Airasia Low Cost Carrier Competition in Indonesia

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CHAPTER I EXECUTIVE SUMMARY

Airline industry nowadays already have a lot of player that bring the industry to the fierce competition, the competition not only in one country anymore, it competition with the world player. From the full service carrier until the low cost carrier, no one can avoided the competition, it’s about competing or die. Low Cost Carrier in airline industry begin more famous start since 36 year ago by southwest airline, which now is the third largest airline in the world. AirAsia from Malaysia that start their operation in 1996 and transform their carrier into Low Cost carrier in 2001 after bought by Tony Fernandes. Not just AirAsia also Tiger Air from Singapore come with their Low Cost Carrier, and also Lion Air from Indonesia come with another Low Cost Carrier, and Jet Start from Australia that has been made by Quantas as their low cost carrier. In every low cost carrier have their own strategy to grab more passenger, most of them use their promo from free seat until buy 2 get 1, and from free baggage until no free baggage included. After all competition, AirAsia is the leader of Low Cost Carrier in Asia with their vision every one can fly, also AirAsia has won a lot of prestigious award from the world best low cost airline from 2009-2012. In 2011 AirAsia has more than 50 million passenger, and more than 100 routes.



CHAPTER II INTRODUCTION

AirAsia established in 1993 and start their operation in 1996, AirAsia owned by DRB-Hicom. In 2001, Tune Air Snd Bhd company that owned by Tony Fernandes purchase AirAsia from DRB-Hicom. Then since that time AirAsia do rebranding and relaunching as a low-fare carrier. As AirAsia

Business model is a low cost carrier, it require the operation to be lean, simple and efficient. The several key that AirAsia have been employed toward this effect, including: • • • • • • Safety First High Aircraft Utilization Low Fare, No Frills Streamline Operation Lean Distribution System Point to Point Network (Exhibit 1 for the explanation)

Nowadays, AirAsia has been the leader of Low Cost Carrier in Asia. But even they have been the leader, competition in the Airline Industry still competing each other. While the other competitor is not a small airline also, which they are Tiger Airways, Lion Air, Jet Star which also have a lot of passenger and routes around Asia. So, in order to achieve their vision which they are “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”,



AirAsia should know when they have to attack and when they have to defense from their competitor.

2.1.

Objective
This paper was written in last quarter of 2012, after the observation and

read the article there must be something that can be learned from AirAsia. AirAsia revenue start from 2001 keep increasing while other new competitors keep coming, and in the uncertainty of the fuel price. As a Low Cost Carrier price is the first decision that the customer make, also with the crash of plane that can make the customer afraid to choose the cheap airlines, AirAsia can keep growing. Based on that situation customer purchasing power being bigger, since more choice that they have. In this paper the analysis will cover what strategy that AirAsia have that make they growth unshakeable.

2.2.

Scope of Work
In this paper will be talk about the airline industry in Indonesia from

2007 to 2012 with 5 year timeline especially in low cost carrier that the origin from Malaysia, Singapore, and Indonesia. The focus on this paper is AirAsia, and will be compared to Tiger Airways, Lion Air as their big competitor. Actually all of them is in Low Cost so the price is the main strategy, but how AirAsia can win the competition above all the competitor. The sampling for the competitor will just from Malaysia, Singapore, and Indonesia with the leader of Low Cost Carrier in each country. So, beside that...
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