Preview

Air Asia Case Study

Best Essays
Open Document
Open Document
2995 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Air Asia Case Study
This case study aims at evaluating the rationale of AirAsia’s strategic plan and how have these strategies been associated with its structure and system. It further aims at assessing the sustainability of the business model and its competitive advantage. AirAsia’s performance and business process management will also be discussed in details.

AirAsia- A Case Study
Contents

Introduction
This case study aims at evaluating the rationale of AirAsia’s strategic plan and how have these strategies been associated with its structure and system. It further aims at assessing the sustainability of the business model and its competitive advantage. AirAsia’s performance and business process management will also be discussed in details. The case study will also discuss the culture and management style of AirAsia and its ability to address to the challenges faced by the company. Furthermore, the report aims at highlighting the expansions of AirAsia with future expectations.
Background of AirAsia
Air Asia, an ailing, in debt, government owned airline was purchased by Tony Fernandes, a Malaysian Indian entrepreneur in 2001. Fernandes invested all his valuables and saving in purchasing this airline company that only possessed two Boeings and was deeply surrounded by many debts. Initially, when Fernandes purchased AirAsia, most of the leading entrepreneurs claimed that the airline won’t survive for long. Tony Fernandes appointed leading experts who possessed expertise in low cost airline strategies to reconstruct the business model of AirAsia. AirAsia was relaunched by the end of 2001 in Malaysia introduced as a low cost airline for domestic travels with three Boeings. Just after one year of his takeover, the company cleared all the debts it had and opened many new routes leaving behind the most dominating airline of that time, Malaysia Airlines. Within no time, AirAsia became a profit making firm from a debt ridden company.



Bibliography: AirAsia. 2013. 'Corporate Porfile. from AirAsia ' Online at http://www.airasia.com/my/en/about-us/corporate-profile.page viewed on May 5, 2013. Akan, O., Allen, R. S., Helms, M. M. and Spralls, S. A. 2006. 'Critical tactics for implementing Porter 's generic strategies. ' Journal of Business Strategy , 27 (1): 43-53. Applegate, L. M., Austin, R. D. and Soule, D. L. 2009. Corporate Information Strategy and Management. New York: McGraw Hill. Emerald Group Publishing Limited. 2007. 'Employee come first at high-flying Southwest Airlines: Model contrasts with the Ryanair approach to low-cost aviation. ' Human Resource Management International Digest , 15 (4): 5. Fernando, Y., Saad, N. M. and Haron, M. S. 2012. 'New marketing definition: a future agenda for low cost carrier airlines in Indonesia. ' Business Strategy Series , 13 (1): 35. Kho, C., Aruan, S. H., Tijtrahardja, C. and Narayansswamy, R. 2005. Air Asia - Strategic IT Initiative. The Univeristy of Melbourne, Department of Economic and Commerce, Melbourne. Laudon, K. C. and Laudon, J. P. 2010. Essentials of Management Information Systems. Florida: Crashing Rocks Books. O 'Connel, J. F. and Williams, G. 2005. 'Passengers ' perceptions of low cost airlines and full service carriers: A case study involving Ryanair, AerLingus, Air Asia and Malaysia Airlines. ' Journal of Air Transport Management , 11: 259-272. Pitt, M. R. and Borwn, A. W. 2001. 'Developing a strategic direction for airports to enable the provision of services to both network and low-fare carriers. ' Developing a Strategic direction for Airports , 19 (1/2): 52. Porter, M. 1985. Competitive Strategy: Creating and Sustaining Superior Performance. New York: The Free Press. Saha, G. C. and Theingi. 2009. 'Service quality, satisfaction and behavioural intentions: A study of low cost airline carriers in Thailand. ' Managing Service Quality , 19 (3): 350-372. Svensson, G. 2001. 'Glocalization of business activities: a "glocal strategy: approach. ' Management Decision , 39 (1): 6-7.

