) . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 7.3 8.6 2.2 2.5Passengers carried (million) . . . . . . . . . . . . . . . . . . . . . 5.0 5.7 6.9 1.8 2.1

International (million) . . . . . . . . . . . . . . . . . . . . . . . . 2.1 2.4 2.9 0.8 0.8Domestic (million) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9 3.3 4.0 1.1 1.3

Seat load factor (%)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 76 78 80 84 87International (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 77 79 84 83Domestic (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 79 81 85 89

ASK (million)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,511 7,605 9,199 2,261 2,540International (million) . . . . . . . . . . . . . . . . . . . . . . . . 4,040 4,680 5,696 1,372 1,501Domestic (million) . . . . . . . . . . . . . . . . . . . . . . . . . . 2,470 2,925 3,502 889 1,040

RPK (million)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,921 5,923 7,389 1,906 2,174International (million) . . . . . . . . . . . . . . . . . . . . . . . . 2,974 3,600 4,539 1,144 1,238Domestic (million) . . . . . . . . . . . . . . . . . . . . . . . . . . 1,947 2,323 2,851 763 936

Average fare(4) (Baht) . . . . . . . . . . . . . . . . . . . . . . . . . . 1,520 1,791 1,849 1,850 1,778Revenue per ASK(5) (RASK):

(Baht) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.43 1.59 1.76 1.84 1.92(US cent)(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.27 5.28 5.54 5.68 6.21

Cost per ASK(6) (CASK):(Baht) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.51 1.39 1.58 1.50 1.71(US cent)(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.51 4.61 4.99 4.63 5.54

Cost per ASK (non-fuel)(7):(Baht) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.99 0.87 0.89 0.86 0.97(US cent)(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.96 2.87 2.80 2.66 3.16

Number of aircraft at period end . . . . . . . . . . . . . . . . . . 20 19 22 20 24Boeing 737-300 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 0 0 0 0Airbus A320 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 19 22 20 24

Average number of operating aircraft(9) . . . . . . . . . . . . 15.6 18.0 19.4 19.0 22.7Number of stages flown . . . . . . . . . . . . . . . . . . . . . . . . 39,388 41,823 47,579 11,971 13,662

International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,612 17,577 20,251 4,989 5,440Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,776 24,246 27,328 6,982 8,222

Average stage length (kilometers)(10) . . . . . . . . . . . . . . 979 1,032 1,074 1,049 1,033Aircraft utilization (block hours per day)(11) . . . . . . . . . 9.4 9.9 11.5 11.7 11.5Ancillary services revenue(12) (Baht in millions) . . . . . 893.0 1,686.7 2,627.2 660.8 753.6Ancillary services revenue per passenger (Baht) . . . . . 179 296 383 364 354Fuel consumed (barrels) . . . . . . . . . . . . . . . . . . . . . . . . 1,217,727 1,346,476 1,600,942 399,816 457,426Average fuel price(13) (US$ per barrel) . . . . . . . . . . . . . 68.0 88.3 124.0 111.2 127.3On time performance (%)(14) . . . . . . . . . . . . . . . . . . . . . 89 88 84 76 72

(1) Represents the number of passengers carried as a proportion to capacity, which is the number of seats available for passengers (180seats available for our Airbus A320 aircraft and 148 seats available for our Boeing 737-300 aircraft). Thai AirAsia began switching toAirbus A320 aircraft in October 2007.

(2) Available seat kilometers, which is the total number of seats available on scheduled flights multiplied by the number of kilometers theseseats were flown.

(3) Revenue passenger kilometers, which is the number of paying passengers carried on scheduled flights multiplied by the number ofkilometers those seats were flown.

(4) Calculated as total passenger revenues divided by total number of passenger carried.

(5) Calculated as revenues divided by ASK.

(6) Calculated as the sum of Thai AirAsia’s operating costs, selling expenses, administrative expenses and management remuneration (butexcluding finance costs) divided by ASK.

(7) Calculated as the sum of Thai AirAsia’s operating costs, selling expenses, administrative expenses and management remuneration (butexcluding finance costs) less fuel costs divided by ASK.

(8) Based on an exchange rate of US$1.00 = Baht 33.37 in 2009, US$1.00 = Baht 30.15 in 2010 and US$1.00 = Baht 31.69 in 2011,US$1.00 = Baht 32.37 in the three months ended March 31, 2011 and US$1.00 = Baht 30.84 in the three months ended March 31, 2012.

(9) Month-end average for the period.

45

(10) Represents the average number of kilometers flown per flight.

(11) Represents the average block hours per day per aircraft during the relevant period. Block hours is calculated by measuring the durationbetween the time of departure of an aircraft and the time of arrival at its destination.

(12) Comprises revenues relating to baggage handling fees, excess baggage fees, seat selection fees, in-flight sales of meals and beverages,convenience fees, freight, in-flight sales of merchandise and cancellation and documentation fees.

(13) Calculated as average fuel price of Jet kerosene for the period (MOPS price).

(14) A flight is deemed “on time” if the actual departure time is no more than 15 minutes of the scheduled departure time.

46

HISTORY AND CORPORATE STRUCTURE

History and Development

The Company was incorporated as Asia Aviation Co., Ltd. on February 14, 2006 by Shin CorporationPublic Company Limited (“Shin Corporation”) and a Thai investor as part of a joint venture with AirAsiaInvestment, a wholly owned subsidiary of AirAsia Berhad, to operate Thai AirAsia. As part of the joint venture,Asia Aviation Co., Ltd. purchased, on February 14, 2006, 50.0% of the shares in Thai AirAsia that wereoriginally held by Shin Corporation, and purchased an additional 1.0% from Mr. Tassapon Bijleveld inNovember 2011, while AirAsia Investment continued to hold 49.0%. On June 21, 2007, Shin Corporation and theThai investor sold and transferred all of their shares held in Asia Aviation Co., Ltd. to the Selling Shareholders.

Asia Aviation Co., Ltd. became a public company and changed its name to Asia Aviation Public CompanyLimited on December 26, 2011.

Under the stewardship and vision of our management, the major milestones in our and Thai AirAsia’scorporate history since 2004 include the following:

February 2004 . . . . . . . . . . . . . . Thai AirAsia began operating domestic air services under the Thai AirAsiabrand from Bangkok’s Don Muang Airport to Hat Yai District, Songkla,Phuket and Chiang Mai with two Boeing 737 aircraft. Thai AirAsia alsobegan operating our first international flight from Bangkok to Singapore.

July 2004 . . . . . . . . . . . . . . . . . . Thai AirAsia commenced flights to Macau.

February 2006 . . . . . . . . . . . . . . We were incorporated and purchased 50.0% of the shares of Thai AirAsia.

July 2007 . . . . . . . . . . . . . . . . . . We commenced flights to Shenzhen.

September 2007 . . . . . . . . . . . . . We moved our Bangkok hub from Don Muang International Airport toSuvarnabhumi International Airport.

October 2007 . . . . . . . . . . . . . . . Our first Airbus A320 aircraft was delivered.

November 2009 . . . . . . . . . . . . . We launched our second hub in Phuket.

August 2010 . . . . . . . . . . . . . . . We ceased operating the Boeing 737 aircraft and our fleet comprised a singleaircraft type, the Airbus A320.

December 2010 . . . . . . . . . . . . . We commenced flights to two destinations in India, Kolkata and New Delhi.We also launched the Phuket to Bali route.

January 2011 . . . . . . . . . . . . . . . We launched our third hub in Chiang Mai. We also launched the Chiang Maito Singapore route.

December 2011 . . . . . . . . . . . . . We operated 22 aircraft with 504 flights per week to 25 destinations.

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Corporate Structure

The following chart shows our shareholding structure before the Combined Offering.

Pre-Combined Offering Structure

AirAsiaBerhad

SellingShareholders

AirAsiaInvestment

The Company

Thai AirAsia

100% 100%

51% 49%

We intend to use substantially all of the net proceeds to us of the Combined Offering to subscribe for newshares in Thai AirAsia pursuant to Thai AirAsia’s rights offering to its existing shareholders scheduled to takeplace immediately after, but on the same day as, the Primary Offering. AirAsia Investment and the other sevenshareholders holding one share each in Thai AirAsia have each agreed that it will not subscribe to its rightsentitlement in the rights offering. As a result, we expect to increase our shareholding in Thai AirAsia to 55.0%after the completion of Thai AirAsia’s rights offering, which we expect to occur on the same day as the PrimaryOffering.

The following chart shows our expected shareholding structure after the Combined Offering and ThaiAirAsia’s rights offering.

Post-Combined Offering Structure

AirAsiaBerhad

SellingShareholders

AirAsiaInvestment

The Company

Thai AirAsia

100%

55%

40% 60%

45%

Public

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MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS

In the following section we discuss the Company’s and Thai AirAsia’s historical results for 2009, 2010 and2011 and the three months ended March 31, 2011 and 2012. You should read the following discussion togetherwith the audited proportionate consolidated and company financial statements as of and for the years endedDecember 31, 2009, 2010 and 2011 and the unaudited proportionate consolidated and company financialstatements as of and for the three months ended March 31, 2011 and 2012 of the Company, and the auditedfinancial statements as of and for the years ended December 31, 2009, 2010 and 2011 and the unauditedfinancial statements as of and for the three months ended March 31, 2011 and 2012 of Thai AirAsia. TheCompany’s proportionate consolidated and company financial statements and Thai AirAsia’s financialstatements have been prepared in accordance with Thai GAAP. Thai GAAP differs in certain material respectsfrom IFRS. For a summary of certain significant accounting differences between Thai GAAP and IFRS that arerelevant to the Company’s proportionate consolidated and company financial statements as of and for the yearsended December 31, 2009, 2010 and 2011 and unaudited proportionate consolidated and company interimfinancial information as of and for the three months ended March 31, 2011 and 2012 as well as Thai AirAsia’sfinancial statements as of and for the years ended December 31, 2009, 2010 and 2011 and unaudited interimfinancial information as of and for the three months ended March 31, 2011 and 2012, see “Summary ofSignificant Differences Between Thai GAAP and IFRS”.

Overview

We are the leading Thai LCC in terms of passengers carried at AOT airports, with a market share of 12.7%for the year ended September 30, 2010, according to S-A-P. Our vision is to be the lowest cost airline in everymarket we serve without compromising our level of service. We focus on providing high-frequency services onshort-haul, point-to-point international and domestic routes.

We operate from three hubs in Thailand, namely Bangkok, Phuket and Chiang Mai, and plan to open afourth hub in Hatyai by 2013 and a fifth hub in Udon Thani by 2014. We target markets within a four-hour flighttime from our various hubs, which gives us access to a population of approximately 3,153 million people inSoutheast Asia, India and China as of the end of 2010. We believe that the growing population in Thailand(approximately 64 million people as of the end of 2010) provides an attractive market in which we can stimulateair travel among a population that previously could not afford to travel by air or who live in areas not serviced byother airlines.

Our business model is based on that of AirAsia Berhad, which will own 45.0% of Thai AirAsia after thecompletion of the Combined Offering and after the Company completes the subscription of new shares in theThai AirAsia rights offering, and with whom we have a strategic partnership. We believe our simple single-class,single type fleet configuration, point-to-point operations, high aircraft utilization, scale, distribution channels andextensive route network provide us with a cost advantage over other Thai airlines and one that comparesfavorably with other LCCs around the world. Our cost competitiveness is evidenced by Thai AirAsia’s cost perASK of Baht 1.39 (4.61 U.S. cents at an exchange rate of US$1.00 = Baht 30.15) in 2010 and Baht 1.58 (4.99U.S. cents at an exchange rate of US$1.00 = Baht 31.69) in 2011. Our low costs, low fares, strong brand andmarketing and reliable service have enabled us to significantly expand our operations since we started operationsin 2004.

We have achieved strong growth in revenue from passenger seat sales since we started operations in 2004.Thai AirAsia’s passenger revenue increased from Baht 7,582.3 million in 2009 to Baht 10,260.3 million in 2010and to Baht 13,007.5 million (US$410.5 million) in 2011, which represents a compounded annual growth rate(“CAGR”) of 31.0% from 2009 to 2011. Similarly, our fleet size grew from 20 aircraft as of December 31, 2009to 22 aircraft (including one spare) as of December 31, 2011. We took delivery of two additional aircraft inJanuary and February 2012 and we intend to expand our fleet to 48 Airbus A320 aircraft by 2016. Thai AirAsiaalso achieved a strong EBITDAR margin of 31.0% in 2011. Thai AirAsia’s domestic passenger servicescomprised 44.1% of its passenger revenue and 57.9% of its total passengers in 2011. Thai AirAsia’s internationalpassenger services comprised 55.9% of its passenger revenue and 42.1% of its total passengers in 2011.

We have been able to achieve our success despite an extraordinarily difficult period for the airline industrycaused by, among other factors, the adverse effects of the global economic crisis which started in 2007, terroristattacks, and rising fuel prices and insurance premiums. Our success is also notable given that, since we startedoperations in 2004, we have competed against strong incumbent operators, some of whom have significantlygreater financial resources.

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Basis of Presentation

Accounting for Investment in Joint Venture

Thai AirAsia, which accounted for 100.0% of our total revenue in 2009, 2010 and 2011, is an incorporatedjoint venture in which we owned 50.0% of the equity shares in 2009, 2010 and up to November 8, 2011, afterwhich we owned 51% of the equity shares. In preparing the proportionate consolidated financial statements of theCompany, we have treated our interest in Thai AirAsia as interest in a joint venture, rather than a subsidiary, toreflect the nature of joint control. For purposes of the proportionate consolidated financial statements of theCompany, a joint venture is a contractual arrangement whereby two or more parties undertake an economicactivity that is subject to joint control. Accordingly, in the proportionate consolidated financial statements of theCompany, we have accounted for Thai AirAsia on a proportionate consolidation basis by taking 50.0% or 51.0%,as appropriate, corresponding to the percentage of equity that we own or control at the relevant time, of each ofthe assets, liabilities, revenues and expenses of Thai AirAsia and combining these with the assets, liabilities,revenues and expenses of the Company on a line-by-line basis after elimination of intra-group transactions. SeeNote 3.3 to the audited proportionate consolidated financial statements of the Company.

In November 2011, we purchased 399,993 shares, representing 1.0% of the equity shares, of Thai AirAsiafrom our Chief Executive Officer Mr. Tassapon Bijleveld at a purchase price of Baht 10 per share, therebyincreasing our shareholding in Thai AirAsia to 51.0%. In addition, immediately after the consummation of theCombined Offering, we plan to use substantially all of the net proceeds to us of the Combined Offering tosubscribe for new shares in Thai AirAsia pursuant to Thai AirAsia’s rights offering to its existing shareholders.AirAsia Investment and the other minority shareholders have each agreed not to subscribe for its entitlement tothe new Thai AirAsia shares. Therefore, after the consummation of Thai AirAsia’s rights offering, we expect ourequity interest in Thai AirAsia to increase from 51.0% to 55.0% and AirAsia Investment’s equity interest in ThaiAirAsia to be diluted to 45.0%. Effective from May 4, 2012 (the “Effective Date”), we treated Thai AirAsia as asubsidiary instead of a joint venture, and we consolidated Thai AirAsia’s financial statements on a fullyconsolidated basis (with a deduction for non-controlling interest to reflect AirAsia Investment’s 49.0% interest inThai AirAsia) instead of on a proportionate consolidation basis. In our consolidated financial statements, we willrecognize a gain or loss in our consolidated statement of comprehensive income for the difference between thevalue of the equity interests held under proportionate consolidation and the fair value on the Effective Date. Wewill also record any excess of the aggregate of the amount of the non-controlling interests and the fair value ofour 51.0% equity interest above the fair value of the identifiable net assets of Thai AirAsia as goodwill. Inaddition, if additional intangible assets are identified as part of the identifiable net assets of Thai AirAsia, wemay have to amortize finite life intangible assets according to their remaining useful lives in our financialstatements and recognize an impairment loss on both finite and infinite life intangible assets, if such intangibleassets are subsequently impaired. As a result, our consolidated financial statements following the Effective Datein 2012 will not be comparable to our proportionate consolidated financial statements prior to the Effective Date.

For the purposes of this Management’s Discussion and Analysis of Financial Condition and Results ofOperations, we discuss the financial condition and results of operations of Thai AirAsia instead of the 50.0% or51.0%, as the case may be, of the assets, liabilities, revenues and expenses attributable to our ownership of 50.0%or 51.0%, as the case may be, equity interest in Thai AirAsia.

Going Concern Assumptions

As of December 31, 2009, 2010 and 2011, Thai AirAsia’s total current liabilities exceeded its total currentassets by Baht 5,220.7 million, Baht 3,310.0 million and Baht 1,394.3 million (US$44.0million), respectively. Inaddition, in 2009, 2010 and 2011, Thai AirAsia had negative shareholders’ equity of Baht 4,514.0 million,Baht 2,503.0 million and Baht 546.0 million (US$17.2 million), respectively, a net loss of Baht 170.5 million in2009 and net profit of Baht 2,011.0 million and Baht 2,020.1 million (US$63.7 million) in 2010 and 2011,respectively.

The negative shareholders’ equity of Baht 4,514.0 million as of December 31, 2009 primarily resulted fromhistoric losses from prior years, including the loss resulting from the early termination of fuel hedgingarrangements in 2008. See “— Factors Affecting Results of Operations — Fuel Prices” for further details. Inaddition, AirAsia Berhad had entered into various interest rate hedging arrangements with third parties on ourbehalf. Due to the a significant decrease in interest rates, these interest rate hedging arrangements were “out ofthe money”, resulting in margin calls. As a result, AirAsia Berhad terminated these interest rate hedgingarrangements prior to their respective maturities, resulting in Thai AirAsia recording a loss and making aprovision for the early termination of such hedging arrangements in 2008 amounting to Baht 853.5 million.

The audited financial statements of Thai AirAsia include a note (Note 2) stating that despite theseconditions, the audited financial statements of Thai AirAsia have been prepared on a going concern basis. In

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2011, the major balances in current liabilities were deferred fare revenues and revenues increased byBaht 4,058.9 million. In addition, Thai AirAsia’s net profit amounted to Baht 2,011.0 million in 2010 andBaht 2,020.1 million in 2011. See Note 2 to the audited financial statements of Thai AirAsia as of and for theyears ended December 31, 2009, 2010 and 2011. The audited proportionate consolidated and company financialstatements of the Company contain a similar paragraph on the preparation of such financial statements on a goingconcern basis. See Note 2 to the audited proportionate consolidated and company financial statements of theCompany as of and for the years ended December 31, 2009, 2010 and 2011.

The increase in Thai AirAsia’s net profit in 2010 and 2011 described in the paragraph above resultedprincipally from an increase in passenger revenues, which increased 35.3% from Baht 7,582.3 million in 2009 toBaht 10,260.3 million in 2010, which further increased 26.8% to Baht 13,007.5 million (US$410.5 million) in2011, as well as a decrease in maintenance costs in 2010 resulting from the gradual change of Thai AirAsia’sfleet from the Boeing 737-300 aircraft to the Airbus A320 aircraft. As a result, Thai AirAsia’s negativeshareholders’ equity decreased as of December 31, 2010 and 2011 to Baht 2,503.0 million and Baht546.0 million (US$17.2 million), respectively.

Factors Affecting Results of Operations

Fuel Prices

The largest component of Thai AirAsia’s total operating costs is jet fuel costs, which include payments forjet fuel and related taxes, and profits or losses under fuel hedging contracts, and comprised 36.0%, 39.9% and46.6% of our total operating costs in 2009, 2010 and 2011, respectively. Thai AirAsia’s fuel costs fluctuatesignificantly in line with changes in global oil prices, which have historically been, and will in the futurecontinue to be, subject to price volatility and fluctuations in supply and demand. Thai AirAsia’s average fuelprice increased from US$68.0 per barrel in 2009 to US$88.3 per barrel in 2010 and US$124.0 per barrel in 2011.

Thai AirAsia procures a substantial majority of its jet fuel required for its flights pursuant to agreementswith PTT and Shell. Prior to 2011, in Kuala Lumpur, Penang and Macau, AirAsia Berhad entered into supplyagreements on Thai AirAsia’s behalf, for which it reimburses AirAsia Berhad at its actual cost in U.S. Dollars, sothat it benefits from economies of scale. From 2011 onwards, Thai AirAsia purchases its fuel requirements inKuala Lumpur and Penang directly, and AirAsia Berhad continues to purchase fuel on Thai AirAsia’s behalf inMacau. Thai AirAsia typically enters into 24-month supply agreements with its Thai fuel suppliers and 12- to20-month supply agreements with its international jet fuel suppliers. Thai AirAsia’s domestic jet fuel supplyagreements are priced in U.S. Dollars but provide for payment in Baht at the average exchange rate of the monthbefore the invoice date. Thai AirAsia’s international jet fuel supply agreements are priced, and generally providefor payment, in U.S. Dollars. Thai AirAsia’s jet fuel prices under its jet fuel supply agreements are generally setat the mean price of oil traded through Singapore, as published by Platts under Mean of Platts Singapore(“MOPS”) or Average Arab Gulf.

Thai AirAsia hedges, through AirAsia Berhad, its fuel prices from time to time primarily to stabilize its jetfuel costs, but such hedging may not necessarily decrease Thai AirAsia’s jet fuel expenses. Thai AirAsia hasagreed with AirAsia Berhad that any gains or losses on such hedges are to be allocated to Thai AirAsia on amonthly basis based on the volume of fuel that it budgets to use during each such month as a proportion to thebudgeted amount of fuel to be used by the AirAsia Group. Because of the nature of these fuel price swapagreements and fuel price option agreements, these agreements constitute financial assets that are required to bemarked to market, with the relevant gain or loss recorded in Thai AirAsia’s financial statements as income orexpense. Thai AirAsia also passes a portion of its fuel price increases to its passengers on international flights inthe form of fuel surcharges. However, Thai AirAsia’s fuel surcharges for its international flights do not fullycompensate it for fuel price increases. The DCA does not allow fuel surcharges to be imposed separately fromthe air fare for scheduled domestic passenger services.

In 2008 and 2009, AirAsia Berhad entered into various fuel price hedging arrangements with third parties onour behalf. Due to the large volumes of fuel hedged and degree of volatility in fuel prices, these fuel pricehedging arrangements were “out of the money”, resulting in margin calls. As a result, AirAsia Berhad terminatedthese hedging arrangements prior to their respective maturities, resulting in penalty charges becoming payable in2008 and 2009. In 2008, Thai AirAsia recorded fuel swap transaction expenses of Baht 1,741.8 million,comprising a loss on the unwinding of a fuel swap contract of Baht 1,765.8 million, partially offset by a gain onsettlement of swap contracts upon their maturity of Baht 24.0 million. In 2009, Thai AirAsia recorded fuel swaptransaction expenses of Baht 275.6 million, comprising losses upon maturity of Baht 253.0 million and a loss onunwind of fuel swap contract of Baht 22.6 million.

In 2010, Thai AirAsia recorded fuel swap transaction income of Baht 76.3 million relating to gains on itshedging arrangements during 2010. There were no outstanding fuel hedging agreements as of December 31,

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2010. In 2011, Thai AirAsia’s policy was to hedge (through AirAsia Berhad) its fuel requirements monthly tomatch Thai AirAsia’s forward bookings, and Thai AirAsia intends to continue these hedging arrangements in2012. In 2011, Thai AirAsia recorded fuel swap transaction income of Baht 13.2 million (US$0.4 million),reflecting gains upon maturity as a result of actual fuel prices exceeding the swap contract fuel prices.

Capacity and Route Mix

Our business, financial condition, results of operations and prospects are affected by Thai AirAsia’scapacity and route mix. These are in turn affected by Thai AirAsia’s fleet profile, route mix strategy and trafficrights for any particular destination.

Fleet Profile

Thai AirAsia measures its passenger capacity in two ways, first by the number of seats that are available toThai AirAsia for sale during the relevant period, and secondly by ASKs, which is the number of seats availableon scheduled flights multiplied by flown kilometers during the relevant period. Thai AirAsia began operations in2004 using the Boeing 737-300 aircraft containing 148 seats, but began switching to the Airbus A320 aircraftcontaining 180 seats beginning in October 2007. Thai AirAsia’s operational fleet comprised eight Boeing737-300 aircraft and 12 Airbus A320 aircraft as of December 31, 2009, 19 Airbus A320 aircraft as ofDecember 31, 2010 and 22 Airbus A320 aircraft as of December 31, 2011. Therefore, our capacity has increasedsignificantly since the beginning of 2009.

Route Mix Strategy

Thai AirAsia aims to maximize profitability by developing a route mix strategy that focuses on high loadfactors at satisfactory yields. Thai AirAsia assesses its route mix on at least a quarterly basis using a variety oftools, including Navitaire’s NewSkies software, to maximize revenues, yield, utilization and capacity. Route mixis primarily driven by supply and demand factors, while Thai AirAsia’s assessment of load factors varies fromroute to route and during different time periods. Thai AirAsia continuously assesses and adjusts its route mixafter reviewing the total capacity allocated to particular routes, the competition on specific routes, passengersflown and average pricing, as well as costs and possible cost escalation.

While other Thai airlines operate on a strategy of a hub-and-spoke system using Bangkok as a hub, ThaiAirAsia’s strategy is to operate on a combination of the hub-and-spoke system using multiple hubs and also onconnecting hub-to-hub. We believe this strategy allows Thai AirAsia to attract passengers who wish to travel fromone part of Thailand to another part of Thailand to bypass Bangkok, allowing them to save on travel time and cost.

Traffic Rights and Slot Availability

Thai AirAsia’s capacity and route mix are affected by allocated traffic rights and the availability of landing anddeparture slots, as each country, the relevant airport operator and/or its relevant aviation or transportation authoritygrants certain rights in relation to volume and frequency of flights. Time slots correspond to the capacity of anairport’s facilities and the ability of a carrier to land at, or take off from, an airport at a specified time and date. Inaddition, there may also be mandated caps on the number of total seats on aircraft that an airline company isallowed to fly into a particular destination. See “Regulation of the Airline Industry in Thailand” for further details.Thailand has not exhausted its traffic rights under its bilateral agreements with countries to which Thai AirAsia fliesother than to Delhi in India. However, the availability of landing and departure slots (particularly in China) and capson total seats may affect Thai AirAsia’s ability to adjust its route mix, as certain restrictions may prevent it fromincreasing flight capacity to more profitable or higher demand destinations. Consequently, Thai AirAsia’s ability toincrease its ASKs may be constrained by its inability to adjust its route mix.

Fares

The fares that Thai AirAsia charges have a direct impact on our revenue and profitability, and are affectedby the following factors.

Pricing Strategy and Yield Management

Thai AirAsia has a multiple fare structure comprising up to 12 tiers of fares, or “fare buckets” per route. Indetermining how many seats to allocate to each fare bucket for each flight and each departure date, Thai AirAsiaconsiders factors including market demand, competition, historical performance and forecasts. Generally, ourpolicy is not to lower our fares once they have been published, and as there are a limited number of seats in thelower fare buckets, the earlier a passenger books a seat, the more likely it is that the passenger will be able topurchase a seat at the lowest published fare. Thai AirAsia seeks to maximize its revenues by responding to

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periods of higher demand by decreasing the number of seats available in lower fare buckets and increasing thenumber of seats available in higher fare buckets. Thai AirAsia typically sells only the highest fare bucket close tothe day of travel, when time sensitivity outweighs price sensitivity. Such seats would typically be sold at anaverage discount of approximately 10% of the published domestic fares offered by full-service airlines. Revenuesfrom these “last minute” fares help maintain Thai AirAsia’s revenue from passenger seat sales.

Thai AirAsia uses the same revenue management system that is used by AirAsia Berhad, using softwareprovided by Navitaire’s NewSkies, an inventory and sales system which is used by most of the leading LCCs.The system facilitates daily monitoring and inventory allocation decisions by making recommendations onpricing adjustments to be made on the basis of the lowest price consistent with demand and profitable operations.In addition, we hold bi-weekly meetings to analyze booking trends, address routes that require adjustments anddiscuss promotions. While we seek to maximize our revenue, our low-cost structure enables us to offer fares thatare on average lower than our competitors on the same routes. Moreover, we periodically offer promotional faresthat are more discounted than our already low fares to promote less popular routes.

Our pricing strategy for domestic fares is subject to a Government-mandated fare ceiling of Baht 30 perkilometer per seat. Because we are an LCC, we do not expect the fare ceiling to prevent us from pricing ourdomestic fares at a level we believe to be appropriate.

Competition

Thai AirAsia faces intense competition on its domestic routes in Thailand and on its international routes,both from other low-cost carriers and from full-service carriers. Thai Airways has recently announced theirintention to establish a new carrier which may compete with us in the future. In addition, Thai AirAsia’s otherexisting competitors and new entrants into the market may undercut its fares in the future, increase capacity ontheir routes in an effort to increase their market share or attempt to conduct low-fare or low-cost airlineoperations of their own, any of which could reduce Thai AirAsia’s fares, load factors and market share and maycause Thai AirAsia to revise its cost structure and fares. The airline industry is particularly susceptible to pricediscounting because airlines incur only nominal variable costs to provide service to passengers occupyingotherwise unsold seats. Any changes in competition conditions in the Thai and regional airline markets, includingas a result of ASEAN “Open Skies” policies, could significantly affect our business, financial condition, resultsof operation and prospects.

Foreign Exchange Implications

Thai AirAsia generates revenue in many currencies. Ticket prices denominated in foreign currencies do notfluctuate although the exchange rates of those foreign currencies against the Baht may do so. Thus, a depreciationof the Baht tends to increase yields on routes for which tickets are sold in foreign currencies. Decreases in yieldstied to an appreciation of the Baht are, to varying degrees, offset by decreases in expenses denominated inforeign currencies, and vice versa.

Expenses

The airline industry is generally characterized by low profit margins and high cost obligations, primarily foraircraft leases, engineering and maintenance charges, jet fuel, staff costs and landing charges. Thai AirAsia’sability to maintain low operating costs is critical to its business model. The cost of operating an aircraft does notvary significantly with the number of passengers an airline carries in a given period. As a result of Thai AirAsia’shigh fixed cost obligations, a relatively small change in the number of passengers and its pricing can have asignificant effect on our business, financial condition, results of operation and prospects. In addition, higheraircraft utilization rates result in lower unit costs, given the higher number of passengers carried.

Certain of Thai AirAsia’s other operating costs, including Thai AirAsia’s maintenance and overhaul costs,are expected to increase over time, on an absolute basis and on a unit cost basis, as Thai AirAsia’s fleet ages andthe manufacturer warranties on Thai AirAsia’s aircraft expire. The average age of Thai AirAsia’s fleet as ofDecember 31, 2011 was two years and four months. Some of these other costs, including those related to our jetfuel costs and labor costs for pilots, cabin crew and ground personnel, vary based on the number of flightsoperated. Therefore, minor changes in yields or load factors could have a material effect on our results ofoperations. Thai AirAsia seeks to manage costs by maximizing aircraft utilization rates. However, when loadfactors are low, Thai AirAsia may make adjustments to flight frequencies or routes to manage its costs and avoidnet losses. This “breakeven” load factor differs from route to route and from time to time, depending onprevailing fares and costs.

Thai AirAsia aims to reach a high daily aircraft utilization of 12.0 block hours per day, as compared to the8.0 block hours per day typical of full-service airlines. High utilization can be achieved in part by reducing

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turnaround time at airports so that Thai AirAsia can fly more hours each day. Aircraft utilization can beinfluenced by a number of factors, some of which are outside Thai AirAsia’s control, including air traffic andairport congestion (particularly at our hubs at the Suvarnabhumi International Airport in Bangkok and PhuketInternational Airport in Phuket), adverse weather conditions, security requirements, mechanical problems withour aircraft and delays of third party contractors for services such as ground handling and refueling. As ThaiAirAsia expands its fleet, Thai AirAsia intends to increase its expenditures for recruitment and training of pilotsand flight attendants in order to support high utilization of its aircraft.

Thai AirAsia’s cost management measures focus on route management, fuel management and hedging(through AirAsia Berhad), negotiation of navigation and other flight operation fees, headcount control andsuspension of salary increases, review of management benefits and overtime and control of cabin crew expenses.As part of Thai AirAsia’s cost management measures, its policy is not to schedule flights that result in ThaiAirAsia’s aircraft being parked at airports (other than our hub airports) overnight. This enables Thai AirAsia tosave on costs because it does not need to base engineering staff (or contract with a service provider) at theseairports to perform overnight maintenance checks or keep spare parts outside our hub airports, and Thai AirAsiadoes not have to pay extra allowances or accommodation costs for the pilots and cabin crew to stay overnight at anon-hub destination.

Passenger Volume and General Economic and Political Conditions

Thai AirAsia’s revenues derived from the transportation of passengers, which includes seat sales, ancillaryrevenues, fuel surcharges and fees and commissions, accounts for substantially all of Thai AirAsia’s revenues.High passenger volumes are essential for Thai AirAsia to maintain and increase its revenues from passenger seatsales and ancillary revenue. Thai AirAsia’s passengers carried have increased from 5.0 million in 2009 to5.7 million in 2010 and to 6.9 million in 2011. The number of passengers Thai AirAsia carries primarily dependson domestic and international tourism and, to a lesser extent, business travel, to Thailand, which is in turnaffected by, among other things, fluctuations in foreign exchange rates relating to the Baht, the levels of globaland Thai economic activity, Thai domestic unrest, natural disasters and seasonal and other changes in trafficpatterns. Strong economic performance in Thailand stimulates consumer disposable income and may increasepassenger demand and allow us flexibility to increase our fares and/or volumes. Conversely, poor economicperformance in Thailand is likely to reduce passenger volumes and/or require Thai AirAsia to providepromotional fares or sell more seats in lower fare buckets.

Recent Significant Events

Since the beginning of 2007, certain significant events have had a material adverse effect on the travelindustry generally, and our business and results of operations. Specifically, the global financial crisis beginningin 2008 and the economic recession reduced global air travel and demand, and adversely affected the growth ofour results of operations. In addition, difficult conditions in the global capital markets and the economy generallyin 2011, including the debt crisis in the euro zone, have affected and may continue to affect our business,financial condition, results of operation and prospects.

Between September and December 2011, Thailand experienced widespread flooding that affected travel toand within Thailand. These events disrupted domestic and international travel and affected the Thai tourismindustry, which had a material adverse effect on Thai AirAsia’s business, financial condition, results of operationand prospects in the fourth quarter of 2011.

There have also been several incidents of political and civil unrest in Thailand. At the end of 2008, protestsagainst the Government resulted in the closure of Suvarnabhumi International Airport and Phuket InternationalAirport from the end of November 2008 to early December 2008. The outbreak of H1N1, which further affectedglobal air travel demand and the travel industry in the second quarter of 2009, also adversely affected the growthof our results of operations. A riot during the Songkran Festival in April 2009 also affected travel to and withinThailand. In 2010, additional developments also adversely affected air travel in Thailand, including the intensecivil and political strife, which culminated in April to May 2010 in widespread protests that prompted aGovernment response and resulted in civilian and military fatalities.

Extraordinary events beyond our control such as terrorist attacks and outbreaks of contagious diseases haveadversely affected the airline industry, the Thai economy and economic activity in the region, resulting indepressed demand for flights and ancillary services, lower airfares, higher insurance premiums and increasedsecurity costs. These extraordinary events may take place in the future and may have short-term or long-termimpact on the airline industry and on our business, financial condition, results of operation and prospects.

However, we anticipate that the demand for travel on LCCs such as Thai AirAsia will be less sensitive toeconomic growth fluctuations when compared to full-service carriers which charge more of a premium. This is

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supported by the increase in Thai AirAsia’s RPK from 4,921 million passenger kilometers in 2009 to7,389 million passenger kilometers in 2011, despite the financial crisis and the debt crisis in the euro zone, ascompared to the decrease or small increase in demand for full-service carriers during the same period.

Seasonality

Our revenues and profitability are affected by the seasonality of the Thai airline industry. Seasonality mayaffect Thai AirAsia’s passenger services revenues and profitability from quarter to quarter. Thai AirAsiagenerally records higher revenue in the first and fourth quarters during Thailand’s peak tourist season.Accordingly, Thai AirAsia’s revenue, operating profit and cash flow is relatively lower in the second and thirdquarters due to decreased travel during those months.

Currency Exposure

Our reporting currency is the Baht. However, most of Thai AirAsia’s jet fuel supply, insurance contracts andall of Thai AirAsia’s aircraft leases are denominated in U.S. Dollars or priced in U.S. Dollars but invoiced inBaht at the prevailing exchange rate. Approximately 79% of Thai AirAsia’s operating costs in 2011 wasdenominated in U.S. Dollars, and the remainder in a variety of other currencies, principally Baht. In addition,approximately 72% of Thai AirAsia’s revenues in 2011 was denominated in Baht, and the remainder in a varietyof other currencies, including the Macau Pataca, Malaysian Ringgit, Singapore Dollar, Hong Kong Dollar andU.S. Dollar. Approximately 33% of our assets and 10% of our liabilities in 2011 were denominated in currenciesother than Baht.

Thai AirAsia adjusts airfare pricing each quarter, but is not able to adjust fuel costs and miscellaneousoperating expenses that are denominated in foreign currencies to adjust for the fluctuation of the Baht.Accordingly, any depreciation in the value of the Baht against Thai AirAsia’s core foreign currencies may have apositive effect on operating revenues but may result in a detrimental effect on Thai AirAsia’s operating costs.Conversely, an appreciation in the value of the Baht against Thai AirAsia’s core foreign currencies may result ina detrimental effect on Thai AirAsia’s operating revenues but may result in a positive effect on Thai AirAsia’soperating costs. In addition, because Thai AirAsia’s expenses in U.S. Dollars are greater than its revenuesgenerated in U.S. Dollars, foreign exchange transactions from other currencies into U.S. Dollars are required tocover Thai AirAsia’s U.S. Dollar-denominated obligations and trade payables.

Thai AirAsia has not entered into any hedging contracts to hedge against fluctuations in exchange rates. Tocover the difference between its expenses and revenues in U.S. Dollars, Thai AirAsia’s policy has been tomanage its U.S. Dollar-denominated exposure by monthly conversion of its non-U.S. Dollar-denominatedforeign currency revenues into U.S. Dollars at the spot rate available at the time of conversion. Thai AirAsia alsocalculates its U.S. Dollar-denominated monthly commitments and matches its commitments with its U.S. Dollarrevenues and the conversion of its non-U.S. Dollar denominated foreign currency revenues. If Thai AirAsia’sU.S. Dollar revenues and converted foreign currency revenues are insufficient to match its U.S. Dollar-denominated obligations in any particular period, Thai AirAsia further converts part of its Baht revenues to U.S.Dollars to cover such shortfall.

Interest Rate Exposure

Thai AirAsia’s outstanding indebtedness is subject to fixed and variable interest rates. As of December 31,2011, Thai AirAsia’s outstanding indebtedness amounted to Baht 513.2 million (US$16.2 million), includingBaht 499.2 million (US$15.8 million) under a facility with CIMB Thai which is subject to a floating rate ofinterest of the Minimum Lending Rate minus 1% per annum. Thai AirAsia does not hedge its interest rateexposure and, as a result, Thai AirAsia is subject to interest rate fluctuations.

Brand License Fee

AirAsia Berhad and Thai AirAsia have entered into the AirAsia Brand License Agreement. Under the termsof the agreement, AirAsia Berhad granted Thai AirAsia a non-exclusive and non-assignable license to reproduceand use the AirAsia brand, except that AirAsia Berhad undertakes that Thai AirAsia’s license to the AirAsiabrand in Thailand is on an exclusive basis for the purposes of Thai AirAsia’s business operations under thepermitted name of “AirAsia” (including the adoption of such name as part of Thai AirAsia’s corporate name forthe duration of the AirAsia Brand License Agreement). Under the AirAsia Brand License Agreement, ThaiAirAsia is required to pay a license fee in U.S. dollars of 1% of its total revenue per annum on a quarterly basis.As a result, we expect our expenses to increase from 2012 onwards.

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Critical Accounting Policies

The proportionate consolidated and company financial statements of the Company and the financialstatements of Thai AirAsia are prepared in accordance with Thai GAAP. In preparing the proportionateconsolidated and company financial statements of the Company and the financial statements of Thai AirAsia, ourrespective management makes judgments, estimates and assumptions regarding uncertainties that affect thereported amounts of certain line items in our assets and liabilities, and disclosure of contingent assets andliabilities, as of the date of the financial statements, and in the reported amounts of revenues and expenses duringthe reporting period. These judgments, estimates and assumptions are, of necessity, subjective in nature. Theability to effectively and accurately establish, monitor and adjust these policies may have a material impact onthe accuracy and quality of the financial information we report.

The judgments, estimates and assumptions of the Company and Thai AirAsia are based on historicalexperiences, including changes in the business environment. However, actual results may differ from judgments,estimates and assumptions under different conditions, sometimes materially. Critical accounting policies arethose that are most important to the portrayal of our financial condition and results of operations and that requirethe management’s most subjective judgments, estimates or assumptions. The critical accounting policies of theCompany and Thai AirAsia are described below.

Aircraft Maintenance Costs Under Operating Leases

Aircraft operating lease agreements require Thai AirAsia to maintain the leased aircraft and containconditions regarding the return of the leased aircraft. Such conditions stipulate that the relevant aircraft is to berestored prior to the return of the aircraft at the end of the contractual period. The costs incurred in relation tosuch conditions are accrued based on an internal estimate which includes estimates of future costs of certainmajor airframe and engine maintenance checks and one-off redelivery costs at the end of the relevant aircraftoperating lease. These costs are recognized as part of the income statement calculated by reference to the numberof flight hours during the year.

Principal Components of Statement of Comprehensive Income

The discussion below relates to the financial statements of Thai AirAsia and not the proportionateconsolidated and company financial statements of the Company.

Revenues

The following table shows the breakdown of Thai AirAsia’s revenues for the periods specified.

Year Ended December 31,

2009 2010 2011

(Baht inmillions) %

(Baht inmillions) %

(Baht inmillions)

(US$ inmillions) %

Passenger revenues(1) . . . . . . . . . . . . . . . . . . . . 7,582.3 81.7 10,260.3 84.8 13,007.5 410.5 80.5Baggage handling and other service fees . . . . . 1,492.5 16.1 1,538.9 12.7 2,805.3 88.5 17.4In-flight revenues . . . . . . . . . . . . . . . . . . . . . . . 107.6 1.1 135.3 1.1 185.5 5.9 1.1Freight revenue . . . . . . . . . . . . . . . . . . . . . . . . . 98.8 1.1 164.2 1.4 159.4 5.0 1.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,281.2 100.0 12,098.7 100.0 16,157.6 509.9 100.0

(1) Net of refunds, and excludes value-added taxes and airport taxes.

Passenger Revenues

Passenger revenues comprise revenues from the sale of tickets for Thai AirAsia’s scheduled flights (net ofdeductions for refunds and excluding value-added taxes and airport taxes) as well as revenues from the provisionof chartered flights. The primary drivers of passenger revenues are passenger volume and the prices at whichThai AirAsia sells each seat.

Baggage Handling and Other Service Fees

Revenues from baggage handling and other service fees include fuel surcharges and revenues generatedthrough baggage handling fees, excess baggage fees, seat selection fees (beginning in 2009), booking amendmentand documentation fees that Thai AirAsia charges passengers for cancellation of flights, convenience fees forpaying by credit card (beginning in 2009), administrative fees it collects from passengers (terminated in June2009), insurance surcharges (terminated in June 2009) and booking service fees for using the call center, salesoffice or airport counter to book tickets.

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Effective from May 2011, fuel surcharges are surcharges that are imposed on Thai AirAsia’s internationalflights to partially offset increases in Thai AirAsia’s fuel costs. Thai AirAsia is prohibited by Thai laws andregulations from imposing fuel surcharges on domestic flights. Thai AirAsia imposes three levels of fuelsurcharges, depending on the length of the flight, ranging from Baht 100 to Baht 300 per passenger.

Prior to November 2008, Thai AirAsia had also imposed fuel surcharges on its international and domesticflights, which were not prohibited under Thai laws and regulations at that time. Fuel surcharges in 2008 wereBaht 550 for domestic flights and three levels of fuel surcharges for international flights, depending on the lengthof the flight, ranging from Baht 850 to Baht 1,200 per passenger. Even though Thai AirAsia ceased imposing fuelsurcharges in November 2008, revenues from fuel surcharges were Baht 150.8 million in 2009 reflecting ticketsales made prior to November 2008 for travel in 2009.

See “Business — Ancillary Services — Add-on Services and Fees” for details of the relevant charges.

In-flight Revenues

In-flight revenues include revenues derived from in-flight services, including in-flight sales of meals andbeverages, in-flight sales of merchandise and the sale of duty free products on our international flights.

Freight Revenue

Freight revenue consists primarily of revenue from freight.

Operating Costs

The following table shows the breakdown of Thai AirAsia’s operating costs for the periods specified.

Year Ended December 31,

2009 2010 2011

(Baht inmillions) %

(Baht inmillions) %

(Baht inmillions)

(US$ inmillions) %

Fuel costs(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,357.2 36.0 3,974.0 39.9 6,405.8 202.1 46.6Aircraft rental . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,712.4 18.4 2,200.6 22.1 2,727.7 86.1 19.8Ramp and airport operations . . . . . . . . . . . . . . . 1,030.9 11.1 1,162.4 11.7 1,366.5 43.1 9.9Staff costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 834.3 9.0 1,036.8 10.4 1,272.1 40.1 9.2Repair and maintenance . . . . . . . . . . . . . . . . . . . 1,264.1 13.6 964.9 9.7 1,101.5 34.8 8.0Guest services and distribution . . . . . . . . . . . . . . 505.2 5.4 609.5 6.1 751.5 23.7 5.5Other operating costs . . . . . . . . . . . . . . . . . . . . . 611.8 6.5 17.0 0.1 132.5 4.2 1.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,315.9 100.0 9,965.2 100.0 13,757.6 434.1 100.0

(1) Includes gains or losses from fuel swap transactions.

Fuel Costs

Fuel costs comprise the cost of jet fuel that Thai AirAsia purchases in connection with its air services, whichfluctuate in accordance with the prices of fuel and the volume of fuel that it consumes. These costs include gainsor losses from fuel swap contracts entered into by AirAsia Berhad on Thai AirAsia’s behalf to hedge a portion ofthe risk of any physical price movements of fuel in the world market. Thai AirAsia receives or makes paymentsfrom or to AirAsia Berhad for the gains or losses, respectively, relating to such fuel swap contracts.

Aircraft Rental

Aircraft rental relates to the cost of leasing aircraft that Thai AirAsia holds under operating leases. ThaiAirAsia currently leases all of its aircraft pursuant to contractual arrangements described in more detail in“Related Party Transactions — Past and Ongoing Related Party Transactions — AirAsia Aircraft Leases”.

Ramp and Airport Operations

Ramp costs comprise principally expenses relating to ramp equipment, including the repair and maintenanceof such equipment. Airport operations costs consist primarily of airport landing and take-off fees, navigation feesimposed by countries that Thai AirAsia flies to, check-in counter charges, aerobridge charges and customs,immigration and quarantine charges.

Staff Costs

Staff costs comprise primarily costs relating to Thai AirAsia’s staff who are directly involved in providingair services, including pilots, cabin crew, engineers, maintenance crew, guest services staff and ramp staff. These

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costs include salaries and allowances, training costs, accommodation and meal costs, and other miscellaneousallowances and expenses.

Repair and Maintenance

Repair and maintenance costs consist primarily of the costs of maintaining, repairing and overhauling all ofThai AirAsia’s aircraft and engines, technical handling fees in relation to pre-flight inspections and the cost ofaircraft spare parts and other related equipment.

Guest Services and Distribution

Guest services costs consist of expenses relating to the provision of in-flight services, including the purchaseof food and beverages for in-flight sales, the cost of merchandise for in-flight sales, commissions to cabin crewfor the in-flight sale of food, beverages and merchandise and ground handling charges.

Distribution costs comprise expenses incurred in connection with ticket sales, including commissions paidto call center and travel agents in connection with those sales, credit card commissions and booking fees payableto AirAsia Berhad for our share of fees in relation to using NewSkies software.

Other Operating Costs

Our other operating costs include depreciation and amortization and insurance.

Net Gain on Exchange Rates

Net gain on exchange rates comprises realized and unrealized foreign exchange gains and losses in relationto foreign exchange rate movements on Thai AirAsia’s revenues, expenses, assets and liabilities that aredenominated in currencies other than Baht.

Other Income

Other income includes other revenue from airport fees collected from passengers, interest income from bankdeposits and receivables from related parties, revenues from fees for the use of the AirAsia website for the sale oftravel insurance under the Go Insurance brand, income from the sale of advertising space in Thai AirAsiaaircraft, and other miscellaneous income.

The following table shows the breakdown of Thai AirAsia’s other income for the periods specified.

Year Ended December 31,

2009 2010 2011

(Baht inmillions) %

(Baht inmillions) %

(Baht inmillions)

(US$ inmillions) %

Other revenue from airport fees collected frompassengers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131.3 60.2 223.4 61.6 253.8 8.0 56.3

Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6 4.4 50.3 13.9 135.9 4.3 30.1Website usage fees . . . . . . . . . . . . . . . . . . . . . . . . 25.8 11.8 26.9 7.4 30.2 1.0 6.7Aircraft advertising . . . . . . . . . . . . . . . . . . . . . . . . — — — — 6.9 0.2 1.5Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.2 23.6 62.4 17.1 24.3 0.8 5.4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217.9 100.0 363.0 100.0 451.1 14.2 100.0

Selling Expenses

Selling expenses comprise expenses principally relating to advertising and sales promotion and other relatedexpenses, such as commissions, salaries and travelling costs. The following table shows the breakdown of ThaiAirAsia’s selling expense for the periods specified.

Year Ended December 31,

2009 2010 2011

(Baht inmillions) %

(Baht inmillions) %

(Baht inmillions)

(US$ inmillions) %

Advertising and sales promotion . . . . . . . . . . . . . 195.3 80.4 260.0 72.6 255.8 8.1 57.5Commissions and salaries . . . . . . . . . . . . . . . . . . . 14.1 5.8 18.9 5.3 28.6 0.9 6.4Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.6 13.8 79.0 22.1 160.3 5.1 36.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243.0 100.0 357.9 100.0 444.7 14.0 100.0

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Administrative Expenses

Administrative expenses comprise expenses relating to administrative and information technology staffsalaries and allowances, management remuneration, information technology equipment and license fees, officerental expenses, professional fees, depreciation relating to office space that we use, utilities such as electricity,fuel and water, and other items. The following table shows the breakdown of Thai AirAsia’s administrativeexpenses for the periods specified.

Year Ended December 31,

2009 2010 2011

(Baht inmillions) %

(Baht inmillions) %

(Baht inmillions)

(US$ inmillions) %

Staff salaries and allowances . . . . . . . . . . . . . . . . 47.2 19.7 37.9 15.7 84.8 2.7 23.7Management remuneration . . . . . . . . . . . . . . . . . . 24.8 10.3 28.8 11.9 48.2 1.5 13.5Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . 30.7 12.8 28.1 11.6 47.1 1.5 13.2Office rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.4 15.2 40.0 16.6 43.6 1.4 12.2Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29.1 12.1 31.7 13.1 33.0 1.0 9.2Information technology . . . . . . . . . . . . . . . . . . . . . 9.7 4.0 7.7 3.2 11.6 0.4 3.2Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 4.3 11.6 4.8 11.1 0.4 3.1Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.7 21.6 55.5 23.0 78.5 2.5 21.9

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239.8 100.0 241.3 100.0 357.9 11.3 100.0

Finance Costs

Finance costs include interest on loans, overdrafts and finance lease payments.

Tax Expenses

Tax expenses comprise income taxes payable to the relevant tax authorities.

Principal Components of Statement of Financial Position

The discussion below relates to the financial statements of Thai AirAsia and not the proportionateconsolidated and company financial statements of the Company.

Assets

Trade and Other Receivables, Net

Trade and other receivables, net include trade accounts receivables from freight and from sale of tickets viathird party sales agents and the GoCorporate program.

Inventories

Inventories principally consist of the value of items to be sold on Thai AirAsia flights.

Prepaid Expenses

Prepaid expenses principally consist of advanced payment for fuel, ramp and airport expenses in certainairports, and health insurance for Thai AirAsia’s employees.

Leasehold Improvements and Equipment, Net

Leasehold improvements and equipment, net include the value of leasehold improvements, computers,office installments and facilities, operational facilities, vehicles, spare parts, and assets to be installed.

Other Non-Current Assets

Other non-current assets principally consist of deposits for aircraft leases, deposits for fuel price swaps,deposits for lease rentals and deposits for airport and ramp expenses in certain airports.

Liabilities

Trade Accounts Payable

Trade accounts payable include payables relating to aircraft insurance premiums, travel insurancepremiums, fuel for aircraft, and airport and ramp services in certain airports.

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Other Accounts Payable

Other accounts payable principally consist of sales promotion with third parties, office facilities, andadvanced payment from sales agents.

Deferred Revenues

Deferred revenues principally comprise the amounts collected from the sale of air tickets for future flights,in relation to which revenues will not have been recognized until Thai AirAsia provides the relevant air servicesto its customers.

Accrued Expenses

Accrued expenses principally consist of trade accounts payable for which Thai AirAsia has not receivedinvoices.

Recent Developments

Results of Operations — Three Months Ended March 31, 2012 Compared to Three Months EndedMarch 31, 2011

Revenue. Revenues increased 17.0% to Baht 4,868.1 million (US$153.6 million) in the three monthsended March 31, 2012 from Baht 4,160.2 million in the three months ended March 31, 2011, primarilyattributable to increases in passenger revenues, revenues from baggage handling and other service fees, in-flightrevenues and freight revenue.

Passenger revenues. Passenger revenues increased 13.6% to Baht 3,892.4 million (US$122.8 million)in the three months ended March 31, 2012 from Baht 3,425.2 million in the three months ended March 31,2011, primarily because of an increase in the number of passengers carried, from 1.8 million in the threemonths ended March 31, 2011 to 2.1 million in the three months ended March 31, 2012, partially offset by adecrease in average fares. Passengers carried increased following an increase in capacity, which contributedto an increase in average passenger load factor to 87% in the three months ended March 31, 2012 from 84%in the three months ended March 31, 2011. Passenger revenues increased following an increase in thenumber of flights, especially from the Chiang Mai hub, which did not account for a significant portion ofpassenger revenues in the three months ended March 31, 2011 as compared with the three months endedMarch 31, 2012 because it opened with a limited number of flights only in January 2011.

Passenger seat capacity increased to 2.5 million seats in the three months ended March 31, 2012 from2.2 million seats in the three months ended March 31, 2011, while ASKs increased to 2,540 millionpassenger kilometers in the three months ended March 31, 2012 from 2,261 million passenger kilometers inthe three months ended March 31, 2011, primarily because Thai AirAsia took delivery of four Airbus A320aircraft. Aircraft utilization slightly decreased to 11.5 block hours per day in the three months endedMarch 31, 2012 from 11.7 block hours per day in the three months ended March 31, 2011, and average stagelength decreased slightly to 1,033 kilometers in the three months ended March 31, 2012 from1,049 kilometers in the three months ended March 30, 2011, in each case primarily as a result of flying moreflights with shorter stage lengths following increases in new shorter-distance domestic routes. Average faresdecreased to Baht 1,778 in the three months ended March 31, 2012 from Baht 1,850 in the three monthsended March 31, 2011, principally because Thai AirAsia instituted a promotional campaign with lower faresto increase demand after the floods in 2011. RPKs increased to 2,174 million passenger kilometers in thethree months ended March 31, 2012 from 1,906 million passenger kilometers in the three months endedMarch 31, 2011.

Baggage handling and other service fees. Revenues from baggage handling and other service feesincreased 34.8% to Baht 876.8 million (US$27.7 million) in the three months ended March 31, 2012 fromBaht 650.6 million in the three months ended March 31, 2011, primarily as a result of fuel surcharges thatThai AirAsia re-introduced with respect to all international flight bookings made from May 3, 2011,amounting to Baht 146.9 million in the three months ended March 31, 2012. The increase was alsoattributable to an increase in revenues from baggage handling fees, principally reflecting the increase inpassenger volumes and increases in baggage handling fees per bag.

In-flight revenues. In-flight revenues increased 4.2% to Baht 54.0 million (US$1.7 million) in thethree months ended March 31, 2012 from Baht 51.8 million in the three months ended March 31, 2011. Thehigher in-flight revenues in the three months ended March 31, 2012 principally reflected an increase inin-flight sales of meals, beverages and duty free items attributable to the increase in number of passengerscarried.

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Freight revenue. Freight revenue increased 37.7% to Baht 44.9 million (US$1.4 million) in the threemonths ended March 31, 2012 from Baht 32.6 million in the three months ended March 31, 2011,principally as a result of higher freight volumes.

Operating costs. Operating costs increased 25.3% to Baht 4,030.7 million in the three months endedMarch 31, 2012 (US$127.2 million) from Baht 3,215.8 million in the three months ended March 31, 2011,primarily attributable to increases in fuel costs, aircraft rental costs, ramp and airport operations, staff costs,repair and maintenance costs and guest services and distribution.

Fuel costs. Fuel costs increased 29.8% to Baht 1,867.9 million (US$58.9 million) in the three monthsended March 31, 2012 from Baht 1,438.8 million in the three months ended March 31, 2011, primarily dueto a significant increase in the average price of jet fuel to US$127.3 per barrel in the three months endedMarch 31, 2012 from US$111.2 per barrel in the three months ended March 31, 2011 and an increase inThai AirAsia’s number of flights, which increased fuel consumption. Thai AirAsia’s jet fuel consumptionincreased to 457,426 barrels in the three months ended March 31, 2012 from 399,816 barrels in the threemonths ended March 31, 2011.

Aircraft rental. Aircraft rental costs increased 14.9% to Baht 753.1 million (US$23.8 million) in thethree months ended March 31, 2012 from Baht 655.2 million in the three months ended March 31, 2011,primarily attributable to an increase in the number of Airbus A320 aircraft.

Ramp and airport operations. Ramp and airport operations increased 14.9% to Baht 387.9 million(US$12.2 million) in the three months ended March 31, 2012 from Baht 337.5 million in the three monthsended March 31, 2011, primarily attributable to an increase in navigational charges attributable to anincrease in the number of Airbus A320 aircraft, resulting in an increase in the number of flights.

Staff costs. Staff costs increased 36.9% to Baht 405.7 million (US$12.8 million) in the three monthsended March 31, 2012 from Baht 296.3 million in the three months ended March 31, 2011, primarily due toan increase in headcount to 2,039 as of March 31, 2012 from 1,810 as of March 31, 2011 and an increase insalaries.

Repair and maintenance. Repair and maintenance costs increased 31.6% to Baht 356.9 million(US$11.3 million) in the three months ended March 31, 2012 from Baht 271.2 million in the three monthsended March 31, 2011, primarily as a result of the lease of four additional Airbus A320 aircraft,unscheduled maintenance and an increase in repair and maintenance rates in accordance with the terms ofexisting agreements.

Guest services and distribution. Guest services and distribution increased 13.4% toBaht 216.1 million (US$6.8 million) in the three months ended March 31, 2012 from Baht 190.6 million inthe three months ended March 31, 2011, primarily attributable to higher passenger volumes.

Other operating costs. Other operating costs increased 64.2% to Baht 43.1 million (US$1.4 million)in the three months ended March 31, 2012 from Baht 26.3 million in the three months ended March 31,2011, primarily due to an increase in insurance costs following the increase in the number of aircraft and, toa lesser extent, from the cost of new operating software.

Gross profit. As a result of the above, Thai AirAsia’s gross profit decreased 11.3% to Baht 837.4 million(US$26.4 million) in the three months ended March 31, 2012 from Baht 944.4 million in the three months endedMarch 31, 2011. As a percentage of revenues, Thai AirAsia’s gross profit decreased to 17.2% in the three monthsended March 31, 2012 from 22.7% in the three months ended March 31, 2011, principally as a result of ThaiAirAsia’s operating costs, principally fuel costs, increasing at a faster rate than Thai AirAsia’s revenues.

Net gain on exchange rates. Net gain on exchange rates decreased 90.7% to Baht 3.3 million(US$0.1 million) in the three months ended March 31, 2012 from Baht 36.0 million in the three months endedMarch 31, 2011, principally as a result of the lower U.S. Dollar-denominated outstanding intercompany balancesto AirAsia Berhad.

Other income. Other income decreased 39.2% to Baht 96.3 million (US$3.0 million) in the three monthsended March 31, 2012 from Baht 158.4 million in the three months ended March 31, 2011, principally because ofa decrease in interest income and in other revenue from airport fees collected from passengers. The substantialdecrease in interest income to Baht 4.0 million (US$0.1 million) in the three months ended March 31, 2012 fromBaht 48.1 million in the three months ended March 31, 2011 was primarily attributable to a decrease in interestfrom accumulated amounts due from related parties that were repaid within 2011. Other revenue from airportfees collected from passengers decreased to Baht 69.3 million (US$2.2 million) in the three months endedMarch 31, 2012 from Baht 97.4 million in the three months ended March 31, 2011 despite an increase inpassengers, reflecting the timing of the receipt of invoices from the relevant airport authorities and the settlementof such invoices.

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Profit before expenses. As a result of the above, profit before expenses decreased 17.7% toBaht 937.0 million (US$29.6 million) in the three months ended March 31, 2012 from Baht 1,138.8 million in thethree months ended March 31, 2011.

Selling expenses. Selling expenses increased 112.3% to Baht 197.3 million (US$6.2 million) in the threemonths ended March 31, 2012 from Baht 92.9 million in the three months ended March 31, 2011, primarilyattributable to an increase in advertising activities, including to promote new routes to Trang, Nakhon Phanom,Chongqing and Chennai, and other selling expenses, including a new brand license fee payable to AirAsiaBerhad under the AirAsia Brand License Agreement amounting to Baht 48.8 million (US$1.5 million), whichwas payable from January 1, 2012 onwards. See “Related Party Transactions — Future Related PartyTransactions — AirAsia Brand License Agreement” for a summary of the AirAsia Brand License Agreement.

Administrative expenses. Administrative expenses increased 41.6% to Baht 112.1 million(US$3.5 million) in the three months ended March 31, 2012 from Baht 79.2 million in the three months endedMarch 31, 2011, primarily attributable to increases in administrative staff salaries and allowances, professionalfees and other administrative expenses.

Profit before finance costs and income tax. As a result of the above, Thai AirAsia’s profit before financecosts and income tax decreased 35.1% to Baht 627.6 million (US$19.8 million) in the three months endedMarch 31, 2012 from Baht 966.7 million in the three months ended March 31, 2011.

Finance costs. Finance costs decreased 92.0% to Baht 6.0 million (US$0.2 million) in the three monthsended March 31, 2012 from Baht 75.1 million in the three months ended March 31, 2011, primarily becauseThai AirAsia had no interest expense payable to related parties in the three months ended March 31, 2012compared with such interest expense of Baht 74.8 million in the three months ended March 31, 2011. Financecosts in the three months ended March 31, 2012 were associated primarily with interest expense relating to theCIMB Loan Agreement that Thai AirAsia entered into in April 2011, but which was repaid in full on March 29,2012.

Profit (loss) before income tax. As a result of the above, Thai AirAsia’s profit before income taxdecreased 30.3% to Baht 621.6 million (US$19.6 million) in the three months ended March 31, 2012 fromBaht 891.6 million in the three months ended March 31, 2011.

Income tax. Thai AirAsia had zero income tax accrual in the three months ended March 31, 2011 or thethree months ended March 31, 2012 because Thai AirAsia had cumulative tax losses to offset future taxableprofits.

Net profit for the year. As a result of the above, Thai AirAsia’s net profit decreased 30.3% toBaht 621.6 million (US$19.6 million) in the three months ended March 31, 2012 from Baht 891.6 million in thethree months ended March 31, 2011. As a percentage of revenues, Thai AirAsia’s net profit decreased to 12.8%in the three months ended March 31, 2012 from 21.4% in the three months ended March 31, 2011, principally asa result of selling and administrative expenses and fuel costs increasing and profit before expenses decreasing.

Financial Condition

As of March 31, 2012, Thai AirAsia had total assets of Baht 4,473.6 million (US$141.2 million), currentassets of Baht 3,508.7 million (US$110.7 million), non-current assets of Baht 964.9 million (US$30.4 million),and building improvements and equipment — net of Baht 346.4 million (US$10.9 million), compared with totalassets of Baht 3,789.8 million (US$119.6 million), current assets of Baht 2,836.3 million (US$89.5 million), non-current assets of Baht 953.5 million (US$30.1 million) and building improvements and equipment — net ofBaht 302.9 million (US$9.6 million) as of December 31, 2011. The increase in total assets in the three monthsended March 31, 2012 was primarily attributable to an increase in cash and cash equivalents from Baht 1,359.7million (US$42.9 million) as of December 31, 2011 to Baht 2,407.2 million (US$76.0 million) as of March 31,2012. The increase in building improvements and equipment — net in the three months ended March 31, 2012was primarily attributable to spare parts.

Liquidity and Capital Resources — Cash Flows in the Three Months Ended March 31, 2012

In the three months ended March 31, 2012, Thai AirAsia had operating cash flows before changes inoperating assets and liabilities of Baht 623.9 million (US$19.7 million) and net increase in operating assets andliabilities of Baht 966.0 million (US$30.5 million). Net increase in operating assets and liabilities wereprincipally a result of a Baht 509.6 million (US$16.1 million) decrease in value added tax receivable due to thereceipt thereof from Thai revenue department, and a Baht 451.6 million (US$14.3 million) increase in deferredrevenues, a Baht 64.9 million (US$2.0 million) decrease in amounts due from related parties, partially offset by a

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Baht 112.2 million (US$3.5 million) increase in cash at financial institutions pledged as security as a collateralfor letter of guarantee in relating to value added tax refund process. See “— Indebtedness — Guarantees” belowfor further information about the letter of guarantee. As a result, Thai AirAsia’s net cash generated fromoperating activities amounted to Baht 1,591.7 million (US$50.2 million).

In the three months ended March 31, 2012, Thai AirAsia’s cash flows used in investing activities ofBaht 61.1 million (US$1.9 million) were primarily from the purchase of leasehold improvements and equipmentof Baht 38.2 million (US$1.2 million) and the payments for short-term investment amounting toBaht 26.0 million (US$0.8 million).

In the three months ended March 31, 2012, Thai AirAsia repaid a long-term borrowing from a financialinstitution of Baht 499.2 million (US$15.8 million). As a result, Thai AirAsia’s cash flows used in financingactivities amounted to Baht 506.2 million (US$16.0 million).

Liquidity and Capital Resources — Liquidity

Thai AirAsia’s total outstanding indebtedness (comprising short-term loans from financial institutions, long-term loans from financial institutions, amounts due to related parties and finance lease liabilities) amounted toBaht 376.8 million (US$11.9 million) as of March 31, 2012.

Thai AirAsia had a working capital deficit, where total current liabilities were more than total current assets,of Baht 792.1 million (US$25.0 million) as of March 31, 2012. Current liabilities comprise principally deferredrevenues amounting to Baht 3,167.9 million (US$100.0 million) in relation to which Thai AirAsia expects torecognize as passenger revenues when it provides the relevant air services.

Indebtedness — Guarantees

In the three months ended March 31, 2012, Thai AirAsia incurred new commitments relating to guaranteesissued by banks relating to the value added tax refund process. Thai AirAsia was required to arrange for a letterof guarantee so that the Thai revenue department would pay the value added tax receivable referred to in “—Liquidity and Capital Resources — Cash Flows in the Three Months Ended March 31, 2012” above prior to thefinal determination of the actual amount due to Thai AirAsia. See Note 15 to the notes to the unaudited financialstatements of Thai AirAsia as of and for the three months ended March 31, 2011 and 2012 for further details.

Capital Expenditures

Thai AirAsia’s capital expenditure in the three months ended March 31, 2012 amounted to Baht 38.5million (US$1.2 million), principally in relation to the purchase of aircraft spare parts.

Contractual Obligations

Following the delivery of two additional Airbus A320 aircraft and the amendment and extension of variousexisting aircraft lease agreements in the three months ended March 31, 2012, Thai AirAsia’s operating leasecommitments (aircraft) have increased significantly to US$970.6 million as of March 31, 2012. See Note 13 tothe notes to the unaudited financial statements of Thai AirAsia as of and for the three months ended March 31,2011 and 2012 for further details.

Related Party Transactions

Thai AirAsia recorded new categories of related party transactions in the three months ended March 31,2012, principally in relation to the brand license fee payable to AirAsia Berhad under the Brand LicenseAgreement and in relation to pilot training expenses payable to Asian Aviation Centre of Excellence Sdn Bhd(“CAE”), a joint venture company of AirAsia Berhad and a third party, for training Thai AirAsia’s pilots at theAirAsia Academy in Kuala Lumpur. These fees are currently being negotiated with CAE.

In the three months ended March 31, 2012, Thai AirAsia recorded brand license fee expense of Baht 48.8million (US$1.5 million) and pilot training expense of Baht 35.3 million (US$1.1 million). As of March 31,2012, Thai AirAsia had accrued expenses payable to related parties of Baht 56.3 million (US$1.8 million) inrelation to accrued brand license fees and Baht 35.3 million (US$1.1 million) in relation to accrued pilot trainingexpenses. See “Related Party Transactions” for a summary of Thai AirAsia’s related party transactions andNote 11 of the notes to the unaudited interim financial information of Thai AirAsia as of and for the three monthsended March 31, 2011 and 2012 for a summary of the related party transactions as of and for the three monthsended March 31, 2011 and 2012.

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Results of Operations

Year Ended December 31, 2011 Compared to Year Ended December 31, 2010

Revenue. Revenues increased 33.5% to Baht 16,157.6 million (US$509.9 million) in 2011 from Baht12,098.7 million in 2010, primarily attributable to increases in passenger revenues, revenues from baggagehandling and other service fees and in-flight revenues, partially offset by a decrease in freight revenue.

Passenger revenues. Passenger revenues increased 26.8% to Baht 13,007.5 million (US$410.5million) in 2011 from Baht 10,260.3 million in 2010, primarily because of an increase in the number ofpassengers carried, from 5.7 million in 2010 to 6.9 million in 2011, following an increase in capacity andaverage fares, which contributed to an increase in average passenger load factor to 80% in 2011 from 78%in 2010. Passenger revenues increased following the improvement in the political climate in 2011, with therate of increase partially offset by the effect of the floods in Thailand between September and December2011. Political unrest in the country culminated in April to May 2010 in widespread protests.

Passenger seat capacity increased to 8.6 million seats in 2011 from 7.3 million seats in 2010, whileASKs increased to 9,199 million passenger kilometers in 2011 from 7,605 million passenger kilometers in2010, primarily because Thai AirAsia took delivery of three Airbus A320 aircraft, increased its aircraftutilization and flew longer stage lengths. Aircraft utilization increased to 11.5 block hours per day in 2011from 9.9 block hours per day in 2010 following increases in frequency on existing routes and theintroduction of new routes from Thai AirAsia’s new Chiang Mai hub that was established during the year.Thai AirAsia’s average stage length increased to 1,074 kilometers in 2011 from 1,032 kilometers in 2010,primarily as a result of the opening of Thai AirAsia’s hub in Chiang Mai and an increase in charteredflights. Average fares increased to Baht 1,849 in 2011 from Baht 1,791 in 2010, principally because of anincrease in load factors. Consequently, RPKs increased to 7,389 million passenger kilometers in 2011 from5,923 million passenger kilometers in 2010.

Baggage handling and other service fees. Revenues from baggage handling and other service feesincreased 82.3% to Baht 2,805.3 million (US$88.5 million) in 2011 from Baht 1,538.9 million in 2010,primarily as a result of an increase in revenues from baggage handling fees, principally reflecting theincrease in passenger volumes and increases in baggage handling fees per bag. The increase was alsoattributable to fuel surcharges that Thai AirAsia re-introduced with respect to all international flightbookings made from May 3, 2011, amounting to Baht 238.9 million in 2011.

In-flight revenues. In-flight revenues increased 37.1% to Baht 185.5 million (US$5.9 million) in 2011from Baht 135.3 million in 2010. The higher in-flight revenues in 2011 principally reflected an increase inin-flight sales of meals, beverages and merchandise attributable to the increase in number of passengerscarried.

Freight revenue. Freight revenue decreased 2.9% to Baht 159.4 million (US$5.0 million) in 2011from Baht 164.2 million in 2010, principally as a result of lower freight volumes.

Operating costs. Operating costs increased 38.1% to Baht 13,757.6 million (US$434.1 million) in 2011from Baht 9,965.2 million in 2010, primarily attributable to increases in fuel costs, aircraft rental costs, ramp andairport operations, staff costs, repair and maintenance costs and guest services and distribution.

Fuel costs. Fuel costs increased 61.2% to Baht 6,405.8 million (US$202.1 million) in 2011 fromBaht 3,974.0 million in 2010, primarily due to a significant increase in the average price of jet fuel toUS$124.0 per barrel in 2011 from US$88.3 per barrel in 2010 and an increase in Thai AirAsia’s flightfrequency, which increased fuel consumption. Thai AirAsia’s jet fuel consumption increased to 1,600,942barrels in 2011 from 1,346,476 barrels in 2010.

Aircraft rental. Aircraft rental costs increased 24.0% to Baht 2,727.7 million (US$86.1 million) in 2011from Baht 2,200.6 million in 2010, primarily attributable to an increase in the number of Airbus A320 aircraft.

Ramp and airport operations. Ramp and airport operations increased 17.6% to Baht 1,366.5 million(US$43.1 million) in 2011 from Baht 1,162.4 million in 2010, primarily attributable to an increase innavigational charges attributable to an increase in frequencies to existing destinations as well as an increasein the number of A320 aircraft.

Staff costs. Staff costs increased 22.7% to Baht 1,272.1 million (US$40.1 million) in 2011 fromBaht 1,036.8 million in 2010, primarily due to an increase in headcount to 2,026 as of December 31, 2011from 1,791 as of December 31, 2010 and an increase in salaries.

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Repair and maintenance. Repair and maintenance costs increased 14.2% to Baht 1,101.5 million(US$34.8 million) in 2011 from Baht 964.9 million in 2010, primarily as a result of the lease of threeadditional Airbus A320 aircraft during the year.

Guest services and distribution. Guest services and distribution increased 23.3% to Baht 751.5million (US$23.7 million) in 2011 from Baht 609.5 million in 2010, primarily attributable to higherpassenger volumes.

Other operating costs. Other operating costs increased significantly to Baht 132.5 million(US$4.2 million) in 2011 from Baht 17.0 million in 2010, primarily due to the reversal of an over-accrual ofon-time guarantee and aircraft delivery amounts that Thai AirAsia accrued in prior periods in relation to itson-time guarantee program that it terminated in 2010.

Gross profit. As a result of the above, Thai AirAsia’s gross profit increased 12.5% to Baht 2,400.0 million(US$75.7 million) in 2011 from Baht 2,133.5 million in 2010. As a percentage of revenues, Thai AirAsia’s grossprofit decreased to 14.9% in 2011 from 17.6% in 2010, principally as a result of Thai AirAsia’s operating costs,principally fuel costs, increasing at a faster rate than Thai AirAsia’s revenues.

Net gain on exchange rates. Net gain on exchange rates decreased 56.5% to Baht 155.3 million(US$4.9 million) in 2011 from Baht 356.8 million in 2010, principally as a result of the depreciation of the Bahtagainst the U.S. Dollar, which increased U.S. Dollar-denominated outstanding payables to AirAsia Berhad.

Other income. Other income increased 24.3% to Baht 451.1 million (US$14.2 million) in 2011 from Baht363.0 million in 2010, principally because of an increase in other revenue from airport fees collected frompassengers and interest income. The 13.6% increase in other revenue from airport fees collected from passengersto Baht 253.8 million (US$8.0 million) in 2011 from Baht 223.4 million in 2010 was primarily due to an increasein the number of passengers carried. The substantial increase in interest income to Baht 135.9 million(US$4.3 million) in 2011 from Baht 50.3 million in 2010 was primarily attributable to an increase in interestfrom accumulated amounts due from related parties that were repaid in 2011.

Profit before expenses. As a result of the above, profit before expenses increased 5.4% to Baht3,006.4 million (US$94.9 million) in 2011 from Baht 2,853.3 million in 2010.

Selling expenses. Selling expenses increased 24.2% to Baht 444.7 million (US$14.0 million) in 2011 fromBaht 357.9 million in 2010, primarily attributable to an increase in advertising and sponsorship and other sellingexpenses.

Administrative expenses. Administrative expenses increased 48.3% to Baht 357.9million (US$11.3million) in 2011 from Baht 241.3 million in 2010, primarily attributable to increases in administrative staffsalaries and allowances, professional fees and other administrative expenses, including managementremuneration which increased because Thai AirAsia paid bonuses in 2011, but did not pay any bonuses in 2010following a net loss in 2009.

Profit before finance costs and income tax. As a result of the above, Thai AirAsia’s profit before financecosts and income tax decreased 2.2% to Baht 2,203.8 million (US$69.5 million) in 2011 from Baht 2,254.1million in 2010.

Finance costs. Finance costs decreased 24.5% to Baht 183.7 million (US$5.8 million) in 2011 fromBaht 243.1 million in 2010, primarily attributable to a decrease in interest expenses paid to related parties toBaht 148.6 million in 2011 from Baht 242.8 million in 2010, partially offset by interest paid under the CIMBLoan Agreement under which we drew down Baht 961.0 million (US$30.3 million) in June 2011 and also tointerest paid under promissory notes issued by a Thai commercial bank in 2011.

Profit before income tax. As a result of the above, Thai AirAsia’s profit before income tax increased 0.4%to Baht 2,020.1 million (US$63.7 million) in 2011 from Baht 2,011.0 million in 2010.

Income tax. Thai AirAsia had zero income tax accrual in 2010 or 2011 because Thai AirAsia hadcumulative tax losses to offset future taxable profits.

Net profit (loss) for the year. As a result of the above, Thai AirAsia’s net profit increased 0.4% toBaht 2,020.1 million (US$63.7 million) in 2011 from Baht 2,011.0 million in 2010. As a percentage of revenues,Thai AirAsia’s net profit decreased to 12.5% in 2011 from 16.6% in 2010, principally as a result of selling andadministrative expenses increasing at a faster rate than profit before expenses.

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Year Ended December 31, 2010 Compared to Year Ended December 31, 2009

Revenues. Revenues increased 30.4% to Baht 12,098.7 million in 2010 from Baht 9,281.2 million in 2009,primarily attributable to increases in passenger revenues, revenues from baggage handling and other service fees,in-flight revenues and freight revenue.

Passenger revenues. Passenger revenues increased 35.3% to Baht 10,260.3 million in 2010 fromBaht 7,582.3 million in 2009, primarily because of an increase in the number of passengers carried, from5.0 million in 2009 to 5.7 million in 2010, following an increase in capacity and average fares, whichcontributed to an increase in average passenger load factor to 78% in 2010 from 76% in 2009. Passengerrevenues increased in spite of the political unrest in the country which culminated in April to May 2010 inprotests and resulted in fatalities.

Passenger seat capacity increased to 7.3 million seats in 2010 from 6.6 million seats in 2009, whileASKs increased to 7,605 million passenger kilometers in 2010 from 6,511 million passenger kilometers in2009, primarily because Thai AirAsia replaced all of its remaining eight Boeing 737-300 aircraft with148 seats with Airbus A320 aircraft with 180 seats, increased its aircraft utilization and flew longer stagelengths. Aircraft utilization increased to 9.9 block hours per day in 2010 from 9.4 block hours per day in2009 following increases in frequency on existing routes and the introduction of six new routes, including toKolkata and New Delhi. The new Indian routes also contributed to an increase in Thai AirAsia’s averagestage length to 1,032 kilometers in 2010 from 979 kilometers in 2009. Average fares increased toBaht 1,791 in 2010 from Baht 1,520 in 2009, principally because Thai AirAsia added more internationalflights, which typically command higher air fares and because of increased demand. Consequently, RPKsincreased to 5,923 million passenger kilometers in 2010 from 4,921 million passenger kilometers in 2009.

Baggage handling and other service fees. Revenues from baggage handling and other service feesincreased 3.1% to Baht 1,538.9 million in 2010 from Baht 1,492.5 million in 2009, primarily as a result ofan increase in revenues from baggage handling fees, partially offset by a decrease in fuel surcharges.Baggage handling fees increased principally attributable to the increase in passenger volumes and increasesin baggage handling fees per bag. Thai AirAsia did not record any revenues from fuel surcharges in 2010because Thai AirAsia ceased charging fuel surcharges in November 2008. Even though Thai AirAsia ceasedimposing fuel surcharges in November 2008, revenues from fuel surcharges were Baht 150.8 million in2009 reflecting ticket sales made prior to November 2008 for travel in 2009.

