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Management Strategy AirAsia’s goal is to establish itself as a leading low-cost carrier in Asia. The principle components of AirAsia’s strategy are as follows: Maximize Shareholders’ Value • Profit creation by expanding business reach within Asia • Expand routes and network via a prudent calculated manner • Invest and enhance brand - raising investors' returns Safety • Never compromise safety • Ensure the security of staff and guests • Comply with every regulations; maintain highest standards Focus On Customers’ Needs • Stimulate demand by offering the lowest fares • Comprehensive distribution channel • Develop various products and services while maintaining simplicity Operational Excellence • All staff are contributors – no ranks or hierarchy • Continuous cost management • Performance based remunerations and incentives Management Transparency • Transparency in decision-making • Disclosure – higher than industry norms • High accessibility to media and investment community Strategic Direction Many people keep forgetting that we are only three years of age. We are still at infancy in terms of our timeline and there are still lots more to do. Below you can find the directions we aspire to reach.
Aggressive brand building & recognition • Introduction to the market • Focus on market penetration • Induce first time flyers & open up new market .Stage 5 Become a multi specialist • Yield maximization for matured routes • Significant ancillary composition Stage 4 Pursue regional market domination. venture destinations previously uncovered • Yield enhancement due to benefits of maturity • Ancillary expansion Stage 3 (we are here) Pursue regional expansion & expanding business on existing platform (ancillary) • Expand network to new countries • Develop strategic partnership for mutual benefits • Use strong brand to drive new business Stage 2 IPO Capital Raising and become publicly traded company • Strengthen financial sheets • Improve company credibility & rating • Ability to negotiate favourable terms with our suppliers Stage 1 Entry to market. Optimise routes and development of new secondary hubs • Further enhance route network.
2001 the heavily – indebted airlines was purchased by the former Time Warner executive Tony Fernandes’s company Tune Air Sdn Bhd for the token sum of one ringgit. has a crew productivity level that is triple that of Malaysia Airlines and achieves an average aircraft utilization rate of 13 hours a day. It operates scheduled domestic and international flights and is Asia’s largest low fare. Indonesia. Its main base is the Low Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport (KLIA). It has hedged 100% of its fuel requirements for the next three years. Malaysia. turning a profit in 2002 and launching new routes from its hub in Kuala Lumpur International Airport at breakneck speed. . achieves an aircraft turnaround time of 25 minutes. Air Asia operates with the world’s lowest unit cost of US$0. Thailand and Soekarno-Hatta International Airport. It is also the first airline in the region to implement fully ticketless travel and unassigned seats. Its affiliate airlines Thai Air Asia and Indonesia Air Asia fly from Suvarnabhumi Airport.023/ASK and a passenger breakeven load factor of 52%. On December 2. undercutting former monopoly operator Malaysia Airlines with promotional fares as low as RM1 (US $ 0. respectively. no frills airlines. Fernandes proceeded to engineer a remarkable turnaround.29). It was originally founded by a government-owned conglomerate DRB – Hicom. The airlines established in 1993 and started operations on 18 November 1996.INTRODUCTION About The Product Air Asia is a low cost airline based in Kuala Lumpur. Air Asia pioneered low cost travelling in Asia.
