=AIRASIA AIRLINES COMPANY

COMPANY BACKGROUND
Air Asia Berhad is an established in 1993 with commenced operations in 1996. In 2001, Tune Air
Sdn.Bhd. Tony Fernandes company purchased this airline from DRB-Hicom. Air Asia never
look back after that. Air Asias first and main base is the Low Cost Carrier Terminal (LCCT) at
Kuala Lumpur International Airport, while its secondary hubs are at Kota Kinabalu International
Airport, Senai International Airport and Penang International Airport.
Air Asia is well known as Malaysian low cost airline and even Asias largest low fare, no frills
airline. The airlines claims No Admin Fee, but has some fees for services which are free on
other airlines. Air Asia slogan is Now Everyone Can Fly. Being the home of Air Asia, the
LCCT is the budget terminal in KLIA, opened on 23 March 2006. LCCT is said to be carried
about 10 million passengers a year. The Air Asia subsidiaries are the likes of Thai Air Asia,
Indonesia Air Asia, Viet Jet Air Asia and Air Asia Red Tix. Meanwhile, Air Asia associate
companies are Air Asia X, Tune Hotel and Tune Money.
SAFETY VALUES OF AIRASIA
The safety values of AirAsia are:

Provide a product with safety and quality as their main goals.

Do our job with the highest level of integrity.
Prepare their employees through first-class training.
Provide equipment that is well maintained.
Select contractors, vendors and suppliers who meet their values.
Value oversight from regulators and other organizations that enhance our system through

checks and balances.

Embed an ethical culture by maintaining openness with regard to safety and quality.

Embed a continuous improvement ethos by learning from aviation industry experiences.

Maintain a high level of environmental consideration in all of their activities.

This basic foundation for doing business allows them the pleasure of serving their guests.
MISSION AND VISION OF AIR ASIA
Vision
To be the largest low cost airline in Asia and serving the 3 billion people who are currently
underserved with poor connectivity and high fares.
Mission

To be the best company to work for whereby employees are treated as part of a big

family.
Create a globally recognized ASEAN brand
To attain the lowest cost so that everyone can fly with Air Asia
Maintain the highest quality product, embracing technology to reduce cost and enhance
service level.

AIRASIAS VALUES

Safety conscious
A safe airline is a happy airline. Their guests' safety is their primary concern so they do
their jobs with care. Because where safety is concerned, every little thing matters.

Caring
It's a warm and friendly feeling to have, so they take pleasure in caring for their guests in
ways that make them feel at home.

Passionate
Being passionate means going the extra mile to achieve a purpose much larger than
ourselves. They say passionate people can change the world and that's something that's
very close to their hearts.

Full of integrity
They believe everything that is worth doing, is worth doing right. It's about them doing
the right things at all times.

Hardworking
It means one team, working together towards a common goal. Whether it's meeting their
25 minute turnaround time or making sure they keep you connected to the best
destinations at the lowest prices, they do it as a team. All for one. One for all.

Fun
Fun means they celebrate life. It means they laugh louder, they smiles are wider, and they
can be their own unique selves. They're a sociable bunch and they enjoy sharing ideas
and solutions to make things even better. After all, fun is meant to be shared.

Air Asia make the low fare model possible and create values through the implementation of the
following key strategies:

Safety first
Partnering with the worlds most renowned maintenance providers and complying with the world
airline operations.
High aircraft utilization
Implementing the regions fastest turn around time only 25 minute, assuring lower costs and
higher productivity
Low fare, no frills, Cost-saving innovations
Providing guests with the choice of customizing services without compromising on quality and
services. Their commitment to low fares lies in their promise of Now Everyone Can Fly.
Their service targets guests who can do without the frills of full-service airlines in exchange for
low fares. Constantly on the lookout for the latest advancement in saving, they are the first
airline to use the new Airbus A320 aircraft installed with sharklet wing tips to lower wind drag
and provide better fuel consumption.
Streamline operations
Making sure that processes are as simple as possible
Lean Distribution System
Offering a wide and innovative range of distribution channels to make booking and travelling

