By YASHDEEP UMESH 1RV09EC119

INTRODUCTION

AirAsia is a Malaysian-based low-cost airline AirAsia is Asia's largest low-fare, no-frills airline and a pioneer of low-cost travel in Asia AirAsia group operates scheduled domestic and international flights to over 400 destinations spanning 25 countries

ESTABLISHMENT

AirAsia was established in 1993 and commenced operations on 18 November 1996 It was originally founded by a government On 2 December 2001, the heavily-indebted airline was purchased by former Time Warner executive Tony Fernandes for the token sum of one ringgit (about $USD0.26 at the time) with USD$11 million (RM40 million) worth of debts

CONTD.. Instead of starting from scratch, his friend advised Fernandes to buy an existing airline instead. Fernandes mortgaged his home and sank his savings to acquire the company, comprising two ageing Boeing 737-300 jets (9M-AAA and 9M-AAB) and USD$11 million (RM40 million) worth of debts, for 26 US cents (one ringgit), and transformed it into an industry player

CONTD..

everyone thought that Fernandes had gone "crazy", predicting that the company would fail miserably Yet, just one year after his takeover, AirAsia had broken even and cleared all its debts

HQs

: Kualalumpur, Malaysia

Existence: Asian Countries Thailand, Malaysia, Singapore, India. Formation: Formed in Malaysia. Taken over from Malaysian govt. Got success within two yrs. Indian : Started in Trichy. They have extensive plan for India. 148 flights/week from 9 destinations. Low fares in comparison to competitors.

SERVICESlow cost carrier(LCC). Courier service. Cargo service. Inter based megastore. Holiday products. Booking services for hotels. Rental cars. Medical care.

ADD-ON SERVICES Baggage supersize Pick a seat. Pre book meals. Air Asia merchandise. Duty free sky shop. Entertainment.

CUSTOMER SERVICE DELIVERYTICKET BOOKING MOBILE ONLINE INFLIGHT SERVICES FOOD & BEVERAGES AIRASIA MERCHANDISE DUTY FREE SKY SHOP ENTERTAINMENT FLIGHT INFO. TRAVEL INFO.

What's the Funda behind ?

Cost
Flying hours
Employees

Rs. 1.57/- Per seat per km as compare to Rs. 2.40/- for other airlines. 17 to 18 hrs compare to Indian airlines 11 to 12 hrs .

68 employees per flight

Fuel Capacity

Air Asia has hedged its jet fuel requirements for three years.

BUSINESS PLANNING
Mission: Sustaining cost advantages while maintaining low-cost, high-quality airline status in the time of unstable oil price and heavy market competition. Goal Formulation: Decrease fuel and oil cost per ASK (Available seat per kilometer), more diversification in air transportation business and more price promotion for customers.

Distinctive Competency: Superior workforce, Purchasing unit and Distribution channel.

MARKETING ANALYSIS
CUSTOMER- AirAsia targeted the budget segment of south eastern Asias air passengers Channel: Multilingual website Telephone booking centre Sales office Travel agent Partnership with local bank and post office By sms for the first time in Asia

SWOT ANALYSIS
o o o o o o o o o o

STRENGTH: Low operational cost Effective distribution channel Malaysian government support Good alliances WEAKNESS: Extra charges for baggage Poor ticketing service OPPORTUNITY: Asias middle class growth Increasing importance of ASEAN route THREATS: Volatile fuel price Increase in cost of airplanes and its components for maintenance Increasing competition

PEST ANALYSIS
Political : Everyday low fare campaign of MAS was subsidized by Malaysia Government Economical: Availing opportunity from recessive market and growth of middle class in ASEAN countries Social: Tony Fernandez wore official red cap and Tshirt to official functions and gave mobile phone no. to all media representatives Technological: Having more fuel efficient airplanes and more tyre longevity.

OVERALL COST LEADERSHIP

o

o o

o o o o o

Operation & Maintenance: Fuel cost reduction due to usage of Airbus 320-200 instead of Boeing 737-300 Doubled no. of landing from same tyre Less depreciation due to better maintenance by GE Engine Services and Volvo Aero Less aviation and user station charge Service: Thailands Shin Corp. helped in e-booking system in the alliance Virgin group provided ticketing system in AirAsiaX HR Department: Minimum no. of employee and most usage of workforce To and fro journey on same day

OVERALL COST LEADERSHIP

Purchasing : o Purchasing of new air planes on attractive terms Marketing: o Effective distribution channel o On time guarantee campaign for customer satisfaction Redefining Value Chain o Started offering travel insurance,. o Launched co-branded Citibank- Air Asia credit card

STRATEGIC PLANNING

To be the Asias first low cost carrier AirAsia choose underused Kuala Lumpur International Airport in very low cost

Took the leadership in implementing the strategy of no flight entertainment and no free meal in flight. It also started no frill concept in Asia which is considered legendary in it's field.

For short-haul flights (less than 4 hours flight) it started returning on the same day to reduce crew accommodation cost and other allowances at the arriving cities.

CONTD..

To save high slotting fees in large airport it focused on secondary airports. Allowed customers to prebook some hot seats for a certain fees by Pick A Seat Service from February,09 Started Checked Baggage Handling Fees for insisting passengers for light weight journey which can cause low fuel consumption

RECOMMENDATION

On which route AirAsia has multiple flights in a day, narrow body flights of higher capacity may be used. e.g. using of Airbus 380 (of seating cap 650) instead of two Airbus 330-300

To reduce no. of vacant seat use less capacity air planes

More fuel economic air plane usage e.g.: using of Air340600

CONTD..

Must pay more attention for service channel as there is a huge customer complaints against very slow server for e-ticketing. It can diversify its business more in cargo sector and can use Airbus Bulega flights for economic model.

Can be diversified more in the island countries like Japan, New Zealand etc.
Can charge higher at peak time.

ACHIEVEMENTS AND AWARDS

Fernandes' biggest achievement has been to turn the AirAsia airline into an international carrier. Fernandes has received several awards for his achievements:
International Herald Tribune Award for the "Visionaries & Leadership Series", for his outstanding work in AirAsia; "Malaysian CEO of the Year 2003" in December 2003 a highly acclaimed recognition, so far awarded to only nine other recipients in the country, by American Express and Business Times. The award was an initiative to recognize entrepreneurial and managerial expertise and performance among leaders of Malaysian corporations. Named the joint winner of the CEO of the Year 2003 award by American Express Corporate Services and Business Times . "Emerging Entrepreneur of the Year" in the Ernst & Young "Entrepreneur Of The Year Awards" in 2003; Made the list of Business Week's "25 Stars of Asia" in 2005. "Malaysian Ernst & Young Entrepreneur of the Year 2006"

"Excellence In Leadership - Asia Pacific Leadership Awards 2009"

2010 Forbes Asia businessman of the year 2011 No. 52, in Fast Company Top 100 Most Creative People in Business.

THANK YOU