Growth of AirAsia Berhad

Topics: AirAsia, Low-cost carrier, Low-cost airlines Pages: 7 (1966 words) Published: July 17, 2010
History of Air Asia

AirAsia Berhad, is a Malaysian low-cost airline. It operates scheduled domestic and international flights and is Asia's largest low fare, no frills airline. AirAsia was a pioneer of low cost flights in Asia. It is also 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. Its main base is the Low Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport (KLIA). Its affiliate airlines Thai AirAsia and Indonesia AirAsia have hubs at Suvarnabhumi Airport, Thailand and Soekarno-Hatta International Airport, Indonesia, respectively. 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. In 2010 Air Asia won an award for the world best low cost airline.


The airline was established in 1993 and started 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

Second Hub

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.

Budget Terminal

A new budget terminal, the first of its kind in Asia was opened in Kuala Lumpur International Airport on 23 March 2006. Built at a cost of RM108 million mand spanning some 35,000 square metres (116,000 square feet), the Low Cost Carrier Terminal (LCCT) is the new home for Air Asia Bhd. Initially, the LCCT handled 10 million passengers a year. Air Asia Group is expected to carry 18 million passengers in 2007. However, all airport taxes charged and collected by the airline have yet to be paid to the terminal owner, due to unknown reasons.

Low Cost Model

Air Asia operates with the world’s lowest unit cost of US$0.023/ASK and a passenger break-even load factor of 52%. It has hedged 100% of its fuel requirements for the next three years, achieves an aircraft turnaround time of 25 minutes, has a crew productivity level that is triple that of Malaysia Airlines and achieves an average aircraft utilisation rate of 13 hours a day.

Airbus 320 Fleet

Air Asia is currently the largest single customer of the Airbus A320. The company has placed an order of 175 units of the same plane to service its routes and at least 50 of these A320 will be operational by 2013. The first unit of the plane arrived on 8 December 2005. On August 2006, Air Asia took over Malaysia Airlines' Rural Air Service routes in Sabah and Sarawak, operating under the Fly Asian Xpress brand. The routes were transferred back to new Malaysia Airlines subsidiary in East Malaysia, MA Swings from August 2007 since they were pulling down profits.

Asian Expansion

On 27 December 2006, Air Asia's CEO Tony Fernandes unveiled a five-year plan to further enhance its presence in Asia. In the plan, Air Asia will strengthen and enhance its route network...
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