AirAsia Case Analysis sunday, pris, 2020 aa PM characters Tony Fernandes (Private Entrepreneur) (Chief Executive offcer of AtAsia) Connor McCarty Former Director of European LCC Ryanair Sir Richard Branson (British tycoon and founder and chairman of the virgin group) Overview of Aviation Industry ‘L. There was huge downturn in Attine industry after 9/11. 2. Aircraft leasing costs had dropped Journey 1L. Tony Fernandes took over debt ridden Airline for sum of USSO.26 Mils 2. This acquisition was welcomed by Malaysian Govt. and that was hoped to boost Undes-used Kuala Lampur International Aiport 3. Sointhe mid of 90s, Tony Fernandes saw great protentional in No fils low cost carriers in Asia just lke he witnessed the success of LCC in west ike Midway Airlines or America west Airlines 4. After Acquiring AitAsia in 2001, he called Connor to join AirAsia’s executive team. 5. They restructured the Ai ine business model and made it fist Airline operator in Asiato adopt low fare, no fills concept. 6. AirAsia was relaunched in January 2002. they started their operations with only three aitcrafts 7. They developed an approach "Easy to book, Easy to pay & Easy to fly", where passengers can book tickets telephone booking centers 8. Just7 months in the operations, In December 2002, AirAsia announced its first profit of about $6 Mls 9. Their primary hub was KUIA, AirAsia setup three other hubs with Malaysiato develop domestic market 10. AirAsia started its operations to its neighboring countries and to make this possible, Thal AltAsia was formed (in 200) under the affiliation \with Thailane's shin corporation (Telecommunication company) witha hub set in Bangkok :1L. For speedy expansion from domestic routes to regional flights they worked on some cheeky advertising strategy, Like when they started their route from Singapore to Bangkok, their ad in newspaper read there is new gil in town: twice the fun and half the price, poking fun in the iconic Singapore Airline's female flight attendants whereas, AirAsia ght attendants were more stylish, projecting more relaxed and ‘efreshing image than others AirAsia focused on low cost with best quality ads, they official became sponsors of Manchester United FC ‘and AT&T Williams formula one team. They aso transported aid to cyclone hit Myanmar and donated free seatsto China'sRed Crossto ‘aise funds forthe Sichuan earthquake recovery. 12. Shin Corporation also heldS1% stake in Thal AirAsia, and also helped them with AirAsia electronic booking system. 13. In200S, Another subsidiary was formed under the name Indonesia AirAsia, which was affliated by Indonesian airline formerly known as ‘Await and setup ts hubs in Jakarta and Balt 44. For LCC passengers, In2006, the main hub of AiAsia was moved from KLIA to nearby LCC terminal, which broadened the destination selection of domestic consumers in Malaysia. 15. 1n2006, AirAsia took over more than Two thirds of MAS's loss making domestic routes through their rationalizing domestic route Arrangement 16. 1n2007, Asia was the frst in Malaysia that offer an internet check In Service, online checkin and can print out their boarding passes 17. Inlate 2007, AirAsia introduced its sister airline AirAsiaX, was brought up by an investor with 20% stake in AirAsia X, wasSir Richard Branson, 18. AirAsiaX was launched for long haul lights with same ticketing website, uniforms and managements but its offered two class cabins and it also offered full meals and allowed passengerstto reserve seats in advance (Pick aSeat service) 19. AirAsiaintended to grab a bigger chunk of Australian market where it explored tes with Australias virgin blue In west such as Easylet and Virgin Atlantic Airways, they intended to venture in European market just to make cheaper fare possible for itslong haul flights to the region 1n2008, AirAsia announced that it wil commence flights from Stansted Airport on the outskirts of London on.11. march 2003, Through out ts journey AifAsia has evolved from a classic LCC into an integrated serve provider, not only providing no fils air tickets but offering travel insurances as well a holiday product AlrAsia partnered with other companies that offered online booking services for hotels, hostels, carrentals, crulses and medical