Air Asia Marketing Case Study

Topics: AirAsia, Low-cost carrier, Low-cost airlines Pages: 8 (1029 words) Published: October 30, 2010
Group – 6 Sec- C

AirAsia is a Malaysian low-cost airline. Initially it was a Malaysian Govt. controlled company. It was re-launched in Jan 2002 as an LCC(Low Cost Carrier) after takeover by Tony Fernandes. It operates scheduled domestic and international flights. AirAsia is a pioneer of low-cost flights in Asia and is the largest Asian nofrills airline. In a very short time, after launching as an LCC, Air Asia converted from a debt ridden company to a profit making company.

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The airline was established in 1993 by a Malaysian government-owned conglomerate DRB-Hicom and started operations on 18 Nov 1996. 2001 Dec – Tony Fernandez takes over the loss making AirAsia for US$ 0.26 2002 Jan – Re-launched as first no frills LCC. 2002 Dec – First profit of US$ 6 million 2004 - Starts regional flights to neighbouring countries. Formation of Thai Air Asia in partnership with Thai Shin Corporation. 2004 Nov – Listing on the Malaysian stock exchange. 2005 - Indonesia Air Asia established, hubs in Jakarta and Bali. 2006 Mar – Main Hub moved from KLIA to neighbouring specifically built LCC terminal 2006 Aug – Domestic Route rationalisation arrangement with MAS, took over two third(96 out of 118) of MAS’s loss making routes. Becomes largest airline in Malaysia. 2007 - ‘Air Asia X’ launched, First long haul flight to Gold Coast, Australia. 2008 May – 25th consecutive quarter of profitability since 2002. 2009 - Servicing 18 countries, 84 Aircrafts, 136 routes, 627 flights per day in the asia pacific route.

•Change in ownership pattern FROM Government owned or Supported TO Private. •Deregulation in airline industry leading to greater competition and pricing freedom. •In order to increase efficiency, carriers are entering into new strategic alliances with each other.

•Fierce competition, rising fuel prices leading to streamlining of operations to enhance the value chain. •Emergence of Low Cost Carrier (LCC) market due to rising economies, increasing business travel and growing disposable incomes especially in Asia.

Business Mission

SWOT Analysis

Goal Formulation

Strategy Formulatio n

Program Formulation and Implementation

Feedback and Control

•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 that everyone can fly with AirAsia •Maintain the highest quality product, embracing technology to reduce cost and enhance service levels

SWOT Analysis
•Low Operational Costs •Highly Trained, well paid and motivated staff. •High Utilization of Resources. •First mover advantage. •Influential Political Support. •Strong Brand Presence

•Frequent flight delays •Limited variety for flyers •Lack of infrastructure and congestion at airports hit bottomline.

•Very limited presence in the long haul segment •Liberalization of ASEAN countries. •Alternate sources of revenue through VAS. •Diversifying into sectors like air cargo.

•Increasing competition •Rising Fuel Prices •Substitutes like high speed rails and other LCC’s. •Terror attacks and health risks

To be the largest low cost airline in Asia and serve the people who are currently underserved with poor connectivity and high fares.

To provide basic airline experience to customers by curtailing costs. This was achieved by providing only the requisite facilities and keeping the prices as low as feasible. To provide requisite safety and focus on simplicity.

Operating Expenses Staff Cost

Cost/ASK for Air Asia 2009 2007 .35 .33

Reason 1.) Superior Productivity –Similar training and incentives . 2.) To and fro flight on the same day Multi layered Hedging Strategy Newer, fuel efficient Aircraft. Efficient flying skills of pilots 1.)New aircraft requires less maintenance. 2.)Single Type of aircraft reduces need for diverse...
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