) as a franchise of AirAsia. the People’s Republic of China. KLIA. Air Asia future plan is seeking to set up a hub in Malacca serving Medan. Air Asia acquired the then defunct Awair in 2004 with a 49% stake in the airline. Associated companies They also have associate companies such as Air Asia X.Bhd. Laos. Since 25 September 2006. Vietnam. Palembang. Madurai and Kochi. The inaugural flight was on 2 November 2007 to Gold Coast. 19 new routes had been introduced over the Air Asia wide network. In 2008. Air Asia X is a service operated by Air Asia X sdn. The first unit of the plane arrived on 8 December. 2005. (previously known as Fly AsianXpress Sdn. new routes were introduced which included destinations in India and China. The first AirAsia ‘no-frills’ hotel. Johor Bahru. Padang. The other subsidiary is Indonesia Air Asia.Bhd. Fly AsiaXpress. Australia. home and motor vehicle insurance as well as prepaid cards. Subsidiaries Thai Air Asia was established as Subsidiaries of Air Asia Berhad on 8 December 2003 as joint venture with Shin Corporation. Indonesia. The airline is based in Soekarno-Hatta International Airport. Myanmar. Thailand. Tune Hotels and Tune Money. full rebranding to Indonesia Air Asia was completed on 1 December 2005. to over 75 domestic and international routes covering Malaysia. Penang and Langkawi. Australia and the Philippines. Singapore. These include routes from Kuala Lumpur to Gold Coast (Via Air Asia X). it comprises life. It has started offering long-haul services from Kuala Lumpur to Australia and China using Airbus A330. is ready for occupancy in Kuala Lumpur and Kota Kinabalu and later in Penang. .Air Asia currently is the main customer of the Airbus A 320. Awair commenced services on behalf of Air Asia in December 2004. Cambodia. Destination Air Asia operates over 200 flights a day. Tune Hotels. This airline is based in Soekarno-Hatta International Airport. Vientiane and Banda Aceh and the connection of Southern China (Macau and Shenzhen) with different Malaysian hubs and Bangkok. Kuching and Sandakan. Pekan Baru. In 2007. the airline is based at the new Suvarnabhumi Airport. Modelled aftaer Virgin Money. The company has placed an order of 175 units of the same plane to service its routes and at least 50 of these A320 will be operational by 2013. Air Asia has gained approval from India authorities to start flying to destinations in India such as Chennai. Brunei.Bhd. Support As a pioneered in low cost air transportation in Asia. Flight operation was commenced on 13 January 2004 from its base in Don Mueang International Airport. Miri. Air Asia has several subsidiaries and associate company to support its operation. Tune money is Asia’s first ‘no-frills’ online financial service owned by Tune Air Sdn.
For some. On Air Asia X flights. The growth phase is when loyalty begins to be built up. The first may be as an improvement on an existing product. The third way is as a totally new product. in which case a customer base needs to be built up. It has no beneficial differentiation to existing products already established in the market. but its loyalties may lie elsewhere. Air Asia has launched its Air Asia X London flights to London Stanstead Airport. for example the merchandising spin – offs from popular movies. The product does not provide any new benefits or it provides benefits that are not sought or valued by the customer. Some products or services can be taken up by the customer base very quickly and achieve rapid growth. · The product itself – by far the most common reason. enabling passengers to get priority boarding for a fee. In the 1960s it was stated that 96 per cent of all new product launches failed. · Incorrect distribution – not in the right channels or if in the right channels. .Value Added Services On 15 May 2007. By the 1980s this had improved to the extent that only 80 per cent of product launches failed. · Incorrect pricing – either too expensive to provide consumer value or too cheap to sustain the costs of production and market activities. meals. in which case there will already be a customer base. the life cycle is measured in decades whilst for others. This product is available in all hubs including Thai Air Asia and Indonesia Air Asia. Reasons for failure were given as: · Incorrect segmentation – trying to reach the wrong market. not in enough of them. The Product Life Cycle (PLC) A product enters the market in one of three ways. Air Asia. Airlines Company with 58 flight destination is in the growth phase position of Product Life Cycle (PLC) stage. interest and action. The second is as a competitor to an existing product. passengers are given a choice of purchasing extra baggage weight. PRODUCT ANALYSIS As with living organisms. Sales of Air Asia Airlines grew tremendously in every country in which they were available. products have a life cycle. · Incorrect communication mix – failure to create the required levels of awareness. a service named ‘Xpress Boarding’ was launched. Research has shown that many new products never move out of the launch stage. such as the Boeing 747. On 26 November 2008. comfort kit and seat selection all with nominal fees. in which case a customer base exists. the life cycle may be measured in mere weeks.
Price Penetration Pricing for Market Share. to build awareness and create brand.It is during the growth phase that the product will begin to recover its development and launch costs and slowly move through the break – even mark to begin to make a profit for the organization. Advertising Heavy media even not as heavy as introduction phase. opportunities and Threats) analysis is a common component of organizational planning and marketing. Distribution Move from selective distribution to intensive distribution. The analysis is in two parts. However well run and competitive an organization is. where as its weaknesses are areas in which it is weaker than the competition. The characteristics of products or services in the growth phase are Gain market share instead of create awareness and promote trial as the objective. Product Product extension and minor modification. The strengths of an organization are those things it does particularly well. Revenue pays off the development costs. During the growth stage of a new market or a new product. As the market still growing. Opportunities are those external factors on which the organization can use its strengths to . moving from the non profits into profit. the competition is growing. The market mix elements during in the Growth phase are as follows. weaknesses. SWOT Analysis A SWOT (Strengths. competitor will also enter the market with similar products or services and competition will become increasingly evident. which are derived from the external analysis. the first part looks at the strengths and weaknesses of the organization and is thus an internal analysis and the second part considers the threats and opportunities facing the organization from the external environment. This period correspond to the star phase of the Boston Consulting Group (BCG). revenues can be expected to increase. increasing the sales. Sales promotion Reduce as demand increases instead of intensive sales promotions to encourage trial likes introduction phase. especially when viewed against the operations of its competitors. As Air Asia gain high market share begins to make a contribution to overall profitability. It will begin to make rival product or service into problem. it will still have weaknesses.