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Apply Porter to Easy Jet

    • 599 Words
    • 3 Pages

    In the airline business, particularly on long haul routes, price is only one competitive factor – quality of service and added value both differentiate the products strongly.…

    • 599 Words
    • 3 Pages
    Satisfactory Essays
  • Best Essays

    Easyjet Market Analysis

    • 5043 Words
    • 21 Pages

    Mason, K. (2001). Marketing low cost airline services to business travellers, Journal of Air Transport Management, Vol. 7, No. 2, pp. 103-109.…

    • 5043 Words
    • 21 Pages
    Best Essays
  • Best Essays

    Arsenault, S. (2009) Airline loyalty: a new prospective. UNISYS. Retrieved 05 May 2012 from www.unisys.com/transportation/insights/insights_compendium/WO-Airline_Loyalty.pdf…

    • 1661 Words
    • 7 Pages
    Best Essays
  • Powerful Essays

    AIrAsia case study

    • 2575 Words
    • 9 Pages

    There is a need of high initial investment to run an airline industry business. This high capital requirement is in the form of buying of aircrafts, staff hiring, pilot hiring, etc. Thus, the threats of new entrants for AirAsia are very low.…

    • 2575 Words
    • 9 Pages
    Powerful Essays
  • Best Essays

    Today airports have become an essential key for the majority of people that lives around the world. Without airports our lives and the economy of the United States will be brutal and will impact the routine and production of many companies around the globe. Airports are the getaways of many nations. Airports open the doors for trade, travelers, and terrorism as well. This is why is so important for aviation the role that airport management plays at the moment of flying. As technology, regulations and funding mechanism change also has change the view of airports managers. Airport management will evolve in order to keep up with future operational issues like capacity, delays, safety and security. The future of airport management will…

    • 1490 Words
    • 6 Pages
    Best Essays
  • Powerful Essays

    * What is Air Asia Business Model? How does information system support this business model?…

    • 2526 Words
    • 11 Pages
    Powerful Essays
  • Powerful Essays

    Question 1 AirAsia, which is one of the earliest low cost carriers (LCC) in Asia, has become a LCC since 2001. So far, it has expanded its network from Malaysia to Thailand to Singapore, Macau and even the Mainland China in 2006. In short, AirAsia “jumped out” from an intra-Malaysia and Thailand market to a “real AirAsia” in the continent. Thus, what are the possible core competencies to ensure that there is quantum leap to success? The internal analysis on the company below will answer the question. Resources, Capabilities & Core Competencies Analysis a) Accounting Ratio Analysis In 2004, AirAsia’s earnings margin before interest and taxes (16.8), return on capital employed (14.6) and return on equity (37.7) accounting ratios were above the industry average – 14.5 is the industry average for earnings margin, 11.6 for return on capital employed and 21.2 for return on equity. This above average results indicates that the company has been managed well and thus is able to achieve high above-average returns. The increase in current ratio from 1.24 (US$49. 206 million / US$39.643 million) to 5.60 (US$230.024 million / US$41.099 million) also serves as a confident booster to investors and shareholders in that AirAsia’s solvency had strengthened and thus is able to fulfill its debt obligations. In fact, the debt-to-asset ratio1 in the last 5 years was low and decreasing too. As a matter of fact, in 2005, it was merely 0.14, which was comparatively lower than many low cost carriers. b) Finance Resources AirAsia’s net profit ending Jun 2005 was reported US$29.2 million, a 126% increase year-on-year. The end of June 2005 financial summary showed that AirAsia, the leading low cost airline in Asia, had a huge reserve (bank and…

    • 8359 Words
    • 34 Pages
    Powerful Essays
  • Powerful Essays

    Introduction to AirAsia

    • 10721 Words
    • 43 Pages

    Established in 1993 and officially started its operation on 18 November 1996, AirAsia is a low cost carrier (LCC) airline in the aviation industry. On 2 December 2001, the heavily-indebted government-linked commercial airline was bought over by the current Chief Executive Officer (CEO) of AirAsia, Tony Fernandes. From then, AirAsia cleared its former debts which worthed USD 11 million and became a profit-making low cost carrier.…

    • 10721 Words
    • 43 Pages
    Powerful Essays
  • Satisfactory Essays

    Blue Ocean Of Airasia

    • 444 Words
    • 2 Pages

    In order to achieve current successes of Airasia, it is undenied the big contributions of Tony Fernandes who purchased bleeding low cost subsidiary of air Malaysia from Malaysian government in 2001. He implemented Blue ocean strategy of Air Asia first in Malaysia and then in Indonesia, Japan, the Philippines and Thailand via joint venture companies.(9)…

    • 444 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Finance of Manager

    • 3989 Words
    • 16 Pages

    * A brief description of the AirAsia Bhd.’s history, the nature of products/services in operation and the objectives.…

