AirAsia Berhad is part of the AirAsia Group, a world-famous low cost airline that operates extensive networks both domestically and internationally with the powerful slogan Now Everyone Can Fly. AirAsia pioneered low cost airfares in Asia and is currently the largest low fare, no-frills airline in Asia. It is also one of the largest airlines in all of Asia for passengers carried. AirAsia has also been voted the World’s Best Low Cost Airline in 2009 until 2018. AirAsia Berhad is currently based in the Kuala Lumpur International Airport (KLIA 2), Sepang. Its associate airline – AirAsia X, is also located at the KLIA 2 and shares operational facilities with AirAsia Berhad. A Brief history of AirAsia ,the airline was established by a Malaysian conglomerate in 1993 and commenced operations in 1996. On December 2001, with the airline heavily in debt, AirAsia was purchased by Tony Fernandes of Tune Air Sdn. Bhd for the price of RM1. As part of the purchase, Tony also took up the Ringgit Malaysia 40 million debts. Under the leadership of Tony Fernandes, the airline was flying high in 2002 and launched its new route that year In 2003, a second hub was opened in Senai International Airport, Johor Bahru, as well as the airline’s maiden international flight to Bangkok. After that the only place AirAsia was heading for was up, as the Thai and Indonesian subsidiaries were set up as well as the commencement of flights to Indonesia, Macau, China, Philippines, Vietnam, and Cambodia in 2005. AirAsia now flies to all ASEAN countries, a great portion of Asian countries that include India, Iran, Sri Lanka and Bangladesh; as well as to the United Kingdom, France, Japan, Korea, and Australia via AirAsia X. AirAsia aims to establish itself as leading carrier in market by valuing its customers through cost advantages created by operational effectiveness and efficiency. More customers can fly taking into consideration the low fare charges as AirAsia capture segments of customers that previously could not afford the airlines’ fare. Air Asia’s brand name is well established in Asia Pacific. The normal print media advertising & promotions, Air Asia’s 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. Their partnership with other service providers such as hotels and hostels, car rental firms, hospitals (medical tourism), Citibank (Air Asia Citibank card) has created a unique image among travellers. Alliance with Galileo GDS (Global Distribution System) that enables travel agents from around the world to check flight details and make bookings have also contributed to their string brand name. Air Asia’s local presence in few countries such as Indonesia (Indonesia Air Asia) and Thailand (Thai AirAsia) have successfully “elevated” the brand to become a regional brand beyond just Malaysia (www.airasia.com).
To be the largest low cost airline in Asia and serving the 3 billion people who are currently underserved with poor connectivity, high fares and fly to more destinations across the region. We aim to be a truly ASEAN airline corporation as we look out for every country’s best interest.
• 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 AirAsia
• Maintain the highest quality product, embracing technology to reduce cost and enhance service levels
2.3 BASIC PRINCIPLE OF AIRASIA
The founding principle of AirAsia is to be aware at all times that we are engaged in a business where the responsibility of peoples’ lives is in our hands. We safeguard that responsibility through the safety and quality of our operations. We operate with the highest level of integrity, striving to exceed industry standards in a proactive manner while doing so with respect to others and the environment.
3.0 ORGANISATIONAL STRUCTURE
AirAsia’s structure is following the basis of functional. Functional Structural can be explained as a group of people with the same skill and knowledge who work together for specific activity in organization. AirAsia’s staffs are being divided into different departments based on their capabilities and knowledge they owned. Every departmental head had the authority for the staffs working for the department and they are all under the department head’s authority. The departmental heads are all under the CEO and the Deputy CEO’s guidance. The subordinates will report to their own departmental head first before the departmental head convey the message to the CEO (Refer to the Appendix B).
3.1 Appendix A Board of Directors
• Datuk Kamarudin bin Meranun (Non-Independent Executive Chairman)
• Tan Sri Tony Fernandes (Non-Independent Executive Director and Group Chief Executive Officer)
• Dato’ Abdel Aziz @ Abdul Aziz bin Abu Bakar (Non-Independent Non-Executive Director)
• Dato’ Mohamed Khadar (Independent Non-Executive Director and Chairman of Audit Committee)
• Dato’ Fam Lee Ee (Independent Non-Executive Director)
• Stuart L Dean (Independent Non-Executive Director)
• Noor Neelofa Mohd Noor (Non-Independent Non-Executive Director)
3.2 Appendix B Airasia Organisation Chart
4.0 TOP MANAGEMENENT AND THE STRATEGIES
Each organization is unique in terms of it resources and capabilities and the key to success merely depend on its ability to find or create a competence that is distinctive (Teece, Pisano and Shuen, 1997). It goes beyond the Strengths, Weaknesses, Opportunities and Threats. The three fundamental market forces; scarcity, demand and appropriability determines the value of a resources and capabilities (Collis and Montgomery, 1995). Organisation could identify whether the resources and capabilities are able to meet market demand. As for AirAsia, the organisation relies on its human resources and management capabilities wherein these two components have satisfied the value requirement, as it has been able to meet the demand for the Low Cost Carrier (LCC) market. Resources and capabilities owned by AirAsia are homogenous in the market but aspect such as work culture and innovative routes make it difference from the competitors. AirAsia’s work culture of openness between employees as well as the leadership from its Chief Executive Officer is something have been built up over a period of time which is difficult to duplicate. Controlling and exploiting the resources and capabilities provides competitive advantages to the organisations (Carpenter and Sanders, 2009). AirAsia has exploited it resources and capabilities, which is reflected in their financial performance. This has helped Air Asia to open up and capture a sizeable market in worldwide. The management team is also very good in strategy formulation and execution. The strategy that they have formulated at the beginnings was a clever blend of proven strategies by other low cost airlines is US and Europe.
4.0 CRITICAL ISSUES
The leading low fare airline in the Asia – AirAsia has been expanding rapidly since 2001, to become an award winning and the largest low cost carrier in Asia. With a fleet of 72 aircrafts, AirAsia flies to over 61 domestic and international destinations with 108 routes, and operates over 400 flights daily from hubs located in Malaysia, Thailand and Indonesia. To date, AirAsia has flown over 55 million guests across the region and continues to spread its wings to create more extensive route network through its associate companies. AirAsia is one of the airline companies who more focused with the strategy how to reduce inefficiency and make it low possible fare in the world. With the cost-efficiency, low complexity and profitability are always the cornerstones of building a strong business. Furthermore, according to Dawna and Blaise (2005), the most successful carriers came to dominate their hub markets allowing them to exert greater control over pricing and capacity. Based on this statement, the current issues in AirAsia Company are how to achieve to be a lowest carrier in the world in Airplane industry. Regarding to this issues, Dawna and Blaise said, the most successful carrier in the airline industry allowing them to exert greater control over pricing and capacity. In addition, according to Haddad (2003), the key to their current success has been to cut costs to the bone through lower salaries and reduced overhead. In airline industry nowadays, customer not only looks at the service that airline company offered to them, but the price of the airline ticket also can influencing the customer to use an airline company. AirAsia Company can compete with the other competitor in the airline industry if they can cut costs through lower salaries and reduced overhead. Moreover, according to Daniel Chan (2000), these moves but a very small price to pay for continued and greater access to the world’s most prospective air travel markets. The very small prices are offered to the customer also can give biggest affect in this business. As all airlines in low cost carrier (LCC) industry compete on costs, AirAsia needs to offer the lowest possible fare in order to win the competition in the current markets served as well as new markets.