Point to point network

Applying the point to point network keeps operation simple and lower costs.
THE AIRASIA FAMILY
At AirAsia, they see themselves as not so much an airline operator but more of a people
company that happens to be in the airline business. Understanding people enables them to realize
the true needs of discerning travellers and provide paramount services and products to deliver
utmost satisfaction to their guests, each and every one with unique requisites and expectations.
AirAsia has sparked a revolution in air travel with more and more people around the region
choosing us as their preferred choice of air transport. As we continuously strive to promote air
travel, we also seek to create excitement amongst our guests with our range of innovative and
personalized services.
Their unique no-frills business concept is an innovation that has changed the airline business
forever. They have the most extensive network and most frequencies to destinations around the
region. From one route between KL and Langkawi, two planes and a staff of 250 in 2002, to over
88 destinations and carried over 220 million guests, they have shrunk the world even more
rapidly. With many routes unique to AirAsia, they really do fly you to places that will give you
new and unique experiences others cannot offer.

What are they and who do they represent? Just take a look at Flight codes the table below.
FLIGHT CODES

OPERATED BY

AK

Malaysia AirAsia

FD

Thai AirAsia

QZ

Indonesia AirAsia

D7

AirAsia X

Z2

Philippines AirAsia

XJ

Thai AirAsia X

I5

AirAsia India

XT

Indonesia AirAsia Extra

Brand new Airbus They operate a fleet of the Airbus A320 aircraft, representing one
of the world's most technologically advanced, safest and most reliable passenger aircraft.
Our fleet is one of the youngest in the region, with an average age of just 3.5 years. There
are currently over 150 Airbus A320s in service and another 200 orders have been placed
for the new A320neo. AirAsia now stamps its dominance in Asia with a record total of

475 narrow bodies on order with Airbus.

Aircraft types Their A320 could fly 180 guests (AirAsia flights below 4 hours) and
377 guests on the A330 (AirAsia flights above 4 hours).

The AirAsia Group services the most extensive network across Asia & Australia which
comprises of the following airline affiliates:
AirAsia Berhad (Malaysia) - Airline code: AK
Established in 2001 and listed on the Main Market of Bursa Malaysia Securities Berhad in
November 2004, with hubs in Kuala Lumpur, Kota Kinabalu, Penang, Johor Bahru and Kuching.
AirAsia Indonesia - Airline code: QZ

Established on December 8, 2004, through a joint venture between AirAsia International Ltd. and
PT. Awair International, with hubs in Jakarta, Bandung, Bali, Surabaya and Medan.
Thai AirAsia - Airline code: FD
Established in 2003 as a joint venture between Asia Aviation and AirAsia Investment, and was
listed on the Stock Exchange of Thailand in May 2012. Thai AirAsia commenced its inaugural
commercial flight on 4 February 2004 from Bangkok to Hat Yai, and now operating from hubs in
Bangkok, Phuket and Chiang Mai.
Philippines AirAsia - Airline code: Z2
Philippines AirAsia (PAA) is a wholly owned subsidiary of AirAsia Inc., which is a joint venture
company between Filipino investors; Antonio O. Cojuango, former Ambassador Alfredo M. Yao,
Michael L. Romero, Marianne B. Hontiveros, and Malaysias AirAsia Berhad. PAA operates
domestic and international flights out of Manila, Cebu and Kalibo (gateway to Boracay). It is, by
far, the only local carrier that services the most number of international flights from China and
South Korea to Kalibo International Airport, with Fly-Thru services via Kuala Lumpur from
Manila to various destinations in Asia, Australia and beyond. Philippines AirAsia is part of the
AirAsia Group that has been awarded the Worlds Best Low-Cost Carrier for seven consecutive
years, from 2009 to 2015, by Skytrax.
AirAsia India - Airline code: I5
Established in 2013, AirAsia (India) Limited is a joint venture between Tata Sons Limited &
AirAsia Investment Limited. The airline currently operates flights from its current base in