In-flight revenues. In-flight revenues increased 25.7% to Baht 135.3 million in 2010 fromBaht 107.6 million in 2009, principally reflecting an increase in in-flight sales of meals, beverages andmerchandise attributable to the increase in number of passengers carried.

Freight revenue. Freight revenue increased 66.3% to Baht 164.2 million in 2010 from Baht98.8 million in 2009, principally as a result of an increase in freight carried.

Operating costs. Operating costs increased 7.0% to Baht 9,965.2 million in 2010 from Baht 9,315.9million in 2009, primarily attributable to increases in fuel costs, aircraft rental costs, ramp and airport operations,staff costs and guest services and distribution, partially offset by a decrease in repair and maintenance costs andother operating costs.

Fuel costs. Fuel costs increased 18.4% to Baht 3,974.0 million in 2010 from Baht 3,357.2 million in2009, primarily due to an increase in average price of jet fuel to US$88.3 per barrel in 2010 from US$68.0per barrel in 2009 and an increase in our flight frequency. Our jet fuel consumption increased to1,346,476 barrels in 2010 from 1,217,727 barrels in 2009. Our fuel efficiency improved following thecompletion of the conversion into an all-Airbus A320 fleet in 2010.

Aircraft rental. Aircraft rental costs increased 28.5% to Baht 2,200.6 million in 2010 fromBaht 1,712.4 million in 2009, primarily attributable to the lease of seven Airbus A320 aircraft, which waspartially offset by the return of eight Boeing 737-300 aircraft which had lower lease rates.

Ramp and airport operations. Ramp and airport operations increased 12.8% to Baht 1,162.4 millionin 2010 from Baht 1,030.9 million in 2009, primarily attributable to an increase in navigational chargesattributable to an increase in frequencies to existing, and the introduction of new, international destinationsas well as an increase in the number of A320 aircraft, which attract higher landing fees compared withBoeing 737-300 aircraft.

Staff costs. Staff costs increased 24.3% to Baht 1,036.8 million in 2010 from Baht 834.3 million in2009, primarily due to an increase in headcount to 1,791 as of December 31, 2010 from 1,625 as ofDecember 31, 2009 and an increase in salaries.

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Repair and maintenance. Repair and maintenance costs decreased 23.7% to Baht 964.9 million in2010 from Baht 1,264.1 million in 2009, primarily as a result of the return of the Boeing 737-300 aircraft,which had higher maintenance and overhaul costs, and lease of new Airbus A320 aircraft, which hadminimal maintenance and overhaul costs.

Guest services and distribution. Guest services and distribution increased 20.6% to Baht609.5 million in 2010 from Baht 505.2 million in 2009, primarily attributable to higher passenger volumes.

Other operating costs. Other operating costs decreased 97.2% to Baht 17.0 million in 2010 fromBaht 611.8 million in 2009, primarily attributable to the reversal of an over-accrual of on-time guaranteeand aircraft delivery amounts that Thai AirAsia accrued in prior periods in relation to its on-time guaranteeprogram that it terminated in 2010.

Gross profit (loss). As a result of the above, Thai AirAsia recorded a gross profit of Baht 2,133.5 million in2010, compared to a gross loss of Baht 34.7 million in 2009. As a percentage of revenues, Thai AirAsia’s grossprofit was 17.6% in 2010 compared with a gross loss of 0.4% in 2009, principally as a result of Thai AirAsia’srevenues increasing at a faster rate than its operating costs following the gradual changeover of Thai AirAsia’s fleetfrom the Boeing 737-300 aircraft to the larger capacity and more fuel efficient Airbus A320 aircraft.

Net gain on exchange rates. Net gain on exchange rates increased 175.5% to Baht 356.8 million in 2010from Baht 129.5 million in 2009, principally as a result of the appreciation of the Baht against the U.S. Dollar,which decreased U.S. Dollar-denominated outstanding payables to AirAsia Berhad.

Other income. Other income increased 66.6% to Baht 363.0 million in 2010 from Baht 217.9 million in2009, principally because of an increase in other revenue from airport fees collected from passengers, interestincome and other miscellaneous income. The 70.2% increase in other revenue from airport fees collected frompassengers to Baht 223.4 million in 2010 from Baht 131.3 million in 2009 was primarily due to an increase in thenumber of passengers carried. The substantial increase in interest income to Baht 50.3 million in 2010 fromBaht 9.6 million was primarily attributable to an increase in interest from amounts due from related parties,following Thai AirAsia’s commencement of charging 6.0% interest per annum on outstanding balances effectivefrom January 1, 2010. Thai AirAsia did not charge any interest on such amounts in 2009.

Profit before expenses. As a result of the above, profit before expenses increased significantly toBaht 2,853.3 million in 2010 from Baht 312.7 million in 2009.

Selling expenses. Selling expenses increased 47.3% to Baht 357.9 million in 2010 from Baht 243.0million in 2009, primarily attributable to increases in our advertising and sales promotion expenses and otherrelated expenses. We commenced a new advertising campaign in 2010 to promote the completion of ourconversion into an all-Airbus A320 fleet.

Administrative expenses. Administrative expenses increased slightly to Baht 241.3 million in 2010 fromBaht 239.8 million in 2009, primarily attributable to increases in office rental and other administrative expenses,including management remuneration which increased because Thai AirAsia increased salaries for management in2010, partially offset by a decrease in administrative staff salaries and allowances.

Profit (loss) before finance costs and income tax. As a result of the above, Thai AirAsia recorded a profitbefore finance costs and income tax of Baht 2,254.1 million in 2010, compared to a loss before finance costs andincome tax of Baht 170.1 million in 2009.

Finance costs. Finance costs increased significantly to Baht 243.1 million in 2010 from Baht 0.4 millionin 2009, primarily attributable to interest accrued on outstanding payables to AirAsia Berhad in 2010 followingAirAsia Berhad’s commencement of charging 6.0% interest per annum on outstanding balances effective fromJanuary 1, 2010. The outstanding payables related to fuel swap losses, lease amounts due under operating leaseand maintenance costs. AirAsia Berhad did not charge any interest on such amounts in 2009.

Profit (loss) before income tax. As a result of the above, Thai AirAsia recorded a profit before income taxof Baht 2,011.0 million in 2010, compared to a loss before income tax of Baht 170.5 million in 2009.

Income tax. Thai AirAsia had zero income tax accrual in 2009 or 2010 because in 2009, Thai AirAsiaincurred a loss before income tax expense and as of December 31, 2010, Thai AirAsia had cumulative tax lossesof Baht 4,248.1 million available to offset future taxable profits. Therefore, Thai AirAsia used Baht 1,567.0million of tax losses carried forward from prior years to fully offset its 2010 taxable profit. Thai AirAsia’sremaining cumulative tax losses carried forward for 2011 amount to Baht 2,681.1 million (US$84.6 million).

Net profit (loss) for the year. As a result of the above, Thai AirAsia recorded a net profit for the year ofBaht 2,011.0 million in 2010, compared to a net loss for the year of Baht 170.5 million in 2009. As a percentageof revenues, Thai AirAsia’s net profit was 16.6% in 2010 compared with a net loss of 1.8% in 2009, principally

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as a result of net gain on exchange rates and other income increasing at a faster rate than selling expenses andfinance costs.

Financial Condition

Total Assets

As of December 31, 2009, 2010 and 2011, Thai AirAsia had total assets of Baht 2,067.1 million,Baht 4,866.8 million and Baht 3,789.8 million (US$119.6 million), respectively.

Current Assets

As of December 31, 2009, 2010 and 2011, Thai AirAsia had current assets of Baht 1,357.9 million,Baht 4,058.3 million and Baht 2,836.3 million (US$89.5 million), respectively. The increase in current assets in2010 was principally attributable to an increase in receivables due from related parties. See “— Liquidity andCapital Resources — Cash Flows” for a further discussion on the increases and decreases in our current assets.

Non-Current Assets

As of December 31, 2009, 2010 and 2011, Thai AirAsia had non-current assets of Baht 709.3 million,Baht 808.5 million and Baht 953.5 million (US$30.1 million), respectively.

Building Improvements and Equipment — Net

As of December 31, 2009, 2010 and 2011, Thai AirAsia had building improvements and equipment — netof Baht 288.0 million, Baht 274.6 million and Baht 302.9 million (US$9.6 million), respectively. The decreasesin building improvements and equipment — net over the 2009 to 2011 period were principally attributable todepreciation. Because Thai AirAsia leases all of its aircraft on an operating lease basis, building improvementsand equipment — net does not include the net value of Thai AirAsia’s aircraft. To the extent that Thai AirAsiapurchases its aircraft in the future, the net value of any such aircraft will be reflected in building improvementsand equipment — net in the future.

Liquidity and Capital Resources

Cash Flows

The following table sets out Thai AirAsia’s condensed statements of cash flows for the periods indicated.

Year Ended December 31,

Cash Flow Data: 2009 2010 2011 2011

Bt Bt Bt US$(in millions)

Cash flows from (used in) operating activities:Operating cash flows before changes in operating assets and liabilities . . . . 280.9 2,207.4 2,115.3 66.7Changes in operating assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . (115.9) (2,523.4) (1,621.4) (51.2)Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.4 ) (0.3 ) (24.0 ) (0.8)Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2 2.7 51.4 1.6

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173.8 (313.6 ) 521.4 16.5

Cash flows from (used in) investing activities:Net decrease (increase) in short-term loans to director . . . . . . . . . . . . . . . . . (187.0) 87.0 100.0 3.2Proceeds from sale of building improvement and equipment . . . . . . . . . . . . 3.5 2.4 7.9 0.2Payments for building improvement and equipment . . . . . . . . . . . . . . . . . . . (101.2) (108.6) (82.0) (2.6)Others(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 (14.0 ) 4.7 0.1

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (289.9) (33.2) 30.6 1.0

Cash flows from (used in) financing activities:Proceeds from short-term borrowings from a financial institution . . . . . . . . — 200.0 — —Payments on short-term borrowings from a financial institution . . . . . . . . . — — (200.0 ) (6.3)Repayments of finance lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.4 ) (1.5 ) (6.1 ) (0.2)Proceeds from long-term borrowings from a financial institution . . . . . . . . — — 961.2 30.3Repayments on long-term borrowings from a financial institution . . . . . . . . — — (462.0 ) (14.6)Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (35.0) (1.1)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.4 ) 198.5 258.1 8.1

Net (decrease) increase in cash and cash equivalents . . . . . . . . . . . . . . . . (117.5) (148.3) 810.0 25.6

(1) Includes payment for general investment, proceeds from general investment, payments for intangible assets and interest received.

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Year Ended December 31, 2011

In 2011, Thai AirAsia had operating cash flows before changes in operating assets and liabilities ofBaht 2,115.3 million (US$66.7 million) and net decrease in operating assets and liabilities of Baht 1,621.4 million(US$51.2 million). Net decrease in operating assets and liabilities were principally a result of a Baht 3,049.0 million(US$96.2 million) decrease in amounts due to related parties principally because Thai AirAsia made payments of aprevious outstanding amount due to AirAsia Berhad, a Baht 418.4 million (US$13.2 million) increase in valueadded tax receivable in relation to three Airbus A320 aircraft that were delivered during the year (pending approvalfrom the Thai revenue department), and a Baht 93.1 million (US$2.9 million) increase in other non-current assets,partially offset by a Baht 1,663.0 million (US$52.5 million) decrease in amounts due from related parties,principally because AirAsia Berhad made payments of previous outstanding amounts and a Baht 342.9 million(US$10.8 million) increase in deferred revenues. The payments made by Thai AirAsia and by AirAsia Berhadprincipally comprised payments made in June 2011 pursuant to an agreement for transfer of right to receivepayment dated June 15, 2011, whereby Thai AirAsia assigned to AirAsia Mauritius the right to receive certainreceivables from AirAsia Berhad to settle certain payables by Thai AirAsia to AirAsia Mauritius. As a result, ThaiAirAsia’s net cash generated from operating activities amounted to Baht 521.4 million (US$16.5 million).

In 2011, Thai AirAsia’s cash flows generated from investing activities of Baht 30.6 million (US$1.0 million)were primarily from the repayments of short-term loan from (net of loan granted to) a director amounting toBaht 100.0 million (US$3.2 million), partially offset by the purchase of building improvements and equipment.

In 2011, Thai AirAsia obtained a long-term loan from a financial institution, repaid a portion of such loanand repaid a short-term loan from a financial institution. As a result, Thai AirAsia’s cash flows from financingactivities amounted to Baht 258.1 million (US$8.1 million).

Year Ended December 31, 2010

In 2010, Thai AirAsia had operating cash flows before changes in operating assets and liabilities ofBaht 2,207.4 million and net decrease in operating assets and liabilities of Baht 2,523.4 million. Net decrease inoperating assets and liabilities were principally a result of a Baht 2,612.7 million increase in amounts due fromrelated parties principally because AirAsia Berhad had collected on our behalf a portion of credit card sales innon-Baht currencies made through the AirAsia Group website that were not paid during 2010 (but which werepaid in 2011, resulting in a significant decrease in amounts due from related parties), a Baht 146.4 millionincrease in prepaid expenses, a Baht 181.1 million decrease in trade accounts payable and a Baht 185.3 milliondecrease in amounts due to related parties, partially offset by a Baht 899.1 million increase in deferred farerevenues. As a result, Thai AirAsia’s net cash used in operating activities amounted to Baht 313.6 million.

In 2010, Thai AirAsia’s cash flows used in investing activities of Baht 33.2 million were primarily forpayments for building improvements and equipment, partially offset by a decrease in short term loan granted to adirector following the repayment of such loan.

In 2010, Thai AirAsia obtained a short-term loan from Kasikornbank plc. As a result, Thai AirAsia’s cashflows from financing activities amounted to Baht 198.5 million.

Year Ended December 31, 2009

In 2009, Thai AirAsia had operating cash flows before changes in operating assets and liabilities ofBaht 280.9 million and net decrease in operating assets and liabilities of Baht 115.9 million. Net decrease inoperating assets and liabilities were principally a result of a Baht 388.9 million decrease in provision for loss onunwind interest rate swap, a Baht 112.0 million decrease in other accounts payable, a Baht 44.2 million decreasein accrued expenses, a Baht 140.2 million increase in other non-current assets and a Baht 111.9 million increasein trade and other receivables as a result of an increase in revenues, partially offset by a Baht 487.6 millionincrease in amounts due to related parties in relation to the return of Boeing 737-300 aircraft prior to theexpiration of their lease term, and a Baht 234.1 million increase in deferred fare revenues. As a result, ThaiAirAsia’s net cash generated from operating activities amounted to Baht 173.8 million.

In 2009, Thai AirAsia’s cash flows used in investing activities of Baht 289.9 million were primarily due to ashort-term loan granted to a director and payments for building improvements and equipment. See “Related PartyTransactions — Past and Ongoing Related Party Transactions — Loans to Director and Interest Income” forfurther information on the loan granted to a director.

In 2009, Thai AirAsia made finance lease payments and, as a result, Thai AirAsia’s cash flows used infinancing activities amounted to Baht 1.4 million.

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Liquidity

Thai AirAsia’s primary sources of funding are cash from operating activities and equity. Shareholder andother related party advances have also been important sources of funding for Thai AirAsia’s business. ThaiAirAsia has also obtained bank loans from time to time. Thai AirAsia’s total outstanding indebtedness(comprising short-term loans from financial institutions, long-term loans from financial institutions, amounts dueto related parties and finance lease liabilities) amounted to Baht 4,222.5 million as of December 31, 2009,Baht 4,364.3 million as of December 31, 2010 and Baht 874.3 million (US$27.6 million) as of December 31,2011.

Thai AirAsia had a working capital deficit, where total current liabilities were more than total current assets,of Baht 5,220.7 million as of December 31, 2009, Baht 3,310.0 million as of December 31, 2010 andBaht 1,394.3 million (US$44.0 million) as of December 31, 2011. Thai AirAsia expects its working capitalposition to improve in 2012 as a result of the receipt of the subscription proceeds from the issue of new shares tothe Company originating from the net proceeds of the Combined Offering.

Indebtedness

Amounts Due to Related Parties

Thai AirAsia has historically received financial support from companies in the AirAsia Group for itsworking capital requirements. The aggregate principal amount of advances outstanding represented by amountsdue to related parties, which are denominated principally in U.S. Dollars, amounted to Baht 4,218.4 million as ofDecember 31, 2009, Baht 4,161.7 million as of December 31, 2010 and Baht 361.1 million (US$11.4 million) asof December 31, 2011. From January 1, 2010, the interest rate on the outstanding balance of these amounts dueto related parties was 6.0% per annum and repayment is made on a monthly rolling basis. Prior to January 1,2010, no interest was payable on the outstanding amounts due to related parties. For more information on theseamounts due to related parties and the Financial Assistance Agreement relating to such advances, see “RelatedParty Transactions”.

Bank Loans

Thai AirAsia has obtained certain credit facilities from CIMB Thai and Kasikornbank plc with amountsavailable to be drawn thereunder. Thai AirAsia’s total bank loans outstanding was zero as of December 31, 2009,Baht 200.0 million as of December 31, 2010 and Baht 499.2 million (US$15.8 million) as of December 31, 2011.In addition, the Company has guaranteed loans granted by Credit Suisse to the Selling Shareholders.

CIMB Facilities

On April 25, 2011, Thai AirAsia entered into a certificate and letter of consent (the “Letter of Consent”)with CIMB Thai, under which CIMB Thai approved certain facilities (the “CIMB Facilities”), comprising anoverdraft facility in the amount of Baht 5.0 million, a long-term loan in the amount of Baht 970.0 million and ashort-term credit line in relation to foreign currency pre-settlement risk in the amount of Baht 45.0 million.

The loan agreement dated April 25, 2011 between Thai AirAsia and CIMB Thai (the “CIMB LoanAgreement”) was for the purpose of funding any expenses relating to the delivery of aircraft prior to the expirydate under an aircraft lease agreement dated September 14, 2009 between Thai AirAsia and AirAsia Mauritius.Thai AirAsia drew down Baht 961.0 million on June 2, 2011.

The interest rate per annum is the Minimum Lending Rate (“MLR”) minus 1.0%. The principal amount isdue in 24 equal monthly installments of not less than Baht 40.5 million, with the first installment due at the endof the month following the first drawdown, which was on June 2, 2011. As of December 31, 2011, the aggregateprincipal amount of the loan outstanding was Baht 499.2 million. Thai AirAsia repaid in full the outstandingprincipal amount of the loan on March 29, 2012.

On May 11, 2011, Thai AirAsia entered into a Baht 5.0 million overdraft facility agreement with CIMBThai (the “CIMB Overdraft Facility Agreement”), under which CIMB Thai agreed to provide a Baht 5.0 millionoverdraft facility in relation to Thai AirAsia’s current account held with CIMB Thai. The interest rate per annumequals to the Minimum Overdraft Rate (“MOR”). Thai AirAsia and CIMB Thai agreed to terminate the CIMBOverdraft Facility Agreement with effect from March 29, 2012.

Credit Suisse Term Loan

Each of the Selling Shareholders (together, the “Borrowers”) entered into a loan agreement dated June 7,2007 (the “Credit Suisse Loan Agreement”) with Credit Suisse, Singapore branch (“Credit Suisse”) in relation to

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a term loan from Credit Suisse in the Baht-equivalent amount of US$39.0 million to, inter alia, finance thepurchase price for the acquisition of all of the Company’s issued share capital that was held by Shin Corporationand Mr. Sitthichai Veerathummnoon (the “Acquired Shares”). The acquisition was completed on June 21, 2007.The interest rate per annum is either the interest hedge rate under the interest rate hedging agreement or, if thereis no interest rate hedging agreement in place, the equivalent Baht interest rate necessary to equal a U.S. Dollarrate equal to LIBOR plus 2.5%. The facility is required to be repaid 60 months from the utilization date, whichwas June 21, 2007. As of December 31, 2011, the aggregate principal amount outstanding was Baht 1,349.8million (US$42.6 million).

If an initial public offering of the Company, Thai AirAsia or any entity established for the purpose ofundertaking an initial public offering of all or part of Thai AirAsia or its successors or assigns occurs, theBorrowers have agreed to pay Credit Suisse its pro rata share of a success fee in the form of fully paid calloptions to purchase shares in the listing vehicle (the “Option Shares”). The number of call options to which thelenders are entitled depends on the valuation of Thai AirAsia at the time of the initial public offering and theinitial public offering price per share of the listing vehicle, with the maximum amount equal to 200% of the Baht-equivalent of US$39.0 million divided by 60% of the initial public offering price of the shares of the listingvehicle.

Immediately upon the occurrence of the initial public offering, the Borrowers have agreed to procure thetransfer of the number of Option Shares equal to the number of outstanding call options to the lenders or, to theextent legal title to the Option Shares cannot be transferred because it would result in, among other things,non-compliance with any minimum shareholding requirements imposed by law, or at the option of the Borrowersor Credit Suisse, to pledge such shares to Credit Suisse. The call options may be exercised at the prevailingexercise price during the option period, which is the period from the first trading day of the listing vehicle’sshares to and including the later of the final maturity date under the Credit Suisse Loan Agreement and the datefalling 24 months after the first trading day. The exercise price is the volume weighted average price of eachshare of the listing vehicle on the five trading days preceding the relevant exercise date. If the call options areexercised, the Borrowers have the option of settling the settlement value by physical delivery of Option Shares orby cash.

Under a Call Option and Settlement Agreement dated March 30, 2012 between the Borrowers and CreditSuisse (the “Call Option and Settlement Agreement”), the Borrowers and Credit Suisse have agreed that:

• Credit Suisse must exercise all of its call options one business day prior to the date of registration of thePrimary Shares sold in the Primary Offering;

• the requirements to transfer legal title of the Option Shares to Credit Suisse or to pledge the Option Sharesto Credit Suisse are waived;

• the Borrowers elect to settle the call options by cash payment of an amount agreed with Credit Suisse,subject to a specified maximum;

• the exercise price for each call option is deemed to be equal to the offer price per share of the CombinedOffering and the strike price is deemed to be 60% of the offer price per share of the Combined Offering;

• a portion of the proceeds of the Vendor Shares must be used to pay the settlement value of the exercise ofthe Call Options and prepay all outstanding amounts under the Credit Suisse Loan Agreement; and

• if the final settlement date does not occur on or prior to June 21, 2012 or the Borrowers do not pay thefinal settlement amount, the terms of the Credit Suisse Loan Agreement will remain in full force andeffect as if the Call Option and Settlement Agreement had not been entered into by the parties.

Credit Suisse has also granted the Selling Shareholders various waivers and consents in relation to specifiedcovenants and events of default that may be breached or triggered as a result of or arising from the CombinedOffering.

In addition, the Selling Shareholders have notified us that they intend to use a portion of the proceeds fromtheir sale of the Vendor Shares received by each of them to prepay in full all outstanding amounts owed by eachof them under the Credit Suisse Loan Agreement. The Selling Shareholders expect to make such payments in twoinstallments, reflecting the timing of receipt of the proceeds from the sale of the Vendor Tranche A Shares,which will be on the date of the registration of the increase in paid-up capital in relation to the New Shares soldin the Primary Offering, and the Vendor Tranche B Shares, which will be on the second trading day of our Shareson the SET.

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The facility is secured by (i) a pledge over the Acquired Shares, which Credit Suisse has agreed to release,in relation to the Vendor Tranche A Shares, on the payment of the proceeds of the Vendor Tranche A Shares intoan escrow account one business day prior to the date of registration of the increase in paid-up capital in relationto the New Shares sold in the Primary Offering, in relation to the Vendor Tranche B Shares, on the payment ofthe proceeds of the Vendor Tranche B Shares into an escrow account one business day prior to the first tradingday of our Shares on the SET and, in relation to the remaining Shares held by the Borrowers, after theoutstanding amounts under the Credit Suisse Loan Agreement is repaid in full, which will be one business dayafter the first trading day of our Shares on the SET, (ii) a pledge over the issued shares in Thai AirAsia which isowned by the Company, which Credit Suisse has agreed to release immediately upon the completion of theregistration of the increase in paid-up capital in relation to the New Shares sold in the Primary Offering and apledge over the issued shares in Thai AirAsia which are owned by Mr. Tassapon Bijleveld, which Credit Suissehas agreed to release after the outstanding amounts under the Credit Suisse Loan Agreement are repaid in full,(iii) an assignment of the debt service reserve account and the charged account and (iv) an assignment of therights of the Borrowers under the shareholders’ agreement of the Company in respect of the Acquired Sharesheld by the Borrowers, which will be re-assigned to the Borrowers after the outstanding amounts under the CreditSuisse Loan Agreement are repaid in full. In addition, the facility is guaranteed by the Company under aguarantee dated June 21, 2007 between the Company and Credit Suisse, which Credit Suisse has agreed todischarge immediately upon the completion of the registration of the increase in paid-up capital in relation to theNew Shares sold in the Primary Offering.

Guarantees

Thai AirAsia has entered into guarantees from time to time with Siam Commercial Bank Pcl., KasikornbankPcl., and Citibank N.A., in relation to the performance of certain obligations under our third party groundhandling, technical support and other flight operation contracts. Thai AirAsia provided its fixed deposit accountsheld with Kasikornbank Pcl. and Citibank N.A. as security for such obligations. These guarantee commitmentsamounted to Baht 7.6 million, US$90,000 and Rupee 27.8 million as of December 31, 2010 and Baht 5.6 million,US$90,000 and Rupee 27.8 million as of December 31, 2011.

In addition, Thai AirAsia entered into a guarantee dated June 23, 2011 with Thanachart Bank Pcl. toguarantee 12 student pilot loans, each for Baht 2,242,000. The guarantee is valid from the date any amountsunder the relevant student pilot loan were drawn down to the earlier of (a) the date Thai AirAsia notifiesThanachart Bank Pcl that the student pilot has graduated and been appointed as an assistant pilot in Thai AirAsiaand (b) the date the student pilot fully repays the loan and/or any outstanding debt to Thanachart Bank Pcl. Theseguarantee commitments amounted to Baht nil and Baht 26.9 million as of December 31, 2010 and December 31,2011, respectively. Thai AirAsia has obtained a pledge of the guarantees granted by each of the trainee pilot’sguarantors.

Capital Expenditures

Thai AirAsia has historically not incurred significant capital expenditures because it obtains its aircraftunder operating leases. Thai AirAsia’s capital expenditures amounted to Baht 105.5 million in 2009, Baht 123.3million in 2010 and Baht 84.3 million (US$2.7 million) in 2011, principally in relation to the purchase of aircraftspare parts. In the future, Thai AirAsia intends to purchase a number of aircraft, in addition to obtaining aircraftunder operating leases. As of the date of this Offering Memorandum, Thai AirAsia does not have a legalcommitment to purchase any aircraft. These purchases will substantially increase Thai AirAsia’s capitalexpenditures beyond amounts which Thai AirAsia has historically incurred. Thai AirAsia intends to finance thepurchase of these aircraft through proceeds from the Combined Offering, operating cash flows and loans.

Thai AirAsia may also construct an office building near the Suvarnabhumi International Airport for itsoffice needs, but no firm decision has been made whether to proceed with the project as of the date of thisOffering Memorandum. Thai AirAsia’s plans depend on a number of factors, including changes in economic,political or other conditions in the countries where it operates, or events that have a material adverse effect on theairline and the tourism industry.

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Contractual Obligations

The following table sets forth Thai AirAsia’s contractual obligations as of December 31, 2011 for theperiods indicated.

Payment Due By Period

Less than1 Year 1-3 Years 3-5 Years

More than5 Years Total

(Baht in millions)

Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486 13 — — 499Operating lease commitments (aircraft)(1) . . . . . . . . . . . . . . . . 2,881 2,657 1,044 1,466 8,048Operating lease commitments (office) . . . . . . . . . . . . . . . . . . . 45 32 3 — 80Finance lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 9 1 — 15

Total contractual obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 3,417 2,711 1,048 1,466 8,642

(1) Excludes payment obligations under the Booking Fee Agreement and the Fuel Hedging Agreement.

Off-Balance Sheet Transactions

As discussed above under “— Indebtedness — Guarantees” and “— Bank Loans — Credit Suisse LoanAgreement” the Company has acted as guarantor and pledged shares in Thai AirAsia as security under the CreditSuisse Loan Agreement. In addition, Thai AirAsia has acted as guarantor to certain pilot trainees’ loans. Inaddition, Thai AirAsia enters (through AirAsia Berhad) into fuel hedging arrangements from time to time. See“— Market Risk — Fuel Price Risk” below for details.

Other than as described above, we do not have any material off-balance sheet transactions.

Market Risks

We are exposed to market risk, including jet fuel price risk, foreign currency risk and interest rate risk. Seethe notes to our proportionate consolidated and company financial statements for a description of our accountingpolicies and additional information.

Fuel Price Risk

We hedge, through AirAsia Berhad, our fuel prices from time to time primarily to stabilize our jet fuel costs,but such hedging may not necessarily decrease our jet fuel expenses. We have agreed with AirAsia Berhad thatany gains or losses on such hedges are to be allocated to us on a monthly basis based on the volume of fuel thatwe budget to use during each such month as a proportion to the budgeted amount of fuel to be used by theAirAsia Group. Because of the nature of these fuel price swap agreements and fuel price option agreements,these agreements constituted financial assets that are required to be marked to market, with the relevant gain orloss recorded in our financial statements as an income or expense. We also pass a portion of our fuel priceincreases to our passengers on international flights in the form of fuel surcharges. However, our fuel surchargesfor our international flights do not fully compensate us for fuel price increases. The DCA does not allow fuelsurcharges to be imposed separately from the air fare for scheduled domestic passenger services.

In 2009, AirAsia Berhad entered into various fuel price hedging arrangements with third parties on ourbehalf. Due to the large volumes of fuel hedged and degree of volatility in fuel prices, these fuel price hedgingarrangements were “out of the money”, resulting in margin calls. As a result, AirAsia Berhad terminated thesehedging arrangements prior to their respective maturities, resulting in penalty charges becoming payable. In2009, Thai AirAsia recorded fuel swap transaction expenses of Baht 275.6 million, comprising losses uponmaturity of Baht 253.0 million and a loss on unwind of fuel swap contract of Baht 22.6 million.

In 2010, we recorded fuel swap transaction income of Baht 76.3 million relating to gains on our hedgingarrangements during 2010. There were no outstanding fuel hedging agreements as of December 31, 2010.

In 2011, our policy is to hedge (through AirAsia Berhad) our fuel requirements monthly to match ourforward bookings, and we intend to continue these hedging arrangements in 2012. In 2011, Thai AirAsiarecorded fuel swap transaction income of Baht 13.2 million (US$0.4 million), reflecting gains upon maturity as aresult of actual fuel prices exceeding the swap contract fuel prices. The outstanding net fair value of fuel swapagreements amounted to US$1.6 million as of December 31, 2011.

Foreign Currency Exchange Rate Risk

Our reporting currency is the Baht. However, most of our jet fuel supply, insurance contracts and all of ouraircraft leases are denominated in U.S. Dollars or priced in U.S. Dollars but invoiced in Baht at the prevailing

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exchange rate. Approximately 79% of our operating costs in 2011 were denominated in U.S. Dollars, and theremainder in a variety of other currencies, principally Baht. In addition, approximately 72% of our revenues in2011 were denominated in Baht, and the remainder in a variety of other currencies, including the Macau Pataca,Malaysian Ringgit, Singapore Dollar, Hong Kong Dollar and U.S. Dollar. Approximately 33% of our assets and10% of our liabilities as of December 31, 2011 were denominated in currencies other than Baht.

We adjust airfare pricing each quarter, but do not adjust fuel costs and miscellaneous operating expensesthat are denominated in foreign currencies to adjust for the fluctuation of the Baht. Accordingly, any depreciationin the value of the Baht against our core foreign currencies may have a positive effect on our operating revenuesbut may result in a detrimental effect on our operating costs. Conversely, an appreciation in the value of the Bahtagainst our core foreign currencies may result in a detrimental effect on our operating revenues but may result ina positive effect on our operating costs. In addition, because our expenses in U.S. Dollars are greater than ourrevenues generated in U.S. Dollars, foreign exchange transactions from other currencies into U.S. Dollars arerequired to cover our U.S. Dollar-denominated obligations and trade payables.

We have not entered into any hedging contracts to hedge against fluctuations in exchange rates. To coverthe difference between our expenses and revenues in U.S. Dollars, our policy has been to manage ourU.S. Dollar-denominated exposure by monthly conversion of our non-U.S. Dollar-denominated foreign currencyrevenues into U.S. Dollars at the spot rate available at the time of conversion. We also calculate our U.S. Dollar-denominated monthly commitments and match our commitments with our U.S. Dollar revenues and theconversion of our non-U.S. Dollar denominated foreign currency revenues. If our U.S. Dollar revenues andconverted foreign currency revenues are insufficient to match our U.S. Dollar-denominated obligations in anyparticular period, we further convert part of our Baht revenues to U.S. Dollars to cover such shortfall.

Interest Rate Risk

Thai AirAsia’s outstanding indebtedness (comprising borrowings from financial institutions and financelease liabilities, but excluding amounts due to related parties) as of December 31, 2011 amounted toBaht 513.2 million (US$16.2 million), including Baht 499.2 million (US$15.8 million) under the CIMB LoanAgreement which attracts a floating rate of interest of MLR minus 1.0% per annum. We may incur indebtednessin the future to fund the acquisition of new aircraft. Increases in interest rates will increase the interest payableunder our outstanding floating rate debt and increase the cost of any new borrowings, and could have a materialadverse effect on our financial position. We do not hedge our interest rate exposure.

Taxation

The prevailing corporate rate of income tax applicable to Thai companies generally is 30% but will bereduced to 23% in 2012, 20% in 2013 and 2014 and revert to 30% thereafter. Neither we nor Thai AirAsia haspaid any corporate income tax during the past three years because the Company and Thai AirAsia had incurredlosses during those periods or were able to benefit from tax loss carry forwards.

Tax Loss Carry-Forwards

Thai AirAsia

Tax loss carry-forwards primarily comprise Thai AirAsia’s tax losses arising before 2011 amounting toBaht 2,681.1 million (US$84.6 million) as of December 31, 2011. Under Thai tax regulations, tax loss carry-forwards resulting from the normal course of business activity can be used for a period of five years after the yearof the tax loss. The table below sets forth Thai AirAsia’s unused tax loss carry-forwards resulting from its normalcourse of business, including the years in which the carry-forwards expire, as of December 31, 2011.

Tax Loss Carry Forward ExpiresAmount of

Carry-Forwards

Bt US$(in millions)

December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,681.1 84.6December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —December 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,681.1 84.6

The amount of income taxes payable by Thai AirAsia in the future will depend on various factors, includingits results of operations, the utilization of available tax loss carry-forwards and the level of its capital

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expenditures. Thai AirAsia’s tax loss carry-forwards may only be used by itself and not by the Company or anyother future subsidiary of the Company or of Thai AirAsia. Thai AirAsia may not be able to use the potentialfuture tax benefits of its tax loss carry-forwards in full or at all if it does not generate sufficient taxable income tooffset the benefits before they expire.

The Company

Tax loss carry-forwards primarily comprise the Company’s tax losses arising before 2011 amounting toBaht 4.1 million (US$0.1 million) as of December 31, 2011. Under Thai tax regulations, tax loss carry-forwardsresulting from the normal course of business activity can be used for a period of five years after the year of thetax loss. The table below sets forth the Company’s unused tax loss carry-forwards resulting from its normalcourse of business, including the years in which the carry-forwards expire, as of December 31, 2011.

Tax Loss Carry Forward ExpiresAmount of

Carry-Forwards

Bt US$(in millions) (in thousands)

December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 47December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.9 28December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.5 16December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.6 19December 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.6 19

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 129

The amount of income taxes payable by the Company in the future will depend on various factors, includingits results of operations, the utilization of available tax loss carry-forwards and the level of its capitalexpenditures. The Company’s tax loss carry-forwards may only be used by itself and not by Thai AirAsia or anyother future subsidiary of the Company. The Company may not be able to use the potential future tax benefits ofits tax loss carry-forwards in full or at all if it does not generate sufficient taxable income to offset the benefitsbefore they expire.

Thai Board of Investment Tax Incentives

Thai AirAsia has received two letters conditionally granting certain privileges by the Board of Investmentrelating to the business of mass transit services and transportation of bulk goods, including (a) exemption frompayment of import duty on machinery approved by the Board of Investment, (b) exemption from payment ofincome tax on net profit from promoted operations for a period of eight years from the date on which income isdeemed to be first derived from such operations, subject to a maximum exempt corporate tax of Baht 443.0million and Baht 437.3 million, as the case may be, (c) a five-year carry forward period for losses for taxpurposes from promoted operations from the expiry of the eight-year period and (d) exemption from income taxon dividends paid to shareholders from the profit of promoted operations during the corporate tax exemptionperiod. These privileges are granted subject to compliance with various conditions, including the import of oneaircraft with a capacity of 180 seats with respect to each letter and the ability to transport one tonne of goodswithin 30 months or 36 months, as the case may be, from the issue date of the Board of Investment certificate.Thai AirAsia is also required to increase its registered capital before the commencement of operation of theaircraft to be imported by Baht 20 million or Baht 40 million, as the case may be, so that the minimum registeredcapital is Baht 420 million or Baht 440 million, as the case may be, prior to the issuance of the relevant Board ofInvestment certificate. Thai AirAsia is in the process of delivering certain documents to the Board of Investmentbefore the Board of Investment issues the relevant certificate granting such privileges.

Inflation

According to the Bank of Thailand, Thailand’s annual overall inflation rate, as measured by the headlineconsumer price index, was negative 0.9%, 3.3% and 3.8% in 2009, 2010 and 2011, respectively. The Bank ofThailand estimates, in their inflation report dated January 2012, that the inflation rate for 2012 and 2013 will be3.2% and 2.9%, respectively. We believe that inflation in Thailand has not had a significant impact on our resultsof operations in recent years.

Changes in Thai GAAP

As of January 1, 2011 a number of new and revised Thai Financial Reporting Standards (“TFRS”) becameeffective, and the revisions to TAS 1 and TAS 19 would likely have a material impact on the Company’sproportionate consolidated and company financial statements and Thai AirAsia’s financial statements for the

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year ended December 31, 2011. See Note 3.2(b) to the audited proportionate consolidated and companyfinancials statements of the Company for details.

Non-GAAP Financial Information

We use EBIT, EBITDA and EBITDAR to provide additional information about the operating performanceof Thai AirAsia. EBITDAR represents earnings before interest and taxation after adding depreciation andamortization and operating lease expenses. EBITDA represents earnings before interest and taxation after addingdepreciation and amortization. EBIT represents earnings before interest and taxation. EBIT margins, EBITDAmargins and EBITDAR margins represent EBIT, EBITDA or EBITDAR, as the case may be, divided byrevenues.

EBIT, EBIT margins, EBITDA, EBITDA margins, EBITDAR or EBITDAR margins are not standardmeasures, nor measurements of financial performance or liquidity, under Thai GAAP or IFRS, and should not beconsidered alternatives to net profit (loss), profit (loss) before finance costs and income tax or any otherperformance measure derived in accordance with Thai GAAP or IFRS, or as an alternative to cash flow fromoperating activities. EBIT, EBIT margins, EBITDA, EBITDA margins, EBITDAR and EBITDAR margins aresupplemental measures of Thai AirAsia’s performance that are not required by, or presented in accordance with,Thai GAAP or IFRS.

As a measure of operating performance, we believe that the most directly comparable measure to EBIT,EBITDA and EBITDAR is net profit. We use EBIT, EBITDA and EBITDAR in addition to net profit becausenet profit includes many accounting items associated with capital expenditures, such as depreciation, as well ascertain other non operating transactions, such as interest income and interest expenses and income tax expenses.These accounting items may vary between companies depending on the method of accounting adopted by eachcompany. By minimizing differences in capital expenditures and the associated depreciation expenses as well asreported tax positions, goodwill amortization and interest income and expenses, EBIT, EBITDA and EBITDARprovides further information about our operating performance and an additional measure for comparing ouroperating performance with other companies’ results. Funds depicted by EBIT, EBITDA and EBITDAR may notbe available for debt service due to covenant restrictions, capital expenditure requirements and othercommitments.

The following table reconciles our net profit under Thai GAAP to our definition of EBIT, EBIT margins,EBITDA, EBITDA margins, EBITDAR and EBITDAR margins for the periods indicated:

Year Ended December 31, Three Months Ended March 31,

2009 2010 2011 2011 2011 2012 2012

Bt Bt Bt US$ Bt Bt US$(in millions, except for percentages)

Net profit (loss) for the period . . . . (170.5) 2,011.0 2,020.1 63.7 891.6 621.6 19.6Add:

Finance cost . . . . . . . . . . . . . . . . . 0.4 243.1 183.7 5.8 75.1 6.0 0.2Income tax expense . . . . . . . . . . . — — — — — — —

EBIT . . . . . . . . . . . . . . . . . . . . . . . . (170.1) 2,254.1 2,203.7 69.5 966.7 627.6 19.8Add:

Depreciation and amortization . . 131.9 123.2 71.5 2.3 18.4 17.7 0.6

EBITDA . . . . . . . . . . . . . . . . . . . . . (38.2) 2,377.3 2,275.3 71.8 985.1 645.3 20.4Add:

Operating lease expenses . . . . . . 1,712.4 2,200.6 2,727.7 86.1 655.2 753.1 23.7

EBITDAR . . . . . . . . . . . . . . . . . . . . 1,674.2 4,577.9 5,003.0 157.9 1,640.3 1,398.4 44.1

Revenues . . . . . . . . . . . . . . . . . . . . . 9,281.2 12,098.7 16,157.6 509.9 4,160.2 4,868.1 153.6EBIT margin . . . . . . . . . . . . . . . . . . (1.8)% 18.6% 13.6% 13.6% 23.2% 12.9% 12.9%EBITDA margin . . . . . . . . . . . . . . . (0.4)% 19.6% 14.1% 14.1% 23.7% 13.3% 13.3%EBITDAR margin . . . . . . . . . . . . . . 18.0% 37.8% 31.0% 31.0% 39.4% 28.7% 28.7%

You should not consider EBIT, EBIT margins, EBITDA, EBITDA margins, EBITDAR and EBITDARmargins in isolation or construe it as an alternative to net income, or as an indicator of operating performance orany other standard measure under Thai GAAP or IFRS. EBIT, EBIT margins, EBITDA, EBITDA margins,EBITDAR and EBITDAR margins measures used in this Offering Memorandum may not be comparable tosimilarly titled measures used by other companies.

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INDUSTRY

The information presented in this section, including all data (actual, estimates and forecasts) relating to,among others, demand, capacity, passenger numbers, number of flights and market share, has been provided byStrategic Airport Planning Ltd (“S-A-P”), an aviation consulting firm that specializes in the preparation ofaviation activity forecasts and strategic business plans, except as otherwise stated, and is derived from S-A-P’sfull report which is reproduced in Annex B to this Offering Memorandum. We do not make any representation asto the accuracy of this information. These sources, including the data provided by S-A-P, are based on economicand other assumptions that may prove to be incorrect and the information has not been independently verified byus, the International Managers or the Joint Thai Lead Underwriters, nor any of our or its respective advisors.You should recognize that certain industry data contained in this section is estimated in the absence of officialcompany confirmation or reliable country source information, and you should not place undue reliance on suchdata

This report includes forecasts and other forward-looking estimates. These forward-looking statements arenecessarily based on various assumptions and estimates that are inherently subject to various risks anduncertainties relating to possible invalidity of the underlying assumptions and estimates and possible changes ordevelopment of social, economic, business, industry, market, legal, government, and regulatory circumstancesand conditions and actions taken or omitted to be taken by others.

Assumptions relating to the foregoing involve judgments with respect to, among other things, futureeconomic and competitive market conditions and future government and business decisions, all of which aredifficult or impossible to predict accurately. Actual results and future events could differ materially from suchprojections. You should not place undue reliance on such statements, or on the ability of S-A-P or any other thirdparty to accurately predict future industry trends or performance. This report contains information supplied by,and analysis based on, public and private sources. To the extent such sources have been cited in this section,S-A-P confirms that it is allowed to reference such sources. While S-A-P believes that the information is correct,it cannot guarantee its validity. Some amounts in this report are rounded. Financial and operating data for someair carrier groups may include cargo and other activities.

In the information presented in this section, “we” refers to S-A-P.

1 Aviation Industry Overview

1.1 Background

According to IATA (the International Air Transport Association), the Asia-Pacific region became the airlineindustry’s largest market in 2009. The region’s growth rates are forecast to remain robust over the next 20 years.If the number of people in Asia flew at the same rates per annum as their counterparts in the United States, theglobal aviation industry would triple in size. The strong historical and projected future growth rates for the Asia-Pacific aviation industry are the result of several factors, including market liberalization efforts and strongeconomic growth.

Aviation activity in Thailand has grown significantly over the past few decades, in part due to the samemarket liberalization and economic growth factors affecting Asia as a whole. Some of the general Asia trendshave been even more pronounced in Thailand, in particular the trend toward low cost carrier (LCC) service.These factors have resulted in average annual growth in traffic of 4.4% from 2005 to 2010, despite severalinterruptions in growth during that time due to political turmoil, natural disasters, and economic crises.

Aviation demand to, from, and within Thailand is driven by inbound tourism, as well as business-relatedtravel and outbound tourism. Thailand’s tourism infrastructure is particularly well-developed and attractive totourists from around the world. More than half of the aviation activity at the primary airports in Thailand iscarried by the four largest Thailand-based airlines: Thai Airways International, Thai AirAsia, Bangkok Airways,and Nok Air.

1.2 Aviation Activity in Thailand

1.2.1 Historical Air Passenger Movements

Air passenger activity at commercial airports in Thailand1 grew at an average annual rate of 4.4% from 2005to 2010. Growth has been strong during several of the years in this period, but has varied significantly due tonatural disasters and political disruptions in the country. Despite the disruptions, Thailand still experienced highcompound average annual growth rates over the past several years.

1 Includes the airports managed by Airports of Thailand PCL (AOT) and the Thai Department of Civil Aviation (DCA) which, together,represent nearly all commercial airports in Thailand. A few small commercial airports are operated by the private sector.

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The largest share of passenger traffic in Thailand is carried by Thai Airways International. The secondgreatest number of passengers is served by Thai AirAsia, which is the only LCC that serves both domestic andinternational destinations from Suvarnabhumi International Airport. Thai AirAsia and Nok Air operate as LCCson domestic routes in the country.

Since the start of LCC operations in the country in 2004, with the launch of Thai AirAsia, LCC operations atThai airports have created significant changes to the market including reduced airfares and increasedaffordability of air travel in the country. Between 2006 and 2010, the share of passengers served by Thai AirAsiaat AOT airports increased from 7.9% to 12.7%. The overall share of LCCs at the airports increased from 15.0%to 20.0% of total activities in the same period.

1.2.2 Domestic Scheduled Passenger Services

During October 20112, Thai Airways International operated the greatest number of scheduled domestic seatsat Suvarnabhumi International Airport (50.2% of total domestic seats) and nationwide (34.2%). LCC ThaiAirAsia operated the second greatest number of domestic seats at Suvarnabhumi International Airport(31.4%) and nationwide (23.0%). From its base at Don Mueang International Airport, LCC Nok Air operated thethird largest number of scheduled domestic seats nationwide. Thai Airways International domestic flightsoperated with an average of 251 seats per flight. LCCs Thai AirAsia and Nok Air operated with an average of180 and 129 seats per flight, respectively.

1.2.3 International Scheduled Passenger Services

During October 20112, Thai Airways International operated the greatest number of scheduled internationalseats at Suvarnabhumi International Airport and across the nation. The AirAsia Group operated the greatestnumber of international seats at Phuket International Airport (HKT) and Chiang Mai International Airport(CNX). Nationwide, the AirAsia Group carriers accounted for 9.7% of total international departing seats. ThaiAirways International flights operated with an average of 311 seats per international departure, the AirAsiaGroup of carriers operated with an average of 180 seats, and all other carriers operated with an average of 226seats.

2. Forecasts of Aviation Activity

According to The Boeing Company (Boeing), passenger air travel in the Asia-Pacific region — as measuredin revenue passenger kilometers (RPKs) — grew at one of the highest rates in the world during this period and isexpected to experience continued strong growth rates in the coming years. Travel volumes in the Asia-Pacificregion are already large, accounting for approximately 27% of global travel according to Boeing.

Asia-Pacific travel volumes are anticipated by Boeing to maintain strong growth rates in the future. Airtravel within the Asia-Pacific region — as measured in RPKs — is projected by Boeing to grow at a compoundaverage annual rate of 6.9% from 2010 to 2030. Boeing expects air travel (as measured in RPKs) to, from, andwithin the Asia-Pacific region to grow at a compound average annual growth rate of 6.7% during the sameperiod.

Southeast Asia is one of the world’s most dynamic regions for air travel. Passenger air travel withinSoutheast Asia — as measured in RPKs — grew at a CAAGR of 6.9% from 1985 to 2010. Although growth ratesin the Southeast Asia region slowed somewhat during the recent global economic downturn, passenger travel byair within the region is projected to grow strongly in the future, at a compound average annual rate of 7.4% from2010 to 2030. By comparison, passenger travel within the Asia-Pacific region is forecast to grow at a compoundaverage annual growth rate of 6.9% during the same period.

3. Growth Factors and Relationships to Air Travel

Historically, air travel activity has shown a strong relationship to overall economic activity, as measured byGross Domestic Product (GDP). Over the last four decades, world airline activity has grown at average rates perannum approximately double those of world GDP. From 1971 to 2010, world GDP grew at a CAAGR of 3.1%,while world airline RPKs grew at a CAAGR of 6.0%.

3.1 Gross Domestic Product

3.1.1 Per Capita GDP and Air Travel Activity

In most areas of the world, per capita levels of GDP correlate with per capita air travel levels. Countrieswith high per capita levels of GDP tend to have high levels of air travel, while countries with low GDP per capita

2 Includes scheduled services at all airports in Thailand, including AOT, DCA, and private sector commercial airports during 1-7 October2011.

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levels tend to have lower than average levels of air travel. Countries surrounded by water or with limitedcompeting substitutes for transport tend to have higher-than-average travel levels than other countries do.

The propensity to travel in Thailand relative to the country’s per capita income levels is high relative toother countries at similar levels of GDP per capita. This is attributable, in part, to the country’s strong inboundtourism levels. Other countries, such as South Korea and Japan, which have competitive ground-basedtransportation systems, have lower-than-typical domestic air travel levels per capita.

As Thai GDP per capita levels grow, which is expected to occur, travel demand should grow and continue tobe high relative to other countries with similar levels of GDP per capita.

3.1.2 GDP Growth in Select Countries in Asia

Several countries in the Asia-Pacific region had high rates of growth from 2000 to 2010 for GDP in nationalcurrency units and in current US Dollars. According to the International Monetary Fund (IMF), GDP (in nationalcurrency units) increased from 2005 to 2010 at a compound average annual growth rate of 16.6% for China,exceeding that of most other countries in the world, and Thailand’s GDP3 grew at a CAAGR of 7.3%4.

China’s GDP per capita3 is projected to grow 11.7% per year from 2010 to 2015 and that of Thailand isforecast to grow at 6.6% during the same period4.

3.2 Effects of Economic Growth on Air Travel in Asia

Rising wages and broadening distribution of wealth in rapidly developing countries in the Asia-Pacificregion will likely result in an increasing share of the population with the ability to travel by air. Thailand’s GDP(in national currency units) grew 11.7% from 2009 to 20104. As Thailand and its neighbors have continuedgrowing through the economic and other crises and as other Asian countries have recovered and are expectingfuture growth, Thai- and foreign-based carriers have the opportunity to benefit from the air travel demandspurred by regional economic growth.

Currently, only a small share of the Thai population travels by air. The S-A-P Group (S-A-P) anticipates thatas the economy develops and the middle class grows and becomes a larger share of the population, air traveldemand will increase. Continued strong growth of GDP and per capita income, declining poverty rates andincreasing disposable income is anticipated by S-A-P to generate strong demand for airline services in Asia andThailand.

3.3 Population Growth and Urbanization

Population growth rates have particularly large impacts on the large populous countries in Asia as evensmall percentage growth rates result in large increases in total population numbers. The population of Thailand isforecasted by the IMF to grow at a CAAGR of 0.6% from 2010 to 2015, while China’s population is forecastedto grow at a CAAGR of 0.5%.

Urbanization rates can serve as an indicator of propensity to travel by air because urban dwellers havehigher-than-average income levels and are located in closer proximity to airports than are non-urban dwellers.The development of existing and new urban centers is expected to create new destinations for regional travel inAsia. In 2010, the urbanization rate of Thailand was 34.0%, China’s was 47.0%, and the world’s was 50.4%. TheUnited Nations forecasts that in 2020, the urbanization rate of Thailand will be 38.9%, China’s will be 55.0%,and world’s will be 54.4%.

3.4 Trade and Tourism

International travel and tourism rates for countries in Southeast Asia have increased at strong rates from2009 to 2010. International tourist arrivals at Thailand grew 12.6% from 2009 to 2010, while they grew at 9.4%at China. As tourists from China and other Asia countries continue to travel within the region, air travel in theregion can be expected to continue to experience healthy growth.

As shown in Figure 1, below, tourist arrivals in Thailand have grown over the past decade despitesignificant disruptions due to various causes:

• In late 2002, the first case of SARS (Severe Acute Respiratory Syndrome) appeared in Asia and spreadrapidly to other areas during 2003.

3 In national currency units.

4 Source: IMF, World Economic Outlook Database, April 2011.

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• The tsunami resulting from the 2004 Indian Ocean earthquake killed an estimated 230,000 people in theregion. Thailand was one of the four most affected countries and tourism declined significantly after thetsunami.

• In September 2006, the Royal Thai Army staged a coup d’état against the government of Prime MinisterThaksin Shinawatra.

• Political unrest in Thailand resulted in an escalation of protests and violence, causing disruptions totourism demand during 2008 and 2009.

Figure 1

INTERNATIONAL TOURIST ARRIVALSThailand

CY1998 TO CY2010

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,00019

98

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Inte

rnat

iona

l Tou

rist A

rriva

ls a

t Tha

iland

SARSTsunami

UnrestCoup

Source: Thailand Department of Tourism, October 2011.

Air service is the most frequently employed mode for entry to Thailand, accounting for 77.7% ofinternational arrivals in 2010. In 2010, 28.5% of international tourist arrivals at Thailand were nationals ofASEAN countries. 22.8% were nationals of other Asian countries, including China, which accounted for 7.0% oftotal international arrivals.

3.5 Other Aviation Growth Factors

Over the last decade, airline price competition has increased as LCCs have grown in market share andairlines struggling with financial challenges and competition have improved efficiency and lowered travel costs.S-A-P anticipates that downward pressure on fares will continue, resulting in increasing demand. Thecombination of Asia’s large geographic size, the separation of many parts of Asia by bodies of water, and thegeneral lack of competitive sea or land transport alternatives provide an ideal market for air travel. Theintroduction of widely available low air fares in the Asia-Pacific region has created a competitive transportsubstitute for ground travel for many people.

S-A-P anticipates that Asia-Pacific nations, especially those in Southeast and North Asia, will continue toremove regulatory restrictions on air services, leading to increased competition and lower airfares and cargo pricing.

S-A-P also anticipates that governments and the private sector will continue to make the necessaryinvestments in airport capacity, air traffic control systems, and aircraft to foster tourism and other economicdevelopment. As a result of investments in terminal and airfield capacity and increased aviation activity demand,airports in the Asia-Pacific region have experienced strong growth rates over the past decade. According toAirports Council International, Suvarnabhumi International Airport was, in terms of passenger movements in2010, the 17th busiest airport in the world and the fifth busiest airport in Asia.

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3.6 Development of LCCs

The success of LCCs around the world has led many traditional passenger carriers to increase their focus onincreasing operating efficiencies, start their own LCC subsidiaries, and compete against the many new LCCs thathave initiated operations. Based on the Boeing Company’s analysis of global scheduled airline data for October2011, LCCs had a share of 26% of worldwide scheduled capacity. Within the Asia-Pacific region, LCC seatcapacity increased 14% from 2010 to 2011. LCC seats to and from the Asia-Pacific region increased 21% duringthe period.

Although the introduction of significant levels of LCC activity occurred later in Asia than in the US andEurope, LCC activity in Asia has grown rapidly over the past decade and continues to grow rapidly. LCCstypically have operating costs, as measured in cost per available seat kilometer (CASKs), that are substantiallylower than those of full-service carriers. Although LCC revenue per available seat kilometer (RASKs) are alsooften lower than those of full-service carriers, as LCC activities grow their market shares and markets start tomature, LCC revenues tend to increase, as evidenced by improvements in their RASK.

3.6.1 Effects of LCC on the Asian Aviation Industry

The introduction and growth of LCCs have had several effects on the Asian aviation industry:

• LCC competition has encouraged established carriers to operate more efficiently, thereby driving downaverage airfares and stimulating demand across the entire market.

• Airport operators in Malaysia and Singapore have created dedicated LCC passenger terminal facilities,which can lead to reduced airline operating costs.

• The rapid growth in air travel that LCCs generate is encouraging some governments and airport operatorsto liberalize bilateral aviation agreements.

During the first 7 days of October 2011, 53% of domestic scheduled flights in Thailand were operated byLCCs. 19% of scheduled flights from 13 other major countries in the Asia-Pacific region were operated by LCCs.

3.7 Airline Infrastructure

Many airlines in Asia have plans for significant changes to their aircraft fleets. As new, higher-efficiencyaircraft are integrated into an airline’s operations, long-term operating costs typically are reduced and, dependingon the financial structure of the implementation, lower overall costs per passenger can result, leading todecreased average airfares and associated increases in demand.

3.8 Asian Aviation Industry Growth Prospects

We believe that Southeast Asia’s domestic and international markets will enjoy strong long-term growthrates for several reasons:

• Proximity to major populations. Approximately 50% of the world’s population lives within a 2,500nautical mile radius from Bangkok, indicating the potential size of the regional aviation market.

• Location on major trade routes. Southeast Asia is well positioned between Europe and the Pacificregion, as well as between North Asia and South Asia.

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• Proximity to China. With its strong economic growth and increasingly relaxed restrictions on travel toforeign destinations, Chinese travelers should create significant air travel demand.

• Location between South Asia and China. The region’s role as a destination for visitors from China (theworld’s most populous country) and South Asia, which includes India (the world’s second most populouscountry), Pakistan (sixth), and Bangladesh (seventh) will grow in prominence as the people of thesecountries start to travel more frequently.

• Transport substitution. As income levels increase and air transport costs decrease, we expect airtransport will substitute for land and sea-based transport modes such as rail, buses, and ferries.

• Liberalization of aviation agreements. Southeast Asian countries have become more liberal with theiraviation agreements, both within ASEAN and with other countries.

• Tourist infrastructure. The region’s well-developed tourist infrastructure will continue to attract leisuretravelers.

• Urbanization. The share of the population in Southeast Asian countries living in cities is generallyexpected to continue to increase.

3.9 Potential Constraints to Asia Aviation Industry Growth

The opportunities for industry-wide aviation activity growth could be offset by several factors:

• Increased fuel prices and/or unfavorable currency exchange levels could constrain aviation demand ifair and other travel costs increase and travelers’ disposable income levels decrease.

• Regional conflicts or scares. Civil unrest, terrorist events, or other events could constrain future activitylevels.

• Travel restrictions. Government restrictions on travel, by limiting the number of entry/exit visas issuedor by imposing high visa costs, could limit future aviation growth.

• Insufficient airport or airspace capacity. Socioeconomic or other constraints could result in delays orchanges in plans by governments regarding planned infrastructure expansion.

• Environmental factors. Natural and man-made environmental events, such as haze, volcanic ash, andnatural disasters, could impact future activity levels.

• Infrastructure constraints at regional airports. Potential constraints to airline travel growth could arisedue to limited growth of infrastructure at regional airports outside of Thailand. Within Thailand, airportinfrastructure is not expected to be a constraint due to the remaining capacity still available at the newSuvarnabhumi International Airport as well as the excess capacity at the old Bangkok airport, DonMueang.

4. Regulatory Environment

4.1 Domestic Airline Regulation Structure in Thailand

Aviation in Thailand is regulated by the Department of Civil Aviation. The Department is in charge of“promoting, developing and regulating civil aviation affairs of Thailand to meet international standards and formextensive civil aviation network and services that will satisfy market demand, promote tourism as well asnational economic growth and make Thailand a hub of aviation is South-East Asia.” Air service operations areapproved and regulated by the department for domestic airlines operating in Thailand and international airlinesserving Thailand.

The administration of most domestic airports is the responsibility of the Director of the Airports of theDepartment of Civil Aviation. Samui, Sukhothai, and Trat Airports are administered by Bangkok AirwaysCompany Limited. Suvarnabhumi, Don Mueang, Chiang Mai, Mae Fah Luang-Chiang Rai, Hat Yai and PhuketInternational Airports are under the AOT. U-Tapao Pattaya International Airport is the responsibility of theRoyal Thai Navy.

4.2 International Regulations

International flights into, from or over Thailand territory are subject to the current Thailand regulationsrelating to civil aviation. These regulations correspond in all essentials to the standards and RecommendedPractices contained in Annex 9 to the Convention on International Civil Aviation. Scheduled international airservices may be operated by a foreign airline into or in transit across Thailand in pursuance of the International

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Air Services Transit Agreement, provided that the states in which the airline is registered is a contracting party tothis agreement, or to an agreement between Thailand and the States in which the airline is registered.

4.3 Liberalization of the Aviation Industry

Studies have shown that the liberalization of air services can lead to new and better air services, therebyincreasing trade in airlines services, gains in consumer welfare and economic growth. Traffic growth subsequentto liberalization of air services agreements between countries typically averaged between 12% and 35%,significantly greater than during years preceding liberalization. In a number of situations, growth exceeded 50%.The creation of the Single European Aviation Market in 1993 led to an average annual growth rate in trafficbetween 1995 and 2004 that was almost double the rate of growth in the years 1990 to 1994.

4.4 ASEAN Member States and Open Skies

The trend of deregulation and liberalization in Asia is expected to continue, particularly amongst countriesthat are part of ASEAN.

Subsequent to an aviation liberalization roadmap adopted by ASEAN member states in 2004, in November2010, the member states reaffirmed their collective commitment to building an ASEAN Single Aviation Marketby 2015. The November 2010 ASEAN Multilateral Agreement on the Full Liberalization of Passenger AirServices (MAFLPAS) and its two Protocols provides for further expansion of the scope of the ASEANMultilateral Agreement on Air Services (MAAS) to include other ASEAN cities. The agreement and its protocolsprovides for designated airlines of a Member State to provide air services from any city with international airportin its territory to any city with international airport in the territory of the other Member States and vice-versa withfull third, fourth, and fifth freedom traffic rights.

Chinese government aviation officials have signed an agreement with ASEAN to build a more liberal airservice framework between China and the ASEAN countries. Other developments contributing to the eventualachievement of open skies are potential similar agreements forthcoming between ASEAN and India as well asASEAN and Korea. China, Japan, and South Korea have indicated an interest in developing a unified aviationmarket comprising the ten ASEAN members plus China, Japan, India and South Korea, which could lead to thecreation of an East Asian-plus-India Common Market.

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BUSINESS

Overview

We are the leading Thai LCC in terms of passengers carried at AOT airports, with a market share of 12.7%for the year ended September 30, 2010, according to S-A-P. Our vision is to be the lowest cost airline in everymarket we serve without compromising our level of service. We focus on providing high-frequency services onshort-haul, point-to-point international and domestic routes.

We operate from three hubs in Thailand, namely Bangkok, Phuket and Chiang Mai, and plan to open afourth hub in Hatyai by 2013 and a fifth hub in Udon Thani by 2014. We target markets within a four-hour flighttime from our various hubs, which gives us access to a population of approximately 3,153 million people inSoutheast Asia, India and China as of the end of 2010. We believe that the growing population in Thailand(approximately 64 million people as of the end of 2010) provides an attractive market in which we can stimulateair travel among a population that previously could not afford to travel by air or who live in areas not serviced byother airlines.

Our business model is based on that of AirAsia Berhad, which will own 45.0% of Thai AirAsia after thecompletion of the Combined Offering and after the Company completes the subscription of new shares in theThai AirAsia rights offering, and with whom we have a strategic partnership. We believe our simple single-class,single type fleet configuration, point-to-point operations, high aircraft utilization, scale, distribution channels andextensive route network provide us with a cost advantage over other Thai airlines and one that comparesfavorably with other LCCs around the world. Our cost competitiveness is evidenced by Thai AirAsia’s cost perASK of Baht 1.39 (4.61 U.S. cents at an exchange rate of US$1.00 = Baht 30.15) in 2010 and Baht 1.58(4.99 U.S. cents at an exchange rate of US$1.00 = Baht 31.69) in 2011. Our low costs, low fares, strong brandand marketing and reliable service have enabled us to significantly expand our operations since we startedoperations in 2004.

We have achieved strong growth in revenue from passenger seat sales since we started operations in 2004.Thai AirAsia’s passenger revenue increased from Baht 7,582.3 million in 2009 to Baht 10,260.3 million in 2010and to Baht 13,007.5 million (US$410.5 million) in 2011, which represents a compounded annual growth rate(“CAGR”) of 31.0% from 2009 to 2011. Similarly, our fleet size grew from 20 aircraft as of December 31, 2009to 22 aircraft (including one spare) as of December 31, 2011. We took delivery of two additional aircraft inJanuary and February 2012 and we intend to expand our fleet to 48 Airbus A320 aircraft by 2016. Thai AirAsiaalso achieved a strong EBITDAR margin of 31.0% in 2011. Thai AirAsia’s domestic passenger servicescomprised 44.1% of its passenger revenue and 57.9% of its total passengers in 2011. Thai AirAsia’s internationalpassenger services comprised 55.9% of its passenger revenue and 42.1% of its total passengers in 2011.

We have been able to achieve our success despite an extraordinarily difficult period for the airline industrycaused by, among other factors, the adverse effects of the global economic crisis which started in 2007, terroristattacks, and rising fuel prices and insurance premiums. Our success is also notable given that, since we startedoperations in 2004, we have competed against strong incumbent operators, some of whom have significantlygreater financial resources.

Our Competitive Strengths

We operate in one of the largest and fastest growing aviation markets in the world

Thailand is a large aviation market with approximately 64 million passenger movements in 2010. The Thaiaviation market is further supported by a large domestic market with a 2010 GDP of US$319 billion and16 million annual tourist arrivals in 2010. Thailand’s aviation market also benefits from its location in SoutheastAsia, which has a collective GDP of approximately US$2 trillion and a population of approximately 600 millionas of the end of 2010.

Thai AirAsia operates in one of the world’s fastest growing air travel regions by passenger volume,according to S-A-P. Southeast Asia had the world’s second fastest passenger growth rate by RPK at 6.9% perannum from 1985 to 2010, behind only China. In addition, Southeast Asia is estimated to continue to be amongthe fastest growing aviation markets in the world at a CAGR of 7.4% from 2010 to 2030, along with South Asiaand China. Air passenger activity at commercial airports in Thailand alone grew by 4.4% per annum from 2005to 2010.

Air travel in Thailand is supported by a number of factors including the country’s GDP growth, per capitaincome growth, tourist arrivals, topography and liberalizing air travel market. Historically, air traffic growth iscorrelated with GDP growth and Thailand’s GDP is expected to continue to grow. Thailand’s GDP grew at aCAGR of 7.3% from 2005 to 2010 and is expected to grow at a CAGR of 6.6% from 2010 to 2015, according to

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S-A-P. Per capita income also has an effect on air travel and suggests potential for growth in Thailand. In 2010,Thailand’s total RPK per capita stood at 895, while Singapore had much higher RPK per capita of 16,975.Furthermore, we expect the significant LCC penetration in Thailand (51.8% of domestic penetration fromOctober 1 to October 7, 2010) will continue to stimulate demand. S-A-P expects international passengers to growas they have in the past with a CAGR of 4.1% from 2005 to 2010, showing resilience despite extraneous shockssuch as SARS in 2002, a tsunami in 2004 and political unrest and the financial crisis in 2008. Finally, givenThailand’s expansive topography lacks an effective road and rail system between many destinations andseparation from most international destinations by sea, air transport is expected to capture increased traveldemand.

We are the leading low cost carrier in Thailand

Thai AirAsia has the largest market share in Thailand amongst LCCs, serving 63.8% of total LCC domesticand international passengers at AOT airports, and second amongst all carriers, serving 12.7% of total domesticand international passengers at AOT airports for the year ended September 30, 2010, according to S-A-P. ThaiAirAsia has the most comprehensive network among LCCs in Thailand, covering 11 destinations (including threehubs) in Thailand and 14 destinations in eight countries outside of Thailand. In addition, the combined networkof AirAsia Berhad, Indonesia AirAsia and Thai AirAsia covers 68 destinations in 15 countries. It is the onlyairline with hubs outside Bangkok, enabling it to operate flights within Thailand that bypass Bangkok, and it isthe only LCC operating domestic and international flights from Suvarnabhumi Airport.

We have a successful track record of growth

Thai AirAsia has successfully demonstrated a track record of growth in passengers and revenues byexpanding its network and re-fleeting and increasing its capacity while maintaining high load factors. In August2010, Thai AirAsia completed its re-fleeting and expansion from a mix of eight aging 148-seat Boeing 737-300aircraft and 12 180-seat Airbus A320 aircraft at the end of 2009 to a single type fleet of 22 Airbus A320 aircraftwith an average age of two years and four months as of December 31, 2011. We took delivery of two additionalAirbus A320 aircraft in January and February 2012. Despite capacity expansion at a CAGR of 18.9% based onASKs during the period from January 1, 2009 to December 31, 2011, Thai AirAsia maintained its load factors at76% in 2009, 78% in 2010 and 80% in 2011.

As a result, Thai AirAsia has been able to serve a continually growing number of passengers from5.0 million in 2009 to 5.7 million in 2010 and to 6.9 million in 2011, while generating revenues ofBaht 9,281.2 million in 2009, Baht 12,098.7 million in 2010 and Baht 16,157.6 million (US$509.9 million) in2011.

We have successfully established a competitive cost structure and are well positioned to expand marginsfurther

Thai AirAsia is able to operate with a competitive cost structure by minimizing costs and maximizingutilization. Thai AirAsia’s total costs per ASK were 4.51 US cents, 4.61 US cents and 4.99 US cents in 2009,2010 and 2011, respectively.

Thai AirAsia minimizes costs through numerous ways, including:

• Modern, fuel efficient single aircraft type fleet. In August 2010, Thai AirAsia completed is re-fleetingfrom 148-seat Boeing 737-300 aircraft to 180-seat Airbus A320 aircraft. The younger fleet helps tominimize maintenance expenses and leads to higher fuel efficiency while the single aircraft type results inincreased cost savings as maintenance is simplified, spare part inventory requirements are reduced,scheduling is more efficient and training costs are lower.

• Low cost internet ticket sales. In 2011, 75% of Thai AirAsia’s tickets were sold through low costdistribution channels such as AirAsia’s website.

• High aircraft utilization and efficient operations. Thai AirAsia’s aircraft were operated at an average of11.5 block hours a day and its average turnaround time was approximately 30 minutes in 2011. ThaiAirAsia optimizes aircraft utilization with simple point-to-point operations, a single fleet type and fastturnaround times. Thai AirAsia also provides incentives for pilots to conserve fuel and operate aircraftmore efficiently.

In addition, Thai AirAsia has improved margins by optimizing high margin ancillary income. Thai AirAsiacan operate profitably with low base fares because of high load factors that drive passenger volume, which on

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average generated Baht 383 of ancillary income per passenger in 2011. Thai AirAsia generates ancillary incomefrom a number of sources, including baggage fees, convenience fees, seat selection fees, in-flight meals, andmerchandise. Ancillary income has very little incremental cost and as a result generates higher margins thanpassenger revenues.

We have a strong partnership with, and unique ability to leverage upon, our relationship with the AirAsiaGroup

The AirAsia Group is one of the largest LCCs in the world and is expected to continue growing as itrecently ordered 200 Airbus A320 New Engine Option (“A320neo”) aircraft in a deal valued at approximatelyUS$18.2 billion, based on the list price. The AirAsia Group is also a pioneer of the joint venture business model.As a result, Thai AirAsia, along with other companies in the AirAsia Group, benefit from the broader AirAsiaGroup network, including increased bargaining power and cross-selling opportunities. For example, ThaiAirAsia’s partnerships with AirAsia Berhad and Indonesia AirAsia allow its customers to connect to68 destinations in 15 countries in their combined route network.

AirAsia is also one of the most recognized brands in the aviation industry. It has won numerous awards,including Skytrax’s World’S Best Low Cost Airline in 2009, 2010 and 2011, and TTG Travel Awards 2009 BestAsian Low-Cost Carrier, and AirAsia Berhad’s CEO won the Malaysia Business Leadership Masterclass GlobalCEO of the Year in 2010. It advertises actively in major sporting events, such as Formula 1 racing, EnglishPremier League football, and the ASEAN Basketball League. AirAsia also actively promotes itself in socialmedia networks, such as Facebook and Twitter.

Thai AirAsia believes that its strong partnership with, and ability to leverage upon its relationship with, theAirAsia Group has given it access to unique, profitable opportunities. In addition, AirAsia’s strong brand equityhas allowed Thai AirAsia to capture market share in existing routes and attract passengers in new routes.

We have a capital structure that gives us flexibility to generate strong free cash flows in the future

Following the Combined Offering and Thai AirAsia’s rights offering, Thai AirAsia believes that itsstrengthened capital structure will enable it to continue to take advantage of growth opportunities, effectivelycompete, and provide a certain extent of financial protection against any temporary deterioration in businessconditions. In addition, Thai AirAsia has total debt with financial institutions (which includes finance leases) ofBaht 513.2 million (US$16.2 million) as of December 31, 2011 and could increase borrowings, if desired, to ownrather than lease aircraft. In addition, Thai AirAsia has generated strong operating cashflows as evidenced byEBITDA of Baht 2,275.3 million (US$71.8 million) in 2011.

We have an experienced management team with a proven track record

Thai AirAsia’s key management team, led by Mr. Tassapon Bijleveld, has extensive managerial experienceand technical knowledge, particularly in Thailand’s aviation market. Thai AirAsia’s key management teamcomprises six officers who have an average experience of approximately seven years in Thai AirAsia. A majorityof the key management team members have been with Thai AirAsia since commencement of operations in 2004.

Thai AirAsia believes that its management team have, over the years, demonstrated their ability to expandthe business, establish brand identity, nurture customer loyalty, achieve cost efficiencies, turn around negativeearnings and steadily navigate through various political, economic, health and environmental shocks.

Our Strategy

Our goal is to establish ourselves as a leading low-cost carrier in every market that we serve by offeringpassengers a safe, reliable and enjoyable flying experience at an affordable price.

The principal components of our strategy are as follows:

Continue to grow the LCC business

To continue growing the LCC business in Thailand, Thai AirAsia plans to:

• Stimulate growth in Thailand’s air travel market. Thai AirAsia intends to continue stimulating growth inThailand’s air travel market by tapping into Thailand’s growing population, strong tourism dynamics, andgeographic configuration. Thai AirAsia intends to continually offer fares that are, on average,substantially lower than the published fares of its full-service competitors, and competitively pricedrelative to the published fares of its low-cost competitors and alternate modes of transport. Thai AirAsiaalso intends to offer tickets at promotional prices to generate interest in new or immature markets.

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• Expand route network. Thai AirAsia intends to expand its route network by using its hubs in Thailand asplatforms to operate high-volume, short-haul routes to cities within a four-hour flight time. Opening hubscloser to the north and south of Thailand allows Thai AirAsia to tap into potential markets in SouthernChina and Eastern India, respectively. Thai AirAsia also focuses on routes that are under-served or notserved by other airlines, including routes that bypass Bangkok. Thai AirAsia continually assesses potentialroutes based on a clear set of criteria that include, amongst others, airport and runway infrastructure,minimum accessible population and existing competition.

• Increase flight frequencies. Thai AirAsia intends to increase flight frequencies in established markets aswell as markets with expected high growth potential. Thai AirAsia continuously monitors its existingroute network and an increase in-flight frequency is generally considered for routes where the load factoris consistently higher than 80% for a certain period of time.

• Increase aircraft fleet and open new hubs. To support the growing demand for LCC business, ThaiAirAsia plans to procure 24 additional aircraft over the next five years and open additional hubs to createnew routes to support passenger demand.

Maximize profitability

To maximize profitability, Thai AirAsia plans to:

• Maximize route profitability. Thai AirAsia intends to develop and optimize revenue streams by focusingon route profitability through the use of a revenue management system. Thai AirAsia maximizes routeprofitability by developing a portfolio of routes which have the potential to deliver consistently highpassenger load factors at attractive yields. Thai AirAsia continually reevaluates its route network toincrease frequencies in profitable routes and eliminate unprofitable ones. In addition, Thai AirAsiaemploys a revenue management system that allows Thai AirAsia to maximize its revenue from passengerseat sales while still offering fares that are, on average, lower than those of its competitors on the sameroutes.

• Maximize existing and introduce new streams of ancillary income. Thai AirAsia currently generatesancillary income through fees including, but not limited to, baggage handling fees, excess baggage fees,seat selection fees, and in-flight sales of meals and beverages. In 2011, ancillary services revenue perpassenger increased 29.5% to Baht 383 compared to Baht 296 in 2010. Thai AirAsia intends to expand itsancillary revenue base by restructuring fees relating to existing ancillary services, such as baggagehandling fee rates which were revised in 2009.

• Improve operating efficiency. Thai AirAsia intends to continue improving operating efficiency tominimize operating costs. Measures include maintaining a relatively young average fleet age whichtranslates into higher fuel efficiency, maximizing aircraft utilization by decreasing aircraft turnaroundtime and maximizing on-time performance. This results in reduction of cost per ASK (non-fuel).Furthermore, Thai AirAsia has a policy that pilots are to save fuel on flights by cruising at optimal speedsto consume the least amount of fuel for a given distance. Finally, Thai AirAsia also minimizes operatingcosts by offering its lowest fares through the Internet to encourage travelers to make Internet bookings, byemploying a full ticketless system, which saves administrative costs and related expenses, and by usingthe bargaining power of the AirAsia Group to negotiate for lower charges, including charges relating toaircraft lease, fuel, fuel hedging and maintenance services.

Continue to strengthen the AirAsia brand

To continue strengthening AirAsia’s brand equity, Thai AirAsia plans to:

• Invest in and enhance AirAsia’s brand. Thai AirAsia intends to generate publicity and conductmarketing and public relations activities to maintain a high level of brand awareness. Thai AirAsia alsointends to continue developing the AirAsia brand and brand awareness in the country, as well as the newmarkets it intends to serve, by using its traditional marketing channels and social media and digitalnetworks on a more frequent basis. Finally, Thai AirAsia intends to continue developing a strongrelationship with the other members of the AirAsia Group for business partnership and brandmanagement.

• Focus on customer service. Thai AirAsia intends to emphasize high-quality, friendly and personalservice, despite charging low fares and employing an LCC model. As part of its efforts to attract businesspassengers, Thai AirAsia introduced a “hot seat” service, where passengers may choose seats atemergency exit rows (which have more legroom) or at the first five rows of the aircraft. In order toprovide quality services, Thai AirAsia also selects and trains employees to provide services consistent

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with Thai AirAsia’s goals. Lastly, Thai AirAsia is also committed to improving the quality of its servicesthrough initiatives to speed up reservations and check-in through the introduction of new technology,improving baggage handling services and providing rapid and effective responses to guest feedback.

• Maintain high safety standards. Thai AirAsia complies with the highest international aviation safetystandards and practices and keeps its operations simple and transparent. Thai AirAsia maintains highsafety standards to enable it to procure favorable rates on insurance policies. It is also Thai AirAsia’spolicy to maintain a low average fleet age to minimize the possibility of mechanical malfunctions.