care. ArAsia also launched the co branded Citibank AirAsia Credit Card that allowed eligble card holders to earn free fights by accumulating ‘reward points known as AirAsia Ringgits Interms of Oi prices surge in mid of 2008, AirAsia opted a strategy in which they pay for fuel in advance and to qualify for low prices, Fernandes believed in its company's working ethics that contributed much to lowering the airline's uel and operational cost AirAsia ordered new fuel efficient Airbus A320-200 aircrafts that replaced their old Boeing 737-300s This purchase made possible by ts listing on the MalaysiaStock exchange in 2004, 27. By 2008, AirAsia owned 72 aircrafts and served over 100 routes an the Asia-Pacific region, with more than 300 fights per day. BR ORB RRR Key Facts 1L_ First Aitine to introduce fully ticket less travel (Passengers can easily make payments through their credit card and will get an email about their travel details) and implement free seating policy (That you can pay for seat that you wanted). 2. They conducted lucky draws on board to surprise passengers 3. Travel fares were0 to 60% lower than itsrivals4. They created Multilingual website to attract travelers to purchase tickets, websites occasionally offer fare promotions and discounts on carly booking. AirAsia's website also ilustrated how its operations conserved the environment, such as its tcketless system that reduces paper waste 5. Airdsiawasthe rst Airline in the world to enable booking by Mobile phone through short messaging service 6. AirAsia short haul fights captured an amount of passengers thatthe Arline could bring them back to their of day, that will reduces costs for crew accommodation and other allowances 7. AirAsia focused on the secondary airportsto save large slotting fees that were charged at the major airports 8. AirAsia introduced Xpress boarding service in site its unassigned seat policy, alimited amount of passengers who paid extrafor Xpress boarding service to board fist and can choose their desired seat 9. ImApril 2008, AirAsia introduced checked in baggage handling fee to encourage customer to travel lighter so that less fuel was burnt and less pollution was caused 10. LCC was proud about its realS star offerings where they provide cozy leather seats and in-flight hot meals, passenger can buy on flight or pre booked them on website and gets discount on them. LL. AirAsia also pay USS61 to each passenger if flight get delayed for more than 3 hours 12. AirAsia wasfirst of tskind to introduce On time Guarantee. Kind ofits journey as wellit was added to the overall experience of using AirAsia 13. 1n2012, AirAsia was tur into Asia-Pacific region's single largest Albus A320 operator. 44. 1n2007 it was recognized the best LCC inthe Asia region by Skytrax, by 2008, AirAsia maintained the lowest cost structure among al Iited airlinesin the world 15. Asof23 May 2008, AirAsia recorded its 25th consecutive quarter profitability since 2002, eer ‘+ Tony Fernandes took over debt ridden Airline for sum of USSO.26 Mils inal countries on a same ‘+ This acquistion was welcomed by Malaysian Govt. and that was hoped to boost Under-used Kuala Lampur International Airport ‘+ AUAsia was relaunched in January 2002 No Frills, Low Cost ‘= So inthemid of 905, Tony Fernandes saw great protentional in No fils low cost carters in Asia just like he witnessed the success of LCC in west ike Midway Airlines or America west Airlines ‘+ After Acquiring AirAsia in 2001, he called Connor to join AirAsia's executive team. ‘+ They restructured the Airline business model and made it first Altline operator in Asia to adopt low fare, no fills concept ‘+ First Airline to introduce fll ticket less travel (Passengers can easly make payments through thei credit card and will get an email about their travel details) and implement free seating policy (That you can pay for seat that you wanted). ‘+ They conducted lucky draws on board to surprise passengers ‘+ Travel fares were 40 to 60% lower than its rivals under theit tagline "Now everyone can fy” ‘+ They created Multilingual website to attract travelers to purchase tickets, websites occasionally affer fare promotions and discounts on carly booking. AirAsia's website also ilustrated how its operations