Bengaluru and Delhi to Chandigarh, Goa, Guwahati, Imphal, Jaipur, Kochi, Pune and
Visakhapatnam.
AirAsia X - Airline code: D7
Established in 2007, it is the long-haul, low-cost affiliate carrier of the AirAsia Group and
currently flies to destinations in the Asia Pacific region. Operates from its hub in Kuala Lumpur.
Thai AirAsia X - Airline code: XJ
Established in 2014, It is an extension of Asias leading low cost carrier, AirAsia, and seeks to
deliver everyday low fares to travellers seeking to travel to destinations greater than four hours
flight time from its hub, Bangkok Don Mueang International Airport.
Indonesia AirAsia X - Airline code: XT
Indonesia AirAsia X is Indonesias first long-haul, low-cost carrier and an affiliate of the AirAsia
Group. The airline currently offers direct flight from Denpasar, Bali to Taipei, Taiwan and
Melbourne, Australia. Indonesia AirAsia X operates on Airbus A330-300s, with a seat
configuration of 12 Business Class seats and 365 Economy seats. Their vision is to solidify their
position as the national and global leader in long-haul, low-cost aviation and to build a strong
network along with other carriers of the AirAsia Group.
AIRASIAS MARKET SEGMENTATION
AirAsia may use segment bases such as demographics, socio-cultural, user-related, user-situation
and benefits-sought segmentation to segment their market, as indicated in below table.

Segment 1

Segment 2

Segment 3

Segment 4

Demographics

MYR0-

MYR40,000-

MYR61,000-

MYR0-

Income

MYR40,000

MYR60,000

MYR80,000

MYR40,000

(YEARLY)

(YEARLY)

Lower class

Middle class

Upper class

Middle class

Low

Moderate

High

High

Leissure

Leissure

Leissure

Business

High

High

Low

High

Socio-cultural

(YEARLY)

Social class
User-related
Usage rate
User-situation
Time
Benefits Sought
Value-formoney
Income
Under demographics, income is one of the variables which AirAsia may use to segment their
market. Income indicates the capability of the consumer to travel with AirAsia as consumers
from different income groups are attracted to different airlines. For example, low-income
[MYR0-MYR40,000 yearly] and middle income [MYR40,001-MYR60,000 yearly] earners are
more price sensitive than high income [MYR60,001 and over] earners, thus they would be more
attracted towards LCCs such as AirAsia. This is because low-income and middle-income earners
generally have lesser disposable income to high-income earners, hence are unlikely to be capable
of purchasing airline tickets from FSCs such as MAS (Malaysia Airlines) as their tickets are

more expensive. For low-income and middle income earners, their main need od an airline ticket
is a vital factor that influences purchasing behaviour. Statistics have indicated that consumers
have increased their expenditure in air travel due to the availability of more affordable domestic
and regional flight from LCCs.
Social Class
AirAsia may have segmented their market into lower, middle and upper social classes on the
basis of this variable because different social classes tend to have different purchasing
behaviours, brand preferences and expectations. A consumers social class is associated with the
income level that the consumer is earning. For example, if a consumers is categorized as a lowincome earner, the consumer will fall within the lower social class. Moreover, upper social class
consumers would tend to have a negative perception about the image of LCCs as a provider of
less comfortable services.
Usage Rate
Usage rate is one of the variables under the user-related segmentation which AirAsia can use to
segment their market and is divided into low, moderate and high usage rates
Depending on the consumers amount of disposable income and preferences, consumers will
have different levels of usage rates. For example, consumers in Segment 4 who travel frequently
for business meetings would have a high usage rate of air travel as they are required to travel to
different destinations frequently. Consumers with low usage rates are mostly from the lowincome category who can only afford to travel at most twice a year depending on the destination.
This is because they have less disposable income compared to high-income earners. However, if

price levels are affordable, then low-income earners in Segment 1 would be able to travel more
often with LCCs.
Time
As for the user-situation base, AirAsia is able to use time as one of their variables to divide the
market. The time variable is categorized into leisure and business. Consumers with different
purposes of travelling have different priorities. For example, low-income earners who are
planning to go on a leisure holiday would have the ability to continuously monitor ticket prices
to ensure that they can attain the cheapest price. Travellers on business trips meanwhile would
probably have to pay higher prices because they may need to purchase airline tickets in advance.

Value-for-money
Value-for-money is one of the benefits sought variables which AirAsia can likely use to segment
their market. The level of importance of value-for-money can be divided into low, moderate and
high whereby consumers with lower income levels tend to place high emphasis on value-formoney products and services. For example, consumers from Segment 4 place high emphasis on
value-for-money because these consumers are working for corporations that are currently
affected by the economic recession happening, thus they are required to reduce their expenses as
much as possible
Target Market
Target market is a set of buyers sharing common needs or characteristics that the company
decides to serve. There are three key factors to target market selection;