Our Relationship with AirAsia Berhad

We began as a joint venture within the AirAsia Group, which also has LCC operations in Malaysia throughAirAsia Berhad (short-haul) and AirAsia X Sdn Bhd (long-haul), in Indonesia through Indonesia AirAsia and inthe Philippines through AirAsia Inc. We also expect the AirAsia Group to commence operations in Japan throughAirAsia Japan Ltd. AirAsia Berhad owns, through AirAsia Investment, a 49.0% equity interest in Thai AirAsia,which will decrease to 45.0% after we subscribe for new shares in Thai AirAsia using the proceeds of theCombined Offering. Effective May 4, 2012, we treated Thai AirAsia as a subsidiary instead of a joint venture.See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Basis ofAccounting — Accounting for Investment in Joint Venture” for further information. As part of the AirAsiaGroup, we benefit from economies of scale because AirAsia Berhad procures various items that we require,including aircraft, fuel, fuel hedging and maintenance services on a group basis. We also benefit from sharingvarious information technology, including the AirAsia website for Internet sales, reservation system software,revenue management software and flight management software. These arrangements are formalized in variousagreements that we have signed with various AirAsia Group members. See “— Operations” and “Related PartyTransactions” for further details.

Our Scheduled Passenger Services

We provide scheduled passenger air travel services aimed at price-sensitive business and leisure air travelpassengers who are willing to forego complimentary meals and airport lounges in exchange for fares that arelower than those offered by traditional full-service airlines. Our passengers can purchase one or more of ourancillary services according to their needs. In 2011, we flew approximately 6.9 million passengers, 57.9% ofwhich were passengers on routes within Thailand, and 42.1% of which were passengers on our internationalroutes.

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The following table presents Thai AirAsia’s operating information for the periods indicated.

Year Ended December 31,Three Months Ended

March 31,

2009 2010 2011 2011 2012

Capacity (million seats) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 7.3 8.6 2.2 2.5Passengers carried (million) . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 5.7 6.9 1.8 2.1

International (million) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 2.4 2.9 0.8 0.8Domestic (million) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9 3.3 4.0 1.1 1.3

Seat load factor (%)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 78 80 84 87International (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 77 79 84 83Domestic (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 79 81 85 89

ASK (million)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,511 7,605 9,199 2,261 2,540International (million) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,040 4,680 5,696 1,372 1,501Domestic (million) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,470 2,925 3,502 889 1,040

RPK (million)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,921 5,923 7,389 1,906 2,174International (million) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,974 3,600 4,539 1,144 1,238Domestic (million) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,947 2,323 2,851 763 936

Average fare(4) (Baht) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,520 1,791 1,849 1,850 1,778Revenue per ASK(5) (RASK):

(Baht) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.43 1.59 1.76 1.84 1.92(US cent)(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.27 5.28 5.54 5.68 6.21

Cost per ASK(6) (CASK):(Baht) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.51 1.39 1.58 1.50 1.71(US cent)(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.51 4.61 4.99 4.63 5.54

Cost per ASK (non-fuel)(7):(Baht) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.99 0.87 0.89 0.86 0.97(US cent)(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.96 2.87 2.80 2.66 3.16

Number of aircraft at period end . . . . . . . . . . . . . . . . . . . . . . . 20 19 22 20 24Boeing 737-300 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 0 0 0 0Airbus A320 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 19 22 20 24

Average number of operating aircraft(9) . . . . . . . . . . . . . . . . . 15.6 18.0 19.4 19.0 22.7Number of stages flown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,388 41,823 47,579 11,971 13,662

International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,612 17,577 20,251 4,989 5,440Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,776 24,246 27,328 6,982 8,222

Average stage length (kilometers)(10) . . . . . . . . . . . . . . . . . . . 979 1,032 1,074 1,049 1,033Aircraft utilization (block hours per day)(11) . . . . . . . . . . . . . . 9.4 9.9 11.5 11.7 11.5Ancillary services revenue(12) (Baht in millions) . . . . . . . . . . 893.0 1,686.7 2,627.2 660.8 753.6Ancillary services revenue per passenger (Baht) . . . . . . . . . . 179 296 383 364 354Fuel consumed (barrels) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,217,727 1,346,476 1,600,942 399,816 457,426Average fuel price(13) (US$ per barrel) . . . . . . . . . . . . . . . . . . 68.0 88.3 124.0 111.2 127.3On time performance (%)(14) . . . . . . . . . . . . . . . . . . . . . . . . . . 89 88 84 76 72

(1) Represents the number of passengers carried as a proportion to capacity, which is the number of seats available for passengers (180seats available for our Airbus A320 aircraft and 148 seats available for our Boeing 737-300 aircraft). Thai AirAsia began switching toAirbus A320 aircraft in October 2007.

(2) Available seat kilometers, which is the total number of seats available on scheduled flights multiplied by the number of kilometers theseseats were flown.

(3) Revenue passenger kilometers, which is the number of paying passengers carried on scheduled flights multiplied by the number ofkilometers those seats were flown.

(4) Calculated as total passenger revenues divided by total number of passenger carried.

(5) Calculated as revenues divided by ASK.

(6) Calculated as the sum of Thai AirAsia’s operating costs, selling expenses, administrative expenses and management remuneration (butexcluding finance costs) divided by ASK.

(7) Calculated as the sum of Thai AirAsia’s operating costs, selling expenses, administrative expenses and management remuneration (butexcluding finance costs) less fuel costs divided by ASK.

(8) Based on an exchange rate of US$1.00 = Baht 33.37 in 2009, US$1.00 = Baht 30.15 in 2010 and US$1.00 = Baht 31.69 in 2011,US$1.00 = Baht 32.37 in the three months ended March 31, 2011 and US$1.00 = Baht 30.84 in the three months ended March 31, 2012.

(9) Month-end average for the period.

(10) Represents the average number of kilometers flown per flight.

(11) Represents the average block hours per day per aircraft during the relevant period. Block hours is calculated by measuring the durationbetween the time of departure of an aircraft and the time of arrival at its destination.

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(12) Comprises revenues relating to baggage handling fees, excess baggage fees, seat selection fees, in-flight sales of meals and beverages,convenience fees, freight, in-flight sales of merchandise and cancellation and documentation fees.

(13) Calculated as average fuel price of Jet kerosene for the period (MOPS price).

(14) A flight is deemed “on time” if the actual departure time is no more than 15 minutes of the scheduled departure time.

Our Route Network and Schedules

Our route network covers a total of 25 cities across eight countries in Asia. As of December 31, 2011, wehad a route network covering 14 international destinations and 11 domestic destinations with 18 internationalroutes and 17 domestic routes*. The map below shows our international and domestic route network as ofDecember 31, 2011.

We focus on short-haul routes to airports in and around major population centers and travel destinations,typically operating within radius of up to 3,500 kilometers and a flight duration of up to four hours from ourhubs. Within the Thai AirAsia route network, we offer frequent point-to-point services, without connections,thereby freeing every flight to depart when it is ready, rather than being delayed when inbound flights carryingconnecting passengers are late. However, we provide on a limited basis connections to select destinations flown

* Bangkok-Phuket and return (using aircraft from our Bangkok hub) and Phuket-Bangkok and return (using aircraft from our Phuket hub)are counted as two routes, and Bangkok-Chiang Mai and return (using aircraft from our Bangkok hub) and Chiang Mai-Bangkok andreturn (using aircraft from our Chiang Mai hub) are counted as two routes.

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by other members of the AirAsia Group, such as AirAsia X’s mid- and long-haul routes. We do not scheduleflights that result in our aircraft being parked at airports (other than our hub airports) overnight. This enables usto save on costs because we do not need to base engineering staff (or contract with a service provider) at theseairports to perform maintenance checks or keep spare parts outside our hub airports and we do not have to payextra allowances or accommodation costs for the pilots and cabin crew to stay overnight at a non-hub destination.In addition, we are the sole airline currently flying non-stop on the Chiang Mai — Hatyai, Phuket — Bali, Phuket— Ubon Ratchathani and Phuket — Udon Thani routes.

We are part of the wider AirAsia Group that has short-haul LCC operations based in Malaysia, Indonesiaand the Philippines and long-haul LCC operations based in Kuala Lumpur, Malaysia. As a result, we benefitfrom the feed that other members of the AirAsia Group provide when their passengers travel across ourrespective networks by capturing passengers that we may not otherwise have captured.

The table below shows the number of our domestic and international flights for the periods indicated.

Year Ended December 31,

Number of Flights: 2009 2010 2011

Flights % Flights % Flights %

International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,612 42.2 17,577 42.0 20,251 42.6Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,776 57.8 24,246 58.0 27,328 57.4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,388 100.0 41,823 100.0 47,579 100.0

An airline must obtain traffic rights to operate domestic and international passenger services and mustobtain time slots to gain access to airports. Time slots correspond to the capacity of an airport’s facilities and theability of a carrier to land at, or take off from, an airport at a specified time and date. See “Regulation of theAirline Industry in Thailand” for further details. We have traffic rights to all the routes that we currently operate,as well as the routes for which we have commenced selling seats as of the date of this Offering Memorandum.Traffic rights in any jurisdiction granted to airlines may be withdrawn by the relevant government. Theavailability of landing and departure slots (particularly in China) may affect our ability to increase frequencies toexisting destinations and our proposed new routes.

We require the approval of the Ministry of Transport to commence new domestic routes, which we seekthrough the DCA. In addition, to increase frequencies to existing domestic routes, we need to obtain a permitfrom the DCA. As for international routes, we need to apply to the DCA to be designated as a Thai airline underthe relevant bilateral agreement between the Thai government and the government of the foreign countries towhich we propose to fly before seeking the approval of the relevant regulatory in such a foreign country. Inaddition, the Bali Concord II declaration endorsed by ASEAN member countries aims to establish a fullyintegrated ASEAN community, with air travel and tourism one of the stated priorities. Consistent with the BaliConcord II, the ASEAN Multilateral Agreement on Air Services envisages that these countries will enter intoimplementing protocols with each other, to be effective by 2015, to implement “open-skies” arrangementscovering all flights between all ASEAN capital cities.

Thailand has signed “open-skies” treaties with the following countries that we serve: Singapore, China(including Macau and Hong Kong), Vietnam, Malaysia, Myanmar and Sri Lanka.

When considering adding a new route to our network, we consider factors such as potential load factors, thepopulation density and tourism industry at the point of departure and destination, current and potentialcompetition, airport fees, traffic rights and distance. This process of considering new routes typically takes threemonths and new routes are approved by Thai AirAsia’s board of directors as part of their approval of ThaiAirAsia’s budget. If a new route is not profitable after a trial period of between six to eight months, we eitherlower the frequency of the route or cancel the route.

We currently operate out of three domestic hubs in Thailand, namely Suvarnabhumi International Airport inBangkok, Phuket International Airport in Phuket and Chiang Mai International Airport in Chiang Mai. We haveplans to create a new hub at Hatyai International Airport in Songkla by 2013 and at Udon Thani Airport in UdonThani by 2014.

Bangkok

Our primary hub is at Suvarnabhumi International Airport, which is located in the sub-district of Bang Phliin Samut Prakan Province approximately 25 kilometers east of Bangkok, and is the largest and busiest airport inThailand, based on the number of aircraft movements and passenger volume. Suvarnabhumi International Airportcomprises one passenger terminal with seven concourses. We have received a request from the Airports of

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Thailand Public Company Limited to move a portion or all of our operations in Bangkok to the Don MuangAirport. We are evaluating such request but have not made any decision.

Set forth below is a route map showing our point-to-point network from our hub at SuvarnabhumiInternational Airport as of December 31, 2011.

As of December 31, 2011, we had 18 operational and one spare Airbus A320 aircraft based in Bangkok andoperated 259 flights per week to 10 domestic destinations and 182 flights per week (including the Bangkok-Phuket flight that flies onward to Singapore) to 14 international destinations from Suvarnabhumi InternationalAirport. We plan to increase the number of domestic flights to 336 flights per week and increase the number ofinternational flights to 229 flights per week, which includes flights to new destinations in India (Chennai), by theend of 2012.

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As of December 31, 2011, a summary of our current flight schedule and flight schedule for routes on whichwe plan to increase or decrease frequency or start or terminate operations by the end of 2012 from Bangkok,subject to the receipt of applicable approvals, is set forth below.

Flight Schedule as of December 31, 2011Planned Flight Scheduleas of December 31, 2011

From Bangkok to:Date ServiceCommenced

Number ofRoundtrip Flights

per Week

Expected Date ofCommencement(1),

Increase orTermination

Expected Number ofNew/(Terminated)

Roundtrip Flights perWeek

International:Singapore . . . . . . . . . . . . . . . . . . February 16, 2004 28 February 2012/

September 2012(2)

14

Phuket and onward toSingapore(3) . . . . . . . . . . . . . . .

October 31, 2007 7 — —

Kuala Lumpur . . . . . . . . . . . . . . . June 16, 2004 21 — —Penang . . . . . . . . . . . . . . . . . . . . June 16, 2004 7 — —Macau . . . . . . . . . . . . . . . . . . . . . July 5, 2004 28 November 2012 14Hanoi . . . . . . . . . . . . . . . . . . . . . October 17, 2005 7 — —Phnom Penh . . . . . . . . . . . . . . . . November 1, 2005 7 — —Yangon . . . . . . . . . . . . . . . . . . . . August 16, 2006 14 July 2012 (7)Shenzhen . . . . . . . . . . . . . . . . . . . July 15, 2007 7 — —Ho Chi Minh City . . . . . . . . . . . . April 4, 2008 14 — —Hong Kong . . . . . . . . . . . . . . . . . October 26, 2008 14 — —Bali . . . . . . . . . . . . . . . . . . . . . . . January 20, 2009 7 — —Guangzhou . . . . . . . . . . . . . . . . . January 20, 2009 7 — —Kolkata . . . . . . . . . . . . . . . . . . . . December 1, 2010 7 — —New Delhi . . . . . . . . . . . . . . . . . . December 1, 2010 7 March 2012 (7)Colombo . . . . . . . . . . . . . . . . . . . — — March 2012 7(8)

Chennai . . . . . . . . . . . . . . . . . . . . — — March 2012 5Chongqing . . . . . . . . . . . . . . . . . — — March 2012 7Shantou . . . . . . . . . . . . . . . . . . . . — — October 2012 7Chengdu . . . . . . . . . . . . . . . . . . . — — November 2012 7

Sub-total . . . . . . . . . . . . . . . . . 182 47

Domestic:Phuket . . . . . . . . . . . . . . . . . . . . . February 3, 2004 56(4) July 2012/

October 2012(5)

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Hat Yai . . . . . . . . . . . . . . . . . . . . February 3, 2004 42 March 2012 7Chiang Mai . . . . . . . . . . . . . . . . . February 3, 2004 42(6) February 2012/

November2012(7)

14

Chiang Rai . . . . . . . . . . . . . . . . . March 28, 2004 21 October 2012 7Udon Thani . . . . . . . . . . . . . . . . . April 7, 2004 21 — —Ubon Ratchathani . . . . . . . . . . . . June 16, 2004 14 — —Narathiwat . . . . . . . . . . . . . . . . . February 9, 2005 7 — —Krabi . . . . . . . . . . . . . . . . . . . . . . February 22, 2006 28 October 2012 7Surat Thani . . . . . . . . . . . . . . . . . April 1, 2006 14 September 2012 7Nakhon Si Thammarat . . . . . . . . November 19, 2008 14 September 2012 7Trang . . . . . . . . . . . . . . . . . . . . . . — — January 2012 7Nakhon Phanom . . . . . . . . . . . . . — — February 2012 7

Sub-total . . . . . . . . . . . . . . . . . 259 77

Total . . . . . . . . . . . . . . . . . . 441 124

(1) Subject to change, pending receipt of relevant governmental approvals.

(2) 7 additional flights per week from February 2012 and 7 additional flights per week from September 2012.

(3) We do not sell tickets for Bangkok-Singapore and return on this flight, only Bangkok-Phuket, Phuket-Singapore, Singapore-Phuket andPhuket-Bangkok.

(4) Includes the 7 flights per week on the Bangkok-Phuket-Singapore route (see footnote (3)), but excludes the 7 flights per week on thePhuket-Bangkok route in the table under “— Phuket” below. Total number of roundtrip Bangkok-Phuket flights amount to 63 flights perweek using aircraft based in Bangkok (56 flights per week) and Phuket (7 flights per week).

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(5) 7 additional flights per week from July 2012 and 7 additional flights per week from October 2012.

(6) Excludes the 4 flights per week on the Chiang Mai-Bangkok route in the table under “— Chiang Mai” below. Total number of roundtripBangkok-Chiang Mai flights amount to 46 flights per week using aircraft based in Bangkok (42 flights per week) and Chiang Mai (4flights per week). With effect from June 2012, all Chiang Mai-Bangkok flights will be operated using aircraft based in Bangkok (49flights per week and, from November 2012, 56 flights per week).

(7) 7 additional flights per week from February 2012 and 7 additional flights per week from November 2012.

(8) Based on the current performance of this new route, Thai AirAsia intends to reduce the frequency at a date to be determined to 3 flightsper week.

Phuket

We began operations from our hub at Phuket International Airport in November 2009. Phuket InternationalAirport is the second-largest and second-busiest airport in Thailand after Bangkok’s Suvarnabhumi InternationalAirport, based on the number of aircraft movements and passenger volume. Phuket International Airport islocated approximately 32 kilometers from downtown Phuket. Phuket International Airport comprises a singlepassenger terminal building that serves both international and domestic flights, from which we operate.

Set forth below is a route map showing our point-to-point network from our hub at Phuket InternationalAirport as of December 31, 2011.

As of December 31, 2011, we had two Airbus A320 aircraft based in Phuket and operated 31 flights perweek to four domestic destinations (including to Bangkok) and 11 flights per week to two internationaldestinations from Phuket International Airport.

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As of December 31, 2011, a summary of our current flight schedule from Phuket is set forth below. We donot have any plans to increase or decrease the frequency of our current routes or to add new routes.

Flight Schedule as of December 31, 2011

From Phuket to:Date ServiceCommenced

Number ofRoundtrip Flights

per Week

International(1):Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November 15, 2009 7Bali . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 17, 2010 4

Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Domestic:Bangkok(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November 15, 2009 7Chiang Mai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 3, 2009 14Udon Thani . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 21, 2009 7Ubon Ratchathani . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . October 12, 2010 3

Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

(1) See “— Bangkok” above for details of flights from Phuket to Singapore.

(2) Excludes the 7 flights per week on the Bangkok-Phuket-Singapore route (see footnote (3) under “— Bangkok” above) and excludes the56 flights per week on the Bangkok-Phuket route in the table under “— Bangkok” above. Total number of roundtrip Phuket-Bangkokflights amount to 63 flights per week using aircraft based in Bangkok (56 flights per week) and Phuket (7 flights per week).

Chiang Mai

We began operations from our hub at Chiang Mai International Airport in January 2011. Chiang MaiInternational Airport is the third-largest and third-busiest airport in Thailand after Bangkok’s SuvarnabhumiInternational Airport and Phuket International Airport, based on the number of aircraft movements and passengervolume, and is located approximately four kilometers from downtown Chiang Mai. Chiang Mai InternationalAirport comprises a single passenger terminal serving both international and domestic flights, from which weoperate.

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Set forth below is a route map showing our point-to-point network from our hub at Chiang Mai InternationalAirport as of December 31, 2011.

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As of December 31, 2011, we had one Airbus A320 aircraft based in Chiang Mai and operated 14 flights perweek to Hatyai and Bangkok and seven flights per week to Singapore from Chiang Mai International Airport. Weintroduced flights to a new destination, Ubon Ratchathani, in November 2011. We also intend to terminate ourseven flights per week to Singapore and introduce seven flights per week to Macau by the end of May 2012.

As of December 31, 2011, a summary of our current flight schedule and flight schedule for routes on whichwe plan to increase or decrease frequency or start or terminate operations by the end of 2012 from Chiang Mai,subject to the receipt of applicable approvals, is set forth below.

Flight Schedule as of December 31, 2011Planned Flight Scheduleas of December 31, 2011

From Chiang Mai to:Date ServiceCommenced

Number ofRoundtripFlights per

Week

Expected Date ofCommencement(1),

Increase orTermination

Expected Number ofNew/(Terminated)

Roundtrip Flights perWeek

International:Singapore . . . . . . . . . . . . . . . . . . . . . January 24, 2011 7 May 2012 (7)Macau . . . . . . . . . . . . . . . . . . . . . . . . — — May 2012 7

Sub-total . . . . . . . . . . . . . . . . . . . . 7 —

Domestic:Bangkok(2) . . . . . . . . . . . . . . . . . . . . January 24, 2011 4 June 2012 (4)Hat Yai . . . . . . . . . . . . . . . . . . . . . . . January 24, 2011 7 — —Ubon Ratchathani . . . . . . . . . . . . . . . November 16 2011 3 June 2012 4

Sub-total . . . . . . . . . . . . . . . . . . . . 14 —

Total . . . . . . . . . . . . . . . . . . . . . 21 —

(1) Subject to change, pending receipt of relevant governmental approvals.

(2) Excludes the 42 flights per week on the Bangkok-Chiang Mai route in the table under “— Bangkok” above. Total number of roundtripChiang Mai-Bangkok flights amount to 46 flights per week using aircraft based in Bangkok (42 flights per week) and Chiang Mai (4flights per week). With effect from June 2012, all Chiang Mai-Bangkok flights will be operated using aircraft based in Bangkok (49flights per week and, from November 2012, 56 flights per week) (see table under “— Bangkok” above).

Planned Hub at Hatyai

We plan to begin operations from our hub at Hatyai International Airport in Hatyai by 2013. HatyaiInternational Airport is located approximately eight kilometers from downtown Hatyai, in Songkla province.Hatyai International Airport comprises a single terminal building serving both international and domestic flights.We intend to base one Airbus A320 aircraft in Hatyai.

Planned Hub at Udon Thani

We plan to begin operations from our hub at Udon Thani International Airport in Udon Thani by 2014.Udon Thani International Airport is located approximately five kilometers from downtown Udon Thani. UdonThani International Airport comprises a single terminal building serving both international and domestic flights.We intend to base one Airbus A320 aircraft in Udon Thani.

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AirAsia Group Network

Our customers have access to the combined route network of AirAsia Berhad, Indonesia AirAsia and ThaiAirAsia that covers 68 destinations in 15 countries with 82 international routes and 59 domestic routes. The mapbelow shows the AirAsia Group’s point-to-point network as of December 31, 2011.

Our Fleet

Aircraft Type

We have a total of 22 Airbus A320 aircraft as of December 31, 2011, 21 of which we operate and theremaining aircraft we keep as a spare. We lease all of our aircraft from AirAsia Mauritius, a subsidiary ofAirAsia Berhad. See “Related Party Transactions — Past and Ongoing Related Party Transactions — AirAsiaAircraft Lease Agreements” for a summary of the general terms. We phased out the use of our Boeing fleet inAugust 2010, after which we operate only Airbus A320 aircraft. We took delivery of two additional Airbus A320

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aircraft in January and February 2012, expanding our fleet to 24. We continuously review our fleet requirementsand we expect to expand our fleet by an additional three A320 aircraft in 2012, six A320 aircraft in 2013, andfive A320 aircraft in each of 2014, 2015 and 2016.

The Airbus A320 aircraft has a proven track record of reliability in short-haul, high frequency operations.By building a uniform fleet, costs for spare parts and training are reduced, allowing us to keep fares low. Havinga uniform fleet also means that almost any aircraft may be used for any route, thereby simplifying and increasingthe flexibility of our flight scheduling arrangements. As all of Thai AirAsia’s aircraft are Airbus A320s, ThaiAirAsia enjoys cost savings from operating one aircraft type.

Each Airbus A320 aircraft is configured, and each Boeing 737-300 aircraft that we operated until August2010 was configured, to seat a single class in order to maximize seating capacity. Our seating configurationmaximizes seating capacity by fitting 180 seats in our Airbus A320 aircraft and, until we phased out our Boeing737-300 aircraft, 148 seats in such aircraft. The average age of our fleet as of December 31, 2011 is two yearsand four months.

Our aircraft leases typically have a term of between nine and 12 years, with an option to renew subject to theterms of the leases. Events of default under the lease agreements include, but are not limited to, our failure tomake rent payments or to comply with our obligations under the lease, the insolvency of Thai AirAsia and across default of financial indebtedness over US$5 million. See “Related Party Transactions — Past and OngoingRelated Party Transactions — AirAsia Aircraft Lease Agreements” for details.

We keep an operational spare aircraft in case of aircraft related issues, such as unscheduled maintenance.When an aircraft falls behind schedule, it often remains behind schedule during the remainder of that day.See “Risk Factors — Risks Relating to the Company and Thai AirAsia — We rely on a high daily aircraftutilization rate to optimize our revenues, making us especially vulnerable to delays”. For the current size of ouroperations, we believe that we have adequate spare aircraft to meet our needs.

Aircraft Utilization

We plan our routes and operations for an average aircraft utilization of above 12.0 block hours per day, ascompared to the 8.0 block hours per day utilization typical of full-service airlines. In 2011, our average aircraftutilization was 11.5 block hours per day. The increased aircraft utilization is achieved through a longer workingday by commencing daily operations at 6:15 a.m. and ceasing at 4:55 am the following day, as well as shorterturnaround times of approximately 25 to 30 minutes, compared to the approximately 45- to 120-minuteturnaround times typical of full-service airlines.

To provide added flexibility to our fleet management, we have obtained permission from the DCA ofThailand to use aircraft from AirAsia Berhad and Indonesia AirAsia on a short-term wet lease basis in case ofmaintenance delays or seasonal increases in demand.

Aircraft Procurement

We analyze our aircraft procurement needs independently from the other members of the AirAsia Group.However, AirAsia Berhad consolidates the respective requirements of each member of the AirAsia Group andplaces a consolidated order for the required number of aircraft from the aircraft manufacturer. This enables us tobenefit from bulk discounts off the official list price of such aircraft and priority of delivery dates over somenon-AirAsia Group airlines. In June 2011, AirAsia Berhad announced that it had placed an order for 200 AirbusA320neo aircraft to be powered by CFM International’s LEAP-X engines.

Pricing and Revenue Management

We have a multiple fare structure comprising up to 12 tiers of fares, or “fare buckets” per route. Indetermining how many seats to allocate to each fare bucket for each flight and each departure date, we considerfactors including market demand, competition, historical performance and forecasts. Generally, our policy is notto lower our fares once they have been published, and as there are a limited number of seats in the lower farebuckets, the earlier a passenger books a seat, the more likely it is that the passenger will be able to purchase aseat at the lowest published fare. We typically sell only the highest fare bucket close to the day of travel, whentime sensitivity outweighs price sensitivity. Such seats would typically be sold at an average discount ofapproximately 10% of the published domestic fares offered by full-service airlines. Revenues from these “lastminute” fares help maintain our revenue from passenger seat sales.

This pricing structure offers our guests savings depending on which distribution channel they use to book,how far in advance a particular booking is made and the level of demand for the seats. All of our fares are pricedbased on one-way travel. Seats must be purchased at the time of reservation and are non-refundable except for

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the portion relating to any applicable airport tax. However, the time of travel (other than in the case ofpromotional fares) can be changed up to 48 hours prior to departure subject to an administration fee and thepayment of the fare difference. We also allow our GoCorporate customers to change their flight schedules up totwo hours prior to departure subject to an administration fee (other than GoCorporate customers on flexible fares)and the payment of the fare difference. The DCA prescribes a fare ceiling on domestic flights of Baht 30 perkilometer per seat. We are not subject to any fare ceilings on our international flights.

We use the same revenue management system that is used by AirAsia Berhad, which facilitates dailymonitoring and inventory allocation decisions by making recommendations on pricing adjustments to be made onthe basis of the lowest price consistent with demand and profitable operations. In addition, we hold bi-weeklymeetings to analyze booking trends, address routes that require adjustments and discuss promotions.

While we seek to maximize our revenue, our low-cost structure enables us to offer fares that are on averagelower than our full-service competitors on the same routes. Moreover, we periodically offer promotional faresthat are more discounted than our already low fares to promote less popular routes. See “— Advertising andPromotions” for further details.

Distribution and Sales

We have three principal distribution channels, the Internet, direct sales through our sales offices and callcenters, indirect sales. All travel with us is through electronic tickets, thereby reducing costs associated withprinting, mailing and modifying tickets, as well as re-issuing lost or stolen tickets. The following chart shows theproportion of our total bookings sold through each of our major distribution channels for the periods indicated.

Year Ended December 31,

2009 2010 2011

(% of passengers)

Internet sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 69 75Direct sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 27 20Indirect sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 4 5

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 100 100

Internet Sales

We rely on the AirAsia Group website, www.airasia.com, for our Internet sales. Online bookings are paidfor by credit card or direct debit, reducing credit risk and accounting processes. This also improves our operatingcash flows as all revenues from Internet sales (including airport taxes and fuel surcharges) are received directlyby our acquiring bank for crediting to our account. To encourage Internet reservations, our lowest fares (whichinclude our promotional fares) are available only through the AirAsia Group website. Use of the Internet to makeflight reservations has increased from 72% of our total passengers in 2009 to 75% in 2011, and we expect thetrend to continue in the future. Online bookings lower our costs by reducing operating costs. Consequently, theInternet is our lowest-cost distribution channel. Through the AirAsia Group website, we also offer our guestsadditional services and products which generate ancillary revenue. See “— Ancillary Services” for a descriptionof such services and products.

We use a common reservations and ticketing platform with the wider AirAsia Group. As a result, customerscan purchase tickets not just to destinations that we fly to, but also to any destination flown to by any of the othermembers of the AirAsia Group. All sales using the www.airasia.com website result in the direct payment to ThaiAirAsia for flights that it operates.

Direct Sales

Direct sales are made at sales offices, ticket counters, airport counters, call centers and for group bookings.Our direct sales comprised 26% of our total passengers in 2009, 27% in 2010 and 20% in 2011.

Sales Offices, Ticket Counters and Airport Counters

We operate sales offices in three locations (one in each of Bangkok, Phuket and Chiang Mai) and smallticket counters in eight locations (five in Bangkok, and one in each of Phuket, Chiang Mai and Hatyai). We alsosell tickets at our ticket counters located in the airports which we serve. These sales offices, ticket counters andairport counters allow guests to walk in to make or change reservations and settle payments either in cash or byusing a credit or debit card.

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Call Centers

We offer our customers the ability to call a telephone number in Thailand 13 hours a day from 8:00 am to9:00 pm to reserve their seats on one of our flights. Guests may settle payment of their call center bookings byusing a credit or debit card, or by cash at any branch of Siam Commercial Bank, Bangkok Bank and KBank andcounter services of 7-Eleven stores throughout Thailand.

Group Bookings

We offer special fares to our customers for group passenger bookings.

Indirect Sales

Our indirect sales comprised 2% of our total passengers in 2009, 4% in 2010 and 5% in 2011.

Third Party Travel Agents

We maintained a network of 248 “sky agents” and 108 “BSP agents” as of December 31, 2011. Our “skyagents” are travel agents who have registered with us and maintain a prepaid account with us from whichbookings made by their guests are debited. “BSP agents” are agents who are members of, and have credit limitswith, IATA. IATA transfers amounts due to us weekly arising from bookings made by such BSP agents. Bothtypes of agents are required to book tickets from the AirAsia website. The services that travel agents provide areparticularly useful for travelers who do not have Internet access and/or credit cards, especially in rural remoteareas of Thailand or in other developing countries.

GoCorporate Bookings

We offer our GoCorporate package to business travelers who maintain corporate accounts with us,providing them with a hassle-free way of booking online with a corporate discount. We maintained a network of132 corporate accounts as of December 31, 2011. Our GoCorporate package allows customers to change theirflight up to two hours before the flights and to check-in complimentary baggage of up to 15 kilograms.

Our GoCorporate bookings comprised 1% of our total passengers in 2009, 2010 and 2011.

Ancillary Services

We provide various ancillary services and generate additional revenue through the provision of additionalproducts and services connected to our core air passenger service, including add-on services, in-flight servicesand other products and services. Ancillary services have comprised an increasing portion of our revenue in recentyears, accounting for 9.6%, 13.9% and 16.3% of our revenues in 2009, 2010 and 2011, respectively.

Add-on Services and Fees

Through the AirAsia Group website, we offer our passengers a range of add-on products and services suchas:

• Check-in luggage: charges are based on the weight of the luggage that passengers are checking in and onwhether the check-in luggage allowance is pre-booked at the time of reservation or purchased at theairport. Our current pre-booked checked bag fees for our flights start from Baht 370 for internationalflights and Baht 270 for domestic flights for 15 kilograms to Baht 630 for international flights and Baht500 for domestic flights for 30 kilograms per flight sector. Checked bag fees for international flights arecurrently Baht 530 for international flights and Baht 480 for domestic flights for 15 kilograms if paid atcheck-in, with excess luggage fees of Baht 450 for international flights and Baht 350 for domestic flightsper kilogram in excess thereof;

• Seat selection: passengers can select their preferred seats on their flights by paying a fee. We beganproviding this service in 2009 and currently charge Baht 350 for the selection of each “Hot Seat”(typically seats at the emergency exit rows and the first five rows of the aircraft) and Baht 65 for any otherseat. Our seat selection service replaced our express boarding service that was in place in 2008 at a fee ofBaht 200 for international flights and Baht 100 for domestic flights;

• Sports equipment fee: entitles our passengers to bring sports equipment such as their golf clubs, divebag, surfboards or any other item of oversized sports equipment up to 20 kilograms in addition to theircheck-in luggage for a fee of Baht 750 for international and domestic flights;

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• Bookings and booking changes: passengers making their bookings through our call center, sales offices,airport sales counters and group desks and Thai AirAsia Tesco booths are currently charged a perpassenger booking service fee of Baht 210. Passengers may also make rebookings, name changes anditinerary changes more than 48 hours before their estimated time of departure, for which we chargeprocessing fees.; and

• Convenience fees: In 2009, we began charging passengers paying for their tickets by credit cards aconvenience fee, currently Baht 50 per passenger for each way.

Prior to June 25, 2009, we also charged administration fees of Baht 225 per seat for international flights andBaht 50 per seat for domestic flights and insurance surcharges to partially cover our insurance costs amounting toBaht 50 per seat for international and domestic flights.

In-Flight Services

Our in-flight services include in-flight sale of beverages, food and merchandise. Food that is pre-booked atthe time of ticket purchase is priced at a 15% discount to the prices charged when purchased during the flight andcomes bundled with a complimentary cup of mineral water. For flights shorter than 75 minutes, hot meals canonly be pre-booked online and are not available for in-flight purchase to ensure the quality of our on-boardservice.

In addition, we offer merchandise including souvenirs (such as airplane models and graphic t-shirts), travelgadgets (such as phone chargers and earphones), seasonal or festive items and travel essentials (such as luggagelocks and pillow and comforter kits). From December 2010, through King Power International, we also offerduty free products which can be purchased on our international flights using cash and credit cards.

AirAsia KBank Credit Card

On December 2, 2009, we entered into a co-branded credit card agreement with KASIKORNBANK PublicCompany Limited (“KBank”) pursuant to which KBank agreed to issue co-branded classic and platinum creditcards to its clients bearing the AirAsia logo. We generate revenues from this partnership through receiving feesfrom KBank for new customers and certain fees based on KBank’s net receivables, annual fees of customers andtotal spending amounts of the customers. We have agreed not to terminate the agreement prior to May 28, 2012and the agreement is scheduled to terminate on May 28, 2014. Holders of the AirAsia KBank credit card enjoypriority bookings on our promotional flights, a loyalty program which provides them with worldwide dining andhotel privileges, travel assistance and accident insurance and other privileges or discounts through marketingpromotions conducted by KBank.

CIMB Savers Account

On April 1, 2010, we entered into the CIMB Thai AirAsia savers program agreement with CIMB Thai BankPublic Company Limited (“CIMB Thai”) pursuant to which CIMB Thai agreed to provide co-branded onlinesavings accounts to its clients bearing the AirAsia logo. The agreement is scheduled to terminate on March 31,2013, subject to automatic renewals unless terminated under the terms of the agreement. Account holders canearn higher interest rates than normal savings accounts, earn cash rebates on the outstanding balances in thesavers account if certain conditions are met, receive a chance to win free flights on and gift vouchers from ThaiAirAsia, and enjoy no or discounted ATM fees. We generate revenues from this partnership through receivingspecified amounts calculated under the terms of the agreement if the account balance of the program meetscertain thresholds.

Go Insurance

We offer, through Krungthai Panich Insurance Co. Ltd., travel insurance coverage to our passengers underthe Go Insurance brand. Customers who use Go Insurance benefit from insurance against accidental death anddismemberment, trip cancellation, flight delay, damage to baggage and personal effects and others. We generaterevenue by receiving fees for the use of the AirAsia website for such insurance sales.

Aircraft In-flight Branding

We generate revenue by providing advertising space on each of our aircraft in places such as the overheadbin compartments, meal trays, inside the washrooms, on the rear of each seat as well as on the rear of eachboarding pass.

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AirAsia Go

AirAsia Go is an online travel portal through which the AirAsia Group is able to offer packages whichinclude our flights, hotels, tours, transportation options and events. We derive revenue from AirAsia Go onlywith respect to the ticket price that we receive for the flights that we provide as part of the travel package.

Freight

We offer limited freight service on our scheduled flights, including courier and mail services. As our corebusiness involves providing passenger air travel services, freight services are only provided if additional space isavailable in an aircraft.

AirAsia BIG Loyalty Program

In 2011, AirAsia Berhad launched the AirAsia BIG Loyalty Program as a means of creating and retainingcustomer loyalty. Members of the program earn points for purchasing tickets on any flight operated by anAirAsia Group member and purchasing ancillary services such as pre-booked baggage, meals and comfort kits,seat selection and Go Insurance. Members also earn points through hotel stays, travel packages, car rentals andother spending with various partners, including AirAsia Megastore, AirAsia Go, Tune Hotels, Hotel PropertiesLimited, Healthway Medical Group and Budget car rentals.

Points may be redeemed, either in full or through a cash top-up, for air travel on flights operated by anAirAsia Group member, AirAsia gift vouchers, AirAsia merchandise, travel packages by AirAsia Go and hotelstays at Tune Hotels. Thai AirAsia earns revenue through redemption seating purchased by the operatingcompany owning the AirAsia BIG Loyalty Program when members redeem their points for flights on ThaiAirAsia. The number of points required to redeem a seat depends on the number of seats available on, and thedestination of, the particular flight for which redemption is to be made.

Advertising and Promotions

We benefit from the goodwill of the AirAsia name, which we license from AirAsia Berhad, but we alsoconduct marketing activities to build upon the AirAsia name in Thailand. Our logo and tagline “Now EveryoneCan Fly” underscores our objective to be a people’s airline. By providing low fares that are on average oftensubstantially less than published fares offered by full-service airlines, we stimulate demand and create newmarkets. Our brand name was primarily established through a combination of tactical advertising, effectivepublic relations and promotions by AirAsia Berhad. We have an agreement with AirAsia Berhad, wherebyAirAsia Berhad provides certain marketing services to us in exchange for a fee. See “Related Party Transactions— Past and Ongoing Related Party Transactions — Booking Fee Agreement” for a summary.

We allocate up to 2% of our total budgeted revenue for our marketing campaigns and activities every year.To ensure effective utilization of our marketing budget, we are selective in determining the advertising mediumand usually use print, supported by radio and billboards to advertise our promotional fares. We regularly offerpromotional fares that are more discounted than our already low fares. For example, we typically conduct twoscheduled promotions a year, timed to launch ticket sales for flights during each of the two aviation industry-mandated flying seasons, during which the airfare component may be as low as Baht zero. In addition to ourscheduled promotions, we may also conduct other promotions such as the “Fabulous Fly-Day” promotionlaunched in October 2010, which offers promotional rates on Fridays for our less popular routes to stimulateshort term demand. We also use television advertising occasionally for promotional and theme advertising. Forexample, we launched our “100% Airbus 100% Happiness” television campaign in 2010 to publicize our newAirbus fleet. We participate, and plan to continue participating, in community and charity projects, such as givingfree plane rides to children with hearing disabilities in 2010 and to youth activists visiting a woman’s prison inBangkok in 2011.

Customer Service

We are committed to providing high quality customer service by providing our guests with a safe, low-cost,valuable, reliable and friendly service. In line with our no-frills, low-cost business model, we eliminate servicesthat we believe our guests view as non-essential, including complimentary meals and airport lounges. As analternative, a number of value-added service enhancements are available on a “user pays” basis. Such serviceenhancements include sales of in-flight food, beverages and merchandise.

We continuously monitor our on-time performance. Our average on-time performance (which measures theproportion of flights departing within 15 minutes of the scheduled departure time) in 2011 was 84%.

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Our ground support service has a system in place to inform guests of delayed or cancelled flights by SMS ortelephone. Guests that cannot be contacted through these means are notified at the check-in counter.

To provide the highest quality customer service, we strive to employ staff who speak English and who areoutgoing, friendly and professional. Staff are selected through a rigorous recruitment process, which is followedby extensive and ongoing training and performance management activities. We specifically budget for trainingfor each customer service personnel every year to ensure staff are fully prepared to assist passengers effectivelyand efficiently.

Operations

Safety and Security

We are fully committed on all levels of operation to the safety and security of our passengers andemployees. This commitment is reflected in our system of maintenance of our aircraft, extensive training given toour pilots, cabin crew and employees and the strict policies and procedures in compliance with local regulations,international standards and best practices regarding all areas of our business that are involved with the operationof our aircraft.

Safety

Our aircraft are equipped with advanced and highly accurate instrument landing systems (“ILS”) thatprovide necessary lateral and vertical guidance to the pilot in navigating the aircraft for a precision approach. Aprecision approach is a descent procedure using a navigation facility aligned with a runway. The ILS in ouraircraft has a height call-out feature that further assists the pilot in navigating the aircraft’s descent. In addition,our aircraft are equipped with traffic alert and collision avoidance system (“TCAS”) technology and enhancedground proximity warning system (“EGPWS”). TCAS technology allows pilots to detect the presence of all otherTCAS and transponder-equipped aircraft, as well as coordinate maneuvers between two opposing aircraft whichare equipped with TCAS, thereby reducing the risk of mid-air collisions. EGPWS is a terrain awareness andalerting system which uses aircraft inputs, including geographic position, altitude, airspeed and glide scope,together with internal terrain, obstacles and airport databases to predict a potential conflict between the aircraftflight path and terrain or an obstacle. In addition, EGPWS provides alerts for excessive glide scope deviation andincorrect landing configurations, and is able to provide flight path angle indications and altitude call-outs.

We have established processes to assist in the identification of potential safety issues. These include:

• a reliability program that tracks the reliability of the aircraft’s system and components;

• monthly review of the results of the reliability program;

• technical crew and cabin safety emergency procedures training;

• safety awareness program for all our staff; and

• ramp safety awareness training.

We have developed a quality assurance system to monitor all areas related to ground and flight operations aspart of our wider quality management objectives. Our quality assurance teams oversee and monitor all aspects ofour aircraft operations to ensure that industry safety standards, including DCA’s guidelines, are strictly adheredto. DCA conducts safety audits on us twice every year and regulatory authorities from other countries alsoregularly conduct safety audits.

Since we began operations in 2004, none of our aircraft has been involved in a serious incident. See “RiskFactors — Risks Relating to the Company and Thai AirAsia — Our business, financial condition, results ofoperation and prospects could be materially and adversely affected in the event of an emergency, accident orincident involving any of our aircraft or any of the aircraft of any AirAsia Group company” for a discussion ofthe potential consequences of an accident or incident.

We have implemented a flight data monitoring system (“FDM”) to reduce accident and incident rates, whileoptimizing costs to remain competitive. FDM is a quality assurance process, which involves the analysis of flightdata on a routine basis, with the aim of promoting the early detection of situations which require, or potentiallyrequire, corrective action. We believe that the adoption of the FDM contributes to increased flight safety andoperational efficiency as it enables our engineers and management to track and evaluate flight operations trends,identify risk precursors, and take the appropriate preventive and/or remedial action where necessary.

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Security

While the relevant airport operators are responsible for security screening of passengers and baggage at ourdomestic and international destinations, we train our staff to remain vigilant in identifying potential securitybreaches, as well as to handle unruly passengers. All potential employees undergo thorough screening of theirbackground prior to being hired.

We provide extensive training to ensure that our staff have appropriate skills to carry out their relevantduties as stipulated in our employee manuals. All crew and ground handling staff are required to undergodangerous goods awareness training to be able to identify potentially dangerous goods and items that threaten thesafety of the flight (these include flammable liquids and containers that are likely to explode under pressure).

Following the terrorist attacks in the United States on September 11, 2001, the International Civil AviationOrganization (“ICAO”) implemented regulations and guidelines requiring airlines to adhere to certain securitymeasures. These include:

• installation of reinforced doors and review of policies and procedures on cockpit visits;

• occupying of jump seats;

• the removal of checked-in luggage from the aircraft when the passenger fails to board the aircraft;

• review of items allowed as cabin luggage;

• enhanced holding baggage surveillance; and

• crew training on handling of disruptive passengers and passenger profiling.

We are in compliance with all of DCA’s and the ICAO’s regulations. In addition, cockpits in all of ouraircraft have reinforced, bulletproof doors.

Maintenance and Spare Parts

Maintenance

We provide line maintenance and light maintenance, which is maintenance below a “C” level check(conducted at 6,000-hour intervals) for all of our aircraft. Any maintenance above a “C” level check or anystructural repairs is outsourced to other certified maintenance, repair and overhaul (“MRO”) service providerssuch as Thai Airways International and Thai Aviation Industries in Thailand, ST Aerospace in Singapore orSepang Aircraft Engineering in Malaysia. Through the AirAsia Aircraft Lease Agreements, Thai AirAsia is ableto rely on manufacturer’s warranties and product support granted to AirAsia Berhad.

Spare Parts

We maintain an inventory of rotable and consumable spare parts, in all three of our hubs, with the majorityof inventory found in Bangkok. AirAsia Berhad also maintains inventory in Kuala Lumpur to which we haveaccess. AirAsia Berhad also has spare engines that we can borrow. As of December 31, 2011, we keptBaht 208.5 million (US$6.6 million) of aircraft spares parts (net book value).

Fuel

Fuel is a major cost component for airlines. Thai AirAsia’s fuel costs in 2009, 2010 and 2011 wereBaht 3,357.2 million, Baht 3,974.0 million and Baht 6,405.8 million (US$202.1 million), accounting for 36.0%,39.9% and 46.6% of Thai AirAsia’s total operating costs, respectively. See “Risk Factors — Risks Relating tothe Company and Thai AirAsia — Our business, financial condition, results of operation and prospects arematerially and adversely affected by the cost or unavailability of sufficient quantities of fuel”.

We purchase a substantial majority of our fuel from PTT and Shell Thailand. Prior to 2011, in KualaLumpur, Penang and Macau, AirAsia Berhad entered into supply agreements on Thai AirAsia’s behalf, for whichit reimburses AirAsia Berhad at its actual cost in U.S. Dollars, so that it benefits from economies of scale. From2011 onwards, Thai AirAsia purchases its fuel requirements in Kuala Lumpur and Penang directly, and AirAsiaBerhad continues to purchase fuel on Thai AirAsia’s behalf in Macau.

In Asia, fuel prices are benchmarked against MOPS. Jet kerosene prices, and therefore fuel prices, areextremely volatile and are subject to many global economic and geopolitical factors. We implement various fuelmanagement strategies to manage the risk of rising fuel prices, including hedging. We have granted AirAsiaBerhad the right and discretion to enter into hedges to manage the risk of any physical price movements of fuel inthe world market. See “Related Party Transactions — Past and Ongoing Related Party Transactions — Fuel

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Hedging Arrangements” and “Management’s Discussion and Analysis of Financial Condition and Results ofOperations — Market Risks — Fuel Price Risk” for details. We cannot assure you that we will be able tocontinue to secure new jet fuel derivative contracts on commercially reasonable terms or at all.

In addition to hedging fuel prices, we have implemented the following fuel management strategies in orderto reduce costs and minimize inherent risks:

• Fuel policy. We control our fuel supply by uplifting as much fuel as possible within optimal limits andregulatory requirements, in destinations where fuel is least expensive, to facilitate the use of the leastexpensive fuel stock;

• Payment upfront. Upfront payment for all purchases gives us negotiating power to obtain better pricing;

• Fuel consumption policy. We attempt to minimize fuel consumption by establishing clear guidelinescovering all areas of flight operations so that aircraft fuel burn rates can be maintained at a functionalminimum. This includes selecting the route that is the shortest distance to fly, selecting the closestalternate airport, allowing the aircraft to reach optimum height within the shortest amount of time,determining the optimum flight level to match the engine performance versus weight as less fuel isconsumed at optimum height, applying best practice flying techniques for all flight profiles by takingstraight-line paths as much as possible, and decreasing the overall weight of the aircraft by reducingexcess weight and, as far as possible, matching supply with demand for food and beverages, on boarddocuments and water; and

• Fuel surcharge. Effective with respect to all flight bookings made from May 3, 2011, we re-introducedfuel surcharges for all of our international routes. The DCA prohibits the imposition of fuel surchargesthat are separate from air fares for domestic routes. The fuel surcharges range from Baht 100 to Baht 300for international routes, depending on the scheduled flight time of the route.

Information Technology

We share various information technology with the wider AirAsia Group. AirAsia Berhad invests ininformation technology where its use directly lowers the AirAsia Group’s costs, enables scalable operations andimproves efficiency and safety. Our key operating software systems (centralized in Kuala Lumpur, Malaysia)include NewSkies 3.2 by Navitaire which we use for inventory and sales management/reservations, Microsoft’sAxapta Financial Management (Axapta) which we use for our financial operations, the Geneva Optimum AirlinePerformance (“OAP”) software which we use for flight scheduling and crew rostering, Navtech software whichwe use for flight planning and Swiss Aviation Software Ltd.’s AMOS operating system (“AMOS”), which weuse for the management of aircraft maintenance engineering and logistics. We subscribe for Axapta, OAP,Navtech and AMOS on an annual basis so as not to commit to these software should they become obsolete, andnot be burdened by a potentially large capital outlay.

NewSkies 3.2 software by Navitaire provides real time access to booking information. This software, whichoperates through a single database, fully integrates bookings received through the Internet, the Nationwide CallCenter and sales offices. The software includes “SkyAgent”, which allows travel agents to book flights online atlower costs, as well as SkySpeed, the reservation system software used by the Nationwide Call Center and salesoffices. We set up a disaster recovery center to handle server failures. See “Risk Factors — Risks Relating to theCompany and Thai AirAsia — We rely on automated systems and the Internet to operate our business and anyfailure of these systems may have a material adverse effect on our operations”.

Axapta software provides accounting, financial reporting and analysis capabilities, thereby assisting in theimprovement of the efficiency of our financial operations and enabling strategic planning activities, the effectivemanagement of cash flow and regulatory compliance.

OAP software provides the most up-to-date information from which to base decisions for sicknessreplacement, disruption of services and training requirements.

Navtech software, provided and hosted by Asprecise Pte Ltd (an affiliate of Temasek Capital Singapore), isa full-service solution designed to meet all airworthiness, reliability, records, inventory and purchasingrequirements of the relevant aviation authorities, as well as other financial and executive reports as may berequired by us. The AMOS software uses current and historical records and operational and maintenanceactivities of each aircraft to prepare maintenance planning and resources and inventory control modules, whichare then used by our engineers.

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Airport Operations

Airport Handling Service

We provide our own ground handling and ground support services at all domestic airports, including rampservices, other than at two domestic airports where we contract to a third party service provider. Our affiliatedcompanies such as AirAsia Berhad and Indonesia AirAsia, as well as a limited number of established thirdparties, provide these services to us at international destinations. We believe that providing our own groundhandling and ground support services ensures that costs are kept low while productivity is high. Providing ourown services also helps ensure that we can monitor and maintain our high customer service levels.

Our ground handling services include baggage and freight handling and aircraft push backs. The equipmentused to perform these services, including tow tractors and trolleys, are owned by us. The ground support servicesthat we provide include check-in counters allocated to us and boarding services. We rent check-in counters aswell as departure gates at each of our hubs, for an indefinite period of time. Other airport operations, includingsecurity screening of passengers and luggage, are the responsibility of the authorities at the airports. We havestation representatives present to oversee the ground handling operations in all of our destinations.

Airport Charges

As with other airlines, we are assessed airport charges, including landing and parking fees, check-in countercharges, air navigation flight charges and security fees. In keeping with our low-cost model, we negotiatedadvantageous terms for these airport charges by delivering a consistently high volume of passengers. Wheneverpossible, we prefer to use less expensive airport facilities such as outdoor boarding steps rather than the moreexpensive passenger boarding bridges.

Insurance

We have aviation and non-aviation insurance coverage in connection with our operations. We believe thatour overall insurance coverage is consistent with industry practice and is maintained at adequate levels. We carrypassenger and third party liability insurance, as required by the terms of our lease agreements, under which weare insured for an amount of up to US$600.0 million for any one occurrence. We also insure our aircraft againstloss and damage, under which we are insured for an amount of up to US$50,000 for any one claim. In addition,we carry non-aviation insurance which covers our assets, accident and hospitalization insurance for ouremployees, neon sign insurance, fidelity guarantee insurance and money insurance. We do not carry insurancecovering business interruptions. We have not experienced any material interruption to our business andoperations.

Insurance rates are based on an evaluation of the insured’s track record in terms of safety, volume andgrowth potential.

Competition

We face competition from other scheduled airlines that service our domestic and international routes. Onsome of our routes, there is also competition from other transportation modes, such as ground and sea. Theintensity of this competition varies from route to route and depends on a number of factors, including thestrengths of competing airlines and other transportation modes. See “Risk Factors — Risks Relating to ourCompany and Thai AirAsia — Increased competition in the airline industry along with competition from otherforms of transportation and communication could materially and adversely affect our business, financialcondition, results of operation and prospects”.

Despite operating in some of the busiest airports in Southeast Asia, China and India, and competing againstsome of the leading global airlines, our low-cost structure has enabled us to be profitable while offeringsignificantly lower average fares than our full-service competitors on both our domestic and international routes.We compete principally on price and frequency of service. We believe our low cost operations put us in a betterposition to endure a decrease in fares as a result of any deterioration in market conditions, the entry of newcompetition into our market or aggressive pricing by competitors.

Domestic

The main competitors on our domestic routes include Thai Airways, a full-service carrier offering multi-class scheduled services to a broad network of 11 domestic destinations as of December 31, 2011, complimentaryin-flight meals, a frequent flyer program and airport lounges, as well as Bangkok Airways, a boutique full-service carrier, and low-cost carriers such as Nok Air (an affiliate of Thai Airways) and Orient Thai Airlines.

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The following table shows our competitors on our top five domestic routes as of December 31, 2011 interms of flight frequency.

ThaiAirAsia

ThaiAirways Nok Air

BangkokAirways

OrientThai

(number of roundtrip flights per week)

Bangkok — Phuket . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 63 28 42 14Bangkok — Chiang Mai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 70 70 35 28Bangkok — Hat Yai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 21 42 — 21Bangkok — Krabi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 21 — — —Bangkok — Chiang Rai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 21 — — 14

International

The main competitors on our international routes include full-service carriers such as Thai Airways, CathayPacific Airways, Singapore Airlines, Vietnam Airlines, Air Macau, Myanmar Airlines International, MalaysianAirlines as well as low-cost carriers such as Tiger Airways, Jetstar Airways and Orient Thai Airlines. AirAsiaBerhad and Indonesia AirAsia are also our competitors on some of our routes.

The following table shows our competitors on our top six international routes as of December 31, 2011 interms of flight frequency.

ThaiAirAsia

AirAsiaAffiliates(1)

ThaiAirways

SingaporeAirlines

MalaysianAirlines

AirMacau

VietnamAirlines

CathayPacific

BangkokAirways

MyanmarAirways Others(2)

(number of roundtrip flights per week)Bangkok — Singapore . . . 28 — 28 35 — — — 7 — 7 56Bangkok — Kuala

Lumpur . . . . . . . . . . . . . 21 35 21 — 28 — — — — — 14Bangkok — Macau . . . . . . 28 — — — — 14 — — — — —Bangkok — Ho Chi Minh

City . . . . . . . . . . . . . . . . 14 — 14 — — — 14 — — — 17Bangkok — Hong

Kong . . . . . . . . . . . . . . . 14 — 35 — — — — 42 — — 35Bangkok — Yangon . . . . . 14 — 14 — — — — — 14 14 —

(1) Includes AirAsia Berhad and Indonesia AirAsia.

(2) Does not include indirect flights.

Future Competition

In the future, we may face competition from potential new entrants. For example, Thai Airways hasannounced its intention to establish a new “light premium” (in between full service and LCC) carrier named ThaiSmile that will serve international and domestic destinations within a four-hour radius from Bangkok. Thai Smileis scheduled to begin operations from Bangkok’s Suvarnabhumi International Airport to five foreign destinationsand one domestic destination in the second half of 2012, with plans to increase to 16 domestic and internationaldestinations by 2015. The Thai Smile fleet will initially comprise three Airbus A320 aircraft, with plans toincrease the fleet by eight additional Airbus A320 aircraft to be delivered between 2013 and 2015. In addition,Scoot, a new LCC owned by Singapore Airlines, has announced plans to fly between Singapore and Bangkokusing Boeing 777 aircraft.

Intellectual Property

We operate under the AirAsia brand in Thailand and use the AirAsia name, trademark and logo underlicense from AirAsia Berhad under the AirAsia Brand License Agreement. Under the terms of the AirAsia BrandLicense Agreement, Thai AirAsia is required to pay an annual license fee equivalent to 1% of its total revenueper annum. See “Related Party Transaction — Future Related Party Transactions — AirAsia Brand LicenseAgreement” for a summary of the terms of these agreements. Our AirAsia Brand License Agreement allows us touse the AirAsia procedures manual and other business knowhow produced or compiled by AirAsia Berhad. Wedo not own, and are not the registered owner of, any part of the AirAsia name, trademark or logo either inThailand or outside Thailand.

Real Property

As of December 31, 2011, we do not own any land or buildings. We lease the office space that we use forour corporate headquarters from Oriental Siam (1978) Co., Ltd. while we lease our hangar, aircraft parking and

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other operational space from the relevant airport authorities. We also lease warehouse space from Total IndustrialServices Co., Ltd. and Kontarat Group Co., Ltd. that we use to store stock for in-flight sales and other items,respectively. A substantial majority of the lease agreements signed by Thai AirAsia are office space leases,warehouse leases and leases of Tesco Lotus booths within Thailand, space lease agreements in Thai airports withAOT, the Thai Treasury Department and the DCA, as well as space lease agreements in airports located in othercountries. A substantial majority of the airport space lease agreements have a term of between one and threeyears.

Employees and Training

General

As of December 31, 2009, 2010 and 2011, we had 1,625, 1,791 and 2,026 employees, respectively. Ouremployees, divided by function and geographic split were as follows:

As of December 31,

By Function: 2009 2010 2011

Pilots and co-pilots . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202 203 258Cabin crew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278 331 410Ground operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 699 742 798Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 198 205Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 32 20Call center and reservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 9 10Head office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 174 222Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 102 103

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,625 1,791 2,026

As of December 31,

By Location: 2009 2010 2011

Bangkok . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,340 1,489 1,622Phuket . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 96 136Chiang Mai . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 44 81Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 162 187

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,625 1,791 2,026

We are not involved in any material labor disputes which has a material effect on our financial position andbusiness, and we are not aware of any circumstances that would give rise to any labor disputes which maymaterially and adversely affect our financial position and business.

We cannot however assure you that we will not experience any labor disputes in the future. In addition, wehave not entered into collective bargaining arrangements with our employees or with any trade unions and ouremployees are not unionized.

We recognize the need to ensure continuity in our management in order to maintain our edge over ourcompetitors. Our directors believe that our continued success depends, among other factors, on the support anddedication of our management personnel. We have put in place human resource strategies, which includecompetitive compensation, fit-for-purpose recruitment and a succession plan.

The loss of any key personnel could materially and adversely affect the Company. See “RiskFactors — Risks Relating to the Company and Thai AirAsia — We depend on our personnel, especially ourexecutive officers and key management, and any difficulties in attracting or retaining such personnel or failure tomaintain our corporate culture may have a material adverse effect on our business, financial condition, results ofoperation and prospects”. In view thereof, we have made efforts to motivate and retain our staff throughperformance-based incentives, and to enhance employees’ skills and competencies by providing training. To thisend, we engage our employees continuously in conferences and training for them to acquire and enhance relevantskills and competencies (both functional and developmental) in line with our business objectives. On-the-jobtraining is another significant approach of transferring knowledge from specialists to new or junior employees.The investment in human capital increases the competency of our existing employees. In addition, thesedevelopment activities serve to groom the lower and middle management staff to progressively assume theresponsibilities of senior management.

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Employee Efficiencies and Costs

Our staff remuneration policy focuses on maximizing efficiency and productivity while keeping staff costsat the minimum functional level consistent with low-cost carrier industry standards. We offer employees at alllevels a wide range of incentives, including variable bonuses. A large portion of our staff cost is linked toperformance.

Aircrew

We adopt a fixed schedule hourly pay scale for our pilots. We believe that our current pay scale for ourpilots is comparable with other airlines in the ASEAN region. Cabin crew remuneration is based on a basicsalary, with flight and productivity allowances given. The flight allowance, which makes up the greatestproportion of the remuneration payable to cabin crew, is calculated based on the scheduled flight time, while theproductivity allowance is linked to the number of leave days taken, as well as punctuality and availability forduty on standby.

We maintain an aircraft to pilot ratio of one to 1:10 and an aircraft to cabin crew ratio of 1:17 for our AirbusA320 aircraft.

Ground Crew

Ground crew remuneration is based on a basic salary, with a large proportion of total compensation basedon performance, commission from sale of seats, and productivity. Total compensation is linked to factors such ascustomer service skills, product knowledge, attendance and punctuality.

Engineers

Our engineers are remunerated based on a basic salary, with type-rating allowances given in recognition ofeach engineer’s qualifications. Type-ratings include air frame, engines, electrical, instrument and radio ratings.We are selective as to which engineers we hire and our turnover is low since we believe we offer our engineersrelatively higher salaries compared with other airlines in the ASEAN region and provide good training. Wemaintain an aircraft to engineer and mechanic ratio of 1:8.5.

Training

Pilots

All of our cadet pilots are enrolled in the Bangkok Aviation Center Co., Ltd, in Thailand (the “BangkokAviation Center”). The Bangkok Aviation Center is equipped with modern training equipment and is certified bythe FAA, JAR and CAA, and includes a standardized curriculum. We do not discriminate in the recruitment ofcadet pilots, and staff from various departments have enlisted in the program. Cadet pilots typically graduateafter one year of training, after which they are required to train with simulators to be type-rated to fly AirbusA320 aircraft. We assist our cadet pilots in financing their tuition, subject to a bond, in exchange for the cadets’commitment to work for us for a period of ten years. We also recruit experienced pilots from other airlines. Wehave 258 pilots as of December 31, 2011 and expect to require a total of approximately 480 pilots by 2016.See “Risk Factors — Risks Relating to the Company and Thai AirAsia — Any difficulties that we mayexperience in attracting and retaining qualified personnel at reasonable costs or any failure to maintain ourcorporate culture may have a material adverse effect on our business, financial condition, results of operation andprospects” for a discussion on risks associated with a potential shortfall of pilots in the future.

Our newly recruited pilots who are not already type-rated undergo type training. A type-rating is a ratingthat allows a pilot to fly a specified type of aircraft. Pilots currently use Airbus A320 flight simulators operatedby the AirAsia Academy based in Kuala Lumpur, which AirAsia Berhad established in 2005, under themanagement of CAE Inc., the supplier of the flight simulators for training purposes, with an emphasis on allaspects of flight operations.

Cabin Crew

Our 60 day cabin crew training program takes place at the AirAsia Academy in Kuala Lumpur and at theThai AirAsia offices in Bangkok. All training is performed by our cabin crew and pilot instructors. Coursesinclude safety emergency procedures, first aid, cabin familiarization, aviation, public announcements, grooming,customer care, in-flight sales and selling skills. The safety and regulatory components of this program have beenapproved by the DCA.

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Cabin crew are required to speak English and continuously undergo training, such as training regardingcorporate resource management, handling of dangerous goods, handling disruptive passengers and a terroristawareness course. Cabin crew are also required to attend refresher courses on safety emergency procedures andfirst aid every year.

Ground Crew

Guest handling personnel undergo a guest services training program which takes place at the AirAsiaAcademy in Kuala Lumpur and which includes training in our reservation and check-in systems, central baggagetracing procedures and customer service. Ground crew undergo training throughout the year, such as training toidentify dangerous goods, perform first aid and handle bomb threats.

Ground handling personnel also undergo ramp training that lasts for two to three weeks which involvesapron driving, aircraft loading and unloading, marshalling, towing, apron safety and emergency procedures. Newemployees also learn about civil aviation regulations, the airport layout and regulation of vehicle movementwithin the airport.

Engineers

All of our engineers are trained at the AirAsia Academy in Kuala Lumpur. The training course is 45 days induration, with an additional three months of on-job-training and subsequent checkouts by Thai AirAsia’s QualityAssurance Department. In exchange, our engineers commit to work for us for a period of two years. Ourengineers are based in our hubs in Bangkok, Phuket and Chiang Mai.

Major Customers

No customer contributed more than 10% of our total revenue in 2009, 2010 or 2011. Customers mainlyconsist of individuals traveling by air. For details on revenue generated by passenger seat sales, see“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results ofOperations — Revenue — Passenger Seat Sales”.

Major Suppliers

In 2009, 2010 and 2011, the only suppliers which accounted for 10% or more of our total cost of sales werePTT and Shell Thailand. Our jet fuel purchases from PTT accounted for 79.4%, 78.7% and 70.2% of our aircraftfuel expenses and 26.3%, 32.0% and 32.7% of our total cost of sales in 2009, 2010 and 2011, respectively. Ourjet fuel purchases from Shell Thailand accounted for 7.5%, 8.4% and 15.1% of our aircraft fuel expenses and2.5%, 3.4% and 7.0% of our total cost of sales in 2009, 2010 and 2011, respectively. Nevertheless, we believethat comparable jet fuel supply, in terms of quality and quantity, and support is available from other establishedsuppliers. Save as disclosed above, there are no other suppliers which accounted for 10% or more of our totalcost of sales in 2009, 2010 and 2011.

Environment

We migrated our aircraft fleet from the Boeing 737-300, which use more fuel and have higher emissions, tothe Airbus A320. We have, through AirAsia Berhad, ordered the Airbus A320neo, which we expect will be morefuel efficient and have lower emissions levels.

Research and Development

We continue to monitor our flight operations and have a team working with Airbus SAS to improve onreducing weight on our aircraft. We also continue to evaluate and enhance our business processes to promoteefficiency through the development of in-house system facilities for, among others, capital expendituremanagement, procurement, service quality and employee benefits management. We incur minimal amounts forresearch and development activities, which do not amount to a significant percentage of our revenues.

Legal Proceedings

From time to time, we may be involved in legal proceedings concerning matters that arise in our day-to-daybusiness operations. However, we are not engaged in any material litigation, regulatory proceedings, claims orarbitration either as plaintiff or defendant, which would have a material effect on our business, financialcondition, results of operations and prospects, and our directors have no knowledge of any such litigation,proceedings, claims or arbitration pending or threatened against us.

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RELATED PARTY TRANSACTIONS

Overview

Thai AirAsia is a party to a number of agreements or transactions with “related parties” as defined, underThai laws, regulations and accounting standards, including our shareholders and directors and their associatecompanies, and we engage from time to time in transactions with them. We believe these agreements andtransactions have generally been entered into on arm’s length terms or on terms that we believe have generallybeen at least as favorable to us as similar transactions with non-affiliates would have been, other than asdescribed below. We describe below the material transactions that the Thai AirAsia has entered into with itsshareholders and directors, associate companies, and other related companies.

Our Related Parties

Some of the Thai AirAsia’s key related parties include:

• AirAsia Berhad;

• AirAsia Mauritius;

• Indonesia AirAsia; and

• directors, including Mr. Tassapon Bijleveld.

The following tables summarize the Company’s and Thai AirAsia’s related party transactions for theperiods and as of the dates indicated.

Year Ended December 31,

2009 2010 2011 2011

Bt Bt Bt US$(in millions)

Interest Income:AirAsia Berhad(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 37.2 111.4 3.5Indonesia AirAsia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 4.9 11.6 0.4Mr. Tassapon Bijleveld . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 5.2 1.3 0.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 47.3 124.3 3.9

Share of Loss (Gain) from Fuel Swap Agreements:AirAsia Berhad(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253.1 (76.3) (13.2) (0.4)Share of Staff Costs for Accounting Services:AirAsia Berhad(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (26.1) (26.5) (0.8)Indonesia AirAsia(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (8.9) (7.3) (0.2)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (35.0) (33.8) (1.0)

Aircraft Rental:AirAsia Mauritius(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,712.4 2,200.6 2,727.7 86.1Aircraft Repair and Maintenance:AirAsia Mauritius(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 968.7 805.6 998.0 31.5Purchase of Merchandise and Equipment:AirAsia Berhad(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55.6 91.3 53.4 1.7Management Fee Expenses:AirAsia Berhad(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.5 15.3 14.8 0.5Booking Fee Expenses:AirAsia Berhad(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.1 36.7 57.2 1.8Estimated Costs of Aircraft Redelivery Before Maturities (Adjusted to Actual):AirAsia Mauritius . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346.7 (114.3) — —Loss on Unwind Fuel Price Swap Agreement:AirAsia Berhad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.6 — — —Interest Expense:AirAsia Mauritius(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 242.8 148.6 4.7Provision for Loss on Unwind Interest Rate Swap Agreement (Adjust to Actual):AirAsia Berhad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6.1) — — —Passenger Revenues and Expenses Received and Paid on Behalf of:Passenger revenues received on behalf of Thai AirAsia by AirAsia Berhad and

Indonesia AirAsia(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,171.9 3,864.2 3,378.9 106.6Cash received on behalf of AirAsia Berhad and Indonesia AirAsia(12) . . . . . . . . . . . . . . 485.7 596.2 459.0 14.5Expenses paid on behalf of Thai AirAsia by AirAsia Berhad and Indonesia

AirAsia(13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 575.1 673.9 715.4 22.6Advance payments on behalf of AirAsia Berhad and Indonesia AirAsia(14) . . . . . . . . . . 307.9 143.4 429.7 13.6

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(1) No outstanding amounts were subject to interest as of December 31, 2011.

(2) Outstanding amount of share of loss from fuel swap agreements payable amounted to Baht 2.7 million (US$0.1 million) as ofDecember 31, 2011.

(3) Outstanding amount of share of staff costs for accounting services receivable amounted to Baht 3.6 million (US$0.1 million) as ofDecember 31, 2011.

(4) Outstanding amount of share of staff costs for accounting services receivable amounted to Baht 16.3 million (US$0.5 million) as ofDecember 31, 2011.

(5) Outstanding amount of aircraft rental payable amounted to Baht 245.5 million (US$7.8 million) as of December 31, 2011.

(6) Outstanding amount of aircraft repair and maintenance payable amounted to Baht 92.4 million (US$2.9 million) as of December 31,2011.

(7) Outstanding amount of purchase of merchandise and equipment payable amounted to Baht 24.3 million (US$0.8 million) as ofDecember 31, 2011.

(8) Outstanding amount of management fee expenses payable amounted to Baht 1.3 million (US$41.0 thousand) as of December 31, 2011.

(9) Outstanding amount of booking fee expenses payable amounted to Baht 5.4 million (US$0.2 million) as of December 31, 2011.

(10) No outstanding amounts were subject to interest as of December 31, 2011.

(11) Outstanding amount of passenger revenues received on behalf of Thai AirAsia by AirAsia Berhad and Indonesia AirAsia receivableamounted to Baht 221.6 million (US$7.0 million) as of December 31, 2011.

(12) Outstanding amount of cash received on behalf of AirAsia Berhad and Indonesia AirAsia payable amounted to Baht 46.9 million(US$1.5 million) as of December 31, 2011.

(13) Outstanding amount of expenses paid on behalf of Thai AirAsia by AirAsia Berhad and Indonesia AirAsia payable amounted toBaht 115.5 million (US$3.64 million) as of December 31, 2011. Of this amount, Baht 36.8 million (US$1.2 million) was payable toIndonesia AirAsia.

(14) Outstanding amount of advance payments on behalf of AirAsia Berhad and Indonesia AirAsia receivable amounted to Baht206.7 million (US$6.5 million) as of December 31, 2011. Of this amount, Baht 167.2 million (US$5.3 million) was receivable fromIndonesia AirAsia.

As of December 31,

2009 2010 2011 2011

Bt Bt Bt US$(in millions)

Amounts Due from Related Parties:AirAsia Berhad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,385.4 5,271.7 175.0 5.5PT Indonesia AirAsia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77.2 119.4 260.3 8.2

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,462.6 5,391.1 435.3 13.7

Amounts Due to Related Parties:AirAsia Berhad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,692.5 2,666.5 159.3 5.0AirAsia Mauritius . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,911.3 4,154.2 361.1 11.4

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,603.8 6,820.7 520.4 16.4

Short-Term Loan to Director:Mr. Tassapon Bijleveld . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187.0 105.2 — —

Other Non-Current Assets:AirAsia Mauritius (Aircraft Deposit)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335.6 410.6 497.9 15.7AirAsia Berhad (Fuel Price Swap Deposit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.8 16.8 15.8 0.5

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352.4 427.4 513.7 16.2

(1) Outstanding amount of aircraft deposit payable amounted to Baht 23.2 million (US$0.7 million) as of December 31, 2011.

Past and Ongoing Related Party Transactions

An audit committee of the Company and Thai AirAsia has considered the related party transactions of theCompany and Thai AirAsia, respectively, and provided their view that such related party transactions have beenentered into on a reasonable basis, in the ordinary course of business of the Company and Thai AirAsia andbased on general commercial terms, taking into account the interests of the Company and Thai AirAsia.

Fuel Hedging Arrangements

On February 2, 2004, Thai AirAsia entered into a fuel hedging agreement with AirAsia Berhad (the “FuelHedging Agreement”), whereby Thai AirAsia authorized AirAsia Berhad, at its discretion, to enter into hedges tomanage the risk of any physical price movements of fuel in the world market to protect our interests. Inaccordance with the terms of the agreement, Thai AirAsia is required to pay our portion of losses to, and entitledto receive our portion of gains from, AirAsia Berhad. The Fuel Hedging Agreement terminates upon notice

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following an event of default, which include our failure to make payments under the agreement, the generaldefault of either party to perform its obligations under the agreement and the insolvency or bankruptcy of eitherparty. Thai AirAsia’s share of gain (loss) from fuel swap agreements amounted to a net loss of Baht275.6 million in 2009, a gain of Baht 76.3 million in 2010 and a gain of Baht 13.2 million (US$0.4 million) in2011. Thai AirAsia’s outstanding share of loss from fuel swap agreements payable to AirAsia Berhad amountedto Baht 2.7 million (US$0.1 million) as of December 31, 2011.

Aircraft Leases

Thai AirAsia sub-leases aircraft from AirAsia Mauritius under operating leases. Aircraft rentals amounted toBaht 1,712.4 million in 2009, Baht 2,200.6 million in 2010 and Baht 2,727.7 million (US$86.1 million) in 2011.Thai AirAsia intends to purchase or continue to lease new aircraft from members of the AirAsia Group, includingAirAsia Mauritius.

Thai AirAsia has entered into 24 aircraft lease agreements with AirAsia Mauritius dated as of the datesspecified in the table below (as amended, the “AirAsia Aircraft Lease Agreements”).

Serial Number Date of Relevant AirAsia Aircraft Lease Agreement Date of Delivery(1) Term

MSN 4917 February 14, 2012 (last amended on February 14, 2012) February 16, 2012 144 monthsMSN 4980 January 23, 2012 (last amended on January 23, 2012) January 23, 2012 144 monthsMSN 4979 December 23, 2011 (last amended on January 1, 2012) December 23, 2011 144 monthsMSN 4807 August 26, 2011 (last amended on January 1, 2012) September 1, 2011 144 monthsMSN 4557 January 20, 2011 (last amended on January 1, 2012) January 20, 2011 144 monthsMSN 4426 September 30, 2010 (last amended on January 1, 2012) September 30, 2010 144 monthsMSN 4390 August 10, 2010 (last amended on January 1, 2012) August 10, 2010 144 monthsMSN 4386 August 5, 2010 (last amended on January 1, 2012) August 5, 2010 144 monthsMSN 4367 July 20, 2010 (last amended on January 1, 2012) July 20, 2010 144 monthsMSN 4333 June 18, 2010 (last amended on January 1, 2012) June 18, 2010 144 monthsMSN 4302 May 21, 2010 (last amended on January 1, 2012) May 21, 2010 144 monthsMSN 4278 May 18, 2010 (last amended on January 1, 2012) May 18, 2010 144 monthsMSN 4126 December 4, 2009 (last amended on January 1, 2012) December 4, 2009 144 monthsMSN 4088 November 6, 2009 (last amended on January 1, 2012) November 6, 2009 144 monthsMSN 4019 September 16, 2009 (last amended on January 1, 2012) September 16, 2009 144 monthsMSN 3729 December 30, 2008 (last amended on December 30, 2011) January 7, 2009 144 monthsMSN 3679 November 12, 2008 (last amended on November 12, 2011) November 12, 2008 144 monthsMSN 3576 February 2, 2009 (last amended on January 1, 2012) February 6, 2009(2) 138 monthsMSN 3505 May 28, 2011 June 3, 2011(3) 144 monthsMSN 3489 May 14, 2011 May 16, 2011(4) 144 monthsMSN 3394 February 4, 2011 (last amended on January 1, 2012) February 7, 2011(5) 108 monthsMSN 3338 December 11, 2010 (last amended on January 1, 2012) December 11, 2010(6) 108 monthsMSN 3299 November 8, 2010 (last amended on January 1, 2012) November 8, 2010(7) 108 monthsMSN 3277 October 12, 2010 (last amended on January 1, 2012) October 19, 2010(8) 108 months

(1) Where an aircraft was subject to an earlier Aircraft Lease Agreement that had expired and was replaced by a later Aircraft LeaseAgreement, the “Date of Delivery” in the table above for the purposes of calculating the term of such later Aircraft Lease Agreement isdeemed to be the expiry date of the term under the earlier Aircraft Lease Agreement and not the date on which the relevant aircraft wasactually delivered.

(2) MSN 3576 was originally delivered to Thai AirAsia on August 6, 2008.

(3) MSN 3505 was originally delivered to Thai AirAsia on June 3, 2008.

(4) MSN 3489 was originally delivered to Thai AirAsia on May 16, 2008.

(5) MSN 3394 was originally delivered to Thai AirAsia on February 7, 2008.

(6) MSN 3338 was originally delivered to Thai AirAsia on December 11, 2007.

(7) MSN 3299 was originally delivered to Thai AirAsia on November 8, 2007.

(8) MSN 3277 was originally delivered to Thai AirAsia on October 19, 2007.

The term of each lease commences on the date the aircraft is delivered under the relevant lease (the “Date ofDelivery”). The leases may be renewed upon written agreement between AirAsia Mauritius and Thai AirAsia,subject to the terms of the head lease and any financing agreements in relation to the aircraft.

Substantially all of our aircraft leases are subordinated to the rights and interests of the lessors of theheadlease agreements or of the beneficiaries of the installment sale agreements and related financing documents,and the aircraft under such leases are mortgaged to the security trustees under the financing documents.

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Rental Payments

Under the terms of the AirAsia Aircraft Lease Agreements, the first rental period commences on the Date ofDelivery. Thai AirAsia is required to pay a fixed monthly rent for each aircraft. Thai AirAsia is also required topay either a supplemental monthly rent or a maintenance reserve for each aircraft to cover certain maintenancecosts specified under the relevant agreement. However, where Thai AirAsia is required to pay a supplementalmonthly rent, AirAsia Mauritius has agreed to reimburse certain maintenance costs to Thai AirAsia inaccordance with the terms of the agreement, provided no event of default has occurred or is continuing. Assecurity for Thai AirAsia’s payment obligations, Thai AirAsia is required to make a deposit to AirAsiaMauritius.

Warranties

Through the AirAsia Aircraft Lease Agreements, Thai AirAsia is able to rely on manufacturer’s warrantiesand product support granted to AirAsia Berhad. Such warranties and support are made available to Thai AirAsiaunder the terms of the AirAsia Aircraft Lease Agreements, provided that no event of default has occurred or iscontinuing and/or that the expiry date has not passed, as relevant. Such manufacturer’s warranties typically coverthe repair or remedy of any defect in the aircraft, including the compensation for loss of use of the aircraft. Undercertain leases, we also enter into separate airframe warranty agreements and engine warranty agreements withAirAsia Mauritius, the parties to the head lease, the owner, the manufacturer and the security trustee, as relevant.

