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Development History Of Airasia Paper

Words: 2493, Paragraphs: 111, Pages: 9

Paper type: Essay , Subject: Airline

A A A A A A A AIRASIA, is one among the top International trade name in the low cost Airline Industry Airasia trade name came into being in 1993 it was a joint public-private sector endeavor, nevertheless in 2001 current CEO Mr Tony Fernandes purchased it and It was under him the Airasia trade name got planetary acknowledgment and impossible growing which started right from 2002 and continues boulder clay day of the month, AirAsia started traveling up the ladder under Tony ‘s leading from 2002 onwards by establishing new paths from its chief hub the capital of Malaysia boulder clay so the national bearer of Malaysia ruled the sky in and around Malaysia.

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In 2007 Airasia announced the birth of Airasia X the long draw budget flights, the first AirAsia X flight was from kuala lumpur International airdrome to Gold seashore in Australia therefore began the journey from south east Asia to capturing paths in major metropoliss around the universe.

In 2007 Virgin Airline head had 20 % interest in AirAsia X and had announced codification sharing between Virgin Blue and AirAsia in and around Australian subcontinent.

Table of Contents

Profile of AirAsia.

AIRASIA, is Asia ‘s largest and one among the top 10 international trade name in the low cost section holding physical base in three states ; Malaysia, Thailand and Indonesia.

AirAsia has four subordinates: AirAsia, , Indonesia AirAsia, ThaiAirAsia and VeitJet Airasia. The company has a strength of around 3000 staffs and It flies to around 65 finishs worldwide utilizing the 97 aircrafts and another 125 on order will be added to it ‘s fleet and it operates over 400 domestic and International flights, The entire figure of riders that flew Airasia numbered 16,000,000 per twelvemonth at a rate of 51000 per twenty-four hours for the twelvemonth 2007.


By September 2008 Airasia had 60 paths and was voted as ‘Worlds best New Airline for 2008 ‘ at ‘World low cost Airline Congress in London ‘ inspite of tough competition it faced over Asiatic skies by trade name which had committed fan following, planetary recession and increased air fuel monetary values. Airasia managed to last and turn against the uneven entirely based on their typical theoretical account and new schemes.


To place itself as the top air hose trade name in the low-cost, short draw based on no frills model..

Opening of new hubs at airdromes and new paths outside their dominated Asiatic zone.

Expanding into the Cargo transit market.

Selling as a Go Green trade name.

User being able to entree engagements and Online Information on Airasia through Blackberry.

Fuel efficiency which helps in the overall decrease of travel cost.

The motto of Airasia is ‘Now Everyone Can FLY ‘ , to pull clients both old and new one ‘s with winging on clip and holding attractive and competitory monetary value and circuit bundles as airasia direction have their ain hotel division holding star hotels around many finishs plus holding broad scope of repast option on the In-fight purchase bill of fare.

The theoretical account which AirAsia under Mr Tony Fernandes adopted for long draw flight was to take airdrome where airdrome charges was low hence alternatively of Sydney airdrome Gold seashore airdrome was considered for airasia nexus between Malaysia and Australia.

To accomplish Reduction in travel fuel cost Airasia concentrated on optimising the air fuel ingestion and with bulk of the plus within the fleet being new Airbus planes, it ‘s more easier said than done. Airasia direction based it ‘s theoretical account around latest engineering including holding entree to it ‘s service [ online engagement, on-line checking and e-ticketing ] through computing machines and blackberries.

Consecutive growing of Airasia since it ‘s re-birth in 2001, can be put on following chief schemes which they adopted:

Cost decrease scheme of Airasia:

Airasia vision is be a leader in the low cost air hose section by aiming the 3 one million millions people who are still under-served with the hapless connectivity & A ; confronting the high menus.

AirAsia directions cardinal schemes on cost decrease are: –

High point concentration on Passenger Safety and care of its fleet to be in best of the status as per the set criterions of regulators and it ‘s spouses.

To accomplish High Aircraft Utilization by seeking to acquire the speedy turnaround by 25 proceedingss and by increasing staff productiveness.

Low menu, no Frills like added installations of luggage transportation, penchant on repasts and place agreement etc. which adds to the client satisfaction.

Streamline Operationss by working with individual aircraft fleet to cut down manpower and stocking of care parts.

Using Latest Lean Distribution System to cut down labor and material use like use of E-ticket.

Point to indicate web.

Summarised in a Table format below.

Cost Class

Cost Item

Levers for cut downing costs


-Aircraft Use.

-Reduce turnaround times. -Reduce care downtime

Fuel Costss

– Path Efficiency

-Weight Decrease

-Shorter en-route and attack times.

-High criterion of swift care.

-Use of fuel hedge scheme.

