INTRODUCTION TO MANAGEMENT

UFA 1001

TITLE:
COMPANY REVIEW
AIR ASIA

DATE:
WEEK 4

LECTURER:
MDM. SYAHIRAH MOHD BAKI

NAME OF CANDIDATES:
NAME MATRIX NO.
1. G. RAM PRASATH BABU A/L GENGAYAH UFA200065
2. WONG LI MIN UFA200092
3. WONG YI JUN UFA200098
4. MUHAMMAD FIRDAUS BIN HABIB MOHAMED UFC200006
5. MUSLINDA BINTI MUSTAPHA UFA20090
TABLE OF CONTENTS
PAGES
1. INTRODUCTION 3-5
2. MANAGEMENT PRATICE

2.1 Planning

 Vision 6

 Mission 6–7

 Strategic Planning 7-9

2.2 Organizing

 Organization Chart 10 - 15

 Type of departmentalization 16

2.3 Leading

 Leadership styles 17 - 18

2.4 Controlling

 Quality control system 19 - 21

3. SWOT ANALYSIS
 SWOT Analysis of Air Asia 22 - 24
4. CONCLUSION
 Opinion on the management practices
 Environmental changes affect the management 25 - 26
5. REFERENCE 27

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1.0 Background of company
AirAsia Berhad (MYX: 5099) is a Malaysian low-cost airline headquartered near
Kuala Lumpur, Malaysia. It is the largest airline in Malaysia by fleet size and
destinations. AirAsia Group operates scheduled domestic and international flights to
more than 165 destinations spanning 25 countries. Its main hub is klia2, the low-
cost carrier terminal at Kuala Lumpur International Airport (KLIA) in Sepang,
Selangor, Malaysia. Its affiliate airlines Thai AirAsia, Indonesia AirAsia, Philippines
AirAsia, and AirAsia India have hubs in Bangkok-Don Mueang, Jakarta-Soekarno–
Hatta, Manila-Ninoy Aquino, and Bengaluru-Kempegowda airports respectively,
while its sister airline, AirAsia X, focuses on long-haul routes. AirAsia's registered
office is in Petaling Jaya, Selangor while its head office is at Kuala Lumpur
International Airport. AirAsia operates with the world's lowest unit cost of US$0.023
per available seat kilometer (ASK) and a passenger breakeven load factor of 52%.
In 2007, The New York Times described the airline as a "pioneer" of low-cost travel
in Asia. AirAsia is the sponsor of Malaysia national football team, Singapore national
football team, Jamshedpur FC and Queens Park Rangers. AirAsia is also a former
sponsor of Manchester United and Asia Red Tour. AirAsia has consistently been
named as the world's best low-cost carrier for 11 years by Skytrax in a row in
international travel and airline awards, including the latest award for 2019.

AirAsia was established in 1993 and began operations on 18 November 1996. It

was founded by a government-owned conglomerate, DRB-HICOM. On 8 September
2001, the heavily indebted airline was bought by former Time Warner executive
Tony Fernandes and Kamarudin Meranun's company Tune Air Sdn Bhd for the
token sum of one-ringgit (about US$0.26 at the time) with US$11 million (MYR 40
million) worth of debts. The partners turned the company around, producing a profit
in 2002 and launching new routes from its hub in Kuala Lumpur, undercutting former
monopoly operator Malaysia Airlines with promotional fares as low as MYR 1
(US$0.27). In 2003, AirAsia opened a second hub at Senai International Airport in
Johor Bahru and launched its first international flight to Bangkok.

AirAsia subsequently started its Thai AirAsia affiliate and began flights to Singapore
and Indonesia. Flights to Macau started in June 2004, and flights to mainland China
(Xiamen) and the Philippines (Manila) in April 2005. Flights to Vietnam and

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 Cambodia followed in 2005 and to Brunei and Myanmar in 2006, the latter by Thai
AirAsia. In August 2006, AirAsia took over Malaysia Airlines's Rural Air Service
routes in Sabah and Sarawak, operating under the FlyAsianXpress brand. The
routes were returned to MASwings a year later, citing commercial reasons.

