INTRODUCTION
Air Asia started with Malaysian government-controlled. It provides lower fare compared to its competition Malaysia Airlines (MAS). In December 2001, Tony Fernandes took over debt-ridden of the airlines for the symbolic sum of USD$0.26. The downturn occurred in September 2001 due to terrorist attacks. Fernandes believed that entering the airline market at that time was the most perfect time. With aircraft leasing cost drop and airline staff experience layoff. Fernandes got acquisition from the Malaysia government in December 2001 and reconstruct the Air Asia system into a low-cost carrier("LCC"). The Idea was a huge success and be a pioneer as LCC in the region.
No Frills, Low Cost
In the mid-1990s, Fernandes saw an opportunity for a no-frills LCC in Asia due to the succession achieve in the west region. Upon acquisition Air Asia in Dec 2001, tony invited the former director of successful European LCC Ryanair to join and be part of the executive team. Then they reconstruct the business model according to the LCC concept. At the same time, Air Asia the first in Asia region to introduce fully ticketless travel and implement a free seating policy. With the LCC concept, Air Asia only provides one standard cabin with no entertainment or free meals. Besides they have beverages to be sold on board.
Next, the fares are now much more cheaper compared to their rival around 40% to 60 % with a tag line of “now everyone can fly“ . The price offered attracted many leisure travelers to book a ticket through a website with regular offer a promotion to encourage early booking with a tagline included with it "Easy to Book to Pay & Easy to Fly". The booking also can be made through telephone booking centeres, sales officers, travel agents, and partnerships wilt local banks and post offices.
Domestic and Short-Haul Regional Services
Air Asia set up another hub within Malaysia and started to provide regional flights to the neighboring country to continually expand their business.
Thai Air Asia: It was formed in affiliation with a telecommunication company that formerly belonging to Thai prime minister Thanksin's family with its Shin Corporation. The hub was set up in Bangkok. With a 51% stake from the company, it gains support in a term in electronic booking and makes it easier and cheaper to access the South-East Asian country and lucrative Chinese market.
Indonesian Airasia: it was established by undergoing affiliation with Indonesian airline formerly known as Awair.The hubs were set up at Jakarta and Bali. The result of the joint venture broadened the destination and the limitation not only in domestic but also provide short travel to neighbor country.
Long-Haul Regional services: Air Asia X
Due to the LCC concept, long-haul service is not provided because of cost concern. However, Air Asia launched its long haul flight to Australia's Gold Coast in late 2007 through its sister airline Air Asia X that has a stake about 20%. The key individual investor is Richard Branson, the British tycoon and founder and chairman of the Virgin Group. It shares the same services, but unlike Air Asia, they offer two kinds of the seat (economy seat and premium XL and offer more food. The Air Asia X, Jetstar started to travel from Sydney to KL One day, the flight need to be stopped regarding fuel price increases that hurting them as LCC.
After that Air Asia exploring partnerships with others LCC in Asi-Pacific with intend to grab a bigger opportunity in Australian market. Other than that, Air Asia also exploring west airlines to venture into the European market and make the fare cheapest as possibles.
Value-added services
In early 2007, Air Asia the first airline in Malaysia introduced internet check-in. in addition, Air Asia offers limited number of seat for express boarding service and enable them to choose their seat at ease. Other services provided are checked luggage that can received at a lower price during pre-book. It is to encourage passengers to travel light and so less fuel will be used and reduce pollution.
Based on the LCC concept, it gives real 5 stars where it includes cozy leather seats and meals on the board. The meal can be got by either buying in the flight or through a pre-book that has a website discount on it. Air Asia also offers a guaranteed flight offer of about USD$61 if it delayed by more than 3 hours.
Moving Down the Value Chain
Air Asia also involves financial services such as travel insurance, as well as other holiday products. Services needed like booking for hotels, hostels, cruise, and medical care can be made online due to undergo partnership with other companies Despite relying on airline programmed, a co-branded Citibank-Air Asia credit card was launched. Holders of the card can get a reward if they collect certain points through purchases at specific stores. exchanged. Moreover, they also can enjoy a discount and have privileges at 40,000 holiday services and retail outlets.
During mid-2008 oil prices have shown high volatility, Fernandes has undergone a layered-hedge strategy to pay for fuel in advance and to have a good quality of oil at low prices.
A good cooperation given by the staff has reduced the fue; consumption nealy 20 %
Moreover, new and more fuel-efficient Airbus A320-200 aircraft had been order to replaced older aircraft, Boeing 737-300
TextDistinctive image and ledarship
Air Asia experienced speedy expansion from a domestic route to regional flight through its cheeky advertising strategy. It started in 2002 with 3 aircraft operations in 2002, but in 2008 Air Asia has owned 72 aircraft that served over 100 routes in the Asia Pacific region with 300 flights a day.
One of the advertising strategies used is they take Singapore girls that have an elegant image in full-page newspapers to attract their passengers with the slogan “There’s a new girl in town: twice the fun, half the price”. In addition to the full-fledged newspaper, they signed to officially sponsor the world-famous Manchester United football club and AT&T Williams F1 team by painting some of its aircraft with the club colors and sports stars with an ambition to be low cost but high-quality airline.
As a chief executive officer of Air Asia, he also acts as a walking advertisement by wearing an official cap and t-shirt in almost every function. He also passes his mobile phone number to a media representative for easy to be approached regarding his company news. Therefore, Air Asia receives free publicity on many occasions.
TextPrice War with Malaysia Airlines
Even though Air Asia and MAS compete in different markets, Air Asia began to give a threat to MAS with the emergence of more value-conscious consumers. Therefore MAS take an initiative to lower their price to enable them to compete in the market and attract customers to fill up their plane. In the early stages of reducing the prices, the profit cannot be seen until it reaches MARCH 2007. They also launch an unexpected campaign in 2008 that offers everyday low prices with an “everyday low fare” slogan on the line and received overwhelming response from the public.
The idea MAS doing their business was opposed by Fernandes with accused MAS as premium airlines turning to LCC. However, Fernandes fought back with its campaign called sub-zero fare. This campaign offering ticket prices below prices offered by the MAS.