Managing Costss

aˆ? Service Level

aˆ? Insourcing.

aˆ? Reduce Handling Fees

aˆ? Pre-cleaning activities by cabin crew

aˆ? Loading/unloading support from crew

aˆ? Global contracts with cardinal providers

aˆ? Off-peak pricing



aˆ? Reduce unit costs

aˆ? Reduce volumes

aˆ? Simplification of repast pick. aˆ? Reduce logistics costs for bringing. aˆ? Monitor riders vs. available repasts.

Thin Distribution direction.

aˆ? Ticketing

aˆ? Gross saless Channelss

aˆ? Gross saless Committees

aˆ? Development of E-ticketing

aˆ? Self-service check-ins

aˆ? Divert clients to online channels.


-Fleet. -Service Costss

-Fleet harmonization. -Reduce mean swift age. -Joint buying of some work. optimise care activities

Porter ‘s Generic Strategies.

AirAsia follows Porter ‘s schemes to concentrate on cost leading to allign with it ‘s concern scheme and mission statement by aiming specific section of monetary value sensitive clients and the first clip flyers looking at value for monetary value and short draw flughts.

Figure 1: Porters Generic Schemes

Cost Leadership ( Broader in range )

Differentiation scheme: ( Broader in range

Focus-differentiation scheme ( Narrow in range )

Porters Generic schemes negotiations of three different generic schemes that any concern can concentrate for a overall border over rivals, sustainability and growing as shown in above figure, the three schemes include Cost leading, Differentiation scheme and market cleavage ( Focused distinction ) ( Johnson & A ; Scholes 1997 ) . A

Cost leading scheme: This scheme allows a concern to go the lowest cost manufacturer of a merchandise within an industry by organizing and pull offing its value- adding activities. Cost advantage may be achieved in footings of how qualitatively a merchandise or services is designed.

Differentiation scheme: This scheme is adopted by carrying clients that a merchandise is superior to that offered by rivals ( Campbell, 2002 ) . The value added by the singularity of the merchandise or services may let the company to bear down a premium monetary value for it. However, the menace to this distinction may include copying of the merchandise by rivals and alterations in client gustatory sensations.

Focus-differentiation scheme is aimed at a section of the market from a merchandise instead than at the whole market or many markets ( Campbell, 2002 ) . The successful manner utilizing focal point scheme is to orient a wide of merchandise or service development strengths to a comparatively narrow market section that they know really good. This scheme may besides confront the menace of imitation and alterations in the mark sections.

AirAsia concern scheme is built around above defined three Porters generic schemes on two of the above strategies it follows Broader approch and on focus-differentiation scheme AirAsia follows narrow approch to prolong its competitory advantage.

AirAsia mission statement was to be the leader in the low cost segement and it follows the porters scheme to the book on costleadership by supplying services at a monetary value that is merely lower than rivals ‘ monetary value and by effectual and efficient operational direction.

Airasia uses Porters cost leading schemes to be on way of it ‘s motto ‘Now everyone can wing ‘ to accomplish this it markets and manages itself as air hose with hassle-free, no-frills, luxary at low menu travel by efficently pull offing it ‘s policy of cost decrease to the micro degree in the value concatenation so that the economy can be passed on to the monetary value senstive riders so as to be the leader in the low cost section.


SWOT analysisA is aA strategic planningA method used to measure theA Strengths, A Weaknesses, A Opportunities, andA Threats involved in in aA businessA venture.A

SWOT analysis points to the Internal ( strength and failing ) and External ( chances and menaces ) factors that would impact in the growing and sustainability of a concern venture in our instance Airasia to prolong it ‘s top place in the low cost bearer section.


Low cost operations which has made AirAsia trade name a leader in the low cost bearer section.

Airasia direction is made of fewer degree which helps in faster and effectual, focused and aggressive direction and with manegment dwelling of members holding strong links with Government in south Pacific Asia, it makes it easy for their concern development with least authorities intervention and more grants.

Airasia Staffs is made up of work force which are Multi-skilled and efficient, Airasia follows the theoretical account of inducements for the hardworking and smart work force, this theoretical account helps to return endowment and to turn along with the company.

Management strong focal point on cost decrease to place AirAsia Groups as industry ‘s lowest cost manufacturer.

Airasia group have strong balance sheet and hard currency flow this helps to endure short-terms unforseen troubles.

Airasia direction decesion to travel to a Single type fleet paid good it helps in understating care fees.

IT Utilization to the upper limit has enabled Airasia to increase efficiency assisting it track it ‘s fleet, staffs and place direction in instance of no-show clients on ASAP footing. IT besides helps in promotional activities and in thin direction based on e-ticketing theoretical account and on-line checking.

Fuel Burn & A ; Emissions: Single type fleet of Airbus A320 helps Airasia stick to it ‘s efficient fuel use constabulary to travel by their GO Green and cost decrease scheme. Airbus A320 ‘s low noise degree improves operational flexibleness and lowers surcharges for airdromes with noise restraints.

Accessory Servicess: In the current twelvemonth from January to April, Airasia achieved accessory income of RM45 per rider. AirAsia ‘s accessory service includes merchandises and services such as luggage supersize, in-flight nutrient and drink, selling and duty-free, courier, airspace advertisement and AirAsia RedTix.