At the end of 2006, Fernandes unveiled a five-year plan to further enhance AirAsia's
presence in Asia. Under the plan, AirAsia proposed enhancing its route network by
connecting all of its existing destinations throughout the region and expanding
further into Vietnam, Indonesia, Southern China (Kunming, Xiamen, Shenzhen) and
India. Through its sister companies, Thai AirAsia and Indonesia AirAsia, the plan
called for a focus on developing its hub in Bangkok and Jakarta. With increased
frequency and the addition of new routes, AirAsia increased passenger volume to
13.9 million in its 2007 fiscal year.

During 2007, passengers from "The Barrier-Free Environment and Accessible

Transport Group" protested against the airline over its refusal to fly passengers who
were completely immobile. They claimed that people with disabilities were
discriminated against when booking tickets online; the CEO of the airline said it did
not turn away passengers in wheelchairs.
.
In August 2011, AirAsia agreed to form an alliance with Malaysia Airlines by means
of a share swap. The alliance was struck down by the Malaysian government, in
effect voiding the agreement of both airlines. By early 2013, AirAsia's profits
increased by 168% on a year-over-year basis compared to the same period in 2012.
For the quarter ending 31 December 2012, the airline's net profit stood at 350.65
million ringgits (US$114.08 million). Despite a 1% rise in the average fuel price, the
airline recorded profits of 1.88 billion ringgit for its full 2012 fiscal year.

In February 2013, AirAsia submitted an application to the Indian Foreign Investment

Promotion Board, through its investment arm, AirAsia Investment Limited, to seek
approval for commencing its operations in India. AirAsia asked to take a 49% stake
in the Indian sister airline, which was the maximum allowed by the Indian
government at that time. AirAsia committed to investing up to US$50 million in the
new airline. Operations would begin in Chennai, expanding its network throughout

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South India, where AirAsia already operates flights from Malaysia and Thailand. In
2019, AirAsia opened its first restaurant that serves plane food in Kuala Lumpur.

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2.0 Management practice
2.1 Planning
Planning is one of the most important project management and management
techniques. Planning is preparing a sequence of action steps to achieve some specific
goal. If you do it effectively, you can reduce much the necessary time and effort of
achieving the goal. The important of planning involves like defining organization goals,
establish strategies to achieve goals, and develop plans to integrate & coordinate work
activities.

A plan is like a map. When following a plan, you can always see how much you have
progressed towards your project goal and how far you are from your destination.
Knowing where you are is essential for making good decisions on where to go or what to
do next. The most important to ensure that everyone is clear of what to accomplish.

Planning is also crucial for meeting your needs during each action step with your time,
money, or other resources. With careful planning you often can see if at some point you
are likely to face a problem. It is much easier to adjust your plan to avoid or smoothen a
coming crisis, rather than to deal with the crisis when it comes unexpected time.
Example Air Asia plans to expand their operations in Europe, so they consultation to the
Government of French. They have been granted landing rights in Paris and is awaiting
further details from authorities.

 Vision
Air Asia’s vision is to be the largest low-cost airline in Asia serving the 3 billion people
who are currently underserved due to poor connectivity and high fares and it aspires
to be the leading low-cost carrier in the Asian region that offers five-star service with
95% of on time performance. At the same time, it wants to promote Malaysian
hospitality and the local food. In addition to charging lowest fares and focusing
customers, it also would like to develop various products and services.

 Mission
The mission in Air Asia got four major point. The first point is to be the best company
to work for whereby employees are treated as part of a big family. Then the second
point is creating a globally recognized ASEAN brand. The third point is to attain the

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 lowest cost so that everyone can fly with AirAsia and the last point is Maintain the
highest quality product, embracing technology to reduce cost and enhance service
levels. They had achieved the goals but the second point they haven’t achieved it
because in this strong competitive era, too many companies like Malaysia Airlines
and Tiger Airways also want to be the globally recognized ASEAN brand, but they will
work hard to achieve their goals.