Indemnities

Thai AirAsia agreed to indemnify AirAsia Mauritius, and under certain leases, the owner of the aircraft, forany taxes and governmental payment requirements arising as a result of the lease of the aircraft to us. In addition,Thai AirAsia agreed to indemnify AirAsia Mauritius, the owner of the aircraft, the head lessor, any financingparties and their employees and agents for any loss suffered which arises directly or indirectly from certainevents, including, but not limited to, the lease, sub-lease, maintenance or repair of the aircraft.

Covenants

Thai AirAsia agreed to certain covenants under the AirAsia Aircraft Lease Agreements. Examples of thetypical covenants, include:

• registering the aircraft in accordance with the applicable laws of the state of registration;

• providing documents relating to the aircraft to AirAsia Mauritius;

• permitting the security trustee to inspect the aircraft under the terms of the AirAsia Aircraft LeaseAgreements;

• fixing notices on the aircraft stating (i) the security trustee’s security interest and (ii) the ownership of theaircraft;

• at its own cost, maintain and operate the aircraft in accordance with prevailing applicable standards; and

• not removing any parts or engines or otherwise altering the aircraft, except as otherwise allowed under theterms of the agreement.

Events of Loss

Thai AirAsia is required to pay an agreed value under the relevant AirAsia Aircraft Lease Agreement if anevent of loss occurs. Under certain leases, following payment of the agreed value to the security trustee, AirAsiaMauritius has agreed to procure the owner of the aircraft to transfer ownership of the aircraft, without recourse orwarranty, to Thai AirAsia. Events of loss include (i) the actual or constructive, compromised, arranged or agreedtotal loss of the aircraft, (ii) the aircraft being destroyed, damaged beyond economic repair or permanentlyrendered unfit for normal use, (iii) the aircraft being requisitioned for title, or title to the aircraft being otherwisecompulsorily acquired by the government, the state of registry or any other authority, and (iv) the aircraft beinghijacked, stolen, confiscated, detained or requisitioned for use or hire for specified periods of time under theagreement.

Events of Default

The occurrence of an event of default constitutes a repudiation of the agreement by Thai AirAsia, andAirAsia Mauritius may accept such repudiation and terminate the agreement, take court action or take possessionof or redeliver the aircraft. Events of default typically include, but are not limited to, (i) any failure by ThaiAirAsia to pay amounts due under the agreement, (ii) the breach of any of Thai AirAsia’s obligations under the

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agreement which would be reasonably likely to have a material adverse effect or which is not remedied within15 days, as relevant, (iii) the cross-default of any of Thai AirAsia’s other financial indebtedness which is inexcess of certain amounts up to US$20 million, as specified under the relevant AirAsia Aircraft LeaseAgreement, and not paid when due or is declared to become prematurely due and payable as a result of an eventof default, (iv) the insolvency of Thai AirAsia, (v) any event or series of events which, in the opinion of AirAsiaMauritius, has or is likely to have a material adverse effect on Thai AirAsia, (vi) Thai AirAsia’s failure to obtainby the relevant deadline or the revocation, cessation or cancellation of, or the non-renewal or variance of anyauthorization to enable Thai AirAsia to perform Thai AirAsia’s obligations under the agreement, includingobtaining the registration of the aircraft, the certificate of airworthiness and any other airline license or airtransport license required, (vii) the non-payment of any European Organization for the Safety of Air Navigationcharges, (viii) the arrest, confiscation or seizure of the aircraft which is not released within 15 business days and(ix) if relevant, the breach of the terms of the subordination acknowledgement.

Costs from Aircraft Redelivery Before Maturities

Thai AirAsia’s lease agreements with AirAsia Mauritius in relation to Thai AirAsia’s previous Boeing737-300 aircraft contained provisions for the imposition of penalties if such aircraft were to be redelivered priorto the maturities under their respective lease agreements. Following Thai AirAsia’s redelivery of Boeing 737-300aircraft prior to the maturities in 2008 and 2009, Thai AirAsia estimated the amount of costs incurred fromaircraft redelivery before maturities of Baht 98.3 million in 2008 and Baht 346.7 million in 2009. However, ThaiAirAsia subsequently made an adjustment of Baht 114.3 million in 2010 for the difference between the estimatedcosts and the actual costs. There were no penalties from aircraft redelivery before maturities in 2011.

Aircraft Repair and Maintenance

AirAsia Berhad enters into various repair and maintenance agreements, including an agreement with GECommercial Aviation Services covering all aircraft used by the AirAsia Group. The terms of the agreement withGE Commercial Aviation Services allows Thai AirAsia to benefit from the AirAsia Group’s negotiated repairand maintenance rates.

In addition, in accordance with the terms of the AirAsia Aircraft Lease Agreements, Thai AirAsia isrequired to pay either a supplemental monthly rent or a maintenance reserve for each aircraft to cover certainmaintenance costs specified under the relevant agreement. However, where Thai AirAsia is required to pay asupplemental monthly rent, AirAsia Mauritius has agreed to reimburse certain maintenance costs to Thai AirAsiain accordance with the terms of the agreement, provided no event of default has occurred or is continuing.See “— Aircraft Leases — Rental Payments” above for details. Aircraft repair and maintenance amounted toBaht 968.7 million in 2009, Baht 805.6 million in 2010 and Baht 998.0 million (US$31.5 million) in 2011.

Purchase of Merchandise and Equipment

Thai AirAsia purchases a portion of its in-flight sales inventory to sell on its flights from AirAsia Berhad.Purchase of merchandise and equipment amounted to Baht 55.6 million in 2009, Baht 91.3 million in 2010 andBaht 53.4 million (US$1.7 million) in 2011.

Management Fee Expenses

On February 2, 2006, Thai AirAsia entered into an administrative fee agreement with AirAsia Berhad (the“Administrative Fee Agreement”), whereby AirAsia Berhad agreed to render support services in considerationfor a management fee of US$40,000 per month. Support services under the agreement include managerialsupport, staff deployment, consultancy and other assistance in respect of our operations. Under its terms, theAdministrative Fee Agreement terminates upon notice following an event of default. Events of default includeour failure to make payments under the agreement, the general default of either party to perform its obligationsunder the agreement and the insolvency or bankruptcy of either party. Management fee expenses amounted toBaht 16.5 million in 2009, Baht 15.3 million in 2010 and Baht 14.8 million (US$0.5 million) in 2011.

Booking Fee Agreement

On February 2, 2004, Thai AirAsia entered into a booking fee agreement with AirAsia Berhad (“BookingFee Agreement”), whereby AirAsia Berhad agreed to provide airline booking and marketing services to ThaiAirAsia in consideration for a booking fee calculated under the terms of the agreement, with such fee based onthe number of Thai AirAsia flights booked. Under its terms, the Booking Fee Agreement terminates upon noticefollowing an event of default. Events of default include Thai AirAsia’s failure to make payments under theagreement, the general default of either party to perform its obligations under the agreement and the insolvencyor bankruptcy of either party.

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Passenger Revenues and Cash Received on Behalf of AirAsia Group Members

AirAsia Berhad and Indonesia AirAsia each receives, on Thai AirAsia’s behalf, passenger revenues frompassengers booking Thai AirAsia air tickets through AirAsia Berhad and Indonesia AirAsia, respectively.Similarly, Thai AirAsia receives, on each of AirAsia Berhad’s and Indonesia AirAsia’s behalf, passengerrevenues from passengers booking AirAsia Berhad and Indonesia AirAsia air tickets through Thai AirAsia.These amounts receivable from and payable to Thai AirAsia are set-off against each other, with the remainingamounts receivable from or payable to, as the case may be, AirAsia Berhad and Indonesia AirAsia, accordingly.Amounts received on behalf of AirAsia Group members are subject to the AirAsia Group’s Standard OperatingProcedures agreed upon by the various AirAsia Group members. See “— Related Party Transaction Policies”below for a summary of the Standard Operating Procedures.

Expenses and Advance Payments on Behalf of Thai AirAsia

AirAsia Berhad and Indonesia AirAsia each pays expenses and makes advance payments, on Thai AirAsia’sbehalf, in relation to certain costs that are invoiced to AirAsia Berhad and Indonesia AirAsia, respectively,including airport and other charges incurred by Thai AirAsia in Malaysia and Indonesia, respectively. Similarly,Thai AirAsia pays expenses and makes advance payments, on each of AirAsia Berhad’s and Indonesia AirAsia’sbehalf, certain costs that are invoiced to Thai AirAsia, including airport and other charges in Thailand incurredby AirAsia Berhad and Indonesia AirAsia, respectively. The amounts that are reimbursable to and payable byThai AirAsia are set-off against each other, with the remaining amounts being reimbursable to or payable by, asthe case may be, AirAsia Berhad and Indonesia AirAsia, accordingly. Payments made on behalf of AirAsiaGroup members are subject to the AirAsia Group’s Standard Operating Procedures agreed upon by the variousAirAsia Group members. See “— Related Party Transaction Policies” below for a summary of the StandardOperating Procedures.

Financial Assistance Agreement

On August 3, 2009, Thai AirAsia entered into a financial assistance agreement with AirAsia Berhad(the “Financial Assistance Agreement”), under which Thai AirAsia agreed that commencing January 1, 2010, itis to repay the outstanding amount of financial assistance provided by AirAsia Berhad as of December 31, 2008,or Ringgit 247.8 million, together with any interest accrued. The interest rate is calculated at the rate equivalentto AirAsia Berhad’s average cost of borrowings. AirAsia Berhad is to net off the aggregate invoices issued toThai AirAsia each month and issue an invoice for the net amount, which Thai AirAsia is to pay not later than30 days following receipt of such invoice. Any failure to pay within 30 days entitles AirAsia Berhad to a latepayment interest equivalent to AirAsia’s average cost of borrowings from the due date until the payment.

AirAsia Berhad has confirmed, in a letter dated January 18, 2012 to Thai AirAsia, that (a) all outstandingamounts due from Thai AirAsia to AirAsia Berhad under the Financial Assistance Agreement have been satisfiedin full, (b) effective from September 15, 2011, Thai AirAsia has been discharged from all its obligations underthe Financial Assistance Agreement, and (c) the Financial Assistance Agreement is deemed to have beenterminated effective from January 18, 2012.

Amounts Due from Related Parties and Interest Income

As a result of the various related party transactions described above, Thai AirAsia had amounts due fromrelated parties of Baht 3,462.6 million as of December 31, 2009, Baht 5,391.1 million as of December 31, 2010and Baht 435.3 million (US$13.7 million) as of December 31, 2011. These amounts are denominated inU.S. Dollars and are payable on demand. Effective January 1, 2010, the outstanding amounts due from relatedparties are subject to interest charged at 6.0% per annum, amounting to Baht 42.1 million in 2010 andBaht 123.0 million (US$3.9 million) in 2011.

Amounts Due to Related Parties and Interest Expense

As a result of the various related party transactions described above, Thai AirAsia had amounts due torelated parties of Baht 7,603.8 million as of December 31, 2009, Baht 6,820.7 million as of December 31, 2010and Baht 520.4 million (US$16.4 million) as of December 31, 2011. These amounts are denominated inU.S. Dollars and are payable on demand. Effective January 1, 2010, the outstanding amounts due to relatedparties are subject to interest charged at 6.0% per annum, amounting to Baht 242.8 million in 2010 andBaht 148.6 million (US$4.7 million) in 2011.

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Loans to Director and Interest Income

In 2009, Thai AirAsia provided an on-demand loan on favorable terms to Mr. Tassapon Bijleveld up to acredit limit of Baht 190.0 million, with interest accruing at 1.5% per annum, of which Baht 187.0 million wasdrawn in 2009 and was outstanding as of December 31, 2009. The amount outstanding as of December 31, 2010was Baht 105.2 million. Interest income from Mr. Tassapon Bijleveld amounted to Baht 5.2 million in 2010 andBaht 1.3 million (US$41,000) in 2011. Thai AirAsia has terminated the loan and Mr. Tassapon Bijleveld hasrepaid all outstanding principal amounts under the loan as of December 31, 2011.

Other Non-Current Assets

Thai AirAsia also makes deposits with related parties for the lease of aircraft and the fuel price swap, whichare accounted for in the statement of financial position as other non-current assets. These related partynon-current assets amounted to Baht 352.4 million as of December 31, 2009, Baht 427.4 million as ofDecember 31, 2010 and Baht 513.6 million (US$16.2 million) as of December 31, 2011.

Guarantee and Pledges Relating to the Credit Suisse Loan Agreement

In relation to our loan from Credit Suisse under the Credit Suisse Loan Agreement, the Company has agreedto guarantee payments under the loan by the Borrowers. In addition, the Company and Mr. Tassapon Bijleveldagreed to pledge the shares they hold in Thai AirAsia and the Borrowers agreed to pledge the shares they hold inthe Company. See “Management’s Discussion and Analysis of Financial Condition and Results of Operation —Indebtedness — Bank Loans — Credit Suisse Term Loan” for details.

Call Centre Services

Prior to February 1, 2011, Thai AirAsia used the call centre services of Asian Contact Centres Sdn Bhd(“ACCS”). ACCS is a joint venture between AirAsia Berhad and a listed company in Malaysia and hasMr. Anthony Francis Fernandes, who is also a director of Thai AirAsia, as one of its directors. Thai AirAsiarecorded operating costs with respect to such services of Baht 69.1 million in 2009, Baht 52.2 million in 2010and Baht 22.9 million (US$0.7 million) in 2011. Trade accounts payable to ACCS amounted to Baht 7.1 millionas of December 31, 2009, Baht 11.1 million as of December 31, 2010 and Baht zero as of December 31, 2011.Thai AirAsia ceases using the services of ACCS beginning from February 1, 2011.

Future Related Party Transactions

Thai AirAsia Shareholders’ Agreement

The Company entered into the Thai AirAsia Shareholders’ Agreement with AirAsia Investment (previouslyknown as AA International Ltd.), AirAsia Berhad, and Thai AirAsia dated February 14, 2012 for the purpose ofoperating Thai AirAsia. The business of Thai AirAsia is to offer “no frills” passenger air transport services andancillary services, with operations based in Thailand. Thai AirAsia’s business is to be modelled on the AirAsiabusiness model exclusively, unless otherwise agreed. Thai AirAsia is to be an approved and licensed operator ofair transport services based in Thailand, and the parties are jointly responsible for the procurement of thenecessary approvals and licenses, and once obtained, the Company is responsible for the maintenance of theapprovals and licenses to operate licensed air transport services in Thailand. AirAsia Investment and AirAsiaBerhad are to provide any relevant assistance in maintaining approvals and licenses, if requested by the Companyor Thai AirAsia. The scope of Thai AirAsia’s passenger air transport routes is limited to domestic andnon-domestic flights originating from Thailand. The parties also agreed that Thai AirAsia is to engage AirAsiaBerhad to provide necessary services and infrastructure required by Thai AirAsia on a commercial and arms-length basis. In addition, the parties agreed that Thai AirAsia and AirAsia Berhad will enter into a technical andmanagement assistance agreement, under which AirAsia Berhad is to provide necessary technical and managerialsupport to the Company.

Management

Board of Directors. The parties agree that the board of directors is to consist of not more than ninedirectors and that the quorum to pass a board resolution requires a majority of the directors. The Company hasthe right to appoint not more than three directors and AirAsia Investment has the right to appoint not more thantwo directors. One of the directors appointed by the Company can be nominated to be the chairman of the boardof directors. The Company and AirAsia Investment each has the right to nominate and appoint not more than twoindependent directors, provided such independent directors have the requisite qualifications specified under therelevant laws and regulations.

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The board of directors is required to meet not less than four times a year. Certain matters are required to beproposed to the board of directors and all decisions relating to such matters require a majority vote. Such mattersinclude:

• amending the memorandum or articles of association;

• changing the authorized or registered capital and issuing any new class of shares, securities or convertibleinstruments;

• decisions relating to dividends and shareholder distributions;

• approval of the business plan and/or budget for each financial year;

• approval of commercial, legal and financial transactions, capital expenditures, capital commitments andhedging transactions over Baht 100 million;

• approval of limits of authority for transactions of Thai AirAsia;

• any reconstruction, merger, consolidation, amalgamation, change of business of Thai AirAsia or any sale,transfer or disposal of any substantial part of the Company’s undertakings, assets or property; and

• appointment or removal of senior management and the employment terms, remuneration and benefits ofdirectors and senior management.

Shareholders. The shareholders are required to meet at least once a year and the quorum for ashareholders’ meeting requires shareholders representing not less than 25% of the registered capital of ThaiAirAsia. Each share entitles the shareholder to cast one vote, and decisions generally require the majority vote ofthe shareholders who are in attendance and entitled to vote at each meeting. Certain matters require a vote of notless than 75% of the total number of votes. Such matters include amending the memorandum or articles ofassociation or changing the registered capital, dissolution, liquidation or amalgamation of Thai AirAsia,allotment of new shares and conversion into a public limited company.

Transfer of Shares

A shareholder is only allowed to transfer or otherwise dispose of or encumber shares in Thai AirAsia inaccordance with the terms of the Thai AirAsia Shareholders’ Agreement. Under the agreement, a shareholdermay transfer any or all of its shares to any of its affiliates upon ten days’ prior notice to the other shareholder. Ashareholder intending to transfer shares is required to give notice to the other shareholder specifying the terms ofthe transfer, with a copy to Thai AirAsia, and invite the other shareholder to purchase the Shares and the offer isrequired to remain valid for a period of 30 days. Transferees are required to enter into an accession agreement inthe form attached to the Thai AirAsia Shareholders’ Agreement (if they not already party to it) and the transferoris required to procure the transfer to the transferee of all loans made by it or any of its affiliates.

A transferor intending to sell all of its Thai AirAsia shares to a third party is required to give written noticeto the other shareholder. If the other shareholder notifies the transferor of its intention to sell any or all of itsshares, the transferor is required to use its best endeavors to procure the third party to purchase all or part of theother shareholder’s shares on a pro rata basis in relation to the total number of shares sold.

Non-Competition

Each shareholder has covenanted that it would not be concerned in any business operating in Thailandwhich is directly or likely to compete with the business of Thai AirAsia. Each shareholder also covenanted that itwould not establish or assist in the establishment of any new entity which is directly or likely to compete with thebusiness of Thai AirAsia in Thailand or Malaysia, except Thai AirAsia’s and AirAsia Berhad’s flightsoriginating and terminating in their respective home countries on a point-to-point basis. In addition, eachshareholder covenanted that it would not operate any business which directly or indirectly competes with the thenexisting business in Thailand or Malaysia of any other party to the Thai AirAsia Shareholders’ Agreement.

Default

Events of default include, among others, (i) a serious or persistent default in performing and observing anyof its obligations under the Thai AirAsia Shareholders’ Agreement which is not remedied within 30 days, (ii) theinsolvency, liquidation or winding up of a party, (iii) any inability to pay debts as they become due which is notremedied within 30 days, (iv) the entering into of any composition or arrangement with creditors or anyappointment of an administrator which is not revoked within 30 days, (v) any disposal of shares other than aspermitted under the Thai AirAsia Shareholders’ Agreement and (vi) any change in control.

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Following an event of default, the non-defaulting parties are entitled to purchase or sell shares by servingnotice to the defaulting party. If the non-defaulting parties elect to sell their shares, the defaulting party isrequired to arrange a third party to purchase the shares in accordance with the terms of the Thai AirAsiaShareholders’ Agreement.

Term

The Thai AirAsia Shareholder’s Agreement is effective from the date the Thai SEC issues a letter to theCompany notifying that it has commenced counting the period of effectiveness of the draft prospectus filed bythe Company in relation to an initial public offering. The agreement may be terminated upon (i) writtenagreement of the parties, (ii) either AirAsia Investment or the Company, together with their respective affiliates,holding, in total, less than 20% of the total issued shares of Thai AirAsia, (iii) a party ceasing to have any furtherrights and obligations under the agreement as a result of it and its affiliates ceasing to hold any shares of ThaiAirAsia, (iv) a special resolution to wind-up Thai AirAsia or to put it into voluntary or compulsory liquidation or(v) the listing of Thai AirAsia’s shares on the SET.

Asia Aviation Shareholders’ Agreement

Each of the Selling Shareholders has entered into a shareholders’ agreement dated March 27, 2012 (the“New Asia Aviation Shareholders’ Agreement”) in respect of their relationship and the conduct of the businessand affairs of the Company, which is intended to replace the existing shareholders’ agreement dated June 21,2007 among the Selling Shareholders (the “Existing Asia Aviation Shareholders’ Agreement”). The New AsiaAviation Shareholders’ Agreement becomes effective upon the release by Credit Suisse of its interest in therights of the Borrowers under the Existing Asia Aviation Shareholders’ Agreement of the Company that wereassigned to Credit Suisse as security under the Credit Suisse Loan Agreement, whereupon the Existing AsiaAviation Shareholders’ Agreement will be terminated. The Selling Shareholders have entered into the New AsiaAviation Shareholders’ Agreement to ensure compliance with applicable laws and treaties that impose limitationson foreign shareholdings with respect to the business activities of Thai AirAsia. Under the New Asia AviationShareholders’ Agreement, the Selling Shareholders have agreed that the only business of the Company is theownership of a shareholding of 51.0% or more in Thai AirAsia.

The New Asia Aviation Shareholders’ Agreement classifies 51.0% of the Shares of the Company after theCombined Offering that are held by the parties to the New Asia Aviation Shareholders’ Agreement as “RestrictedShares” and the remaining Shares held by such parties as “Free Shares”. Each party may create a security interestover his Free Shares or transfer Free Shares to any person without any restrictions. In addition, the transfer ofRestricted Shares is limited to the transfer of all (and not some only) of the Restricted Shares in a single transfer.However, each party has agreed not to transfer or create any security interest over his Restricted Shares for aperiod of five years from the completion of the Primary Offering.

After the expiry of the five-year lock-up period, if such transfer is to be made to a third party, thetransferring shareholder must first offer such Restricted Shares on terms no less favorable than the terms offeredto the third party to the other shareholders who are a party to the New Asia Aviation Shareholders’ Agreement inproportion to their shareholding. The offer must be open for 20 business days and, if accepted, must becompleted within 65 business days. If the offer is declined, all of such Restricted Shares may be transferred tosuch third party if the transferee is approved and agreed in writing by a majority in number of the othershareholders who are parties to the New Asia Aviation Shareholders’ Agreement who together own a majority ofthe total shares held by such other shareholders, and such transferee must accede to the New Asia AviationShareholders’ Agreement. The restrictions on transfer described above do not apply to transfers of RestrictedShares to any other party to the New Asia Aviation Shareholders’ Agreement or to his spouse, children, siblingsor parents, provided they accede to the New Asia Aviation Shareholders’ Agreement. No transfers of Shares maybe effected if it could result in the contravention of any applicable law or international treaty that imposes a limiton the ownership of Shares in the Company or Thai AirAsia while they continue their ordinary businessactivities.

In addition, after the expiry of the five-year lock-up period, each party has also agreed that no party maycreate a security interest over his Restricted Shares unless such security interest is on terms that ensure continuedcompliance with any applicable law or international treaty that imposes a limit on the ownership of Shares in theCompany or Thai AirAsia while they continue their ordinary business activities, and all other parties have agreedin writing.

Each Selling Shareholder has agreed, following the expiry of the SET Lock-Up, to deposit such RestrictedShares with the TSD or an alternative custodian or escrow agent for so long as any applicable law or internationaltreaty that imposes a limit on the ownership of Shares in the Company or Thai AirAsia while they continue theirordinary business activities requires.

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Subject to the transfer restrictions described above, if a party desires to transfer his Restricted Shares to athird party, such transferring party is required to notify the other parties of the terms and conditions of theproposed transfer and the other parties have the right to elect to participate in the transfer on the same terms andconditions. To the extent the prospective purchaser refuses to purchase such Shares from the other parties whoelect to participate in the transfer, the transferring party must not transfer his Shares to the purchaser unless,simultaneously with such transfer, the transferring party purchases the Shares from the other parties who elect toparticipate in the transfer. In addition, if any one or more of the parties holding in aggregate more than 12.5% ofthe total Shares in issue sell all of their Shares to a third party purchaser, such sellers may require by notice to theother parties that such other parties sell all of their Shares to the same purchaser on the same terms andconditions as those received by the seller.

If there is a breach of the New Asia Aviation Shareholders’ Agreement that is not remedied within 10business days after notice is given to remedy such breach, a non-defaulting party may issue a default notice to allother parties. Within 15 business days after the default notice, the defaulting party must offer to sell all of hisShares to the other parties by delivering a transfer notice to the other parties. Within 15 business days of receiptof the transfer notice, the other shareholders must notify the defaulting shareholder in writing whether they (as agroup) accept or reject the offer. The sale price for such shares is to be equal to 90% of the volume weightedaverage price at which the Shares were traded on the SET during the five trading days prior to the giving of theacceptance notice of the offer or, if the Shares were not traded on the SET during such five days, 90% of the fairmarket value as determined by an independent certified valuer.

AirAsia Brand License Agreement

AirAsia Berhad and Thai AirAsia entered into the AirAsia Brand License Agreement dated January 1, 2012.Under the terms of the agreement, AirAsia Berhad granted Thai AirAsia a non-exclusive and non-assignablelicense to reproduce and use the AirAsia brand, except that AirAsia Berhad undertakes that Thai AirAsia’slicense to the AirAsia brand in Thailand is on an exclusive basis for the purposes of Thai AirAsia’s businessoperations under the permitted name of “AirAsia” (including the adoption of such name as part of Thai AirAsia’scorporate name for the duration of the AirAsia Brand License Agreement). Thai AirAsia is required to use theAirAsia brand in accordance with the AirAsia branding guidelines, including for the purposes of marketingcommunications. Any usage of the AirAsia brand, or any part thereof, in connection with any items ofmerchandise requires the written consent of AirAsia Berhad.

The initial term of the AirAsia Brand License Agreement is five years. Thai AirAsia may extend theagreement for additional five year terms, provided that Thai AirAsia provides AirAsia Berhad with a notice ofextension at least one year prior to the expiry of the then current term and the AirAsia Brand License Agreementhas not been lawfully terminated prior to such notice of extension.

License Fee

Thai AirAsia is required to pay a license fee in U.S. dollars of 1% of its total revenue per annum. Paymentof the license fee is to be made on a quarterly basis. Such quarterly payment is calculated based on ThaiAirAsia’s accounts and records at the end of each quarter and adjusted once the final audited accounts for theyear is available.

Obligations

AirAsia Berhad agreed, among other things, (i) to permit Thai AirAsia to undertake its business operationsin accordance with the terms of the agreement, (ii) to provide Thai AirAsia with reasonable know-how, adviceand guidance relating to the implementation of and/or adherence to the AirAsia branding guidelines inconnection with Thai AirAsia’s business operations, (iii) to not directly or indirectly invest in or license anotherlow cost air carrier based in Thailand and (iv) to provide reasonable assistance and advice in respect of the initialand ongoing training requires for customer service staff.

Thai AirAsia agreed, among others, to (i) undertake its business operations in accordance with the terms ofthe agreement, (ii) take all necessary steps to ensure compliance with the AirAsia branding guidelines,(iii) ensure that all customer service staff undergo training as required by AirAsia Berhad from time to time,(iv) not, and to ensure that its majority shareholders do not, do anything which is additional to or not inaccordance with, or may be detrimental or prejudicial to, the AirAsia brand or the AirAsia branding guidelines,(v) protect and promote the goodwill associated with the AirAsia brand and branding guidelines and ensure itsstaff, representatives and agents conduct the business operations in such a manner as to maintain the quality andreputation of the AirAsia brand, (vi) provide certain information to AirAsia Berhad, (vii) not make use of theAirAsia brand other than for the proper conduct of Thai AirAsia’s business, and (viii) not solicit AirAsia

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Berhad’s crew and staff members without the prior written consent of AirAsia Berhad. Thai AirAsia has alsoagreed to adopt and apply a customer relations and complaints handling policy consistent with the AirAsiabranding guidelines and to adopt the conditions of carriage of AirAsia Berhad where permitted by applicablelaws and competent authorities. Thai AirAsia and AirAsia Berhad are to provide the other party with full detailsof any complaints received in respect of the business operations.

In addition, Thai AirAsia is required to have technical and operational control of its aircraft, to comply withall applicable laws governing activity in relation to its aircraft and to execute or perform its business operationsand maintain certain insurance policies specified under the AirAsia License Agreement. Thai AirAsia is alsorequired to use suppliers nominated by AirAsia Berhad for certain specified items.

Marketing

In connection with marketing and promotions, Thai AirAsia is required to comply with the standardoperating procedures in the AirAsia procedures manual. Thai AirAsia is also required to cooperate with AirAsiaBerhad in any advertising campaign, sales promotion program or other special activity in which AirAsia Berhadmay engage or specify, including the display of point-of-service advertising and distribution of promotionalliterature.

AirAsia Brand

AirAsia Berhad has exclusive ownership of the AirAsia brand and all parts of it, including any amendmentsand modifications to it, and all marketing communications and slogans used to promote the AirAsia brand.AirAsia Berhad also has exclusive rights to make additions or modifications to the AirAsia brand, the AirAsiabranding guidelines and the AirAsia procedures manual.

Thai AirAsia is required to use the AirAsia brand in strict accordance with the AirAsia procedures manualor as directed by AirAsia Berhad from time to time. Thai AirAsia is also required to, among other things, (i) notcause or permit anything which may damage, endanger or reduce the value or the brand (or any part thereof),other intellectual property of AirAsia Berhad and AirAsia Berhad’s title to the brand, (ii) not contest the validityof the AirAsia brand or AirAsia Berhad’s rights, interests or ownership of the AirAsia brand, (iii) provideAirAsia Berhad with details of any suspected infringement of the brand (or any part thereof) or other intellectualproperty of AirAsia Berhad and give reasonable assistance to AirAsia Berhad in dealing with such infringementor claim, (iv) affix notices to protect the brand on all documents or advertising associated with Thai AirAsia’sbusiness operations, as directed by AirAsia Berhad, (v) cease to use the brand upon expiry or termination of theAirAsia Brand License Agreement or if AirAsia Berhad amends or ceases to use the brand and (vi) not apply forregistration of the brand or name or any part thereof. In addition, to ensure maintenance of the AirAsia brand,Thai AirAsia is required to use suppliers nominated in writing by AirAsia Berhad for certain goods and servicesspecified under the AirAsia Brand License Agreement. AirAsia Berhad has the right to undertake brandingguideline reviews.

Thai AirAsia is prohibited from modifying the AirAsia brand in its business operations without prior writtenconsent of AirAsia Berhad. Under the terms of the AirAsia Brand License Agreement, AirAsia Berhad will ownany permitted modifications to the AirAsia brand.

Indemnities

AirAsia Berhad is to indemnify and hold harmless Thai AirAsia from any claims asserted or recovered by athird party if (i) the claim is made against Thai AirAsia for infringing on a third party’s intellectual propertyrights in relation to its use of the AirAsia brand in the course of its business operations and in accordance withthe terms of the AirAsia Business License Agreement and (ii) any losses, damages, costs or expenses directlyincurred as a result of any breach by AirAsia Berhad of the representations and warranties in the AirAsia BrandLicense Agreement; provided such liability does not arise out of Thai AirAsia’s breach of the agreement,negligence or wilful misconduct.

Thai AirAsia is to indemnify and hold harmless AirAsia Berhad from claims asserted or recovered by a thirdparty for, among others, (i) claims or actions arising from Thai AirAsia’s business operations, (ii) claims oractions for any loss or damage from the use of the AirAsia brand not in accordance with the AirAsia BusinessLicense Agreement and (iii) any damages, costs or expenses directly incurred as a result of any breach by ThaiAirAsia of the representations and warranties in the AirAsia Business License Agreement; provided such liabilitydoes not arise out of AirAsia Berhad’s breach of the agreement, gross negligence or wilful misconduct.

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Termination

AirAsia Berhad may terminate the AirAsia Brand License Agreement immediately upon notice (i) if ThaiAirAsia takes any legal or procedural step to challenge AirAsia Berhad’s exclusive right to all or any part of theAirAsia brand or the validity of all or any part of the AirAsia Brand License Agreement, (ii) if Thai AirAsia’s airoperator certificate or air services license is revoked or cancelled, (iii) if a force majeure under the agreementoccurs or (iv) if there is a change of control of Thai AirAsia, other than in connection with an initial publicoffering.

Either party may terminate the agreement immediately upon notice under certain circumstances, including,among others, (i) if there is any breach by a party which is not remedied under the terms of the agreement, (ii) ifa party makes or offers to make any arrangement or composition with or for the benefit of its creditors, (iii) if aparty ceases or threatens to cease to carry on business or suspends or threatens to suspend all or substantially allof its operations, except in a case of a permitted strike as described in the agreement (iv) if a party suspendspayment of or is unable to pay its debts and (v) if a party becomes insolvent or bankrupt.

Thai AirAsia has agreed that on expiry or other termination of the AirAsia Brand License Agreement, itwill, among others, (i) immediately and permanently cease to use the AirAsia brand and (ii) immediately ceasecarrying on its business operations under the AirAsia brand and refrain from any action that would or mayindicate a relationship with AirAsia Berhad.

Shared Service Center Service Agreements

Thai AirAsia and AirAsia Berhad entered into a service agreement dated January 1, 2012 with respect tocertain financial accounting services (the “AirAsia Berhad Shared Service Center Service Agreement”). Underthe terms of the agreement, Thai AirAsia has agreed to establish a shared service center staffed by Thai AirAsia’semployees to perform various mutually agreed standard operating procedures for financial accounting services toAirAsia Berhad. The services to be provided do not include management accounting services or systemdevelopment, but the shared service center will be responsible for the maintenance of system security and accesslevels to AirAsia Berhad’s accounting software.

AirAsia Berhad has agreed to pay a monthly fee for such services, with the amount tied to the number ofaircraft operated by AirAsia Berhad plus a specified markup, together with reimbursement of Thai AirAsia’scosts (other than remuneration) on an actual costs basis. The AirAsia Berhad Shared Service Center ServiceAgreement is valid for a term of five years from the date of the agreement, unless terminated in accordance withits terms. The AirAsia Berhad Shared Service Center Service Agreement may be terminated by either party upon60 days’ written notice for any material breach of the Agreement, if AirAsia Berhad terminates its operations orif the shared service center is not able to provide the contracted services. AirAsia Berhad may also terminate theAirAsia Berhad Shared Service Center Service Agreement upon giving 90 days’ written notice if it wishes to stopusing the contracted services.

Thai AirAsia and Indonesia AirAsia also entered into a service agreement dated January 1, 2012 (the“Indonesia AirAsia Shared Service Center Service Agreement”), with substantially the same terms as the AirAsiaBerhad Shared Service Center Service Agreement described above.

ICT Service Agreement

AirAsia Berhad and Thai AirAsia entered into a service agreement dated October 1, 2011 with respect tocertain information and communication technology services (the “ICT Service Agreement”). Under the terms ofthe agreement, AirAsia Berhad has agreed to perform various specified information and communicationtechnology services to Thai AirAsia.

Thai AirAsia has agreed to pay for such services as invoiced on a monthly basis by AirAsia Berhad. If thereis a significant change in the services provided or the cost thereof, AirAsia Berhad has agreed to advise ThaiAirAsia of the changes in cost allocations related to the services provided. The ICT Service Agreement is validfor a term of five years from the date of the agreement, unless terminated in accordance with its terms. The ICTService Agreement may be terminated by either party upon 60 days’ written notice if AirAsia Berhad terminatesits operations. The ICT Service Agreement may also be terminated upon written notice upon the occurrence of anevent of default.

Related Party Transaction Policies

Our board of directors has established and approved policies governing related party and connectedtransactions to avoid conflicts of interest and to manage these transactions. Our audit committee is responsible

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for ensuring that the terms and conditions of related party transactions are consistent with market practice andthat the prices to be charged in these transactions are evaluated and compared with market prices. If marketprices are not available, our audit committee must ensure that the prices are reasonable and the transactions arecarried out in the Company’s and the shareholders’ best interests. We may use information from the report of anindependent third party appointed by us to evaluate the reasonableness of a proposed transaction as well as tocompare prices and other terms to ensure reasonable pricing and provide the best arrangement for us. Approvalfor related party transactions is to be granted by our management, our board of directors or our shareholders,depending on the size of the proposed related party transaction.

Any manager or director who has a conflict of interest will not be allowed to vote on or approve atransaction. In executing related party transactions, we comply with the regulations of the Thai SEC and SET, aswell as the accounting standards regarding disclosure of information concerning related persons and companiesas determined by the Institute of Certified Accountants and Auditors of Thailand.

In addition, all AirAsia Group members are required to comply with Standard Operating Procedures that setforth the guidelines, policies and procedures to govern the identification, recording, reporting and monitoring ofintercompany transactions and balances. Under the Standard Operating Procedures, intercompany transactionsshould be carried out based on normal commercial terms that are generally available to third parties, on arm’slength basis, not to the detriment of the minority shareholders and in compliance with the relevant legislativerequirements of the jurisdiction of each party to the intercompany transaction. In addition, all intercompanytransactions should be supported by written documents or contracts, and intercompany contracts should beapproved in a similar manner as contracts with third parties. The Standard Operating Procedures also containprovisions regarding:

• the recording of intercompany transactions and balances;

• monitoring of intercompany transactions and balances;

• chargebacks to the relevant intercompany party;

• payments made on behalf of an intercompany party;

• collections received on behalf of an intercompany party; and

• detailed procedures relating to the above.

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REGULATION OF THE AIRLINE INDUSTRY IN THAILAND

International Regulatory Framework

The Chicago Convention

The regulatory system for international air transport is based upon principles laid down by the Conventionon International Civil Aviation signed at Chicago on December 7, 1944 (the “Chicago Convention”), which wasentered into and ratified by Thailand in 1944 and 1947, respectively. The Chicago Convention recognizes theprinciple that each state has sovereignty over its airspace and has the right to regulate the operation of scheduledand unscheduled international air services over or into its territory.

The Chicago Convention also established ICAO, which operates as a specialized agency of the UnitedNations. ICAO has developed standards and recommended practices for a wide range of international airtransport activities such as aircraft operations, rules of the air, personnel licensing, security standards, accidentinvestigation, navigation services, airport design and environmental protection. As a member of ICAO, Thailandhas adopted most of the standards and practices recommended by ICAO.

Freedoms of the Air

In addition, international air transport is founded on a collection of transport rights that derive from twomultilateral air transport agreements among states, the International Air Transport Agreement of 1944 (the “FiveFreedoms Agreement”) and the International Air Services Transit Agreement of 1944 (the “Transit Agreement”);in addition, these rights are referred to in air services agreements negotiated between individual states.

The Five Freedoms Agreement defines certain “air freedoms”, or traffic rights, which each signatory statemay grant to another signatory state by agreement and which may be summarized as follows:

• First Freedom. Often referred to as “transit rights”, the privilege of a carrier to use the airspace of asovereign state other than its home state without landing.

• Second Freedom. The privilege of a carrier to land in a sovereign state other than its home state fornon-traffic purposes, such as refueling or maintenance.

• Third Freedom. Often referred to as “transport rights”, the privilege of a carrier to put down, in asovereign state other than its home state, passengers, mail and cargo taken on in the home state.

• Fourth Freedom. The privilege of a carrier to take on passengers, mail and cargo destined for its homestate.

• Fifth Freedom. The privilege of a carrier to take on passengers, mail and cargo in a sovereign state otherthan its home state, and then fly on to another sovereign state (rather than return to the home state) tounload the passengers, mail and cargo provided the flight originates from or continues to the carrier’shome state.

Thailand is not a party to the Five Freedoms Agreement but has entered into air services agreements thatrefer to such freedoms. Thailand also signed the Transit Agreement in 1944 and ratified it in 1947. The TransitAgreement gives airlines based in contracting states rights for scheduled flights to fly over the territories of theother contracting states without landing and to make non-traffic stops in such territories, while the ChicagoConvention permits non-scheduled flights (including cargo flights) to fly over the territories of the signatorystates and gives rights for non-scheduled flights to make stops for non-traffic purposes in territories of suchstates, subject to certain restrictions which can be imposed by individual states.

General Agreement On Trade in Services

Thailand became a founding member of the World Trade Organization (“WTO”) on December 28, 1994.All WTO members are also members of the General Agreement on Trade in Services (“GATS”) and, to varyingdegrees, have assumed commitments under GATS following the principle of progressive liberalization.

The GATS Annex on Air Transport Services applies to measures affecting trade in air transport services,whether scheduled or non-scheduled, and ancillary services, which are not relevant to traffic rights agreements.These are aircraft repair and maintenance services (excluding line maintenance), selling and marketing of airtransport services (excluding their pricing and other conditions) and computer reservations system services.

However, Thailand made specific commitments under GATS in relation to air transport services to providemost favored nation access to the Thai economy only in relation to aircraft repair and maintenance services andthe sale and marketing of air transport services. The specific commitments made by Thailand under GATS do notreduce Thailand’s obligations under air service agreements.

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IATA

In addition to the interstate regulatory framework, scheduled air transport companies created IATA, thetrade association for international airlines, in 1945 in Havana, Cuba. IATA holds a mandate to establishregulations for the air transport profession and to supply participant members with a forum for the coordinationand the proper implementation of tariffs on international routes. IATA provides a forum for tariff coordination oninternational routes by convening traffic conferences and also serves as an international liaison in areas such ascommercial and financial procedures (e.g., commercial documentation, common ticket dispensers and thelicensing of travel agents).

International Limitations on Liability of Carriers

The Convention for the Unification of Certain Rules Relating to International Carriage by Air Signed atWarsaw on October 12, 1929 (the “Warsaw Convention”) and the Protocol to Amend the Convention for theUnification of Certain Rules Relating to International Carriage by Air Signed at Warsaw on October 12, 1929Done at The Hague, October 28, 1955 (the “Hague Protocol”) established limited liability for air transportcompanies based on a presumption fault. The financial limits on liability set out in the Warsaw Convention maybe exceeded only if the victim proves gross negligence on the part of the air transport company. Certaincountries, particularly the United States, have contested both the principle of limited liability and the damageamounts available under the Warsaw Convention. Thailand has yet to accede to the Warsaw Convention or theHague Protocol.

In 1999, member states of the ICAO adopted the Convention for the Unification of Certain Rules forInternational Carriage (the “Montreal Convention”), which amended the Warsaw Convention with respect tocompensation for passengers and owners of cargo involved in aviation disasters. The Montreal Conventionintroduced a two-tier liability system for carriers. The first tier involves a strict liability regime for air transportcompanies with respect to the first 100,000 IMF Special Drawing Rights. The second tier provides for unlimitedliability if an air transport company cannot disprove liability for an aviation disaster. As of December 31, 2009,the limitation of liability for passengers under the first tier was expanded by 13.1% under the auto-escalationmechanism provided for in the Montreal Convention. As a result, passengers are now afforded up to 113,100IMF Special Drawing Rights per individual passenger, 19 IMF Special Drawing Rights per kilogram for cargo,IMF 1,131 Special Drawing Rights for baggage and 4.694 IMF Special Drawing Rights for passenger delays.Thailand has yet to accede to the Montreal Convention.

The Warsaw Convention, the Hague Protocol or the Montreal Convention may apply where a journeyoriginates and terminates in countries that are parties to the relevant convention, even if the journey connectsthrough a country that is not a party to the relevant convention.

The Rome Convention on Damage Caused by Foreign Aircraft to Third Parties on the Surface signed atRome on October 7, 1952 (the “Rome Convention”) also regulates third-party damages. Thailand has not ratifiedthe Rome Convention and third-party damages in Thailand are regulated in accordance with the principles ofThai law.

International Security Interests

The Convention on International Interests in Mobile Equipment (the “Cape Town Convention”), which tookeffect on March 1, 2006 when it was ratified by eight countries, creates international standards for registration ofownership, security interests (liens), leases and conditional sales contracts, as well as various legal remedies fordefault, including relief pending final determination of claims and safeguards for debtors. The Cape TownConvention’s Aircraft Protocol also standardized transactions involving movable property, particularly aircraftand aircraft engines, and as such, aircraft under lease, hire-purchase or conditional sale may be subject to aninternational security interest. The Cape Town Convention also establishes the priority of creditors under aircraftfinancing transactions in the signatory countries.

Allocation of Time Slots at International Airports

Access to international airports is primarily regulated by the allotment of time slots. Time slots correspondto the capacity of an airport’s facilities and the ability of a carrier to land at, or take off from, an airport at aspecified time and date.

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Time slots are allotted twice a year, at the time airline flight schedules for the relevant IATA timetableperiod are collected by the designated airport coordinator, according to the following procedures:

• the airport coordinator notifies all air carriers of airport capacity for the season and historical time slotinformation;

• airlines submit to the airport coordinator their requests for time slots five months prior to the beginning ofeach timetable period;

• the airport coordinator first allocates time slots to airlines exercising “grandfather rights” (airlines that hadoperated the same time slots during the previous equivalent timetable period);

• the airport coordinator gives airlines information regarding preliminary time slot allocations, includingwhich time slots were allotted to incumbents and which time slots are required to be adjusted due toairport capacity limitations;

• a pool is created which includes all available time slots, whether they are newly created, unused orabandoned for any reason; and

• the airport coordinator allocates the pooled time slots to new entrants and to incumbents on a pro ratabasis.

Requests for new time slots are rarely satisfied at busy airports. At the close of this preliminary allotmentprocess, an IATA schedule coordination conference is organized in June and November of each year, to enableairlines to coordinate the time slots they are allotted in different airports, so that when a flight links two airports,the time slots granted on each platform are compatible with one another; and exchange time slots amongthemselves in the event that the time slots originally allotted by the airport coordinators are unsatisfactory.Unused time slots are typically re-allotted.

The grandfather rights of historic users give established airlines a decisive commercial advantage over otherairlines at busy airports.

International Air Traffic Tariffs and International Airport Landing Charges

Airlines are subject to air transport tariffs which are divided into air navigation charges and airport charges.Air navigation charges include routing charges for overflights and terminal charges. Airport charges includelanding fees and passenger charges. In 2011, we paid a total of Baht 1,289.8 million (US$40.7 million), for theseair navigation and airport charges.

Domestic Regulatory Framework

The airline industry in Thailand is governed by the Announcement of the National Executive CouncilNo. 58 (“NEC No. 58”) and the Air Navigation Act B.E. 2497 (1954), as amended (the “Air Navigation Act”).The authority responsible for overseeing the industry in Thailand is the DCA.

DCA

The DCA is an organization within the Ministry of Transport (the “MOT”) which administers aviationactivities. The DCA is the authority for all activities that involve the transportation of passengers, mail and cargofrom and into Thai airspace and is responsible for aircraft certification, registration, personnel certification,airport licensing, air operator certification, air traffic control and air navigation equipment certification.

The DCA’s main objective is to ensure that the air transportation system operated by direct serviceproviders is safe for passengers and to ensure that air transport service operators conduct their activities incompliance with appropriate regulations. As Thailand is a member of the ICAO, Thai aviation laws andregulations have been based on the ICAO standards and recommended practice.

Airline Operations in Thailand

To operate either scheduled or non-scheduled air transport services in Thailand, the NEC No. 58 requires anair transport service operator to obtain an ASL from the Minister of Transport. An ASL can be suspended orrevoked by the Minister of Transport if the licensee fails to comply with the conditions prescribed in the licenseor the laws and regulations regarding air navigation or safety standards prescribed by the DCA. The ASL is validfor a period determined by the DCA. Our current ASL was issued on November 6, 2008 and is valid for fiveyears.

According to the Air Navigation Act, an air service operator is required to obtain an AOC. An AOC isissued by the DCA under the Rule of Civil Aviation Board of Thailand (“CAB”) No. 85 to certify that the

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licensee has complied with the safety standards prescribed by the CAB in the provision of air services. An AOCis issued for a term of not more than five years and can be renewed for further terms of not more than five years,subject to the licensee’s passing a safety inspection by the DCA. Our current AOC was issued on December 26,2008 and was latest amended on October 28, 2010, and will continue to be in effect under its terms untilNovember 5, 2013, unless surrendered, suspended or revoked.

An AOC can be suspended or revoked if the air service provider fails to comply with the operationsspecifications attached to the AOC, the operating manuals approved by the relevant competent authorities, or thelaws regarding air navigation and safety standards as prescribed by the DCA. An AOC can also be suspended orrevoked if the air service provider amends its operating manuals without obtaining the approval of the relevantcompetent authority.

The Air Navigation Act contains provisions regulating air navigation in Thailand. The Air Navigation Actalso contains provisions in relation to the registration of aircraft, external marking of aircraft, aircraft types,aircraft production, airworthiness control, journey log books, aerodromes, air navigation facilities, accidents,qualifications of operating personnel, ramp services and technical services.

The Air Navigation Act provides for the registration of aircraft to be administered by the DCA where theapplicant (i) is the owner or (ii) has a right of possession over the aircraft and has received permission from theMinister of Transport to carry out the registration. All applicants must be Thai nationals. Where the applicant is alimited company or public company, (i) the company must be incorporated under Thai law, (ii) no shares in thecompany may be in bearer form, (iii) the majority of the directors must be Thai nationals, (iv) its head officemust be located in Thailand and (v) at least 51% of its shares must be held either singly or collectively by eitherThai natural persons, ministries or sub-ministries or departments of Thai Government (“Government Entity”), ora limited company or public company in which not less than 51% of the shares are held by a Government Entityor Thai natural persons.

In relation to any aircraft registered in Thailand (a “Thai aircraft”), the operator of the Thai aircraft isrequired to hold a certificate of registration granted by the DCA for such Thai aircraft. Such certificate is grantedto certify that the aircraft has been duly entered on the register of Thailand and in accordance with the ChicagoConvention and with the Air Navigation Act.

A Thai aircraft may fly only if it has been issued a certificate of airworthiness by the DCA. The DCA issuesa certificate of airworthiness only when it is satisfied that the aircraft is fit to fly, having considered factors suchas the design, construction and materials of the aircraft, the results of flying trials and such other tests as requiredby the DCA. A standard certificate of airworthiness is valid for a period of three years and can be renewed if theDCA is satisfied that such aircraft has undergone maintenance and is in a condition for safe operation.

The Air Navigation Act also established the CAB to issue rules in accordance with the Air Navigation Actand the Annexes to the Chicago Convention, as well as to (a) prescribe rules and method of calculation ofdomestic airfares and freight rates, subject to the approval of the Minister of Transport, and the maximum tariffsfor domestic airfares and freight rates set out under the relevant MOT’s ministerial regulation and (b) approve therates charged for the use of air navigation facilities. Under the MOT’s ministerial regulation, domestic airfaresmust be distance based fares and must not exceed Baht 30 per kilometer. Pursuant to the Notification of the DCARegarding Determination of Domestic Airfares dated January 13, 2010, domestic airfares must not exceedBaht 13 per kilometer for routes which have a flight distance of over 300 kilometers and Baht 22 per kilometerfor routes which have a flight distance of under 300 kilometers and which is inconvenient for ground travelling.

Domestic Traffic Rights

In order to operate scheduled domestic passenger services, an airline is required to secure rights from theDCA. The DCA is the approving authority for domestic flight rights and grants these rights depending on trafficvolume and the spread of services.

International Traffic Rights

The operation of international passenger services depends on traffic rights negotiated between the Thaigovernment and the government of another country. These rights are enshrined in an air services agreement(“ASA”) between the two governments with the capacity of the international airline services to be negotiated. AsASAs are negotiated and agreed on a government-to-government basis, the relevant traffic rights under theseagreements belong to the relevant governments. In Thailand, any applications for the operation of passengerservices to international destinations is required to be directed to the DCA for approval and allocation of therequested traffic rights. Our ability to expand our route network and to increase frequency and capacity is subjectto our ability to obtain sufficient traffic rights and time slots to various destinations.

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Beside traffic rights, international operators are also subject to slot coordination for each IATA season. Thetwo IATA seasons annually are the summer season and winter season. The winter season runs from the lastSunday of October to the last Saturday of March and the summer season runs from the last Sunday of March tothe last Saturday of October each year. Generally, schedules are planned approximately six months in advance.

Thailand’s ASAs

As of the date of this Offering Memorandum, Thailand is a party to bilateral air services agreements with 99countries. Each air services agreement contains provisions regarding matters such as landing rights, routes,capacity, tariffs (including freight charges), sales and marketing, other commercial activities and operatingauthorization. Traffic rights granted in bilateral air services agreements are based on one or more of the airfreedoms defined in the Five Freedoms Agreement. Each air services agreement may be amended from time totime at the request of either of the contracting states.

Traffic rights for non-scheduled flights are generally granted unilaterally by each state participating in theChicago Convention in relation to its own airspace directly to the airlines concerned. The home states of theseairlines are involved only in the case of disputes.

An initiative to liberalize air transport services among ASEAN countries within an “open skies” frameworkwas initiated in 2004. In order to gradually remove restrictions and achieve greater flexibility and capacity in airservices operations in ASEAN, as laid out in the initial policy in 2004, and to build a single unified ASEANaviation market by 2015, the ASEAN countries signed the ASEAN Multilateral Agreement on Air Services in2009 and the ASEAN Multilateral Agreement on the Full Liberalization of Passenger Air Services in November2010.

Our status as a designated airline allows us to exercise the traffic rights granted to Thailand under the airservices agreements to which Thailand is a contracting state. Although the Government has designated and maycontinue to designate additional airlines according to its liberalization policy, our rights, particularly in relation tofrequency and capacity of flights, under the air services agreements would not necessarily be affected by thedesignation of additional carriers. Any subsequently designated airline would be entitled to enjoy the unusedrights of Thailand under the air services agreements. Alternatively, the Government could negotiate with itscontracting states to obtain additional traffic rights for the newly designated airline, rather than reducing therights currently enjoyed by us.

Domestic air traffic tariffs and domestic airport landing charges

Pursuant to the Air Navigation Act, the CAB has the power to prescribe the regulations regarding landingand parking charges and passenger service charges, with approval from the Minister of Transport. The CABprescribes the maximum landing and parking charges and passenger service charges chargeable by AOT andother airport operators.

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MANAGEMENT AND CORPORATE GOVERNANCE

Board of Directors

Board of Directors of the Company

Our board of directors has ultimate responsibility for the administration of affairs of the Company. OurArticles of Association provide for a board of directors of at least five directors, and not less than half of thedirectors are required to reside in Thailand. In addition, our Articles of Association provide that one-third, or thenumber of directors closest to one-third, of our board of directors is required to retire at each annual generalmeeting of shareholders. The directors who are to retire during the first and second years following theregistration of the Company are to be drawn by lots. In subsequent years, those directors who have held the officethe longest must retire first and retiring directors are eligible for re-election.

The business address of all the directors is 60/1, 3rd Floor, Monririn B Building, Sai Lom Lane,Phahonyothin Road, Samsen Nai Sub-district, Phaya Thai District, Bangkok, Thailand. Our directors are asfollows:

Name Age Position

Dr. Pongsathorn Siriyodhin . . . . . . . . . . . . . . . . . . . . . 60 Chairman and Independent DirectorMr. Tassapon Bijleveld . . . . . . . . . . . . . . . . . . . . . . . . 44 DirectorMr. Pornanan Gerdprasert . . . . . . . . . . . . . . . . . . . . . . 45 DirectorMr. Tanapat Ngamplang . . . . . . . . . . . . . . . . . . . . . . . 55 DirectorMr. Preechaya Rasametanin . . . . . . . . . . . . . . . . . . . . 53 DirectorM.L. Bovornovadep Devakula . . . . . . . . . . . . . . . . . . 50 DirectorMr. Santisuk Klongchaiya . . . . . . . . . . . . . . . . . . . . . . 46 DirectorMr. Distorn Vajarodaya . . . . . . . . . . . . . . . . . . . . . . . . 48 Independent DirectorMr. Nuttawut Phawborom . . . . . . . . . . . . . . . . . . . . . . 47 Independent Director

Dr. Pongsathorn Siriyodhin. Dr. Siriyodhin was appointed Chairman and Independent Director of theCompany and of Thai AirAsia on December 13, 2011. Dr. Siriyodhim has also been the Chairman of KrungthaiCard Public Co. Ltd. since 2001, and the Chairman of Ananda Development Plc since October 2011. Previously,Dr Siriyodhin was a director of Nok Air Co., Ltd. from 2004 until September 2011. Dr. Siriyodhin holds aBachelor of Arts degree, majoring in economics, from the California State University, a Master’s degree ineconomics from the California State University and a Ph.D. in economics from the University of Cincinnati.

Mr. Tassapon Bijleveld. Mr. Bijleveld was appointed Director of the Company and Thai AirAsia onJune 21, 2007 and September 19, 2003, respectively. Mr. Bijleveld is also the Chief Executive Officer of ThaiAirAsia, where he has been employed since 2004. Prior to joining Thai AirAsia, he was the Managing Directorof Warner Music (Thailand) Ltd. Mr. Bijleveld holds a Bachelor of Business Administration degree fromAssumption University and a Master of Marketing degree from Thammasat University.

Mr. Pornanan Gerdprasert. Mr. Gerdprasert was appointed Director of the Company and Thai AirAsia onJune 21, 2007 and July 1, 2004, respectively. Mr. Gerdprasert is also the Chief Financial Officer of Thai AirAsia,where he has been employed since 2004. Prior to joining Thai AirAsia, he was the Finance and AccountingDirector of Teleinfo Media Co., Ltd. Mr. Gerdprasert holds a Bachelor’s degree in accounting, a Higher Diplomain Auditing and a Masters degree in accounting from Thammasat University.

Mr. Tanapat Ngamplang. Mr. Ngamplang was appointed Director of the Company on December 13, 2011.Mr. Ngamplang is also the Director of Operation of Thai AirAsia, where he has been employed since 2003. Priorto joining Thai AirAsia, he was the Director of Flight Operation for Phuket Airline Co., Ltd. Mr. Ngamplangholds a Bachelor of Science degree, majoring in electrical engineering, from Royal Thai Air Force Academy, aBachelor of Arts degree, majoring in public administration, from Sukhothai Thammathirat Open University and aMaster of Business Administration degree from Kirk University.

Mr. Preechaya Rasametanin. Mr. Rasametanin was appointed Director of Thai AirAsia on January 1,2004 and a Director of the Company on June 21, 2007. Mr. Rasametanin is also the Director of Engineering ofThai AirAsia, where he has been employed since 2004. Prior to joining Thai AirAsia, he was the Product SupportManager of the Aviation Products Division for Goodyear Thailand Public Company Ltd. Mr. Rasametanin holdsa Bachelor of Science degree, majoring in mechanical engineering, from the Royal Thai Air Force Academy.

M.L. Bovornovadep Devakula. M.L. Devakula was appointed Director of the Company on December 13,2011. M.L. Devakula is also the Director of Business Development of Thai AirAsia, where he has beenemployed since March 1, 2004. Prior to joining Thai AirAsia, he was the Manager of Advance Info Services, Plcfrom 1999 to 2003 and the Secretary to the Chairman of the board of directors of Shin Corporation Plc. from

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1994 to 1998, Secretary to the Deputy Prime Minister of Thailand from 1994 to 1998 and Secretary to theMinister of Foreign Affairs from 1994 to 1998. M.L. Devakula holds a Bachelor of Science degree from the StateUniversity of New York.

Mr. Santisuk Klongchaiya. Mr. Klongchaiya was appointed Director of the Company on December 13,2011. Mr. Klongchaiya is also the Director of Commercial for Thai AirAsia, where he has been employed sinceJanuary 1, 2007. Prior to joining Thai AirAsia, he was the General Manager of Warner Music (Thailand) Co., Ltdfrom 2000 to 2006 and the Marketing Manager of Reebok Wongpaitoon Footwear Plc from 1996 to 2000.Mr. Klongchaiya holds a Bachelor of Business Administration degree, majoring in marketing, from AssumptionUniversity and a Master of Science degree, majoring in marketing, from Thammasart University.

Mr. Distorn Vajarodaya. Mr. Vajarodaya was appointed Independent Director of the Company onDecember 13, 2011. He also serves as the Grand Chamberlain of the Royal Household. Previously, he was theChairman of the board of directors of Suvarnchad Company Limited in 2002 and the Chairman of the board ofdirectors of Golden Place Management Company Limited in 2000. Mr. Vajarodaya holds a Bachelor ofAccounting degree from The University of the Thai Chamber of Commerce and a Master of BusinessAdministration degree from Kasetsart University.

Mr. Nuttawut Phawborom. Mr. Phawborom was appointed Independent Director of the Company and ofThai AirAsia on December 13, 2011. He has also been an Independent Director at the Health Network PublicCompany Limited since 2010, a member of the audit committee and Chairman of the remuneration committee ofPrasit Pattana Public Company Limited since 2003 and an executive director of KPN Music Company since1999. Previously, Mr. Phawborom was an advisor of the Deputy Minister of Education from 2000 to 2001.Mr. Phawborom holds a Bachelor of Economics degree from The University of the Thai Chamber of Commerceand a Master of Business Administration degree from City University.

Board of Directors of Thai AirAsia

Thai AirAsia’s board of directors has ultimate responsibility for the administration of the affairs of ThaiAirAsia. Thai AirAsia’s Articles of Association provide for a board of directors of not more than nine directors.Thai AirAsia’s Articles of Association provide that one third, or the number of directors closest to one-third, ofits board of directors is required to retire at each annual general meeting of shareholders. Further, under the termsof the Thai AirAsia Shareholders’ Agreement, the Company has a right to appoint not more than three directorsof Thai AirAsia and AirAsia Investment has the right to appoint not more than two directors of Thai AirAsia.

The business address of all Thai AirAsia’s directors is 99 1st Floor, OSC Building, Kingkaew Road,Tambon Rachatewa, Ampur Bangplee, Samutprakarn. Thai AirAsia’s directors are as follows:

Name Age Position

Dr. Pongsathorn Siriyodhin . . . . . . . . . . . . . . . . . . . . . 60 Chairman and Independent DirectorTan Sri Anthony Francis Fernandes . . . . . . . . . . . . . . 47 DirectorDato Kamarudin Bin Meranun . . . . . . . . . . . . . . . . . . 49 DirectorMr. Tassapon Bijleveld . . . . . . . . . . . . . . . . . . . . . . . . 44 DirectorMr. Pornanan Gerdprasert . . . . . . . . . . . . . . . . . . . . . . 45 DirectorMr. Preechaya Rasametanin . . . . . . . . . . . . . . . . . . . . 53 DirectorMr. Nuttawut Phowborom . . . . . . . . . . . . . . . . . . . . . . 47 Independent DirectorDato Ahmad Farid Bin Ridzuan . . . . . . . . . . . . . . . . . 50 Independent Director

Dr. Pongsathorn Siriyodhin. See “— Board of Directors of the Company” for information onDr. Siriyodhin.

Tan Sri Anthony Francis Fernandes. Mr. Tony Fernandes was appointed Director of Thai AirAsia onSeptember 19, 2003. Mr. Tony Fernandes has also been the Group Chief Executive Officer of AirAsia Berhadsince December 2001. Prior to joining the AirAsia Group, Mr. Tony Fernandes was Financial Controller atVirgin Communications London from 1987 to 1989, Senior Financial Analyst at Warner Music InternationalLondon from 1989 to 1992, Managing Director at Warner Music Malaysia from 1992 to 1996 and RegionalManaging Director, ASEAN and Vice President, ASEAN at Warner Music South East Asia from 1996 to 1999and from 1999 to 2001, respectively. Mr. Tony Fernandes holds a Master of Business Administration degreefrom City University and Master of Business Administration degree from the London School of Economics.Mr. Tony Fernandes was admitted as an Associate Member of the Association of Chartered CertifiedAccountants in 1991 and became a Fellow Member in 1996.

Dato Kamarudin Bin Meranun. Dato Kamarudin was appointed Director of Thai AirAsia on December 8,2003. Dato Kamarudin has also been the Group Deputy Chief Executive Officer of AirAsia Berhad since

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December 2005. Prior to that, Dato Kamarudin was a Director of AirAsia Berhad from 2001 to 2004 and anExecutive Director of AirAsia Berhad from 2004 to 2005. Prior to joining the AirAsia Group, Dato Kamarudinwas a Portfolio Manager at Arab-Malaysian Merchant Bank from 1988 to 1993 and an Executive Director ofInnosabah Capital Management Sdn. Bhd., a subsidiary of Innosabah Securities Sdn. Bhd., in 1994. DatoKamarudin subsequently acquired the shares of the joint venture partner of Innosabah Capital Management Sdn.Bhd., which was later renamed Intrinsic Capital Management Sdn. Bhd. Dato Kamarudin holds a Diploma inActuarial Science from the University Technology MARA, a Bachelor of Science degree, magna cum laude,majoring in finance, and a Master of Business Administration from Central Michigan University.

Mr. Tassapon Bijleveld. See “— Board of Directors — Board of Directors of the Company” forinformation on Mr. Bijleveld.

Mr. Pornanan Gerdprasert. See “— Board of Directors — Board of Directors of the Company” forinformation on Mr. Gerdprasert.

Mr. Preechaya Rasametanin. See “— Board of Directors — Board of Directors of the Company” forinformation on Mr. Rasametanin.

Mr. Nuttawut Phawborom. See “— Board of Directors — Board of Directors of the Company” forinformation on Mr. Phawborom.

Dato Ahmad Farid Bin Ridzuan. Mr. Ridzuan was appointed Independent Director of Thai AirAsia onDecember 13, 2011. Previously, he was the Executive Director of Leo Burnett Advertising Sdn. Bhd. from 1998-2002, Managing Director of Acxiom Asia Limited from 1997-1998 and Vice-President of Marketing & SalesGroup Marketing Division of Cellular Communication Network Sdn. Bhd from 1994-1997. Dato’ Ridzuan holdsa Master of Business Administration degree from United States International University and a Bachelor ofBusiness Administration degree, majoring in marketing, from Western Michigan University.

Audit Committees of the Company and Thai AirAsia

Our audit committee was appointed by our shareholders at a shareholders’ meeting on December 13, 2011.Thai AirAsia’s audit committee was appointed by Thai AirAsia’s shareholders at a shareholders’ meeting onJanuary 25, 2012. The Thai SEC and SET regulations require our audit committee to consist of at least threeindependent directors, one of whom is to have sufficient knowledge and experience to review the reliability ofthe financial statements. The members of our audit committee are as follows:

Name Age Position Within Committee

Dr. Pongsathorn Siriyodhin . . . . . . . . . . . . . . . . . . . . . 60 ChairmanMr. Nuttawut Phowborom . . . . . . . . . . . . . . . . . . . . . . 47 MemberMr. Distorn Vajarodaya . . . . . . . . . . . . . . . . . . . . . . . . 48 Member

The members of Thai AirAsia’s audit committee are as follows:

Name Age Position Within Committee

Dr. Pongsathorn Siriyodhin . . . . . . . . . . . . . . . . . . . . . 60 ChairmanMr. Nuttawut Phowborom . . . . . . . . . . . . . . . . . . . . . . 47 MemberDato Ahmad Farid Bin Ridzuan . . . . . . . . . . . . . . . . . 50 Member

Our and Thai AirAsia’s respective audit committees are accountable to the board of directors of theCompany or Thai AirAsia, as relevant, for the performance of their duties. The scope of authority, duties andresponsibilities of each audit committee includes the following:

• to review the financial reporting process to ensure that it is accurate and adequate;

• to review the internal control system and internal audit system to ensure that they are suitable andefficient, to determine an internal audit unit’s independence, as well as to approve the appointment,transfer and dismissal of the chief of an internal audit unit and/or hiring an internal audit company or anyother unit in charge of an internal audit;

• to review the compliance with the law on securities and exchange, the regulations of the SET, and thelaws relating to the business of the Company or Thai AirAsia, as relevant;

• to consider, select and nominate an independent person to be the auditor, and to propose such person’sremuneration, as well as to attend a non-management meeting with an auditor at least once a year;

• to review the efficiency and the suitability of the risk management;

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• to review and recommend the scope, duties and responsibilities of the audit committee to be consistentwith the situation;

• to have the authority to inspect and investigate relevant parties subject to the authority of the auditcommittee and to have the authority to hire or procure a professional specialist to assist in the inspectionand investigation;

• to review the connected transactions, or the transactions that may lead to conflicts of interest, to ensurethat they are in compliance with the laws and the regulations of the SET, and are reasonable and for thehighest benefit of the Company or Thai AirAsia, as relevant;

• to prepare, and to disclose in the annual report, an audit committee’s report, which must be signed by theChairman of the audit committee and consist of at least the following information:

(a) an opinion on the accuracy, completeness and credibility of the financial report;

(b) an opinion on the adequacy of the internal control system;

(c) an opinion on the compliance with the law on securities and exchange, the regulations of theSET, or the laws relating to the relevant business;

(d) an opinion on the suitability of the relevant auditor;

(e) an opinion on the transactions that may lead to conflicts of interests;

(f) the number of the audit committee meetings, and the attendance at such meetings by eachcommittee member;

(g) an opinion or overview of comments received by the audit committee from its performance ofduties in accordance with the charter; and

(h) other transactions which, according to the audit committee’s opinion, should be known to theshareholders and general investors;

• in its performance of duties, if it is found or suspected that there is a transaction or any of the followingacts which may materially affect the financial condition and operating results, the audit committee shallreport to the board of directors for ratification within the period of time that the audit committee thinks fit:

(a) a transaction which causes a conflict of interest;

(b) any fraud or irregularity which causes a conflict of interest;

(c) an infringement of the law on securities and exchange, the regulations of the SET, or any lawrelating to the Company’s business.

If the board of directors or management fails to make a rectification within the period of time asaforementioned, any audit committee member may report on the transaction or act as aforementioned tothe office of the Thai SEC or SET; and

• to perform any other act as assigned by the relevant board of directors, with the approval of the auditcommittee.

Executive Officers

Executive Officers of the Company

Our executive officers consist of the following persons:

Name Age Position

Mr. Tassapon Bijleveld . . . . . . . . . . . . . . . . . . . . . . . . 44 Chief Executive OfficerMr. Pornanan Gerdprasert . . . . . . . . . . . . . . . . . . . . . . 45 Chief Financial OfficerMr. Tanapat Ngamplang . . . . . . . . . . . . . . . . . . . . . . . 55 Director of OperationMr. Preechaya Rasametanin . . . . . . . . . . . . . . . . . . . . 53 Director of EngineeringM.L. Bovornovadep Devakula . . . . . . . . . . . . . . . . . . 50 Director of Business DevelopmentMr. Santisuk Klongchaiya . . . . . . . . . . . . . . . . . . . . . . 46 Director of Commercial

Certain information with respect to our executive officers is set out below:

Mr. Tassapon Bijleveld. See “— Board of Directors — Board of Directors of the Company” forinformation on Mr. Bijleveld.

Mr. Pornanan Gerdprasert. See “— Board of Directors — Board of Directors of the Company” forinformation on Mr. Gerdprasert.

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Mr. Tanapat Ngamplang. See “— Board of Directors — Board of Directors of the Company” forinformation on Mr. Ngamplang.

Mr. Preechaya Rasametanin. See “— Board of Directors — Board of Directors of the Company” forinformation on Mr. Rasametanin.

M.L. Bovornovadep Devakula. See “— Board of Directors — Board of Directors of the Company” forinformation on M.L. Devakula.

Mr. Santisuk Klongchaiya. See “— Board of Directors — Board of Directors of the Company” forinformation on Mr. Klongchaiya.

Executive Officers of Thai AirAsia

The executive officers of Thai AirAsia consist of the following persons:

Name Age Position

Mr. Tassapon Bijleveld . . . . . . . . . . . . . . . . . . . . . . . . 44 Chief Executive OfficerMr. Pornanan Gerdprasert . . . . . . . . . . . . . . . . . . . . . . 45 Chief Financial OfficerMr. Tanapat Ngamplang . . . . . . . . . . . . . . . . . . . . . . . 55 Director of OperationsMr. Preechaya Rasametanin . . . . . . . . . . . . . . . . . . . . 53 Director of EngineeringM.L. Bovornovadep Devakula . . . . . . . . . . . . . . . . . . 48 Director of Business DevelopmentMr. Santisuk Klongchaiya . . . . . . . . . . . . . . . . . . . . . . 46 Director of CommercialMr. Vorakit Techapalokul . . . . . . . . . . . . . . . . . . . . . . 42 Director of PeopleMr. Natthawach Siriwongsal . . . . . . . . . . . . . . . . . . . . 38 Director of Commercial, Ancillary

Certain information with respect to the executive officers of Thai AirAsia is set out below:

Mr. Tassapon Bijleveld. See “— Board of Directors — Board of Directors of the Company” forinformation on Mr. Bijleveld.

Mr. Pornanan Gerdprasert. See “— Board of Directors — Board of Directors of the Company” forinformation on Mr. Gerdprasert.

Mr. Tanapat Ngamplang. See “— Board of Directors — Board of Directors of the Company” forinformation on Mr. Ngamplang.

Mr. Preechaya Rasametanin. See “— Board of Directors — Board of Directors of the Company” forinformation on Mr. Rasametanin.

M.L. Bovornovadep Devakula. See “— Board of Directors — Board of Directors of the Company” forinformation on M.L. Devakula.

Mr. Santisuk Klongchaiya. See “— Board of Directors — Board of Directors of the Company” forinformation on Mr. Klongchaiya.

Mr. Vorakit Techapalokul. Mr. Techapalokul has been the Director of People of Thai AirAsia sinceSeptember 2011. Prior to joining Thai AirAsia, he was the Business Unit Human Resources Manager of NestleThai Co., Ltd. from 2009 to 2011, the Human Resources Business Partner of Cadbury Adams Thailand from2006 to 2009 and Human Resources Manager in CS Loxinfo Co., Ltd. from 2003 to 2006. Mr. Techapalokulholds a Bachelor’s degree from Chulalongkorn University and a Master’s degree from National Institution ofDevelopment Administration.

Mr. Natthawach Siriwongsal. Mr. Siriwongsal has been the Director of Commercial, Ancillary of ThaiAirAsia since September 2011. Prior to joining Thai AirAsia, he was the Head of Marketing and GTM of LGMobile division in LG Electronics from 2009 to 2011, Group Brand Manager in Pepsi-Cola (Thai) from 2007 to2009 and Group Brand Manager in Nestle Thai from 2001 to 2007. Mr. Siriwongsal holds a Master’s degree inmarketing from Thammasart University and a Bachelor of Business Administration degree, majoring in finance,from Assumption University.

Our Corporate Governance Policy

Our board of directors has passed a resolution to approve our corporate governance policy, which lays downguidelines that comply with the SET principles of good corporate governance and best practicerecommendations. The following is a summary of our corporate governance policy:

• protect and facilitate shareholders’ rights by promoting the equal treatment of shareholders in all matters,timely dissemination of information, exercise of such rights, facilitating shareholder’s attendance andvoting at the meetings, giving information relating to shareholder’s meeting and giving opportunity toshareholders to ask questions and express their opinions at the shareholder meetings;

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• provide fair treatment of stakeholders, which includes the shareholders, customers, employees, businesspartners and the society, the community and the environment;

• provide a structure to implement clear duties, responsibilities and independence for the board of directors;

• provide timely and transparent disclosure of information;

• implement appropriate internal controls and risk management; and

• inculcate good ethics and implement appropriate codes of conduct.

This policy became effective on January 27, 2012 and we expect it will be updated annually to keep it inline with best business practices. We expect these changes to be communicated to our board of directors,management and all employees to comply with both the letter and spirit of the corporate governance policy.

Policy of Investment in Subsidiaries, Associates and Jointly Controlled Entities

We focus on investing in businesses with growth potential and good returns on investment. We have apolicy of making investments of a sufficient size to allow us to participate in the management and businessoutlook of the entity in which we are investing to allow us to direct the business towards sustainable growth.Prior to making any investments, our policy is to undertake a feasibility study and to consider the growthpotential and risk. We will then present the investment to the Company’s board of directors for consideration andapproval.

Presently, we have invested in Thai AirAsia, a low cost airline with the goal of being the leader in thebudget airline industry and able to serve the customers extensively. We take a long-term view with respect to thefundamentals and outlook of our investment in Thai AirAsia. In the future, we may invest in businesses whichare consistent with our business condition and strategic plans.

Policy of Managing Subsidiaries, Associates and Jointly Controlled Entities

Our policy is to closely monitor the performance and operations of our subsidiaries, associates and jointlycontrolled entities. We affect the actions of our subsidiaries, associates and jointly controlled entities throughpresenting our results of analysis, including our comments and suggestions, to the board of directors of therelevant subsidiary, associate or jointly controlled entity.

Under the Thai AirAsia Shareholders’ Agreement, we can nominate and appoint three directors to ThaiAirAsia’s board of directors. We choose directors based on their qualifications and relevant business experience.We also aim to ensure that such directors do not have any conflicts of interest with Thai AirAsia’s business. Suchdirectors are to manage Thai AirAsia’s business in accordance with the relevant rules and regulations, the ThaiAirAsia Shareholder’s Agreement, Thai AirAsia’s articles of association and the Company’s policies.

Compensation

The remuneration policy for the Company and Thai AirAsia is for the remuneration of directors to bereviewed annually by the respective boards of directors and submitted to the respective shareholders forapproval. In 2011, the total management remuneration of Thai AirAsia was Baht 48.2 million (US$1.5 million).

Interest in Shares

Other than as described under “Principal Shareholders”, none of our directors or executive officers ownsany of our Shares.

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PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information with respect to the registered ownership of our Shares asof March 31, 2012, based on an aggregate of 4,100,000,000 Shares outstanding as of that date. See “Business —History and Development” for further details.

Name

Shares OwnedImmediately BeforeCompletion of the

Combined Offering

SharesPurchased/(Sold) in theCombinedOffering

Shares OwnedImmediately AfterCompletion of the

Combined Offering

No. of Shares % No. of Shares No. of Shares %

Directors and Executive Officers:Mr. Tassapon Bijleveld . . . . . . . . . . . . . . . . 2,254,999,800 55.0 (654,500,000) 1,600,449,800 33.0Mr. Pornanan Gerdprasert . . . . . . . . . . . . . . 410,000,400 10.0 (119,000,000) 291,000,400 6.0Mr. Tanapat Ngamplang . . . . . . . . . . . . . . . 409,999,900 10.0 (119,000,000) 290,999,900 6.0Mr. Preechaya Rasametanin . . . . . . . . . . . . . 409,999,900 10.0 (119,000,000) 290,999,900 6.0M. L. Bovornovadep Devakula . . . . . . . . . . 409,999,900 10.0 (119,000,000) 290,999,900 6.0Mr. Santisuk Klongchaiya . . . . . . . . . . . . . . 205,000,000 5.0 (59,500,000) 145,500,000 3.0

Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 — — 100 —Public Shareholders(1) . . . . . . . . . . . . . . . . . . — — 1,940,000,000 1,940,000,000 40.0

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,100,000,000 100.0 750,000,000 4,850,000,000 100.0

(1) None of the public shareholders will be a director or an executive officer of the Company or of Thai AirAsia immediately after theCombined Offering, nor will any such individual public shareholder be allocated in the Combined Offering more than 5.0% of the Sharesoutstanding immediately after completion of the Combined Offering.

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DESCRIPTION OF SHARES

Set forth below is certain general information relating to our Shares including brief summaries of certainprovisions of our Articles of Association, the PLCA and the SEC Act, all as currently in effect.

General

We are governed by our Articles of Association, the SEC Act and the provisions of the PLCA. We wereconverted from a private limited company into a public company limited on December 26, 2011.

Share Capital

As of March 31, 2012, our paid-up share capital prior to the Combined Offering was Baht 410,000,000,consisting of 4,100,000,000 Shares of Baht 0.10 par value each, while our registered share capital was Baht485,000,000, consisting of 4,850,000,000 Shares of Baht 0.10 par value each. All Issued Shares are fully paidand in registered form, and are recorded in our share register book maintained by the TSD.

Transfer of Shares

Under the PLCA, which applies to shares listed on the SET, a transfer of listed shares in scrip form is validbetween the transferor and the transferee by an endorsement on the back of the share certificate representing theshares transferred, execution by the transferor and the transferee, and the delivery of the endorsed certificate tothe purchaser. For a transfer to be valid against the issuer company, a request for an entry of the transfer into ashare register book must be received by the company (through the TSD as its registrar). To be valid against athird party the entry of the transfer must actually be made into the share register book.

See “Taxation — Thai Taxation” for a description of Thai stamp duty on transfers and “The Thai SecuritiesMarket” for a description of transfer procedures for trades on the SET.

