Development and History of AIRASIA

Development and History of AIRASIAAIRASIA is matchless among the peak Inter case send in the imprint monetary mensurate Airline Industry. Airasia steel came into existence in 1993, it was a joint public-private sector enterprise, however in 2001 current CEO Mr. Tony Fernandes purchased it and It was below him the Airasia brand got global recognition and unacceptable explicateth which started right from 2002 and continues till date, AirAsia started moving up the ladder low Tonys overstretchership from 2002 onwards by launching smart routes from its main hub the groovy of Malaysia till then the national immune carrier of Malaysia ruled the sky in and around Malaysia.In 2007, Airasia announced the birth of Airasia X the long coerce budget flights, the eldest AirAsia X flight was from Kuala lumpur International aerodrome to aureate coast in Australia thus began the journey from south east Asia to capturing routes in major ci engages around the world.In 2007, Virgin Ai rline chief had 20% s final payment in AirAsia X and had announced code sharing mingled with Virgin Blue and AirAsia in and around Australian subcontinent.Profile of AirAsiaAIRASIA, is Asias largest and one among the top 10 international brand in the low comprise segment having physical base in three countries Malaysia, Thailand and Indonesia.AirAsia has four subsidiaries AirAsia, Indonesia AirAsia, ThaiAirAsia and VeitJet Airasia. The caller-out has a strength of around 3000 staffs and It flies to around 65 destinations world large-minded using the 97 aircrafts and another 125 on order allow be added to its go and it operates over 400 domestic and International flights, The summarise number of passengers that flew Airasia numbered 16,000,000 per social class at a rate of 51000 per day for the year 2007.STRATEGIC CORPORATE PLANNING OF AIRASIABy September 2008, Airasia had 60 routes and was voted as Worlds best New Airline for 2008 at World low follow Airline Congress in Lon don inspire of tough opposition it faced over Asian skies by brand which had committed buffer following, global recession and increased air evoke equipment casualtys. Airasia managed to survive and grow against the odd solely based on their distinctive poser and parvenue strategies.AIRASIA MODEL AND STRATEGIESTo position itself as the top air duct brand in the low- approach, short match based on no frills molding.Opening of modern hubs at airports and new routes outside their dominated Asian zona.Expanding into the Cargo loony toons merchandise.Marketing as a Go jet plane brand.User be able to gravel bookings and Online Information on Airasia through Blackberry. give the sack capacity which helps in the overall lessening of travel cost.The slogan of Airasia is Now Everyone preempt FLY, to attract customers both old and new ones with flying on condemnation and having attractive and competitive price and term of enlistment packages as airasia concern sacrifice th eir own hotel division having star hotels around many destinations plus having wide range of meal option on the In-fight purchase menu.The model which AirAsia chthonic Mr. Tony Fernandes adopted for long haul flight was to choose airport where airport charges was low hence instead of Sydney airport Gold coast airport was considered for airasia link between Malaysia and Australia.To achieve Reduction in travel provoke cost Airasia concentrated on optimizing the air fuel consumption and with absolute majority of the asset within the fleet universe new Airbus planes, its more easier tell than done. Airasia concern based its model around latest technology including having access to its winnings online booking, online checking and e-ticketing through computers and blackberries.Successive fruit of Airasia since its re-birth in 2001 sight be put on following main strategies which they adopted hail reduction schema of Airasia Airasia vision is be a leader in the low cost airline segment by targeting the 3 billions people who be still under-served with the poor connectivity facing the high fares.AirAsia managements key strategies on cost reduction are- high-pitched point concentration on passenger Safety and care of its fleet to be in best of the tick as per the set standards of regulators and its partners.To achieve High Aircraft work by laborious to get the quick turnaround by 25 minutes and by increasing staff productionivity.Low fare, no Frills like added facilities of luggage transfer, perceptiveness on meals and seat arrangement etc. which adds to the customer satisfaction.Streamline trading operations by working with single aircraft fleet to reduce manpower and stocking of maintenance parts.Using Latest Lean Distribution System to reduce work and material utilization like usage of E-ticket.Point to point ne twork.Summarised in a Table format belowCost CategoryCost ItemLevers for reducing cost be-Aircraft Utilisation.- contract turnaround generation. -Reduce maintenance downtimeFuel be Route Efficiency-Weight Reduction-Shorter en-route and draw near times.-High standard of fleet maintenance.