Clement Ong

Keita

Ivy Wong
Zhang Cen

We proudly present to
you..
Please fasten your seat belts
Have you flown with
AirAsia yet?
Video link.
Corporate Profile
Established in 1993 and commenced operation on 18 November 1996.
2 December 2001, it was purchased by former Time Warner executive Tony Fernandess
company Tune Air Sdn Bhd from the ownership of HICOM Holdings Bhd for the token
sum of only RM1, and with only 2 Boeing 737-300 aircraft together with RM40 million in
debt.
AirAsia Berhad is a Malaysia-based low-cost airline.
The largest low-fare, no-frills airline and a pioneer of low cost travel in Asia.
AirAsia is proud to be a truly ASEAN (Association of South East Asian Nation) carrier.
Operates scheduled domestic and international flights to over 400 destinations spanning
to 25 countries.
Had flown over 100 million guests upon the core believe that Now Everyone Can Fly.
Main terminal hub is the Low-Cost Carrier Terminal (LCCT) at Kuala Lumpur
International Airport (KLIA).
AirAsias associates companies- AirAsia X, Thai AirAsia (TAA), Indonesia (IAA) and
Malaysia AirAsia (MAA), and VietJet AirAsia.
Previously known as FlyAsianXpress Sdn Bhd.
Focusing on the low-cost, haul segment.
Established in 2007 to provide high-frequency and point-to-point networks to the long
haul-business.
AirAsia X is spreading its wing to exciting destinations such as Australia, China, India,
Middle East and Europe.
AirAsia X
Tune Hotels
Limited service hotel chain founded by AirAsia CEO Datos Tony Fernandes.
Its hotel operates in Kuala Lumpur, Kota Kinabalu, Kuching, Penang, LCCT Sepang and
Westminster, London.
The Star Highlights of
Air Asia Founder & CEO- Dato' Sri Dr. Tony Fernandes

Malaysian, aged 48.
Appointed Group Chief Executive Officer of the Company in December 2001.
Financial Controller at Virgin Communication London (1987- 1989).
Senior Financial Analyst at Warner Music International London (1992-1996).
Regional Managing Director, ASEAN (1996-1999).
Vice President, ASEAN at Warner Music South East Asia (1999-2001).
After graduating in London School of Economics, he worked with Virgin
Atlantic and Richard Branson became his boss and mentor.
Under his leadership, AA broke even within a mere 12 months and cleared its
debt.
Outperform Malaysias national carrier MAS, in terms of size, revenue, profit
and popularity.



Vision Statement
To be the largest low cost airline in Asia and serving the 3 billion people
who are currently underserved with poor connectivity and high fares.

Mission Statement
To be the best company to work for whereby employees are treated as
part of a big family.
Create a globally recognized ASEAN brand.
To attain the lowest cost so that everyone can fly with Air Asia.
Maintain the highest quality product, embracing technology to reduce
cost and enhance service levels.
Key Strategies
Safety First
High Aircraft Utilization
Low Fare, No Frills
Streamline Operations
Lean Distribution System
Point to Point Network
Achievements:
Y
e
a
r

2
0
0
3
-
2
0
1
0

Internal Capabilities
Foster a dependency on Internet technology, eg. online booking, online checking
(flight status, promotions).
Investment in the AirAsia Academy.
Dynamic environment between employees.
No communication barriers between employers and employees, friendly.
Employees before customers.
Aggressive marketing tactics, massive advertising, promotional packages etc
Employees motivation- rewards free flights for their staff.
Offer customers the ticketless concept.
Low operating cost- wages, airport fees, short ground waits due to simple boarding
processes.
Keeping cost low- uses one type of aircraft, Airbus.
Welcome to Air Asia Internet Homepage!
AirAsia Electronic Ticket
Ordering Process
External Capabilities
Partnerships- with Vietnam-Malaysia cooperation forming VietJet AirAsia.
Strong branding strategy: AT&T Williams F1 team, Manchester United, Asean Basketball
League (ABL), EPL Referees, Oakland Raiders, NFL, The Amazing Race Asia, Monsoon Cup
2006, etc.
First landing of Air Asia X greeted by Prince Andrew from Kuala Lumpur to Standsted,
London.
Linking with Virgin Airlines- landing right in overseas.
Look for suppliers with good quality on certain prices, build long-term relationship.
Airports have low cost terminal hub.
CSR, recently involve in providing flight services for evacuation of Malaysian students in
Egypt.
COMPETITVE ADVANTAGE OF AIR ASIA

1- Usage of one type of aircraft

Economies of scale

Cost can be cut by 50%

Small inventories ( cube-square rule, power of purchasing)

Reduce time on employees training and learning curve


ASK: Available seat kilometers, which is the total number of seats available on scheduled
flights
multiplied by the number of kilometers these seats were flown.

Cost per ASK: Total operating expenses (excluding finance costs and taxation) divided by
ASK. In the
airline industry, this is comparable to unit cost.

Air Asia.com, 2009
2- Synergy between the AA management and the employees

Management support and motivate employees to work and creativity

Competitors find it hard to follow

3- Productive and Skillful employees

Employees create tips to help in procedures and save time, costs.
example: the one type concept

4- Limited passenger service

Food and beverages are not included , transportation from the airplane to the airport
not includes etc .