Limitation on Foreign Ownership of Shares

Under the PLCA, we are not allowed to set up share transfer restrictions, unless the purpose of therestriction is to preserve our lawful rights and benefits or to maintain the ratio of shareholding between Thaishareholders and non-Thai shareholders.

Under our Articles of Association, no more than 0.1% of the total issued Shares in the Company may beheld by non-Thai shareholders.

The Foreign Business Act B.E. 2542 (1999) restricts foreigners from engaging in certain specified activities,including domestic air transportation. Domestic air transportation is considered a business related to Thainational security, and any foreigners engaging in domestic air transportation is required to obtain the permissionof the MOC and the prior approval of the Cabinet.

The Air Navigation Act B.E. 2497 (1954) and the Notification of Department of Air TransportationRegarding Qualification and Criteria for Consideration of Permission of an Air Operator dated July 2, 2008issued under the Announcement of the National Executive Council No. 58 requires that air service operations andapplicants of aircraft registrations which are a limited company or public company limited to (i) have no bearershares, (ii) have a board of directors which comprises a majority Thai nationals (iii) and have at least 51% of theshares belong to persons in one or more of the following categories:

• natural persons being of Thai nationality;

• ministries, public bodies and departments of the Government;

• limited companies or public companies limited of which ministries, public bodies or departments of theGovernment hold not less than 51% of the total number of shares;

• limited companies or public companies limited of which natural persons being of Thai nationality hold notless than 51% of the total number of shares;

• other juristic persons to be prescribed in any ministerial regulations.

Our Articles of Association do not provide sanctions for the transfer of Shares in violation of the limitationscontained in our Articles of Association, or a method for requiring the divestiture of such Shares. Nonetheless, ifa non-Thai person acquires Shares which results in the aggregate percentage of Shares owned by non-Thaipersons exceeding 0.1% of our issued Shares, there can be no assurance that such person will not lose the benefitof such investment (i.e. he will not be entitled to attend and vote at any shareholders’ meeting and/or receive anydividends) either because our registrar may refuse to register the ownership of such Shares or because divestment

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may be required by applicable Thai law and regulations. It is not always possible for a non-Thai person acquiringshares to know in advance whether the Shares being acquired will fall within legal limits and be eligible to beregistered in such person’s name.

Dividends

Annual dividends are recommended by our board of directors, and are subject to shareholders’ approval atthe annual general meeting of the shareholders. The board of directors by resolution may decide to pay to theshareholders such interim dividends as appear to the directors to be justified by our profits and as permitted underour articles of association. After such interim dividends have been paid, such dividend payment shall be reportedto the shareholders at the next shareholders meeting. Dividends (annual or interim) are distributed equally oneach outstanding Share. Dividends may be distributed either in cash or, if approved by the shareholders in ageneral meeting, in the form of shares. See “Dividend Policy” for a description of our dividend policy.

Pursuant to the PLCA, we cannot make any distribution of dividends otherwise than out of our net profit. Ifwe have an accumulated loss, we cannot pay any individuals even if we record a positive net profit for the year.In addition, in any year in which we have a net profit, we are required by the PLCA and by our Articles ofAssociation to set aside as a reserve an amount not less than 5% of our annual net profit less any accumulatedlosses carried forward until the total reserve is not less than 10% of our registered capital.

Any claim made against us with respect to the payment of dividends will be valid only within 10 years fromthe relevant payment date.

General Meetings of the Shareholders

Our board of directors is required to convene an annual general meeting of shareholders within four monthsfrom the last day of our fiscal year. Our board of directors may call an extraordinary general meeting wheneverthe board of directors deems it appropriate, and is required to call such a meeting upon the written request of theholders of 20% or more of our total issued Shares, or not less than 25 shareholders holding, in aggregate, not lessthan 10% of our total issued Shares. Notice of any general meeting must be given to all shareholders and theRegistrar, Department of Business Development, MOC at least seven days in advance. Publication of said noticemust be made for three consecutive days in a local newspaper not less than three days prior to the meeting.

A quorum for any shareholders’ meeting is constituted by the presence, either in person or by proxy, of notless than 25 shareholders or one half of the total number of shareholders, in either case holding in aggregate, notless than one-third of the total number of issued shares. If a quorum is not present within one hour, a generalmeeting shall be dissolved in the case where the meeting was requested by shareholders and in every other caseshall be adjourned to another date prior to which notice must be sent to shareholders at least seven days inadvance. A quorum is not required for the adjourned meeting to be properly constituted.

Our Articles of Association provide that at the annual general meetings of shareholders, shareholders shall:

• review the report of the board of directors regarding the operating results in the preceding year;

• consider and approve the Company’s financial statements and the auditor’s report for the past year;

• consider and approve profit allocation;

• consider and elect new directors in place of those who are retiring by rotation;

• fix the remuneration of directors;

• appoint and fix the remuneration of our auditor; and

• consider any other business.

Voting Rights

A shareholder is entitled to one vote per Share. A resolution can be adopted at a general meeting ofshareholders by a simple majority of the votes of the shareholders who attend the meeting and casting their votes,except, among others, in the following matters, which require at least three fourths of all shareholders present andentitled to vote:

• the sale or transfer of all or a substantial part of our business to other persons;

• the purchase by us or acceptance of transfer of the businesses of other companies to us;

• the making, amendment or termination of contracts relating to the leasing out of all or a substantial part ofour business, the assignment of any other persons to manage our business or the consolidation of thebusiness with other persons with an objective towards profit and loss sharing; and

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• the increase or reduction of registered capital, issuance of bonds, amalgamation with another company,

• the dissolution and the amendment of our Memorandum of Association and Articles of Association.

The removal of a director before his/her term requires a resolution of a general meeting of shareholders ofnot less than three fourths of all shareholders present and entitled to vote, holding Shares in aggregate of not lessthan one half of the total number of Shares present and entitled to vote.

In addition, to fix the remuneration of directors requires a resolution of a general meeting of shareholders ofnot less than two thirds of all votes present.

Issuance of Additional Shares

The PLCA provides that all or some of any new shares issued may, by a resolution of shareholders adoptedat a general meeting, be offered to existing shareholders in proportion to their respective shareholding or offeredto the public or other persons. Such resolution must be registered with the Registrar, Department of BusinessDevelopment, MOC. Every increase of the registered and paid-up share capital must be registered with the MOCand no share certificate can be issued without such prior registration. As of the date hereof, we have not adoptedany resolution of shareholders providing for pre-emptive rights to the existing shareholders.

Financial Statements

The PLCA provides that our board of directors must prepare a non-consolidated balance sheet and incomestatement annually, at the end of each fiscal year. The balance sheet and income statement must be certified bythe auditor and approved by the shareholders at the annual general meeting of shareholders. A copy of thebalance sheet, income statement, auditor’s report and the annual report of the board of directors, together with thenotice of the annual general meeting of shareholders, will be sent to all shareholders at their respective addressesas listed in the share register book.

In addition to the PLCA requirements set out above, as a SET-listed company and in compliance with theregulations of the Thai SEC, we will be required to prepare and submit to the SET and the Thai SEC annualaudited non-consolidated and consolidated financial statements within three months, as the case may be, from theend of each accounting year and quarterly reviewed non-consolidated and consolidated financial statementswithin 45 days from the end of each quarter.

Liquidation Rights

The PLCA provides that in the event of liquidation, the assets remaining after payment of all debts,liquidation expenses and taxes will be distributed among the shareholders in proportion to the number of sharesheld.

Acquisition by Us of Our Own Shares

Pursuant to the PLCA and our Articles of Association, we may not own our own shares, or take them inpledge, provided that:

• we may repurchase our Shares from dissenting shareholders who vote against a shareholders’ resolution ata shareholders’ meeting approving an amendment to our Articles of Association in respect of voting rightsand the right to receive dividends which such shareholders view to be unfair to them; or

• we may repurchase our Shares for financial management purposes when we have accumulated profits andexcess liquidity, provided that the share repurchase will not cause us financial difficulty.

In order for us to repurchase Shares, we must obtain approval from our shareholders. However, if the sharerepurchase is not more than 10% of the paid-up capital, our board of directors is authorized to approve such sharerepurchase without shareholder approval.

Shares purchased and held by our Company may not be counted towards forming a quorum for meeting ofour shareholders, and do not carry any voting rights or the right to receive any dividend. Under Thai law, we arerequired to sell these Shares within the period prescribed by the Share repurchase scheme but not exceeding threeyears from the completion of the share repurchase. If we fail to dispose of the Shares within this prescribedperiod, we are required to reduce our paid-up capital by writing off the unsold Shares.

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DESCRIPTION OF THE NVDR ISSUER AND THE NVDRS

The following is a summary of the terms and conditions of the NVDRs and of the NVDR Issuer. You shouldread the summary below together with the full terms and conditions of the NVDRs and the NVDR Issuerdescribed in “Annex A — Issuance of Non-Voting Depositary Receipts — Prospectus” to the OfferingMemorandum. We have neither prepared nor independently confirmed the statements in, and do not take anyresponsibility for the contents of, “Annex A — Issuance of Non-Voting Depositary Receipts — Prospectus”.

Investment in Thai companies or in certain Thai securities by “non-Thai persons” may be limited by theForeign Business Act B.E. 2542 (1999), by a Board of Investment Promotion certificate issued under theInvestment Promotion Act B.E. 2520 (1977), as amended, or by restrictions contained in a company’s articles ofassociation. Thai SEC regulations issued in August 2000 enabled the creation of a new class of securities in Thaicompanies, non-voting depository receipts, or “NVDRs”, that may be held by both Thai persons and non-Thaipersons. No person may hold NVDRs and shares in a Thai listed company that reaches or exceeds 25% of thetotal number of voting rights of such company.

The NVDRs are a SET-listed security issued by the Thai NVDR Company Limited, a wholly ownedsubsidiary of the SET, representing underlying shares registered in the name of Thai NVDR Company Limited,enabling non-Thais to receive the underlying economic benefits of shares that may otherwise only be held byThai persons. The Thai NVDR Company Limited may issue additional NVDRs from time to time upon receipt ofNVDR purchase orders from investors and after the purchase of the underlying shares.

Holders of NVDRs are not considered shareholders of the underlying issuer, and do not have any rights asshareholders of the underlying issuer. Thai NVDR Company Limited, as the shareholder of the underlying issuer,reserves the right to attend the meeting of the shareholders of the underlying issuer but shall not vote unless themeeting has been called specifically to consider delisting of the underlying securities. Where any person, on hisown or with his related person, acquires or disposes of the NVDRs and the underlying shares and thereby(treating each NVDR as the equivalent of one underlying share) increases or decreases the number of the sharesby any multiple of 5% of the total number of voting rights of such business, such person shall report to the ThaiNVDR Company Limited within three business days following the date of such acquisition or disposition.

A more detailed description of the Thai NVDR Company Limited and of the terms and conditions of theNVDRs are provided in Annex A — Issuance of Non-Voting Depositary Receipts — Prospectus, which youshould read. We have neither prepared nor independently confirmed the statements in, and do not take anyresponsibility for the contents of, “Annex A — Issuance of Non-Voting Depositary Receipts — Prospectus”.

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THE THAI SECURITIES MARKET

History

The first organized stock exchange in Thailand was formed as a limited partnership in 1962 which laterbecame a limited liability company and changed its name to the Bangkok Stock Exchange Co., Ltd in 1963.Approximately 35 securities were listed on the Bangkok Stock Exchange but trading remained low bycomparison with present volumes. Following a Government initiative in 1969, plans were drawn up for anofficial stock exchange, and in May 1974 the Securities Exchange of Thailand Act B.E. 2517 (1974) (the “SETAct”) was enacted, leading to the replacement of the Bangkok Stock Exchange with the Securities Exchange ofThailand. In January 1991, the Securities Exchange of Thailand was renamed the Stock Exchange of Thailand.The SET Act provided the basis for regulation of the primary and secondary securities markets in quotedsecurities in Thailand and placed responsibility for control of the SET with the Ministry of Finance.

Dealings at the SET commenced on April 30, 1975, with a total of 16 quoted securities. The SET Index wasalso established on this date. The SET Index was established to show the market price movement of the tradedsecurities. The SET Index includes all listed shares. It was set at 100 on the SET’s opening day. The SET Indexuses the most recent transacted price for a security when no transaction in that security occurs on a particular dayand is adjusted for new listings, de-listings and capitalization changes.

The SET is the principal stock exchange in Thailand. Public limited companies, state enterprises, juristicpersons established under special purpose legislation or investment projects having the appropriate qualificationsmay file applications with the SET to have their securities listed.

In February 1992, the National Legislative Assembly passed the Securities and Exchange Act B.E. 2535(1992), or the Thai SEC Act, which replaced the SET Act and came into force in May 1992. The Thai SEC Acthad provided for the establishment of the Securities and Exchange Commission, or the Thai SEC, andempowered it to introduce policies for the development and supervision of the securities markets and relatedactivities in Thailand. The PLCA, which came into force in June 1992, repealing the Public Limited CompaniesAct B.E. 2521 (1978), provides that only companies incorporated (or which have converted their incorporationstatus) under the PLCA are permitted to issue shares or other equity-linked securities to the public. A publicoffering of newly issued securities is permitted only where the issuer of such securities has received approvalfrom the Thai SEC to offer such securities and a registration statement in the prescribed form together with adraft prospectus submitted to the Thai SEC by the issuer of the securities have become effective.

While primary responsibility for the regulation of new securities issues has shifted to the Thai SEC, the SETcontinues to operate the stock exchange and is responsible for listing application approvals once the Thai SECregistration, prospectus and related requirements have been met for domestic offers.

In July 1992, the SET expanded its Securities Depository Centre, or SDC, by allowing, in addition tobrokers, local custodians, sub-brokers and any juristic person who is allowed to be an eligible depositor asstipulated by the SET to become members of the settlement system. At the same time, the SET introducedregulations to facilitate the establishment of the scripless trading system. In the past several years, due in part tothe economic situation in Thailand and Southeast Asia as well as the depreciation in the value of the Baht, theSET has experienced significant volatility. Between January 3, 1996 and December 27, 2002, the SET Index fellfrom 1,323.43 to 356.48, a decline of 73.1%. See “Risk Factors — Risks Relating to Our Shares — There arerisks associated with the trading and delivery of our Shares on the Stock Exchange of Thailand”; and “RiskFactors — Risks Relating to Our Shares — The Thai securities market is relatively small and may cause themarket price of our Shares to be more volatile” for a discussion of the risks relating to the trading and prices ofour Shares on the SET.

The Stock Exchange of Thailand

The SET is the principal stock exchange in Thailand and is organized as a non-profit entity, composed ofmembers which are securities companies. The SET is responsible, inter alia, for processing all listingapplications, for ensuring that disclosure requirements for listed companies are met and for monitoring all tradingactivities in respect of listed securities. TSD now acts as clearing house, securities depository, dividend payingagent, transfer agent, and registrar for the great majority of all listed Thai companies. As of December 31, 2011,the SET had 472 listed companies, a market capitalization of Baht 8,407.7 billion, and a daily average turnoverof Baht 28,854. million per day.

There are five separate boards on the SET on which trading takes place on computerized systems: the mainboard for regular trading of shares, preference shares, warrants, NVDRs, investment units and investment units ofThai Trust Funds; the odd-lot board for dealings in odd lots; the special board for the trading of governmentbonds debentures and convertible bonds; the big lot board for dealings in large lots of securities and the foreign

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board for trading in foreign registered shares which are available to be registered in the name of non-Thainationals. The SET established the “foreign board” on the exchange in September 1987 for dealings only insecurities registered in the name of non-Thai persons. Trading in this foreign board has so far been sporadicalthough on occasions the volumes traded have been material in relation to those traded on the “main” (or“domestic”) board. The prices at which shares have been dealt on the foreign board have at times been at apremium to those then being quoted on the main board.

Shares are traded in one board lot (100 shares) or multiples of board lots except that, in the case of sharesfor which the closing price on each trading day has been in excess of Baht 500 for six consecutive months, theSET may consider changing the board lot to 50 shares. Trading hours are divided into two sessions. In the firstsession, trading commences between 9.55 a.m. and 10.00 a.m. and ceases at 12.30 p.m., and in the second sessiontrading commences at any time from 2.25 p.m. to 2.30 p.m. and ceases between 4.35 p.m. and 4.40 p.m., exceptthat trading on the odd-lot board ceases at 4.30 p.m. Trading days are Monday through Friday, except for Thaipublic holidays and holidays as prescribed by the SET in each year.

The SET requires that bid and offer quotations for shares or NVDRs be within prescribed spreads,depending on the market price per share or NVDR and in accordance with a table of values. Subject to certainexceptions, the SET also limits upward and downward price movements for shares or NVDRs during a tradingsession to 30% of the previous business day’s closing price.

From January 1, 2010 to December 31, 2011, brokers are permitted to charge brokerage or agent’s fees forshare or NVDR trades from their customers other than those who are non-member securities companies at thefollowing rates of the trade value per day:

Trade Value per Day Rate

Not exceeding Baht 5,000,000 Not less than 0.25% and not exceeding 1%

More than Baht 5,000,000 but not exceeding Baht 10,000,000 Not less than 0.22% and not exceeding 1%

More than Baht 10,000,000 but not exceeding Baht 20,000,000 Not less than 0.18% and not exceeding 1%

Exceeding Baht 20,000,000 At the rate as agreed with the customers andnot exceeding 1%

From January 1, 2010 to December 31, 2011, the following rates of the trade value per day shall be appliedin the event that shares or NVDRs are traded through the Internet:

Trade Value per Day

Rate

Cash Balance Account or Credit BalanceAccount Other Accounts

Not exceeding Baht 5,000,000 Not less than 0.15% and notexceeding 1%

Not less than 0.20% and notexceeding 1%

More than Baht 5,000,000 but notexceeding Baht 10,000,000

Not less than 0.13% and notexceeding 1%

Not less than 0.18% and notexceeding 1%

More than Baht 10,000,000 but notexceeding Baht 20,000,000

Not less than 0.11% and notexceeding 1%

Not less than 0.15% and notexceeding 1%

Exceeding Baht 20,000,000 At the rate as agreed with thecustomers and not exceeding 1%

From January 1, 2012 onwards brokers are permitted to charge brokerage or agent’s fees at the rate asagreed with their customers.

Under the disclosure regulations of the SET, listed companies are required to report the following, amongother things, to the Thai SEC and the SET for public disclosure:

• corporate resolution or other event which will have a material effect on the rights of a company’sshareholders or that might materially affect the value of the shares or the benefit of the shareholders; inprinciple, such events are required to be reported on the day such an event occurs or on the next tradingday at least one hour before the commencement of trading;

• audited annual financial statements for each accounting period, conforming to prescribed disclosurestandards, which must be filed within three months of the end of the relevant accounting period;

• annual registration form (Form 56-1), which must be filed within three months of the end of the relevantaccounting period;

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• an annual report, which must be filed within 120 days of the end of the relevant accounting period; and

• quarterly unaudited financial statements reviewed by a licensed auditor, which must be filed within45 days of the end of each quarter.

Thailand Securities Depository Company Limited

In November 1994, the SET established a private limited company, Thailand Securities Depository Co.,Ltd., or TSD, pursuant to the Thai SEC Act to undertake four main functions: registrar, securities depositorycentre, clearing house and broker operation services. Since the commencement of its operations in January 1995,TSD operates a clearing and settlement system for scripless shares of Thai public companies. The TSD is 99.9%owned by the SET and has a registered capital of Baht 200.0 million. Under the Thai SEC Act, TSD may operatewithout a license from the Thai SEC as long as the SET owns a minimum of 75% of the total shares of TSD. Thefollowing persons may become members of TSD: (1) securities companies; (2) commercial banks; (3) financecompanies; (4) life or non-life insurance companies; (5) financial institutions established by specified legislation;and (6) other persons as prescribed by the SET.

Short Selling

The Thai SEC issued a new notification in August 2009 (effective from September 2009) allowing securitiescompanies to conduct short selling activities, either for their own account or for the account of their customers.Before undertaking short selling for its own account, a securities company is required to procure its source forborrowing securities so that it is able to deliver the securities pursuant to the short selling transaction in the timeperiod prescribed by clearing house, TSD or as agreed between the parties.

In case of short selling to the order of a customer, a securities company is required to ensure the availabilityof securities or the availability of a source of securities for the purpose of lending those securities to thecustomer, except where a customer has shown that it has already borrowed the securities and is able to deliver thesecurities for the settlement purpose pursuant to the short selling transaction within the time prescribed by theclearing house, TSD or as agreed between the parties. Under the SET notification issued in January 2001 andamended in 2010, a securities company which is a member of the SET may carry out short selling only withrespect to securities specified by the SET. This is however not the case where a securities company is shortselling securities for which it is allowed to be a market maker.

Securities Lending and Borrowing

The Thai SEC issued notifications allowing a person wanting to conduct the business of securities lendingand borrowing to apply for a license from the Minister of Finance through the Thai SEC.

In the borrowing or lending of securities, both the licensed securities borrower and securities lender arerequired, among other things to prescribe the procedures for accepting the customers, arrange for having riskmanagement system and arrange for a securities lending agreement to be executed. Pursuant to Thai SECregulations, the securities borrower may be required to provide security, to the lender thereof. The security maybe given which includes, among other things, in the form of cash, treasury bills, Government bonds, bonds of theBOT, listed securities, units of daily redemption fund or other instruments specified by the Thai SEC.

Market Making

Market makers are responsible for creating liquidity in securities listed on the SET. The SET, pursuant to itsnotification issued in April 2010, as amended which replaced the previous notification, allows a member of theSET to be registered as a market maker for the securities that it is registered for. A non-SET member certified bya SET member can also be registered as a market maker for certain specified securities if it qualifies under thenotification. The SET notification also clarifies the duties and function of the market maker.

MAI

In June 1999, the SET established, with the Thai SEC’s approval, the Market for Alternative Investmentrenamed as MAI, to facilitate access to capital markets by small and medium-sized enterprises, or SMEs. TheMAI’s principal objectives include providing alternative financing for, and encouraging venture capitalinvestment in, SMEs, facilitating debt restructuring by enabling creditors to sell securities received in debt-equityconversions, and providing additional investment alternatives to public investors. We are not listed, and do notintend to list, on the MAI. As of December 31, 2011, the MAI had 70 listed companies, a market capitalization ofBaht 66 billion and a year-to-date average turnover of Baht 658 million per day.

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Independent Directors and Audit Committee Requirements

In 2008, the Thai SEC issued regulations requiring all companies applying for a public offering with theThai SEC to ensure at least one third of the Board is composed of independent directors, with the necessaryqualifications required by the regulations, and in any case, the number of the independent directors shall not beless than three.

In January 1998, the SET issued regulations requiring all public companies whose shares are listed on theSET to set up an audit committee. In addition, in October 2003, the Thai SEC issued similar regulations forcompanies that apply for a public offering with the Thai SEC. The audit committee must include not less thanthree independent directors appointed by the shareholders or by the board of directors in accordance with therules of the SET and the Thai SEC. The SET and the Thai SEC both require at least one member of the auditcommittee to have sufficient knowledge and experience to review the reliability of the financial statements.

The SET and the Thai SEC specifically require the audit committee to carry out the following duties:

• to review the company’s financial reporting process to ensure that it is accurate and adequate;

• to review the company’s internal control system and internal audit system to ensure that they are suitableand efficient, to determine an internal audit unit’s independence, as well as to approve the appointment,transfer and dismissal of the chief of an internal audit unit or any other unit in charge of an internal audit;

• to review the company’s compliance with the law on securities and exchange, the regulations of the SET,and the laws relating to the company’s business;

• to consider, select and nominate an independent person to be the company’s auditor, and to propose suchperson’s remuneration, as well as to attend a non-management meeting with an auditor at least once ayear;

• to review the connected transactions, or the transactions that may lead to conflicts of interest, to ensurethat they are in compliance with the laws and the regulations of the SET, and are reasonable and for thehighest benefit of the company;

• to prepare, and to disclose in the company’s annual report, an audit committee’s report which must besigned by the Chairman of the audit committee and consist of at least the following information:

(a) an opinion on the accuracy, completeness and credibility of the company’s financial report;

(b) an opinion on the adequacy of the company’s internal control system;

(c) an opinion on the compliance with the law on securities and exchange, the regulations of theSET, or the laws relating to the company’s business;

(d) an opinion on the suitability of an auditor;

(e) an opinion on the transactions that may lead to conflicts of interests;

(f) the number of the audit committee meetings, and the attendance at such meetings by eachcommittee member;

(g) an opinion or overview of comments received by the audit committee from its performance ofduties in accordance with the charter; and

(h) other transactions which, according to the audit committee’s opinion, should be known to theshareholders and general investors, subject to the scope of duties and responsibilities assigned by theCompany’s board of directors.

• to perform any other act as assigned by the company’s board of directors, with the approval of the auditcommittee.

Thai SEC Reporting and Tender Offer Requirements

Under the Thai SEC Act, the Thai SEC and the Capital Market Supervisory Board notifications issuedthereunder, an acquisition or disposition of shares or convertible securities of a listed company (either on his ownor acting in concert with others) such that the holder now holds any multiple of 5% of the total number of votingrights of such company must be reported to the Thai SEC. Notwithstanding the above, a disposition ofconvertible securities in a listed company is not required to be reported to the Thai SEC.

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A mandatory tender offer must be made when a person (either on his own or acting in concert with others)acquires shares in a listed company resulting in such person holding shares which are equal to or in excess of thefollowing threshold amounts:

• 25% of the total number of voting rights of such company;

• 50% of the total number of voting rights of such company; or

• 75% of the total number of voting rights of such company.

In the case where a listed company buys back its own shares, a mandatory tender offer is also required to bemade if a person acquires any additional shares in the company resulting in such person’s shareholding becomingequal to or in excess of the foregoing thresholds.

In addition, a mandatory bid is required to be made if a person (either on his own or acting in concert withothers) acquires significant controlling power in a juristic person that is an existing shareholder of a listedcompany (“chain principle”), regardless of whether such controlling power is direct or indirect throughshareholding or control in any juristic persons down through the juristic person that is the existing shareholder ofthe listed company.

However, a mandatory bid is exempted in any of the following circumstances:

(a) where shares are acquired by inheritance or from the exercise of rights to purchase shares or ofconversion rights attaching to convertible securities acquired by inheritance;

(b) where the acquisition of shares takes place following a stock dividend or the exercise ofpre-emptive rights to purchase new shares in proportion to the number of existing shares already held(“rights offering”);

(c) where shares are acquired in the course of a separate tender offer for all of the securities of thecompany or from the exercise of rights to purchase shares or conversion rights attaching to convertiblesecurities acquired in the course of a separate tender offer for all of the securities of the company, inaccordance with the relevant Thai SEC notifications;

(d) the acquisition of shares by the following persons who, according to relevant regulations, do notnormally exercise voting rights at a shareholders’ meeting of a listed company: (i) the Thai Trust Fund(which is a passive open-ended mutual fund established and managed by Thai Trust Fund ManagementCompany Limited, 99.0% of whose shares are controlled by the SET); and (ii) Thai NVDR CompanyLimited, as a result of its sale of non-voting depository receipts;

(e) where the acquirer reduces his shareholding or controlling power, in a manner prescribed by thenotifications of the Thai SEC;

(f) where the Thai SEC has granted approval for a partial tender offer; and

(g) where a waiver is obtained from the Thai SEC or from the Thai Takeover Panel in one of thefollowing circumstances:

(i) a waiver of the mandatory tender offer may be obtained from the Thai SEC in the followingcases:

• the acquisition of shares triggering the mandatory bid obligation causes no change in thecontrol of the company;

• the acquisition was made with a purpose of assisting or rehabilitating the company;

• the acquisition of new shares and the shareholders’ meeting approves the issue of suchshares to such person without need to make the tender offer for all securities of thecompany (whitewash), in accordance with criteria prescribed by the Thai SEC;

• the acquisition in a circumstance where the Takeover Panel has established a precedent;and

• in any other circumstances in which the Thai SEC deems necessary and otherwiseappropriate;

(ii) a waiver of the mandatory tender offer may be obtained from the Takeover Panel in thefollowing cases:

• the acquisition of significant controlling power over a juristic person which is ashareholder of a listed company (“chain principle”) without an intention to take oversuch listed company; and

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• in any other circumstances where the Thai SEC deems a waiver should be considered bythe Takeover Panel.

Foreign Ownership

The Thai Government has generally allowed foreign investment, but on a controlled basis in certain sectorsof the economy. Investment in Thai companies or in certain Thai securities by “non-Thai persons” (as defined inrelevant laws or in a company’s articles of association) may be limited by the Foreign Business Act B.E. 2542(1999), by a Board of Investment Promotion Certificate issued under the Investment Promotion Act B.E. 2520(1977), as amended, or by restrictions contained in a company’s articles of association. The articles ofassociation of many Thai companies, including us, contain such restrictions. See “Description of Shares —Limitation on Foreign Ownership of Shares”. The TSD, as our registrar, may refuse to register transfers of Sharesto a non-Thai person, or divestment may otherwise be required, if as a result of such transfer the percentage ofissued and outstanding Shares registered in the name of non-Thai persons would exceed the then applicablelimitation on foreign ownership of the Shares. Ownership of the Shares by non-Thai persons as such is nototherwise restricted by Thai law.

Where a foreign person acquires shares that would exceed the applicable limit, the investor is exposed to therisk of losing the benefit of such investment because ownership may not be registered in such foreign person’sname. See “Risk Factors — Risks Relating to the Shares — The Company is subject to foreign ownershiprestrictions” for details.

It is not always possible for a foreign purchaser of Thai securities (that are subject to such limits) to know inadvance whether shares purchased by him will fall within the limits and be eligible to be registered in his name,or whether the company or the TSD, as share registrar, will have to decline to effect registration of the transfer. Itis a criminal offense in Thailand for a Thai national to hold shares as a nominee for a foreign person if it is doneto avoid any applicable maximum limit on foreign ownership imposed by Thai law.

Settlement

General

All settlement and clearance of transactions effected on the SET must be handled by the TSD on the thirdbusiness day following the day of the contract date. The TSD offsets sales and purchases of each member andonly the net balance of securities and cash delivered or received by the member through the TSD is credited.

Shares in Certificated Form

As between sellers and their brokers, sellers must deliver the relevant share certificates duly endorsed totheir brokers by no later than midday on the next business day following the date of the contract subject to theinternal regulation of the brokers. The respective brokers for the seller and buyer receive the payment or, as thecase may be, the securities certificates on or before the third business day after the contract date. On or before thefourth business day after the contract date, the broker for the seller must deliver the duly endorsed securitiescertificates to or for the order of the buyer. Delivery is made in the form of certificate(s) or certificate receipt(s).The latter is an acknowledgment by the registrar for the shares in question that the shares are in the course ofregistration and must be exchanged for share certificates before the new owner can have them registered in hisname.

Shares in Scripless Form

In July 1992, the SET introduced regulations to facilitate the establishment of a scripless trading system.Under this scripless system, a member broker, sub-broker or local custodian may deposit certificates in respect ofsecurities with the TSD. Any person becoming a TSD participant is required to open at least one account with theTSD for the deposit, withdrawal or transfer of securities. After the TSD has accepted a deposit of securities, itwill hold such securities on behalf of its participants or its participants’ clients. In addition, each TSD participantis obliged to maintain a list of owners of the securities deposited with it for establishing ownership rights to thesecurities and any other shareholder rights. Sales and purchases of securities are settled by off-setting the relevantsecurities deposit accounts via computers and at the end of each trading day the TSD delivers a statementshowing the balance of securities held for each participant.

Transfer of Shares

Transfers of listed shares, whether effected on or off the SET are governed by the PLCA, and the Thai SECAct. Under the PLCA, and the Thai SEC Act, a transfer of listed shares in certificated form is valid as between

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the transferor and the transferee by an endorsement on the back of a share certificate representing the sharestransferred, execution by the transferor and the transferee, and the delivery of the endorsed certificate to thepurchaser or his broker. To be valid as against the company, a request for an entry of the transfer into a shareregister must be received by the company; and to be valid against a third party, the entry of the transfer mustactually be made into the share register.

Under the Thai SEC Act, transfers of scripless shares are made by way of appropriate instruction to therelevant brokers, sub-brokers or custodians with whom the transferor and the transferee involved maintainsecurities accounts in accordance with individual arrangements with such brokers, sub-brokers or custodians.Upon receipt of such instructions, the relevant brokers, sub-brokers or custodians will, in accordance with sucharrangements, effect the relevant changes in the list of owners of the securities they are required to maintain forrights and entitlement purposes.

Share Transfer Registration

A public listed company (or TSD if acting as its registrar) must record in the share register the transfer of itsshares within 14 days of receipt of a written request for an entry of the transfer. If the transferee requires a newshare certificate, the company (or TSD if acting as its registrar) must issue a new share certificate to thetransferee within one month from the date that the transferee delivers to it the request, duly signed by thetransferee (with at least one witness signing in attestation to the signature), and the previous share certificate orother relevant evidence must be properly returned by the transferee. In such cases, the company must record thetransfer in the share register within seven days of receipt of a written request for an entry of transfer.

Listing of Newly Issued Shares

Although a company whose shares are listed on the SET is required to maintain a listing on the SET for allits issued shares of that class, it must make a separate application for the listing of new shares of that class whenthey are issued. The SEC is entitled to consider a listing application for up to seven days from the date ofsubmission of the completed listing application. Unless and until listing approval is given and listing has becomeeffective, the shares may not be dealt in on the SET but purchasers and sellers may be matched through brokersin off-exchange transactions.

Internet Trading

In January 2000, the SET allowed the trading of securities through the Internet. A member broker wishing tooffer Internet trading services is required to apply for permission from the SET and the broker’s computer andsecurity systems must meet the regulations of the SET.

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TAXATION

The discussion below is not intended to constitute a complete analysis of all tax consequences relating to theownership of our Shares. Prospective purchasers of our Shares should consult their own tax advisors concerningthe tax consequences of their particular situations. This description is based on laws, regulations andinterpretations as now in effect and available as of the date of this Offering Memorandum. The laws, regulationsand interpretations, however, may change at any time, and any change could be retroactive to the date ofissuance of the Shares. These laws and regulations are also subject to various interpretations and the relevanttax authorities or the courts could later disagree with the explanations or conclusions set out below.

Thai Taxation

This summary contains a description of the principal Thai income tax consequences of the purchase,ownership and disposition of ordinary shares by an individual or corporate investor who is not resident inThailand for tax purposes (referred to herein as “non-resident individual holders” and “non-resident corporateholders”, respectively, and together as “non-resident holders”). It does not purport to be a comprehensivedescription of all of the tax considerations that may be relevant to a decision to purchase ordinary shares. Thesummary is based upon the tax laws of Thailand in effect on the date of this Offering Memorandum.

PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN PROFESSIONAL ADVISORSCONCERNING THE ACQUISITION, OWNERSHIP AND DISPOSITION OF ORDINARY SHARES,INCLUDING THE CONSEQUENCES UNDER THAI LAW, THE LAWS OF THE JURISDICTION OFWHICH THEY ARE RESIDENT AND ANY TAX TREATY BETWEEN THAILAND AND THEIRCOUNTRY OF RESIDENCE FOR TAX PURPOSES.

In general, the registered owner of ordinary shares will be treated as the owner of such ordinary shares forThai tax purposes. In the case of ordinary shares that settle through the TSD’s scripless system, the holder whosename appears on the list of owners with respect to the ordinary shares maintained by each TSD-member broker,sub-broker, or custodian will be treated as the owner for Thai tax purposes. See “The Thai Securities Market —Settlement”.

Taxation of Dividends

Dividends in respect of ordinary shares are generally subject to Thai withholding tax at a rate of 10%,whether paid to non-resident corporate investors or to non-resident individual investors.

Taxation of Capital Gains

Gains realized by a non-resident corporate holder from the sale or other disposition of ordinary sharesoutside Thailand in connection with which payment is made neither from nor within Thailand and neither thepurchaser nor the seller reside or do business in Thailand, are not subject to Thai tax. A non-resident corporateholder will be subject to a withholding tax of 15% on gains realized on any sale or other disposition of ordinaryshares in Thailand (including a sale through the SET) unless such holder is entitled to an exemption under anapplicable tax treaty.

Gains realized by a non-resident individual holder from the sale or other disposition of ordinary sharesoutside Thailand in connection with which payment is made neither from nor within Thailand and neither thepurchaser nor the seller resides or does business in Thailand, are not subject to Thai tax. Gains realized by anon-resident individual holder on a sale of ordinary shares through the SET are exempt from Thai income tax.Unless exempt under an applicable tax treaty, gains realized by a non-resident individual holder from a sale orother disposition of ordinary shares made otherwise than through the SET and in which payment is made from orwithin Thailand is subject to Thai income tax at a rate of 15%. Any such tax withheld is creditable against theThai personal income tax.

In the foregoing cases, where withholding tax applies, the purchaser of such ordinary shares (or in the caseof a sale through the SET, the broker executing such sale on behalf of the purchaser) is required under Thai lawto withhold the applicable amount of Thai withholding tax from the sales price and make payment thereof to therelevant Thai tax authority.

Personal Income Tax

Non-resident individual holders are required under certain circumstances to file a Thai personal income taxreturn and may be subject to Thai personal income tax at marginal rates between 5% and 37% on income earnedin Thailand, including any cash dividends and other distributions paid by us and any gains on sale or otherdispositions of the ordinary shares realized during any calendar year. Tax withheld by us in respect of such

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dividends and other distributions, and by purchasers in respect of any such gains, may be credited against anyThai personal income tax payable at year end by such non-resident individual holders, who may be entitled to arefund with respect to such taxes withheld.

Tax Treaties

Each non-resident holder should inquire for himself or herself whether he or she is entitled to the benefit ofa tax treaty between Thailand and his or her resident country. Where an applicable tax treaty so provides, anyotherwise taxable gain on the sale or other disposition of ordinary shares may be exempt from or subject toreduced Thai withholding tax. Thailand currently has tax treaties for the avoidance of double taxation within thefollowing countries: Armenia, Australia, Austria, Bahrain, Bangladesh, Belgium, Republic of Bulgaria, Canada,Chile, China, Republic of Cyprus, Czech Republic, Denmark, Finland, France, Germany, Hong Kong, Hungary,India, Indonesia, Israel, Italy, Japan, Republic of Korea, Kuwait, Laos, Luxembourg, Malaysia, Republic ofMauritius, Myanmar, Nepal, The Netherlands, New Zealand, Norway, Oman, Pakistan, the Philippines, Poland,Romania, Russia, Seychelles, Singapore, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland,Republic of Turkey, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan and Vietnam.

Stamp Duty

Generally, a stamp duty of Baht 1 per every Baht 1,000 (or a fraction thereof) of the greater of the paid-upvalue of shares and the selling price of the shares is payable within 15 days from the date of execution of a sharetransfer instrument, or within 30 days from the date the share transfer instrument is brought into Thailand ifexecuted outside Thailand. No stamp duty is payable on a transfer of listed securities where TSD, as a personappointed by the SET, is acting as a registrar of such securities.

NVDRs

For a summary of the Thai tax considerations for non-resident investors with respect to the NVDRs, see“Annex A — Issuance of Non-Voting Depositary Receipts — Prospectus — Part 6 Thai Taxation Considerationsfor Non-Resident Investors”.

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THAI FOREIGN EXCHANGE REGULATIONS

Thai foreign exchange controls are administered by the BOT on behalf of the Ministry of Finance, pursuantto the Exchange Control Act B.E. 2485 (1942), as amended. The BOT has granted commercial banks and certainother entities the authority to conduct foreign exchange transactions as authorized agents of the BOT. The BOTinstituted measures in 1998 to restrict certain foreign exchange related transactions by domestic financialinstitutions with non-residents of Thailand and to safeguard against instability and speculation in the domesticcurrency market. However, the easing of exchange controls may be granted from time to time as the BOTconsiders appropriate to the financial circumstance. These measures, which were amended on February 29, 2008,among other things, (i) limit the value of foreign exchange related transactions for underlying trade or investmentactivities in Thailand not exceeding the actual value of the underlying trade or investment activity and, fortransactions without any underlying trade or investment activity in Thailand, not exceeding Baht 300 million orBaht 10 million, depending on the type of transaction, per non-resident and its related parties as a group; and(ii) regulate direct loans granted to non-residents.

The inward remittance of money into Thailand for investment in securities does not require registration withthe exchange control authorities. On February 4, 2008, the BOT issued significant relevant Notifications of theCompetent Officer on Rules and Practices Regarding Currency Exchange No. 15 and the Notification of theCompetent Officer on Rules and Practices Regarding Currency Exchange No. 20 on October 5, 2010(collectively, the “Notifications”) which amended the criteria for depositing foreign currency into a foreigncurrency account. The Notifications required that any person (excluding non-residents, short-term foreignresidents, foreign embassy staff, persons with diplomatic immunity and staff of certain internationalorganizations) bringing foreign currency into Thailand must, within 360 days, either (i) sell such foreigncurrency to an authorized agent or (ii) deposit it into a foreign currency account opened with a commercial bankin Thailand for which a specified form must be submitted to such authorized agent if the amount sold ordeposited is at least US$50,000 (or its equivalent).

The Notifications also provide that a person depositing foreign currency must prove one of the following toan authorized agency:

(a) the deposit originated abroad, in which case the depositor may deposit an unlimited amount offoreign currency as requested into the foreign currency account, except where the Competent Officer setsthe amount;

(b) the deposit is purchased, exchanged or borrowed from an authorized agency by a Thai resident and:

(i) if the depositor can prove that he will be subject to an obligation to pay those foreign currencyfunds outside Thailand or to an authorized agency, the depositor may deposit the foreign currencyamounts in the foreign currency account. However, the amount deposited must not exceed the paymentobligation, and the daily balance of the foreign currency deposited in all accounts held by that depositormust not exceed US$1,000,000 or its equivalent for an individual, or US$100,000,000 or its equivalentfor a legal entity;

(ii) if the amount deposited exceeds the amount specified in (i), the depositor must prove that hewill be required to pay those foreign currency funds outside Thailand or to an authorized agency within12 months from the date of deposit, in which case, the amount deposited must not exceed the paymentobligation; or

(iii) if the depositor cannot prove it has a payment obligation, the deposit must be placed in aseparate account, and the daily balance of foreign currency in all accounts held by that depositor mustnot exceed US$100,000 or its equivalent for an individual, or US$300,000 or its equivalent for a legalentity; or

(c) the depositor (except for certain persons, including government organizations and Thai state-ownedenterprises) is a person who does not have a foreign exchange license, the depositor may deposit not morethan US$10,000 or its equivalent in cash per day into the foreign currency account.

The outward remittance from Thailand of dividends or the proceeds of sale (including capital gain) from thetransfer of shares after payment of the applicable Thai taxes, if any, may be made without the requirement to filea specified form to the relevant authorized agent if the amount is less than US$50,000 or the equivalent amountin relevant currency per remittance. Because the BOT has a policy not to allow any person to bring Baht currencyout of Thailand, dividends paid to a non-resident must be converted into foreign currency prior to the outwardremittance from Thailand. If the amount is at least US$50,000 or its equivalent in the relevant currency, aspecified form must be submitted to the authorized commercial bank together with documents or evidence as tothe particular transaction (such as evidence of the disposal of shares).

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Export of share certificates or other securities certificates from Thailand does not require prior approvalfrom an exchange control officer appointed by the BOT. The exporter may either dispatch the certificates by mailor carry them when travelling abroad.

On February 29, 2008, the BOT issued Notification of the Competent Officer on Rules and PracticesRegarding Currency Exchange No. 17, which establishes the criteria for the withdrawal and deposit of the Bahtinto (i) non-resident Baht accounts for securities, for example, for the purpose of investing in equity instruments,debt instruments and units (“NRBS”), and (ii) non-resident Baht accounts for other purposes, including aninvestment in at least 10.0% or more of the total share capital of companies in Thailand.

Further to the Notification of the Competent Officer on Rules and Practices Regarding Currency ExchangeNo. 17 above, the BOT has also issued the Rules and Practices on the Measures to Prevent Thai Baht Speculationdated February 29, 2008. The measures establish rules and practices for domestic financial institutions toundertake transactions involving Baht with non-residents in order to reduce volatility of the Baht resulting fromspeculative activities or from non-residents’ financial transactions without underlying trade or investment inThailand. One of the measures relates to non-resident Baht accounts and non-resident Baht accounts forsecurities. Where a non-resident wishes to open an NRBS, such account is to be a current or savings accountonly, and the financial institution is required to monitor the outstanding balances of all NRBSs at the end of eachday to ensure that such accounts do not exceed the limit of Baht 300.0 million per non-resident. Such limitationincludes balances of all NRBSs opened by each non-resident with all financial institutions in Thailand, except forthose approved by the BOT on a case-by-case basis.

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PLAN OF DISTRIBUTION

We, the Selling Shareholders and the International Managers have entered into a purchase agreement datedMay 22, 2012 (the “International Purchase Agreement”) pursuant to which we have agreed to sell, and theInternational Managers have agreed to purchase or to procure purchasers for, subject to certain conditions, thenumber of New Shares (represented by Non-Voting Depositary Receipts (“NVDRs” and, together with theShares, the “Securities”)) in the International Offering indicated in the following table.

International Manager Number of Shares/NVDRs

Credit Suisse (Singapore) Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266,667,000

CIMB Bank (L) Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133,333,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000,000

The International Managers have agreed to purchase all of the Securities sold under the InternationalPurchase Agreement if any of these Securities are not purchased. The International Managers are offering theSecurities when, as and if issued to and accepted by them, subject to the validity of the Securities and otherconditions contained in the International Purchase Agreement, such as the receipt by the International Managersof certificates from each of the Selling Shareholders and legal opinions. The International Managers reserve theright to withdraw, cancel or modify such offers and to reject orders in whole or in part.

Investors in the International Offer will be required to purchase and receive NVDRs in lieu of Shares. See“Annex A — Issuance of Non-Voting Depositary Receipts — Prospectus”, “Special Note Regarding NVDRs”,and “Risk Factors — Risks Relating to the NVDRs” for further information concerning the NVDRs.

We and the Selling Shareholders have agreed to indemnify the International Managers against certainliabilities.

Underwriting Commission

The International Managers have agreed to purchase and/or procure the purchase of the Securities under theInternational Purchase Agreement at a purchase price equal to the Offer Price of the NVDRs/Shares set forth onthe cover page of this Offering Memorandum. We will pay or allow the each of the International Managers anunderwriting commission of 1.0% of the Offer Price for each of the Securities that International Managerpurchases or procures purchasers for under the International Purchase Agreement.

General

Purchasers of Securities sold by the International Managers may be required to pay stamp taxes and/or othercharges in accordance with the laws and practice of the country of purchase.

Investors in the International Offer will be required to pay to the International Managers, in addition to theOffer Price, a brokerage fee equal to 1.0% of the purchase price of the Securities at the time of settlement.

Domestic Offer

We and the Selling Shareholders have also entered into an underwriting agreement (the “Thai UnderwritingAgreement”) with the Thai underwriters, for whom CIMB Securities (Thailand) Co., Ltd. and ThanachartSecurities Public Company Limited are acting as the Joint Thai Lead Underwriters, for the sale of the shares inThailand. Subject to the terms and conditions in the Thai Underwriting Agreement, and concurrently with thesale of 400,000,000 shares to the International Managers pursuant to the International Purchase Agreement, weand the Selling Shareholders have agreed to appoint the Thai underwriters to procure subscribers for, and theThai underwriters severally have agreed to procure subscribers for, or failing which to subscribe for, 812,500,000shares from us and the Selling Shareholders. The closing of the International Offer is conditional upon theclosing of the Domestic Offer and vice versa.

Securities Are Not Being Registered under the U.S. Securities Act

The International Managers, directly or through their investees, propose to offer the Securities for resale intransactions not requiring registration under the U.S. Securities Act or applicable state securities laws, in salespursuant to Regulation S under the U.S. Securities Act or pursuant to another available exemption from theregistration requirements of the U.S. Securities Act. Specifically, none of the International Managers will offer orsell the Securities except outside the United States in offshore transactions in reliance on Regulation S under theU.S. Securities Act or pursuant to another available exemption from the registration requirements of theU.S. Securities Act.

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In addition, until the expiration of 40 days after the later of the commencement of the International Offerand the end of the subscription period, an offer or sale of the Securities within the United States by any broker-dealer (whether or not it is participating in the International Offer) may violate the registration requirements ofthe U.S. Securities Act if such offer or sale is made otherwise than pursuant to another exemption under theU.S. Securities Act.

Securities sold pursuant to Regulation S may not be offered or resold within the United States (as defined inRegulation S) except under an exemption from the registration requirements of the U.S. Securities Act or under aregistration statement declared effective under the U.S. Securities Act.

Each purchaser of the Securities will be deemed to have made the representations, agreements andacknowledgments as described under the “Transfer Restrictions” section of this Offering Memorandum.

Lock-up

We and each of the Selling Shareholders have agreed with the International Managers that for a period of180 days following the closing date of the Primary Offering, we and each Selling Shareholder will not, withoutthe prior written consent of the International Managers:

(i) issue, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any optionor contract to sell, grant any option, right or warrant to purchase, lend, hypothecate or encumber orotherwise transfer or dispose of any Shares or any securities convertible into or exercisable or exchangeablefor or repayable with Shares or that carry rights to subscribe for or purchase Shares (collectively, “Lock-UpShares”);

(ii) enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of theeconomic consequences of ownership of the Lock-Up Shares whether any transaction described in (i) or (ii)is to be settled by delivery of Shares or other securities, in cash or otherwise;

(iii) deposit any Shares or any securities convertible into or exchangeable for or that carry rights tosubscribe for or purchase Shares in any depositary receipt facilities; or

(iv) publicly disclose any intention to do any of the above.

The restrictions set forth above do not apply to the sale of the Vendor Tranche B Shares by the SellingShareholders and the settlement of all amounts relating to the call option shares granted under the Credit SuisseLoan Agreement.

Delivery of Securities

Payment for the Securities is expected to be made on or about May 29, 2012. We are required to register theincrease in our paid-in registered capital with the Ministry of Commerce before we are permitted to issue anddeliver the Shares. NVDRs will not be issued and delivered until we have first delivered the underlying Shares tothe NVDR Issuer following such registration. There is uncertainty under Thai law as to the status of purchasersof Securities in the period between payment for such Securities and registration of the increase in paid-inregistered capital. It is possible that, during this period, purchasers of Shares will not be shareholders and insteadwill be our unsecured creditors. For a description of the status of purchasers of NVDRs in the period betweenpayment for NVDRs and the delivery of NVDRs, see “Annex A — Issuance of Non-Voting Depositary Receipts— Prospectus”. In addition, the International Managers or their respective affiliates may make arrangements withparticular purchasers of the Securities to provide certain undertakings with respect to the delivery of theSecurities purchased by them.

Other Relationships

Some of the International Managers and the Joint Thai Lead Underwriters and their affiliates have engagedin, and may in the future engage in, investment banking and other commercial dealings in the ordinary course ofbusiness with us or our affiliates. They have received, or may in the future receive, customary fees andcommissions for these transactions. See, for example, “Management’s Discussion and Analysis of FinancialCondition and Results of Operations — Indebtedness — Bank Loans — Credit Suisse Loan Agreement”.

In addition, in the ordinary course of their business activities, the International Managers and the Joint ThaiLead Underwriters and their affiliates may make or hold a broad array of investments and actively trade debt andequity securities (or related derivative securities) and financial instruments (including bank loans) for their ownaccount and for the accounts of their customers. Such investments and securities activities may involve securitiesand/or instruments of us or our affiliates. The International Managers and the Joint Thai Lead Underwriters andtheir affiliates may also make investment recommendations and/or publish or express independent research views

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in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire,long and/or short positions in such securities and instruments.

Selling Restrictions

General

None of the Company, the Selling Shareholders, the International Managers and the Joint Thai LeadUnderwriters have taken any action, or will take any action, in any jurisdiction other than Thailand that wouldpermit a public offering of our Shares, or the possession, circulation or distribution of this OfferingMemorandum or any other material relating to the Combined Offering in any jurisdiction other than Thailandwhere action for that purpose is required.

Accordingly, each purchaser of the Securities may not offer or sell, directly or indirectly, any Securities andmay not distribute or publish this Offering Memorandum or any other offering material or advertisements inconnection with the Securities in or from any country or jurisdiction except in compliance with any applicablerules and regulations of such country or jurisdiction.

European Economic Community

Each of the International Managers have represented and agreed that the Securities have not been and willnot be offered, sold or publicly promoted or advertised by it in any Member State of the European EconomicArea (“EEA”) which has implemented the Prospectus Directive (each, a “Relevant Member State”) other than incompliance with the Prospectus Directive or any other laws applicable in the EEA governing the issue, offeringand sale of securities.

No action has been taken, or will be taken, in any Relevant Member State to permit an offer to the public ofany of the Securities in that Relevant Member State. Accordingly, the Securities are not being (and will not be)offered and will not be allocated to any person in the EEA other than:

(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not soauthorized or regulated, whose corporate purpose is solely to invest in securities;

(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the lastfinancial year; (2) a total balance sheet of more than EUR43,000,000 and (3) an annual net turnover of morethan EUR50,000,000, as shown in its last annual or consolidated accounts;

(c) to fewer than 100 natural or legal persons (other than qualified investors as defined in theProspectus Directive) subject to obtaining the prior consent of the International Managers for any suchoffer; or

(d) in any other circumstances falling within Article 3(2) of the Prospectus Directive,

provided that no such offer of Securities shall result in a requirement for the publication by the Company orthe International Managers of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer to the public” in relation to any Securities in anyRelevant Member State means the communication to persons in any form and by any means, presentingsufficient information on the terms of the offer and the securities to be offered, so as to enable an investor todecide to purchase or subscribe to these securities, as the same may be varied in that Member State by anymeasure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive”means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

Hong Kong

The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You areadvised to exercise caution in relation to the offer. If you are in any doubt about any of the contents of thisdocument, you should obtain independent professional advice.

This Offering Memorandum has not been approved by the Securities and Futures Commission in HongKong and, accordingly, (i) the Securities may not be offered or sold in Hong Kong by means of this OfferingMemorandum or any other document other than to "professional investors" as defined in the Securities andFutures Ordinance of Hong Kong (Cap. 571) and any rules made thereunder, or in other circumstances which donot result in the document being a "prospectus" as defined in the Companies Ordinance of Hong Kong (Cap. 32)or which do not constitute an offer to the public within the meaning of the Companies Ordinance, and (ii) noperson shall issue or possess for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement,

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invitation or document relating to the Securities which is directed at, or the contents of which are likely to beaccessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of HongKong) other than with respect to the Securities which are or are intended to be disposed of only to personsoutside Hong Kong or only to professional investors (as set out above).

Japan

The Securities have not been and will not be registered under the Financial Instruments and Exchange Actof Japan (Act No. 25 of 1948, as amended; the "FIEA"). Each of the International Managers has represented andagreed that it will not offer or sell any Securities, directly or indirectly, in Japan or to, or for the benefit of, anyresident of Japan (as defined under Item 5, Paragraph 1, Article 6 of the Foreign Exchange and Foreign TradeAct (Act No. 228 of 1949, as amended)), or to others for reoffering or resale, directly or indirectly, in Japan or to,or for the benefit of, a resident of Japan except pursuant to an exemption from the registration requirements of,and otherwise in compliance with, the FIEA and any other applicable laws, regulations and ministerial guidelinesof Japan.

Malaysia

No approval from the Malaysian Securities Commission has been applied for or will be obtained for theoffering for subscription or purchase, the invitation to subscribe for or purchase or the sale of the Securities inMalaysia. This document has not been and will not be registered as a prospectus or deposited as an informationmemorandum with the Malaysian Securities Commission under the Malaysian Capital Markets and Services Act2007. Accordingly, no offering for subscription or purchase and no invitation to subscribe for or purchase of theSecurities may be made in Malaysia. This document or any document or other materials in connection therewithmay not be distributed or made available in Malaysia directly or indirectly for the purpose of any offering forsubscription or purchase, invitation to subscribe for or purchase of or sale of, the Securities in Malaysia.

In the event, for any reason whatsoever, this document is received in Malaysia, (i) it will not have any effectas an offer or invitation to purchase or subscribe for any securities; (ii) it does not make available, and will not beconstrued as making available, any securities for purchase or subscription; and (iii) it must be promptly returnedto the Company.

People’s Republic of China (excluding Hong Kong SAR, Macau SAR and Taiwan) (the “PRC”)

The Securities have not been offered or sold and will not be offered or sold in the PRC as part of the initialdistribution of the Securities.

This document does not constitute an offer to sell or the solicitation of an offer to buy any securities in thePRC to any person to whom it is unlawful to make the offer or solicitation in the PRC.

The Company does not represent that this document may be lawfully distributed, or that any Securities maybe lawfully offered, in compliance with any applicable registration or other requirements in the PRC, or pursuantto an exemption available thereunder, or assume any responsibility for facilitating any such distribution oroffering. In particular, no action has been taken by the Company which would permit a public offering of anySecurities or distribution of this document in the PRC. Accordingly, the Securities are not being offered or soldwithin the PRC by means of this document or any other document. Neither this document nor any advertisementor other offering material may be distributed or published in the PRC, except under circumstances that will resultin compliance with any applicable laws and regulations.

Saudi Arabia

Any investor in the Kingdom of Saudi Arabia or who is a Saudi person (a “Saudi Investor”) who acquiresSecurities pursuant to the Offering should note that the offer of Securities is a limited offer under Article 11 ofthe “Offer of Securities Regulations” as issued by the Board of the Capital Market Authority resolution number2-11-2004 dated October 4, 2004 and amended by the Board of the Capital Market Authority resolution number1-28-2008 dated August 18, 2008 (the “KSA Regulations”). Each International Manager has represented,warranted and agreed that the offer of the Securities will not be directed at more than 60 Saudi Investors in total(excluding “Sophisticated Investors” (as defined in Article 10 of the KSA Regulations)) and the minimumamount payable per Saudi Investor will be not less than Saudi Riyal (SR) 1 million or an equivalent amount. Theoffer of Securities shall not therefore constitute a “public offer” pursuant to the KSA Regulations, but is subjectto the following restrictions on secondary market activity under Article 17 of the KSA Regulations:

(a) A Saudi Investor (the “transferor”) who has acquired Securities pursuant to a limited offer may notoffer or sell Securities to any person (referred to as a “transferee”) unless the offer or sale is made through

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an authorized person appropriately licensed by the Saudi Arabian Capital Market Authority and thetransferee is a Sophisticated Investor (as defined in Article 10 of the KSA Regulations) or the price to bepaid by the transferee for such Securities equals or exceeds SR 1 million, or the offer or sale is otherwise incompliance with Article 17 of the KSA Regulations.

(b) If the provisions of paragraph (a) cannot be fulfilled because the price of the Securities beingoffered or sold to the transferee has declined since the date of the original limited offer, the transferor mayoffer or sell the Securities to the transferee if their purchase price during the period of the original limitedoffer was equal to or exceeded SR 1 million.

(c) If the provisions of (a) and (b) cannot be fulfilled, the transferor may offer or sell Securities if he/she sells his entire holding of Securities to one transferee.

The provisions of paragraphs (a), (b) and (c) shall apply to all subsequent transferees of the Securities.

This document may not be distributed in Saudi Arabia except to such persons as are permitted under theOffers of Securities Regulations issued by the Capital Market Authority.

The Capital Market Authority does not make any representation as to the accuracy or completeness of thisdocument, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in relianceupon, any part of this document. Prospective purchasers of the securities offered hereby should conduct their owndue diligence on the accuracy of the information relating to the securities. If you do not understand the contentsof this document you should consult an authorized financial adviser.

Singapore

The International Managers acknowledge that the Offering Memorandum has not been registered as aprospectus with the Monetary Authority of Singapore, and the Securities will be offered pursuant to exemptionsunder the Securities and Futures Act, Chapter 289 of Singapore (the “Securities and Futures Act”). Accordingly,each of the International Managers represents and agrees that it has not offered or sold any Securities or causedthe Securities to be made the subject of an invitation for subscription or purchase and will not offer or sell anySecurities or cause the Securities to be made the subject of an invitation for subscription or purchase, and has notcirculated or distributed, nor will it circulate or distribute, the Offering Memorandum or any document ormaterial in connection with the offer or sale, or invitation for subscription or purchase, of any Securities, whetherdirectly or indirectly, to any person in Singapore other than (a) to an institutional investor pursuant toSection 274 of the Securities and Futures Act, (b) to a relevant person under Section 275(1) of the Securities andFutures Act, or to any person pursuant to Section 275(1A) of the Securities and Futures Act and in accordancewith the conditions specified in Section 275 of the Securities and Futures Act, or (c) otherwise pursuant to, and inaccordance with the conditions of, any other applicable provision of the Securities and Futures Act.

Each of the following persons specified in Section 275 of the Securities and Futures Act which hassubscribed or purchased Securities, namely a person who is:

(a) a corporation (which is not an accredited investor (as defined in Section 4A of the Securities andFutures Act)) the sole business of which is to hold investments and the entire share capital of which isowned by one or more individuals, each of whom is an accredited investor; or

(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investmentsand each beneficiary is an individual who is an accredited investor,

should note that shares, debentures and units of shares and debentures of that corporation or the beneficiaries'rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust hasacquired the Securities under Section 275 of the Securities and Futures Act except:

(i) to an institutional investor under Section 274 of the Securities and Futures Act or to a relevantperson or to any person pursuant to Section 275(1) and Section 275(1A) of the Securities and Futures Act,respectively and in accordance with the conditions specified in Section 275 of the Securities and FuturesAct; or

(ii) where no consideration is or will be given for the transfer; or

(iii) where the transfer is by operation of law; or

(iv) pursuant to Section 276(7) of the Securities and Futures Act.

Thailand

Each International Manager has agreed that, as a part of the distribution of the Securities offered hereby, andsubject to certain exceptions, it will not offer or sell Securities, directly or indirectly, to any person within the

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Kingdom of Thailand. Each Thai underwriter has agreed pursuant to an intersyndicate agreement that, as part ofthe distribution of the Offering Shares offered as part of the Domestic Offer and subject to certain exceptions, itwill not offer or sell Offering Shares, directly or indirectly, to any person outside the Kingdom of Thailand.Pursuant to the intersyndicate agreement, sales may be made between the International Managers and the JointThai Lead Underwriters of such number of Offering Shares as may be mutually agreed. The price of any OfferingShares so sold shall be the Offer Price set forth on the cover page of this Offering Memorandum less the pershare amount of the commission.

United Kingdom

Each of the International Managers has represented, warranted and undertaken that:

(i) it has only communicated or caused to be communicated and will only communicate or cause to becommunicated any invitation or inducement to engage in investment activity (within the meaning of section21 of the Financial Services and Markets Act 2000 (“FSMA”) in connection with the issue or sale of anySecurities in circumstances in which section 21(1) of FSMA does not apply to BSSR; and

(ii) it has complied and will comply with all applicable provisions of FSMA with respect to anythingdone by it in relation to the Securities in, from or otherwise involving the United Kingdom.

United States

The Securities have not been and will not be registered under the Securities Act and, subject to certainexceptions, may not be offered or sold within the United States. The Securities are being offered and sold outsideof the United States in reliance on Regulation S under the Securities Act.

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TRANSFER RESTRICTIONS

Because the following restrictions will apply to the International Offer, purchasers are advised to consulttheir own legal counsel prior to making any offer, resale, pledge or transfer of the Securities. Each purchaser ofthe Securities outside the United States pursuant to Regulation S under the U.S. Securities Act (other thaninvestors in Thailand), by accepting delivery of this Offering Memorandum and the Securities, will be deemed tohave represented, agreed and acknowledged that:

• It is authorized to consummate the purchase of the Securities in compliance with all applicable laws andregulations.

• It acknowledges (or if it is a broker-dealer acting on behalf of a customer, its customer has confirmed to itthat such customer acknowledges) that the Securities have not been and will not be registered under theU.S. Securities Act.

• It certifies that either (i) it is, or at the time the Securities are purchased will be, the beneficial owner ofthe Securities and it is located outside the United States (within the meaning of Regulation S); or (ii) it is abroker-dealer acting on behalf of its customer and its customer has confirmed to it that (A) such customeris, or at the time the Securities are purchased pursuant to Regulation S will be, the beneficial owner of theSecurities and (B) such customer is located outside the United States (within the meaning ofRegulation S).

• It agrees (or if it is a broker-dealer acting on behalf of a customer, its customer has confirmed to it thatsuch customer agrees) that it (or such customer) will not offer, sell, pledge or otherwise transfer theSecurities other than in accordance with any applicable laws of the states or territories of the United Statesand any other jurisdiction, including Thailand.

• It is eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire theSecurities, and will comply with such laws, rules, regulations, guidelines and approvals in any sale, pledgeor transfer of the Securities.

• It acknowledges that the Company, the Selling Shareholders, the International Managers, the Joint ThaiLead Underwriters and their respective representatives, agents, affiliates and nominees will rely upon thetruth and accuracy of the foregoing representations, agreements and acknowledgments and agrees that, ifany of such representations, agreements and acknowledgments deemed to have been made by virtue of itspurchase of the Securities are no longer accurate, it will promptly notify the Company, and if it isacquiring any Securities as a fiduciary or agent for one or more accounts, it has sole investment discretionwith respect to each such account and that it has full power to make the foregoing representations,agreements and acknowledgments on behalf of each such account.

• It is relying on this Offering Memorandum and not on any other information or representation concerningthe Company, the Selling Shareholders or the Securities and none of the Company, the SellingShareholders nor any other person responsible for this Offering Memorandum or any part of it, nor theInternational Managers or the Joint Thai Lead Underwriters, will have any liability for any such otherinformation or representation.

Any resale, pledge or other transfer, or attempted resale, pledge or other transfer, made other than incompliance with the above stated restrictions, will not be recognized by the Company.

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LEGAL MATTERS

Certain matters in connection with the offering will be passed upon for us by White & Case Pte. Ltd. withrespect to matters of U.S. federal securities laws and English law. Certain matters in connection with the offeringwill be passed upon for us by Weerawong, Chinnavat & Peangpanor Ltd. with respect to matters of Thai law.

Certain legal matters in connection with the offering will be passed upon for the International Managers byAllen & Overy LLP with respect to matters of U.S. federal securities laws and English law and by Allen & Overy(Thailand) Co., Ltd., with respect to matters of Thai law.

INDEPENDENT ACCOUNTANTS

The audited proportionate consolidated and company financial statements of the Company as of and for theyears ended December 31, 2009, 2010 and 2011, each of which has been prepared and presented in accordancewith Thai GAAP and included in this Offering Memorandum, have been audited by PwC Thailand, a memberfirm of PricewaterhouseCoopers International Limited, which expressed an unqualified opinion on thosefinancial statements.

The audited financial statements of Thai AirAsia as of and for the years ended December 31, 2009, 2010and 2011, each of which has been prepared and presented in accordance with Thai GAAP and included in thisOffering Memorandum, have been audited by PwC Thailand, a member firm of PricewaterhouseCoopersInternational Limited, which expressed an unqualified opinion on those financial statements.

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SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN THAI GAAP AND IFRS

The following is a general summary of certain principal differences between Thai GAAP and IFRS that webelieve are applicable to us.

Thai GAAP differs in certain material respects from IFRS. A brief description of certain significantaccounting differences between Thai GAAP and IFRS as applicable to our Company and Thai AirAsia for thefinancial years ended December 31, 2009, 2010 and 2011 and the three months ended March 31, 2011 and 2012is set out below. The organizations that promulgate Thai GAAP and IFRS have issued new pronouncements thatmay impact subsequent periods and have significant ongoing projects that could affect the differences betweenThai GAAP and IFRS described below and the impact of these differences relative to the Company’sproportionate consolidated and company financial statements and Thai AirAsia’s financial statements in thefuture. Accordingly, this summary is not intended to provide a comprehensive listing of all existing or futuredifferences between Thai GAAP and IFRS related to us or the industry in which we operate. No attempt has beenmade to quantify the differences. Had we undertaken to identify the differences specifically affecting theCompany’s proportionate consolidated and company financial statements and Thai AirAsia’s financialstatements presented in this Offering Memorandum, other potentially significant differences may have come toour attention that are not provided in the following summary.

Accordingly, we can provide no assurance that this summary of certain significant differences between ThaiGAAP and IFRS provides a complete description of all differences that may have an impact on the Company’sproportionate consolidated and company financial statements and Thai AirAsia’s financial statements. IFRS isgenerally more restrictive and comprehensive than Thai GAAP regarding the recognition and measurement oftransactions, account classifications and disclosure requirements. No attempt has been made in this summary toidentify disclosure, presentation or classification differences that would affect the manner in which transactionsand events are reflected in the Company’s proportionate consolidated and company financial statements andThai AirAsia’s financial statements or the respective notes thereto.

Thai Financial Reporting Standards (“TFRS”) and accounting interpretations were renumbered, effectiveJune 26, 2009, following the endorsement in the Government Gazette and the announcement by the FAP in orderto conform to the numbers used in the IFRS. Unless otherwise stated, references to TFRS below are based on therenumbered TFRS.

In making an investment decision, investors must rely upon their own examination of the Company and ThaiAirAsia’s financial statements, the terms of the offering and the financial information. Potential investors shouldconsult their own professional advisers for an understanding of the differences between Thai GAAP and IFRSand how these differences might affect the financial information in this Offering Memorandum.

Presentation of Financial Statements

Under Thai GAAP, TAS 1 “Presentation of Financial Statements” provides guidance on the overallrequirements for the presentation of financial statements, guidelines for their structure and minimumrequirements for their content. The format of the financial statements under Thai GAAP follows the formatprescribed by the Department of Business Development under the Ministry of Commerce.

Prior to the financial year beginning on January 1, 2009, guidance on the presentation of financialstatements under IFRS was covered by IAS 1 “Presentation of Financial Statements” which was similar to thoserequired under Thai GAAP. From January 1, 2009, IAS 1 was revised, resulting in a number of significantdifferences between Thai GAAP and IFRS. For example, IAS 1 (revised) requires all changes in equity arisingfrom transactions with owners in their capacity as owners to be presented separately from non-owner changes inthe statement of changes in equity. Non-owner changes will be presented in the statement of comprehensiveincome. An entity has a choice of presenting income and expenses in one statement (a statement ofcomprehensive income) or in two statements (an income statement and a statement of comprehensive income). Inaddition, IAS 1 (revised) requires presentation of a statement of financial position as at the beginning of theearliest comparative period when an entity applies an accounting policy retrospectively or makes a retrospectiverestatement of items in its financial statements, or when it reclassifies items in its financial statements. Thiseffectively means that the entity is required to present three years of statement of financial positions in theseinstances.

TAS 1 has recently been revised based on IAS 1 (revised) and became effective on January 1, 2011.However, the TAS 1 (revised) provides a one-time policy choice for an entity to present two years of financialpositions when TAS 1 (revised) was adopted on January 1, 2011. On the adoption of TAS 1 (revised), theCompany and Thai AirAsia have elected to present income and expenses in one statement of comprehensiveincome.

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Employee Benefits

Prior to the financial year beginning on January 1, 2011, there was no effective Thai GAAP in relation toaccounting for employee benefits. Our primary obligations in respect of employee benefits are contributions onbehalf of employees to our provident funds and the payment of statutory severance benefits on retirement andterminating employment involuntarily under Thai Labor Law. In our proportionate consolidated and companyfinancial statements and Thai AirAsia’s financial statements, we charge contributions to the provident funds andstatutory severance and retirement payments when incurred. No provision was recognized for such benefits.

Under IFRS, IAS 19 “Employee Benefits” requires an entity to recognize employee benefits as expenses inthe period which the entity receives service from the employee, rather than when the benefits are paid or payable.In addition, obligations for post-employment benefits which are defined benefit plans are recognized net of thefair value of any plan assets on the balance sheet, using the Projected Unit Credit Method, as the present value ofthe estimated future cash outflows based on employee wages, turnover rate, retirement ages, mortality, length ofservice and others, and using the interest rates of high quality corporate bond rates or government bond rates (incountries where there is no deep market for corporate bond) that are denominated in the currency in which thebenefits will be paid, which have terms to maturity approximately the term of the related obligations. Actuarialgains or losses arising from changes in actuarial assumptions may be recognized using corridor approach or anysystematic method that results in faster recognition of actuarial gains and losses. The cost associated withproviding these benefits are charged to profit or loss so as to spread the cost over the period of employmentduring which the entitlement to benefit is earned.

TAS 19 “Employee Benefits”, which is based on IAS 19, became effective on January 1, 2011. On theadoption of TAS 19, the Company and Thai AirAsia have elected to adjust the transitional adjustment to theopening retained earnings as at January 1, 2011 as permitted by TAS 19. The Company and Thai AirAsia havealso elected to recognize actuarial gains or losses immediately in other comprehensive income in the period inwhich they arise.

Foreign Currency Translation

Under Thai GAAP, TAS 21 “The Effects of Changes in Foreign Exchange Rates” was based on the previousversion of IAS 21 “The Effects of Changes in Foreign Exchange Rates” and has no concept of functionalcurrency. Assets, liabilities and operating results of each entity are recorded in each respective local currency andthe proportionate consolidated financial statements are presented in Baht.

Under IFRS, IAS 21 requires each entity to determine its functional currency and measure its results andfinancial position in that currency. However, the entity may choose a presentation currency to present itsfinancial statements.

TAS 21 has recently been revised based on IAS 21 and will become effective on January 1, 2013. Althoughearly adoption is permitted, the Company and Thai AirAsia have not early adopted this standard.

Operating Segments

Under Thai GAAP, TAS 14 “Reporting Financial Information by Segment” was based on IAS 14(1993) “Reporting Financial Information by Segment”. Disclosure was required in relation to primary andsecondary segments information based on either business segments or geographical segments, depending on anentity’s risks and returns governing the primary segment. The secondary segment format requires less disclosure.The Company does not disclose segment information because the Company has only one significant segmentwhich is the provision of air transportation services.

Under IFRS, prior to the financial year beginning on January 1, 2009, IAS 14 (revised 2005) “SegmentReporting” prescribed similar but more extensive disclosure than required under TAS 14. From the financial yearbeginning on January 1, 2009, IAS 14 (revised 2005) was superseded by IFRS 8 Operating Segments (“IFRS 8”).IFRS 8 requires segment information to be reported based on the entity’s operating segment. Operating segmentsare components of an enterprise in which separate financial information is available and is evaluated regularly bythe chief operating decision maker in deciding how to allocate resources and in assessing performance.Generally, financial information is required to be reported on the same basis as is used internally for evaluatingsegment performance and deciding how to allocate resources to segments.

TFRS 8 “Operating Segments”, which is based on IFRS 8, has recently been issued and will becomeeffective on January 1, 2013. Although early adoption is permitted, the Company and Thai AirAsia have notearly adopted this standard.

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Income Taxes

There is no currently effective Thai GAAP in relation to accounting for income taxes and deferred taxes.While not specifically addressed in Thai GAAP, provisions for income taxes are typically based on corporateincome taxes currently payable in the period under the Revenue Code of Thailand. However, no deferred taxeshave been recognized in the Company’s proportionate consolidated and company financial statements and ThaiAirAsia’s financial statements as of December 31, 2009, 2010 and 2011.

Under IAS 12 “Income Taxes”, deferred taxes are recognized for the estimated future tax effects oftemporary differences. Temporary differences, which are differences between the carrying amount of an asset orliability in the balance sheet and its tax base, comprise taxable temporary differences and deductible temporarydifferences. Deferred tax liabilities are the amounts of income tax payable in future periods in respect of taxabletemporary differences. Deferred tax assets are the amounts of income taxes recoverable in future periods inrespect of deductible temporary differences and the carryforward of unused tax losses when it is probable that theasset can be utilized.

TAS 12 “Income Taxes”, which is based on IAS 12, has recently been issued and will become effective onJanuary 1, 2013. Although early adoption is permitted, the Company and Thai AirAsia have not early adoptedthis standard.

Financial Instruments — Recognition and Measurement

While there is no one single standard capturing accounting for all types of financial instruments, there are anumber of TFRS standards which provide guidance on accounting for financial instruments, such as TAS 105“Accounting for Investment in Debt and Equity Securities” and TAS 101 “Doubtful Accounts and Bad Debts”.

Under IFRS, IAS 39 “Financial Instruments: Recognition and Measurement” has extensive guidance on therecognition and measurement of financial instruments, including the categorization of financial assets andliabilities, accounting for derivatives and hedging activities and impairment. The International AccountingStandards Board has also issued IFRS 9 “Financial Instruments” which will eventually supersede IAS 39. IFRS 9is effective for the annual period beginning on or after January 1, 2015 but early adoption is permitted.

Significant differences between Thai GAAP and IAS 39 as applicable to the Company and Thai AirAsia forthe year ended December 31, 2009, 2010 and 2011 are as follows:

Categorization of Financial Assets and Liabilities

Categorization of financial assets and liabilities under Thai GAAP follows the general guidance in theFramework and in each respective standard. In contrast, IAS 39 requires financial assets to be categorized into(i) financial asset at fair value through profit or loss, (ii) held to maturity investments, (iii) loan and receivablesand (iv) available for sale financial assets. The categorization depends on the purpose for which the financialassets were acquired. Financial liabilities are either categorized into financial liability at fair value through profitor loss or financial liability carried at amortized cost. All financial assets and liabilities are initially recognized atfair value net of transaction costs that are directly attributable to the acquisition or issue of the financial asset orfinancial liability. Subsequent accounting depends on their respective categories.

Derivative Financial Instruments

Under IFRS, derivatives financial instruments are required to be marked to market at fair value andrecognized on the balance sheet. Changes to fair value are recognized through profit and loss. If hedgeaccounting is elected and appropriate based upon the specific criteria of IAS 39, the impact of recording thederivative instrument is offset to the extent the hedging relationship is effective. If a hedge is designated as a fairvalue hedge, changes in the derivative’s fair value are recorded in profit and loss and the hedged item is markedto market for changes in fair value associated with the hedged risk. If designated as a cash flow hedge, theeffective portion of the hedge is recorded in equity as a component of other comprehensive income, and releasedfrom other comprehensive income into earnings as the hedged item affects earnings. All ineffectiveness in thehedging relationship, as well as derivative instruments not qualifying for hedge accounting, is reflected in thestatement of income immediately. The Company and Thai AirAsia were not a party to derivative agreements forthe year ended December 31, 2009, 2010 and 2011.

Financial Guarantees

Thai AirAsia provides financial guarantees to banks for loans given to pilot trainees in accordance with theprofessional pilot course. Such financial guarantees are disclosed in the financial statements for the years endedDecember 31, 2009, 2010 and 2011.

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Under IAS 39, financial guarantee contracts are accounted for as financial liabilities and should initially berecognized at fair value by the issuer. Subsequent to the initial recognition, financial guarantee contracts aremeasured and recognized at the higher of the amount determined in accordance with IAS 37 “Provisions,Contingent Liabilities and Contingent Assets”, and the amount initially recognized at fair value less, whenappropriate, cumulative amortization of the initial amount recognized in accordance with IAS 18 “Revenue”.

Financial Instruments — Presentation and Disclosure

Thai GAAP addresses financial instruments presentation through TAS 32 “Financial Instruments:Presentation and Disclosure” which is based on the previous version of IAS 32 “Financial Instruments:Presentation”. The current version of IAS 32 revised the definitions of financial liabilities, and equity instrumentand provided additional guidance on the classification between financial liability and equity instrument. It alsoprovides additional guidance on classification of contracts settled in an entity’s own equity instruments, puttableinstruments and treasury shares.

Disclosure requirements under TAS 32 are not as extensive as those required by IFRS 7 “FinancialInstruments: Disclosure”. IFRS 7 requires extensive qualitative and quantitative disclosure about exposure torisks rising from financial instruments, including specified minimum disclosures about credit risk, liquidity riskand market risk and how the entity manages those risks.

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ANNEX A

ISSUANCE OF NON-VOTING DEPOSITARY RECEIPTS — PROSPECTUS

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ANNEX B

REPORT OF THE AVIATION CONSULTANT: THAI AIRASIA CO., LTD. DATED JANUARY 16, 2012

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Report of the Aviation Consultant

Americas: 1342 Jones Street Suite 6 San Francisco, California 94109 USA +1 415 577-2127 (office) +1 978 246-6031 (fax)

inquiry@thesapgroup.com

Asia-Pacific:55 Soi Langsuan, Suite 1902 Ploenchit Road Bangkok, Thailand 10330 +66 (86) 060-4626 (office) +1 978 246-6031 (fax)

Please use San Francisco address for correspondence.

