Asia’s leading airline was established with the dream of making flying possible

for everyone. Since 2001, AirAsia has swiftly broken travel norms around the
globe and has risen to become the world’s best. With a route network that spans
through more than 20 countries, AirAsia continues to pave the way for low-cost
aviation through our innovative solutions, efficient processes and a passionate
approach to business. Together with our associate companies, AirAsia X, Thai
AirAsia and Indonesia AirAsia, AirAsia is set to take low-cost flying to an all new
high with our believe, ‘’Now Everyone Can Fly’’.

Wikipedia:

AirAsia was established in 1993 and commenced operations on 18 November

1996. It was originally founded by a government-owned conglomerate DRB-
Hicom. On 2 December 2001, the heavily-indebted airline was purchased by
former Time Warner executive Tony Fernandes's company Tune Air Sdn Bhd
for the token sum of one ringgit. This was after great deliberation as the initial
offer was fifty sen. Fernandes proceeded to engineer a remarkable turnaround,
turning a profit in 2002 and launching new routes from its hub in Kuala Lumpur
International Airport at breakneck speed, undercutting former monopoly operator
Malaysia Airlines with promotional fares as low as RM1 (US$0.27).

Tune Hotels
Main article: Tune Hotels
Tune Hotels.com is a limited service hotel chain founded by AirAsia CEO Dato' Tony
Fernandes, Currently Tune Hotels.com has hotels in operation in Kuala Lumpur, Kota
Kinabalu, Kuching, Penang, the Low Cost Carrier Terminal in Sepang, Bali (Kuta and
Legian) and Westminster, London.

Tune Money
Main article: Tune Money Tune Money is Asia's first "no-frills" online financial services
portal. Modelled after Virgin Money, it comprises life, home and motor vehicle insurance as
well as prepaid credit cards.
http://www.oppapers.com/essays/Background-Of-Air-Asia/357266 author- Annie
Tan (Jun 2010); accessed date: 18th Nov 2010
Company Background
AirAsia Berhad as know as AirAsia is a Malaysian low-cost airline. It operates
scheduled domestic and international uflights and is Asia's largest low fare, no
frills airline. AirAsia pioneered low cost travelling in Asia. The airline was
established in 1993 and started operations on 18 November 1996. A
government-owned conglomerate DRB-Hicom originally founded it. On 2
December 2001, the heavily-indebted airline was purchased by former Time
Warner executive Tony Fernandes's company Tune Air Sdn Bhd. AirAsia is the
first airline in the region to implement fully ticketless travel and unassigned
seats. However, as of 5 February 2009, AirAsia has implemented allocated
seatings across all AirAsia flights, including in their sister airlines, Indonesia
AirAsia and Thai AirAsia.

In 2003, AirAsia opened a second hub at Senai International Airport in Johor

Bahru near Singapore and launched its first international flight to Bangkok.
AirAsia has since started a Thai subsidiary, added Singapore itself to the
destination list, and commenced flights to Indonesia. Flights to Macau started in
June 2004, while flights to Mainland China (Xiamen) and the Philippines (Manila)
started in April 2005. Flights to Vietnam and Cambodia followed later in 2005
and to Brunei and Myanmar in 2006, the latter by Thai AirAsia.

Its main base is the Low Cost Carrier Terminal (LCCT) at Kuala Lumpur
International Airport (KLIA). LCCT will initially handle 10 million passengers a
year. Its affiliate airlines Thai AirAsia and Indonesia AirAsia have hubs at
Suvarnabhumi Airport, Thailand and Soekarno-Hatta International Airport,
Indonesia, respectively. The airline is also considering founding Hong Kong
AirAsia in the future. AirAsia's registered office is in Petaling Jaya, Selangor while
its head office is on the grounds of Kuala Lumpur International Airport in Sepang,
Selangor.
http://www.oppapers.com/essays/Background-Of-Air-Asia/357266 author- Annie
Tan (Jun 2010); accessed date: 18th Nov 2010

In its dynamic and competitive environment, Air Asia has reaped great benefit by
applying low cost advantage in its business model. By the combination of
technology
advancement in its selling and marketing strategy and also strong recognition of
various languages used by its world customers, AirAsia has successfully
developed its
business into a widely known best performance company in Southeast Asia
airlines
industry.