No reward mileage for customer loyalty. Travel is often one of the first activities to be hit. THREATS STRATEGIES AND TACTICS .outclass the competition. WEAKNESSES • • • • • • • • • Inflexible. Certain flights departs at odd hours (ie. 4 or 5 am) No fixed seat selection resulting in passenger rushing for seats. Fluctuation in fuel price. Threat of world recession. Other low cost operators such as value air. when passenger needs to change his flight reservation. We can book the hotel. jet air. Mass segment is wider than premium target. many people moved to budget airlines. (More people aware and understand how to work with and the using of Internet) Alliance with other carriers and hotels. People like travelling and they like to pay low cost. Increases in airport charges. rental car. etc Cutting price (promotion class) offered by traditional airlines such as Garuda Q Class. Operate out of less popular airports (Budget terminal). Less varieties of in flight shopping Meal and drink are not provided by the airlines. and threats are those factors from external environment from which the organization may suffer because of its weaknesses. meals in the same time of ticket booking thru the internet instead. tour package. Increase the uses of Internet. Tight leg room makes it uncomfortable for bigger size passenger. Lack of spare aircraft hinder flexibility and occasionally caused flight delay. tiger air. STRENGTHS • • • • Low cost carrier (Value for money) Internet booking systems (Reduce the man power cost and cut down the channel and time of distribution as they as close to the market already) Reputation gained over time (the market share is gained as Air Asia is not in the introduction phase) Added value on the service. OPPPORTUNITIES • • • • • • • • • • Due to current economic situation.
Lowering the price of that product for a time in order to stimulate sales is a tactic. Blue Ocean Strategy . With the Four Actions Framework proposed by Blue Ocean Strategy authors.Strategy is used to refer to an overall plan of action. As a low – cost operation. Example of the strategic move as follows: Eliminate: • • • • • • Over the counter booking system Free Food/Beverage on the plane Seating Class booking system “luxury” facilities provided by Airport Lounge No of attendance service on the plane Seat Quality Focus on several key destination Increase frequency of flight Reduce : Raise: • • .Example : Air Asia Posted on February 14th. controlling the cost of doing business is clearly highly important to the airlines’ ability to be competitive by offering low fares. The strategic plan of a company will indicate where the organization is going and how different functions fit into the plan. Tactics are the smaller scale actions that are taken to realize the objectives of the strategy. Gaining 40 percent market share for a product in order to boost profits is a strategy. Air Asia have implemented many strategic move to ensure they are making Malaysia Airline and regional airline company irrelevant. The good example in Malaysia is Air Asia. Air Asia have managed to avoid the red ocean (compete with Malaysia Airline and regional airline) by looking into the factors that industry take for granted and also factors that important to customers. The Internet provides the most cost – effective distribution channel available. 2008 by admin One of the significant changes that airline industry have changed is the evolvement of budget airline industry. The Internet plays a vital part in the Air Asia business and has proved to be critical to the success of the business.
airasia.Malaysia. This will help Air Asia to reduce cost and at the same time increase the value to the customers . Speaking at the Centre for Asia Pacific Aviation's (CAPA) "Outlook 2006 Summit" in Kuala Lumpur this week. 2006. "This is the first time AirAsia has launched a major regional marketing campaign of such magnitude and it will be the biggest online free seats campaign ever offered in Asia. AirAsia aims for a fleet of 400 planes to serve region 8 December 2005 The Nation (Thailand) AirAsia chief executive Tony Fernandes foresees the day when his airline will operate a fleet of more than 400 aircraft. and is applicable for one way travel only. fuel surcharges. The free seat offer excludes airport taxes and fees. easy booking system etc. 2005 for travel from Feb 7 2006 to Oct 10. AirAsia Offers 2 Million Free Seats in Big Marketing Push 6 December 2005 Bernama . The two million free seats are available for all domestic and regional flights departing from AirAsia's hubs in Kuala Lumpur. Bangkok and Jakarta." its executive vice president (commercial).Value Innovation. the Philippines and Cambodia. bookings must be completed online at www.Malaysian National News Agency AirAsia Bhd will give away two million airline seats in a "no holds barred" regional marketing campaign to mark its fourth anniversary beginning tomorrow. To be eligible for the free seats. AirAsia has so far carried 15 million passengers in the region.com had increased by 65 percent in the last four years. Air Asia able to focus on factors that really bring value to the customers such as point to point travel system. Thailand.Create : • • Online Booking system Point to point travel system With this strategic move. Senai. Vietnam. Indonesia. Macau.airasia. Fernandes said AirAsia could grow as big as the US low- .com between Dec 7 and Dec 28.airasia. Singapore. Tan also disclosed that AirAsia's Internet bookings at www. making it one of the most successful distribution channels to date.com or via mobile. The campaign will be launched simultaneously in the eight countries where the budget airline operates over 100 domestic and regional flights -. said today. Kathleen Tan.
