Airasia Case Study

Topics: Airline, Low-cost carrier, Southwest Airlines Pages: 11 (3543 words) Published: February 15, 2011
AirAsia: “Now Everyone Can Fly”
I. Introduction
AirAsia is a Low-fare airline company owned by Anthony Fernandes. The company had its beginnings since 2001 and has been growing rapidly ever since. Within two years, AirAsia has proven that low-fare airline models such as Southwest’s, Ryanair’s, and easyJet’s model would fare well in the Asian marketplace. Its success has even spawned numerous imitators and competitors. But the question still remains, can the low-fare model continue to succeed and grow in Asia? With the corporate philosophy of “Now Everyone Can Fly,” AirAsia has paved the way for low-cost aviation through “innovative solutions, efficient processes and a passionate approach to business.” More people around the region are choosing AirAsia as their preferred choice of transport. AirAsia creates value through their Vision and Mission:

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.|

* 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|

AirAsia makes the low-fare model through implementing these strategies: Key Strategies| |
Safety First | Partnering with the world’s most renowned maintenance providers and complying with the world airline operations. | High Aircraft Utilization| Implementing the regions fastest turnaround time at only 25 minutes, assuring lower costs and higher productivity. | Low Fare, No Frills| Providing guests with the choice of customizing services without compromising on quality and services. | Streamline Operations| Making sure that processes are as simple as possible. | Lean Distribution System | Offering a wide and innovative range of distribution channels to make booking and traveling easier. | Point to Point Network | Applying the point-to-point network keeps operation simple and lower costs.|

II. Business Model
Not all Low-fare Airlines employ the same business model practices. AirAsia’s business model has the following characteristics: Simple Product| • Catering on demand for extra payment • Planes with narrow seating and only a single class • No seat assignment • No frequent flyer programs | Positioning| • Non-business passengers, especially leisure traffic and price-conscious business passengers • Short-haul point to point traffic with high frequencies • Aggressive marketing • Secondary airports • Competition with all transport carriers | Low Operating Costs| • Low wages • Low airport fees • Low costs for maintenance, cockpit training and standby crews due to homogeneous fleet • High resource productivity • Short ground waits due to simple boarding processes• No air freight, no hub services, short cleaning times, and high percentage of online sales|

III. External Factors
a. Competitive Profile Matrix
| AirAsia| Ryanair| Southwest|
Critical Success Factors| Weight| Rating| Score| Rating| Score| Rating| Score| Support| 0.05| 2| 0.1| 2| 0.1| 4| 0.2|
Product Quality| 0.15| 4| 0.6| 3| 0.45| 4| 0.6|
Price Competitiveness| 0.25| 4| 1| 2| 0.5| 3| 0.75| Customer Loyalty| 0.15| 3| 0.45| 2| 0.3| 4| 0.6|
Global Expansion| 0.15| 4| 0.6| 1| 0.15| 3| 0.45|
Features| 0.1| 4| 0.4| 4| 0.4| 3| 0.3|
Reputation (safety, efficiency)| 0.15| 3| 0.45| 4| 0.6| 4| 0.6| Total| 1.0| | 3.6| | 2.5| | 3.5|

AirAsia has the best price based on the cost per average-seat-kilometer which means that they have lower operating costs than the other two airlines; this may be caused by their location (which affects costs such as wages and fuel) and airports used. Southwest...
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