Air Asia Economic Analysis

A successful example of a Malaysian no frills airline is Air Asia. Revolutionized
and Reinvented by Tony Fernandez in 2001. It is based on the low-cost, no-frills
model of the US carrier Southwest. The concept of Air Asia is based on the belief
that demands for short-haul air transport is price flexible. That means, if prices
for flights are being reduced, more people will fly. Traditionally, airline concepts
are based on the assumption that airline traffic grows in line with the economy
and that cutting prices will only lead to a decrease in revenues. With the
introduction of the ‘no-frills’ concept to the Malaysian market, Air Asia has
proven this theory wrong and goes from strength to strength by actually
increasing the size of the market and more recently by taking away passengers
from the major airline competitors.

With its expanding strategy as objectives to reach excellent standard around the
world, marketing in Asia has been the key player to achieve success.
Air Asia is one of the businesses that have successfully adopted cost leadership
through operational effectiveness and efficiency. The cost advantages have
enabled Air Asia to become the Asia’s leading low fare airline. Air Asia has
successfully positioned itself in customers’ mind. Its net profit for the second
quarter ending 31 December 2004 was reported RM 44.4 million, a 323%
increase over the previous quarter. AirAsia until today has flown more than 55
million passengers in and around Asia (Air Asia, 2005).
AirAsia has also ventured into other market that complements with the airlines
business. It has started franchises like the tunes hotels and red box couriers to
gain maximum efficiency in and around the airline business.
Air Asia Strategic Analysis
STRATEGIC ANALYSIS OF

AIRASIA
THE BEST LOW-COST CARRIER AIRLINES IN THE WORLD

ASSIGNMENT FOR MICROECONOMICS FACULTY OF ECONOMICS AND

BUSINESS NATIONAL UNIVERSITY OF MALAYSIA

A low-cost carrier (also known as a no-frills or discount carrier) is an airline that

offers low fares but eliminates all “non-essential” services. The typical low-cost
carrier business model is based on: – –
–

a single passenger class a single type of airplane (reducing training and servicing
costs) a simple fare scheme (typically fares increase as the plane fills up, which
rewards early reservations) free seating (which encourages passengers to board
early) direct, point to point flights with no transfers flying to cheaper, less
congested secondary airports short flights and fast turnaround times (allowing
maximum utilization of planes) "Free" in-flight catering and other
"complimentary"

services are eliminated, and replaced by optional paid-for in-flight food and
drink.

Simple Product A typical low cost airline product is extremely basic. It focuses on
getting passengers from point A to B, cutting out all the “extras”. This means
there are no meals, drinks or snacks served free on board. In certain airlines,
these may be purchased on request. The aircraft have Narrow seating to permit
greater capacity. Low cost airlines offer all-economy flights, with

no additional space requirements for wider business class seating. This means
more passengers can be accommodated on each sector. There are no facilities
for seat allocations as this “free-seating” makes passengers board the flights
early to get themselves a decent seat. The pricing structures of low cost airlines
allow for no additional schemes or sales promotion activities, including frequent-
flyer programmes.

Positioning The low cost airlines the world over are known to target Non-business
passengers, leisure traffic and the...
Swot Analysis Of Air Asia
SWOT Analysis for AirAsia
Strengths, Weaknesses, Opportunities and Threats Analysis for AirAsia
1.0 Strengths
Ø Air Asia has a very strong management team with strong links with governments and
airline industry leaders. This is partly contributed by the diverse background of the executive
management teams which consists of industry experts and ex-top government officials. For
example, Shin Corp (formerly owned by the family of former Thai Prime Minister - Thaksin
Shinawatra) holds a 50% stake in Thai AirAsia. This has helped AirAsia to open up and
capture a sizeable market in Thailand. With their strong working relationship with Airbus,
they managed to get big discount for aircraft purchase which is also more fuel efficient
compared to Boeing 737 planes which is being used by many other airlines
Ø The management team is also very good in strategy formulation and execution. The
strategy that they have formulated at the beginnings was a clever blend

of proven strategies by other low cost airlines is US and Europe. They are
Ryanair’s operational strategy (no frills, landing in secondary airport),
Southwest’s people strategy (employee comes first) and Easyjet’s branding
strategy (linking with other service providers like hotels, car rental).
Ø AirAsia’s brand name is well established in Asia Pacific. Besides the normal
print media advertising & promotions, AirAsia’s top management also capitalised
on promotions through news by being very “media friendly” and freely sharing
the latest information on Air Asia as well as the airline industry. Their partnership
with other service providers such as hotels and hostels, car rental firms,
hospitals (medical tourism), Citibank (AirAsia Citibank card) has created a very
unique image among travellers. Alliance with Galileo GDS (Global Distribution
System) that enables travel agents from around the world to check flight details
and make bookings have also contributed to their string brand name. Air Asia’s
local presence in...
Analysis Of Air Asia
STRATEGIC MANAGEMENT
ASSIGNMENT #1