 Strategic Planning
Strategic planning is an organizational management activity that is used to set
priorities, focus energy and resources, strengthen operations, ensure that
employees and other stakeholders are working toward common goals, establish
agreement around intended outcomes/results, and assess and adjust the
organization’s direction in response to a changing environment. It is a disciplined
effort that produces fundamental decisions and actions that shape and guide what
an organization is, who it serves, what it does, and why it does it, with a focus on the
future. Effective strategic planning articulates not only where an organization is
going and the actions needed to make progress, but also how it will know if it is
successful.

The Group's entire business model centers around a low-cost philosophy which
requires its operations to be lean, simple and efficient. Several key strategies have
been employed towards this effect, including:

• High Aircraft Utilization

AirAsia focuses on high frequency and high turnaround of flights, both of which add
to customer convenience and greater cost efficiencies. Its turnaround of 25 minutes
is the fastest in the region.

• Low Fare, No Frills

This means no frequent flyer miles or airport lounges in exchange for lower fares.
Guests have the choice of paying for in-flight meals, snacks and drinks.

• Point to Point Network

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All short-haul AirAsia flights (four-hour flight radius or less) and medium- to long
haul AirAsia X flights are non-stop, doing away with the need for human resources,
physical infrastructure and facilities at transit locations.
In addition, a decision was made in December 2004 to convert the existing fleet
of ageing Boeing B737s with the higher capacity yet more fuel-efficient, reliable and
cost-efficient Airbus A320s. As a result, today, the Group boasts the largest and
newest A320 fleet in the region.

Collectively, these strategies have established AirAsia as the lowest-cost airline

in the world, with a cost/ASK (available seat kilometer) of 3.67 (US cents) as at
FY2018. This has been achieved without compromising safety. The highest priority
is given to safe operations, and AirAsia complies with conditions asset by regulators
in all the countries where it operates. The Group also partners with the most
renowned maintenance providers to ensure its fleet is always in the best condition.

Innovative use of technology has played a key role in AirAsia's success story,
beginning with online booking. It was the first airline in Asia to go ticketless -in
March 2002 - allowing guests to pay for their bookings by credit card over the
phone. Over the years, it has built on its IT platform to increase the ease of
customer transactions as well as provide greater savings to the Group. In 2010,
AirAsia unveiled its latest IT booking innovation in the form of New Skies, which
allows customers to better manage their online bookings. With the advent of the
social media, tools such as Facebook, Twitter and blogs have become integral to
the Group's customer relationship initiatives. AirAsia is, in fact, recognized as the
most popular airline in the region on Facebook in terms of fan base.

Year 2019, AirAsia officially embark on the AirAsia 3.0 transformation journey
into a travel and financial platform company consisting of three main cores -
Teleport, which manages the aircraft freight belly space of AirAsia and third-party
airlines; AirAsia.com, a full-fledged travel and lifestyle platform; and BigPay, our
financial services provider.

The Group's adherence to best practices has been recognized via numerous
awards over the years. Perhaps most notably AirAsia has been voted the World's

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Best Low-Cost Airline for eleven consecutive years from 2009 to 2019. This award
from Skytrax, reflects the opinions of about 20 million travelers worldwide who were
polled by the London-based aviation consultant. AirAsia feels proud of such
endorsement and is committed to living up to guests' expectations by continuing to
keep costs down while providing the highest levels of service and efficiency as it
spreads its wings further and wider across the skies.