Segment size and growth

Segment structural attractiveness
Businesses objectives and resources

For AirAsia that started in 2001, it was not too difficult for the Airline to identify its target
market. They have earlier survey the market to help them segregate their would be potential
customers. According to CEOs of the company, Mr. Fernandez, he knew there are a lot workers
or low pay salaries earners who would like to travel often to meet their families especially during
special occasions but due to how expensive it was that time, their desire are not fulfilled. By
introducing a low fare will give all those people opportunity to travel if not more than once in a
year. This enables them to identify their target market. AirAsia is encouraging a new [market]
segment to be formed and therefore is creating a larger base for domestic demand."
WAYS TAKING TO IDENTIFY THEIR TARGET MARKET
For AirAsia, the following are some of element identified that AirAsia used to identify their
target market and formed a niche market.
Branding:
AirAsia went into intensive General advertisements and other high profile activities, which
contributed, to the high offering of their company's image. They came with a brand Now
everyone can fly These points of contact with their target customer help them to mold their
image, which in turn created loyalty from their customers.
Philanthropy:
Donating money, services, and/or time can build trust and a positive image for your

business. Philanthropy contributes both toward your branding efforts and toward your company's
internal well-being. AirAsia embark on this to build and attract more customers. In early 2005,
AirAsia Sdn Berhad announced that it would give away 10,000 free seats on its flights to select
Southeast Asian destinations. The airline said that was its way of celebrating the completion of
three years of successful flying and of saying thank you to the people for their support.
"AirAsia's accomplishments and success today is a reflection of the public's trust and faith in the
company," said Tony Fernandes (Fernandes), CEO of AirAsia. With this incentive and
philanthropy, more and more customers are attracted to their business
New Product/services Pipeline:
New products in development represent your future sales. AirAsia has extended its services to
different part of the world. AirAsia was initially a local company but it has become international
with its extension of its services to different part of the world to meet up with their market.
AirAsia get feedback from their customers or potential target market, and they designed new
services to meet their needs, this practice is ensuring a demand for their products in the future.
Reduced Price Sales:
This was one of the basics of securing a target market for AirAsia. They reduced their price to
suit their class of customers. AirAsia saw a need for a lot of low pay salary citizens who could
not afford the money to travel home. With the introduction of their services of low fares, most
people can travel home and most people that can only afford to travel once could travel up to
three times with their cheaper fares. This limited time sales encourage customers to act. You
likely have customers intending to buy but have not "gotten around to it". Holding a reduced
price sale will give them incentive to purchase.

Group Discounts and Offers.

Discounts or other offers to a specific group can help exposure your business to new customers,
resulting in a sales surge. AirAsia is a ticketless Airline that allows customers to purchase their
ticket online with at a discounted rate. They also have a scheme of group discount and this help
to get more target market, especially internet based customers.
Foreign workers and Contractors strategy
AirAsia also target most foreign workers from Indonesia, Singapore, Thailand, China, Macau
who may not afford the expensive flight home and offer them the cheap fare which attracted
most of them as would go home very often without paying much.

POSITIONING STRATEGY

Figure shown is AirAsias perceptual map.

AirAsia has positioned itself as the leading and largest LCC in Asia with the philosophy of
Now Everyone Can Fly. They believe in the no-frills, hassle-free, low fare business concept
and believe that keeping costs low requires high efficiency in every part of the business. Air Asia
always tries to keep the operations simple and efficient to keep the costs low, for example by
simple and efficient online ticket booking. They also tries to keep the cost low by recruiting only
numbers of workers needed and selecting only capable and hard workers, so each worker will
have works to do and the company does not have to pay workers who do not work efficiently.
The company also gives multiple task to some of the employees, for example Air Asia does not
hire cleaners to clean used planes that stop in airports. Instead, the stewardess or stewards of the
planes have to clean the used plane. So, other than saving another amount of money, it also can
make maximum use of the human resources available.
Efficiency creates savings which are then passed on to consumers in order to make affordable
air travel a reality. AirAsia has sparked a revolution in air travel with more and more people
around the region choosing AirAsia as their preferred airline. Figure shown indicates the position
in which AirAsia currently stands against its competitors. The vertical axis illustrates the price
range while the horizontal axis represents the service quality. Despite being Asias largest and
leading LCC, service quality of AirAsia lacks behind other LCC such as Jetstar. Thus, while
AirAsia hopes to maintain its current position as the leading LCC, it also hopes to moves
towards providing better services in the future as seen in figure shown.