AirAsia RedTix is a alone Ancillary income system which is related with non-airline fining system concentrating on tickets to events, athleticss and music. Accessory income non merely contributes to the air hose ‘s bottom line, but it besides provides a buffer against lifting fuel monetary values.


Airasia do non hold their ain MRO ( care, Repair and Overhaul ) installations.

Bing a immature fleet with immature staff at times makes it hard to manage unforseen state of affairs at both physical location and over the client service direction chiefly related with alteration of flight and over refunds..

AirAsia have faced troubles with authorities intervention chiefly at degree where Airasia ‘s chief competition happens to be straight with the national bearer.

Bing a immature trade name makes it a challenge to catch the attending of frequent and first clip flyers for Branding is critical for market place.

Airasia depends on service based on outsourcing which at times can take to bringing holds and hinderance of long continuance on two section IT and MBR.

Young fleet at times shows deficiency of eventuality program on irregular state of affairss.


AirAsis after doing a grade for it ‘s trade name in short draw low cost bearer sector is targetting the Long draw flight sphere as an test stage to tap portion of that market every bit good.

After holding tasted success in Asia-Pacific part, AirAsia is targetting new paths and finishs on a planetary degree.

AirAsia by holding tie up with other established low cost bearers on Exisiting, new paths and finishs untapped by AirAsia trade name for illustration Airasia have tieup with Virgin Airline on set downing rights and set downing slots.

AirAsia have tied with assorted newAirports outside of Malaysia for puting up for new AirAsia hub at these Airports.

AirAsia direction through it ‘s RedTix subordinate can enchance it ‘s trade name growing by holding Service related Industry-wide common cooperation.

AirAsia being in a Dominant/monopoly place in many paths in and around the Asia-Pacific zone will give them dickering power on the pricing forepart.


Established bearers both private and national bearers if start conveying down their monetary values to pull the cost sensitive clients will straight impact AirAsia which is based on low cost, no frills, no fuss theoretical account.

Global uncertainness on Business and Political forepart straight causes fuel monetary values to increase and High Fuel monetary values decreases gross and hurts more for a low cost bearer.

IT Utilization to maximum can besides hold a side consequence on growing for heavy trust on on-line gross revenues is hazardous as system can breakdown anytime.

New signifier of revenue enhancements for illustration Environmental revenue enhancements adds on to disruption on the cost equation.

With terrorist act being a planetary evil air hose Industry is the ever under menace, Accidents due to human and natural catastrophe is ever a menace.

Uncertainities on Aviation ordinances and authorities policies.

Plague Analysis


Political Uncertainties in Asia-pacific part be it Malaysia, Indonesia and the broad agitation in Thailand.

Malayan Government Regulation played a critical function at the initial phases.

There existed a heavy limitation on competition in this industry imposed by the single states chiefly malaaysia seeking to protect their national air hoses.

The bilateral understanding between the states led to the deregulating of the industry.

Terrorism is one of the factor which plays behind the head of the traveller want to take a holiday in the Asia-pacific zone specially after Bali bombing which is one of the ascendant part for AirAsia trade name.


The terrorist onslaughts, wars, epidemics like SARS, played a really important function in the air hose industries.

Uncertainty in fuel and energy costs

Uncertainties on the economical Recession forepart can extremely impact the AirAsia growing.


The Growth in the Middle category population in Asia where AirAsia has a ruling presence.

Attractive Travel and touristry bundle by authorities initiated touristry Ministry and private circuit operators attracted big figure of flyers.

Exclusive monetary values provided by AirAsia helped in the growing of it ‘s trade name among monetary value witting flyers.


Bing a Young fleet, AirAsia had the Advantage to put and utilize latest engineering and constructs as their concern theoretical account. AirAsia along with utilizing World Wide web for online services are internally utilizing -Yield Management system, computing machine reserve system and latest Microsoft ‘s Enterprise Resource Planning System.

All these have helped AirAsia to cut down operating costs and supply fast, efficient service like look intoing of flight agendas, booking seats, on-line check-in, and pre-order repasts, Supersize my luggage.

FINANCIAL HIGHLIGHTS upto 2nd One-fourth of 2010.

Table below Shows the positive growing of AirAsia trade name in last 3 old ages with strong net income after revenue enhancement public presentation of RM 549 million

AirAsia ‘s Malayan Statement in Malaysia currency RM.

2010 ( 2nd ) One-fourth

2009 ( Annual )

2008 ( Annual )

Operating Gross




Core Operating Net income




Net income after Tax




Core Operating Net income Margin

14.1 %

6.3 %

Net income after Tax Margin

21.1 %

17.3 %

-17.4 %

About the author

This sample is completed by Emma with Health Care as a major. She is a student at Emory University, Atlanta. All the content of this paper is her own research and point of view on Development History Of Airasia and can be used only as an alternative perspective.

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