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2.2 Organizing
Organizational Chart AIRASIA GROUP BERHAD

BOARD OF
DIRECTORS

MANAGEMENT

AIRLINE NON-AIRLINE

Page | 10
 BOARD OF DIRECTORS

SENIOR MANAGEMENT TEAM

 Chief Executive Officer

 Deputy Chief Executive Officer
 President, Airlines
 CEO, airasia.com
 President, RedBeat Ventures
 Chief Financial Officer
 Chief Operations Officer
 Chief People & Culture Officer
 Chief Data Science
 Head Internal Audit

AIRLINE CEOs NON-AIRLINE CEOs

 CEO, AirAsia Malaysia  CEO and Co-Founder, BigPay

 Executive Chairman, AirAsia Thailand  CEO, Telepor
 CEO, AirAsia Thailand  CEO, BIGLIFE
 CEO, AirAsia Indonesia  General Manager, Santan
 CEO, AirAsia Philippines  CEO, FORMAT & Head,Branding
 CEO, AirAsia India
 COO, AirAsia Japan
 CEO, AirAsia Greater China

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 BOARD OF DIRECTORS

Deputy

Tan Sri Anthony Francis

Fernandes
Dato’ Abdel Aziz @
(widely known as Tan Sri
Datuk Kamarudin bin Abdul Aziz bin Abu
Tony Fernandes)
Meranun Bakar
Non-Independent
Non-Independent Non-Independent
Executive Director
Executive Chairman Non-Executive Director
Chief Executive Officer

Dato’ Mohamed
Dato’ Fam Lee Noor Neelofa
Khadar bin Stuart L Dean
Ee binti Mohd Noor
Merican
Senior
Independent Independent
Independent Independent
Non-Executive Non-Executive
Non-Executive Non-Executive
Director Director
Director Director

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 SENIOR MANAGEMENT TEAM

Tan Sri Anthony Datuk

Francis Fernandes Kamarudin bin
(widely known as Meranun BO LINGAM KAREN CHAN
Tan Sri Tony
Fernandes) Non-Independent
President, CEO,
Airlines AirAsia.com
Non-Independent Executive
Chairman
Executive Director
Deputy Chief
Chief Executive Executive Officer
Officer

AIREEN OMAR PATTRA JAVED MALIK

BOOSARAWONGSE
President, Chief Operations
RedBeat Chief Financial Officer Officer
Ventures

PK MEDAPPA LYE KONG WEI TAN ENG ENG

Chief People & Chief, Data Science Head, Internal Audit

Culture Officer

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 AIRLINE CEOs

SANTISUK
RIAD ASMAT TASSAPON BIJLEVELD
KLONGCHAIYA
CEO Executive Chairman
CEO
AirAsia Malaysia AirAsia Thailand
AirAsia Thailand

VERANITA SUNIL
YOSEPHINE RICARDO ISLA BHASKARAN
SINAGA
CEO CEO
CEO
AirAsia Philippines AirAsia India
AirAsia Indonesia

JUN AIDA MICHAEL ZHOU HU

COO CEO

AirAsia Japan AirAsia Greater China

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 NON-AIRLINE CEOs

CHRIS DAVISON PETE

SPENCER LEE
CHAREONWONGSAK
CEO and Co-Founder CEO BIGLIFE
BigPay CEO Teleport
Operator of a loyalty
Fintech company Logistics operations
programme for the
focused on e-wallet, encompassing freight,
travel and lifestyle
remittance and parcel and food
ecosystem
lending businesses

CATHERINE GOH
RUDY KHAW
General Manager
CEO Format & Head,
Santan
Branding
F&B company
Multimedia company
offering ASEAN fast
offering ASEAN digital
food inflight and on-
content
ground

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Type of Departmentalization AirAsia Group Berhad
There are 3 types of departmentalization AirAsia use as a process of breaking down
enterprise into various department. The aim is to group activities and personal to make
manageable units. These all features are related with the hierarchy in the organizational
structure of AirAsia.

Functional departmentalization
Functional structure AirAsia is grouping of activities or tasks based on the functions.
AirAsia staff are being divided into different departments based on their capabilities and
knowledge they owned. Every departmental head had the authority for the staff working
for the department. The department heads are all under the CEO and the Deputy CEO’s
guidance. When comes to reporting, the subordinates will report to their own
departmental head first before the departmental head convey the message to the CEO.

