Ayilu is the name given to a Fairy whom Annie met by The Annan Waters. Originally a resident of Gillitie Wood, Ayilu was one of the two last members of her class to pass the Test--which required her to die--to get a new body. Annie refused to help her in this, but Ayilu eventually passed the test with the help of Ysengrin and his stomach. ( ) After her death and subsequent transformation into a human, Ayilu enrolled at Gunnerkrigg Court, in Foley House.
While a fairy, Ayilu's best friend was her fellow fairy Red, but after their transformation Ayilu grew apart from her friend because Red "changed". It turns out that the change to which Ayilu objected was purely aesthetic, and after Red gets a hair cut Ayilu begs to be her friend again.
In Chapter 36: Red Gets a Name it was revealed that she can manipulate other people's memory, at least when in ethereal shape. She is also, like other transformed fairies and animals, quite skilled at doing amusing things in etheric form while simultaneously doing complex tasks like learning advanced physics and math with her physical body. In her etheric form she can create massive illusions, which she combines with her manipulative abilities to make them particularly convincing.
As fairies usually do not receive names until after completing school, "Blue" is a nickname that Antimony and Kat used. However, they were careful not to use it in front of her after Antimony accidentally names Red.