3.

Reasons of successful AirAsia

Cheap Prices
One of the missions of AirAsia is to attain the lowest cost so that everyone can fly (AirAsia,
2015). Cheap prices encourage more people to travel through plane than trains and boat
(Antoni, 2011). This made everyone look forward to the promotion that AirAsia have to offer.
In addition, from figure 3.1, customers could get even cheaper prices if they make the
bookings earlier.

Figure 3.1 Ticket price at different date (Source: AirAsia, 2015)

Fast Turnaround Time

Faster turnaround time means higher aircraft utilization (Spitzer, 2007). AirAsia has an
average turnaround time of 25 minutes which is than than half of the time required for a full
service carrier which is around 1 hour (AirAsia Philippines, 2015).

Online System
Having an online system allows AirAsia to advertise their current promotions. In addition, the
main function of the online system allows customers to make bookings and make payment
easily at any time of the day (Antoni, 2011). Internet sales makes up to 65% of their total
sales, which shows that people prefer to book their ticket online. This helps AirAsia to save
on cost for sales office and travel agent.

Making things simple

AirAsia only provide one type of aircraft, one single class and same standard operating
procedures. In addition, customers are free to choose where they want. This means that
they could save cost on training their staff as everything are the same and time to get the
customers to their allocated seats (AirAsia, 2015).
No Frills
Most customers prefer to choose what they get instead of a bundle (Buttle, 2004).
Customers only pay for their air tickets and anything else will not be included. Customers
thus won’t feel pressured in paying for things that they think that they will not enjoy.
However, customers are free to purchase any additional items such as food & beverages or
extra luggage space. Since the air tickets are to be kept at low price, no refunds and
rescheduling will be entertained due to no shows (AirAsia, 2015).

Maintaining the expenses

AirAsia implement some work rules and streamline the administrative work that help
employee to perform multiple roles (Singh, Pangarkar & Heracleous, 2014). This allows
AirAsia to further decrease the number of employees required for an aircraft. In addition,
AirAsia pays lower salary as compared to other airlines but instead they offer incentive such
as performance and productivity bonus. Pilots are also paid not in hours but the number of
sectors they have flied (Pilot Career Centre, 2015). This helps to encourage the pilots to
make fly more for their own salary.

Targeting at the local Market

AirAsia does not travel long distances and most of their ride don’t exceed 4 hours. They are
targeting at customers that will be traveling who are traveling to nearby countries to take a
break. Thus, AirAsia often have promotions during school holidays or any public holidays to
attract customers. An example is shown below in figure 3.2. In addition, AirAsia who had
done their research will often choose the country where people prefer to go.

Figure 3.2 School holiday promotions (Source: AirAsia, 2015)