Airport tax


Air Asia.com, 2009
5- Frequent, Reliable schedules








7- High aircraft utilization

Space are well used in the airplanes to provide more site

No first class

8- No Fuel Surcharges Policy

despite hike in oil prices.

Fuel surcharge of RM20 will only be made if oil price is $100 per barrel
6- Short haul ( point to point ), often
secondary airports

Less cost for the company
Air Asia.com, 2009
COMPARISON

This diagram compare Air Asia with other company in terms of cost per unit.













Air Asia was the Best Low-Cost Airline for 2010

Air Asia.com, 2009
Too much to know? Stay
Tuned We will be back!
Video link.
Financial Performance
(Annual Report 2009)

Operating profit margin at 29.1%

Strong deposits, cash and bank balances of RM746 million

Despite a economic downturn period, AirAsia revenue for the year

jumped 9.71% to RM3.1 billion and recorded a profit of RM506 million.

Note
Group Company

2009
RM000
2008
RM000
2009
RM000
2008
RM000

Revenue

4

3,132,901

2,854,970

3,072,049

2,815,262
Operating expenses
- Staff costs
- Depreciation of property, plant and equipment
- Aircraft fuel expenses
- Maintenance, overhaul, user charges
and other related expenses
- Aircraft operating lease expenses
- Travel and tour operating expenses
- Gain/(loss) on unwinding of derivatives
- Provision for loss on unwinding of derivatives
- Other operating expenses
Other income
Operating profit/(loss)
Finance income
Finance costs
Profit/(loss) before taxation
Taxation
- Current taxation
- Deferred taxation
Net profit/(loss) for the financial year

5
11
25
6
7
8
8
9
9

(306,002)
(447,644)
(927,795)
(410,583)
(107,251)
(53,524)
22,457
-
(92,188)
102,383

(236,793)
(346,954)
(1,389,841)
(307,205)
(92,649)
(37,945)
(678,503)
(151,713)
(46,570)
81,545

(304,551)
(447,637)
(927,795)
(410,583)
(107,251)
-
22,457
-
(90,543)
102,383

(235,773)
(346,946)
(1,389,841)
(307,205)
(92,649)
-
(678,503)
(151,713)
(44,627)
81,545

912,754
84,505
(374,971)

(351,658)
35,245
(552,785)

908,539
84,462
(374,971)

(350,450)
35,245
(552,782)

622,288
(11,186)
(104,835)

(869,198)
(3,769)
376,404

618,020
(11,186)
(104,835)

(867,987)
(3,769)
376,404

(116,021)

372,635

(116,021)

372,635

506,267

(496,563)

501,999

(495,352)
(Air Asia Press Release Q3 2010)

Revenue: RM988 Million (34% growth year-on-year from RM740 million)

Profit after Tax: RM327 million

Had been described as outstanding performance

Looking forward to 2011
driving down the costs
raising the yields
increase productivity
expand the route network

Strengths Weaknesses
Strong brand recognition, marketing approach
and awareness

Strong management team consists of industry
experts and ex-top government officials
( all the board of directors have outstanding
portfolio

Low cost operations (ticketless, online booking,
online check-in, quick turnaround of 25 minutes,
low fares and no frills)

Using single aircraft fleet (reduce the
maintenance and training costs)

Enter and focus on potential market (lower and
middle income group)

Multi-skilled and well-trained staffs to enhance
the efficiency

Service resource is limited due to low costs

Government interference and regulation on
airport deals

Non-central location of secondary airports

Heavy reliance on outsourcing

Complaint from customers regarding the current
overcrowded LCCT (handled about 17 million
passengers instead of its capability to handle 15
million passengers)

Opportunities Threats
Long haul flight to approach undeveloped
market (Air Asia X to Europe)

Expansion to new routes based on low cost
philosophy (exploit growing markets like China,
India)

Higher fuel costs means less profitable
competitors may be forced out of business

Partnerships with Virgin airline to use existing
strengths (brand recognition, landing rights)

Differentiate from old LCC model (include
customer service and operation as full service
airline)

Entrance of other low cost couriers (Firefly,
Tiger Airways)

Accident and disaster affect customer
confidence (Example: an aircraft skidded off the
runway while landing at KCH International Airport
on Jan 2011)

Aviation regulation and government policy
(barriers in new routes expansion)

Full service airlines start cut costs to compete
(MAS offered discounted fares with meals and
comfortable seats)



BIG SALE: 1,000,000 seats up for grab now!
Air Asia RM1 Promotion
Special Day Promotions
Passport of love Fly with your loved ones this Valentines
~ Does not meet every customers demand for convenience in terms e-ticketing. (Eg. Not
possessing any related card services for transaction, emergency booking (before 24 hours
fight)
Problems Faced by AirAsia
~ Problems with crowded seating
~ Problems with the long distance walk between
the airplane stop and the terminal entrance.
Recommendations:

Failure of internet system
Leverage competency in creating cost advantage across multiple value chain.
Emphasis on more effective safety & security to avoid accidents. (Eg.
demonstrations and procedures for passengers, avoid crash landings)
Punctuality should be their main concern especially AA wants to penetrate
into the business travelers market.
Arrangement of seating should be organized.

In summary,
Video link.
NOW EVERYONE CAN FLY