Geographical departmentalization
In this company, there are some geographical division in the world, such as Indonesia,
Thailand, India and Philippines. Each country has a specific CEO to control the
organization and they need to report to the Senior Management team of AirAsia Group
Berhad. The geographical organizational structure in operation between different
employees is responsible for carrying out business activities at designated locations. In
geographic structure, units and divisions are based on the places and the geographical
area.

Product departmentalization
AirAsia also uses the product-based division in the organization. For example, AirAsia
has a division of the airline and to provide the services to the customer. The organization
enable focus on the certain service line and can become more expert in their industry.

The team of the AirAsia organization is different use of it. In each of the AirAsia group,
the company has team to provide the goods and service to the customer. The features
of this organizational structures enable provide goods and service to customer.

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2.3 Leading
The Board is committed to maintaining high standards of corporate governance, the
process by which the Group is directed and managed, risks are identified and controlled,
and effective accountability assured. The Board considers that it has complied
throughout the year under review with the principles and best practices as set out in the
Malaysian Code on Corporate Governance. This statement describes how the principles
and provisions of corporate governance set out in the Malaysian Code on Corporate
Governance have been applied within the Group.

Board Composition of Air Asia

Size of board
The Board believes that it should generally have no fewer than three and no more than
15 members. The size of the Board could, however, be increased or decreased if
determined to be appropriate by the Board. Against the board composition of Air-Asia,
there are 7 members in board composition.

Independence of directors
The Board will determine annually, based on all of the relevant facts and circumstances,
whether each director satisfies the criteria for independence and must disclose each of
these determinations in its filings. The Board may adopt and disclose categorical
standards to assist it in making such determinations and may make a general disclosure
if a director meets these standards. Any determination of independence for a director
who does not meet these standards, however, must be specifically explained.

CEO and chairman duality

Air Asia Board of charter strictly outlines that Chief Executive Officer (CEO) and
chairman must be held by a different individual. This practice supports the agency
theories perspective to have different individual for CEO and chairman in order to ensure
there are no special interest in decision and increase the effectiveness of monitoring.
Inside Air Asia Board, the charter also clearly explains the roles and responsibility of
chairman and CEO. Chairman was required to do more overall monitoring of board
members performance and decision-making job. Chairman also has the important roles
to ensure high quality of information and knowledge gain for board. Role and

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responsibility for CEO, specifically for financial, stakeholder management, operation,
customers and people related issues. Clear outline inside Air Asia board of charter can
avoid weaknesses of duality issue and improve the governance efficiency.

Whistleblowing
It is understanding that there are two type of channel for whistleblower to raise the
issues which are external and internal. According to the study conducted to Air Asia, we
able to recognize that Air Asia prefer channel to whistleblowing to be internal. According
to Dqorking and Callahan, (1993) the best choice is external rather than internal as
internal whistleblowing would create extensive form of retaliation to the employee from
the management. Therefore, to protect the employee from extensive retaliation, Air Asia
came with a policy that would make sure those issue raised by the workers which
included the directors, employees and others would be concern genuinely and retaliation
is strictly prohibited by the corporate policy and would not be tolerated. Besides that, Air
Asia create a platform for the workers to raise the issue which through their email and
educate the workers on what matter to be raised and not to rise under the platform.
Therefore, whistleblowing channel in Air Asia actually looks transparent and protective
as how Lilanthi.R (2003) claims that to have a transparent and to protect the employee
in whistleblowing, first there should be a law to protect the whistle blower and
corporations should conduct training to the workers. Beside that Air Asia took the
whistleblower channel seriously by appoint legal director to get those reports and direct
it to the chairman of the board, audit committee (BAC) and report to management the
outcome of the enquiry for further action.

Financial disclosure
Air Asia level of financial disclosure is measured by using a conceptual framework for
characterizing and measuring corporate transparency which is introduced by Bushman,
Patrioski and Smith (2001). In their framework has two main elements which are
corporate reporting and information dissemination via the media and Internet channels.

