The largest low-fare, no-frills airline, one of the fastest growing company, a pioneer of low-cost travel, won World's

best low-cost airline award in 2007, 2009, 2010 and 2011 (skytrax) and a Malaysian based company known as AirAsia berhad is an organization that can be proud of and had done masses of innovation in the airlines industry. The main nature of business is Low cost airline carrier. From an airline with two aircraft plying six routes in Malaysia in January 2002, AirAsia has soared in the last nine years to cover 65 destinations in 18 countries. Today, employing more than 8,000 staff and with a market capitalization of just over RM7.06 billion (as at 31 December 2010), it is the only Truly ASE AN airline, serving the regions 600 million population from 10 hubs in three countries - Kuala Lumpur, Kuching, Penang and Kota Kinabalu in Malaysia; Bangkok and Phuket in Thailand; and Jakarta, Bali, Bandung and Surabaya in Indonesia. In 2011, we introduced two hubs, Chiang Mai for AirAsia Thailand and Medan for AirAsia Indonesia. Singapore functions as a virtual hub where AirAsia features among the top 10 airlines in terms of contribution to passenger traffic. Further strengthening its ASE AN network, the Group in December 2010 signed an agreement to establish a Philippine-based lowcost affiliate, which is expected to be operational by end 2011. The quest to democratise air travel began when Tune Air Sdn. Bhd. founded in 2001 by Dato Sri Dr. Tony Fernandes, Dato Pahamin Ab. Rajab, Dato Kamarudin Meranun and Dato Aziz Bakar - bought over the lossmaking, debt-riddled AirAsia from HI COM Holdings Berhad (now DRB-HICOM Berhad) for a token sum of RM1. The enterprising group quickly settled the airlines debts and set about rebranding and relaunching AirAsia as a lowfare carrier. The Groups entire business model centres around a low-cost philosophy which requires its operations to be lean, simple and efficient. (Financial Report 2010) With a simple motto but very powerful Now Everyone Can Fly, AirAsia has enlighten the travelling industry with more and more people to choose airlines or AirAsia as a mode of transportation choice. With the concept of cost benefit or people choose what they want basis had given the customer to choose which service they want from AirAsia.

The vision of Airasia 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. has given them a good direction on what they want and on what segment of market they interested in.

With the mission as below also gives give a good strategies and control for the senior management in the direction of the company

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

The key strategies of AirAsia is We make the low fare model possible through the implementation of the following key strategies,

Safety First: Partnering with the worlds most renowned maintenance providers and complying with the with world airline operations.

High Aircraft Utilisation: 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 travelling easier.

Point to Point Network: Applying the point-to-point network keeps operations simple and costs low.

What made Airasia as the chosen company is because from a loss making company, the management team has change it to become one of the most profitable company in Malaysia and the innovation of budgeted airlines has make Malaysia known to the world. Types of Innovation There are four basic types of innovation (kuratko and hodgetts, 2004) which is invention, extension, Duplication and synthesis. Invention is creating process in seeing new possibilities that can lead to new innovation. Inventions are mainly idea that a person have and the idea was put into realization. In AirAsia case, Dato Tony Fernandes and the management team has bought a company that was at loss and change it to a very profitable company. At that time knowing that Malaysia still does not have a budgeted airline and to use a fully service airline is very expensive has drive them to do so. Invention in AirAsia also can be seen in how the Business model had been developed by looking at a few airlines model, marketing strategies and technology utilization has shown how innovative AirAsia is and now a lot of companies are studying the business model that AirAsia has develop. Not only in the business model was a new invention to Malaysia but from the operation to all the detail of the plane is a new invention that works splendidly in AirAsia. In operation, AirAsia had utilized the staff to the maximum so that they will lower the cost and gives a better service. Although the staff is been fully utilized but the benefits to the staff was never fail to be taken care off so that they get the balance of working and life. AirAsia also had the idea of internet basis which most of the transaction is done via computer and at home. This actually can reduce the number of staff that has to work because everything can be done online. It was convenience to the customer and less cost to the company. Human error also is been eliminated because all the transaction is done by the customer and it is not bound to the company if the customer make the mistake. The latest invention that AirAsia had come out is by having a mobile application to do transaction and event now all passengers can

check in via online and just leave the baggage at the counter. This innovation has lead to a huge cost reduction as AirAsia also is aiming for environmental friendly company in the future. For the second basic innovation that is extension which can be defined as the expansion or addition of a business with new product or services. With adding a new product not only can introduce new features but also can make sure that customer will wanted to keep update on the company products. Extension of a product can make sure that the quality of service is been improve by time to time. In AirAsia, new product always been developed to satisfy the customer need. From only giving service on budgeted airlines, they come up with plenty of idea such as bus services, budget hotel, cargo, mobile number and even event management. By having all these extensions will lead to more productivity of the company and the satisfaction of customer. Now not only ticket can be booked but we can also include feature such as transfer from a place to another place and also hotel as well which they will charger it lower if we bought it together. The innovations of AirAsia towards diversifying their product also make the company better known. Although there are more famous on the branding of low cost airlines but when people click in the website, the can see other features such as hotel booking and others facilities on the same website which help in marketing this product. The extension into different product market can also reduce their cost and increase the profit as all the product can be an interrelated service to the same customer. Not only free marketing happen but they can create customer loyalty as all the product can give benefit to them. For example, if we buy AirAsia mobile number via tunetalk, we can also get redemption on the AirAsia ticket. This interrelated benefit is also good innovations that happen in AirAsia Group. Extension on sponsorship also had help AirAsia to be well known to the world. For example is AirAsia sponsored Manchester United give them a great chance to be known to the world and the latest collaboration is with a Korean pop sensation which is 2pm which Tony Fernandes has announce to sponsor them coming to Malaysia. Although at first it looks like they are using extra money but this kind of sponsorship had given a free marketing for Korean and Malaysia to know that they actually have a direct route from Kuala Lumpur to Seoul.