Thai AirAsia Co. Ltd. Bangkok, Thailand

prepared by

The S-A-P Group Bangkok and San Francisco

report date

16 January 2012

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TABLE OF CONTENTS

1 AVIATION INDUSTRY OVERVIEW ........................................................................................................ 11.1 Background ............................................................................................................................ 1

1.1.1 Aviation in the Asia-Pacific Region ............................................................................. 11.1.2 Aviation in Thailand ................................................................................................... 1

1.2 Aviation Activity in Thailand .................................................................................................... 31.2.1 Historical Air Passenger Movements .......................................................................... 31.2.2 Domestic Scheduled Passenger Services: Seats ......................................................... 61.2.3 Domestic Scheduled Passenger Services: Average Seat Capacity ............................... 61.2.4 International Scheduled Passenger Services: Seats .................................................... 71.2.1 International Scheduled Passenger Services: Average Seat Capacity ......................... 7

2 FORECASTS OF AVIATION ACTIVITY ................................................................................................... 82.1 Historical and Forecast Global Air Travel Growth Rates ............................................................ 82.2 Historical and Forecast Air Travel Growth Rates in Southeast Asia ......................................... 10

3 GROWTH FACTORS AND RELATIONSHIPS TO AIR TRAVEL ................................................................ 113.1 Gross Domestic Product ........................................................................................................ 11

3.1.1 World GDP and Air Travel Activity ........................................................................... 113.1.2 Per Capita GDP and Air Travel Activity ..................................................................... 123.1.3 GDP Growth in Select Countries in Asia ................................................................... 14

3.2 Effects of Economic Growth on Air Travel in Asia .................................................................. 163.2.1 China ...................................................................................................................... 163.2.2 Thailand .................................................................................................................. 16

3.3 Population Growth and Urbanization .................................................................................... 163.4 Trade and Tourism ................................................................................................................ 18

3.4.1 Global Trade and Air Travel ..................................................................................... 183.4.2 Tourism and Air Travel in Southeast Asia ................................................................. 183.4.3 Historical Foreign Visitor Arrivals in Thailand ............................................................ 193.4.4 Mode of Transport for International Arrivals at Thailand ......................................... 213.4.5 Visitor Arrivals in Thailand by Country of Residence ................................................. 21

3.5 Airline Service and Fares ....................................................................................................... 233.5.1 Medium-Haul and Long-Haul Opportunities ............................................................. 233.5.2 Airfares and Low Cost Carriers ................................................................................ 23

3.6 Other Aviation Growth Factors.............................................................................................. 233.6.1 Geographical Characteristics.................................................................................... 233.6.2 Liberalization of Air Travel ....................................................................................... 233.6.3 Transportation Infrastructure .................................................................................. 23

4 COMPETITIVE LANDSCAPE ............................................................................................................... 244.1 Key Financial and Operating Performance for Select Carriers ................................................. 244.2 Development of Low Cost Carriers ........................................................................................ 25

4.2.1 Effects of LCC on the Asian Aviation Industry .......................................................... 254.3 Airline Infrastructure ............................................................................................................. 264.4 Asian Aviation Industry Growth Prospects ............................................................................. 274.5 Potential Constraints to Asia Aviation Industry Growth .......................................................... 28

5 REGULATORY ENVIRONMENT .......................................................................................................... 285.1 Domestic Airline Regulation Structure in Thailand ................................................................. 285.2 International Regulations ...................................................................................................... 295.3 Liberalization of the Aviation Industry ................................................................................... 295.4 ASEAN Member States and Open Skies................................................................................. 30

5.4.1 Within ASEAN ......................................................................................................... 305.4.2 Outside of ASEAN ................................................................................................... 31

5.5 Open Skies Agreements with Thailand .................................................................................. 31

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ABBREVIATIONS AND DEFINITIONS

AirAsia Group AirAsia Berhad, AirAsia X, PT Indonesia AirAsia, and Thai AirAsia Co Ltd AOT Airports of Thailand Public Company Limited ASEAN Association of Southeast Asian Nations ASK Available seat kilometer(s) (equals one passenger seat flown one kilometer)

CAAGR compound average annual growth rate CASK cost per available seat kilometer DCA Thai Department of Civil Aviation FSC full-service carrier

FY Fiscal Year GDP Gross Domestic Product IATA International Air Transport Association ICAO International Civil Aviation Organization

IMF International Monetary Fund km kilometer(s) LCC low-cost carrier n.a. not available or not applicable

RASK revenue per available seat kilometer RPK revenue passenger kilometer(s) (one revenue passenger flown one kilometer) S-A-P The S-A-P Group (Strategic Airport Planning Ltd) Southeast Asia Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore,

Taiwan, Thailand, and Vietnam

Thai AirAsia Thai AirAsia Company Limited UNWTO United Nations World Tourism Organization

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IMPORTANT NOTES

The S-A-P Group (Strategic Airport Planning Ltd) was asked by Thai AirAsia Company Limited to prepare this Report of the Aviation Consultant on Thai AirAsia Co Ltd and air travel in Southeast Asia. This independent expert report was prepared to be included in documentation (including, but not limited to any prospectus or offering circular) to support the Initial Public Offering of Thai AirAsia Co Ltd or its majority shareholder, Asia Aviation Public Company Limited, to occur in 2012.

The S-A-P Group (S-A-P) is an aviation consulting firm that specializes in the preparation of aviation activity forecasts and strategic business plans. Over the past 16 years, staff of The S-A-P Group have prepared forecasts of aviation activity in Australia (Sydney, Perth, Adelaide, Darwin), Indonesia (Jakarta), Malaysia, New Zealand (Auckland and Wellington), South Korea (Seoul), Thailand (Bangkok, Phuket, Chiang Mai, Chiang Rai, and Had Yai) and the United States (numerous).

This report includes forecasts and other forward-looking estimates. These forward-looking statements are necessarily based on various assumptions and estimates that are inherently subject to various risks and uncertainties relating to possible invalidity of the underlying assumptions and estimates and possible changes or development of social, economic, business, industry, market, legal, government, and regulatory circumstances and conditions and actions taken or omitted to be taken by others.

Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic and competitive market conditions and future government and business decisions, all of which are difficult or impossible to predict accurately. This report contains information supplied by and analysis based on public and private sources. To the extent such sources have been cited herein, we hereby confirm that the S-A-P Group is allowed to reference such sources. While we believe that the information is correct, we cannot guarantee its validity. Some amounts in this report are rounded. Financial and operating data for some air carrier groups may include cargo and other activities.

We are not obligated to update this report after today’s date. However, if we become aware of material changes affecting the items documented in this report, either (a) between the date of the report and the issue of the prospectus, or (b) after the issue of the prospectus and before the issue of the securities, then we agree to notify Thai AirAsia Company Limited.

STRATEGIC AIRPORT PLANNING LTD Date of report: 16 January 2012

Bill A. Matz Managing Director

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REPORT OF THE AVIATION CONSULTANT

Thai AirAsia Co Ltd

16 January 2012

1 AVIATION INDUSTRY OVERVIEW

1.1 Background

1.1.1 Aviation in the Asia-Pacific Region

According to IATA (the International Air Transport Association), the Asia-Pacific region became the airline industry's largest market in 2009. Strong growth continued in 2010 as over a quarter of the world’s travelers journeyed to, from, or within the Asia-Pacific region on commercial flights. The Asia-Pacific region’s growth rates are forecast to remain robust over the next 20 years. If the number of people in Asia flew at the same rates per annum as their counterparts in the United States, the global aviation industry would triple in size.

The strong historical and projected future growth rates for the Asia-Pacific aviation industry are the result of several factors, including:

• Market liberalization efforts, which have allowed for the introduction of new entrant low-cost carriers (LCC) and increased competition, leading to reduced airfares and the introduction of new services and markets.

• Strong economic growth in most countries, leading to increased demand for domestic and international passenger services and for inbound transport of goods.

• Strong economic growth across the region and other parts of the world, leading to strong inbound international passenger services and demand for outbound cargo services.

1.1.2 Aviation in Thailand

Aviation activity in Thailand has grown significantly over the past few decades, in part due to the same market liberalization and economic growth factors affecting Asia as a whole. Some of the general Asia trends have been even more pronounced in Thailand, in particular the trend toward LCC carrier service. These factors have resulted in average annual growth in traffic of 4.4% from 2005 to 2010, despite several interruptions in growth during that time due to political turmoil, natural disasters, and economic crises.

Aviation demand to, from, and within Thailand is driven by inbound tourism, as well as business-related travel and outbound tourism. Thailand’s tourism infrastructure is particularly well-developed and attractive to tourists from around the world.

More than half of the aviation activity at the primary airports in Thailand is carried by the four largest Thailand-based airlines: Thai Airways International, Thai AirAsia, Bangkok Airways, and Nok Air.

Thai Airways International is the national carrier of the Kingdom of Thailand and largest airline in the country. It operates full service domestic, regional and international flights in a hub and spoke system from its base in Bangkok to destinations around the world and within Thailand. Thai Airways International was founded in 1960 as a joint venture between Thailand's domestic carrier, Thai Airways Company and Scandinavian Airlines System. The Thai government took full ownership of the carrier in 1977 and listed

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shares on the Thai Stock Exchange in 1991. Thai Airways also has an LCC partner, Nok Air, which serves domestic routes in Thailand.

Thai AirAsia is an associate company of the AirAsia group of airlines, which includes Indonesia AirAsia and AirAsia X. AirAsia was founded in 2001 in Malaysia with a focus on low cost service. Thai AirAsia launched domestic operations in Thailand on February 2004 and serves domestic and regional destinations from its base of operations at Suvarnabhumi International Airport. The carrier serves destinations in Thailand and other countries using a fleet of 21 Airbus A-320 aircraft in a single-class configuration of 180 seats. Thai AirAsia is 51% owned by Asia Aviation PCL and 49% owned by AirAsia Berhad.

Bangkok Airways began scheduled services in 1986, becoming Thailand's first privately-owned domestic airline. The airline is 92% owned by Dr. Prasert Prasarttong-Osoth. In a unique capital investment for an airline, Bangkok Air in 1989 built its own airport on the island resort of Koh Samui, Thailand. The airline later developed airports in Sukhothai and Trat. From its base at Suvarnabhumi International Airport, the carrier operates 17 aircraft, including ATR 72-500s and Airbus A-319s and A-320s. Bangkok Air recently cancelled an Airbus A-350 aircraft order that would have allowed for operations to Europe.

Nok Air is an LCC that serves domestic routes in Thailand. The carrier is partially owned by Thai Airways International. Since its inception, Nok Air has operated largely independently from its parent company. Nok Air operates Boeing B-737-400 and B-737-800 and ATR 72-200 aircraft. The carrier’s primary base of operations is Don Mueang International Airport. However, the carrier has temporarily relocated its operations to Suvarnabhumi International due to the recent flooding-related closure of Don Mueang airport.

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1.2 Aviation Activity in Thailand

1.2.1 Historical Air Passenger Movements

As shown in Table 1, below, air passenger activity at commercial airports in Thailand1 grew at an average annual rate of 4.4% from 2005 to 2010. Growth has been strong during several of the years in this period, but has varied significantly due to natural disasters and political disruptions in the country. Despite the disruptions, Thailand still experienced high compound average annual growth rates over the past several years.

Table 1

HISTORICAL AIR PASSENGER MOVEMENTS Thailand

2005-2010

CAAGR2005 2006 2007 2008 2009 2010 2005~2010

Domestic passengers DCA airports 4,426,568 4,823,692 5,376,415 4,296,139 5,092,804 5,653,579 5.0% AOT airports 17,102,635 19,772,586 20,727,678 20,021,472 21,109,118 21,549,308 4.7% Subtotal 21,529,203 24,596,278 26,104,093 24,317,611 26,201,922 27,202,887 4.8%International passengers (a) 29,999,039 34,256,445 35,433,805 33,683,888 32,828,075 36,690,283 4.1%Total 51,528,242 58,852,723 61,537,898 58,001,499 59,029,997 63,893,170 4.4%

____________Sources: AOT and DCA, July 2011.(a) AOT airports.

As shown in Table 2, below, the largest share of passenger traffic in Thailand is carried by Thai Airways International. The second greatest number of passengers is served by Thai AirAsia, which is the only LCC that serves both domestic and international destinations from Suvarnabhumi International Airport. Thai AirAsia and Nok Air operate as LCCs on domestic routes in the country.

Since the start of LCC operations in the country in 2004, with the launch of Thai AirAsia, LCC operations at Thai airports have created significant changes to the market including reduced airfares and increased affordability of air travel in the country.

1 Includes the airports managed by Airports of Thailand PCL (AOT) and the Thai Department of Civil Aviation (DCA) which, together, represent nearly all commercial airports in Thailand. A few small commercial airports are operated by the private sector.

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Table 2

HISTORICAL AIR PASSENGER MOVEMENTS, BY AIRLINE AOT Airports in Thailand

2006-2010 (period: 1 October to 30 September)

CAAGR2006 2007 2008 2009 2010 2006~2010

Thai Airways International 22,463,733 23,308,495 22,342,145 22,517,047 21,637,221 -0.9%Bangkok Airways 2,499,257 2,515,311 2,466,657 2,875,734 3,141,726 5.9%Orient Thai Airlines 2,741,923 2,084,766 1,184,326 753,151 1,406,138 -15.4%Cathay Pacific Airways 1,442,158 1,337,343 1,314,490 1,401,463 1,392,701 -0.9%Emirates 926,827 996,814 918,992 1,001,111 1,220,538 7.1%China Airlines 1,267,394 1,164,394 1,136,886 1,001,783 783,804 -11.3%Korean Air 742,850 762,028 734,030 654,932 769,554 0.9%Singapore Airlines 1,315,323 1,206,930 1,104,283 814,221 671,320 -15.5%Eva Air 701,845 669,745 669,338 614,978 534,491 -6.6%JALways 723,121 785,300 691,810 639,227 461,034 -10.6%Silk Air 338,238 281,080 374,077 339,250 335,661 -0.2%Others 10,745,676 11,338,372 12,056,040 11,677,400 14,265,712 7.3% Subtotal 45,908,345 46,450,578 44,993,074 44,290,297 46,619,900 0.4%

Thai Air Asia 4,251,827 4,762,073 5,773,827 6,728,445 7,418,362 14.9%AirAsia 580,111 583,362 297,512 329,197 413,618 -8.1%Indonesia Air Asia - 14,293 59,882 96,543 92,464 n.a. AirAsia Group 4,831,938 5,359,728 6,131,221 7,154,185 7,924,444 13.2%Nok Air 2,537,281 3,354,441 2,624,959 1,819,988 2,975,343 4.1%Tiger Airways 492,265 476,539 146,270 187,508 255,673 -15.1%Others 259,202 520,197 512,236 485,215 464,231 15.7%Subtotal 8,120,686 9,710,905 9,414,686 9,646,896 11,619,691 9.4%Total 54,029,031 56,161,483 54,407,760 53,937,193 58,239,591 1.9%

______________Source: AOT, October 2011.

Full Service/Mainline Carriers

Low-Cost Carriers

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Table 3, below, documents the airline market shares for passengers (domestic and international) at AOT airports2 from 2006 to 2010.

Between 2006 and 2010, the share of passengers served by Thai AirAsia at AOT airports increased from 7.9% to 12.7%. The overall share of LCCs at the airports increased from 15.0% to 20.0% of total activities in the same period.

Table 3

HISTORICAL AIR PASSENGER MOVEMENTS, BY AIRLINE MARKET SHARE AOT Airports in Thailand

2006-2010 (period: 1 October to 30 September)

2006 2007 2008 2009 2010Thai Airways International 41.6% 41.5% 41.1% 41.7% 37.2%Bangkok Airways 4.6% 4.5% 4.5% 5.3% 5.4%All others 38.8% 36.7% 37.1% 35.0% 37.5% Full Service/Mainline Carriers 85.0% 82.7% 82.7% 82.1% 80.0%

Thai Air Asia 7.9% 8.5% 10.6% 12.5% 12.7%AirAsia 1.1% 1.0% 0.5% 0.6% 0.7%Indonesia Air Asia 0.0% 0.0% 0.1% 0.2% 0.2% AirAsia Group 8.9% 9.5% 11.3% 13.3% 13.6%All others 6.1% 7.7% 6.0% 4.6% 6.3% Low-Cost Carriers 15.0% 17.3% 17.3% 17.9% 20.0%

Total 100.0% 100.0% 100.0% 100.0% 100.0%

______________Source: AOT, October 2011.

Full Service/Mainline Carriers

Low-Cost Carriers

2 Source: AOT, October 2011. AOT operates Suvarnabhumi and Don Mueang international airports in Bangkok and the international airports in Chiang Mai, Chiang Rai, Phuket, and Hatyai. Data by airline for other commercial airports is not available. AO T airport data represents 91% of total traffic in Thailand and all international traffic. Throughout this report, AOT data reflects AOT financial years (1 October to 30 September of the year noted).

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1.2.2 Domestic Scheduled Passenger Services: Seats

Table 4, below, provides a summary of the carrier shares of departing domestic scheduled weekly passenger seats operated by carriers serving Thailand airports during October 20113. As shown, Thai Airways International operated the greatest number of domestic seats at Suvarnabhumi International Airport (50.2% of total domestic seats) and nationwide (34.2%). LCC Thai AirAsia operated the second greatest number of domestic seats at Suvarnabhumi International Airport (31.4%) and nationwide (23.0%). From its base at Don Mueang International Airport, LCC Nok Air operated the third largest number of scheduled domestic seats nationwide.

Operating carriers

Suvarnabhumi International Airport (BKK)

Don Mueang International

Airport (DMK)

Phuket International Airport (HKT)

Chiang Mai International Airport (CNX)

All other airports Total

Thai Airways Int'l 50.2% -- 43.0% 31.0% 24.0% 34.2%Thai AirAsia 31.4% -- 26.0% 27.1% 22.0% 23.0%Nok Air -- 68.0% 6.0% 13.4% 26.0% 18.7%Bangkok Airways 18.4% -- 18.0% 12.0% 16.5% 14.0%Orient Thai Airlines -- 32.0% 7.0% 10.4% 8.0% 8.7%Nok Mini -- -- -- 6.1% 3.5% 1.4%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

_________________Source: The S-A-P Group, based on data from OAG, October 2011.

Weekly domestic departing seats; shares

1.2.3 Domestic Scheduled Passenger Services: Average Seat Capacity

Thai Airways International domestic flights operated with an average of 251 seats per flight. LCCs Thai AirAsia and Nok Air operated with an average of 180 and 129 seats per flight, respectively.

3 Includes scheduled services at all airports in Thailand, including AOT, DCA, and private sector commercial airports during 1-7 October 2011.

Table 4

DEPARTING DOMESTIC SCHEDULED PASSENGER SERVICES (SHARE OF SEATS) Departures from Airports in Thailand

Activity Period: 1-7 October 2011

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1.2.4 International Scheduled Passenger Services: Seats

Table 5, below, provides a summary of departing international scheduled weekly passenger seats operated by carriers serving Thai airports during October 20114. As shown, Thai Airways International operated the greatest number of international seats at Suvarnabhumi International Airport and across the nation. The AirAsia Group operated the greatest number of international seats at Phuket International Airport (HKT) and Chiang Mai International Airport (CNX). Nationwide, the AirAsia Group carriers accounted for 9.7% of total international departing seats.

Operating carriers

Suvarnabhumi International Airport (BKK)

Don MueangInternational

Airport (DMK)

Phuket International

Airport (HKT)

Chiang Mai International

Airport (CNX)All other airports Total

Thai Airways Int'l 36.0% -- 8.7% -- -- 32.8%

Thai AirAsia 6.3% -- 8.1% 31.0% -- 6.6%AirAsia 1.1% -- 12.6% 31.0% 35.2% 2.6%Indonesia AirAsia 0.5% -- 1.2% -- -- 0.5% AirAsia Group 7.9% -- 21.9% 62.0% 35.2% 9.7%

Cathay Pacific Airwa 4.2% -- -- -- -- 3.8%Emirates Airlines 3.6% -- -- -- -- 3.3%Bangkok Airways 0.2% -- -- -- 23.5% 2.5%Qatar Airways 2.0% -- 5.0% -- -- 2.2%Korean Air 1.5% -- 6.2% 7.8% -- 2.1%Tiger Airways 1.0% -- 5.8% -- 35.2% 1.9%China Airlines 2.0% -- 0.5% -- -- 1.9%All others 41.6% -- 51.9% 30.2% 6.1% 39.8%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

_________________Source: The S-A-P Group, based on data from OAG, October 2011.

Weekly international departing seats; shares

1.2.1 International Scheduled Passenger Services: Average Seat Capacity

Thai Airways International flights operated with an average of 311 seats per international departure, the AirAsia Group of carriers operated with an average of 180 seats, and all other carriers operated with an average of 226 seats.

4 Includes scheduled services at all airports in Thailand, including AOT, DCA, and private sector commercial airports during 1-7 October 2011.

Table 5

DEPARTING INTERNATIONAL SCHEDULED PASSENGER SERVICES (SEATS) Departures from Airports in Thailand

Activity Period: 1-7 October 2011

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2 FORECASTS OF AVIATION ACTIVITY

Historical and forecast passenger growth rates for select air markets are provided in the sections that follow. The forecasts are based on industry publications that rely on econometric analysis of socioeconomic growth factors, global surveys of origins and destinations and infrastructure development, and other factors and analysis.

As with most aviation activity forecasts, significant levels of judgment are employed and actual results may be significantly different than the forecasts.

2.1 Historical and Forecast Global Air Travel Growth Rates

As shown in Table 6, which follows, global passenger air travel, as measured in revenue passenger kilometers (RPKs), grew at a compound average annual growth rate of 4.6% from 1985 to 2010.

According to The Boeing Company, passenger air travel in the Asia-Pacific region—as measured in RPKs—grew at one of the highest rates in the world during this period and is expected to experience continued strong growth rates in the coming years. Travel volumes in the Asia-Pacific region are already large, accounting for approximately 27% of global travel according to Boeing.

Asia-Pacific travel volumes are anticipated by Boeing to maintain strong growth rates in the future. Air travel within the Asia-Pacific region—as measured in RPKs—is projected by Boeing to grow at a compound average annual rate of 6.9% from 2010 to 2030. Boeing expects air travel (RPKs) to, from, and within the Asia-Pacific region to grow at a compound average annual growth rate of 6.7% during the same period.

Historical and forecast growth rates for passenger activity within select world regions for 1985 to 2030 are shown in Table 6, below.

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Forecast 1985~1990 1990~1995 1995~2000 2000~2005 2005~2010 1985~2010 2010~2030

Global 6.8% 3.3% 5.7% 4.1% 2.9% 44.66%% 5.1%

Within regionswithin China 16.7% 25.4% 5.4% 13.5% 13.5% 114.77%% 7.5%within Europe 8.7% 3.5% 7.5% 4.6% 2.7% 55.44%% 4.0%within Middle East 1.9% 1.3% 5.7% 4.6% 9.6% 44.66%% 5.0%within North America 4.6% 2.6% 5.3% 3.6% -2.0% 22.88%% 2.3%

within Northeast Asia 9.2% 6.1% 3.2% 0.9% 1.2% 44.11%% 3.3%within Oceania 7.1% 10.2% 2.9% 4.4% 4.5% 55.88%% 4.7%within South America 2.8% 3.2% 6.2% 3.7% 10.8% 55.33%% 7.0%within South Asia 2.1% 5.6% 1.0% 8.5% 14.5% 66.22%% 9.4%within Southeast Asia 11.1% 12.5% -0.1% 7.6% 3.7% 66.99%% 7.4%

__________________Source: The Boeing Company, Current Market Outlook, 2003, 2009, and 2011.Northeast Asia: Japan, North Korea and South KoreaSouth Asia: India, Pakistan, and AfghanistanSoutheast Asia: Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Taiwan, Thailand, and Vietnam

Historical CAAGR

Table 6

HISTORICAL AND FORECAST ANNUAL PASSENGER GROWTH RATES Activity (in RPKs) Within Select Regions of the World

1985 to 2030

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2.2 Historical and Forecast Air Travel Growth Rates in Southeast Asia

Southeast Asia is one of the world’s most dynamic regions for air travel. Passenger air travel within Southeast Asia—as measured in RPKs—grew at a CAAGR of 6.9% from 1985 to 2010. Although growth rates in the Southeast Asia region slowed somewhat during the recent global economic downturn, passenger travel by air within the region is projected to grow strongly in the future, at a compound average annual rate of 7.4% from 2010 to 2030. By comparison, passenger travel within the Asia-Pacific region is forecast to grow at a compound average annual growth rate of 6.9% during the same period.

Historical and forecast growth rates for passenger activity within the Southeast Asia region and between the Southeast Asia region and select world regions are shown in Table 7, below.

Forecast 1985~1990 1990~1995 1995~2000 2000~2005 2005~2010 1985~2010 2010~2030

Within Southeast Asia 11.1% 12.5% -0.1% 7.6% 3.7% 66.99%% 7.4%

Between Southeast Asia andChina 12.4% 9.7% 5.0% 9.1% 3.3% 77.88%% 8.3%Europe 11.8% 7.3% 7.8% 3.0% 0.0% 55.99%% 5.2%Middle East -6.2% 13.4% 3.1% 7.8% 13.7% 66.11%% 6.7%North America 13.8% 11.1% 4.4% 4.5% -2.7% 66.11%% 6.4%Northeast Asia 15.2% 6.4% 1.8% 7.0% 0.9% 66.11%% 6.0%Oceania 14.7% 6.4% 6.9% 4.8% 2.0% 66.99%% 5.9%South Asia 0.5% 6.9% 6.2% 8.1% 6.9% 55.77%% 8.5%

__________________Source: The Boeing Company, Current Market Outlook, 2003, 2009, and 2011.Northeast Asia: Japan, North Korea and South KoreaSouth Asia: India, Pakistan, and AfghanistanSoutheast Asia: Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Taiwan, Thailand, and Vietnam

CAAGR Historical

Table 7

HISTORICAL AND FORECAST ANNUAL PASSENGER GROWTH RATES Activity (in RPKs) Within and Between Southeast Asia and Select Regions of the World

1985 to 2030

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3 GROWTH FACTORS AND RELATIONSHIPS TO AIR TRAVEL

3.1 Gross Domestic Product

3.1.1 World GDP and Air Travel Activity

Historically, air travel activity has shown a strong relationship to overall economic activity, as measured by gross domestic product (GDP). Over the last four decades, world airline activity has grown at average rates per annum approximately double those of world GDP.

Figure 1, below, illustrates the historical relationship between GDP levels and airline activity. From 1971 to 2010, world GDP grew at a CAAGR of 3.1%, while world airline RPKs grew at a CAAGR of 6.0%.

____________Sources: Airline Monitor, Boeing and World Bank, World Development Indicators, 2011.

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Figure 1

RELATIONSHIP BETWEEN WORLD GDP AND WORLD AIRLINE RPKs 1971 to 2010

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3.1.2 Per Capita GDP and Air Travel Activity

Per capita income growth results from growth in gross domestic product (GDP) levels and employment. Increased disposable income results from growth in the middle class in countries that are experiencing increased per capita and household income levels.

In most areas of the world, per capita levels of GDP correlate with per capita air travel levels. Countries with high per capita levels of GDP tend to have high levels of air travel, while countries with low GDP per capita levels tend to have lower than average levels of air travel. Countries surrounded by water or with limited competing substitutes for transport tend to have higher-than-average travel levels than other countries do.

Figure 2, which follows, highlights this relationship for sixteen countries in the Asia-Pacific region. The propensity to travel in Thailand relative to the country’s per capita income levels is high relative to other countries at similar levels of GDP per capita. This is attributable, in part, to the country’s strong inbound tourism levels. The data indicate that as GDP per capita grows, as is expected to occur, travel demand should grow and continue to be high relative to other countries with similar levels of GDP per capita. (Note: the air travel revenue passenger kilometer (RPK) amounts include travel by both local residents and foreign visitors.)

Country

Domestic and int'l RPKs

(millions)

GDP (in current

US$) Domestic

and int'l RPKs Australia 95,579 55,590 4,300 Bangladesh 4,905 638 30 Brunei 5,260 31,228 12,614 Cambodia 18,000 814 1,260 China 400,610 4,382 299 India 99,692 1,265 82 Indonesia 46,974 3,015 200 Japan 138,079 42,820 1,083 Lao PDR 3,000 984 466 Malaysia 51,564 8,423 1,825 New Zealand 25,512 32,143 5,839 Philippines 28,087 2,007 299 Singapore 87,674 43,117 16,975 South Korea 91,759 20,591 1,876 Thailand 57,201 4,992 895 Vietnam 21,095 1,174 239

_________Sources: The S-A-P Group reference files, including ICAO, 2010 Annual Report. Note: Amounts include domestic and international air travel to/from reporting airports in the countries shown and may include some transfer passengers. Some amounts are estimated.

Per capita

Australia

Bangladesh

Brunei

China

IndiaIndonesia

JapanMalaysia

New Zealand

Singapore

South Korea

Thailand

Vietnam

y = 7E-05x0.9392

R² = 0.8507

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Figure 2

RELATIONSHIPS BETWEEN PER CAPITA GROSS DOMESTIC PRODUCT (GDP) AND AIR TRAVEL Select Countries in the Asia-Pacific Region

2010

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Figure 3, below, illustrates the per capita relationships between GDP and domestic air travel for thirteen countries in the Asia-Pacific region. Countries such as South Korea and Japan, which have competitive ground-based transportation systems, have lower-than-typical domestic air travel levels per capita.

Country

Domestic RPKs

(millions)

GDP (in current

US$) Domestic

RPKs Australia 48,677 55,590 2,190 Bangladesh 33 638 0 Cambodia 9,000 814 630 China 327,122 4,382 244 India 49,807 1,265 41 Indonesia 34,314 3,015 146 Japan 65,867 42,820 517 Malaysia 10,845 8,423 384 New Zealand 3,703 32,143 848 Philippines 7,891 2,007 84 South Korea 4,638 20,591 95 Thailand 3,944 4,992 62 Vietnam 8,374 1,174 95

_________Sources: The S-A-P Group reference files, including ICAO, 2010 Annual Report. Note: Amounts include domestic and international air travel to/from reporting airports in the countries shown and may include some transfer passengers. Some amounts are estimated.

Per capita

Australia

Cambodia

China

India

Indonesia

Japan Malaysia

New Zealand

Philippines South KoreaThailand

Vietnam

y = 7E-05x0.9392

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010)

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Figure 3

RELATIONSHIPS BETWEEN PER CAPITA GDP AND DOMESTIC AIR TRAVEL Select Countries in the Asia-Pacific Region

2010

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3.1.3 GDP Growth in Select Countries in Asia

According to the International Monetary Fund (IMF), GDP (in national currency units) increased from 2005 to 2010 at a compound average annual growth rate of 16.6% for China, exceeding that of most other countries in the world, and Thailand’s GDP5 grew at a CAAGR of 7.3%. China’s GDP per capita5 is projected to grow 11.7% per year from 2010 to 2015 and that of Thailand is forecast to grow at 6.6% during the same period6.

As shown in Tables 8 and 9, below, which document key economic indicators for select countries in the Asia-Pacific region, several countries in the region had high rates of growth from 2000 to 2010 for GDP (in current US Dollars). The IMF projects that total current GDP for the Asian countries shown below will experience strong growth over the next five years.

Table 8

KEY ECONOMIC INDICATORS Select Countries in Asia

2000-2015

Actual Projected

Country 2000 2005 2010 2011E 2013E 2015E 2005~ 2010

2010~ 2015E

Indonesia 165,521$ 285,856$ 706,735$ 822,631$ 997,944$ 1,212,317$ 19.8% 11.4%Thailand 122,725$ 176,352$ 318,850$ 332,470$ 397,986$ 460,501$ 12.6% 7.6%Malaysia 93,789$ 138,022$ 237,959$ 247,781$ 288,978$ 336,195$ 11.5% 7.2%Singapore 94,308$ 125,429$ 222,699$ 253,736$ 278,768$ 305,028$ 12.2% 6.5%Philippines 75,912$ 98,829$ 188,719$ 202,865$ 233,397$ 269,226$ 13.8% 7.4%Vietnam 31,176$ 52,931$ 103,574$ 118,567$ 143,272$ 176,312$ 14.4% 11.2%Lao PDR 1,640$ 2,726$ 6,341$ 6,946$ 7,979$ 9,615$ 18.4% 8.7%Cambodia 3,653$ 6,286$ 11,629$ 13,001$ 15,798$ 19,098$ 13.1% 10.4%

China 1,198,478$ 2,256,919$ 5,878,257$ 6,515,861$ 8,057,406$ 10,061,803$ 21.1% 11.3%India 479,871$ 809,723$ 1,537,966$ 1,704,063$ 2,061,138$ 2,516,310$ 13.7% 10.3%

___________________Source: IMF, World Economic Outlook Database (WEO), October 2011. Some amounts are estimated.(a) Gross domestic product, current prices (U.S. dollars). Values are based upon GDP in national currency and the exchange rate projections provided by country economists for the group of other emerging market and developing countries. Exchanges rates for advanced economies are established in the WEO assumptions for each WEO exercise.

GDP (current US$ million) (a) CAAGR growth

Estimated GDP (current US$ million) (a)

5 in national currency units. 6 Source: IMF, World Economic Outlook Database, April 2011.

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Table 9

KEY ECONOMIC INDICATORS Select Countries in Asia

2000-2015

Actual Projected

Country 2000 2005 2010 2011E 2013E 2015E 2005~ 2010

2010~ 2015E

Indonesia 807$ 1,300$ 3,015$ 3,421$ 4,052$ 4,816$ 18.3% 9.8%Thailand 1,983$ 2,825$ 4,992$ 5,174$ 6,120$ 6,997$ 12.1% 7.0%Malaysia 4,030$ 5,213$ 8,423$ 8,624$ 9,725$ 10,939$ 10.1% 5.4%Singapore 22,791$ 28,500$ 43,117$ 48,285$ 51,254$ 54,179$ 8.6% 4.7%Philippines 987$ 1,159$ 2,007$ 2,117$ 2,342$ 2,597$ 11.6% 5.3%Vietnam 402$ 637$ 1,174$ 1,328$ 1,566$ 1,882$ 13.0% 9.9%Lao PDR 304$ 464$ 984$ 1,059$ 1,173$ 1,363$ 16.2% 6.7%Cambodia 288$ 455$ 814$ 901$ 1,073$ 1,272$ 12.4% 9.3%

China 946$ 1,726$ 4,382$ 4,833$ 5,917$ 7,316$ 20.5% 10.8%India 460$ 716$ 1,265$ 1,412$ 1,663$ 1,978$ 12.0% 9.4%

Average (b) 816$ 1,345$ 2,980$ 3,296$ 3,950$ 4,771$ 17.2% 9.9%Average (c) 1,260$ 1,769$ 3,360$ 3,667$ 4,228$ 4,863$ 13.7% 7.7%

___________________Source: World Bank, World Development Indicators, and IMF, World Economic Outlook Database, October 2011. Some amounts are estimated.(a) Gross domestic product, current prices (U.S. dollars). Values are based upon GDP in national currency and the exchange rate projections provided by country economists for the group of other emerging market and developing countries. Exchanges rates for advanced economies are established in the WEO assumptions for each WEO exercise.(b) All Asian countries shown. (c) All Asian countries shown, except India and China.

Per Capita GDP (current US$) (a) Estimated Per Capita GDP (current US$) (a) CAAGR growth

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3.2 Effects of Economic Growth on Air Travel in Asia

Rising wages and broadening distribution of wealth in rapidly developing countries such as China and other countries in Asia will likely result in an increasing share of the population with the ability to travel by air.

3.2.1 China

According to the IMF, China’s GDP (in national currency units) grew at an average annual rate of 14.9% from 2000 to 2010. Although growth slowed somewhat during the recent economic downturn, growth was still high relative to most other countries in the world, and China’s GDP7 grew 16.7% from 2009 to 2010. The Civil Aviation Administration of China projects that the number of airline passengers in China will more than double between 2010 and 2020 as economic growth in the country stimulates air travel demand.

Aviation activity to, from, and within China rose from 2.3 million passengers in 1978 to 564.3 million in 2010. Total domestic airline passenger traffic in China is now the world’s second largest, following that of the United States. As the country’s growth continues, China serves as a large and growing regional neighbor with opportunities for trade, cooperation, travel, and tourism with Thailand.

3.2.2 Thailand

Thailand’s GDP7 grew 11.7% from 2009 to 2010. As Thailand and its neighbors have continued growing through the economic and other crises and as other Asian countries have recovered and are expecting future growth, Thai- and foreign-based carriers have the opportunity to benefit from the air travel demand spurred by regional economic growth.

Currently, only a small share of the Thai population travels by air. S-A-P anticipates that as the economy develops and the middle class grows and becomes a larger share of the population, air travel demand will increase. S-A-P also anticipates that as the middle class grows in Thailand’s secondary cities, demand for service from these cities to new domestic and international destinations will increase. This service can be supported by the increased use of small, regional jets.

Continued strong growth of GDP and per capita income, declining poverty rates and increasing disposable income is anticipated by S-A-P to generate strong demand for airline services in Asia and Thailand.

3.3 Population Growth and Urbanization

Population growth rates have particularly large impacts on the large populous countries in Asia as even small percentage growth rates result in large increases in total population numbers. Population growth in large countries such as China that are also experiencing strong economic growth will result in increased demand for air travel.

Urbanization rates can serve as an indicator of propensity to travel by air because urban dwellers have higher-than-average income levels and are located in closer proximity to airports than are non-urban dwellers. The development of existing and new urban centers is expected to create new destinations for regional travel in Asia

7 in national currency units. Source: IMF, World Economic Outlook Database, April 2011.

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Population and urbanization shares (the share of a country’s population living in urban areas) for countries in the Asia-Pacific region are expected to grow over the next 10 years, as shown in Table 10, below.

Number ofcities (a)

Share of urban

population2010 2010~'15 2010 2020 2005 2005

Country Actual CAAGR Actual Forecast actual actual Indonesia 234,377,000 1.3% 44.3% 48.1% 7 18.0%Philippines 94,013,000 2.0% 48.9% 52.6% 2 22.0%Vietnam 88,257,000 1.2% 30.4% 37.0% 3 50.0%Thailand 63,878,000 0.6% 34.0% 38.9% 1 32.3%Myanmar 61,187,000 2.0% 33.7% 40.7% 1 27.0%Malaysia 28,251,000 1.7% 72.2% 78.5% 1 8.0%Cambodia 14,289,000 1.0% 21.1% 23.8% 1 50.0%Lao PDR 6,443,000 1.9% 33.2% 44.2% -- 0.0%Singapore 5,165,000 1.7% 100.0% 100.0% 1 100.0%Total/average SE Asia 595,860,000 1.4% 46.4% 51.5% 17 34.1%

India 1,215,939,000 1.3% 30.0% 33.9% 40 40.0%China 1,341,414,000 0.5% 47.0% 55.0% 93 43.0%

World Total 6,818,066,000 1.1% 50.4% 54.4%______________Sources: IMF World Economic Outlook Database, April 2011, and UN, World Urbanization Prospects: The 2010 Revision Population Database, October 2011. Urbanization: World Urbanization Prospects, the 2009 Revision: Highlights. New York, 2010 Note: 2010~2016 population growth rates represent IMF forecasts.(a) Cities or agglomerations.

Cities of 1 million persons or greater

Population

Urbanisation (share of total

population

Table 10

POPULATION INDICATORS Select Countries in Asia and the Pacific

Multiple Years

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3.4 Trade and Tourism

3.4.1 Global Trade and Air Travel

Increased intra-regional business and reduced trade barriers between countries generate cross-border travel demand. High levels of trade and other commercial activities lead to increased demand for travel, including travel by air for business and tourism. Countries with competitive aviation industries and strong pricing competition generate increased levels of aviation activity per capita. Most countries in Asia have been moving toward increased business relationships, reduced trade barriers, increased trade and tourism, and increased air travel levels.

3.4.2 Tourism and Air Travel in Southeast Asia

International travel and tourism rates for countries in Southeast Asia have, as shown in Table 11, below, increased at strong rates from 2009 to 2010. As tourists from China and other Asia countries continue to travel within the region, air travel in the region can be expected to continue to experience healthy growth.

As shown below, Thailand in 2010 attracted the second greatest number of tourist arrivals amongst countries in Southeast Asia and the third greatest number amongst countries in Asia.

Arrivals Growth

Country 2010 2009~2010Malaysia 24,577,000 3.9%Thailand 15,936,400 12.6%Singapore 9,161,000 22.3%Indonesia 7,003,000 10.7%Vietnam 5,050,000 34.8%Philippines 3,520,000 16.7%Cambodia 2,399,000 17.3%

China 55,665,000 9.4%India 5,584,000 8.0%

___________Sources: World Tourism Organization (UNWTO), June 2011, and Thailand Department of Tourism, October 2011.

Table 11

INTERNATIONAL TOURIST ARRIVALS Arrivals at Select Countries

2010

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3.4.3 Historical Foreign Visitor Arrivals in Thailand

As shown in Figure 4, below, tourist arrivals in Thailand have grown over the past decade despite significant disruptions due to various causes:

• In late 2002, the first case of SARS (Severe Acute Respiratory Syndrome) appeared in Asia and spread rapidly to other areas during 2003. Tourism in Thailand and throughout Asia declined significantly due to public fears about the disease and official travel restrictions designed to identify and reduce the spread of infected travelers.

• The tsunami resulting from the 2004 Indian Ocean earthquake killed an estimated 230,000 people in the region. Thailand was one of the four most affected countries and tourism declined significantly after the tsunami. Although much of the tourism infrastructure was not extensively damaged, the psychological effects on potential tourism resulted in declines in tourism even to beach areas that were not impacted from the tsunami.

• In September 2006, the Royal Thai Army staged a coup d'état against the government of Prime Minister Thaksin Shinawatra.

• In 2008, ongoing political change and unrest in Thailand resulted in an escalation of protests and violence, including protests that closed Suvarnabhumi and Don Mueang international airports during late 2008, causing disruptions to immediate tourist activity and ongoing tourism during 2008 and 2009.

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_______________Source: Thailand Department of Tourism, October 2011.

0

2,000,000

4,000,000

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1998

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natio

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at Th

ailan

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Figure 4

INTERNATIONAL TOURIST ARRIVALS Thailand

1998 to 2010

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3.4.4 Mode of Transport for International Arrivals at Thailand

As shown in Table 12, below, air service is the most frequently employed mode for entry to Thailand.

Arrivals ShareAir 12,377,874 77.7%Land 3,072,585 19.3%Sea 485,941 3.0%Total 15,936,400 100.0%

___________Source: Thailand Department of Tourism, October 2011.

3.4.5 Visitor Arrivals in Thailand by Country of Residence

Table 13, below, provides a summary of the foreign visitor arrivals, by country of residence, in Thailand during 2009 and 2010. Amongst Asian countries, visitor arrivals from China, Malaysia, Korea and India grew rapidly from 2009 to 2010. We believe that a share of this growth can be attributed to the availability of LCC services to Thailand.

Table 12

MODE OF TRANSPORT International Arrivals at Thailand

2010

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GrowthNationality Number Share Number Share 2010~2009

Malaysia 1,757,813 12.4% 2,058,956 12.9% 17.1%Laos 655,034 4.6% 715,345 4.5% 9.2%Singapore 563,575 4.0% 603,538 3.8% 7.1%Vietnam 363,029 2.6% 380,368 2.4% 4.8%Indonesia 227,205 1.6% 286,072 1.8% 25.9%Philippines 217,705 1.5% 246,430 1.5% 13.2%Cambodia 96,586 0.7% 146,274 0.9% 51.4%Myanmar 79,279 0.6% 90,179 0.6% 13.7%Brunei 8,353 0.1% 7,073 0.0% -15.3% Subtotal (ASEAN) 3,968,579 28.0% 4,534,235 28.5% 14.3%

China 777,508 5.5% 1,122,219 7.0% 44.3%Japan 1,004,453 7.1% 993,674 6.2% -1.1%Korea 618,227 4.4% 805,445 5.1% 30.3%Taiwan 362,783 2.6% 369,220 2.3% 1.8%Hong Kong 318,762 2.3% 316,476 2.0% -0.7%Others 25,878 0.2% 25,895 0.2% 0.1% Subtotal (other Asia) 3,107,611 22.0% 3,632,929 22.8% 16.9%

South Asia 826,437 5.8% 995,321 6.2% 20.4%Oceania 737,459 5.2% 789,632 5.0% 7.1%Europe 4,059,988 28.7% 4,442,375 27.9% 9.4%Americas 853,381 6.0% 844,644 5.3% -1.0%Middle East 483,983 3.4% 569,334 3.6% 17.6%Africa 112,403 0.8% 127,930 0.8% 13.8% Subtotal 7,073,651 50.0% 7,769,236 48.8% 9.8%Total 14,149,841 100.0% 15,936,400 100.0% 12.6%

_______________Source: Thailand Department of Tourism, October 2011.

2009 2010International Tourist Arrivals

Table ___

INTERNATIONAL TOURIST ARRIVALS Thailand

CY2009 to CY2010

Table 13

INTERNATIONAL TOURIST ARRIVALS Thailand

2009 to 2010

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3.5 Airline Service and Fares

3.5.1 Medium-Haul and Long-Haul Opportunities

The introduction of larger aircraft as well as smaller aircraft that can fly further is projected by S-A-P to help to increase opportunities for international service to and from Thailand to other parts of the world.

3.5.2 Airfares and Low Cost Carriers

Over the last decade, price competition has increased as LCCs have grown in market share and airlines struggling with financial challenges and competition have improved efficiency and lowered travel costs. S-A-P anticipates that downward pressure on fares will continue, resulting in increasing demand.

3.6 Other Aviation Growth Factors

3.6.1 Geographical Characteristics

Countries with widely distributed population centers or with large surrounding bodies of water or mountains tend to have higher-than-average aviation activity levels. The combination of Asia’s large geographic size, the separation of many parts of Asia by bodies of water, and the general lack of competitive sea or land transport alternatives provide an ideal market for air travel.

Unlike in the US and Europe, where extensive road and rail networks provide a competitive substitute for air transport, modal competition is less common in Southeast Asia. The introduction of widely available low air fares in the Asia-Pacific region has greatly reduced the cost barrier to air travel and created a competitive transport substitute for ground travel for many people.

3.6.2 Liberalization of Air Travel

S-A-P anticipates that Asia-Pacific nations, especially those in Southeast and North Asia, will continue to remove regulatory restrictions on air services, leading to increased competition and lower airfares and cargo pricing.

3.6.3 Transportation Infrastructure

S-A-P anticipates that governments and the private sector will continue to make the necessary investments in airport capacity, air traffic control systems, and aircraft to foster tourism and other economic development. Airport capacity and airline capacity changes mutually support growth in one another. The rapid growth of air passenger demand in Asia has encouraged some governments and airport operators to develop new airport capacity to accommodate the increased demand.

Countries with limited forms of competitive ground transport options, such as road or rail, often have above average levels of aviation activity per capita. Just as cellular phone networks in developing countries that utilize the airways for communication can be less resource-intensive to develop than landline infrastructure can be, air carrier networks can similarly bypass roadway and railway development to facilitate long distance travel more quickly and efficiently than land-based options can.

As a result of investments in terminal and airfield capacity and increased aviation activity demand, airports in the Asia-Pacific region have experienced strong growth rates over the past decade. According to Airports Council International, Suvarnabhumi International Airport was, in terms of passenger movements in 2010, the 17th busiest airport in the world and the fifth busiest airport in Asia.

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4 COMPETITIVE LANDSCAPE

Potential business constraints to the future growth of Thai AirAsia include the competitive strength of large, well-established Asian carriers, as well as continued strong competition from other LCCs.

4.1 Key Financial and Operating Performance for Select Carriers

Table 14, which follows, provides key performance data for select full-service and low-cost carriers.

US$ millionsOperating Operating Operating Pax Pax Aircraft Oper revRevenue Profit Margin RASK CASK load factor (millions) in fleet per aircraft FY ending

AsiaJapan Airlines (Japan) $16,018 $2,216 13.8% 18.48 15.92 69% 34.8 174 92.1$ Mar 11ANA Group (Japan) $15,963 $797 5.0% 18.44 17.52 67% 45.7 152 105.0$ Mar 11Air China (China) $12,203 $1,617 13.2% 11.36 9.86 80% 46.2 255 47.9$ Dec 10Cathay Pacific (SAR China) $11,523 $1,813 15.7% 9.95 8.39 83% 26.8 121 95.2$ Dec 10China Southern Airlines (China) $11,317 $930 8.2% 8.05 7.39 79% 76.5 324 34.9$ Dec 10China Eastern Airlines (China) $11,089 $841 7.6% 8.87 8.20 78% 67.8 248 44.7$ Dec 10Singapore Airlines (Singapore) $10,957 $959 8.8% 10.14 9.25 78% 16.6 110 99.6$ Mar 11Korean Air (South Korea) $9,923 $949 9.6% 12.49 11.29 76% 22.9 131 75.7$ Dec 10Thai Airways Int'l (Thailand) $5,822 $717 12.3% 7.70 6.75 74% 18.2 90 64.7$ Dec 10China Airlines (Taiwan) $4,401 $470 10.7% 11.05 9.87 81% n/a 65 67.7$ Dec 10Average (Asia Top 10) $10,922 $1,131 10.5% 11.65 10.44 77% 39.5 167 72.8$

Average (Europe Top 10) $11,780 $305 2.9% 12.46 12.20 77% 31.3 175 61.2$

Average (N. Amer. Top 10) $12,316 $680 7.7% 10.03 9.30 81% 51.6 344 35.7$

AsiaJetstar/Jetstar Asia (Australia, Singapore) $2,241 $134 6.0% 7.48 7.04 79% 14.6 61 36.7$ Jun 10AirAsia (Malaysia) $1,231 $333 27.0% 5.05 3.69 76% 16.1 50 24.6$ Dec 10IndiGo (India) $750 $132 17.6% 6.56 5.40 84% 8.5 27 27.8$ Mar 11Skymark Airlines (Japan) $678 $163 24.1% 12.42 9.43 82% 4.4 13 52.1$ Mar 11Cebu Pacific Air (Philippines) $646 $143 22.2% 6.22 4.84 75% 10.5 29 22.3$ Dec 10spiceJet (India) $644 $29 4.5% 6.65 6.35 81% 6.8 21 30.7$ Mar 11Spring Airlines (China) $510 $71 13.9% 5.96 5.13 95% 5.9 18 28.3$ Dec 10Tiger Airways (Singapore, Australia) $469 $36 7.6% 5.98 5.53 85% 4.8 18 26.1$ Mar 11Air Do (Japan) $448 $21 4.7% n/a n/a 80% n/a 10 44.8$ Mar 11Thai AirAsia (Thailand) $391 $61 15.6% 5.15 4.35 78% 5.7 19 20.6$ Dec 10Average (Asia Top 10) $801 $112 14.3% 6.83 5.75 82% 8.6 27 31.4$

Average (Europe Top 10) $2,658 $162 5.2% 8.03 7.55 73% 21.6 80 42.4$

Average (N. Amer. Top 8) $2,957 $241 8.6% 0.07 0.06 82% 21.6 131 22.7$

______________Source: The S-A-P Group, based on industry sources, September 2011.Europe Mainline includes Lufthansa Group, Air France-KLM Group, IAG (British Airways, Iberia), SAS Group, Turkish Airlines SWISS, Aeroflot-Russian Airlines, Alitalia, TAP Portugal, Austrian.N. America Mainline includes United Continental Holdings, Delta Air Lines, AMR Corp, US Airways, Air Canada, Alaska Air Group, SkyWest Airlines, Republic Airways Holdings, Aeromexico, Copa Airlines. Europe LCCs include Air Berlin, Ryanair, EasyJet, Virgin, Thomson Airways, Aer Lingus, Norwegian, Vueling Airlines, WIZZ Air, and Icelandair Group.N. America LCCs include Southwest Airlines, JetBlue Airways, AirTran Airways, WestJet Airlines, Spirit Airlines, Virgin America, Allegiant Air, and Interjet.

US$ millions US cents

Mainline carriers

Low-cost carriers

Table 14

KEY FINANCIAL AND OPERATING PERFORMANCE Select Full-Service and Low-Cost Carriers

FY ending in 2010 and 2011

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4.2 Development of Low Cost Carriers

Historically, much of the focus of the global airline industry has been on creating opportunities to increase revenues. The success of LCCs around the world, however, has led many traditional passenger carriers to increase their focus on increasing operating efficiencies, start their own LCC subsidiaries, and compete against the many new LCCs that have initiated operations.

Based on the Boeing Company’s analysis of global scheduled airline data for October 2011, overall scheduled airline operations showed signs of moderating, but strong growth, with LCCs now having a worldwide scheduled capacity share of 26%, with an additional 7.7 million seats in the global LCC network compared with October 2010. Similar volume growth was experienced by the intra-Asia market. LCC presence within the Asia-Pacific region grew rapidly, increasing capacity by 2.29 million available seats to 18.9 million, an increase of 14%. Low-cost seats to and from the Asia-Pacific region increased 21% during the period.

Although the introduction of significant levels of LCC activity occurred later in Asia than in the US and Europe, LCC activity in Asia has grown rapidly over the past decade and continues to grow rapidly. Southeast Asia has seen the launch of a high share of Asia-based LCC operators, the result of relaxed aviation policies in the region. The introduction of widely available low airfares in the Asia-Pacific region has greatly reduced the cost barrier to air travel and created a competitive transport substitute for many people.

LCCs typically have operating costs, as measured in CASKs, that are substantially lower than those of FSC. Although LCC RASKs are also often lower than those of full-service carriers, as LCC activities grow their market shares and markets start to mature, LCC revenues tend to increase, as evidenced by improvements in their RASK.

4.2.1 Effects of LCC on the Asian Aviation Industry

The introduction and growth of LCCs have had several effects on the Asian aviation industry:

• LCC competition has encouraged established carriers to operate more efficiently, thereby driving down average airfares and stimulating demand across the entire market. Established carriers may choose to launch strong competitive responses to LCCs, including significant decreases in airfares, increases in seat capacity and flight frequency, and the start of new point-to-point flights, among others. Several Asian network carriers have introduced, or are planning to introduce their own LCCs.

• Airport operators in Malaysia and Singapore have created dedicated LCC passenger terminal facilities, which can lead to reduced airline operating costs and airport service fees that are paid by passengers. Some airport operators in the region are providing aeronautical charge discounts for new routes and for efficient use of airport facilities, such as quick aircraft turnarounds.

• The rapid growth in air travel that LCCs generate is encouraging some governments and airport operators to liberalize bilateral aviation agreements and to develop new airport capacity to accommodate the increased demand.

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Table 15, which follows, documents LCC seats as a share of weekly scheduled departing seats between and within select Asia-Pacific countries.

Table 15

LCC SEATS AS A SHARE OF TOTAL SCHEDULED MOVEMENTS Select Asia-Pacific Countries

Activity Period: 1-7 October 2011

Destination Domestic

International activity from all countries noted

International activity from

ThailandAustralia 23% 19% 7%Cambodia 16% 14% 13%China 2% 7% 13%Taiwan -- 3% --

India 57% 18% 8%Indonesia 47% 38% 37%Japan 26% 3% -- Malaysia 59% 52% 56%

New Zealand 15% 25% -- Philippines 74% 28% 18%Republic of Korea 32% 6% 10%Singapore n.a. 30% 43%

Thailand 53% 19% n.a.Vietnam 17% 14% 18%

_________________Source: The S-A-P Group analysis, based on data from OAG, October 2011.(a) International activity from/to the 14 countries noted.

Intra-regional (a)

4.3 Airline Infrastructure

Many airlines in Asia have plans for significant changes to their aircraft fleets. As new, higher-efficiency aircraft are integrated into an airline’s operations, long-term operating costs typically are reduced and, depending on the financial structure of the implementation, lower overall costs per passenger can result, leading to decreased average airfares and associated increases in demand.

The size of new aircraft available currently has grown significantly, particularly with the development of the Airbus A-380, which can hold over 800 passengers in a single-class configuration. Fleet modernization programs can also provide airlines with reduced fuel and other operating costs, including lower aircraft maintenance expenses. Operating a limited number of aircraft types can lead to reduced aircraft training and spare part costs.

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4.4 Asian Aviation Industry Growth Prospects

We believe that Southeast Asia’s domestic and international markets will enjoy strong long-term growth rates for several reasons:

• Proximity to major populations. Approximately 50% of the world’s population lives within a 2,500 nautical mile radius from Bangkok, indicating the potential size of the regional aviation market. However, as a result of low GDP per capita throughout most of the region and other factors, a large proportion of the population has, historically, been unable to afford air transportation. As mentioned previously, we expect the affordability of air travel to grow with increases in GDP per capita, which should result in higher population penetration.

• Location on major trade routes. Southeast Asia is well positioned between Europe and the Pacific region, as well as between North Asia and South Asia.

• Proximity to China. With its strong economic growth and increasingly relaxed restrictions on travel to foreign destinations, travelers from the world’s most populous country will create significant demand for leisure and business travel to Southeast Asian countries.

• Proximity to Australia. Australia has one of the most mature economies in the region, with a high GDP per capita, high levels of disposable income, higher propensity to travel per capita, and strong tourism connections with Thailand and other regions in Asia

• Location between South Asia and China. The region’s role as a destination for visitors from China (the world’s most populous country) and South Asia, which includes India (the world’s second most populous country), Pakistan (sixth), and Bangladesh (seventh) will grow in prominence as the people of these countries start to travel more frequently.

• Transport substitution. As income levels increase and air transport costs decrease, we expect air transport will substitute for land and sea-based transport modes such as rail, buses, and ferries. As shown in a previous figure, Thailand has a low per capita income compared to other countries in South East Asia, but a relatively higher propensity to travel than other countries with similar income levels. Therefore, we expect that as incomes increase in Thailand, residents will be able to make use of low-cost air carriers for their travels. As a result, we anticipate that air travel will increase at strong rates.

• Liberalization of aviation agreements. Southeast Asian countries have become more liberal with their aviation agreements, both within ASEAN and with other countries.

• Tourist infrastructure. The region’s well-developed tourist infrastructure will continue to attract leisure travelers.

• Urbanization. The share of the population in Southeast Asian countries living in cities is generally expected to continue to increase.

2,500 miles (~5.5 hours)

Bangkok

1,750 miles (~4 hours)

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4.5 Potential Constraints to Asia Aviation Industry Growth

The opportunities for industry-wide aviation activity growth could be offset by:

• Increased fuel prices and/or unfavorable currency exchange levels could constrain aviation demand if air and other travel costs increase and travelers’ disposable income levels decrease.

• Regional conflicts or scares. Civil unrest, terrorist events, or other events could constrain future activity levels.

• Travel restrictions. Government restrictions on travel, by limiting the number of entry/exit visas issued or by imposing high visa costs, could limit future aviation growth.

• Insufficient airport or airspace capacity. Socioeconomic or other constraints could result in delays or changes in plans by governments regarding planned infrastructure expansion.

• Environmental factors. Natural and man-made environmental events, such as haze, volcanic ash, and natural disasters, could impact future activity levels.

• Infrastructure constraints at regional airports. Potential constraints to airline travel growth could arise due to limited growth of infrastructure at regional airports outside of Thailand. Within Thailand, airport infrastructure is not expected to be a constraint due to the remaining capacity still available at the new Suvarnabhumi International Airport as well as the excess capacity at the old Bangkok airport, Don Mueang, which currently is serving approximately three million passengers, while at its peak served over thirty million.

5 REGULATORY ENVIRONMENT

5.1 Domestic Airline Regulation Structure in Thailand

Aviation in Thailand is regulated by the Department of Civil Aviation. The Department is in charge of “promoting, developing and regulating civil aviation affairs of Thailand to meet international standards and form extensive civil aviation network and services that will satisfy market demand, promote tourism as well as national economic growth and make Thailand a hub of aviation is South-East Asia.” Air service operations are approved and regulated by the department for domestic airlines operating in Thailand and international airlines serving Thailand.

The responsibilities of the Department include the following:

1. To implement the Air Navigation Act, Act on Certain Offences against Air Navigation and other civil aviation laws relating to licensing of pilot, aircraft mechanic and air traffic controller, aircraft registration, licensing of aerodrome and temporary landing area, authorization for setting up airlines, to monitor and inspect civil aviation activities to comply with the required standard and regulations, to prevent the sabotage of aircraft and airport as well as aircraft hijacking and to investigate aircraft accident.

2. To promote and develop national civil aviation infrastructure in order to build up nationwide air transport network and boost national aviation industry.

3. To systematize the civil aviation in accordance with regulations and universal standard to fully safeguard the rights of consumers and operators.

4. To set up and run affiliated airports to provide the public with quality services and to ensure safety of aircrafts, passengers and other activities pertaining to transport of goods, luggage and postal items by air.

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5. To cooperate with domestic and international organizations or agencies concerning civil aviation, to deal with international conventions and agreements such as bilateral and multilateral negotiations and signing of agreements on air traffic rights and aircraft standards and to act as a search and rescue centre for aircraft and vessel in distress.

The administration of most domestic airports is the responsibility of the Director of the Airports of the Department of Civil Aviation. Samui, Sukhothai, and Trat Airports are administered by Bangkok Airways Company Limited. Suvarnabhumi, Don Mueang, Chiang Mai, Mae Fah Luang-Chiang Rai, Hat Yai and Phuket International Airports are under AOT. U-Tapao Pattaya International Airport is the responsibility of the Royal Thai Navy.

5.2 International Regulations

International fight into, from or over Thailand territory are subject to the current Thailand regulations relating to civil aviation. These regulations correspond in all essentials to the standards and Recommended Practices contained in Annex 9 to the Convention on International Civil Aviation. To fly over or take-off or land in the territory of Thailand, foreign aircraft/airline is required to obtain prior per mission. Application for such permission shall be made to the Director of Air Transport Control Division as address in designated Authorities. No aircraft entering or leaving the Kingdom shall land before or depart except at or from a Customs Airport.

Scheduled international air services may be operated by a foreign airline into or in transit across Thailand in pursuance the International Air Services Transit Agreement, provided that the states in which the airline is registered is a contracting party to this agreement, or to an agreement between Thailand and the States in which the airline is registered.

5.3 Liberalization of the Aviation Industry

Studies have shown that the liberalization of air services can lead to new and better air services, thereby increasing trade in airlines services, gains in consumer welfare and economic growth. Liberal aviation agreements allow for increased competition on routes and lower airfares, thereby stimulating additional activity.

Traffic growth subsequent to liberalization of air services agreements between countries typically averaged between 12% and 35%, significantly greater than during years preceding liberalization. In a number of situations, growth exceeded 50%, and in some cases reached almost 100% of the pre-liberalization rates. The creation of the Single European Aviation Market in 1993 led to an average annual growth rate in traffic between 1995 and 2004 that was almost double the rate of growth in the years 1990 to 1994.

Countries across the Asia-Pacific region and in particular, Southeast Asia, are liberalizing broadly the international bilateral agreements that can, in their extreme, regulate items such as the precise number and type of carriers that can operate, the number of total seats that can be provided, and the levels of airfares that can be charged.

The December 2008 lifting of restrictions on the Kuala Lumpur-Singapore route offers a good example of the impact that the easing of aviation market restrictions can have. Capacity (as measured by weekly flight frequencies, according to OAG) on this route for the month of September 2009 increased 72.5% as compared to September 2008 levels.

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The S-A-P Group

5.4 ASEAN Member States and Open Skies

The trend of deregulation and liberalization in Asia is expected to continue, particularly amongst countries that are part of ASEAN.

ASEAN was established in 1967 with initially five member countries: Indonesia, Malaysia, Philippines, Singapore and Thailand. Its membership increased over time with Brunei joining in 1984, followed by Vietnam in 1995, Laos and Myanmar in 1997 and Cambodia in 1999. ASEAN was formed to promote regional peace, prosperity and stability.

5.4.1 Within ASEAN

Subsequent to an aviation liberalization roadmap adopted by ASEAN member states in 2004, in November 2010, the member states reaffirmed their collective commitment to building an ASEAN Single Aviation Market by 2015. The November 2010 ASEAN Multilateral Agreement on the Full Liberalisation of Passenger Air Services (MAFLPAS) and its two Protocols provides for further expansion of the scope of the ASEAN Multilateral Agreement on Air Services (MAAS) to include other ASEAN cities. The agreement and its protocols provides for designated airlines of a Member State to provide air services from any city with international airport in its territory to any city with international airport in the territory of the other Member States and vice-versa with full third, fourth, and fifth freedom traffic rights.

Aviation traffic freedoms are defined as follows:

First Freedom: the right to fly over a foreign country without landing there. Also known as the Technical Freedom, it is nearly universal, although some countries maintain restrictions and fees and designated routes may apply.

Second Freedom: the right to stop in another country solely for the purpose of refueling or carrying out maintenance in a foreign country on the way to another country. Because of longer range of modern airliners, second freedom rights are comparatively rarely exercised by passenger carriers today, but they are widely used by air cargo carriers, and are more or less universal between countries

Third Freedom: the right to fly and carry passengers from one's own country to another. This is known as the “first commercial freedom” and is the first right that requires more in-depth negotiation.

Fourth Freedom: the right to fly from another country to one's own. Third and fourth freedom rights are almost always granted simultaneously in bilateral agreements between countries.

Fifth Freedom: the right to fly between two foreign countries during flights while the flight originates or ends in one's own country. Known as “beyond rights”, it covers for example, a Thai airline flying from Bangkok to Sydney Australia, then on to Auckland New Zealand.

Sixth Freedom: the right to fly from a foreign country to another one while stopping in one's own country for non-technical reasons. Airlines in Asia use sixth-freedom rights extensively to fly passengers between Europe and Australasia (also known as the Kangaroo Route).

Seventh Freedom: the right to fly between two foreign countries while not offering flights to one's own country.

Eighth Freedom: the right to fly between two or more airports in a foreign country while continuing service to one's own country, for example, a Thai airline flying from Beijing to Shanghai to Bangkok.

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Ninth Freedom: the right to fly inside a foreign country without continuing service to one's own country, for example, a Thai airline flying from Beijing to Shanghai.

5.4.2 Outside of ASEAN

Chinese government aviation officials have signed an agreement with ASEAN to build a more liberal air service framework between China and the ASEAN countries. Other developments contributing to the eventual achievement of open skies are potential similar agreements forthcoming between ASEAN and India as well as ASEAN and Korea. China, Japan, and South Korea have indicated an interest in developing a unified aviation market comprising the ten ASEAN members plus China, Japan, India and South Korea, which could lead to the creation of an East Asian-plus-India Common Market. In addition, South Korea, China, and Japan have been working on a "North Asia Triangle" Open Skies agreement.

5.5 Open Skies Agreements with Thailand

Open skies agreements in effect in Thailand include agreements with the following countries:

• Bahrain • Brunei • Cambodia (ASEAN Agreement 2010) • China (through ASEAN agreement with China) • Indonesia (ASEAN Agreement 2010) • Kuwait

• Laos (ASEAN Agreement 2010) • Malaysia (ASEAN Agreement 2010) • Myanmar (ASEAN Agreement 2010) • Pakistan (MOU with limited open skies for cargo) • Philippines (ASEAN Agreement 2010) • Singapore

• South Korea • Sri Lanka • Switzerland • United States of America • Vietnam

B-36

INDEX TO FINANCIAL STATEMENTS

Page

Audited Proportionate Consolidated and Company Financial Statements of Asia Aviation PublicCompany Limited as of and for the Years Ended December 31, 2009, 2010 and 2011

Audit Report of Certified Public Accountant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3Statements of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7Statements of Changes in Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-8Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-10Notes to the Special Purpose Proportionate Consolidated and Company Financial Statements . . . . . . . . . F-12

Audited Financial Statements of Thai AirAsia Company Limited as of and for the Years EndedDecember 31, 2009, 2010 and 2011

Audit Report of Certified Public Accountant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-43Statements of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-44Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-46Statements of Changes in Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-47Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-48Notes to the Special Purpose Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-50

Unaudited Proportionate Consolidated and Company Interim Financial Information of Asia AviationPublic Company Limited as of and for the Three Months Ended March 31, 2011 and 2012

Review Report of Certified Public Accountant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-75Statements of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-77Statements of Comprehensive Income (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-80Statements of Changes in Shareholders’ Equity (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-81Statements of Cash Flows (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-83Condensed Notes to the Special Purpose Interim Proportionate Consolidated and Company Financial

Information (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-85

Unaudited Interim Financial Information of Thai AirAsia Company Limited as of and for the ThreeMonths Ended March 31, 2011 and 2012

Review Report of Certified Public Accountant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-100Statements of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-102Statements of Comprehensive Income (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-105Statements of Changes in Shareholders’ Equity (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-106Statements of Cash Flows (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-107Condensed Notes to Special Purpose Interim Financial Information (Unaudited) . . . . . . . . . . . . . . . . . . . . F-109

F-1

ASIA AVIATION PUBLIC COMPANY LIMITED(FORMERLY ASIA AVIATION COMPANY LIMITED)

SPECIAL PURPOSE PROPORTIONATE CONSOLIDATED AND COMPANYFINANCIAL STATEMENTS

31 DECEMBER 2011, 2010 AND 2009

F-2

F-3

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Statements of Financial PositionAs at 31 December 2011, 2010 and 2009

2011 2010 2009 2011 2010 2009

Notes Baht Baht Baht Baht Baht Baht

Assets

Current assets

Cash and cash equivalents 8 694,425,971 260,382,950 333,595,159 977,900 6,472,054 6,557,387

Cash at financial institutions

pledged as security 7,373,833 25,000,000 - - - -

Short-term investment 9 4,651,341 4,489,237 4,434,209 - - -

Trade and other receivables, net 10 97,835,916 55,286,737 83,791,094 - - -

Amounts due from

related parties 24.5 140,742,129 1,366,092,516 38,578,877 - - -

Short-term loan to a director 24.7 - 52,583,531 93,500,000 - - -

Inventories 26,128,736 3,195,014 2,363,268 - - -

Prepaid expenses 115,024,798 89,121,327 15,904,427 - - -

Value added tax receivable, net 351,470,624 135,384,430 103,232,924 - - -

Other current assets 13,392,997 43,855,459 10,042,857 3,530,000 - -

Total current assets 1,451,046,345 2,035,391,201 685,442,815 4,507,900 6,472,054 6,557,387

Non-current assets

Cash at financial institutions

pledged as security 28,559,991 12,487,800 - - - -

Investment in a joint venture 11 - - - 403,999,930 400,000,000 400,000,000

General investment 12 3,534,044 3,743,550 4,108,850 - - -

Leasehold improvements and

equipment, net 13 154,498,165 137,327,711 143,997,289 2,006 5,800 13,938

Intangible assets, net 14 7,274,065 10,563,422 5,445,554 1,052 2,012 3,296

Goodwill 15 286,184,317 286,184,317 286,184,317 - - -

Other non-current assets 16 292,419,374 240,112,467 201,115,898 - - 11,840

Total non-current assets 772,469,956 690,419,267 640,851,908 404,002,988 400,007,812 400,029,074

Total assets 2,223,516,301 2,725,810,468 1,326,294,723 408,510,888 406,479,866 406,586,461

The accompanying notes are an integral part of these special purpose proportionate consolidated and company financial statements.

2

Proportionate consolidated Company

F-4

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Statements of Financial Position (Cont'd)As at 31 December 2011, 2010 and 2009

2011 2010 2009 2011 2010 2009

Notes Baht Baht Baht Baht Baht Baht

Liabilities and shareholders'

equity

Current liabilities

Trade accounts payable 54,025,061 87,507,017 179,177,236 - - -

Other accounts payable 33,848,064 23,895,235 23,459,994 - - -

Short-term borrowings from

a financial institution 17 - 100,000,000 - - - -

Amounts due to related parties 24.6 184,156,928 2,081,108,171 2,109,270,066 - 486,987 93,166

Deferred revenues 1,385,345,343 1,186,722,330 737,189,266 - - -

Accrued expenses 247,386,536 194,954,635 231,149,578 4,577,061 100,000 23,000

Current portion of long-term

borrowing from a financial

institution 18 247,859,915 - - - - -

Current portion of finance -

lease liabilities 2,431,587 579,141 740,269 - -

Other current liabilities 7,175,962 9,758,086 8,385,698 20,736 5,167 6,942

Total current liabilities 2,162,229,396 3,684,524,615 3,289,372,107 4,597,797 592,154 123,108

Non-current liabilities

Long-term borrowing from

a financial institution 18 6,713,256 - - - - -

Finance lease liabilities 4,719,811 689,263 1,268,404 - - -

Employee benefit obligations 19 42,203,653 - - - - -

Total non-current liabilities 53,636,720 689,263 1,268,404 - - -

Total liabilities 2,215,866,116 3,685,213,878 3,290,640,511 4,597,797 592,154 123,108

The accompanying notes are an integral part of these special purpose proportionate consolidated and company financial statements.

3

Proportionate consolidated Company

F-5

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Statements of Financial Position (Cont'd)As at 31 December 2011, 2010 and 2009

2011 2010 2009 2011 2010 2009

Notes Baht Baht Baht Baht Baht Baht

Liabilities and shareholders'

equity (Cont'd)

Shareholders' equity

Share capital 20

Authorised share capital

Ordinary shares,

shares 4,850,000,000 shares

of par Baht 0.1 each

(2010 and 2009: 41,000,000

shares of par Baht 10 each) 485,000,000 410,000,000 410,000,000 485,000,000 410,000,000 410,000,000

Issued and paid-up share capital

Ordinary shares,

shares 4,100,000,000 shares

of paid-up Baht 0.1 each

(2010 and 2009: 41,000,000

shares of paid-up Baht 10 each) 410,000,000 410,000,000 410,000,000 410,000,000 410,000,000 410,000,000

Effect on additional proportion

of investment in

a joint venture 11 (15,526,868) - - - - -

Deficits (386,822,947) (1,369,403,410) (2,374,345,788) (6,086,909) (4,112,288) (3,536,647)

Total shareholders' equity 7,650,185 (959,403,410) (1,964,345,788) 403,913,091 405,887,712 406,463,353

Total liabilities and

shareholders' equity 2,223,516,301 2,725,810,468 1,326,294,723 408,510,888 406,479,866 406,586,461

The accompanying notes are an integral part of these special purpose proportionate consolidated and company financial statements.

4

Proportionate consolidated Company

F-6

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Statements of Comprehensive IncomeFor the years ended 31 December 2011, 2010 and 2009

2011 2010 2009 2011 2010 2009

Notes Baht Baht Baht Baht Baht Baht

Revenues 21 8,123,184,534 6,049,363,033 4,640,582,353 - - -

Operating costs (6,915,278,360) (4,982,586,529) (4,657,973,679) - - -

Gross profit (loss) 1,207,906,174 1,066,776,504 (17,391,326) - - -

Net gain on exchange rates 77,957,909 178,421,116 64,755,373 - - -

Other income 225,998,637 181,520,690 108,987,233 26,232 16,190 17,061

Profit before expenses 1,511,862,720 1,426,718,310 156,351,280 26,232 16,190 17,061

Selling expenses (223,941,917) (178,965,693) (121,511,922) - - -

Administrative expenses (181,869,947) (121,248,944) (120,510,823) (2,000,853) (591,831) (646,482)

Profit (loss) before finance costs

and income tax 22 1,106,050,856 1,126,503,673 (85,671,465) (1,974,621) (575,641) (629,421)

Finance costs (91,928,865) (121,561,295) (193,235) - - -

Profit (loss) before income tax 1,014,121,991 1,004,942,378 (85,864,700) (1,974,621) (575,641) (629,421)

Income tax - - - - - -

Profit (loss) for the year 1,014,121,991 1,004,942,378 (85,864,700) (1,974,621) (575,641) (629,421)

Total comprehensive income

(expense) for the year 1,014,121,991 1,004,942,378 (85,864,700) (1,974,621) (575,641) (629,421)

Earnings (loss) per share 23

Basic earnings (loss) per share 0.25 0.25 (0.02) (0.00) (0.00) (0.00)

The accompanying notes are an integral part of these special purpose proportionate consolidated and company financial statements.

5

Proportionate consolidated Company

F-7

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Statements of Changes in Shareholders' EquityFor the years ended 31 December 2011, 2010 and 2009

Other componentof equity

Issued and Effect on additionalpaid-up proportion of investment

share capital Deficits in a joint venture TotalNotes Baht Baht Baht Baht

Opening balance as at1 January 2009 410,000,000 (2,288,481,088) - (1,878,481,088)

Total comprehensiveexpense for the year - (85,864,700) - (85,864,700)

Closing balance as at31 December 2009 410,000,000 (2,374,345,788) - (1,964,345,788)

Opening balance as at1 January 2010 410,000,000 (2,374,345,788) - (1,964,345,788)

Total comprehensiveincome for the year - 1,004,942,378 - 1,004,942,378

Closing balance as at31 December 2010 410,000,000 (1,369,403,410) - (959,403,410)

Opening balance as at1 January 2011 410,000,000 (1,369,403,410) - (959,403,410)

Adjustment for adoption ofa new accounting standard 3.2 - (31,541,528) - (31,541,528)

Balance after adjustment 410,000,000 (1,400,944,938) - (990,944,938)Effect on additional proportion

of investment in a joint venture 11 - - (15,526,868) (15,526,868)Total comprehensive

income for the year - 1,014,121,991 - 1,014,121,991

Closing balance as at31 December 2011 410,000,000 (386,822,947) (15,526,868) 7,650,185

6

Proportionate consolidated

The accompanying notes are an integral part of these special purpose proportionate consolidated and company financial statements.

F-8

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Statements of Changes in Shareholders' Equity (Cont'd)For the years ended 31 December 2011, 2010 and 2009

Issued and paid-upshare capital Deficits Total

Note Baht Baht Baht

Opening balance as at 1 January 2009 410,000,000 (2,907,226) 407,092,774Total comprehensive expense for the year - (629,421) (629,421)

Closing balance as at 31 December 2009 410,000,000 (3,536,647) 406,463,353

Opening balance as at 1 January 2010 410,000,000 (3,536,647) 406,463,353Total comprehensive expense for the year - (575,641) (575,641)

Closing balance as at 31 December 2010 410,000,000 (4,112,288) 405,887,712

Opening balance as at 1 January 2011 410,000,000 (4,112,288) 405,887,712Adjustment for adoption of a new

accounting standard 3.2 - - -

Balance after adjustment 410,000,000 (4,112,288) 405,887,712Total comprehensive expense for the year - (1,974,621) (1,974,621)

Closing balance as at 31 December 2011 410,000,000 (6,086,909) 403,913,091

7

Company

The accompanying notes are an integral part of these special purpose proportionate consolidated and company financial statements.

F-9

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Statements of Cash FlowsFor the years ended 31 December 2011, 2010 and 2009

2011 2010 2009 2011 2010 2009Notes Baht Baht Baht Baht Baht Baht

Cash flows from operating activitiesProfit (loss) before income tax 1,014,121,991 1,004,942,378 (85,864,700) (1,974,621) (575,641) (629,421)Adjustments for:

Doubtful debts expenses (reversals) (1,434,189) (969,445) 1,272,595 - - -Depreciation 13 33,527,657 59,378,324 64,402,389 3,794 8,138 8,138Amortisation 14 2,460,984 2,223,776 1,537,816 960 1,284 1,284Loss (gain) on disposals and writes-off

of leasehold improvements andequipment and intangible assets 567,341 (706,119) 513,609 - - -

Estimated costs of aircraftsredelivery before maturities(Adjusted to actual) 22, 24.2 - (57,138,257) 173,348,702 - - -

Reversal of provision for loss onunwind interest rate swapagreements 22, 24.2 - - (3,046,410) - - -

Employee benefit expenses 19 9,890,526 - - - - -Unrealised gain on exchange rates (21,352,923) (1,000,536) (7,760,313) - - -Finance costs 91,928,865 121,561,295 193,235 - - -Interest income (67,541,623) (25,185,603) (4,794,832) (26,232) (16,190) (17,061)

1,062,168,629 1,103,105,813 139,802,091 (1,996,099) (582,409) (637,060)

Changes in operating assets and liabilities:(Excluding the effect on

additional proportion ofinvestment in a joint venture)

- Cash at financial institutionspledged as security 2,273,965 (37,487,800) - - - -

- Trade and other receivables (39,435,191) 29,473,802 (55,967,239) - - -- Amounts due from related parties 1,269,742,659 (1,306,339,648) (29,749,078) - - -- Inventories (22,815,370) (831,746) 321,892 - - -- Prepaid expenses (22,832,947) (73,216,900) 18,231,347 - - -- Value added tax receivable (209,946,335) (32,151,506) (19,029,482) - - -- Other current assets 31,152,636 (33,812,602) (3,469,745) (3,530,000) - -- Other non-current assets (46,937,577) (38,996,569) (70,085,160) - 11,840 (132)- Trade accounts payable (35,673,960) (90,560,769) 9,877,856 - - -- Other accounts payable 8,968,778 435,241 (55,990,704) - - -- Amounts due to related parties (1,962,745,382) (92,444,265) 243,892,523 (486,987) 393,821 88,321- Deferred revenues 168,948,125 449,533,064 117,034,850 - - -- Accrued expenses 49,060,816 (36,194,943) (22,107,446) 4,477,061 77,000 1,000- Provision for loss on unwind

interest rate swap agreements - - (194,453,590) - - -- Other current liabilities (2,697,114) 1,372,388 3,599,419 15,569 (1,775) 3,973

Cash generated from (used in) operation 249,231,732 (158,116,440) 81,907,534 (1,520,456) (101,523) (543,898)Interest paid (12,015,037) (140,666) (193,235) - - -Interest received 25,212,310 1,373,053 4,636,102 26,232 16,190 17,061

Net cash generated from (used in)operating activities 262,429,005 (156,884,053) 86,350,401 (1,494,224) (85,333) (526,837)

The accompanying notes are an integral part of these special purpose proportionate consolidated and company financial statements.

