Air Asia Company Analysis

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Accounting & Finance
TP 023513
UC1F1007BMP (AF)
Utari Asmelia
Introduction of Management
08
Fall
AirAsia Company Analysis

Background of AirAsia Company
Dato’ Tony Fernandez was the entrepreneur that brought up AirAsia to be the one of the award wining the largest low fare airlines that is currently well known for now in Asia. Since then it has been flying to over 61 domestic and international destination with 108 routes, and furthermore it operates over 400 flights daily from hubs that are basically located in Malaysia, Thailand and Indonesia. Today if we look at their progress, AirAsia has flows over 55million guests across the region and continues to create more extensive route network through its associate companies. The company AirAsia furthermore belives in the no-frills, hassle-free, low fare business concept and feels that keeping costs low requires a specific element of high efficiency in every oart of their business. So, as we know, through the corporate philosophy which stands that “Now Everyone Can Fly”.

AirAsia Berhad is a Asia’s aeroplane largest low-fare, no frills airline and a pionner of low cost travel in Asia. AirAsia group operates scheduled domestic and international flights to over 400 destinations already spanning 25 countries. Its main hub is the Low-Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport. Its affilate airlines Thai AirAsia and Indonesia AirAsia respectively. AirAsia won the Skytrax World’s best low-cost airline award in 2009 and 2010. It has the world’s lowest operating costs at $0.035/seat-kilometre in 2010. It is also the first airline in the region to implement fully ticketless air travel system. THE HISTORY OF AIRASIA CO.

AirAsia was established in 1993 and commenced operations on 18 November 1996. It was originally founded by a government-owned conglomerate DRB-Hincom. On 2 December 2001, the heabily-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 was the initial offer was fifty sen. Fernandes proceeded to engineer a remarkable turnaround, turning 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 RM 1 (US$0.27).

MEGA ENVIRONMENT
i) International Elements

Based on the history of these company, on August 2006, Airasia took over Malaysia Airlines’s Rural Air Service routes in Sabah and Sarawak, operating under the FlyAsianXpress brand, the routes were subsequently returned back to MASwings a year later citing commercial reasons. AirAsia’s CEO Tony Fernandes subsequently unveiled a five-year plan to further enhance its presence in Asia. Today, AirAsia has strengthen and enhance its route network by connecting all the existing cities in the region and expanding further into Indochina, Indonesia, Southern China (Kun Ming), Xiamen, Shenzen) and India. The airline focused on developing its hubs in Bangkok and Jakarta through its sister companies, Thai AirAsia and Indonesia Airasia. Hence, with increase frequency and addition of new routes, AirAsia expects passenger volume to hit 18 million by end-2007. Now, AirAsia has some pathways and more wide network. For demography sectors, AirAsia has more than 558 million inhabitants (ASEAN countries) and over 3 billions with China and India.

ii) Economic Elements
AirAsia Economic Analysis

A successful example of a Malaysian no frills airline is AirAsia. Revolutionized and Reinvented by Tony Fernandez in 2001, like I told before it is based on the low-cost, no-frills model of the US carrier Southwest. The concept of AirAsia 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...
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