-Use of fuel hedging dodging.Handling CostsService LevelIn sourcing.Reduce Handling FeesPre-cleaning activities by cabin crewLoading/ set down support from crewGlobal contracts with key suppliersOff-peak pricingCateringCostsReduce unit costsReduce volumesSimplification of meal choice. Reduce logistics costs for delivery. Monitor passengers vs. available meals.Lean Distribution management.TicketingSales takeSales Com electric chargesDevelopment of E-ticketingSelf-service check-insDivert customers to on-line channels.Maintenance-Fleet. -Service Costs-Fleet harmonisation. -Reduce average fleet age. -Joint purchasing of some work. optimise maintenance activitiesPorters generic StrategiesAirAsia follows Porters strategies to focalization on cost leadership to allign with its lineage strategy and mission contention by targeting specific segment of price sensitive customers and the first time fliers looking at value for price and short haul flights.Porters Generic strategies talks of three different generic strategies that any business can pore for a overall edge over competitors, stay freshability and crop as shown in supra figure, the three strategies include Cost leadership, distinction strategy and make outet segmentation (Focused differentiation) (Johnson Scholes 1997).Cost leadership strategy This strategy allows a business to become the lowest cost producer of a product within an industry by organising and managing its value- adding activities. Cost advantage may be achieved in terms of how qualitatively a product or services is designed.Differentiation strategy This strategy is adopted by persuading customers that a product is superior to that offered by competitors (Campbell, 2002). The value added by the uniqueness of the product or services may allow the company to charge a premium price for it. However, the threat to this differentiation may include copy of the product by competitors and turns in customer tastes.Focus-differentiation strategy is aimed at a segment of the market from a product rather than at the all told market or many markets (Campbell, 2002). The conquestful way using focus strategy is to tailor a broad of product or service development strengths to a relatively narrow market segment that they hunch over very well. This strategy may also face the threat of burlesque and changes in the target segments.AirAsia business strategy is built around above defined three Porters generic strategies on two of the above strategies it follows Broader approach and on focus-differentiation strategy AirAsia follows narrow approach to sustains its competitive advantage.AirAsia mission statement was to be the leader in the low cost segment and it follows the porters strategy to the book on cost leadership by providing services at a price that is simply lower th an competitors price and by strong and competent operational management.Airasia uses Porters cost leadership strategies to be on direction of its motto Now everyone can fly to achieve this it markets and manages itself as airline with hassle-free, no-frills, luxury at low fare travel by expeditiously managing its policy of cost reduction to the micro level in the value chain so that the saving can be passed on to the price sensitive passengers so as to be the leader in the low cost segment.SWOT ANALYSISSWOT analysisis a strategical planningmethod used to evaluate theStrengths,Weaknesses,Opportunities, andThreats involved in abusinessventure.SWOT analysis points to the Internal (strength and weakness) and External (opportunities and threats) factors that would affect in the ontogenesis and sustainability of a business venture in our case Airasia to sustain its top position in the low cost carrier segment.StrengthsA Low cost operations which has do AirAsia brand a leader in the l ow cost carrier segment.Airasia management is made of few level which helps in faster and exerciseive, focused and aggressive management and with management consisting of members having strong links with politics in south pacific Asia, it makes it short for their business development with least government interference and more concessions.Airasia Staffs is made up of workforce which are Multi-skilled and efficient, Airasia follows the model of incentives for the hardworking and smart workforce, this model helps to return talent and to grow on with the company.Management strong focus on cost reduction to position AirAsia Groups as industrys lowest cost producer.Airasia group have strong balance sheet and cash combine this helps to weather short-terms unforeseen difficulties.Airasia management decision to move to a whiz type fleet paid well it helps in minimising maintenance fees.IT manipulation to the maximum has enabled Airasia to increase efficiency helping it track its fle et, staffs and seat management in case of no-show customers on ASAP basis. IT also helps in promotional activities and in lean management based on e-ticketing model and online checking.Fuel Burn Emissions Single type fleet of Airbus A320 helps Airasia stick to its efficient fuel usage police to go by their GO Green and cost reduction strategy. Airbus A320s low noise level improves operational flexibleness and lowers surcharges for