Case Study Air Asia

Topics: Low-cost carrier, Airline, AirAsia Pages: 63 (11629 words) Published: December 28, 2013
Tony Fernandes, as the Chief Executive Officer of AirAsia, decided to pursue his dream to start an airline with the following vision: “To be an airline that flies long-hauls with low fares with a corporate culture that is flexible and functional”. AirAsia has achieved its title as “The World Lowest Cost Airline,” and was also one of the world’s most profitable airlines. This report provides an analysis and evaluation of internal and external of the company. Methods of analysis includes of internal and external assessment and financial analysis. SWOT analysis provided in this report will shows the strengths, weaknesses, opportunities and threats of AirAsia. At last of this report, we have provided the recommendations for AirAsia to increase their performance.

1.1 Company Background
Asia’s leading airline was established with the dream of making flying possible for everyone. Since 2001, Air Asia has swiftly broken travel norms around the globe and has risen to become the world’s best. Air Asia was named the World’s Best Low Cost Airlines in the annual World Airline Survey by Skytrax for five year consecutive years in 2009, 2010, 2011, 2012 and 2013 and has been ranked Top 5 among the most recognized and admired airlines in the Asia Pacific Top 1000 Brands 2008. With a route network that spans through to over 20 countries, Air Asia continues to pave the way for low-cost aviation through our innovative solutions, efficient processes and a passionate approach to business. Together with our associate companies, AirAsia X, Thai AirAsia, Indonesia AirAsia, Philipines’s 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”.

1.2 History
AirAsia was established in 1993 and commence operation in 1996. AirAsia had rather a shaky start and the 1997-1998 financial crisis had further worsen the situation for AirAsia to grow as a low cost carrier. During it dire stage, the company was taken over by Tune Air under the leadership of Dato Tony Fernandes with the help of Conor McCarthy, former Director of Group Operations, Ryanair. Based on Southwest Airlines and Ryanair’s business model, AirAsia offer “No frills” airlines with a catchy tagline of “Now Everbody Can Fly”. Within 2 years AirAsia posted a net income 18.8 million and broke the 100 million net income barriers in 2005. Since then nothing has stopped AirAsia from moving forward and setting milestones, notably the first Asian Airlines to go ticketless in 2002, first multi lingual Asian airlines website in 2003 and the world’s first airline to launch a mobile site. All these are aligned with AirAsia’s philosophy to make flying affordable, easy and convenient. Having flown 100 million guest AirAsia has been in the spotlight for all right reason, for aggressive marketing, for awards and achievements.

1.3 Air Asia’s Business Modal
AirAsia is the market leader in cost leadership by maintaining 7 key components of Low Cost Carrier model. The key to delivering low fares is to consistently keeping cost low. Attaining low cost requires high efficiency in every part of the business and maintaining simplicity. Therefore every system process must incorporate the best industry practices. The key components of the Low Cost Carrier business model are the following:- i. High aircraft utilisation

AirAsia’s high frequency flights have made it more convenient for guest to travel as the airline implements a quick turnaround of 25 minutes for short haul flights and 60 minutes for long haul flights, which is the fastest in the region. This has resulted in high aircraft utilization, lower costs and greater airline and staff productivity.

ii. No frills
AirAsia’s fares are significantly lower than those of other operators. This service targets guests who will do without the frills of meals, frequents flyer miles or airport lounges in exchange for fares...

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David F.R (2013), Strategic Management Concepts & Cases, Fourteenth Edition, Francis Marion University, Florence, south Carolina
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