UNIVERSITY OF MALAYA
STRATEGIC MANAGEMENT ACCOUNTING
DATE OF SUBMISSION: 2 APRIL 2008
AirAsia is one of the businesses that have successfully adopted cost leadership through operational effectiveness and efficiency. The cost advantages have enabled AirAsia to become the Asia’s leading low fare airline. Established on 12 December 2001, AirAsia has been such a big phenomenon in airline industry especially in Asia. By using a simple but strong slogan “Now Everyone Can Fly”, AirAsia 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, 2005). The leading low fare airline in the Asia - AirAsia has been expanding rapidly since 2001, to become an award winning and the largest low cost carrier in Asia. With a fleet of 72 aircrafts, AirAsia flies to over 61 domestic and international destinations with 108 routes, and operates over 400 flights daily from hubs located in Malaysia, Thailand and Indonesia. To date, AirAsia has flown over 55 million guests across the region and continues to spread its wings to create more extensive route network through its associate companies, Thai AirAsia and Indonesia AirAsia. AirAsia believes in the no-frills, hassle-free, low fare business concept and feels that keeping costs low requires high efficiency in every part of the business. Efficiency creates savings which are then passed on to guests so that affordable air travel can become a reality. Through our philosophy of ‘Now Everyone Can Fly’, AirAsia has sparked a revolution in air travel with more and more people around the region choosing AirAsia as their preferred choice of transport. As AirAsia continuously strives to promote air travel, we also seek to create excitement amongst our guests with our range of innovative and personalized service.
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
AirAsia mission is want 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 AirAsia and maintain the highest quality product, embracing technology to reduce cost and enhance service levels to the customers. VALUES
We make the low fare model possible through the implementation of the following key strategies. • Safety First:
Partnering with the world’s most renowned maintenance providers and complying with the with world airline operations. • High Aircraft Utilization:
Implementing the regions fastest turnaround time at only 25 minutes, assuring lower costs and higher productivity. • Low Fare, No Frills:
Providing guests with the choice of customizing services without compromising on quality and services. • 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 easier. • Point to Point Network:
Applying the point-to-point network keeps operations simple and costs low. ENVIRONMENTAL SCANNING
Environmental scanning is performed to assess the attractiveness of Airline industry specifically in Asia. Before Air Asia can identify its business strategy, Air Asia should scan their business environment in term of Macro-environmental and micro-environmental. Macro-environmental will be conducted by analyzing significant macro factors (Demographic fundamentals such as large populations, rising middle classes with increasing leisure time and disposable incomes & Geographic such as rapidly increasing urbanization trends) that affecting the Airline industry. Whereas, Porter’s five...