conserved the environment, such as its tcketless system that reduces paper waste ‘+ They developed an approach "Easy to book, Easy to pay & Easy to fy", where passengers can book tickets telephone booking centers ‘+ Just7 months in the operations, In December 2002, AirAsia announced itsfirst profit of about $6 Mils ‘+ 1n2003. AitAsia's website was most popular online shopping site for Malaysia's internet users. ‘+ AirAsia was the firs Aitline in the world to enable booking by Mobile phone through short messaging service in August 2003, See ‘+ Their primary hub was KLA, AirAsia setup three other hubs with Malaysia to develop domestic market ‘+ 1n2004, AirAsia started expanding its operations to its neighboring countries and to make this possible, Thai AirAsia was formed (in2004) ‘under the affiliation with Thailand's shin corporation (Telecommunication company) with a hub set in Bangkok This joint venture provide AlrAsiato gain easier and cheaper access o other South-East Asian counties and mainland Chinese market. ‘Shin Corporation also held 51% stake in Thai AirAsia, and also helped them with AirAsia electronic booking system, ‘+ 1n2005, Another subsidiary was formed under the name Indonesia AlAsia, which was affliated by Indonesian airline formerly known as ‘Await and set up its hubs in Jakarta and Balt‘+ For LCC passengers, in2006, the main hub of AirAsia was moved from KLIA to nearby LCC terminal, which broadened the destination selection of domestic consumers in Malaysia ‘+ 1n2006, AirAsia took over more than Two thirds of MAS's loss making domestic routes through thelr rationalizing domestic route Arrangement , making AirAsia the largest domestic national airline in Malaysia ‘+ AirAsia short haul fights captured an amount of passengers thatthe Ailine could bring them back t thelr original countries on a same day, that will reduces costs for crew accommodation and other allowances ‘+ AlrAsia focused on the secondary airports to save large slotting fees that were charged at the major airports ‘+ AlrAsiaintroduced innovative services that twill use to compete with new entrants WE ‘= In2007, AirAsia was the frst in Malaysia that offer an internet check InService, online checkin and can printout thei boarding passes ‘* AlrAsiaintroduced Xpress boarding service in spite its unassigned seat policy, alimited amount of passengers who paid extrafor Xpress boarding service to board fist and can choose their desired seat ‘+ ImAprit2008, AirAsia introduced checked in baggage handling fee to encourage customer to travel lighter so that lessfuel was burnt and less pollution was caused ‘+ LCC was proud about its realS star offerings where they provide cozy leather seats and in-flight hot meals, passenger can buy on flight or pre booked them on website and gets discount on them. ‘+ AlrAsia was first of itskind to introduce On time Guarantee. Kind of itsjourney as wellit was added tothe overall experience of using AirAsia. “+ AlrAsia also pay USS61 worth of AirAsia e git vouchers to each passenger if ight get delayed for more than'3 hours. Ee ‘ Inlate 2007, AirAsia introduced its sister airline AirAsiaX, was brought up by an investor with 20% stake in AirAsia X, wasSit Richard Branson, ‘+ AirAsia was launched for long haul lights with same ticketing website, uniforms and managements but its offered two class cabins and it also offered full meals and allowed passengers to reserve seats in advance (Pick aSeat service) ‘+ AlrAsiaintended to grab a bigger chunk of Australian market where it explored ties with Australia's virgin blue In west such as EasyJet and Virgin Atlantic Airways, they intended to venture in European market just to make cheaper fare possible for itslong haul flights to the region ‘+ One day ater AirAsiaX started its operations, JetStar alow cost subsidiary in Australia's Qantas Airways, Launched its long haul service from Sydney to Kuala Lampur and its was ranked the worlds best LCC in 2007 by leading airlines research firm Skytrax ‘+ AlrAsiaintended to grab a bigger chunk of Australian market where it explored ties with Australia's virgin blue In west such as easylet and Virgin Atlantic Airways, they intended to venture in European market just to make cheaper fare possible for itslong haul