8

Proportionate consolidated Company

F-10

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Statements of Cash Flows (Cont’d)For the years ended 31 December 2011, 2010 and 2009

2011 2010 2009 2011 2010 2009Notes Baht Baht Baht Baht Baht Baht

Cash flows from investing activitiesShort-term loan granted to a director 24.7 (31,520,600) (31,700,000) (93,500,000) - - -Repayments of short-term loan

to a director 24.7 81,520,600 75,200,000 - - - -Investment in a joint venture, net of

cash and cash equivalents obtained 11 8,802,867 - - - - -Payment for additional

investment in a joint venture 11 - - - (3,999,930) - -Proceeds from general investment 12 278,800 365,300 - - - -Payment for general investment 12 - - (389,500) - - -Proceeds from disposals of leasehold

improvements and equipment 3,964,598 1,181,099 1,728,505 - - -Payments for leasehold improvements

and equipment (41,424,662) (54,293,178) (50,614,954) - - -Payments for intangible assets (1,196,806) (7,341,644) (2,150,532) - - -Interest received 3,328,696 - - - - -

Net cash generated from (used in)investing activities 23,753,493 (16,588,423) (144,926,481) (3,999,930) - -

Cash flows from financing activitiesProceed from (repayment of) short-term

borrowings from a financialinstitution 17 (100,000,000) 100,000,000 - - - -

Repayments of finance lease (3,054,306) (740,269) (686,720) - - -Proceed from long-term borrowing

from a financial institution 18 480,581,626 - - - - -Repayments of long-term borrowing

from a financial institution 18 (233,404,958) - - - - -Interest paid (17,614,762) - - - - -

Net cash generated from (used in)financing activities 126,507,600 99,259,731 (686,720) - - -

Net increase (decrease) in cash andcash equivalents 412,690,098 (74,212,745) (59,262,800) (5,494,154) (85,333) (526,837)

Cash and cash equivalentsat the beginning of the year 260,382,950 333,595,159 385,097,646 6,472,054 6,557,387 7,084,224

Effect of exchange rates 21,352,923 1,000,536 7,760,313 - - -

Cash and cash equivalentsat the end of the year 694,425,971 260,382,950 333,595,159 977,900 6,472,054 6,557,387

Non-cash transactions

Purchase of motor vehiclesunder finance lease agreements 8,962,183 - - - - -

Purchase of leasehold improvements andequipment which have not been paid - 335,048 1,444,498 - - -

The accompanying notes are an integral part of these special purpose proportionate consolidated and company financial statements.

9

Proportionate consolidated Company

Significant non-cash transactions during the years ended 31 December 2011, 2010 and 2009 are as follows:

F-11

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

10

1 General information

Asia Aviation Public Company Limited (formerly Asia Aviation Company Limited) (“the Company”) is a public companyand incorporated in Thailand. The address of the Company’s registered office is as follows:

60/1 Monririn Tower 3rd floor, B Building, Soi Sailom, Phahol-yothin Road, Samsennai, Phayathai, Bangkok 10400.

The Company and its joint venture’s operating office is located at 99 OSC Building, Kingkaew Road, Rachatewa,Bangplee, Samutprakarn 10540.

The principal business operations of the Company and its joint venture are summarised below:

The Company’s principal business operation is to invest in low-fare airline company which is Thai AirAsia Company Limited.The Company’s shareholding interest is 51%.

The Joint Venture, Thai AirAsia Company Limited, principally provides low-fare airline service.

The Company has registered as a public company with the Department of Business Development, Ministry of Commerceon 26 December 2010 and has changed its name to Asia Aviation Public Company Limited since then.

The special purpose proportionate consolidated and company financial statements were approved by the Board of Directorson 19 March 2012.

2 Financial position

As at 31 December 2011, the Company and its joint venture had total current liabilities exceeding its total current assets atamount of Baht 711 million (2010: Baht 1,649 million and 2009: Baht 2,604 million). Major balances in current liabilitieswere deferred revenues, which the Company and its joint venture will be able to provide the services as normal operations.In addition, revenues for the year have increased by Baht 2,074 million, and there was a net profit for the year ended 31December 2011 amounting to Baht 1,014 million (2010: Baht 1,005 million and 2009: loss Baht 85 million). The relatedfinancial information for the year then ended of the Company and its joint venture, revealed a significant improvement inoperating results. Therefore, these special purpose proportionate consolidated financial statements have been prepared on agoing concern basis.

3 Accounting policies

The principal accounting policies adopted in the preparation of these special purpose proportionate consolidated and companyfinancial statements are set out below:

3.1 Basis of preparation

The special purpose proportionate consolidated and company financial statements have been prepared in accordancewith Thai Generally Accepted Accounting Principles under the Accounting Act B.E. 2543, being those ThaiFinancial Reporting Standards (“TFRS”) issued under the Accounting Profession Act B.E.2547, and the financialreporting requirements of the Securities and Exchange Commission under the Securities and Exchange Act. for thepurpose of inclusion in the Company’s offering circular as part of the Company’s initial public offering of shares toinvestors.

The special purpose proportionate consolidated and company financial statements are based on local statutoryfinancial statements which are adjusted and reclassified to conform with changes in presentation in the current yearand to comply with the requirement of the Department of Business Development, TFRS and the reportingrequirements of the Securities and Exchange Commission. The statutory company financial statements for the yearended 31 December 2009 were prepared in accordance with Thai Accounting Standards which are designated asapplicable to non-public companies and the Company has chosen not to apply TAS No. 24 “Related PartyDisclosures”, No. 31 “Interests in Joint Ventures”, No. 36 “Impairment of Assets” and No. 107 “Financial InstrumentsDisclosure and Presentation”.

The special purpose proportionate consolidated financial statements have been prepared in its shares of the jointventure’s individual income and expenses, assets and liabilities and cash flows of Thai AirAsia Company Limitedwhich is its joint venture from the Company’s interest at 51% portion (2010 and 2009: 50%) (Note 11).

F-12

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

11

3 Accounting policies (Cont’d)

3.1 Basis of preparation (Cont’d)

The special purpose proportionate consolidated and company financial statements have been prepared under thehistorical cost convention, except if disclosed otherwise in the accounting policies.

The preparation of special purpose proportionate consolidated and company financial statements are in conformitywith Thai Generally Accepted Accounting Principles requires the use of certain critical accounting estimates. It alsorequires management to exercise its judgment in the process of applying the Company and its joint venture’saccounting policies. The areas involving a higher degree of judgment or complex areas where assumptions andestimates are significant to the special purpose financial statements are disclosed in note 5.

An English version of the special purpose proportionate consolidated and company financial statements has been preparedfrom the special purpose proportionate consolidated and company financial statements that are in the Thai language.In the event of a conflict or a difference in interpretation between the two languages, the Thai language specialpurpose proportionate consolidated and company financial statements shall prevail.

3.2 New accounting standards, new financial reporting standards, new interpretation, and amendments toaccounting standards

a) Commencing 1 January 2011, the Company and its joint venture have applied the following new accountingstandards, new financial reporting standards, new interpretations, and amendments to accounting standards(collectively “the accounting standards”) that are mandatory for the financial year beginning on or after1 January 2011. The accounting standards which are relevant to the Company and its joint venture are listedbelow:

TAS 1 (Revised 2009) Presentation of Financial StatementsTAS 2 (Revised 2009) InventoriesTAS 7 (Revised 2009) Statement of Cash FlowsTAS 8 (Revised 2009) Accounting Policies, Changes in Accounting Estimates and ErrorsTAS 10 (Revised 2009) Events after the Reporting PeriodTAS 16 (Revised 2009) Property, Plant and EquipmentTAS 17 (Revised 2009) LeasesTAS 18 (Revised 2009) RevenueTAS 19 Employee BenefitsTAS 24 (Revised 2009) Related Party DisclosuresTAS 27 (Revised 2009) Consolidated and Separate Financial StatementsTAS 31 (Revised 2009) Interests in Joint VenturesTAS 33 (Revised 2009) Earnings per ShareTAS 34 (Revised 2009) Interim Financial ReportingTAS 36 (Revised 2009) Impairment of AssetsTAS 37 (Revised 2009) Provisions, Contingent Liabilities and Contingent AssetsTAS 38 (Revised 2009) Intangible AssetsTFRS 3 (Revised 2009) Business CombinationsTSIC 31 Revenue - Barter Transactions Involving Advertising Services

F-13

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

12

3 Accounting policies (Cont’d)

3.2 New accounting standards, new financial reporting standards, new interpretation, and amendments toaccounting standards (Cont’d)

The new accounting standards which are considered to have an impact to the special purpose proportionateconsolidated and company financial statements are described below:

TAS 1 (Revised 2009), the revised standard requires entities to present the statement of financial positionand the statement of comprehensive income. Entities can choose whether to present one statement (thestatement of comprehensive income) or two statements (the statement of income and statement ofcomprehensive income). The Company and its joint venture choose to present one statement.

TAS 19 deals with accounting for employee benefits which requires the entity to measure the defined benefitplan and other long-term employee benefits by using the Projected Unit Credit method (PUC). An entity canchoose to recognise any actuarial gain or loss for defined benefit plan either in other comprehensive incomeor profit or loss. The Company and its joint venture choose to record that gain or loss in the statement ofcomprehensive income. Actuarial gain or loss for other long-term employee benefits shall be recognised inprofit or loss.

The Company and its joint venture apply this standard for the first time by choosing to adjust a total amountagainst the deficits as of 1 January 2011. The effects of the adoption of the above standards to the specialpurpose financial statements are as follows:

Proportionateconsolidated Company

Baht Baht

Statements of changes in shareholders’ equityDeficits as of 1 January 2011 increased 31,541,528 -

TAS 27 (Revised 2009), the revised standard requires the effects of all transactions with non-controllinginterests to be recorded in equity if there is no change in control and these transactions will no longer resultin goodwill or gains and losses. The standard also specifies the accounting when control is lost. Anyremaining interest in the entity is re-measured to fair value, and gain or loss is recognised in profit or loss.The company and its joint venture will apply the revised standard prospectively to transactions with non-controlling interests from 1 January 2011.

TFRS 3 (Revised 2009), the revised standard continues to apply the purchase method to businesscombinations, with some significant changes. For example, all payments to purchase a business are to berecorded at fair value at the acquisition date, with contingent payments classified as debt and aresubsequently re-measured through profit or loss. There is a choice on an acquisition-by-acquisition basis tomeasure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’sproportionate share of the acquiree’s net assets. All acquisition-related costs should be expenses. TheCompany and its joint venture have applied the revised standard prospectively to all business combinationsince 1 January 2011.

F-14

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

13

3 Accounting policies (Cont’d)

3.2 New accounting standards, new financial reporting standards, new interpretation, and amendments toaccounting standards (Cont’d)

b) New accounting standards and amendments to accounting standards which are currently relevant to theCompany and its joint venture but the Company and its joint have not yet early adopted them:

Effective for the periods beginning on or after 1 January 2013TAS 12 Income taxesTAS 21 (Revised 2009) The Effects of Changes in Foreign Exchange Rates

The management has assessed and determined that the new accounting standards and amendments toaccounting standards will not significantly impact the financial statements being presented except the newaccounting standard as disclosed below:

TAS 12 deals with taxes on income, comprising current tax and deferred tax. Current tax assets andliabilities are measured at the amount expected to be paid to or recovered from the taxation authorities,using tax rates that tax law have been enacted or substantively enacted by the end of the reporting period.Deferred taxes are measured by based on the temporary difference between the tax base of an asset orliability and its carrying amount in the financial statements and using the tax rates that are expected to applyto the period when the asset is realised or the liability is settled. The Company and its joint venture willapply this standard from 1 January 2013 retrospectively with an expected incur of deferred tax account andan impact to retained earnings and income tax expense. The management is currently assessing the impact ofapplying this standard.

3.3 Investment in a joint venture

The Company’s interest in jointly controlled entities is accounted for using proportionate consolidation in theproportionate consolidated financial statements. The Company combines its share of the joint venture’s individual incomeand expenses, assets and liabilities and cash flows on a line-by-line basis with items in the financial statements.

In the Company’s separate financial statements, interest in jointly controlled entities is accounted for using the costmethod.

3.4 Foreign currency translation

Items included in the financial statements are measured using Thai Baht. The proportionate consolidated financialstatements are presented in Thai Baht.

Foreign currency transactions are translated into Thai Baht using the exchange rates prevailing at the date of thetransaction. Monetary assets and liabilities denominated in foreign currencies are translated to Thai Baht at theexchange rates prevailing at the statement of financial position date. Gains and losses resulting from the settlementof foreign currency transactions and from the translation of monetary assets and liabilities denominated in foreigncurrencies are recognised in profit or loss.

3.5 Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquidinvestments with maturities of three months or less from the date of acquisition and are not pledged as security.

3.6 Trade accounts receivable

Trade accounts receivable are carried at the original invoice amount and subsequently measured at the remainingamount less any allowance for doubtful receivables based on a review of all outstanding amounts at the end of year.The amount of the allowance is the difference between the carrying amount of the receivable and the amountexpected to be collectible. Bad debts are written off during the year in which they are identified and recognised inprofit or loss within administrative expenses.

F-15

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

14

3 Accounting policies (Cont’d)

3.7 Inventories

Inventories comprise food, beverage, merchandise and consumables.

Food, beverage and merchandise are stated at the lower of cost or net realisable value. Cost is determined by the first-in, first-out method. The cost of purchase comprises both the purchase price and costs directly attributable to theacquisition of the inventories such as import duties and transportation charges, less all attributable discounts,allowances or rebates.

Consumables used internally for aircraft repairs and maintenance are stated at the lower of cost or net realisable value.Cost is determined on the weighted average basis, and comprises the purchase price and incidentals incurred inbringing the inventories to their present location and condition.

Net realisable value is the estimate of the selling price in the ordinary course of business, less estimated cost necessaryto make the sale. Allowance is made, where necessary, for obsolete, slow moving or defective inventories.

3.8 General investment

The Company and its joint venture’s general investment is non-marketable equity security. The classification depends onthe purpose for which the investment was acquired. Management determines the appropriate classification of itsinvestment at the time of the purchase and re-evaluates such designation on a regular basis.

General investment is carried at cost less impairment.

A test for impairment is carried out when there is a factor indicating that an investment might be impaired. If thecarrying value of the investment is higher than its recoverable amount, impairment loss is charged to profit or loss.

On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged orcredited to profit or loss. When disposing of part of the Company and its joint venture’s holding of particular investmentin debt or equity securities, the carrying amount of the disposed part is determined by the weighted average carryingamount of the total holding of the investment.

3.9 Leasehold improvements and equipment

Leasehold improvements and equipment are stated at cost less accumulated depreciation. Historical cost includesexpenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, onlywhen it is probable that future economic benefits associated with the item will flow to the Company and its jointventure and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. Allother repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Depreciation is calculated on the straight-line basis to write-off the cost of each asset, to its residual value over theestimated useful life as follows:

Leasehold improvements 5 yearsComputers 5 yearsFurniture, fixtures and office equipment 5 yearsOperating equipment 5 yearsMotor vehicles 5 yearsAircraft spare parts 4 - 10 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reportingperiod.

F-16

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

15

3 Accounting policies (Cont’d)

3.9 Leasehold improvements and equipment (Cont’d)

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately toits recoverable amount.

Gains or losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised inprofit or loss.

3.10 Intangible assets

3.10.1 Computer software

Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bringto use the specific software. These costs are amortised over their estimated useful lives of 5 years on thestraight-line basis.

3.10.2 Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Company’s share of thenet identifiable assets of the acquired joint venture undertaking at the date of acquisition. Goodwill onacquisition of joint venture is reported in the proportionate consolidated statement of financial position asgoodwill and is reported in the company statement of financial position as part of the investment in a jointventure. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocationis made to those cash generating units or group of cash generating units that are expected to benefit from thebusiness combination in which the goodwill arose.

Goodwill is tested for impairment as part of the overall investment in a joint venture balance.

Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses.Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include thecarrying amount of goodwill relating to the entity sold.

3.11 Leases - where the Company and its joint venture are the lessees

Leases of assets which substantially transfer all the risks and rewards of ownership are classified as finance leases.Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased assets or thepresent value of the minimum lease payments. Each lease payment is allocated to the principal and to the financecharges so as to achieve a constant rate on the finance balance outstanding. The outstanding rental obligations, netof finance charges, are included in finance lease liabilities. The interest element of the finance cost is charged toprofit or loss over the lease period. The assets acquired under finance lease is depreciated over the useful life of theasset.

Leases not transferring a significant portion of the risks and rewards of ownership to the lessee are classified asoperating leases. Payments made under operating leases (net of any incentives received from the lessor) are chargedto profit or loss on a straight-line basis over the period of the lease.

When an operating lease is terminated before the lease period has expired, any payment required to be made to thelessor by way of penalty is recognised as an expense in the period in which termination takes place.

3.12 Borrowings

Borrowings are recognised initially at the proceeds received, net of transaction costs incurred. Borrowings aresubsequently stated at amortised cost as the redemption value. Borrowings are classified as current liabilities unlessthe Company and its joint venture have an unconditional right to defer settlement of the liability for at least 12months after the statement of financial position date.

F-17

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

16

3 Accounting policies (Cont’d)

3.13 Employee benefits

3.13.1 Provident fund

The Company and its joint venture operate a provident fund that is a defined contribution plan. The fundassets are held in a separate trust fund and are managed by an external fund manager. The provident fund isfunded by payments from employees and by the Company and its joint venture. The Company and its jointventure have no legal or constructive obligations to pay further contributions if the fund does not holdsufficient assets to pay all employees the benefits relating to employee service in the current and priorperiods. The Company and its joint venture’s contributions to the provident fund are charged to profit orloss in the year to which they relate.

3.13.2 Retirement benefits

The retirement benefit is a defined benefit plan that an employee will receive on retirement according to ThaiLabour Law depending on age and years of service.

The liability of retirement benefit is recognised in the statement of financial position using the present value of theobligation at the statement of financial position date. The retirement benefit is calculated annually by anindependent actuary using the projected unit credit method. The present value of the benefit obligation isdetermined by discounting the estimated future cash outflows using interest rates of referred government bonds thatare denominated in the currency in which the benefits will be paid and that have terms to maturity approximating tothe terms of the related retirement liabilities. Actuarial gains and losses arising from experience adjustments andchanges in actuarial assumptions are charged or credited to equity in other comprehensive income in the period inwhich they arise.

3.14 Provisions

Provisions, which exclude the provision relating to employee benefits, are recognised when the Company and its joint venturehave a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources willbe required to settle the obligation, and a reliable estimate of the amount can be made. Where the Company and its jointventure expect a provision to be reimbursed, the reimbursement is recognised as a separate assets but only when thereimbursement is virtually certain.

3.15 Revenue recognition

Passenger revenue and other related services such as baggage handling fee, assigned seat revenue and cancellationand documentation revenue are recognised upon the rendering of services. The value of seats sold for whichservices have not been rendered is included in deferred revenues.

Revenue from sales comprises receivable for the sale of goods net of output tax, rebates and discounts. Revenuefrom sales of goods is recognised when significant risks and rewards of ownership of the goods are transferred tothe buyer.

Interest income is recognised on a time proportion basis, taking account of the principal outstanding and theeffective rate over the period to maturity, when it is determined that such income will accrue to the Company andits joint venture.

Other income is recognised on an accrual basis.

F-18

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

17

4 Financial risk management

4.1 Financial risk factors

The Company and its joint venture’s activities expose them to a variety of financial risks, including the effects ofchanges in fuel price and foreign currency exchange rates. The Company and its joint venture’s overall riskmanagement programme focuses on the votality of financial markets and seeks to minimise potential adverse effectson the financial performance. The Company and its joint venture do not have policies to use derivative financialinstruments for trading or speculative purpose.

Fuel price risk

The Company and its joint venture are exposed to the fluctuation of fuel price. To manage the risk of fuel pricefluctuation, AirAsia Berhad, a related party, is carried out the risk management on behalf of the Company and itsjoint venture (Note 4.2).

Foreign exchange risk

Foreign currency assets mainly represent deposits at financial institutions, other deposits and amounts due fromrelated parties. Foreign currency liabilities mainly represent trade accounts payable and amount due to relatedparties.

The Company and its joint venture are exposed to foreign exchange risk arising from currency exposures mainly inrespect of US Dollars. The Company and its joint venture manage risk by natural hedge to the extent that paymentsfor foreign currency payables are matched against receivables denominated in the same foreign currency. However,the Company and its joint venture do not use any derivative financial instruments to hedge foreign currencyexposure.

Interest rate risk

The Company and its joint venture’s interest rate risk arises from short-term borrowings, long-term borrowing,amount due from related parties and amounts due to related parties. Borrowings issued at variable rates andamounts due from and due to related parties issued at fixed rate. Management considers that interest rate risk is notsignificant. However, all interest rate derivative transactions, which may be incurred, are subject to approval by theBoard of Directors before execution.

Credit risk

Most of the Company and its joint venture’s income, being passenger revenue, is normally paid by clients in advance.The credit risk incurred from amounts due from related parties and short-term loan to a director is low.Management is therefore of the opinion that credit risk is not significant. The Company and its joint venture have notentered into any derivative contracts relating to credit risk. Cash transactions are limited to high credit qualityfinancial institutions.

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability offunding through an adequate amount of credit facilities and the ability to close out market positions. Due to thedynamic nature of the underlying business, the Company and its joint venture Treasury aims at maintaining flexibilityin funding by keeping credit lines available.

4.2 Accounting for derivative financial instruments and hedging activities

Derivative financial instruments, which the Company and its joint venture used to manage risk, comprise fuel priceswap agreements.

Fuel price swap agreements

AirAsia Berhad, a related party, has entered into fuel price swap agreements with third parties which protect theCompany and its joint venture from the risk of movements in fuel price. The Company and its joint venture haveentered into the agreement with AirAsia Berhad under the term of the agreement that gains or losses on fuel priceswap agreements are allocated to the Company and its joint venture based on proportion of fuel consumption on amonthly basis. The Company and its joint venture recorded these transactions in profit or loss as a component ofoperating costs when they incur.

F-19

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

18

4 Financial risk management (Cont’d)

4.3 Fair value estimation

Fair values of financial assets and liabilities are approximate their carrying amounts because their periods ofmaturities are short, therefore, there are no significant risk that would impact the Company and its joint venture’sfuture cash flows.

Fuel price swap agreements

The fair value of fuel price swap agreements at the statement of financial position date is as follows:

Proportionate consolidated Company2011 2010 2009 2011 2010 2009

US Dollars US Dollars US Dollars US Dollars US Dollars US Dollars

Favourable fuel priceswap agreements 821,892 - 74,165 - - -

There was no outstanding fuel price swap agreement as at 31 December 2010.

5 Critical accounting estimates, assumptions, and judgements

Estimates, assumptions, and judgements are continually evaluated and are based on historical experience and other factors,including expectations of future events that are believed to be reasonable under the circumstances.

Aircraft maintenance under operating leases

The joint venture has a commitment to maintain aircrafts under operating lease agreements, a provision is made throughoutthe lease term for the rectification obligations contained within the lease agreements. The provision is based on estimatedfuture repair and maintenance costs of major airframe, certain engine maintenance checks and estimated one-off costs willbe incurred at the end of the lease by charging to profit or loss according to the number of flying hours in each year.

6 Capital risk management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern inorder to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure toreduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders,return capital to shareholders, issue new shares or sell assets to reduce debt.

7 Segment information

The Company and its joint venture do not disclose the segment information because there is no significant businesssegment other than the provision of air transportation services.

F-20

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

19

8 Cash and cash equivalentsProportionate consolidated Company2011 2010 2009 2011 2010 2009Baht Baht Baht Baht Baht Baht

Cash on hand 3,248,952 10,171,366 7,112,545 - - 1,250Deposits held at call with banks 585,811,055 250,211,584 326,482,614 977,900 6,472,054 6,556,137Short-term bank deposits 3,365,999 - - - - -Bill of exchange with maturity

of three months or less 101,999,965 - - - - -

Total cash and cash equivalents 694,425,971 260,382,950 333,595,159 977,900 6,472,054 6,557,387

The interest rate of deposits held at call with banks was 1.40% per annum (2010: 0.50% per annum and 2009: 0.50%per annum).

As at 31 December 2011, interest rates of short-term bank deposits and bill of exchange with maturity of three months orless were 14.00% per annum and 3.00% per annum, respectively (2010 and 2009: nil).

9 Short-term investment

Movements of short-term investment are summarised as follows:

Proportionate consolidated Company2011 2010 2009 2011 2010 2009Baht Baht Baht Baht Baht Baht

Opening net book amount 4,489,237 4,434,209 4,275,482 - - -Effect on additional proportion -of investment in a joint venture 90,127 - - - - -

Interest received 71,977 55,028 158,727 - - -

Closing net book amount 4,651,341 4,489,237 4,434,209 - - -

The summary of short-term investment is as follows:

Proportionate consolidated Company2011 2010 2009 2011 2010 2009Baht Baht Baht Baht Baht Baht

Fixed deposits with maturity ofover than three monthsbut within twelve months 4,651,341 4,489,237 4,434,209 - - -

Total short-term investment 4,651,341 4,489,237 4,434,209 - - -

The average interest rate of fixed deposits with maturity of over three months but within twelve months was 1.57% perannum (2010: 1.23% per annum and 2009: 1.25% per annum).

F-21

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

20

10 Trade and other receivables, netProportionate consolidated Company2011 2010 2009 2011 2010 2009Baht Baht Baht Baht Baht Baht

Trade accounts receivable 79,456,542 40,603,844 34,885,685 - - -Less Allowance for doubtful

accounts - (1,434,189) (2,403,634) - - -

Trade accounts receivable, net 79,456,542 39,169,655 32,482,051 - - -Accrued revenues 16,596,705 2,809,863 38,991,465 - - -Other accounts receivable 1,782,669 13,307,219 12,317,578 - - -

Total trade and otherreceivables, net 97,835,916 55,286,737 83,791,094 - - -

Outstanding trade accounts receivable can be analysed by age as follows:

Proportionate consolidated Company2011 2010 2009 2011 2010 2009Baht Baht Baht Baht Baht Baht

Up to 3 months 71,932,116 36,900,006 24,773,483 - - -3-6 months 3,805,546 568,199 3,293,000 - - -6-12 months 2,553,899 553,948 219,248 - - -Over 12 months 1,164,981 2,581,691 6,599,954 - - -

79,456,542 40,603,844 34,885,685 - - -Less Allowance for doubtful

accounts - (1,434,189) (2,403,634) - - -

79,456,542 39,169,655 32,482,051 - - -

11 Investment in a joint venture

Details of jointly controlled company are as follows:

Company2011 2010 2009

Par valueBaht

Totalnumber of

% ofshareholding

TotalNumber of

% ofshareholding

TotalNumber of

% ofshareholding

Business per share shares percent shares percent shares percent

Thai AirAsiaCompany Limited

providing alow-fare

airlineservice 10 20,399,993 51.00 20,000,000 50.00 20,000,000 50.00

Thai AirAsia Company Limited is jointly controlled by the Company and AirAsia Investment Ltd. (formerly AAInternational Ltd.), incorporated in Malaysia, which own 51% and 49% of the joint venture’s shares, respectively.Investment in Thai AirAsia Company Limited is considered as investment in a joint venture.

Movements of investment in a joint venture during the year are as follows:Company

2011 2010 2009Baht Baht Baht

Opening net book amount 400,000,000 400,000,000 400,000,000Additional investment in a joint venture 3,999,930 - -

Closing net book amount 403,999,930 400,000,000 400,000,000

F-22

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

21

11 Investment in a joint venture (Cont’d)

On 8 November 2011, the Company entered into the Agreement for Sale and Purchase Shares in Thai AirAsia CompanyLimited with a director of Thai AirAsia Company Limited to purchase 399,993 shares additionally at a par value of Baht 10constituting 1% of total issued and paid-up share capital of its joint venture, Thai AirAsia Company Limited. The totalpurchase value was Baht 3,999,930. Therefore, the Company’s interest in Thai AirAsia Company Limited increased from 50%to 51% from that date. However, the additional investment did not result in control according to the shareholders’ agreement.

Details of net assets acquired and effect of the additional proportion of investment in a joint venture are as follows:

As at8 November 2011(a)

Baht

Purchase consideration 3,999,930Net identifiable assets (liabilities) (11,526,938)

Effect on additional proportion of investment in a joint venture 15,526,868

Cash paid for the additional proportion of investment 3,999,930Less Proportionate cash and cash equivalents of a joint venture (12,802,797)

Cash inflows on the additional proportion of investment in a joint venture (8,802,867)

Net assets at 100% interest of assets and liabilities in Thai AirAsia Company Limited are as follows:

As at8 November 2011(a)

Baht

Cash and cash equivalents 1,280,302,080Short-term investment 9,012,844Trade accounts receivable and amounts due from related parties 451,513,613Inventories and other current assets 1,006,392,758Cash at financial institutions pledged as security 72,000,035General Investment 6,929,500Leasehold improvements and equipment, net 281,220,782Intangible assets and other non-current assets 555,102,117Trade accounts payable and amount due to a related party (568,717,581)Deferred revenues (2,967,540,700)Accrued expenses and other current liabilities (447,020,475)Long-term borrowing from a financial institution (739,663,251)Finance lease liabilities (15,084,652)Employee benefit obligations (77,161,203)

Identifiable net assets (liabilities) (1,152,714,133)

Interest acquired 1.00%Proportionate identifiable net assets (liabilities) (11,526,938)

(a) The carrying amount of asset and liabilities was based on 30 September 2011(reviewed), which was the nearestaccounting period date, to the acquisition date (8 November 2011) which the financial information was available.

Investment in a joint venture as at 31 December 2011, 2010 and 2009 includes goodwill of Baht 286,184,317.

F-23

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

22

11 Investment in a joint venture (Cont’d)

The following amounts represent assets, liabilities, and revenues and profit (loss) of the joint venture:

2011 2010 2009Baht Baht Baht

Non-current assets 953,495,582 808,454,277 709,277,034Current assets 2,836,350,864 4,058,324,477 1,357,864,022

Total assets 3,789,846,446 4,866,778,754 2,067,141,056

Non-current liabilities 105,170,074 1,378,526 2,536,808Current liabilities 4,230,651,645 7,368,351,104 6,578,591,164

Total liabilities 4,335,821,719 7,369,729,630 6,581,127,972

Net assets (545,975,273) (2,502,950,876) (4,513,986,916)

Revenues 16,157,597,567 12,098,726,066 9,281,164,705

Profit (loss) before income tax 2,020,058,659 2,011,036,040 (170,470,558)Income tax - - -

Profit (loss) for the year 2,020,058,659 2,011,036,040 (170,470,558)

12 General investment

Proportionate consolidated Company2011 2010 2009 2011 2010 2009Baht Baht Baht Baht Baht Baht

Opening book amount 3,743,550 4,108,850 3,719,350 - - -Effect on additional proportion

of investment in a joint venture 69,294 - - - - -Increase in investment - - 389,500 - - -Decrease in investment (278,800) (365,300) - - - -

Closing book amount 3,534,044 3,743,550 4,108,850 - - -

General investment is the investment in ordinary shares of Aeronautical Radio of Thailand Limited.

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F-27

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

26

13 Leasehold improvements and equipment, net (Cont’d)

CompanyOffice

equipmentBaht

At 1 January 2009Cost 40,687Less Accumulated depreciation (18,611)

Net book amount 22,076

For the year ended 31 December 2009Opening net book amount 22,076Depreciation charge (8,138)

Closing net book amount 13,938

At 31 December 2009Cost 40,687Less Accumulated depreciation (26,749)

Net book amount 13,938

For the year ended 31 December 2010Opening net book amount 13,938Depreciation charge (8,138)

Closing net book amount 5,800

At 31 December 2010Cost 40,687Less Accumulated depreciation (34,887)

Net book amount 5,800

For the year ended 31 December 2011Opening net book amount 5,800Depreciation charge (3,794)

Closing net book amount 2,006

At 31 December 2011Cost 40,687Less Accumulated depreciation (38,681)

Net book amount 2,006

F-28

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

27

14 Intangible assets, netProportionate consolidated

Computersoftware

Computer undersoftware installation Total

Baht Baht Baht

At 1 January 2009Cost 9,475,285 988,304 10,463,589Less Accumulated amortisation (5,630,751) - (5,630,751)

Net book amount 3,844,534 988,304 4,832,838

For the year ended 31 December 2009Opening net book amount 3,844,534 988,304 4,832,838Additions 816,163 1,334,369 2,150,532Transfers 549,483 (549,483) -Amortisation charge (1,537,816) - (1,537,816)

Closing net book amount 3,672,364 1,773,190 5,445,554

At 31 December 2009Cost 10,840,931 1,773,190 12,614,121Less Accumulated amortisation (7,168,567) - (7,168,567)

Net book amount 3,672,364 1,773,190 5,445,554

For the year ended 31 December 2010Opening net book amount 3,672,364 1,773,190 5,445,554Additions 4,958,267 2,383,377 7,341,644Transfers 1,432,324 (1,432,324) -Amortisation charge (2,223,776) - (2,223,776)

Closing net book amount 7,839,179 2,724,243 10,563,422

At 31 December 2010Cost 17,231,522 2,724,243 19,955,765Less Accumulated amortisation (9,392,343) - (9,392,343)

Net book amount 7,839,179 2,724,243 10,563,422

For the year ended 31 December 2011Opening net book amount 7,839,179 2,724,243 10,563,422Effect on additional proportion of investment

in a joint venture 126,191 55,404 181,595Additions 91,864 1,104,941 1,196,805Writes-off and adjustments, net (619) (2,206,154) (2,206,773)Transfers 287,805 (287,805) -Amortisation charge (2,460,984) - (2,460,984)

Closing net book amount 5,883,436 1,390,629 7,274,065

At 31 December 2011Cost 15,769,674 1,390,629 17,160,303Less Accumulated amortisation (9,886,238) - (9,886,238)

Net book amount 5,883,436 1,390,629 7,274,065

F-29

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

28

14 Intangible assets, net (Cont’d)

CompanyComputer

softwareBaht

At 1 January 2009Cost 6,420Less Accumulated amortisation (1,840)

Net book amount 4,580

For the year ended 31 December 2009Opening net book amount 4,580Amortisation charge (1,284)

Closing net book amount 3,296

At 31 December 2009Cost 6,420Less Accumulated amortisation (3,124)

Net book amount 3,296

For the year ended 31 December 2010Opening net book amount 3,296Amortisation charge (1,284)

Closing net book amount 2,012

At 31 December 2010Cost 6,420Less Accumulated amortisation (4,408)

Net book amount 2,012

For the year ended 31 December 2011Opening net book amount 2,012Amortisation charge (960)

Closing net book amount 1,052

At 31 December 2011Cost 6,420Less Accumulated amortisation (5,368)

Net book amount 1,052

F-30

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

29

15 Goodwill

No impairment loss was required for the carrying amount of goodwill as assessed at 31 December 2011, 2010 and 2009 bymanagement as the recoverable amount was in excess of the carrying amount.

The recoverable amount of a cash-generating unit (CGU) contained goodwill is determined based on fair value less cost tosell calculation. The calculation uses pre-tax cash flow projection based on financial budget approved by managementcovering a five-year period. Cash flows beyond the five-year period is extrapolated using estimated growth rates, the cashflow projections are based on long-term business plans with a corresponding increase in capital expenditure to support thegrowth rate. These cash flows are then aggregated with a terminal value. The growth rate does not exceed the long-termaverage growth rate for the business in which the CGU operates.

The key assumptions used for fair value less cost to sell calculation are as follows:

Growth rate1 3.00%Discount rate2 6.75%

1 Weighted average growth rate used to extrapolate cash flow beyond the budget period.

2 Pre-tax discount rate, determined from the Company incremental borrowing rate, is applied to the cash flow projection.

16 Other non-current assets

Proportionate consolidated Company2011 2010 2009 2011 2010 2009

Note Baht Baht Baht Baht Baht Baht

Aircraft rentaldeposits 24.8 253,912,027 205,285,063 167,814,986 - - -

Fuel price swapdeposits 24.8 8,045,374 8,412,400 8,412,400 - - -

Rental deposits 9,276,291 9,100,722 9,242,503 - - -Other deposits 21,185,682 17,314,282 15,646,009 - - 11,840

Total othernon-current assets 292,419,374 240,112,467 201,115,898 - - 11,840

17 Short-term borrowings from a financial institution

Proportionate consolidated Company2011 2010 2009 2011 2010 2009Baht Baht Baht Baht Baht Baht

Promissory notes - 100,000,000 - - - -

Total short-term borrowingsfrom a financial institution - 100,000,000 - - - -

Short-term borrowings from a financial institution were four-month promissory notes with a local commercial bank whichwere due for repayment in 2011 and had interest rate at MLR (approximately 6.56% per annum). The Company and its jointventure used their fixed deposit account amounting to Baht 25 million (proportionated) as the collateral for thesepromissory notes. During the year ended 31 December 2011, the Company and its joint venture had already repaid theseborrowings.

F-31

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

30

18 Long-term borrowing from a financial institution

Maturity of long-term borrowing from a financial institution is as follows:

Proportionate consolidated Company2011 2010 2009 2011 2010 2009Baht Baht Baht Baht Baht Baht

Within 1 year 247,859,915 - - - - -Over 1 year but less than 5 years 6,713,256 - - - - -

254,573,171 - - - - -

Movements of long-term borrowing from a financial institution are summarised as follows:

Proportionateconsolidated Company

Baht Baht

For the year ended 31 December 2011Opening net book value - -Effect on additional proportion of investment in a joint venture 7,396,503 -Addition during the year 480,581,626 -Loan repayments (233,404,958) -

Closing net book value 254,573,171 -

On 25 April 2011, the joint venture entered into a borrowing agreement with a local commercial bank with respect to thecredit facility of Baht 495 million (proportionate) in order to repay debts to related parties. This borrowing bears aninterest at the rate of MLR - 1% per annum (approximately 6.65% per annum), with a repayment term within 2 years.

This borrowing is secured by a fixed deposit account amounting to Baht 25 million (proportionate). In addition, theCompany and its joint venture have to maintain deposits at bank not less than amount of Baht 255 million (proportionate)over the borrowing periods.

F-32

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

31

19 Employee benefit obligations

Movements of the retirement benefit obligations over the year are as follows:

Proportionateconsolidated Company

Note Baht Baht

For the year ended 31 December 2011Opening book amount as at 1 January 2011 - -Adjustment to deficits brought forward as at 1 January 2011 3.2 31,541,528 -Effect on additional proportion of investment in a joint venture 771,599 -Current service costs 8,556,614 -Interest costs 1,333,912 -Actuarial (gain) loss - -Benefit paid - -

Closing book amount as at 31 December 2011 42,203,653 -

The amounts recognised in profit or loss are as follows:

Proportionateconsolidated Company

2011 2011Baht Baht

Current service costs 8,556,614 -Interest costs 1,333,912 -

Total, included in staff costs 9,890,526 -

The principal actuarial assumptions used are as follows:

Proportionateconsolidated Company

Discount rate % per annum 4.16 -Future salary increase rate % per annum 5.34 - 7.00 -Resignation rate % per annum 0.00 - 11.00 -

F-33

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

32

20 Share capital

Number ofauthorised

ordinary Issued and paid-up OrdinaryPar value shares ordinary shares Shares

Baht Shares Shares Baht

At 1 January 2009 10.00 41,000,000 41,000,000 410,000,000Issue of shares - - - -

At 31 December 2009 10.00 41,000,000 41,000,000 410,000,000

At 1 January 2010 10.00 41,000,000 41,000,000 410,000,000Issue of shares - - - -

At 31 December 2010 pre-split 10.00 41,000,000 41,000,000 410,000,000

At 26 December 2011 post-split 0.10 4,100,000,000 4,100,000,000 410,000,000Additional shares registered 0.10 750,000,000 - -

At 31 December 2011 0.10 4,850,000,000 4,100,000,000 410,000,000

At the Extraordinary Shareholders’ Meeting held on 26 December 2011, there were matters approved by the shareholdersas follows:

An alteration of par value from Baht 10 per share to Baht 0.10 per share. Therefore, the number of theCompany’s shares increased from 41 million shares to 4,100 million shares. The Company registered thealteration of par value with the Ministry of Commerce on 26 December 2011.

An increase in the authorised share capital of the Company from 4,100 million shares to 4,850 millionshares by issuing additional ordinary shares of 750 million shares with a par value of Baht 0.10 each. TheCompany registered the increase in the additional shares with the Ministry of Commerce on 26 December2011.

The allocation of new additional ordinary shares of no greater than 750 million shares with a par value ofBaht 0.10 per share for the Initial Public Offering.

21 Revenues

Revenues from sales and services are as follows:

Proportionate consolidated Company2011 2010 2009 2011 2010 2009Baht Baht Baht Baht Baht Baht

Passenger revenues 6,630,354,597 5,130,154,251 3,791,146,240 - - -Baggage handling and

other service fees 1,332,005,113 769,468,940 746,243,009 - - -In-flight revenues 80,275,240 67,635,474 53,822,472 - - -Freight revenues 80,549,584 82,104,368 49,370,632 - - -

Total revenues 8,123,184,534 6,049,363,033 4,640,582,353 - - -

F-34

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

33

22 Expense by nature

The following expenditure items, classified by nature, have been charged in arriving at the operating profit (loss):

Proportionate consolidated Company2011 2010 2009 2011 2010 2009

Notes Baht Baht Baht Baht Baht Baht

Depreciation andamortisation 13,14 35,988,641 61,602,100 65,940,205 4,754 9,422 9,422

Staff costs 720,936,869 561,691,372 460,624,324 437,636 475,720 447,598Fuel costs 3,220,341,012 1,986,982,945 1,667,316,398 - - -Aircraft rental 24.2 1,371,072,992 1,100,295,587 856,182,091 - - -Repair and maintenance 553,552,554 482,440,936 632,052,773 - - -Ramp and airport

operating costs 686,780,497 581,190,754 515,431,659 - - -Estimated costs of aircraft

redelivery before maturities(Adjusted to actual) 24.2 - (57,138,257) 173,348,702 - - -

Loss on unwind fuel priceswap agreements 24.2 - - 11,278,537 - - -

Reversal of provision forloss on unwind interestrate swap agreements 24.2 - - (3,046,411) - - -

23 Earnings (loss) per share

Basic earnings (loss) per share is calculated by dividing the net profit (loss) attributable to shareholders by the weightedaverage number of paid-up ordinary shares outstanding during the year.

Proportionate consolidated Company2011 2010 2009 2011 2010 2009

Net profit (loss) attributable toshareholders (Baht) 1,014,121,991 1,004,942,378 (85,864,700) (1,974,621) (575,641) (629,421)

Weighted average number ofpaid-up ordinary sharesoutstanding (Shares) 4,100,000,000 4,100,000,000 4,100,000,000 4,100,000,000 4,100,000,000 4,100,000,000

Basic earnings (loss) per share(Baht) after share split 0.25 0.25 (0.02) (0.00) (0.00) (0.00)

The above calculations already have been reflected the share spilt as mentioned in note 20.

The Company does not have diluted ordinary shares as at 31 December 2011, 2010 and 2009.

F-35

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

34

24 Related party transactions

Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, orare under common control with, the Company, including holding companies, subsidiaries and fellow subsidiaries arerelated parties of the Company. Associates and individuals owning, directly or indirectly, an interest in the voting power ofthe Company that gives them significant influence over the enterprise, key management personnel, including directors andofficers of the Company and close members of the family of these individuals and companies associated with theseindividuals also constitute related parties.

In considering each possible related party relationship, attention is directed to the substance of the relationship, and notmerely the legal form.

The major shareholder of the Company is Mr. Tassapon Bijleveld, which own 55% of the Company’s ordinary shares.

Related party transactions were carried out on conditions as follows:

Pricing policies

- Interest income At a mutual agreed rate and equivalent to interest expenses rate paidto other related parties.

- Share of loss (gain) on fuel price swap agreements Based on fuel consumption ratio.- Chargeable staff costs for shared accounting services Actual staff costs allocated by number of aircrafts.- Aircraft rental For aircrafts owned by AirAsia Berhad, rental charge is based

on AirAsia Berhad's cost of capital. For sub-leased aircrafts,rental charge is based on master agreement that AirAsiaGroup has leased from a third party adjust with someassumptions to reflect The joint venture’s credit risk profile.

- Aircraft repair and maintenance Based on the average of the contractual amount between AirAsiaBerhad and the vendor, adjusted for annual escalation andstepped incremental rates under the master agreement.

- Purchase of merchandises and equipment At the purchase price.- Management fee expenses At agreement price with AirAsia Berhad.- Booking fee expenses At agreement price which approximates the master agreement

that AirAsia Group has agreed with third parties.- Interest expenses At a rate equivalent to AirAsia Group’s borrowing rate.

The following significant transactions were carried out with related parties:

24.1) Income

Proportionate consolidated Company2011 2010 2009 2011 2010 2009Baht Baht Baht Baht Baht Baht

Interest incomeOther related parties 62,718,814 21,036,364 - - - -A director 668,139 2,583,531 - - - -

63,386,953 23,619,895 - - - -

F-36

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

35

24 Related party transactions (Cont’d)

The following significant transactions were carried out with related parties: (Cont’d)

24.2) Purchases of goods and services

Proportionate consolidated Company2011 2010 2009 2011 2010 2009Baht Baht Baht Baht Baht Baht

Share of loss (gain)from fuel priceswap agreements

Other related party (6,558,801) (38,170,833) 126,530,736 - - -

Chargeable staff costsfor shared accountingservices

Other related parties (17,005,329) (17,499,648) - - - -

Aircraft rentalOther related party 1,371,072,992 1,100,295,587 856,182,091 - - -

Aircraft repair andmaintenance

Other related party 501,725,050 402,809,684 484,342,417 - - -

Purchase ofmerchandisesand equipment

Other related party 26,937,820 45,661,396 27,801,551 - - -

Managementfee expenses

Other related party 7,423,069 7,638,986 8,271,320 - - -

Booking fee expensesOther related party 28,745,760 18,373,947 16,530,897 - - -

Estimated costs ofaircraft redeliverybefore maturities

(Adjusted to actual)Other related party - (57,138,257) 173,348,702 - - -

Interest expensesOther related party 74,322,470 121,420,629 - - - -

Loss on unwind fuelprice swap agreements

Other related party - - 11,278,537 - - -

Reversal of provisionfor loss on unwindinterest rate swapagreements

Other related party - - (3,046,410) - - -

F-37

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

36

24 Related party transactions (Cont’d)

The following significant transactions were carried out with related parties: (Cont’d)

24.2) Purchases of goods and services (Cont’d)

Aircraft redelivery agreement

During the year 2009, the joint venture entered into aircraft redelivery agreement with AirAsia (Mauritius) Limited,a lessor, who was a related party to redeliver Boeing aircrafts before the end of leasing periods with an intention toenter into new aircraft rental agreements to save repair and maintenance costs of the aircrafts. The joint venture’smanagement estimated the proportionate amount of costs of aircraft redelivery before maturities amounting to Baht273.50 million and recorded these costs as operating costs during the years 2007, 2008 and 2009. However,management has made a subsequent adjustment for a difference between the estimation and the actual proportionateamount of Baht 57.14 million during the year 2010. The difference was due to the fact that the joint venture couldskip some technical checking stages during redelivery process.

Fuel price swap agreements

During the year 2009, AirAsia Berhad, the related party had terminated some of its fuel price swap agreements withthird parties before their maturities and allocated penalty charge to the joint venture at proportionate of Baht 11.28million. The joint venture recorded these costs as operating costs for the year then ended 31 December 2009.During the years 2011 and 2010, there was no such transaction.

Interest rate swap agreements

AirAsia Berhad, the related party has entered into purchase aircraft agreements for using in AirAsia Group. It hasentered into loan agreement for aircraft purchasing and interest rate swap agreements which protect the jointventure from the risk of movements in interest rates of loan agreements with third parties.

During the year 2008, AirAsia Berhad has terminated interest rate swap agreements with third parties before theirmaturities because of a significant decrease in interest rate and allocated a penalty charge to the joint venture. Inview of continuing uncertainties in the global economy, AirAsia Berhad has evaluated the global economicsituation and made arrangements to further terminations of its swap positions. AirAsia Berhad has estimated theamount of loss on the termination in respect of these interest rate swap agreements and allocated it to the jointventure at proportionate amount of Baht 197.50 million. The joint venture recorded these costs in the financialstatements for the year then ended 31 December 2008. AirAsia Berhad called for the payments of these costs duringthe year 2009 at proportionate amount of Baht 194.46 million. The joint venture recorded the difference betweenactual payments and provision for loss amounting to Baht 3.05 million (proportionate) in profit or loss. And as at31 December 2009, the joint venture presented the outstanding balances under amounts due to related parties.

During the years 2011 and 2010, the joint venture had no terminated interest rate swap agreements with third partiesbefore their maturities.

24.3) Management remunerations

Key management includes directors (executive and non-executive). The compensation paid or payable to keymanagement for employee services is shown below:

Proportionate consolidated Company2011 2010 2009 2011 2010 2009Baht Baht Baht Baht Baht Baht

Salaries and other short-termemployee benefits 23,329,959 14,393,970 12,377,880 180,000 - -

Retirement benefits 1,053,365 - - - - -

24,383,324 14,393,970 - 180,000 - -

F-38

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

37

24 Related party transactions (Cont’d)

The following significant transactions were carried out with related parties: (Cont’d)

24.4) Passenger revenues and expenses received and paid on behalf

Proportionate consolidated Company2011 2010 2009 2011 2010 2009Baht Baht Baht Baht Baht Baht

Passenger revenuesreceived on behalfof the Company and itsjoint ventureby other related parties 1,718,031,522 1,932,087,734 1,085,941,304 - - -

Cash received on behalf ofother related party 232,983,292 298,092,233 242,832,113 - - -

Expenses paid on behalf ofthe Company and itsjoint venture byother related parties 362,955,005 336,932,864 287,531,884 - - -

Advance payments onbehalf of otherrelated parties 218,597,173 71,717,072 153,971,801 - - -

Outstanding balances arising from receivables, payables, short-term loan to a director and other non-current assets aresummarised as follows:

24.5) Amounts due from related parties

Proportionate consolidated Company2011 2010 2009 2011 2010 2009Baht Baht Baht Baht Baht Baht

Amounts due fromrelated parties

Other related parties 140,742,129 1,366,092,516 38,578,877 - - -

From 1 January 2010, amounts due from related parties have been charged the interest at 6.00% per annum (2010:6.00% per annum and 2009: nil).

24.6) Amounts due to related parties

Proportionate consolidated Company2011 2010 2009 2011 2010 2009Baht Baht Baht Baht Baht Baht

Amounts due torelated parties

Other related party 184,156,928 2,081,108,171 2,109,270,066 - - -A joint venture - - - 486,987 93,166

184,156,928 2,081,108,171 2,109,270,066 - 486,987 93,166

Amounts due to related parties are mainly denominated in US Dollar. From 1 January 2010, amounts due to relatedparties have been charged the interest at 6.00% per annum (2010: 6.00% per annum and 2009: nil).

F-39

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

38

24 Related party transactions (Cont’d)

Outstanding balances arising from receivables, payables, short-term loan to a director and other non-current assets aresummarised as follows: (Cont’d)

24.7) Short-term loan to a director

Proportionate consolidated Company2011 2010 2009 2011 2010 2009Baht Baht Baht Baht Baht Baht

Short-term loanto a director

Beginning balance 52,583,531 93,500,000 - - - -Increase during the year 31,520,600 31,700,000 93,500,000 - - -Received during the year (81,520,600) (75,200,000)Increase from interest

receivable during the year 655,038 2,583,531 - - - -Interest received during

the year (3,238,569) - - - - -

Ending balance - 52,583,531 93,500,000 - - -

As at 31 December 2010 and 2009, short-term loan to a director was unsecured and denominated in Thai Baht,carried interest at 1.50% per annum. The loan was fully settled during the year 2011.

24.8) Other non-current assets

Proportionate consolidated Company2011 2010 2009 2011 2010 2009Baht Baht Baht Baht Baht Baht

Aircraft rental depositsOther related party 253,912,027 205,285,063 167,814,986 - - -

Fuel price swap depositsOther related party 8,045,374 8,412,400 8,412,400 - - -

25 Commitments

Operating lease commitments

As at 31 December, the Company and its joint venture had outstanding commitments in respect of the non-cancellableoffice leases and others as follows:

Proportionate consolidated Company2011 2010 2009 2011 2010 2009Baht Baht Baht Baht Baht Baht

Not later than 1 year 23,074,434 24,886,928 6,193,728 - - -Later than 1 year but not later

than 5 years 17,611,543 26,939,652 5,780,000 - - -

Total 40,685,977 51,826,580 11,973,728 - - -

F-40

Asia Aviation Public Company Limited(Formerly Asia Aviation Company Limited)Notes to the Special Purpose Proportionate Consolidated and Company Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

39

25 Commitments (Cont’d)

Operating lease commitments (Cont’d)

As at 31 December 2011, the Company and its joint venture had outstanding commitments in respect of non-cancellableaircraft lease agreements made with AirAsia (Mauritius) Limited which covered rental and insurance agreements of22 aircrafts (2010: 19 aircrafts and 2009: 20 aircrafts) as follows:

Proportionate consolidated2011 2010 2009

Insurance Insurance InsuranceRental agreements Rental agreements Rental agreements

USD USD USD USD USD USD

Not later than 1 year 45,747,483 411,034 29,833,068 425,424 27,009,517 442,221Later than 1 year but not later than

5 years 59,296,481 - 29,103,341 - 20,113,556 -Later than 5 years 23,480,282 - - - - -

Total 128,524,246 411,034 58,936,409 425,424 47,123,073 442,221

26 Guarantees

As at 31 December 2011, the joint venture had a commitment related to guarantees issued by bank in respect of pilottrainee’s loans in accordance with their professional pilot courses at proportionate amount of Baht 13.72 million (2010: Niland 2009: Baht 24.66 million). Normally, a guarantee is terminated when the pilot trainee earns a commercial pilot’slicense and is assigned as a co-pilot or when the pilot trainee settles all outstanding debts with the bank. However, thejoint venture can fully reclaim the stated liabilities from the pilot trainees’ guarantors, who have pledged guarantees withthe joint venture.

As at 31 December 2011, 2010 and 2009, the Company had a commitment relating to guarantees given to the borrowersunder a credit agreement for the Baht equivalent of USD 39 million. The agreement was between Credit Suisse, Singaporebranch, as the lender, and the borrowers, a group of six of the Company’s shareholders. Under the credit agreement, theborrowers pledged the Company’s shares and the Company pledged its investment in equity securities in Thai AirAsiaCompany Limited to such lenders as a guarantee.

27 Letters of guarantee

As at 31 December 2011, the Company and its joint venture had commitments relating to guarantees issued by banks inrespect of ground handling, technical support, and other flight operation activities in the ordinary course of business atproportionate amount of Baht 2.9 million, USD 45,900 and India Rupee 14.2 million (2010: Baht 3.8 million, USD 45,000and India Rupee 13.5 million and 2009: Baht 2.8 million and USD 45,000). The Company and its joint venture used theirfixed deposit accounts at proportionate amount of India Rupee 14.2 million (2010: India Rupee 13.5 million and 2009:nil)as the collateral for these letters of guarantee.

28 Subsequent events

On 1 January 2012, the joint venture has entered into addendums of 20 aircraft specific lease agreements with a relatedcompany for extension of their specific lease terms from 3, 5 and 8 years to 12 years from the date of aircraft delivery. Theterms and conditions of these addendums are effective from 1 January 2012.

At the Extraordinary Shareholders’ Meeting of the joint venture held on 15 February 2012, the shareholders approved anincrease in registered share capital of the joint venture from 40,000,000 shares to 43,555,560 shares by issuing additionalordinary shares of 3,555,560 shares with a par value of Baht 10 each in order to offer to the existing joint venture’sshareholders.

F-41

THAI AIRASIA COMPANY LIMITED

SPECIAL PURPOSE FINANCIAL STATEMENTS

31 DECEMBER 2011, 2010 AND 2009

F-42

F-43

Thai AirAsia Company LimitedStatements of Financial PositionAs at 31 December 2011, 2010 and 2009

2011 2010 2009Notes Baht Baht Baht

Assets

Current assets

Cash and cash equivalents 8 1,359,702,567 507,821,793 654,075,545Cash at financial institutions pledged

as security 14,458,500 50,000,000 -Short-term investment 9 9,120,279 8,978,474 8,868,419Trade and other receivables, net 10 191,835,196 110,573,474 167,582,186Amounts due from related parties 22.5 275,965,053 2,732,185,031 77,157,753Short-term loan to a director 22.7 - 105,167,062 187,000,000Inventories 51,232,834 6,390,028 4,726,536Prepaid expenses 225,538,898 178,242,654 31,808,854Value added tax receivable, net 689,158,323 270,768,859 206,465,848Other current assets 19,339,214 88,197,102 20,178,881

Total current assets 2,836,350,864 4,058,324,477 1,357,864,022

Non-current assets

Cash at financial institutions pledgedas security 56,000,000 24,975,600 -

General investment 11 6,929,500 7,487,100 8,217,700Leasehold improvements

and equipment, net 12 302,933,748 274,643,823 287,966,702Intangible assets, net 13 14,260,815 21,122,820 10,884,517Other non-current assets 14 573,371,519 480,224,934 402,208,115

Total non-current assets 953,495,582 808,454,277 709,277,034

Total assets 3,789,846,446 4,866,778,754 2,067,141,056

The accompanying notes are an integral part of these special purpose financial statements.

2

F-44

Thai AirAsia Company LimitedStatements of Financial Position (Cont’d)As at 31 December 2011, 2010 and 2009

2011 2010 2009Notes Baht Baht Baht

Liabilities and shareholders’ equity

Current liabilities

Trade accounts payable 105,931,528 175,014,034 358,354,471Other accounts payable 66,368,776 47,790,469 46,919,988Short-term borrowings from

a financial institution 15 - 200,000,000 -Amounts due to a related party 22.6 361,092,140 4,161,728,551 4,218,446,966Deferred revenues 2,716,364,349 2,373,444,659 1,474,378,531Accrued expenses 476,097,173 389,709,270 462,253,157Current portion of long-term borrowing

from a financial institution 16 486,000,000 - -Current portion of finance lease liabilities 4,767,819 1,158,282 1,480,538Other current liabilities 14,029,860 19,505,839 16,757,513

Total current liabilities 4,230,651,645 7,368,351,104 6,578,591,164

Non-current libilities

Long-term borrowing froma financial institution 16 13,163,251 - -

Finance lease liabilities 9,254,534 1,378,526 2,536,808Employee benefit obligations 17 82,752,289 - -

Total non-current liabilities 105,170,074 1,378,526 2,536,808

Total liabilities 4,335,821,719 7,369,729,630 6,581,127,972

Shareholders’ equity

Share capital 18Authorised share capital

Ordinary shares, shares 40,000,000 sharesof par Baht 10 each 400,000,000 400,000,000 400,000,000

Issued and paid-up share capitalOrdinary shares, shares 40,000,000 shares

of paid-up Baht 10 each 400,000,000 400,000,000 400,000,000Premium on share capital 18 1,227,629 1,227,629 1,227,629Deficits (947,202,902) (2,904,178,505) (4,915,214,545)

Total shareholders’ equity (545,975,273) (2,502,950,876) (4,513,986,916)

Total liabilities and shareholders’ equity 3,789,846,446 4,866,778,754 2,067,141,056

The accompanying notes are an integral part of these special purpose financial statements.

3

F-45

Thai AirAsia Company LimitedStatements of Comprehensive IncomeFor the years ended 31 December 2011, 2010 and 2009

2011 2010 2009Notes Baht Baht Baht

Revenues 19 16,157,597,567 12,098,726,066 9,281,164,705Operating costs (13,757,646,077) (9,965,173,058) (9,315,947,358)

Gross profit (loss) 2,399,951,490 2,133,553,008 (34,782,653)Net gain on exchange rates 155,268,528 356,842,232 129,510,746Other income 451,084,289 363,009,001 217,940,344

Profit before expenses 3,006,304,307 2,853,404,241 312,668,437Selling expenses (444,678,078) (357,931,386) (243,023,844)Administrative expenses (357,909,177) (241,314,226) (239,728,682)

Profit (loss) before finance costsand income tax 20 2,203,717,052 2,254,158,629 (170,084,089)

Finance costs (183,658,393) (243,122,589) (386,469)

Profit (loss) before income tax 2,020,058,659 2,011,036,040 (170,470,558)Income tax - - -

Profit (loss) for the year 2,020,058,659 2,011,036,040 (170,470,558)

Total comprehensive income (expense)for the year 2,020,058,659 2,011,036,040 (170,470,558)

Earnings (loss) per share 21

Basic earnings (loss) per share 50.50 50.28 (4.26)

The accompanying notes are an integral part of these special purpose financial statements.

4

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5

F-47

Thai AirAsia Company LimitedStatements of Cash FlowsFor the years ended 31 December 2011, 2010 and 2009

2011 2010 2009

6

Notes Baht Baht BahtCash flows from operating activitiesProfit (loss) before income tax 2,020,058,659 2,011,036,040 (170,470,558)

Adjustments for:Doubtful debts expenses (reversals) (2,868,378) (1,938,890) 2,545,190

Depreciation 12 66,711,759 118,740,369 128,788,49713 4 823 576 4 444 984 3 073 063Amortisation 13 4,823,576 4,444,984 3,073,063

Loss (gain) on disposals and writes-off ofleasehold improvements and equipmentand intangible assets 1,046,574 (1,412,236) 1,027,217

Estimated costs of aircraftsredelivery before maturities(Adjusted to actual) 20, 22.2 - (114,276,519) 346,697,404(Adjusted to actual) 20, 22.2 (114,276,519) 346,697,404

Reversal of provision for loss on unwindinterest rate swap agreements 20, 22.2 - - (6,092,821)

Employee benefit expenses 17 19,669,233 - -

Unrealised gain on exchange rates (41,868,490) (2,001,071) (15,520,626)

Finance costs 183,658,393 243,122,589 386,469

Interest income (135,911,978) (50,338,825) (9,555,539)

2,115,319,348 2,207,376,441 280,878,296

Changes in operating assets and liabilities:- Cash at financial institutions pledged as security 4,517,100 (74,975,600) -

- Trade and other receivables (78,393,344) 58,947,602 (111,934,476)

- Amounts due from related parties 1,662,997,284 (2,612,679,296) (59,498,156)

- Inventories (44,842,806) (1,663,492) 643,784

- Prepaid expenses (47,296,244) (146,433,800) 36,462,693

- Value added tax receivable (418,389,464) (64,303,011) (38,058,963)

- Other current assets 68,857,888 (68,018,221) (6,939,490)

- Other non-current assets (93,146,585) (78,016,819) (140,170,055)

- Trade accounts payable (69,082,506) (181,121,534) 19,755,713

- Other accounts payable 18,578,307 870,481 (111,981,406)

- Amounts due to related parties (3,048,987,508) (185,283,154) 487,608,406- Amounts due to related parties (3,048,987,508) (185,283,154) 487,608,406

- Deferred revenues 342,919,690 899,066,128 234,069,700

- Accrued expenses 86,387,903 (72,543,887) (44,216,890)

- Provision for loss on unwindinterest rate swap agreements - - (388,907,179)

- Other current liabilities (5,475,979) 2,748,326 7,190,885

Cash generated from (used in) operation 493,963,084 (316,029,836) 164,902,862Cash generated from (used in) operation 493,963,084 (316,029,836) 164,902,862Interest paid (24,046,808) (281,331) (386,469)Interest received 51,435,756 2,713,726 9,238,085

Net cash generated from (used in) operating activities 521,352,032 (313,597,441) 173,754,478

The accompanying notes are an integral part of these special purpose financial statements.

6

F-48

Thai AirAsia Company LimitedStatements of Cash Flows (Cont’d)For the years ended 31 December 2011, 2010 and 2009

2011 2010 2009

7

Notes Baht Baht BahtCash flows from investing activitiesShort-term loan granted to a director 22.7 (63,041,200) (63,400,000) (187,000,000)Repayments of short-term loan to a director 22.7 163,041,200 150,400,000 -Proceeds from general investment 11 557,600 730,600 -Payment for general investment 11 - - (779,000)P d f di l fProceeds from disposals of

leasehold improvements and equipment 7,892,381 2,362,198 3,457,009Payments for leasehold improvements

and equipment (82,040,718) (108,586,355) (101,229,907)Payments for intangible assets (2,288,579) (14,683,287) (4,301,066)Interest received 6,477,138 - -

Net cash generated from (used in) investing activities 30,597,822 (33,176,844) (289,852,964)

Cash flows from financing activitiesProceed from (repayment of) short-term

borrowings from a financial institution 15 (200,000,000) 200,000,000 -Repayments of finance lease (6,087,368) (1,480,538) (1,373,439)

d f l b i fProceed from long-term borrowing froma financial institution 16 961,163,251 - -

Repayments of long-term borrowing froma financial institution 16 (462,000,000) - -

Interest paid (35,013,453) - -

Net cash generated from (used in) financing activities 258,062,430 198,519,462 (1,373,439)Net cash generated from (used in) financing activities 258,062,430 198,519,462 (1,373,439)

Net increase (decrease) in cashand cash equivalents 810,012,284 (148,254,823) (117,471,925)

Cash and cash equivalentsat the beginning of the year 507,821,793 654,075,545 756,026,844

Effect of exchange rates 41,868,490 2,001,071 15,520,626

Cash and cash equivalents at the end of the year 1,359,702,567 507,821,793 654,075,545

Non-cash transactions

Significant non-cash transactions during the years ended 31 December 2011, 2010 and 2009 are as follows:

Purchase of motor vehicles under finance lease agreements 17,572,913 - -Purchase of leasehold improvements and

equipment which have not been paid - 670,097 2,889,000

The accompanying notes are an integral part of these special purpose financial statements.

7

F-49

Thai AirAsia Company LimitedNotes to the Special Purpose Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

8

1 General information

Thai AirAsia Company Limited (“the Company”) is a limited company and incorporated in Thailand. Theaddress of the Company’s registered office is as follows:

60/1 Monririn Tower 3rd floor, B Building, Soi Sailom, Phahol-yothin Road, Samsennai, Phayathai, Bangkok10400.

The Company’s operating office is located at 99 OSC Building, Kingkaew Road, Rachatewa, Bangplee, Samutprakarn10540.

The principal business operation of the Company is to provide low-fare airline service.

The Company is jointly controlled by Asia Aviation Public Company Limited (formerly Asia Aviation CompanyLimited), incorporated in Thailand and AirAsia Investment Ltd. (formerly AA International Ltd.), incorporated inMalaysia, which own 51% and 49% of the Company’s shares, respectively.

The special purpose financial statements were approved by the Board of Directors on 19 March 2012.

2 Financial position

As at 31 December 2011, the Company had total current liabilities exceeding its total current assets at amountof Baht 1,394 million (2010: Baht 3,310 million and 2009: Baht 5,221 million). Major balances in currentliabilities were deferred revenues, which the Company will be able to provide the services as normal operations.In addition, revenues for the year have increased by Baht 4,059 million, and there was a net profit for the yearended 31 December 2011 amounting to Baht 2,020 million (2010: Baht 2,011 million and 2009: loss Baht 170million). The related financial information for the year then ended of the Company, revealed a significantimprovement in operating results. Therefore, these special purpose financial statements have been prepared ona going concern basis.

3 Accounting policies

The principal accounting policies adopted in the preparation of these special purpose financial statements areset out below:

3.1 Basis of preparation

The special purpose financial statements have been prepared in accordance with Thai GenerallyAccepted Accounting Principles under the Accounting Act B.E. 2543, being those Thai FinancialReporting Standards (“TFRS”) issued under the Accounting Profession Act B.E.2547, and the financialreporting requirements of the Securities and Exchange Commission under the Securities and ExchangeAct. for the purpose of inclusion in the Asia Aviation Public Company Limited’s offering circular as partof the Asia Aviation Public Company Limited’s initial public offering of shares to investors.

The special purpose financial statements are based on local statutory financial statements which areadjusted and reclassified to conform with changes in presentation in the current year and to comply withthe requirement of the Department of Business Development, TFRS and the reporting requirements ofthe Securities and Exchange Commission.

F-50

Thai AirAsia Company LimitedNotes to the Special Purpose Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

9

3 Accounting policies (Cont’d)

3.1 Basis of preparation (Cont’d)

The special purpose financial statements have been prepared under the historical cost convention, exceptif disclosed otherwise in the accounting policies.

The preparation of special purpose financial statements are in conformity with Thai Generally AcceptedAccounting Principles requires the use of certain critical accounting estimates. It also requiresmanagement to exercise its judgement in the process of applying the Company’s accounting policies.The areas involving a higher degree of judgement or complex areas where assumptions and estimates aresignificant to the special purpose financial statements are disclosed in note 5.

An English version of the special purpose financial statements has been prepared from the specialpurpose financial statements that are in the Thai language. In the event of a conflict or a difference ininterpretation between the two languages, the Thai language special purpose financial statements shallprevail.

3.2 New accounting standards, new financial reporting standards, new interpretation, and amendments toaccounting standards

a) Commencing 1 January 2011, the Company has applied the following new accounting standards,new financial reporting standards, new interpretations, and amendments to accounting standards(collectively “the accounting standards”) that are mandatory for the financial year beginning on orafter 1 January 2011. The accounting standards which are relevant to the Company are listedbelow :

TAS 1 (Revised 2009) Presentation of Financial StatementsTAS 2 (Revised 2009) InventoriesTAS 7 (Revised 2009) Statement of Cash FlowsTAS 8 (Revised 2009) Accounting Policies, Changes in Accounting Estimates and ErrorsTAS 10 (Revised 2009) Events after the Reporting PeriodTAS 16 (Revised 2009) Property, Plant and EquipmentTAS 17 (Revised 2009) LeasesTAS 18 (Revised 2009) RevenueTAS 19 Employee BenefitsTAS 24 (Revised 2009) Related Party DisclosuresTAS 33 (Revised 2009) Earnings per ShareTAS 34 (Revised 2009) Interim Financial ReportingTAS 36 (Revised 2009) Impairment of AssetsTAS 37 (Revised 2009) Provisions, Contingent Liabilities and Contingent AssetsTAS 38 (Revised 2009) Intangible AssetsTSIC 31 Revenue - Barter Transactions Involving Advertising Services

F-51

Thai AirAsia Company LimitedNotes to the Special Purpose Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

10

3 Accounting policies (Cont’d)

3.2 New accounting standards, new financial reporting standards, new interpretation, and amendments toaccounting standards (Cont’d)

The new accounting standards which are considered to have an impact to the special purpose financialstatements are described below:

TAS 1 (Revised 2009), the revised standard requires entities to present the statement of financialposition and the statement of comprehensive income. Entities can choose whether to present onestatement (the statement of comprehensive income) or two statements (the statement of incomeand statement of comprehensive income). The Company chooses to present one statement.

TAS 19 deals with accounting for employee benefits which requires the entity to measure thedefined benefit plan and other long-term employee benefits by using the Projected Unit Creditmethod (PUC). An entity can choose to recognise any actuarial gain or loss for defined benefitplan either in other comprehensive income or profit or loss. The Company chooses to record thatgain or loss in the statement of comprehensive income. Actuarial gain or loss for other long-termemployee benefits shall be recognised in profit or loss.

The Company has applied this standard for the first time by choosing to adjust a total amountagainst the deficits as of 1 January 2011. The effects of the adoption of the above standards to thespecial purpose financial statements are as follows:

Baht

Statement of changes in shareholders’ equityDeficits as of 1 January 2011 increased 63,083,056

b) New accounting standards and amendments to accounting standards which are currently relevantto the Company but the Company has not yet early adopted them:

Effective for the periods beginning on or after 1 January 2013TAS 12 Income taxesTAS 21 (Revised 2009) The Effects of Changes in Foreign Exchange Rates

The Company’s management has assessed and determined that the new accounting standards andamendments to accounting standards will not significantly impact the financial statements beingpresented except the new accounting standard as disclosed below:

TAS 12 deals with taxes on income, comprising current tax and deferred tax. Current tax assets andliabilities are measured at the amount expected to be paid to or recovered from the taxation authorities,using tax rates that tax law have been enacted or substantively enacted by the end of the reportingperiod. Deferred taxes are measured by based on the temporary difference between the tax base of anasset or liability and its carrying amount in the financial statements and using the tax rates that areexpected to apply to the period when the asset is realised or the liability is settled. The Company willapply this standard from 1 January 2013 retrospectively with an expected incur of deferred tax accountand an impact to retained earnings and income tax expense. The Company’s management is currentlyassessing the impact of applying this standard.

F-52

Thai AirAsia Company LimitedNotes to the Special Purpose Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

11

3 Accounting policies (Cont’d)

3.3 Foreign currency translation

Items included in the financial statements are measured using Thai Baht.

Foreign currency transactions are translated into Thai Baht using the exchange rates prevailing at the date ofthe transaction. Monetary assets and liabilities denominated in foreign currencies are translated to ThaiBaht at the exchange rates prevailing at the statement of financial position date. Gains and losses resultingfrom the settlement of foreign currency transactions and from the translation of monetary assets and liabilitiesdenominated in foreign currencies are recognised in profit or loss.

3.4 Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highlyliquid investments with maturities of three months or less from the date of acquisition and are notpledged as security.

3.5 Trade accounts receivable

Trade accounts receivable are carried at the original invoice amount and subsequently measured at theremaining amount less any allowance for doubtful receivables based on a review of all outstandingamounts at the end of year. The amount of the allowance is the difference between the carrying amountof the receivable and the amount expected to be collectible. Bad debts are written off during the year inwhich they are identified and recognised in profit or loss within administrative expenses.

3.6 Inventories

Inventories comprise food, beverage, merchandise and consumables.

Food, beverage and merchandise are stated at the lower of cost or net realisable value. Cost is determinedby the first-in, first-out method. The cost of purchase comprises both the purchase price and costs directlyattributable to the acquisition of the inventories such as import duties and transportation charges, less allattributable discounts, allowances or rebates.

Consumables used internally for aircraft repairs and maintenance are stated at the lower of cost or netrealisable value. Cost is determined on the weighted average basis, and comprises the purchase price andincidentals incurred in bringing the inventories to their present location and condition.

Net realisable value is the estimate of the selling price in the ordinary course of business, less estimated costnecessary to make the sale. Allowance is made, where necessary, for obsolete, slow moving or defectiveinventories.

F-53

Thai AirAsia Company LimitedNotes to the Special Purpose Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

12

3 Accounting policies (Cont’d)

3.7 General investment

The Company’s general investment is non-marketable equity security. The classification depends on thepurpose for which the investment was acquired. Management determines the appropriate classification ofits investment at the time of the purchase and re-evaluates such designation on a regular basis.

General investment is carried at cost less impairment.

A test for impairment is carried out when there is a factor indicating that an investment might be impaired.If the carrying value of the investment is higher than its recoverable amount, impairment loss is charged toprofit or loss.

On disposal of an investment, the difference between the net disposal proceeds and the carrying amount ischarged or credited to profit or loss. When disposing of part of the Company’s holding of particularinvestment in debt or equity securities, the carrying amount of the disposed part is determined by theweighted average carrying amount of the total holding of the investment.

3.8 Leasehold improvements and equipment

Leasehold improvements and equipment are stated at cost less accumulated depreciation. Historical costincludes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, asappropriate, only when it is probable that future economic benefits associated with the item will flow to theCompany and the cost of the item can be measured reliably. The carrying amount of the replaced part isderecognised. All other repairs and maintenance are charged to profit or loss during the financial period inwhich they are incurred.

Depreciation is calculated on the straight-line basis to write-off the cost of each asset, to its residualvalue over the estimated useful life as follows:

Leasehold improvements 5 yearsComputers 5 yearsFurniture, fixtures and office equipment 5 yearsOperating equipment 5 yearsMotor vehicles 5 yearsAircraft spare parts 4 - 10 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of eachreporting period.

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is writtendown immediately to its recoverable amount.

Gains or losses on disposals are determined by comparing the proceeds with the carrying amount and arerecognised in profit or loss.

F-54

Thai AirAsia Company LimitedNotes to the Special Purpose Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

13

3 Accounting policies (Cont’d)

3.9 Intangible assets

Computer software

Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire andbring to use the specific software. These costs are amortised over their estimated useful lives of 5 yearson the straight-line basis.

3.10 Leases - where the Company is the lessee

Leases of assets which substantially transfer all the risks and rewards of ownership are classified asfinance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value ofthe leased assets or the present value of the minimum lease payments. Each lease payment is allocatedto the principal and to the finance charges so as to achieve a constant rate on the finance balanceoutstanding. The outstanding rental obligations, net of finance charges, are included in finance leaseliabilities. The interest element of the finance cost is charged to profit or loss over the lease period. Theassets acquired under finance lease is depreciated over the useful life of the asset.

Leases not transferring a significant portion of the risks and rewards of ownership to the lessee areclassified as operating leases. Payments made under operating leases (net of any incentives receivedfrom the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.

When an operating lease is terminated before the lease period has expired, any payment required to bemade to the lessor by way of penalty is recognised as an expense in the period in which termination takesplace.

3.11 Borrowings

Borrowings are recognised initially at the proceeds received, net of transaction costs incurred.Borrowings are subsequently stated at amortised cost as the redemption value. Borrowings are classifiedas current liabilities unless the Company has an unconditional right to defer settlement of the liability for atleast 12 months after the statement of financial position date.

3.12 Employee benefits

3.12.1 Provident fund

The Company operates a provident fund that is a defined contribution plan. The fund assets areheld in a separate trust fund and are managed by an external fund manager. The provident fundis funded by payments from employees and by the Company. The Company has no legal orconstructive obligations to pay further contributions if the fund does not hold sufficient assets topay all employees the benefits relating to employee service in the current and prior periods. TheCompany’s contributions to the provident fund are charged to profit or loss in the year to whichthey relate.

F-55

Thai AirAsia Company LimitedNotes to the Special Purpose Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

14

3 Accounting policies (Cont’d)

3.12 Employee benefits (Cont’d)

3.12.2 Retirement benefits

The retirement benefit is a defined benefit plan that an employee will receive on retirementaccording to Thai Labour Law depending on age and years of service.

The liability of retirement benefit is recognised in the statement of financial position using thepresent value of the obligation at the statement of financial position date. The retirement benefitis calculated annually by an independent actuary using the projected unit credit method. Thepresent value of the benefit obligation is determined by discounting the estimated future cashoutflows using interest rates of referred government bonds that are denominated in the currencyin which the benefits will be paid and that have terms to maturity approximating to the terms ofthe related retirement liabilities. Actuarial gains and losses arising from experience adjustmentsand changes in actuarial assumptions are charged or credited to equity in other comprehensiveincome in the period in which they arise.

3.13 Provisions

Provisions, which exclude the provision relating to employee benefits, are recognised when theCompany has a present legal or constructive obligation as a result of past events, it is probable that anoutflow of resources will be required to settle the obligation, and a reliable estimate of the amount canbe made. Where the Company expects a provision to be reimbursed, the reimbursement is recognised asa separate assets but only when the reimbursement is virtually certain.

3.14 Revenue recognition

Passenger revenue and other related services such as baggage handling fee, assigned seat revenue andcancellation and documentation revenue are recognised upon the rendering of services. The value ofseats sold for which services have not been rendered is included in deferred revenues.

