Healthy Competition in the Sky Business (Airasia vs Malaysian Airlines)

Topics: Malaysia Airlines, Airline, AirAsia Pages: 3 (899 words) Published: October 5, 2008
AirAsia, the most successful and leading low fare carrier in Asia Pacific region is practicing a concentration strategy since it takes over by Tony Fenendez in late 1990s. I strongly believe this strategy will continue to work if it is under the leadership of Tony Fenendez. The concentration strategy under the current practice will able to make AirAsia remain competitive:- 1.Managing Cost of Human Capital. Multi tasking Cabin Crew. Where all the Cabin crew are required to handle check in ticketing counter, boarding announcement and on board cabin service. By doing this AirAsia has a better cost control if it is compare with Malaysia Airline systems hence it will reduce the operating cost and increase the operating profit. Total cabin crew needed for 2007 are 250 and they only trained for 300 person. With a excellent cost control, the staff cost for AirAsia is only USD0.35 cent per staff per ASK. 2.Securing of Hardware. Government had granted Investment Tax Allowance (ITA) for 160% capital allowance on qualifying Capex and unutilized portion can be carried forward perpetually. In order for AirAsia to benefit on the ITA, therefore AirAsia had secured aircraft financing for 60 A320 aircraft by taking 12 years financing at 5.30%-5.50% interested rate (Kuwait Finance House Malaysia Berhad).Furthermore, Air Bus 320’s cost economics far superior if it is compared with Boeing 737-300. By doing this AirAsia had save up to RM300million on Hard ware expenditure. 3.Dynamic leadership. Tony Fenendez is a very dynamic person, he always show an example and he believe in bottom up approach, where all AirAsia staff could voice up their idea, staff are not required to wear tie if it is compare with MAS. 4.Yield Management. AirAsia are focus on “Load Active, Yield Passive”. They always maintain high load factor to achieve cost effective. The load factor are being measure on daily basis. Overall the route profile are very young, there are 18 route less than 12...
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