The third basis innovation is duplication. Duplication is the process of replicating the existing product. By replicating the process it does not mean that the business will replicate everything but it will look at the analysis of the product that they intend to duplicate. Some of the process cant really be duplicate because maybe there are certain factor that it does not applicable in other product or service. Usually before replicating a product, all the necessary analysis will be done so that the duplication is done smoothly. Duplication happen a lot in AirAsia, the most obvious duplication in AirAsia on the birth of the subsidiaries starting with AirAsia X, then Thai AirAsia, Indonesia AirAsia, VietJet AirAsia, AirAsia Philippines, and lastly AirAsia Japan on August 2011. AirAsia had done a lot of duplication in different country on expanding AirAsia as the largest low cost carrier. This duplication does not mean that all the Standard Operation Procedures will be the same in all the subsidiaries but the main business model, vision and mission is mostly same as the parent company. Usually the operation of each subsidiary will take into consideration the environment of the country. This is a good example of how duplication innovation is done in AirAsia. Not only the parent company is in profitable but also the subsidiaries which replicated from the parent company. By having the subsidiaries also help in making sure AirAsia is equip with more fleet to give more service to the customer. The last basic type of innovation is synthesis which is the process of combining separated part of product into something new. Synthesis also can be known as improving existing product to something which can add value to the product. When AirAsia announce that they will be operating from Low Cost Carrier Terminal (LCCT) in KLIA, they had actually figure out everything from making shuttle bus from KL sentral to LCCT to developing self check in shows how synthesis AirAsia management is. AirAsia also had tried to serve accommodation to the customer by developing Tune hotel and giving cheaper rates to call by using TuneTalk. This two products are very diverting to what the real nature of business for AirAsia but it actually had add value to the company service and satisfaction towards the customer because now customer can make AirAsia as one stop Centre for planning a trip to destination that they want.

Doing synthesis innovation also can reduce cost of marketing as now AirAsia can do all in one shot. AirAsia also have gone into event management which they will organize event and if they need hotel to stay, they have their own hotel, if they need them to fly they have the capabilities to perform that at a very lower cost as they are interrelated. Impact of innovation on AirAsia Listed as one of 50 most innovative companies by BizTimes show how innovated AirAsia is. The impact on innovation can really see in how many organization actually awarded AirAsia for all the achievement. Turning the company from a nonprofit able company to a million profit shows how the innovation done by the management help in making sure they are on the target. With the right strategies, mission and vision, and safeguard from the director had help in making sure the company never has conflict of interest between the board and the management team. A statement from Tony Fernandes stated that In the history of my working life, innovation has been the one priority foremost in my mind to ensure that we are always competitive shows that the company had always look at new innovation that can be implement to make sure that AirAsia can serve the customer to the maximum level. The innovations also have help in the rapid expansion of AirAsia because innovation has help to reduce cost and benefit the company. In this case, competitive advantage was held by AirAsia against other budgeted Airlines in the world. AirAsia's operating costs are the lowest of any airline in the world, and so are its fares. The innovations of giving customer to choose what they want also have given a huge impact on AirAsia. As we all know that customer is always right and customer is the one that have the buying power to the product. So by giving the customer to customize what they want actually have help in boosting the sale as customer only pay what they intend to take. This had lead to mo favoritism of the customer in choosing AirAsia at their transport of travelling. The impact of innovation also can be seen in the expansion of subsidiaries and expansion of the route that they are travelling. The expansion of subsidiaries has given a chance for AirAsia group

to have a few hubs as their station. This will help them in making sure they are doing the route with the maximum cost benefit. The innovation also had help in making the brand stronger because they can market different product using one major brand which is AirAsia. By doing this create a sustainable marketing to the company and customer will always know new information on AirAsia by powerful marketing. The innovation that been done also had help in making sure they are equip with the latest technologies with low cost as they are constantly bringing new innovation to the operation of AirAsia. Conclusion As a leading Low Cost Carrier in the world had proven that Innovation can help in making sure a company is well adequate with the latest system or latest operation procedure that can lead to cost effective. There is strength in AirAsia at this moment that can help in making sure their brand is well known to the world. As the world changes in a rapid, so innovation can help in making sure that cost is at minimum and profit is at maximum and the management is always ready for changes and ready for something new in a company. Problem that been face a lot by Government linked company is they cant adapt to the changes that fast so they are leave behind. For AirAsia giving the lowest price possible to the customer will always be their strongest point without forgetting all the safety guideline. Although AirAsia always have new threat in the market but they actually counter most of it by having a good management in thinking out of the box and using blue ocean strategies.

References http://www.airasia.com/my/en/home.html?gclid=CMKb19LHrKwCFUIa6wodX273Xw http://www.airasia.com/my/en/big/big-loyalty.page? AirAsia 2010 Annual Report" http://www.tonyfernandesblog.com/main.php/2009/01/30/innovation http://www.fastcompany.com/fast50_08/airasia.html http://www.budiey.com/airasia-x-presents-2pm-live-in-kuala-lumpur/ www.tradingeconomics.com http://www.areadevelopment.com/international/nov08/Malaysia-strong-economicfundamentals.shtml http://www.navitaire.com/res_and_dist/openskies.asp http://www.jstor.org/pss/1910798 http://www.worldairlineawards.com/main/2010Awards.htm