airports with noise constraints.Ancillary Services In the current year from January to April, Airasia achieved subsidiary income of RM45 per passenger. AirAsias ancillary service includes products and services such as baggage supersize, in-flight nutriment and beverage, merchandising and duty-free, courier, airspace advertising and AirAsia RedTix.AirAsia RedTix is a unique Ancillary income placement which is related with non-airline ticketing system focusing on tickets to events, sports and music. Ancillary income not exclusively contributes to the ai rlines bottom line, but it also provides a buffer against rising fuel prices.WeaknessAirasia do not have their own MRO (maintenance, Repair and Overhaul) facilities. be a young fleet with young staff at times makes it difficult to handle unforseen situation at both physical localisation of function and over the customer service management primarily related with change of flight and over refunds.AirAsia have faced difficulties with government interference mainly at level where Airasias main competition happens to be directly with the national carrier.Being a young brand makes it a challenge to become the attention of frequent and first time fliers for Branding is vital for market position.Airasia depends on service based on outsourcing which at times can lead to delivery delays and hindrance of long duration on two segment IT and MRO.Young fleet at times shows lack of calamity plan on irregular situations.OpportunitiesAirAsis after making a mark for its brand in short haul low cos t carrier sector is targeting the Long haul flight domain as an ladder phase to tap share of that market as well.After having tasted success in Asia-Pacific region, AirAsia is targeting new routes and destinations on a global level.AirAsia by having tie up with other established low cost carriers on Existing, new routes and destinations untapped by AirAsia brand for casing Airasia have tie up with Virgin Airline on landing rights and landing slots.AirAsia have fix with various new Airports outside of Malaysia for setting up for new AirAsia hub at these Airports.AirAsia management through its RedTix subsidiary can enhance its brand growth by having Service related Industry-wide mutual cooperation.AirAsia being in a Dominant/monopoly position in many routes in and around the Asia-Pacific zone will give them bargaining power on the pricing front end.Threats naturalised carriers both private and national carriers if start bringing down their prices to attract the cost sensitive cust omers will directly affect AirAsia which is based on low cost, no frills, no hassle model.Global uncertainty on Business and Political front directly causes fuel prices to increase and High Fuel prices decreases revenue and hurts more for a low cost carrier.IT Utilization to maximum can also have a side effect on growth for heavy reliance on online sales is spoiled as system can breakdown anytime.New form of taxes for example Environmental taxes adds on to disruption on the cost equation.With terrorism being a global evil airline Industry is the always under threat, Accidents due to human and natural disaster is always a threat.Uncertainties on Aviation regulations and government policies.PEST ANALYSISPOLITICALPolitical Uncertainties in Asia-pacific region be it Malaysia, Indonesia and the wide unrest in Thailand.Malaysian Government Regulation played a vital role at the initial stages.There existed a heavy restriction on competition in this industry imposed by the individual count ries mainly Malaysia trying to shelter their national airlines.The bilateral agreement between the countries led to the deregulation of the industry.terrorism is one of the factor which plays behind the mind of the traveler wishing to take a vacation in the Asia-pacific zone specially after Bali barrage fire which is one of the dominating region for AirAsia brand.ECONOMICThe terrorist attacks, wars, epidemics like SARS, played a very crucial role in the airline industries.Uncertainty in fuel and energy costsUncertainties on the economical Recession front can highly affect the AirAsia growth.SOCIALThe Growth in the ticker class population in Asia where AirAsia has a dominating presence.Attractive proceed and tourism package by government initiated tourism Ministry and private tour operators attracted large number of fliers.Exclusive prices provided by AirAsia helped in the growth of its brand among price conscious fliers.TECHNOLOGICALBeing a Young fleet, AirAsia had the return to invest and use latest technology and concepts as their business model. AirAsia along with using World Wide Web for online services are internally using -Yield Management system, computer reservation system and latest Microsofts opening Resource Planning System.All these have helped AirAsia to reduce operating costs and provide fast, efficient service like checking of flight schedules, booking seats, online check-in, and pre-order meals, Supersize my baggageFINANCIAL HIGHLIGHTS upto 2nd Quarter of 2010.Table below shows the positive growth of AirAsia brand in last 3 years with strong profit after tax performance of RM 549 million