The AirAsia chief executive was recently named CAPA's aviation executive of the year. Limbang and Mulu in East Malaysia which are being operated by MAS' De Havilland DHC6 Twin Otter aircraft." Fernandes said. a distinction he has held for two consecutive years. We can speed up (delivery).South-East Asia's largest discount carrier. AirAsia had made a firm order for 60 Airbus A320s and 40 purchase rights of the same aircraft. The airline recently signed an agreement to buy 60 Airbus A320 aircraft. The Malaysian carrier and its international joint ventures in Thailand and Indonesia are profitable operations. and it is expected to begin paying off soon. While Southwest Airlines focuses only on the US market. AirAsia Fully Prepared To Service All Domestic Routes 12-12-2005 KUALA LUMPUR. He said that the past two years have been a time of investment in AirAsia's network.mainly through more efficient use of fuel . . the national carrier.cost carrier Southwest Airlines. the first of which will be delivered to Kuala Lumpur today. the company has more than 100 planes and continues ordering new aircraft to achieve its expansion plans. Fernandes said. He had recently said that AirAsia could operate all domestic routes. says its group chief executive officer Datuk Tony Fernandes. began business with three aircraft and it now operates a fleet of more than 400. So far. Its role model. "It's a great time to be in the airline business if you've got the right business model. he said. AirAsia has a wider. This is the first year that all three operations have seen positive cash flow. MAS. The aircraft are expected to reduce AirAsia's costs by 12 per cent . to the government by February next year. AirAsia Bhd. will submit a turnaround plan. "We have ordered 100 Airbus aircraft." he told reporters at the 2005 Asean Business and Investment Summit 2005 here Sunday. except for Lahad Datu. which may cover its domestic routes. Southwest Airlines. regional field of operation. is fully prepared to service all the domestic routes it has proposed to take over from Malaysia Airlines (MAS). Dec 11 (Bernama) -. He was asked whether AirAsia could serve the routes if the government decided to pass the bulk of them under the rationalisation of domestic routes.while offering better service to its customers.
Chairman Datuk Aziz Bakar said nasi kandar outlets in the island state will be one marketing source for the airline. Aziz welcomed 165 passengers on board AirAsia's inaugural AK 5702 flight. The route is a welcome relief to South Indian-bound passengers from the northern states who have had to fly either via Kuala Lumpur or Singapore to Chennai previously." said Aziz. which landed from Chennai at 3. Malaysia Airlines had stopped serving the Penang-Chennai route more than eight years ago. They include Bangalore. Idris Jala. The Kuala Lumpur-Chennai route will be operating on May 17. "The nasi kandar operators. and the rest of Malaysia. April 29. AsiaAsia to use nasi kandar as selling point Business Times. 2010 PENANG'S gastranomic icon . "The five hours was more than what I had with MAS in the last four years. who themselves are wealthy. Hyderabad." he said but he declined to provide details of the meeting.It took delivery of its first Airbus A320 on Dec 8 and is scheduled to receive its second A320 on Dec 25.40pm. Fernandes was also asked about the five hour-long meeting he had recently with MAS newly-appointed managing director.the nasi kandar .000 Indian tourist arrival this year. are also another potential group of travellers for us. in line with Tourism Malaysia's target of 650. 2005." he told reporters at the Penang International Airport yesterday. . AirAsia conquered the Indian skies in January this year by launching six new routes to the subcontinent.will be the marketing channel tapped by lowcost carrier AirAsia Bhd to promote its newly launched Penang-Chennai route. where restaurant workers are mainly Indian nationals. "With this new route connecting Malaysia's most popular northern state and India's fifth most populous city. Mumbai and New Delhi. we hope to bring in more Indian tourists to discover Penang.
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