AIR ASIA

1. a) AirAsia’s vision:
• To be established as the leading low-cost carrier in the Asian region.
AirAsia’s mission:
• A low cost airline carrier that offers five-star service with 95% of on-time
performance.
• To be able to provide affordable airfares, at the same time promoting Malaysian
hospitality and the local food.
• To focus on customer’s needs by stimulating demand and offers the lowest fares,
comprehensive distribution channel and developing various products and services.
AirAsia’s objective:
• Aims to carry 70 million passengers a year, within six years starting from 2014.
• Turn the low-cost carrier terminal at the KL International Airport into the regional
hub for budget travel.
• Plans to introduce more routes, add frequencies and develop the existing ones.

competence:
• A low-cost no frills airline, with an extensive regional network in Asia
that caters people of all income levels.
AirAsia’s core competence:
• Offers low-cost and affordable airfares
• Offers in-flight services that promote Malaysian hospitality and a huge
variety of the local food.
• Offers internet and mobile services as mediums for check-in and
booking.

AirAsia’s distinctive competence:

• A low cost carrier which offers five-star service where everybody can
fly.
 c) Opportunities:
• AirAsia will have the opportunity to promote Malaysian tourism, which
in return will increase the company’s revenue.
• Within the South-East region, AirAsia can tap on a lot of opportunities
since there is huge potential for customers that consist of foreign workers from
neighbouring countries such as Indonesia, Myanmar and Vietnam.
• AirAsia...

Air Asia- Porter's Five Forces

Porter’s five forces
Michael E. Porter claimed that there are five competitive forces which can shape every
industry by identify and analysis those five forces(appendix) and thus determine strengths
and weaknesses of the industry. Those five forces are now used to determined Air Asia’s
strengths and weaknesses which are shown as below:

Threat of Entry
There is a high barrier entering airlines industry since it requires high capital to set up
everything such as purchase or lease air craft, set up office, hire staffs, and etc. Thus, this has
reduced the treat to Air Asia. Moreover, brand awareness is quite important in this industry.
Thus, to enter this industry not only required high capital but also have to take some time to
create brand awareness. Consumers always choose the product or service they really trust.
Thus, instead of creating brand awareness, new entry has to create so called brand loyalty.
Hence, this is reducing treat to Air Asia

oo.( Roy L. Simerly) However, the government legislation is one of the barriers
for entering airlines industry. For example, MAS has been protected by Malaysia
government on the route to Sydney and Seoul Incheon. Therefore Air Asia find
itself very difficult getting a new route from government. This not only affects
the timeline set by Air Asia but also influence their profit.

Power of suppliers
Every industry has someone to play the role as suppliers. Power of the suppliers
is important as it will affect the industry. In airline industry, the power of
suppliers is quite high since there are only two major suppliers which are Airbus
and Boeing hence there are not many choices to airline industry. Nevertheless,
the global economic crisis has limited the new entrant and also reducing the
upgrade of planes in the immediate future. However, both suppliers provide
almost same standard aircrafts and hence the switching to Air Asia is low.
Moreover, Air Asia placed a large amount of order from Airbus in order to...
Porter's Five Forces For Sw Airline
II. Porter's five Forces
Bargaining power of supplies
Plane manufacturers are the one who dictates the prices on the planes, which are over-value
because of the scarcity of plane manufacturers. Only two manufacturers in the airplane
industry are Boeing and Airbus. There is a fierce competition between the two, which leaves
very little marginal space for bargaining to the plane buyers. Airbus and Boeing, as
suppliers are always deeply concerned by suggestions and demands of the airlines, since they
compete over their own productivity when it comes to closing a deal with an airline.
Switching costs too high for any airline to switch to another provider since substitutes are
non-existent. And not to mention, the price of the oil is high.
Substitutes
Substitute's can be considered as direct competitors along with other airlines such as United,
Northwest, Delta, and other airlines. Transportations such as the trains, cars, and buses, and

the switching costs for customers are very low compared of the airlines.
Yes, the airline industry is very attractive industry because it is not over
saturated; when purchasing tickets, switching costs are high between airline
fares. I believe SW can even generate more profits if they establish hubs in very
populated areas were not many airline companies have not established
themselves, just like Wal-Mart does to every rural city, and abolish al possible
threats. SW has the resources, capabilities, and the know, they can penetrate
any virgin or densely competitive areas and still are a low-cost leader in prices,
because of their operating systems and a well developed economies of scales.
Another option is that they can merge with other companies to have a
competitive advantage over its competition.
Bargaining Power of buyers
SW is only limiting regular average customers who only make short trips such as
business-oriented customers. Once again, SW stresses that their prices are very
low companies to Delta and United....