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2.4 Controlling
Quality Control System
Quality control is a critical concept that is in every industry or profession. In Air Asia,
Quality Assurance and Control is heavily taken into account. Air Asia has achieved ISO
9000 standards in Quality Management. ISO is a recognition given by the International
Organization of Standardization. This proves how much importance Air Asia has given
into quality. Besides that, quality assurance is of real advantage in terms of identifying
whether the procedure that is used to produce the product or services are suitable for
the right time and as well as conditions.

To ensure the highest level of quality and satisfactory Air Asia has carry out three type of
information system such as yield management system (YMS), customer reservation
system (CRS), and enterprise resource planning (ERP) system. This system make Air
Asia more effective and efficiency and possibly able to reduce the cost and eliminated
inefficiency in their business.
Yield Management System

Yield management system as known revenue management system. It understands,

anticipates, and reacts to the behavior of customer to maximize revenues for the
organization. In this system, Air Asia used it to takes into account the operating costs
aids Air Asia to optimize price and allocate capacity to maximize expected revenues.

Air Asia has done two level of optimization that is Seat and Route. For seat is
considered an opportunity to maximize revenue. Seats are available at various prices in
different time. A reservation done at a later date will be charged more than the one done
earlier for the same seat. Route is the adjustment of price through a demand when the
demand is higher compared to other. The effective method however is to combine these
two levels for all flights, all routes so that both the seat and the route are effectively
priced for all the flights.

Air Asia can more understand the behavior of customer and offering the effectives and
efficiency strategy. It also can be allocating capacity to maximize the expected revenue.
Air Asia can make efficiency to know their customer using IT technology with lowest cost
by using this system.

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Computer Reservation System (CRS)
It is an integrated web-enabled reservation and inventory system suite powered by
Novitiate Open Skies technology that includes Internet; call center and airport departure
control functionality. Centralized customer data is also maintained by Open Skied and
this help Air Asia to track booking and schedule fight activities with real-time, on-demand
reporting feature. An important feature is that Open Skies seamlessly integrates with the
already implemented YMS so that the system can be used in unison for pricing and
revenue maximization and driving down the cost of operation at the same time.

CRS enabled Air Asia to introduce the first ticket less travel option and also provide
features such as advanced boarding passes in addition to online booking that enabled
the growth of Air Asia as these features attracted customers that did not have the time
for purchasing tickets from counters and coming in 1 hour early for securing a seat on
the aircraft.

Enterprise Resource planning system (ERP)

Integrated ERP solution powered by Microsoft business solutions (MBS) on Microsoft
technology platform which is implemented by Avanade consultants in MA 2005. With the
robust ERP technology platform, Air Asia is able to successfully maintain process
integrity, red financial month-end closing processing time, speeds up reporting and data
retrieval process.

Airline reservation system (ARS)

Airline reservation system (ARS) is a type of system also known as manufacturing
management process. This system is used for supply chain planning in the sense that it
uses information from ERP for planning and scheduling operations (Muzumdar, no date)
[Online]. APS also can be used to tracks costs based on the activities in the production
of manufactured goods. However, due ERP system does not provide for better supply
chain management to analyses the flexibility and intelligence required implemented by
AirAsia. AirAsia therefore use APS system helps to improve AirAsia’s strategic and
operational performance, classifies and clusters orders from customer, and checks
resources availability.

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ARS is also part of the so-called passenger service systems (PSS), which are
applications supporting the direct contact with the passenger.

The airline reservations system was[when?] one of the earliest changes to improve
efficiency. ARS eventually evolved into the computer reservations system (CRS). A
computer reservation system is used for the reservations of a particular airline and
interfaces with a global distribution system (GDS) which supports travel agencies and
other distribution channels in making reservations for most major airlines in a single
system.

