How Tony Fernandes brought up the idea?
Despite the air-travel downturn following the 11 September 2001 terrorist attacks, Fernandes believed that the timing for entering the airline market was just right, as aircraft leasing costs had dropped sharply and experienced staff were readily available due to airline layoffs.
Motto
Upon acquisition of AirAsia in 2001, Fernandes invited Connor McCarthy, the former director of successful European LCC(Low-Cost Carrier) Ryanair, to join AirAsia’s executive team. AirAsia was really making a serious effort to enable everyone to fly on the no frills airline.
Under the tagline “Now Everyone Can Fly”, the airfares were 40% to 60% lower than those of its rivals. In fact if you were lucky enough the tickets you bought could even be cheaper than the cost of the ticket for a long haul bus.Many domestic leisure travellers were attracted to purchase air tickets through its multilingual website, which offered regular fare promotions for specific travelling periods to encourage early booking.
Price War & Political Issues
AirAsia became a real threat to the former monopoly operator with the emergence of more value-conscious consumers who were more receptive to the low-cost, nofrills concept. MAS had at times lowered its ticket price to fight back, but this effort had not produced a significant profit turnaround.
On 6 May 2008, MAS launched its unexpected “Everyday Low Fare” campaign, offering 1 million free seats (excluding fuel surcharge and taxes) for its domestic flights and other shorthaul routes within South-East Asia.
This campaign was strongly opposed by Fernandes, who regarded the competition as unhealthy and unfair. He accused the premium airline of turning into an LCC and concentrating its low-fare promotion on AirAsia routes. He also alleged that the MAS campaign was subsidised by the government and urged the government to allow a level playing field by removing subsidies for MAS.
How airasia started?
Having started as a three-aircraft operation in 2002, AirAsia owned 72 aircraft by 2008 andserved over 100 routes in the Asia-Pacific region, with more than 300 flights per day.
Domestic and Short-Haul Regional Services
The primary hub was at the Kuala Lumpur International Airport(KLIA), then AirAsia set up three other hubs within Malaysia to better serve the domestic market. In 2004, while continuing to expand its domestic business, AirAsia started to provide regional flights to neighbouring countries.
First Airline Online Check-in system in Malaysia
In early 2007, AirAsia became the first airline in Malaysia to offer an internet check-in service, allowing domestic travellers to enjoy online check-in and to print out their own boarding passes.
Long-Haul Regional Service: AirAsia X
Despite most LCCs being hesitant to operate long-haul routes due to cost concerns, AirAsia launched its first long-haul flight to Australia’s Gold Coast in late 2007 through its sister airline, AirAsia X. Unlike AirAsia, it offered two-class cabins (ie, economy seats and premium XL
seats) and allowed passengers to reserve seats when booking in advance.
Moving Down the Value Chain
AirAsia had evolved from a classic LCC into an integrated service provider, offering not only no-frills air tickets but also financial services such as travel insurance, as well as other holiday products. Having sought out various companies to partner with, the company offered online booking services for hotels, hostels, car rentals, cruises and medical care.