Analyzing Air Asia In Business Competition Era

In its dynamic and competitive environment, Air Asia has reaped great benefit by
applying low cost advantage in its business model. By the combination of
technology
advancement in its selling and marketing strategy and also strong recognition of
various languages used by its world customers, AirAsia has successfully
developed its
business into a widely known best performance company in Southeast Asia
airlines
industry.

Doing businesses has become harder in today’s competitive era. Businesses are
not just facing higher pressure from increasing number of competitors, but they
also
have to compete in more dynamic and complex...

Air Asia Strategic Mgt Plan (Smp)

EXECUTIVE SUMMARY
It has been a great pride in the history of AirAsia that despite the challenges that they have
faced, AirAsia continues to defy the odds. Since December 8, 2001, when the company was
taken over by the new Air Asia management, AirAsia has grown to become the largest low-
cost carrier in Asia. Today the airlines are operating in Malaysia, Thailand and Indonesia.
With more than 6,000 talented, hardworking and committed employees and a market
capitalization in excess of RM2billion, Air Asia has earned a reputation as a consistent
performer no matter what the external environment. They have seen a future in which their
success is not constrained by resources or opportunity.

ORGANIZATIONAL ANALYSIS
Company Background
AirAsia is Malaysia’s second national airline was incorporated in 1993 as a full-service
regional airline under DRB-Hicom. They started their operations on 1996. After starting their
operations for few years, AirAsia

failed to attract enough passengers to establish its own niche market. AirAsia
was also facing problems such as the demise of Tan Sri Yahaya Ahmad and
1997-1998 Asian financial crisis. Due to 1997-1998 Asian financial crisis, AirAsia
was heavily indebted.
On 8 December 2001, music mogul Dato’ Seri Tony Fernandes decided to retire
from music industry and purchased 99.25 per cent equity (51.68 million shares)
in shares from DRB-Hicom via his company Tune Air Sdn. Bhd. with a token sum
of one ringgit. Without looking back, Tony Fernandes transformed AirAsia as a
low fare airline together with Conor McCarthy, the former Ryanair director of
group operation. Known of its corporate tagline “Now everybody can fly”, AirAsia
became the first successful low cost and ticket-less airline in the Southeast Asian
region.
AirAsia offers a simple service at fares lower than those offered by other full-
service airlines. It was modelled on U.S.-based Southwest Airlines and Dublin-
based Ryanair. AirAsia was established to create a new...
The Air Asia Establishment
The Air Asia Story

Inspired by the LCC business model of Southwest Airlines inspired Tony. Southwest Airlines
was established in 1971 and had been profitable every year since 1973. Then model adopted
by Europe after liberalization of aviation industry. Ryanair (Ireland) and easyJet (London) are
the largest LCC in Europe and follow the same business model.

Air Asia was established initially by DRB-Hicom Bhd in late 1996, asian financial crisis in
1997.

Government studied Tony’s proposal to start a LCC carrier and refused to issue a new licence
and had requested Tony to buy over an existing airline.

Tune Air, set up by Tony and his investors bought Air Asia over from DRB-Hicom on 8th
Dec 2001 for a token sum of RM1, with its 2 x Boeing 737-300s, a tiny route network and
nearly RM 40 million in debts.

Tony Fernandez (VP, Times Warner Music, SEA), from music industry had RM 1 million in
hand (mortaged house and sold off Times Warner Share Options) to pump into Air Asia.

Air Asia’s LCC runs short-haul (less than 3hours) and is low-cost, no-frills carrier
serving routes within Asia.

Air Asia was re-launched in January 2002, with fares lower than bus ticket for
local destinations and even gave away free tickets. First day of operations
started with RM 1 promotional price.

Air Asia started with routes from KL, and then from Senai Airport in Johor in 2003.
By Dec 2002, the revenue was stated to be RM 113 million and profits of RM 19.4
million, 1.1 million passengers and most debts settled.

Cost cutting measures such as : Fuel consumption being cut by half, and
landings being doubled with the tyres. Safety and service were given same
priority as cost cutting measures. Problems raised were resolved within 24 hours
as a KPI.