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3.0 SWOT Analysis
What is SWOT?
SWOT in its entirety means Strength, Weaknesses, Opportunity and Threat. SWOT can
be categorized into 2 factors which are Internal factors which a company can control and
External factors which a company have little to no control. Internal factors consist of
Strengths and Weaknesses whereas External factors consists of Opportunities and
Threats.

a) Strengths are the strong points of your restaurant that can drive its growth. They are
the reasons your restaurant will be a success. Strengths are the first thing you
analyse while writing a restaurant business plan. Your strengths can include things
like the USP of your restaurant, competitive pricing, prime location, quick service, etc.

b) Weaknesses are the weak links in your restaurant which can slow its growth. These
are the things that your restaurant is not good at but they can be worked upon. It is
also essential to consider the weakness of your restaurant so that you may be
prepared to tackle the problems that may arise from them. For instance, as a new
business, your weakness may be an unestablished brand identity or untrained staff.

c) Opportunities are upcoming trends in the market which no one has grasped onto yet.
If grasped at the right time and invested in, opportunities can take your business to
the next level. Analyse the gaps in the current market trends and note how you can
benefit from it. For example, as a new concept in the area, you can have a First
Mover Advantage. A viable opportunity can be anything like the increase in demand
for vegan food or even the availability of better restaurant technology.

d) Threats can be anything that may pose damage to your restaurant business. These
are external factors that you have no control over yet they may hamper business.
These can range from anything; from a new restaurant competition to a sudden
shortage of supplies. The best way to deal with threats to your restaurant business is
to prepare how you will tackle them in advance and include it in your restaurant
business plan.

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The table below consists of the SWOT analysis for Air Asia:

Strengths
1. Air Asia’s strong management team with strong links with governments and
airlines industry leaders. The executive management come from diverse
background which consists of industry experts and ex- top government officials.
2. Air Asia’s brand name well established in Asia Pacific and Worldwide by winning
11 consecutive World’s Best Low-Cost Airline Award by Skytrax. Besides the
normal print media advertising and promotions, Air Asia top management also
capitalized on promotions through news by being very “media friendly” and freely
sharing the latest information on Air Asia as well as the airline industry.
3. Air Asia is the low-cost leader among airlines in Asia. With the help of Air Asia
Academy, Air Asia has successfully created a “low-cost airline mentality” among
their workforce. The workforce is very flexible and high committed and very critical
in making Air Asia the lowest cost airline in Asia.

Opportunities
1. The increasing oil price at the first glance may pose threat for Air Asia. This is not.
Being a low- cost leader, Air Asia has an upper hand in this matter because its cost
will be still the lowest among all the regional airlines. Thus, Air Asia has a great
opportunity to capture some of the existing customers of full service and other low-
cost airlines customers.
2. The population of Asia middle class will be reaching almost 700 million by
2020.This creates a larger market and a huge opportunity for all low- cost airlines in
this region including Air Asia.
Weaknesses
1. Air Asia receives a lot of complaints from customers about it services. Examples of
complaints are around flight delays, being charged for a lot of things and not able
to change flight or get a refund if customers could not make it. Good customer
service and management is critical especially when competition is getting intense.
2. Air Asia as part of its expansion plan. Air Asia is purchasing more aircrafts to cater
for the increase demand. However, this cost is surging. To overcome this problem,
Air Asia now getting the planes on lease instead of buying.

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Threats
1. Aviation businesses are fragile as experienced by airlines across the world during
the Covid-19 pandemic which have forced the aviation sector to a standstill.
2. AirAsia is reaping profit margin of more than 30% and this has already attracted
many competitions. Most of the full-service airlines already have or planning to
create a low- cost subsidiary to compete directly with Air Asia. For example,
Singapore Airlines has created a low- cost carrier Tiger Airways.

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4.0 Conclusion
To be a leader in the low- cost carrier industry, Air Asia needs to use strategic
management continuously because the airline industry is a unique and complex in
nature. The budget airline needs not just reduce cost and make the operational activities
running effectively but also needs to come out with the strategy that can make
competition irrelevant or uncontested market space through differentiation which Air Asia
already doing but it has to enhance it further. In a conference recently CEO Datuk Tony
Fernandes said that Air Asia is in the best financial position now and it would continue its
focus on lowering cost, improving returns and expanding its network. Despite the share
increase in prices of oil and aviation fuel resulting from the Middle East crisis, Datuk
Tony Fernandes has assured to the customers that it will impose fuel surcharges.