flights to the region ‘+ 12008, AirAsia announced that it will commence lights from Stansted Airport on the outskirts of London on:L1. march 2009 and for Asi, ‘twas aiming high to fly to more cities in northern china and tothe skies of India and Middle east Lee Through out ts journey AltAsia has evolved from a classic LCC into an integrated serve provider, not only providing no fils air tickets but offering travel insurances as well as holiday product ‘+ AirAsia partnered with other companies that offered online booking services for hotels, hostels, carrentals, crulses and medical care. AirAsia also launched the co branded Citibankc AirAsia Credit Card that allowed eligble card holders to earn free flights by accumulating ‘reward points known as AirAsia Ringgits ‘+ Interms of Oil prices surge in mid of 2008, AirAsia opted a strategy in which they pay for fuel in advance and to qualify for low prices, Fernandes believed in its company's working ethics that contributed much to lowering the airline's fuel and operational cost AlrAsia ordered new fuel efficient Airbus A320-200 aircrafts that replaced their old Boeing 737-300 This purchase made possible by its listing on the Malaysia Stock exchange in 2008. ‘+ 1n2012, AirAsia was tur into Asia Pacific region's single largest Albus A320 operator‘+ They started their operations with only three aircrafts in 2002. By 2008, AirAsia owned 72 acrafts and served over 100 routes an the Asia Pacficregion, with more than 300 flights per day ‘+ For speedy expansion from domestic routes to regional lights they worked on some cheeky advertising strategy, Like when they started their route from Singapore to Bangkok, their ad in newspaper read there is new gil in town: twice the fun and half the price, poking fun in the iconic Singapore Airline's female flight attendants whereas, AirAsia ght attendants were more stylish, projecting more relaxed and ‘efreshing image than others AirAsia focused on low cost with best quality ads, they official became sponsors of Manchester United FC ‘and AT&T Williams formula one team. They also transported ad to cyclone hit Myanmar in2008 and donated free seatsto China's Red ‘Crossto raise funds for the Sichuan earthquake recovery ‘+ Fernandes was a walking advertisement for the company. He wore AirAsia‘ red cap and T-shirt to every official function He even gave his ‘mobile number to all the media representatives making easier for them to approach him for company news They also gain free publicity ‘on many occasions Between 2003 and 008, AirAsia received several local and internationals awardsfor its service excellence and success ‘nbbrand building, Business management and leadership. ‘+ In2007 it was recognized the best LCC in the Asia region by Skytrax, by 2008, AirAsia maintained the lowest cost structure among all listed airlinesin the world Ee ‘AlrAsta became athreat to the countries former airline, Malaysian Alin at times lowered its pricesto fight back but this effort didn’t produced significant amount of profit. But after route rationalization process in 2006, MAS began to generate profit in 2007, it also founded Firefly, alow cost subsidiary that flew domestically and to the few cities in Thailand and Indonesia ‘+ Onmay 6 2008, MAS launched its unexpected "Everyday low fare" campaign offering Mils free seats (Exc fuel surcharge and taxes) for ts domestic and short haul fights with South Asia and they received an overwhelming response from public, t was a win win situation for all, MAS customers were enjoying low fares and five star services and they were not even loosing revenue. ‘+ Fernandes opposed this campaign, he regarded that a premium airline is turning into LCC and concentrating low fare on AiAsia's routes. ‘+ Femandes also alleged that the MAS campaign was subsidized by the Govt. and urged govt to allow aleve playing field by removing subsidiaries of MAS. ‘+ Jala defended that the Zero fare campaign was not subsidized by Govt and it wasn’t even targeting AirAsia, it was only to fill up 30% ‘Surplus seats that were remained unsold. ‘+ AlrAsia ought back with its "Sub Zero Campaign” offering tickets prices much lesser than MAS. ‘+ As of29 May 2008, AirAsia recorded its 25th consecutive quarter profitability since 2002,