Airasia-Sustaining Competitve Advantage

Topics: Low-cost carrier, AirAsia, Airline Pages: 21 (5691 words) Published: June 17, 2013


AirAsia was established in 1993 and began operations on 18 November 1996. It was originally founded by a government-owned conglomerate, DRB-Hicom. By ‘Flying Low-Cost With High Hopes’, AirAsia started out as a Malaysian government-controlled, full-service regional airline that offered slightly lower fares than its number-one competitor, Malaysia Airlines (“MAS”). On December 2, 2001 the heavily-indebted airline was bought by former Time Warner executive Tony Fernandes's company Tune Air Sdn Bhd . He took over the debt-ridden airline for the symbolic sum of US$0.26. Despite the air-travel downturn following the 11 September 2001 terrorist attacks, Fernandes believed that the timing for entering the airline market was just right, as aircraft leasing costs had dropped sharply and experienced staff were readily available due to airline layoffs. Moreover, the acquisition was welcomed by the Malaysian government, which hoped to boost the under-used Kuala Lumpur International Airport (“KLIA”). Fernandes restructured AirAsia into the first no-frills, low-cost carrier (“LCC”) in Asia, and the new business model was a huge success.

The company is a Malaysian low-cost airline headquartered in Kuala Lumpur. It is Asia's largest, and the world's best, low-fare, no-frills airline and a pioneer of low-cost travel in Asia. AirAsia group operates scheduled domestic and international flights to 78 destinations spanning 25 countries. Its main hub is the Low-Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport (KLIA). Its affiliate airlines Thai AirAsia, Indonesia AirAsia, AirAsia Philippines and AirAsia Japan have hubs in Don Mueang International Airport, Soekarno–Hatta International Airport, Clark International Airport and Narita International Airport respectively. AirAsia's registered office is in Petaling Jaya, Selangor while its head office is at Kuala Lumpur International Airport. Asia's leading airline was established with the dream of making flying possible for everyone. Since 2001, AirAsia has swiftly broken travel norms around the globe and has risen to become the world's best. With a route network that spans through to over 20 countries, AirAsia continues to pave the way for low-cost aviation through their innovative solutions, efficient processes and a passionate approach to business. Together with their associate companies, AirAsia X, Thai AirAsia, Indonesia AirAsia, Philippines' AirAsia Inc and AirAsia Japan , AirAsia is set to take low-cost flying to an all new high with our belief, "Now Everyone Can Fly".

Focusing on the low-cost, long-haul segment - AirAsia X was established in 2007 to provide high-frequency and point-to-point networks to the long-haul business. AirAsia X's cost efficiencies are derived from maintaining a simple aircraft fleet and a route network based on low-cost airports, without complex code-sharing and other legacy overheads that weigh down traditional airlines without compromising on safety. Guests continue to enjoy low fares, through cost savings that they pass on to their guests. AirAsia X's efficient and reliable operations are fully licensed and monitored by Malaysian and international regulators, and adhere to full international standards. AirAsia X is committed in offering X-citing low fares, X-emplary levels of safety and care, and an X-traordinary in-flight and service experience to all our guests - spreading the amazing AirAsia experience to X-citing destinations in Australia and Greater Asia.

In August 2011, AirAsia agreed to form an alliance with Malaysia Airlines by means of a share swap. The alliance was struck down by the Malaysian government, in effect voiding the agreement of both airlines. On 2 April 2012 Air Asia had their first flight from Sydney to Kuala Lumpur. By early 2013, AirAsia had seen a steep increase in its profitability. The year-on-year comparison had shown a 168% increase in profits as compared to 2012. For the quarter...

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