Microeconomics Analysis of Air Asia

Topics: AirAsia, Airline, Low-cost carrier Pages: 10 (3257 words) Published: February 17, 2011

The purpose of this assignment is to apply the concept of microeconomics in analysis of the company that listed in Bursa Malaysia. We are required to select one of the companies that listed in Bursa Malaysia. Described the background and the type of products or services offered by this company. Besides that, we need to explain type of market structure that this company can be categorizes into and also explain the characteristics of that market structure. By using the annual report from this particular company of at least 3 years, do an analysis on cost, revenue, and profit of this company. All types of figure in balance sheet and income statement will be calculated and showed by graph to prove the difference figures in the particular years. The company we selected is AirAsia Berhad. As we know Air Asia is one of the famous airline companies in Malaysia. AirAsia is a name synonymous with low fares, quality service and dependability. With over 110 routes across 13 countries, AirAsia is truly Asia’s leading airline with the widest route connectivity and largest customer base. With the unmistakable tagline, “Now Everyone Can Fly”, AirAsia has made flying affordable for more than 61million. As a largest and successful firm in the particular industries, it is suitable to be an example of the oligopoly competition because there are only a small number of firms that joined or operates business in this sector. That will be one of the factors that the company can maximize their profit in the future. Every value of figure that includes in the annual report was calculated to get the analysis of the market structure and also sketch of every particular graph.

Background of AirAsia
Air Asia was initially launched in 1996 as a full-service regional airline offering slightly cheaper fares than its main competitor, Malaysia Airlines. Originally, it was founded by a government-owned conglomerate DRB-Hicom. On 2 December 2001, the heavily-indebted airline was purchased by former Time Warner executive Fernandez’s company Tune Air Sdn Bhd for the token sum of one ringgit. This was after great deliberation as the initial offer was fifty cent. Fernandez 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 (US$0.27). Air Asia, as the second Malaysian National Airline, provides a totally different type of service in line with the nation's aspirations to benefit all citizens and worldwide travellers. AirAsia Berhad is a Malaysian low-cost airline which operates scheduled domestic and international flights and is Asia's largest low fare, no frills airline. AirAsia pioneered low cost travelling in Asia. Besides that, it is also the first airline in the region to implement fully ticketless travel and unassigned seats. On 5 February 2009, AirAsia has finally implemented allocated seating 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. The airline is considering founding Hong Kong AirAsia in the future. 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.

“Now everyone can fly”
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
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...
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