One environmental issue that has grown in severity and becomes difficult to manage is
air pollution, with the particulate matter or PM 2.5 situation this past year is a clear
indicator of this problem. Air and climate change are a global concern only likely to grow
in significance and impact the economy, society and the environment in the near future.
With aviation businesses significantly contributing to these matters, both burning fuels
and releasing pollutants with each flight, Thai AirAsia has acknowledged its need to
exert maximum effort to reducing its carbon dioxide emissions and reduce its landfilled
waste. Towards these goals, the airline carries out the following practices:

1. Green Operating Procedures

While accepting that flight operations must produce an amount of carbon dioxide as a
result of fuel usage, Thai AirAsia is resolute in mitigating its environmental impact.
Throughout 2019, the airline continued to carry out various projects to cut energy
consumption and pollution emissions from 2018, emphasizing Green Operating
Procedures with detailed practices outlined for pilots targeted at utmost efficiency in all
dimensions, reducing fuel usage and reducing noise pollution, all while maintaining
safety as a priority.

2. Waste Management
Thai AirAsia acknowledges the impact of its creation of “aircraft waste” through
operations and has resolved to reduce the amount of landfillable waste it produces by

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the year 2023. In 2019, Thai AirAsia commenced programs to manage “aircraft waste”
alongside waste from its offices and food products.

3. Reduction of Paper Usage

The Quality Assurance Department in 2019 transitioned its quality assessment report
process to an electronic system to replace the use of paper documents, downsizing the
process for all departments by allowing for expedited collaboration and reducing the
entire company’s use of paper. In the latter half of 2019, Electronic Flight Bag (EFB)
introduced on a trial basis. Flight manuals and airport information were made available
through an application accessible via electronic tablet rather than paper document. Pilots
were given clear instructions on how to assess and access the information and the
change reduced paper usage by 290,000 sheets/month on average.

4. Other resource consumption

In addition, Thai AirAsia has collected the data of other resource consumption such as
Electricity and Water to set up and implement the saving plan in the upcoming year.

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5.0 Reference
1. https://en.wikipedia.org/wiki/AirAsia
2. https://airasiainformationsystem.weebly.com/company-background.html
3. https://www.ukessays.com/essays/tourism/planning-process-and-decision-making-
in-air-asiaairasia-tourism-essay.php
4. https://www.academia.edu/14027818/AIR_ASIA
5. https://www.nst.com.my/business/2020/09/623246/airasia-establishes-mro-entity
6. https://www.thestar.com.my/business/business-news/2020/10/09/us1bil-loan-offer-
for-airasia-data
7. https://ir.airasia.com/misc/ar2019.pdf
8. https://ders.es/unit-3.pdf 
9. AirAsia Berhad, Annual Report 2008,2009 and 2010
10. Danny Yap and Elaine Ang, Blure Ocean Strategy for Corporate Malaysia, Article
published in the Star Daily on 16/7/2007
11. https://ders.es/unit-3.pdf
12. CORPORATE GOVERNANCE IN AIR ASIA BERHAD. (n.d.). Retrieved October
28, 2020, from
http://umpir.ump.edu.my/id/eprint/17606/1/4. Corporate governance in air asia
berhad.pdf
13. Statement on corporate governance. (n.d.). Retrieved October 28, 2020, from
https://ir.airasia.com/newsroom/AIRASIA-Page_63_to_ProxyForm_(1MB).pdf
14. Corporate Structure. (n.d.). Retrieved October 28, 2020, from
https://ir.airasia.com/corporate_structure.html
15. Corporate Profile. (n.d.). Retrieved October 28, 2020, from
https://ir.airasia.com/corporate_profile.html
16. Balanced Scorecard Institute. (2020, October 22). Strategic Planning Basics.
Retrieved from https://balancedscorecard.org/strategic-planning-basics/

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