Revenue from sales comprises receivable for the sale of goods net of output tax, rebates and discounts.Revenue from sales of goods is recognised when significant risks and rewards of ownership of the goodsare transferred to the buyer.

Interest income is recognised on a time proportion basis, taking account of the principal outstanding andthe effective rate over the period to maturity, when it is determined that such income will accrue to theCompany.

Other income is recognised on an accrual basis.

F-56

Thai AirAsia Company LimitedNotes to the Special Purpose Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

15

4 Financial risk management

4.1 Financial risk factors

The Company’s activities expose it to a variety of financial risks, including the effects of changes in fuelprice and foreign currency exchange rates. The Company’s overall risk management programme focuseson the votality of financial markets and seeks to minimise potential adverse effects on the financialperformance. The Company does not have policies to use derivative financial instruments for trading orspeculative purpose.

Fuel price risk

The Company is exposed to the fluctuation of fuel price. To manage the risk of fuel price fluctuation,AirAsia Berhad, a related party, is carried out the risk management on behalf of the Company (Note 4.2).

Foreign exchange risk

Foreign currency assets mainly represent deposits at financial institutions, other deposits and amountsdue from related parties. Foreign currency liabilities mainly represent trade accounts payable andamounts due to related parties.

The Company is exposed to foreign exchange risk arising from currency exposures mainly in respect ofUS Dollars. The Company manages risk by natural hedge to the extent that payments for foreigncurrency payables are matched against receivables denominated in the same foreign currency. However,the Company does not use any derivative financial instruments to hedge foreign currency exposure.

Interest rate risk

The Company’s interest rate risk arises from short-term borrowings, long-term borrowing, amount duefrom related parties and amounts due to related parties. Borrowings issued at variable rates and amountsdue from and due to related parties issued at fixed rate. Management considers that interest rate risk isnot significant. However, all interest rate derivative transactions, which may be incurred, are subject toapproval by the Board of Directors before execution.

Credit risk

Most of the Company’s income, being passenger revenue, is normally paid by clients in advance. Thecredit risk incurred from amounts due from related parties and short-term loan to a director is low.Management is therefore of the opinion that credit risk is not significant. The Company has not enteredinto any derivative contracts relating to credit risk. Cash transactions are limited to high credit qualityfinancial institutions.

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, theavailability of funding through an adequate amount of credit facilities and the ability to close out marketpositions. Due to the dynamic nature of the underlying business, the Company Treasury aims atmaintaining flexibility in funding by keeping credit lines available.

F-57

Thai AirAsia Company LimitedNotes to the Special Purpose Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

16

4 Financial risk management (Cont’d)

4.2 Accounting for derivative financial instruments and hedging activities

Derivative financial instruments, which the Company used to manage risk, comprise fuel price swapagreements.

Fuel price swap agreements

AirAsia Berhad, a related party, has entered into fuel price swap agreements with third parties which protectthe Company from the risk of movements in fuel price. The Company has entered into the agreement withAirAsia Berhad under the term of the agreement that gains or losses on fuel price swap agreements areallocated to the Company based on proportion of fuel consumption on a monthly basis. The Companyrecorded these transactions in profit or loss as a component of operating costs when they incur.

4.3 Fair value estimation

Fair values of financial assets and liabilities are approximate their carrying amounts because theirperiods of maturities are short, therefore, there is no significant risk that would impact the Company’sfuture cash flows.

Fuel price swap agreements

The fair value of fuel price swap agreements at the statement of financial position date is as follows:

2011 2010 2009US Dollars US Dollars US Dollars

Favourable fuel price swap agreements 1,611,554 - 148,329

There was no outstanding fuel price swap agreement as at 31 December 2010.

5 Critical accounting estimates, assumptions, and judgements

Estimates, assumptions, and judgements are continually evaluated and are based on historical experience and otherfactors, including expectations of future events that are believed to be reasonable under the circumstances.

Aircraft maintenance under operating leases

The Company has a commitment to maintain aircrafts under operating lease agreements, a provision is madethroughout the lease term for the rectification obligations contained within the lease agreements. The provisionis based on estimated future repair and maintenance costs of major airframe, certain engine maintenance checksand estimated one-off costs will be incurred at the end of the lease by charging to profit or loss according to thenumber of flying hours in each year.

6 Capital risk management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as agoing concern in order to provide returns for shareholders and benefits for other stakeholders and to maintainan optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid toshareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

F-58

Thai AirAsia Company LimitedNotes to the Special Purpose Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

17

7 Segment information

The Company does not disclose the segment information because there is no significant business segment otherthan the provision of air transportation services.

8 Cash and cash equivalents2011 2010 2009Baht Baht Baht

Cash on hand 6,370,496 20,342,732 14,222,591Deposits held at call with banks 1,146,732,071 487,479,061 639,852,954Short-term bank deposits 6,600,000 - -Bill of exchange with maturity of three months or less 200,000,000 - -

Total cash and cash equivalents 1,359,702,567 507,821,793 654,075,545

The interest rate of deposits held at call with banks was 1.40% per annum (2010: 0.50% per annum and 2009:0.50% per annum).

As at 31 December 2011, interest rates of short-term bank deposits and bill of exchange with maturity of threemonths or less were 14.00% per annum and 3.00% per annum, respectively (2010 and 2009: nil).

9 Short-term investment

Movements of short-term investment are summarised as follows:2011 2010 2009Baht Baht Baht

Opening net book amount 8,978,474 8,868,419 8,550,965Interest received 141,805 110,055 317,454

Closing net book amount 9,120,279 8,978,474 8,868,419

The summary of short-term investment is as follows:

2011 2010 2009Baht Baht Baht

Fixed deposits with maturity of over thanthree months but within twelve months 9,120,279 8,978,474 8,868,419

Total short-term investment 9,120,279 8,978,474 8,868,419

The average interest rate of fixed deposits with maturity of over three months but within twelve months was1.57% per annum (2010: 1.23% per annum and 2009:1.25% per annum).

F-59

Thai AirAsia Company LimitedNotes to the Special Purpose Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

18

10 Trade and other receivables, net

2011 2010 2009Baht Baht Baht

Trade accounts receivable 155,797,194 81,207,688 69,771,369Less Allowance for doubtful accounts - (2,868,378) (4,807,268)

Trade accounts receivable, net 155,797,194 78,339,310 64,964,101Accrued revenues 32,542,570 5,619,727 77,982,930Other accounts receivable 3,495,432 26,614,437 24,635,155

Total trade and other receivables, net 191,835,196 110,573,474 167,582,186

Outstanding trade accounts receivable can be analysed by age as follows:

2011 2010 2009Baht Baht Baht

Up to 3 months 141,043,413 73,800,012 49,546,9633-6 months 7,461,857 1,136,398 6,586,0026-12 months 5,007,647 1,107,896 438,496Over 12 months 2,284,277 5,163,382 13,199,908

155,797,194 81,207,688 69,771,369Less Allowance for doubtful accounts - (2,868,378) (4,807,268)

155,797,194 78,339,310 64,964,101

11 General investment

2011 2010 2009Baht Baht Baht

Opening book amount 7,487,100 8,217,700 7,438,700Increase in investment - - 779,000Decrease in investment (557,600) (730,600) -

Closing book amount 6,929,500 7,487,100 8,217,700

General investment of the Company is the investment in ordinary shares of Aeronautical Radio of ThailandLimited.

F-60

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the

year

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11,2

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and

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19

12L

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hold

impr

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and

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2009

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t24

,943

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49,3

12,7

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,780

,540

69,2

52,6

9259

,304

,984

337,

983,

369

2,73

2,01

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0,30

9,37

6Le

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3,82

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9,95

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2,77

1,06

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4,57

3)(1

36,8

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-(2

42,7

33,4

50)

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amou

nt13

,899

,250

18,1

62,7

566,

384,

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36,4

81,6

3038

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,411

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115,

144

2,73

2,01

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the

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13,8

99,2

5018

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6,38

4,72

536

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38,8

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42,

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317,

575,

926

Add

ition

s36

8,27

07,

203,

275

247,

518

3,54

3,64

79,

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499

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nt11

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1,62

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F-61

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1,59

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-(3

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nt11

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17,1

81,8

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35,9

7134

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49,8

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5,76

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42,4

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-(5

29,7

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nt9,

329,

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19,2

74,3

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5137

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F-63

Thai AirAsia Company LimitedNotes to the Special Purpose Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

22

13 Intangible assets, netComputer

softwareComputer under

software installation TotalBaht Baht Baht

At 1 January 2009Cost 18,937,728 1,976,607 20,914,335Less Accumulated amortisation (11,257,821) - (11,257,821)

Net book amount 7,679,907 1,976,607 9,656,514

For the year ended 31 December 2009Opening net book amount 7,679,907 1,976,607 9,656,514Additions 1,632,328 2,668,738 4,301,066Transfers 1,098,965 (1,098,965) -Amortisation charge (3,073,063) - (3,073,063)

Closing net book amount 7,338,137 3,546,380 10,884,517

At 31 December 2009Cost 21,669,021 3,546,380 25,215,401Less Accumulated amortisation (14,330,884) - (14,330,884)

Net book amount 7,338,137 3,546,380 10,884,517

For the year ended 31 December 2010Opening net book amount 7,338,137 3,546,380 10,884,517Additions 9,916,534 4,766,753 14,683,287Transfers 2,864,648 (2,864,648) -Amortisation charge (4,444,984) - (4,444,984)

Closing net book amount 15,674,335 5,448,485 21,122,820

At 31 December 2010Cost 34,450,203 5,448,485 39,898,688Less Accumulated amortisation (18,775,868) - (18,775,868)

Net book amount 15,674,335 5,448,485 21,122,820

For the year ended 31 December 2011Opening net book amount 15,674,335 5,448,485 21,122,820Additions 120,223 2,168,356 2,288,579Writes-off and adjustments, net (1,214) (4,325,794) (4,327,008)Transfers 564,323 (564,323) -Amortisation charge (4,823,576) - (4,823,576)

Closing net book amount 11,534,091 2,726,724 14,260,815

At 31 December 2011Cost 30,908,352 2,726,724 33,635,076Less Accumulated amortisation (19,374,261) - (19,374,261)

Net book amount 11,534,091 2,726,724 14,260,815

F-64

Thai AirAsia Company LimitedNotes to the Special Purpose Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

23

14 Other non-current assets

2011 2010 2009Note Baht Baht Baht

Aircraft rental deposits 22.8 497,866,890 410,570,125 335,629,972Fuel price swap deposits 22.8 15,775,250 16,824,800 16,824,800Rental deposits 18,188,812 18,201,445 18,485,005Other deposits 41,540,567 34,628,564 31,268,338

Total other non-current assets 573,371,519 480,224,934 402,208,115

15 Short-term borrowings from a financial institution

2011 2010 2009Baht Baht Baht

Promissory notes - 200,000,000 -

Total short-term borrowings from a financial institution - 200,000,000 -

Short-term borrowings from a financial institution were four-month promissory notes with a local commercialbank which were due for repayment in 2011 and had interest rate at MLR (approximately 6.56% per annum).The Company used its fixed deposit account amounting to Baht 50 million as the collateral for these promissorynotes. During the year ended 31 December 2011, the Company had already repaid these borrowings.

16 Long-term borrowing from a financial institution

Maturity of long-term borrowing from a financial institution is as follows:

2011 2010 2009Baht Baht Baht

Within 1 year 486,000,000 - -Over 1 year but less than 5 years 13,163,251 - -

499,163,251 - -

Movements of long-term borrowing from a financial institution are summarised as follows:

Baht

For the year ended 31 December 2011Opening net book value -Addition during the year 961,163,251Loan repayments (462,000,000)

Closing net book value 499,163,251

On 25 April 2011, the Company entered into a borrowing agreement with a local commercial bank with respectto the credit facility of Baht 970 million in order to repay debts to related parties. This borrowing bears aninterest at the rate of MLR - 1% per annum (approximately 6.65% per annum), with a repayment term within 2years.

This borrowing is secured by a fixed deposit account amounting to Baht 50 million. In addition, the Companyhas to maintain deposits at bank not less than amount of Baht 500 million over the borrowing periods.

F-65

Thai AirAsia Company LimitedNotes to the Special Purpose Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

24

17 Employee benefit obligations

Movements of the retirement benefit obligations over the year are as follows:

Note Baht

For the year ended 31 December 2011Opening book amounts as at 1 January 2011 -Adjustment to deficits brought forward as at 1 January 2011 3.2 63,083,056Current service costs 17,014,908Interest costs 2,654,325Actuarial (gain) loss -Benefits paid -

Closing book amount as at 31 December 2011 82,752,289

The amounts recognised in profit or loss are as follows:2011Baht

Current service costs 17,014,908Interest costs 2,654,325

Total, included in staff costs 19,669,233

The principal actuarial assumptions used are as follows:

Discount rate % per annum 4.16Future salary increase rate % per annum 5.34 - 7.00Resignation rate % per annum 0.00 - 11.00

18 Share capitalNumber of

sharesOrdinary

sharesPremium onshare capital Total

Shares Baht Baht Baht

At 1 January 2009 40,000,000 400,000,000 1,227,629 401,227,629Issue of shares - - - -

At 31 December 2009 40,000,000 400,000,000 1,227,629 401,227,629Issue of shares - - - -

At 31 December 2010 40,000,000 400,000,000 1,227,629 401,227,629Issue of shares - - - -

At 31 December 2011 40,000,000 400,000,000 1,227,629 401,227,629

The total authorised number of ordinary shares is 40,000,000 shares (2010 and 2009: 40,000,000 shares) with apar value of Baht 10 per share (2010 and 2009: Baht 10 per share). All issued shares are fully paid.

F-66

Thai AirAsia Company LimitedNotes to the Special Purpose Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

25

19 Revenues

Revenues from sales and services are as follows:2011 2010 2009Baht Baht Baht

Passenger revenues 13,007,455,688 10,260,308,502 7,582,292,480Baggage handling and other service fees 2,805,257,116 1,538,937,880 1,492,486,018In-flight revenues 185,490,493 135,270,948 107,644,944Freight revenues 159,394,270 164,208,736 98,741,263

Total revenues 16,157,597,567 12,098,726,066 9,281,164,705

20 Expense by nature

The following expenditure items, classified by nature, have been charged in arriving at the operating profit (loss):

2011 2010 2009Notes Baht Baht Baht

Depreciation and amortisation 12,13 71,535,335 123,185,353 131,861,560Staff costs 1,433,667,587 1,122,431,304 920,353,452Fuel costs 6,405,837,534 3,973,965,890 3,334,632,796Aircraft rental 22.2 2,727,706,220 2,200,591,175 1,712,364,182Repair and maintenance 1,101,464,553 964,881,872 1,264,105,545Ramp and airport operating costs 1,366,458,157 1,162,381,508 1,030,863,319Estimated costs of aircraft redelivery before

maturities (Adjusted to actual) 22.2 - (114,276,519) 346,697,404Loss on unwind fuel price swap agreements 22.2 - - 22,557,073Reversal of provision for loss on unwind

interest rate swap agreements 22.2 - - (6,092,821)

21 Earnings (loss) per share

Basic earnings (loss) per share is calculated by dividing the net profit (loss) attributable to shareholders by theweighted average number of paid- up ordinary shares outstanding during the year.

2011 2010 2009

Net profit (loss) attributable to shareholders (Baht) 2,020,058,659 2,011,036,040 (170,470,558)

Weighted average number of paid-up ordinary sharesoutstanding during the year (Shares) 40,000,000 40,000,000 40,000,000

Basic earnings (loss) per share (Baht) 50.50 50.28 (4.26)

The Company does not have diluted ordinary shares as at 31 December 2011, 2010 and 2009.

F-67

Thai AirAsia Company LimitedNotes to the Special Purpose Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

26

22 Related party transactions

Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or arecontrolled by, or are under common control with, the Company, including holding companies, subsidiaries andfellow subsidiaries are related parties of the Company. Associates and individuals owning, directly or indirectly, aninterest in the voting power of the Company that gives them significant influence over the enterprise, keymanagement personnel, including directors and officers of the Company and close members of the family ofthese individuals and companies associated with these individuals also constitute related parties.

In considering each possible related party relationship, attention is directed to the substance of the relationship,and not merely the legal form.

Related party transactions were carried out on conditions as follows:

Pricing policies

- Interest income At a mutual agreed rate and equivalent to interest expensesrate paid to other related parties.

- Share of loss (gain) on fuel price swap agreements Based on fuel consumption ratio.- Chargeable staff costs for shared accounting services Actual staff costs allocated by number of aircrafts.- Aircraft rental For aircrafts owned by AirAsia Berhad, rental charge is

based on AirAsia Berhad's cost of capital. For sub-leased aircrafts, rental charge is based on masteragreement that AirAsia Group has leased from a thirdparty adjust with some assumptions to reflect TheCompany’s credit risk profile.

- Aircraft repair and maintenance Based on the average of the contractual amount betweenAirAsia Berhad and the vendor, adjusted for annualescalation and stepped incremental rates under themaster agreement.

- Purchase of merchandises and equipment At the purchase price.- Management fee expenses At agreement price with AirAsia Berhad.- Booking fee expenses At agreement price which approximates the master

agreement that AirAsia Group has agreed with thirdparties.

- Interest expenses At a rate equivalent to AirAsia Group’s borrowing rate.

The following significant transactions were carried out with related parties:

22.1) Income2011 2010 2009Baht Baht Baht

Interest incomeOther related parties 122,978,108 42,072,727 -A director 1,310,076 5,167,062 -

124,288,184 47,239,789 -

F-68

Thai AirAsia Company LimitedNotes to the Special Purpose Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

27

22 Related party transactions (Cont’d)

Related party transactions were carried out on conditions as follows: (Cont’d)

22.2) Purchases of goods and services

2011 2010 2009Baht Baht Baht

Share of loss (gain) fromfuel price swap agreements

Other related party (13,220,978) (76,341,665) 253,061,471

Chargeable staff costs for sharedaccounting services

Other related parties (33,845,696) (34,999,296) -

Aircraft rentalOther related party 2,727,706,220 2,200,591,175 1,712,364,182

Aircraft repair and maintenanceOther related party 997,958,217 805,619,368 968,684,834

Purchase of merchandises and equipmentOther related party 53,358,495 91,322,792 55,603,101

Management fee expensesOther related party 14,770,940 15,277,972 16,542,640

Booking fee expensesOther related party 57,181,533 36,747,894 33,061,794

Estimated costs of aircraft redelivery beforematurities (Adjusted to actual)

Other related party - (114,276,519) 346,697,404

Interest expensesOther related party 148,644,940 242,841,258 -

Loss on unwind fuel price swap agreementsOther related party - - 22,557,073

Reversal of provision for loss on unwindinterest rate swap agreements

Other related party - - (6,092,821)

F-69

Thai AirAsia Company LimitedNotes to the Special Purpose Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

28

22 Related party transactions (Cont’d)

Related party transactions were carried out on conditions as follows: (Cont’d)

22.2) Purchases of goods and services (Cont’d)

Aircraft redelivery agreement

During the year 2009, the Company entered into aircraft redelivery agreement with AirAsia (Mauritius)Limited, a lessor, who was a related party to redeliver Boeing aircrafts before the end of leasing periodswith an intention to enter into new aircraft rental agreements to save repair and maintenance costs of theaircrafts. The Company’s management estimated the amount of costs of aircraft redelivery before maturitiesamounting to Baht 547.00 million and recorded these costs as operating costs during the years 2007, 2008 and2009. However, management has made a subsequent adjustment for a difference between the estimation and theactual amount of Baht 114.28 million during the year 2010. The difference was due to the fact that the Companycould skip some technical checking stages during redelivery process.

Fuel price swap agreements

During the year 2009, AirAsia Berhad, the related party had terminated some of its fuel price swapagreements with third parties before their maturities and allocated penalty charge to the Company ofBaht 22.56 million. The Company recorded these costs as operating costs for the year then ended 31December 2009. During the years 2011 and 2010, there was no such transaction.

Interest rate swap agreements

AirAsia Berhad, the related party has entered into purchase aircraft agreements for using in Air AsiaGroup. It has entered into loan agreement for aircraft purchasing and interest rate swap agreementswhich protect the Company from the risk of movements in interest rates of loan agreements with thirdparties.

During the year 2008, AirAsia Berhad has terminated interest rate swap agreements with third partiesbefore their maturities because of a significant decrease in interest rate and allocated a penalty charge tothe Company. In view of continuing uncertainties in the global economy, AirAsia Berhad has evaluatedthe global economic situation and made arrangements to further terminations of its swap positions.AirAsia Berhad has estimated the amount of loss on the termination in respect of these interest rate swapagreements and allocated it to the Company of Baht 395.00 million. The Company recorded these costsin the financial statements for the year then ended 31 December 2008. AirAsia Berhad called for thepayments of these costs during the year 2009 amounting to Baht 388.91 million. The Company recordedthe difference between actual payments and provision for loss amounting to Baht 6.09 million in profitor loss. And as at 31 December 2009, the Company presented the outstanding balances under amountsdue to related parties.

During the years 2011 and 2010, the company had no terminated interest rate swap agreements with thirdparties before their maturities.

22.3) Management remunerations

Key management includes directors (executive and non-executive). The compensation paid or payable tomanagement for employee services is shown below:

2011 2010 2009Baht Baht Baht

Salaries and other short-term employee benefits 46,107,099 28,787,939 24,755,760Retirement benefits 2,096,249 - -

48,203,348 28,787,939 24,755,760

F-70

Thai AirAsia Company LimitedNotes to the Special Purpose Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

29

22 Related party transactions (Cont’d)

The following significant transactions were carried out with related parties: (Cont’d)

22.4) Passenger revenues and expenses received and paid on behalf

2011 2010 2009Baht Baht Baht

Passenger revenues received on behalf of theCompany by other related parties 3,378,937,833 3,864,175,468 2,171,882,609

Cash received on behalf of other related party 459,037,583 596,184,467 485,664,226Expenses paid on behalf of the Company by

other related parties 715,424,322 673,865,728 575,063,769Advance payments on behalf of

other related parties 429,660,570 143,434,144 307,943,602

Outstanding balances arising from receivables, payables, short-term loan to a director and other non-currentassets are summarised as follows:

22.5) Amounts due from related parties2011 2010 2009Baht Baht Baht

Amounts due from related partiesOther related parties 275,965,053 2,732,185,031 77,157,753

From 1 January 2010, amounts due from related parties have been charged the interest at 6.00% perannum (2010: 6.00% per annum and 2009: nil).

22.6) Amounts due to a related party2011 2010 2009Baht Baht Baht

Amounts due to a related partyOther related party 361,092,140 4,161,728,551 4,218,446,966

Amounts due to a related party are mainly denominated in US Dollar. From 1 January 2010, amountsdue to a related party have been charged the interest at 6.00% per annum (2010: 6.00% per annum and2009: nil).

22.7) Short-term loan to a director2011 2010 2009Baht Baht Baht

Short-term loan to a directorBeginning balance 105,167,062 187,000,000 -Increase during the year 63,041,200 63,400,000 187,000,000Received during the year (163,041,200) (150,400,000) -Increase from interest receivable during the year 1,310,076 5,167,062 -Interest received during the year (6,477,138) - -

Ending balance - 105,167,062 187,000,000

As at 31 December 2010 and 2009, short-term loan to a director was unsecured and denominated in ThaiBaht, carried interest at 1.50% per annum. The loan was fully settled during the year 2011.

F-71

Thai AirAsia Company LimitedNotes to the Special Purpose Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

30

22 Related party transactions (Cont’d)

Outstanding balances arising from receivables, payables, short-term loan to a director and other non-currentassets are summarised as follows: (Cont’d)

22.8) Other non-current assets

2011 2010 2009Baht Baht Baht

Aircraft rental depositsOther related party 497,866,890 410,570,125 335,629,972

Fuel price swap depositsOther related party 15,775,250 16,824,800 16,824,800

23 Commitments

Operating lease commitments

As at 31 December, the Company had outstanding commitments in respect of the non-cancellable office leasesand others as follows:

2011 2010 2009Baht Baht Baht

Not later than 1 year 45,244,003 49,773,856 12,387,457Later than 1 year but not later than 5 years 34,532,449 53,879,304 11,560,000

Total 79,776,452 103,653,160 23,947,457

As at 31 December 2011, the Company had outstanding commitments in respect of non-cancellable aircraftlease agreements made with AirAsia (Mauritius) Limited which covered rental and insurance agreements of the22 aircrafts (2010: 19 aircrafts and 2009: 20 aircrafts) as follows:

2011 2010 2009Insurance Insurance Insurance

Rental agreements Rental agreements Rental agreementsUSD USD USD USD USD USD

Not later than 1 year 89,700,977 805,951 59,666,136 850,848 54,019,034 884,443Later than 1 year but

not later than 5 years 116,267,650 - 58,206,682 - 40,227,113 -Later than 5 years 46,039,785 - - - - -

Total 252,008,412 805,951 117,872,818 850,848 94,246,147 884,443

24 Guarantees

As at 31 December 2011, there was a commitment related to guarantees issued by bank in respect of pilottrainees’ loans in accordance with its professional pilot courses amounting to Baht 26.9 million (31 December2010: nil and 2009: Baht 49.32 million). Normally, a guarantee is terminated when the pilot trainee earns acommercial pilot’s license and is assigned as a co-pilot or when the pilot trainee settles all outstanding debtswith the bank. However, the Company can fully reclaim the stated liabilities from the pilot trainees’guarantors, who have pledged guarantees with the Company.

F-72

Thai AirAsia Company LimitedNotes to the Special Purpose Financial StatementsFor the years ended 31 December 2011, 2010 and 2009

31

25 Letters of guarantee

As at 31 December 2011, the Company had a commitment relating to guarantees issued by banks in respect ofground handling, technical support, and other flight operation activities in the ordinary course of business atamount of Baht 5.6 million, USD 90,000 and India Rupee 27.8 million (2010: Baht 7.6 million, USD 90,000and India Rupee 27.8 million and 2009: Baht 5.6 million and USD 90,000). The Company used its fixeddeposit account at amount of India Rupee 27.8 million (2010: India Rupee 27.8 million and 2009: nil) as thecollateral for these letters of guarantee.

26 Subsequent events

On 1 January 2012, the Company has entered into addendums of 20 aircraft specific lease agreements with arelated company for extension of their specific lease term from 3, 5 and 8 years to 12 years from the date ofaircraft delivery. The terms and conditions of these addendums are effective from 1 January 2012.

At the Extraordinary Shareholders’ Meeting of the Company held on 15 February 2012, the shareholdersapproved an increase in registered share capital of the Company from 40,000,000 shares to 43,555,560 sharesby issuing additional ordinary shares of 3,555,560 shares with a par value of Baht 10 each in order to offer tothe existing shareholders.

F-73

ASIA AVIATION PUBLIC COMPANY LIMITED

SPECIAL PURPOSE INTERIM PROPORTIONATE

CONSOLIDATED AND COMPANY FINANCIAL

INFORMATION

(UNAUDITED)

31 MARCH 2012

F-74

F-75

F-76

Asia Aviation Public Company Limited

Statements of Financial Position

As at 31 March 2012 and 31 December 2011

(Unaudited) (Audited) (Unaudited) (Audited)

31 March 31 December 31 March 31 December

2012 2011 2012 2011

Notes Baht Baht Baht Baht

Assets

Current assets

Cash and cash equivalents 1,233,087,528 694,425,971 5,404,471 977,900

Cash at financial institutions

pledged as security 89,403,632 7,373,833 - -

Short-term investments 17,911,336 4,651,341 - -

Trade and other receivables 6 103,291,246 97,835,916 - -

Amounts due from related parties 11.5 102,247,842 140,742,129 - -

Inventories 24,387,898 26,128,736 - -

Prepaid expenses 116,193,415 115,024,798 - -

Value added tax receivable, net 91,599,757 351,470,624 - -

Other current assets 19,895,608 13,392,997 8,576,007 3,530,000

Total current assets 1,798,018,262 1,451,046,345 13,980,478 4,507,900

Non-current assets

Cash at financial institutions

pledged as security 3,763,018 28,559,991 - -

Investment in a joint venture 7 - - 403,999,930 403,999,930

General investment 3,534,044 3,534,044 - -

Leasehold improvements and

equipment, net 8 176,656,988 154,498,165 24 2,006

Intangible assets, net 8 6,878,507 7,274,065 409 1,052

Goodwill 286,184,317 286,184,317 - -

Other non-current assets 301,273,807 292,419,374 - -

Total non-current assets 778,290,681 772,469,956 404,000,363 404,002,988

Total assets 2,576,308,943 2,223,516,301 417,980,841 408,510,888

3

Proportionate consolidated Company

The accompanying notes are an integral part of these special purpose interim proportionate consolidated and company

financial information.

F-77

Asia Aviation Public Company Limited

Statements of Financial Position (Cont’d)As at 31 March 2012 and 31 December 2011

(Unaudited) (Audited) (Unaudited) (Audited)

31 March 31 December 31 March 31 December

2012 2011 2012 2011

Notes Baht Baht Baht Baht

Liabilities and shareholders’

equity

Current liabilities

Trade accounts payable 50,507,076 54,025,061 - -

Other accounts payable 40,396,003 33,848,064 - -

Amounts due to related parties 11.6 190,745,543 184,156,928 10,550,252 -

Deferred revenues 1,615,649,228 1,385,345,343 - -

Accrued expenses 291,886,325 247,386,536 4,054,561 4,577,061

Current portion of long-term

borrowing from a financial

institution 9 - 247,859,915 - -

Current portion of finance

lease liabilities 2,093,770 2,431,587 - -

Other current liabilities 11,319,201 7,175,962 8,255 20,736

Total current liabilities 2,202,597,146 2,162,229,396 14,613,068 4,597,797

Non-current liabilities

Long-term borrowing from

a financial institution 9 - 6,713,256 - -

Finance lease liabilities 4,508,948 4,719,811 - -

Employee benefit obligations 10 45,060,506 42,203,653 - -

Total non-current liabilities 49,569,454 53,636,720 - -

Total liabilities 2,252,166,600 2,215,866,116 14,613,068 4,597,797

4

The accompanying notes are an integral part of these special purpose interim proportionate consolidated and company

financial information.

Proportionate consolidated Company

F-78

Asia Aviation Public Company Limited

Statements of Financial Position (Cont’d)As at 31 March 2012 and 31 December 2011

(Unaudited) (Audited) (Unaudited) (Audited)

31 March 31 December 31 March 31 December

2012 2011 2012 2011

Baht Baht Baht Baht

Liabilities and shareholders’

equity (Cont’d)

Shareholders’ equity

Share capital

Authorised share capital

Ordinary shares,

shares 4,850,000,000 shares

of par Baht 0.1 each 485,000,000 485,000,000 485,000,000 485,000,000

Issued and paid-up share capital

Ordinary shares,

shares 4,100,000,000 shares

of paid-up Baht 0.1 each 410,000,000 410,000,000 410,000,000 410,000,000

Effect on additional proportion

of investment in a joint venture (15,526,868) (15,526,868) - -

Deficits (70,330,789) (386,822,947) (6,632,227) (6,086,909)

Total shareholders’ equity 324,142,343 7,650,185 403,367,773 403,913,091

Total liabilities and

shareholders’equity 2,576,308,943 2,223,516,301 417,980,841 408,510,888

5

The accompanying notes are an integral part of these special purpose interim proportionate consolidated and company

financial information.

Proportionate consolidated Company

F-79

Asia Aviation Public Company Limited

Statements of Comprehensive Income (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

2012 2011 2012 2011

Baht Baht Baht Baht

Revenues 2,482,734,594 2,080,124,405 - -

Operating costs (2,055,679,231) (1,607,920,294) - -

Gross profit 427,055,363 472,204,111 - -

Net gain on exchange rates 1,705,138 17,984,307 - -

Other income 49,101,313 79,216,365 - -

Profit before expenses 477,861,814 569,404,783 - -

Selling expenses (100,636,893) (46,469,070) - -

Administrative expenses (57,681,628) (39,778,535) (545,318) (209,923)

Profit (loss) before finance costs

and income tax 319,543,293 483,157,178 (545,318) (209,923)

Finance costs (3,051,135) (37,568,834) - -

Profit (loss) before income tax 316,492,158 445,588,344 (545,318) (209,923)

Income tax - - - -

Net profit (loss) for the period 316,492,158 445,588,344 (545,318) (209,923)

Total comprehensive income

(expense) for the period 316,492,158 445,588,344 (545,318) (209,923)

Earnings (loss) per share

Basic earnings (loss) per share 0.08 0.11 (0.00) (0.00)

6

Proportionate consolidated Company

The accompanying notes are an integral part of these special purpose interim proportionate consolidated and company

financial information.

F-80

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F-82

Asia Aviation Company Limited

Statements of Cash Flows (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

2012 2011 2012 2011

Notes Baht Baht Baht Baht

Cash flows from

operating activities

Profit (loss) before income tax 316,492,158 445,588,344 (545,318) (209,923)

Adjustments for:

Depreciation 8 8,520,822 7,329,228 1,982 1,764

Amortisation 8 511,328 1,869,142 643 317

Loss (gain) on disposals of

leasehold improvements

and equipment 62,767 (1,581,965) - -

Employee benefit expenses 10 2,856,853 2,346,358 - -

Unrealised gain on exchange rates (11,800,682) (6,347,548) - -

Finance costs 3,051,135 37,568,834 - -

Interest income (2,034,686) (24,070,710) - -

317,659,695 462,701,683 (542,693) (207,842)

Changes in operating

assets and liabilities:

- Cash at financial institutions

pledged as security (57,232,826) 1,175,850 - -

- Trade and other receivables (5,455,330) (12,177,715) - -

- Amounts due from related parties 38,494,287 (785,818,396) - 164,446

- Inventories 1,740,838 (278,694) - -

- Prepaid expenses (1,168,617) 13,816,802 - -

- Value added tax receivable 259,870,867 3,596,226 - -

- Other current assets (6,502,611) 512,923 (5,046,007) -

- Other non-current assets (8,854,433) (12,675,645) - -

- Trade accounts payable (3,517,985) 14,674,627 - -

- Other accounts payable 6,547,939 18,986,171 - -

- Amounts due to related parties 6,588,615 360,419,821 10,550,252 -

- Deferred revenues 230,303,885 103,006,322 - -

- Accrued expenses 32,645,832 (55,440,024) (522,500) 19,238

- Other current liabilities 4,143,239 (1,718,573) (12,481) -

Cash generated from (used in) operation 815,263,395 110,781,378 4,426,571 (24,158)

Interest paid - (37,410,953) - -

Interest received 908,506 23,852,595 - -

Net cash generated from (used in)

operating activities 816,171,901 97,223,020 4,426,571 (24,158)

9

Proportionate consolidated Company

The accompanying notes are an integral part of these special purpose interim proportionate consolidated and

company financial information.

F-83

Asia Aviation Company Limited

Statements of Cash Flows (Unaudited) (Cont’d)

For the three-month periods ended 31 March 2012 and 2011

2012 2011 2012 2011

Note Baht Baht Baht Baht

Cash flows from investing activities

Short-term loan granted to a director - (12,718,117) - -

Payments for short-term investments (13,259,995) - - -

Proceeds from disposals of leasehold

improvements and equipment 612,000 1,583,719 - -

Payments for leasehold improvements

and equipment (19,500,455) (7,891,510) - -

Payments for intangible assets (115,770) (1,083,916) - -

Interest received 1,126,180 218,117 - -

Net cash used in investing activities (31,138,040) (19,891,707) - -

Cash flows from financing activities

Repayments of short-term borrowings

from a financial institution - (50,000,000) - -

Repayments of finance lease (548,680) (210,688) - -

Repayments of long-term borrowing

from a financial institution 9 (254,573,171) - - -

Interest paid (3,051,135) (157,881) - -

Net cash used in financing activities (258,172,986) (50,368,569) - -

Net increase (decrease) in cash and

cash equivalents 526,860,875 26,962,744 4,426,571 (24,158)

Cash and cash equivalents

at the beginning of the period 694,425,971 260,382,951 977,900 6,472,054

Effect of exchange rates 11,800,682 6,347,548 - -

Cash and cash equivalents

at the end of the period 1,233,087,528 293,693,243 5,404,471 6,447,896

Non-cash transactions

Purchase of leasehold improvements and

equipment which have not been paid 11,853,957 - - -

10

The accompanying notes are an integral part of these special purpose interim proportionate consolidated and

company financial information.

Proportionate consolidated Company

Significant non-cash transactions during the periods ended 31 March 2012 and 2011 are as follows:

F-84

Asia Aviation Public Company Limited

Condensed Notes to the Special Purpose Interim Proportionate Consolidated and

Company Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

11

1 General information

Asia Aviation Public Company Limited (“the Company”) is a public company and incorporated

in Thailand. The address of the Company’s registered office is as follows:

99 OSC Building 1st floor, Moo 5, Kingkaew Road, Rachatewa, Bangplee, Samutprakarn

10540.

The principal business operations of the Company and its joint venture are summarised below:

The Company’s principal business operation is to invest in low-fare airline business company

which is Thai AirAsia Company Limited. The Company’s shareholding interest is 51%.

The Joint Venture, Thai AirAsia Company Limited principally provides low-fare airline service.

The special purpose interim proportionate consolidated and company financial information

were approved by the Board of Directors on 10 May 2012.

These special purpose interim proportionate consolidated and company financial information

have been reviewed, not audited.

2 Basis of preparation

These special purpose interim proportionate consolidated and company financial information

have been prepared in accordance with Thai Generally Accepted Accounting Principles under

the Accounting Act B.E. 2543, being those Thai Accounting Standards issued under the

Accounting Professions Act B.E. 2547, and the financial reporting requirements of the

Securities and Exchange Commission. The primary financial information (i.e., statement of

financial position, statements of comprehensive income, changes in shareholders’ equity and

cash flows) are prepared in the full format as required by the Securities and Exchange

Commission. The notes to the special purpose financial information are prepared in a

condensed format according to Thai Accounting Standard 34, “Interim Financial Reporting”

and additional notes are presented as required by the Securities and Exchange Commission

under the Securities and Exchange Act. for the purpose of inclusion in the Company’s offering

circular as part of the Company’s initial public offering of shares to investors.

The special purpose interim proportionate consolidated financial information has been prepared

in its shares of the joint venture’s individual income and expenses, assets and liabilities and

cash flows of Thai AirAsia Company Limited which is its joint venture from the Company’s

interest at 51% portion.

F-85

Asia Aviation Public Company Limited

Condensed Notes to the Special Purpose Interim Proportionate Consolidated and

Company Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

12

2 Basis of preparation (Cont’d)

An English version of the special purpose interim proportionate consolidated and company

financial information has been prepared from the special purpose interim financial information

that are in the Thai language. In the event of a conflict or a difference in interpretation between

the two languages, the Thai language special purpose interim financial information shall prevail.

Costs that are incurred unevenly during the financial year are anticipated or deferred in the

interim financial information only if it would also be appropriate to anticipate or defer such costs

at the end of the financial year.

3 Significant accounting policies

The accounting policies used in the preparation of the special purpose interim proportionate

consolidated and company financial information are consistent with those used in the special

purpose proportionate consolidated and company financial statements for the year ended

31 December 2011.

New accounting standards, amendments to accounting standards and new financial

reporting standards

The new accounting standards, amendments to accounting standards and new financial reporting

standards are mandatory for the accounting periods beginning on or after 1 January 2013,

which are currently relevant to the Company and its joint venture but the Company and its

joint venture have not early adopted them are as follows:

TAS 12 Income taxes

TAS 21 (Revised 2009) The Effects of Changes in Foreign Exchange Rates

TFRS 8 Operating Segments

The management has assessed and determined that the new accounting standards, amendments

to accounting standards and new financial reporting standards will not significantly impact

the special purpose interim proportionate consolidated and company financial information being

presented except for TAS 12 which the management is currently assessing the impact of

applying this standard.

F-86

Asia Aviation Public Company Limited

Condensed Notes to the Special Purpose Interim Proportionate Consolidated and

Company Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

13

4 New accounting policies

The Company and its joint venture applied Thai Accounting Standard 19, which dealt with

accounting for employee benefits, on 1 January 2011 by adjusting a total amount against the

deficits as of 1 January 2011. The effects of the adoption of the above standards were as

follows:

Proportionate

consolidated Company

Baht Baht

Statement of changes in shareholders’ equity

Deficits as of 1 January 2011 increased 31,541,528 -

5 Segment information

The Company and its joint venture do not disclose the segment information because there is no

significant business segment other than the provision of air transportation services.

6 Trade and other receivables

Proportionate consolidated Company

(Unaudited) (Audited) (Unaudited) (Audited)

31 March 31 December 31 March 31 December

2012 2011 2012 2011

Baht Baht Baht Baht

Trade accounts receivable 87,170,685 79,456,542 - -

Accrued revenues 13,665,214 16,596,705 - -

Other accounts receivable 2,455,347 1,782,669 - -

Total trade and other

receivables 103,291,246 97,835,916 - -

Trade accounts receivable can be analysed by age as follows:

Proportionate consolidated Company

(Unaudited) (Audited) (Unaudited) (Audited)

31 March 31 December 31 March 31 December

2012 2011 2012 2011

Baht Baht Baht Baht

Up to 3 months 79,943,739 71,932,116 - -

3 - 6 months 224,603 3,805,546 - -

6 - 12 months 5,403,735 2,553,899 - -

Over 12 months 1,598,608 1,164,981 - -

Total trade accounts

receivable 87,170,685 79,456,542 - -

F-87

Asia Aviation Public Company Limited

Condensed Notes to the Special Purpose Interim Proportionate Consolidated and

Company Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

14

7 Investment in a joint venture

Details of jointly controlled company are as follows:

Company

(Unaudited) (Audited)

31 March 31 December

2012 2011

Total

number of Par value % of Cost Cost

holding Baht shareholding method method

Business shares per share Percent Baht Baht

Thai AirAsia Company Limited providing a

low-fare

airline

service 20,399,993 10 51.00 403,999,930 403,999,930

403,999,930 403,999,930

Thai AirAsia Company Limited is jointly controlled by the Company and AirAsia Investment

Ltd., incorporated in Malaysia, which own 51% and 49% of the joint venture’s shares,

respectively. Investment in Thai AirAsia Company Limited is considered as investment in a

joint venture.

On 14 February 2012 ,the Company entered into an “Amended and Restated Shareholders’

Agreement” with AirAsia Investment Ltd. (a subsidiary of AirAsia Berhad), AirAsia Berhad

and Thai AirAsia Company Limited pursuant to which the parties set out their respective

rights and obligations with respect to Thai AirAsia Company Limited. According to the

“Amended and Restated Shareholders’ Agreement”, the Company will have control over Thai

AirAsia Company Limited . Therefore, Thai AirAsia Company Limited will be considered as

a subsidiary instead of a joint venture. The “Amended and Restated Shareholders’ Agreement”

will be effective from the date that the Securities and Exchange Commission issues a letter

to the Company notifying that it has commenced counting the period of effectiveness of the

draft prospectus filed by the Company in relation to an initial public offering.

Investment in a joint venture as at 31 March 2012 and 31 December 2011 includes goodwill

of Baht 286,184,317.

F-88

Asia Aviation Public Company Limited

Condensed Notes to the Special Purpose Interim Proportionate Consolidated and

Company Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

15

8 Leasehold improvements, equipment and intangible assets, net

Proportionate consolidated Company

(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Leasehold Leasehold

improvements Intangible improvements Intangible

and equipment assets and equipment assets

Baht Baht Baht Baht

For the three-month period

ended 31 March 2012

Opening net book amount 154,498,165 7,274,065 2,006 1,052

Additions 31,354,412 115,770 - -

Disposals, net (674,767) - - -

Depreciation/amortisation (8,520,822) (511,328) (1,982) (643)

Closing net book amount 176,656,988 6,878,507 24 409

9 Long-term borrowing from a financial institution

Maturity of long-term borrowing from a financial institution is as follows:

Proportionate consolidated Company

(Unaudited) (Audited) (Unaudited) (Audited)

31 March 31 December 31 March 31 December

2012 2011 2012 2011

Baht Baht Baht Baht

Within 1 year - 247,859,915 - -

Over 1 year but less

than 5 years - 6,713,256 - -

- 254,573,171 - -

Movements in long-term borrowing from a financial institution are summarised as follows:

Proportionate

consolidated Company

(Unaudited) (Unaudited)

Baht Baht

For the three-month period ended 31 March 2012

Opening book amount 254,573,171 -

Loan repayments (254,573,171) -

Closing book amount - -

F-89

Asia Aviation Public Company Limited

Condensed Notes to the Special Purpose Interim Proportionate Consolidated and

Company Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

16

10 Employee benefit obligations

Proportionate

consolidated Company

(Unaudited) (Unaudited)

Baht Baht

For the three-month period ended 31 March 2012

Opening book amount as at 1 January 2012 42,203,653 -

Retirement benefit expenses during the period 2,856,853 -

Closing book amount as at 31 March 2012 45,060,506 -

11 Related party transactions

Enterprises and individuals that directly, or indirectly through one or more intermediaries,

control, or are controlled by, or are under common control with, the Company, including

holding companies, subsidiaries and fellow subsidiaries are related parties of the Company.

Associates and individuals owning, directly or indirectly, an interest in the voting power of

the Company that gives them significant influence over the enterprise, key management

personnel, including directors and officers of the Company and close members of the family

of these individuals and companies associated with these individuals also constitute related

parties.

In considering each possible related party relationship, attention is directed to the substance

of the relationship, and not merely the legal form.

The major shareholder of the Company is Mr. Tassapon Bijleveld, who owns 55% of the

Company’s ordinary shares.

F-90

Asia Aviation Public Company Limited

Condensed Notes to the Special Purpose Interim Proportionate Consolidated and

Company Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

17

11 Related party transactions (Cont’d)

Related party transactions were carried out on conditions as follows:

Pricing policies

- Interest income At a mutual agreed rate and equivalent to interest

expenses rate paid to other related parties.

- Share of loss (gain) on fuel price swap

agreements Based on fuel consumption ratio.

- Share of staff costs for accounting

services Actual staff costs allocated by number of aircrafts.

- Aircraft rental For aircrafts owned by AirAsia Berhad, rental

charge is based on AirAsia Berhad’s cost of

capital. For sub-leased aircrafts, rental charge is

based on master agreement that AirAsia Group

has leased from a third party adjusted with some

assumptions to reflect the joint venture’s credit

risk profile.

- Aircraft repair and maintenance Based on the average of the contractual amount

between AirAsia Berhad and the vendor, adjusted

for annual escalation and stepped incremental

rates under the master agreement.

- Purchase of merchandises and

equipment At the purchase price.

- Management fee expenses At agreement price with AirAsia Berhad.

- Booking fee expenses At agreement price which approximates the

master agreement that AirAsia Group has agreed

with third parties.

- Pilot training expenses Under negotiation process with Asian Aviation

Centre of Excellence Sdn Bhd (CAE).

- Brand license fee At 1% of total revenues per annum.

- Interest expenses At a rate equivalent to AirAsia Group’s borrowing

rate.

F-91

Asia Aviation Public Company Limited

Condensed Notes to the Special Purpose Interim Proportionate Consolidated and

Company Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

18

11 Related party transactions (Cont’d) The following significant transactions were carried out with related parties: 11.1) Income

Proportionate consolidated Company

For the three-month periods ended 31 March (Unaudited)

2012 2011 2012 2011

Baht Baht Baht Baht

Interest income

Other related parties 792,236 23,846,245 - -

A director - 218,117 - -

792,236 24,064,362 - -

11.2) Purchases of goods and services

Proportionate consolidated Company

For the three-month periods ended 31 March (Unaudited)

2012 2011 2012 2011

Baht Baht Baht Baht

Share of gain from fuel

price swap agreements

Other related party (20,347,566) (5,660,296) - -

Share of staff costs for

accounting services

Other related parties (4,525,503) (4,056,574) - -

Aircraft rental

Other related party 384,066,597 327,578,234 - -

Aircraft repair and

maintenance

Other related party 148,592,829 120,300,588 - -

Purchase of merchandises

and equipment

Other related party 23,498,562 9,402,175 - -

Management fee expenses

Other related party 1,888,189 1,849,502 - -

Booking fee expenses

Other related party 9,077,012 7,565,380 - -

F-92

Asia Aviation Public Company Limited

Condensed Notes to the Special Purpose Interim Proportionate Consolidated and

Company Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

19

11 Related party transactions (Cont’d)

The following significant transactions were carried out with related parties: (Cont’d)

11.2) Purchases of goods and services (Cont’d)

Proportionate consolidated Company

For the three-month periods ended 31 March (Unaudited)

2012 2011 2012 2011

Baht Baht Baht Baht

Pilot training expenses

Other related parties 18,016,905 - - -

Brand license fee

Other related party 24,904,040 - - -

Interest expenses

Other related party - 37,410,953 - -

11.3) Management remunerations

Key management includes directors (executive and non-executive). The compensation

paid or payable to key management for employee services is shown below:

Proportionate consolidated Company

For the three-month periods ended 31 March (Unaudited)

2012 2011 2012 2011

Baht Baht Baht Baht

Salaries and other

short-term

employee

benefits 5,733,981 8,497,055 220,000 -

Retirement benefits 296,254 262,031 - -

6,030,235 8,759,086 220,000 -

F-93

Asia Aviation Public Company Limited

Condensed Notes to the Special Purpose Interim Proportionate Consolidated and

Company Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

20

11 Related party transactions (Cont’d)

The following significant transactions were carried out with related parties: (Cont’d)

11.4) Passenger revenues and expenses received and paid on behalf

Proportionate consolidated Company

For the three-month periods ended 31 March (Unaudited)

2012 2011 2012 2011

Baht Baht Baht Baht

- Passenger revenues received on behalf

of the Company and its joint venture by other related parties 337,781,329 763,513,557 - -

- Cash received on behalf

of other related party 62,723,283 66,329,372 - -

- Expenses paid on behalf

of the Company and

its joint venture by

other related parties 79,392,478 58,592,710 5,550,252 -

- Advance payment on

behalf of other

related parties 21,173,849 79,028,621 - -

Outstanding balances arising from receivables, payables, other non-current assets and accrued

expenses are summarised as follows:

11.5) Amounts due from related parties

Proportionate consolidated Company

(Unaudited) (Audited) (Unaudited) (Audited)

31 March 31 December 31 March 31 December

2012 2011 2012 2011

Baht Baht Baht Baht

Amounts due from

related parties

Other related parties 102,247,842 140,742,129 - -

Amount due from related parties have been charged the interest for overdue amount

at 6.00% per annum (2011: 6.00% per annum).

F-94

Asia Aviation Public Company Limited

Condensed Notes to the Special Purpose Interim Proportionate Consolidated and

Company Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

21

11 Related party transactions (Cont’d)

Outstanding balances arising from receivables, payables, other non-current assets and accrued

expenses are summarised as follows: (Cont’d)

11.6) Amounts due to related parties

Proportionate consolidated Company

(Unaudited) (Audited) (Unaudited) (Audited)

31 March 31 December 31 March 31 December

2012 2011 2012 2011

Baht Baht Baht Baht

Amounts due to

related parties

Other related parties 185,575,918 184,156,928 - -

A joint venture 5,169,625 - 10,550,252 -

190,745,543 184,156,928 10,550,252 -

Amounts due to related parties comprise trade accounts receivable and advance

payments. Amounts due to related parties are mainly denominated in US Dollars and

have been charged the interest for overdue amount at 6.00% per annum (2011: 6.00%

per annum).

11.7) Other non-current assets

Proportionate consolidated Company

(Unaudited) (Audited) (Unaudited) (Audited)

31 March 31 December 31 March 31 December

2012 2011 2012 2011

Baht Baht Baht Baht

Aircraft rental

deposits

Other related party 268,653,899 253,912,027 - -

Fuel price swap

deposits

Other related party 7,827,911 8,045,374 - -

F-95

Asia Aviation Public Company Limited

Condensed Notes to the Special Purpose Interim Proportionate Consolidated and

Company Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

22

11 Related party transactions (Cont’d)

Outstanding balances arising from receivables, payables, other non-current assets and accrued

expenses are summarised as follows: (Cont’d)

11.8) Accrued expenses

Proportionate consolidated Company

(Unaudited) (Audited) (Unaudited) (Audited)

31 March 31 December 31 March 31 December

2012 2011 2012 2011

Baht Baht Baht Baht

Accrued brand

license fee

Other related party 28,718,688 - - -

Accrued pilot

training expenses

Other related party 18,016,905 - - -

12 Net fair value of financial instruments

Fuel price swap agreements

The net fair value of fuel price swap agreements at the statement of financial position date is

as follow:

Proportionate consolidated Company

(Unaudited) (Audited) (Unaudited) (Audited)

31 March 31 December 31 March 31 December

2012 2011 2012 2011

US Dollars US Dollars US Dollars US Dollars

Favourable fuel price swap

agreements 700,027 821,892 - -

F-96

Asia Aviation Public Company Limited

Condensed Notes to the Special Purpose Interim Proportionate Consolidated and

Company Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

23

13 Commitments

For the three-month period ended 31 March 2012, there were no significant changes in

commitments or contingent liabilities, including significant contracts from the year ended

31 December 2011 (please see the special purpose proportionate consolidated and company

financial statements for the year ended 31 December 2011).

As at 31 March 2012, the joint venture had outstanding commitments in respect of non-cancellable

aircraft lease agreements made with AirAsia (Mauritius) Limited, a related company, which

cover rental and insurance agreements of the 24 aircrafts (As at 31 December 2011: 22 aircrafts)

as follows:

Proportionate consolidated

(Unaudited) (Audited)

31 March 2012 31 December 2011

Insurance Insurance

Rental agreement Rental agreement

US Dollars US Dollars US Dollars US Dollars

Within 1 year 51,316,182 102,759 45,747,483 411,034

Later than 1 year but not

later than 5 years 205,264,730 - 59,296,481 -

Later than 5 years 238,445,733 - 23,480,282 -

Total 495,026,645 102,759 128,524,246 411,034

14 Guarantees

As at 31 March 2012, the joint venture had a commitment related to guarantees issued by

banks in respect of pilot trainees’ loans in accordance with their professional pilot courses

amounting to Baht 13.72 million (31 December 2011: Baht 13.72 million).

As at 31 March 2012 and 31 December 2011, the Company had a commitment relating to

guarantees given to the borrowers under a credit agreement for the Baht equivalent of USD

39 million. The agreement was between Credit Suisse, Singapore branch, as the lender, and

the borrowers, a group of six of the Company’s shareholders. Under the credit agreement,

the borrowers pledged the Company’s shares and the Company pledged its investment in

equity securities in Thai AirAsia Company Limited to such lender as a guarantee.

F-97

Asia Aviation Public Company Limited

Condensed Notes to the Special Purpose Interim Proportionate Consolidated and

Company Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

24

15 Letters of guarantee

The Company and its joint venture had commitments relating to guarantees issued by banks

in respect of ground handling, technical support, and other flight operating activities in the

ordinary course of business as follows :

Proportionate consolidated

31 March 2012 (Unaudited) 31 December 2011 (Audited)

Baht

US

Dollars

India

Rupee

Baht

US

Dollars

India

Rupee

million million million million million million

Guarantees relating to

flight operating

activities 2.86 0.20 15.72 2.86 0.05 14.19

Guarantees relating to

value added tax

refund process 321.87 - - - - -

Total 324.73 0.20 15.72 2.86 0.05 14.19

The Company and its joint venture also used its fixed-deposit accounts and bills of exchange as

collateral for these letters of guarantee as follows:

Proportionate consolidated

31 March 2012

(Audited)

31 December 2011

(Audited)

Baht India Rupee Baht India Rupee

million million million million

Fixed-deposit accounts 4.28 15.88 3.06 14.19

Bills of exchange 80.58 - - -

Total 84.86 15.88 3.06 14.19

16 Subsequent events

On 4 May 2012, the Securities and Exchange Commission (“SEC”) issued a letter to the

Company notifying that SEC has commenced counting the period of effectiveness of the

draft prospectus filed by the Company in relation to an initial public offering. Therefore,

Thai AirAsia Company Limited changed from a joint venture to a subsidiary from 4 May

2012 onwards under the “Amended and Restated Shareholders’ Agreement” as mentioned

in Note 7.

F-98

THAI AIRASIA COMPANY LIMITED

SPECIAL PURPOSE INTERIM FINANCIAL INFORMATION

(UNAUDITED)

31 MARCH 2012

F-99

F-100

F-101

Thai AirAsia Company Limited

Statements of Financial Position

As at 31 March 2012 and 31 December 2011

Unaudited Audited

31 March 31 December

2012 2011

Notes Baht Baht

Assets

Current assets

Cash and cash equivalents 2,407,222,507 1,359,702,567

Cash at financial institutions

pledged as security 175,301,300 14,458,500

Short-term investments 35,120,280 9,120,279

Trade and other receivables 6 202,531,924 191,835,196

Amounts due from related parties 11.5 211,036,285 275,965,053

Inventories 47,819,425 51,232,834

Prepaid expenses 227,830,304 225,538,898

Value added tax receivable, net 179,607,428 689,158,323

Other current assets 22,195,301 19,339,214

Total current assets 3,508,664,754 2,836,350,864

Non-current assets

Cash at financial institutions

pledged as security 7,378,470 56,000,000

General investment 6,929,500 6,929,500

Leasehold improvements

and equipment, net 7 346,386,323 302,933,748

Intangible assets, net 7 13,486,472 14,260,815

Other non-current assets 590,733,158 573,371,519

Total non-current assets 964,913,923 953,495,582

Total assets 4,473,578,677 3,789,846,446

The accompanying notes are an integral part of these special purpose interim financial

information.

3

F-102

Thai AirAsia Company Limited

Statements of Financial Position (Cont’d)

As at 31 March 2012 and 31 December 2011

Unaudited Audited

31 March 31 December

2012 2011

Notes Baht Baht

Liabilities and shareholders’ equity

Current liabilities

Trade accounts payable 99,033,517 105,931,528

Other accounts payable 79,207,877 66,368,776

Amounts due to related parties 11.6 363,874,474 361,092,140

Deferred revenues 3,167,940,749 2,716,364,349

Accrued expenses 564,376,203 476,097,173

Current portion of long-term borrowing

from a financial institution 8 - 486,000,000

Current portion of finance lease liabilities 4,105,433 4,767,819

Other current liabilities 22,178,333 14,029,860

Total current liabilities 4,300,716,586 4,230,651,645

Non-current liabilities

Long-term borrowing from

a financial institution 8 - 13,163,251

Finance lease liabilities 8,841,078 9,254,534

Employee benefit obligations 9 88,353,964 82,752,289

Total non-current liabilities 97,195,042 105,170,074

Total liabilities 4,397,911,628 4,335,821,719

The accompanying notes are an integral part of these special purpose interim financial

information.

4

F-103

Thai AirAsia Company Limited

Statements of Financial Position (Cont’d)

As at 31 March 2012 and 31 December 2011

Unaudited Audited

31 March 31 December

2012 2011

Note Baht Baht

Liabilities and shareholders’ equity (Cont’d)

Shareholders’ equity

Share capital 10

Authorised share capital

Ordinary shares, shares 40,000,000 shares

of par Baht 10 each 400,000,000 400,000,000

Issued and paid-up share capital

Ordinary shares, shares 40,000,000 shares

of paid-up Baht 10 each 400,000,000 400,000,000

Premium on share capital 1,227,629 1,227,629

Deficits (325,560,580) (947,202,902)

Total shareholders’ equity 75,667,049 (545,975,273)

Total liabilities and shareholders’ equity 4,473,578,677 3,789,846,446

The accompanying notes are an integral part of these special purpose interim financial

information.

5

F-104

Thai AirAsia Company Limited

Statements of Comprehensive Income (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

2012 2011

Baht Baht

Revenues 4,868,108,717 4,160,248,810

Operating costs (4,030,744,973) (3,215,840,588)

Gross profit 837,363,744 944,408,222

Net gain on exchange rates 3,343,409 35,968,613

Other income 96,277,118 158,432,731

Profit before expenses 936,984,271 1,138,809,566

Selling expenses (197,327,310) (92,938,141)

Administrative expenses (112,032,020) (79,137,224)

Profit before finance costs and income tax 627,624,941 966,734,201

Finance costs (5,982,619) (75,137,667)

Profit before income tax 621,642,322 891,596,534

Income tax - -

Net profit for the period 621,642,322 891,596,534

Total comprehensive income for the period 621,642,322 891,596,534

Earnings per share

Basic earnings per share 15.54 22.29

The accompanying notes are an integral part of these special purpose interim financial

information.

6

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7

F-106

Thai AirAsia Company Limited

Statements of Cash Flows (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

2012 2011

Notes Baht Baht

Cash flows from operating activities

Profit before income tax 621,642,322 891,596,534

Adjustments for:

Depreciation 7 16,703,613 14,654,928

Amortisation 7 1,001,343 3,737,650

Loss (gain) on disposals of leasehold

improvements and equipment 123,074 (3,163,930)

Employee benefit expenses 9 5,601,675 4,692,716

Unrealised gain on exchange rates (23,138,599) (12,695,095)

Finance costs 5,982,619 75,137,667

Interest income (3,989,581) (48,141,422)

623,926,466 925,819,048

Changes in operating assets and liabilities:

- Cash at financial institutions pledged as security (112,221,270) 2,351,700

- Trade and other receivables (10,696,728) (24,355,429)

- Amounts due from related parties 64,928,768 (1,571,965,682)

- Inventories 3,413,409 (557,388)

- Prepaid expenses (2,291,406) 27,633,604

- Value added tax receivable 509,550,895 7,192,451

- Other current assets (2,856,087) 1,025,845

- Other non-current assets (17,361,639) (25,351,290)

- Trade accounts payable (6,898,011) 29,349,254

- Other accounts payable 12,839,101 37,972,341

- Amounts due to related parties 2,782,334 720,839,642

- Deferred revenues 451,576,400 206,012,644

- Accrued expenses 65,035,968 (110,918,524)

- Other current liabilities 8,148,473 (3,437,146)

Cash generated from operation 1,589,876,673 221,611,070

Interest paid - (74,821,906)

Interest received 1,781,384 47,705,189

Net cash generated from operating activities 1,591,658,057 194,494,353

The accompanying notes are an integral part of these special purpose interim financial

information.

8

F-107

Thai AirAsia Company Limited

Statements of Cash Flows (Unaudited) (Cont’d)

For the three-month periods ended 31 March 2012 and 2011

2012 2011

Note Baht Baht

Cash flows from investing activities

Short-term loan granted to a director - (25,436,233)

Payments for short-term investments (26,000,000) -

Proceeds from disposals of

leasehold improvements and equipment 1,200,000 3,167,438

Payments for leasehold

improvements and equipment (38,236,201) (15,783,020)

Payments for intangible assets (227,000) (2,167,831)

Interest received 2,208,197 436,233

Net cash used in investing activities (61,055,004) (39,783,413)

Cash flows from financing activities

Repayments of short-term borrowings

from a financial institution - (100,000,000)

Repayments of finance lease (1,075,842) (421,375)

Repayments of long-term borrowing

from a financial institution 8 (499,163,251) -

Interest paid (5,982,619) (315,761)

Net cash used in financing activities (506,221,712) (100,737,136)

Net increase in cash and cash equivalents 1,024,381,341 53,973,804

Cash and cash equivalents at the beginning of the period 1,359,702,567 507,821,793

Effect of exchange rates 23,138,599 12,695,095

Cash and cash equivalents at the end of the period 2,407,222,507 574,490,692

Non-cash transactions

Significant non-cash transactions during the periods ended 31 March 2012 and 2011 are as

follows:

Purchase of leasehold improvements and equipment

which have not been paid 23,243,061 -

The accompanying notes are an integral part of these special purpose interim financial

information.

9

F-108

Thai AirAsia Company Limited

Condensed Notes to Special Purpose Interim Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

10

1 General information

Thai AirAsia Company Limited (“the Company”) is a limited company and incorporated

in Thailand. The address of the Company’s registered office is as follows:

99 OSC Building, 1st floor, Moo 5, Kingkaew Road, Rachatewa, Bangplee, Samutprakarn

10540.

The principal business operation of the Company is to provide low-fare airline service.

The Company is jointly controlled by Asia Aviation Public Company Limited, incorporated

in Thailand and AirAsia Investment Ltd., incorporated in Malaysia, which own 51%

and 49% of the Company’s shares, respectively.

The special purpose interim financial information were approved by the Board of Directors

on 10 May 2012.

These special purpose interim financial information have been reviewed, not audited.

2 Basis of preparation

These special purpose interim financial information have been prepared in accordance

with Thai Generally Accepted Accounting Principles under the Accounting Act B.E.

2543, being those Thai Accounting Standards issued under the Accounting Professions

Act B.E. 2547, and the financial reporting requirements of the Securities and Exchange

Commission. The primary financial information (i.e., statement of financial position,

statements of comprehensive income, changes in shareholders’ equity and cash flows) are

prepared in the full format as required by the Securities and Exchange Commission. The

notes to the special purpose financial information are prepared in a condensed format

according to Thai Accounting Standard 34, “Interim Financial Reporting” and additional

notes are presented as required by the Securities and Exchange Commission under the

Securities and Exchange Act. for the purpose of inclusion in the Asia Aviation Public

Company Limited’s offering circular as part of the Asia Aviation Public Company

Limited’s initial public offering of shares to investors.

An English version of the special purpose interim financial information has been prepared

from the special purpose interim financial information that is in the Thai language. In

the event of a conflict or a difference in interpretation between the two languages, the

Thai language special purpose interim financial information shall prevail.

Costs that are incurred unevenly during the financial year are anticipated or deferred in

the interim financial information only if it would also be appropriate to anticipate or defer

such costs at the end of the financial year.

F-109

Thai AirAsia Company Limited

Condensed Notes to Special Purpose Interim Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

11

3 Significant accounting policies

The accounting policies used in the preparation of the special purpose interim financial

information are consistent with those used in the special purpose financial statements for

the year ended 31 December 2011.

New accounting standards, amendments to accounting standards and new financial

reporting standards

The new accounting standards, amendments to accounting standards and new financial

reporting standards are currently mandatory for the accounting periods beginning on or

after 1 January 2013, which are relevant to the Company but the Company has not early

adopted them are as follow:

TAS 12 Income taxes

TAS 21 (Revised 2009) The Effects of Changes in Foreign Exchange Rates

TFRS 8 Operating Segments

The Company’s management has assessed and determined that the new accounting

standards, amendments to accounting standards and new financial reporting standards

will not significantly impact the special purpose interim financial information being

presented, except for TAS 12 which the management is currently assessing the impact

of applying this standard.

4 New accounting policies

The Company applied Thai Accounting Standard 19, which dealt with accounting for

employee benefits, on 1 January 2011 by adjusting a total amount against the deficits as

of 1 January 2011. The effects of the adoption of the above standards were as follows:

Baht

Statement of changes in shareholders’ equity

Deficits as of 1 January 2011 increased 63,083,056

5 Segment information

The Company does not disclose the segment information because there is no significant

business segment other than the provision of air transportation services.

F-110

Thai AirAsia Company Limited

Condensed Notes to Special Purpose Interim Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

12

6 Trade and other receivables

Unaudited Audited

31 March 31 December

2012 2011

Baht Baht

Trade accounts receivable 170,922,971 155,797,194

Accrued revenues 26,794,546 32,542,570

Other accounts receivable 4,814,407 3,495,432

Total trade and other receivables 202,531,924 191,835,196

Trade accounts receivable can be analysed by age as follows:

Unaudited Audited

31 March 31 December

2012 2011

Baht Baht

Up to 3 months 156,752,484 141,043,413

3 - 6 months 440,398 7,461,857

6 - 12 months 10,595,563 5,007,647

Over 12 months 3,134,526 2,284,277

Total trade accounts receivable 170,922,971 155,797,194

7 Leasehold improvements, equipment and intangible assets, net

Unaudited

Leasehold

improvements

and equipment

Intangible

assets

Baht Baht

For the three-month period ended

31 March 2012

Opening net book amount 302,933,748 14,260,815

Additions 61,479,262 227,000

Disposals, net (1,323,074) -

Depreciation/amortisation (16,703,613) (1,001,343)

Closing net book amount 346,386,323 13,486,472

F-111

Thai AirAsia Company Limited

Condensed Notes to Special Purpose Interim Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

13

8 Long-term borrowing from a financial institution

Maturity of long-term borrowing from a financial institution is as follows:

Unaudited Audited

31 March 31 December

2012 2011

Baht Baht

Within 1 year - 486,000,000

Over 1 year but less than 5 years - 13,163,251

- 499,163,251

Movements in long-term borrowing from a financial institution are summarised as

follows:

Unaudited

Baht

For the three-month period ended 31 March 2012 Opening book amount 499,163,251

Loan repayments (499,163,251)

Closing book amount -

9 Employee benefit obligations

Unaudited

Baht

For the three-month period ended 31 March 2012

Opening book amount as at 1 January 2012 82,752,289

Retirement benefit expenses during the period 5,601,675

Closing book amount as at 31 March 2012 88,353,964

10 Share capital

At the Extraordinary Shareholders’ Meeting of the Company held on 15 February 2012,

the shareholders approved an increase in registered share capital of the Company from

40,000,000 shares to 43,555,560 shares by issuing additional ordinary shares of 3,555,560

shares with a par value of Baht 10 each in order to offer for the existing shareholders.

However, as at 31 March 2012, the Company has not yet registered the additional shares

with the Ministry of Commerce.

F-112

Thai AirAsia Company Limited

Condensed Notes to Special Purpose Interim Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

14

11 Related party transactions

Enterprises and individuals that directly, or indirectly through one or more intermediaries,

control, or are controlled by, or are under common control with, the Company, including

holding companies, subsidiaries and fellow subsidiaries are related parties of the

Company. Associates and individuals owning, directly or indirectly, an interest in the

voting power of the Company that gives them significant influence over the enterprise,

key management personnel, including directors and officers of the Company and close

members of the family of these individuals and companies associated with these

individuals also constitute related parties.

In considering each possible related party relationship, attention is directed to the substance

of the relationship, and not merely the legal form.

Related party transactions were carried out on conditions as follows:

Pricing policies

- Interest income At a mutual agreed rate and equivalent to interest

expenses rate paid to other related parties.

- Share of loss (gain) on fuel price

swap agreements Based on fuel consumption ratio.

- Share of staff costs for accounting

services Actual staff costs allocated by number of aircrafts.

- Aircraft rental For aircrafts owned by AirAsia Berhad, rental

charge is based on AirAsia Berhad’s cost of

capital. For sub-leased aircrafts, rental charge is

based on master agreement that AirAsia Group

has leased from a third party adjusted with some

assumptions to reflect the Company’s credit risk

profile. - Aircraft repair and maintenance Based on the average of the contractual amount

between AirAsia Berhad and the vendor,

adjusted for annual escalation and stepped

incremental rates under the master agreement.

- Purchase of merchandises and

equipment At the purchase price.

- Management fee expenses At agreement price with AirAsia Berhad.

- Booking fee expenses

At agreement price which approximates the master

agreement that AirAsia Group has agreed with

third parties.

- Pilot training expenses Under negotiation process with Asian Aviation

Centre of Excellence Sdn Bhd (CAE).

- Brand license fee At 1% of total revenues per annum.

- Interest expenses At a rate equivalent to AirAsia Group’s borrowing

rate.

F-113

Thai AirAsia Company Limited

Condensed Notes to Special Purpose Interim Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

15

11 Related party transactions (Cont’d)

The following significant transactions were carried out with related parties:

11.1) Income

For the three-month

periods ended 31 March

Unaudited

2012 2011

Baht Baht

Interest income

Other related parties 1,553,405 47,692,490

A director - 436,233

1,553,405 48,128,723

11.2) Purchases of goods and services

For the three-month

periods ended 31 March

Unaudited

2012 2011

Baht Baht

Share of gain from fuel price swap agreements

Other related party (39,897,202) (11,320,591)

Share of staff costs for accounting services

Other related parties (8,873,538) (8,113,149)

Aircraft rental

Other related party 753,072,017 655,156,467

Aircraft repair and maintenance

Other related party 291,358,589 240,601,175

Purchase of merchandises and equipment

Other related party 46,075,628 18,804,350

Management fee expenses

Other related party 3,702,332 3,699,004

Booking fee expenses

Other related party 17,798,069 15,130,761

Pilot training expenses

Other related party 35,327,277 -

F-114

Thai AirAsia Company Limited

Condensed Notes to Special Purpose Interim Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

16

11 Related party transactions (Cont’d)

The following significant transactions were carried out with related parties: (Cont’d)

11.2) Purchases of goods and services (Cont’d)

For the three-month

periods ended 31 March

Unaudited

2012 2011

Baht Baht

Brand license fee

Other related party 48,831,467 -

Interest expenses

Other related party - 74,821,906

11.3) Management remunerations

Key management includes directors (executive and non-executive). The

compensation paid or payable to management for employee services is shown

below:

For the three-month

periods ended 31 March

Unaudited

2012 2011

Baht Baht

Salaries and other short-term employee benefits 10,811,731 16,994,110

Retirement benefits 580,891 524,062

11,392,622 17,518,172

F-115

Thai AirAsia Company Limited

Condensed Notes to Special Purpose Interim Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

17

11 Related party transactions (Cont’d)

The following significant transactions were carried out with related parties: (Cont’d)

11.4) Passenger revenues and expenses received and paid on behalf

For the three-month

periods ended 31 March

Unaudited

2012 2011

Baht Baht

- Passenger revenues received on behalf of the

Company by other related parties 662,316,559 1,527,027,113

- Cash received on behalf of other related party 122,986,871 132,658,744

- Expenses paid on behalf of the Company by

other related parties 150,338,981 117,185,420

- Advance payment on behalf of

other related parties 47,067,617 158,057,242

Outstanding balances arising from receivables, payables, other non-current assets and

accrued expenses are summarised as follows:

11.5) Amounts due from related parties

Unaudited Audited

31 March 31 December

2012 2011

Baht Baht

Amounts due from related parties

Other related parties 200,486,033 275,965,053

A joint venturer 10,550,252 -

211,036,285 275,965,053

Amounts due from related parties comprise trade accounts receivable and

advance payments. Trade accounts receivable have been charged the interest for

overdue amount at 6.00% per annum (2011: 6.00% per annum).

F-116

Thai AirAsia Company Limited

Condensed Notes to Special Purpose Interim Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

18

11 Related party transactions (Cont’d)

Outstanding balances arising from receivables, payables, other non-current assets and

accrued expenses are summarised as follows: (Cont’d)

11.6) Amounts due to related parties

Unaudited Audited

31 March 31 December

2012 2011

Baht Baht

Amounts due to related parties

Other related parties 363,874,474 361,092,140

Amounts due to related parties are mainly denominated in US Dollars and have

been charged the interest for overdue amount at 6.00% per annum (2011: 6.00%

per annum).

11.7) Other non-current assets

Unaudited Audited

31 March 31 December

2012 2011

Baht Baht

Aircraft rental deposits

Other related party 526,772,532 497,866,890

Fuel price swap deposits

Other related party 15,348,850 15,775,250

F-117

Thai AirAsia Company Limited

Condensed Notes to Special Purpose Interim Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

19

11 Related party transactions (Cont’d)

Outstanding balances arising from receivables, payables, other non-current assets and

accrued expenses are summarised as follows: (Cont’d)

11.8) Accrued expenses

Unaudited Audited

31 March 31 December

2012 2011

Baht Baht

Accrued brand license fee

Other related party 56,311,172 -

Accrued pilot training expenses

Other related party 35,327,277 -

12 Net fair value of financial instruments

Fuel price swap agreements

The net fair value of fuel price swap agreements at the special purpose statement of

financial position date is as follows:

Unaudited Audited

31 March 31 December

2012 2011

US Dollars US Dollars

Favourable fuel price swap agreements 1,372,603 1,611,554

13 Commitments

For the three-month period ended 31 March 2012, there were no significant changes in

commitments or contingent liabilities, including significant contracts from the year

ended 31 December 2011 (please see the special purpose financial statements for the

year ended 31 December 2011).

F-118

Thai AirAsia Company Limited

Condensed Notes to Special Purpose Interim Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

20

13 Commitments (Cont’d)

As at 31 March 2012, the Company had outstanding commitments in respect of

non-cancellable aircraft lease agreements made with AirAsia (Mauritius) Limited, a

related company, which cover rental and insurance agreements of the 24 aircrafts (As at

31 December 2011: 22 aircrafts) as follows:

Unaudited Audited

31 March 2012 31 December 2011

Insurance Insurance

Rental agreement Rental agreement

US Dollars US Dollars US Dollars US Dollars

Within 1 year 100,620,000 201,488 89,700,977 805,951

Later than 1 year but

not later than 5 years 402,480,000 - 116,267,650 -

Later than 5 years 467,540,814 - 46,039,785 -

Total 970,640,814 201,488 252,008,412 805,951

14 Guarantee

As at 31 March 2012, there was a commitment related to guarantees issued by banks in

respect of pilot trainees’ loans in accordance with their professional pilot courses

amounting to Baht 26.9 million (31 December 2011: Baht 26.9 million).

15 Letters of guarantee

The Company had commitments relating to guarantees issued by banks in respect of

ground handling, technical support, and other flight operating activities in the ordinary

course of business as follows:

Unaudited Audited

31 March 2012 31 December 2011

Baht

US

Dollars

India

Rupee

Baht

US

Dollars

India

Rupee

million million million million million million

Guarantees relating to

flight operating

activities 5.60 0.39 30.83 5.60 0.09 27.83

Guarantees relating to

value added tax

refund process 631.11 - - - - -

Total 636.71 0.39 30.83 5.60 0.09 27.83

F-119

Thai AirAsia Company Limited

Condensed Notes to Special Purpose Interim Financial Information (Unaudited)

For the three-month periods ended 31 March 2012 and 2011

21

15 Letters of guarantee (Cont’d)

The Company also used its fixed-deposit accounts and bills of exchange as collateral for

these letters of guarantee as follows:

Unaudited

31 March 2012

Audited

31 December 2011

Baht India Rupee Baht India Rupee

million million million million

Fixed-deposit accounts 8.40 31.13 6.00 27.83

Bills of exchange 158.00 - - -

Total 166.40 31.13 6.00 27.83

17 Subsequent events

On 14 February 2012, the Company entered into an “Amended and Restated Shareholders’

Agreement” with AirAsia Investment Ltd. (a subsidiary of AirAsia Berhad), AirAsia

Berhad and Asia Aviation Public Company Limited pursuant to which the parties set

out their respective rights and obligations with respect to the Company. According to

the “Amended and Restated Shareholders’ Agreement,” Asia Aviation Public Company

Limited will have control over the Company. Therefore, the Company will be

considered as a subsidiary of Asia Aviation Public Company Limited instead of a joint

venture. The “Amended and Restated shareholders’ Agreement” will be effective from

the date that the Securities and Exchange Commission (“SEC”) issues a letter to Asia

Aviation Public Company Limited notifying that it has commenced counting the period

of effectiveness of the draft prospectus filed by Asia Aviation Public Company Limited

in relation to an initial public offering.

On 4 May 2012, SEC issued a letter to Asia Aviation Public Company Limited notifying

that SEC has commenced counting the period of effectiveness of the draft prospectus

filed by Asia Aviation Public Company Limited in relation to an initial public offering.

Therefore, the Company changed from a joint venture to a subsidiary of Asia Aviation

Public Company Limited from 4 May 2012 onwards.

F-120

Registered Office of the Company

Asia Aviation Public Company Limited60/1 Monririn Building B, 3rd Floor, Soi Sailom

Phahol Yothin Road, Samsen NaiPhayathai, Bangkok

Thailand

Legal Advisors

To the Company

as to U.S. Federal and English law as to Thai law

White & Case Pte. Ltd.8 Marina View #27-01Asia Square Tower 1

Singapore 018960Republic of Singapore

Weerawong, Chinnavat & Peangpanor Ltd.22nd Floor, Mercury Tower

540 Ploenchit RoadLumpini, Pathumwan

Bangkok 10330Thailand

To the International Managers

as to U.S. Federal and English law as to Thai law

Allen & Overy LLP50 Collyer Quay

#09-01 OUE BayfrontSingapore 049321

Republic of Singapore

Allen & Overy (Thailand) Co., Ltd.22nd Floor, Sindhorn Tower 3

130-132 Wireless RoadLumpini, Pathumwan

Bangkok 10330Thailand

Independent AccountantsPricewaterhouseCoopers ABAS Ltd.

15th Floor, Bangkok City Tower179/74-80 South Sathorn Road

Bangkok 10120Thailand

1,940,000,000 Ordinary Shares

Offering Memorandum

May 22, 2012