Air Asia Economic Analysis -Mba

Table of Contents {text:bookmark-start} {text:bookmark-start} Background {text:bookmark-end} {text:bookmark-end} A successful example of a Malaysian no frills airline is Air Asia. Revolutionized and Reinvented by Tony Fernandez in 2001. It is based on the low-cost, no-frills model of the US carrier Southwest. The concept of Air Asia is based on the belief that demands for short-haul air transport is price flexible. That means, if prices for flights are being reduced, more people will fly. Traditionally, airline concepts are based on the assumption that airline traffic grows in line with the economy and that cutting prices will only lead to a decrease in revenues. With the introduction of the ‘no-frills’ concept to the Malaysian market, Air Asia has proven this theory wrong and goes from strength to strength by actually increasing the size of the market and more recently by taking away passengers from the major airline competitors. With its expanding strategy as objectives to reach excellent standard around the world, marketing in Asia has been the key player to achieve success. Air Asia is one of the businesses that have successfully adopted cost leadership through operational effectiveness and efficiency. The cost advantages have enabled Air Asia to become the Asia’s leading low fare airline. Air Asia 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 until today has flown more than 55 million passengers in and around Asia (Air Asia, 2005). AirAsia has also ventured into other market that complements with the airlines business. It has started franchises like the tunes hotels and red box couriers to gain maximum efficiency in and around the airline business. {text:bookmark-start} {text:bookmark-start} The Business Environment Needed for the Firm to Adapt {text:bookmark-end}

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