    • 3989 Words
    • 16 Pages
    Good Essays
  • Good Essays

    Airasia History

    • 1616 Words
    • 7 Pages

    AirAsia was established in 1993 and began operations on 18 November 1996. It was originally founded by a government-owned conglomerate, DRB-Hicom. The heavily-indebted airline was bought by former Time Warner executive Tony Fernandes's company Tune Air Sdn Bhd for the token sum of one ringgit with 40 million ringgit worth of debts on 2 December 2001. Fernandes turned the company around, producing a profit in 2002 and launching new routes from its hub in Kuala Lumpur, undercutting former monopoly operator Malaysia Airlines with promotional fares as low as 1 ringgit. AirAsia's CEO Tony Fernandes subsequently unveiled a five-year plan to further enhance its presence in Asia. Under the plan, AirAsia proposes to strengthen and enhance its route network by connecting all the existing cities in the region and expanding further into Vietnam, Indonesia, Southern China (Kunming, Xiamen, Shenzhen) and India. The airline will focus on developing its hubs in Bangkok and Jakarta through its sister companies, Thai AirAsia and Indonesia AirAsia. With increased frequency and the addition of new routes, AirAsia expects passenger volume to reach 18 million by the end of 2007. AirAsia's CEO Tony Fernandes subsequently unveiled a five-year plan to further enhance its presence in Asia. Under the plan, AirAsia proposes to strengthen and enhance its route network by connecting all the existing cities in the region and expanding further into Vietnam, Indonesia, Southern China (Kunming, Xiamen, Shenzhen) and India. The airline will focus on developing its hubs in Bangkok and Jakarta through its sister companies, Thailand AirAsia and Indonesia AirAsia. With increased frequency and the addition of new routes, AirAsia expects passenger volume to reach 18 million by the end of 2007.…

    • 1616 Words
    • 7 Pages
    Good Essays
  • Powerful Essays

    Air Asia Assignment

    • 2048 Words
    • 9 Pages

    Air Asia 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' company Tune Air Sdn Bhd for the token sum of one ringgit (about $USD0.40 at the time). This was after great deliberation as the initial offer was fifty cent. 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).…

    • 2048 Words
    • 9 Pages
    Powerful Essays
  • Satisfactory Essays

    Ob Air Asia

    • 707 Words
    • 3 Pages

    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 several years, AirAsia failed to attract enough passengers to establish its own niche market due to the demise of Tan Sri Yahaya Ahmad and financial crisis. Hence, AirAsia was heavily indebted. In 2001, Tony Fernandes’s company,Tune Air Sdn Bhd bought this airline from DRB-Hicom with estimation of RM 40 million debts. There are many continuous transformations that Air Asia makes in order to become outstanding, to accomplish its strategic mission and vision and maintain sustainability in the industry. Using the catchy and effective slogan of "Now everyone can fly", AirAsia became the first successful low cost and ticket-less airline in the Southeast Asian region. People can experience the flight with affordable price and it does not consider as an expensive choice of transportation, rather one of the economically justified ways of traveling to domestic and international destinations.…

    • 707 Words
    • 3 Pages
    Satisfactory Essays
  • Powerful Essays

    Strategy

    • 3077 Words
    • 13 Pages

    AirAsia Berhad was established in 1993 and commenced operation on November 18, 1996. It was originally founded by a government-owned conglomerate DRB-Hicom. Then, instead of starting from scratch, Mahathir advised Tony Fernandes, a Malaysian entrepreneur to buy an existing airline instead because of their heavily-indebted. He turing AirAsia, a failing government-linked commercial airline, into a highly successful budget airline public-listed company. He introduced the first budget no frills airline, AirAsia to Malaysians with the tagline which is “Now everyone can fly”. Achievements of AirAsia Berhad are ATW Value Airline of the Year on year 2012, World’s Best Low Cost Airline and Best Asian Low-Cost Carrier by TTG Travel Awards on year 2011 (academia.edu,…

    • 3077 Words
    • 13 Pages
    Powerful Essays
  • Powerful Essays

    Airport Management

    • 2608 Words
    • 11 Pages

    The airport business is experiencing unprecedented change. The world’s airlines are undergoing global liberalisation and consolidation, and competition between airports is increasing. Tremendous investment programs are required simply to keep pace with the projected growth in air travel demand, while governments are reducing their funding for airport projects. These factors are literally changing the face of the world’s airports.…

    • 2608 Words
    • 11 Pages
    Powerful Essays

Related Topics