...1. Briefly describe the trends in the global airline industry. a) Increasing travel demand Two of the top six U.S. airlines saw their best traffic results in 18 months this past November. While Southwest recorded a 12 percent increase, Continental registered a 2.8 percent increase, respectively, in miles flown per passenger. These figures represent absolute increases in ‘warm bodies’ flown – a more reliable metric than passenger load factor. Clearly, the slump in air travel is ending. IATA has now revised its passenger traffic estimates for 2010 upwards by 4.5 percent (as against the previous forecast of 3.2 percent in September 2009). An estimated 2.28 billion people are expected to fly in 2010, bringing the total passenger numbers back in line with the peak recorded in 2007. b) Airline-supplier consolidation As airlines improve services while implementing aggressive pricing strategies, many plan to forge new links with distributors, including travel management agencies that don’t rely on the traditional GDS connections. A trend that first started two years ago, airlines are expected to continue to implement direct-connect models to manage products and inventories, and establish closer ties with their customers. For example, last October, American Airlines indicated its plans to move all indirect volume to direct connections. This will change the nature of Airline-GDS relationships. One notable potential by-product of this trend could be GDS / TMC consolidation...
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...Air Asia: The World’s Lowest Cost Airline Air Asia is a Malaysia-based low cost airline which builds its business on the LLC model created by Southwest airlines in the U.S. Air Asia’s mission statement is to be the Asia's leading low fare no frills airline and first to introduce "ticketless" traveling. Now Everyone Can Fly clearly describes Air Asia’s value. Cost advantages created by Air Asia through operational effectiveness and efficiency go directly to the customers. The customers now enjoy much more surplus than before as the fare falls dramatically and Air Asia captures some of the ‘dead weight losses’ by capturing segments of customers that previously cannot afford the airlines’ fare. The cost drivers in the industry are scale, technology, product and process design, input costs, and capacity utilization. The nature of the operational structure of low cost carriers provides them with initial cost advantages. This lean cost structure translates itself into high turnaround time, basic amenities, standard operating procedures and a lean distribution system To maintain a low flight fare, Air Asia uses many sources of cost advantages. First one should be economies of scale. In many activities, increases in output do not require proportionate increases in input. This can be applied to the airline industry. Air Asia offers a single class, which allows more seats per plane. As mentioned in the case, the Boeing 737 can be equipped 12 more seats per plane in the single class...
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...Assignment One Task (One) 1) Cost Leadership Strategy Definition Companies that choose a cost leadership strategy offer relatively standardized products with features or characteristics that are acceptable to customers. In other words, with a minimum level of differentiation and also at the lowest competitive price. This means that companies offer standardized to an industry’s typical customer. Customers receive value when a company successfully implements a cost leadership strategy. Companies that wish to be successful by following a cost leadership strategy must maintain constant efforts aimed at lowering their costs which relative to competitors cost and creating value for customers. Cost reduction strategies include: • Building an efficient scale facilities • Establishing tight control of production and overhead costs • Minimizing the costs of sales. Product research and development, and service. • Investing in state of the art manufacturing technologies. In simply, cost leadership strategy is a type of competitive strategy with which the organization aggressively seeks efficient facilities, cuts costs, and employs tight cost controls to be more efficient than competitors. Undercut competitors’ prices and still offer comparable quality and earn a reasonable profit. Successful strategy to defend against the five competitive forces. Such protected from powerful customers and suppliers, because customers cannot find lower prices elsewhere,...
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...Executive summary Air Asia Airline is one of the companies that once facing a critical financial crisis situation within the organisation. However Air Asia has successfully overcome this problem and expand this nearly bankrupt organisation to become million valued company within a short period of time. Air Asia only used 4 years times to change from a heavily debt organisation and become a high profit company that earn a net profit of RM112 million during 2004 (Air Asia 2005). This has illustrate that Air Asia has undergo a radically change within the organisation. Hence this report will mainly discuss and analyze on what has been done and how was the changes has been done to Air Asia so that the company could manage these changes properly as well as creates positive profit in this financial report. Table of content |Executive Summary |1 | |Table of Content |2 | |1.0 Introduction |3 | |2.0 Company Background |3 | |3.0 Drivers of Change ...
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...INTRODUCTION OF AIR ASIA [pic] Air Asia is one of the Malaysian Airline, as the second Malaysian National Airline, Air Asia was born in 1993 and started operations on 18 November 1996. It was originally founded by a government-owned conglomerate DRB-Hicom. On 2 December 2001, the heavily-indebted airline was purchased by former Time Warner executive Tony Fernandes's company Tune Air Sdn Bhd for the token sum of one ringgit. Normally low-costs Airline has a lot of differences with traditional Airline. These differences such as ticketless travel, online ticket booking & pay, no international offices, no free food and beverages, use second city airports. These doesn’t make Air Asia hard to survive in Airline industry, whereas became the features of Air Asia. By using a simple but strong slogan “Now Everyone Can Fly”, Air Asia become a successful company in Airline industry. Now in this era Air Asia is one of the succeed low-costs Airline company in the world. Nowadays, Air Asia has put their investment to other areas. Air Asia is not only focus on Airline industry. Tune hotel is one of the good examples. Air Asia boasted total assets worth RM9.52billion in 2008, is the one of growing rapidly company in Malaysia. Nowadays, people use computer to let their life easier. Management information system is systems that use hardware, software, people, procedures and data to help companies work more efficiency. It included helping to collect, distribute...
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...History. Air Asia was established in 1993 and the operations began in 1996. Air Asia had rather shaky start and the 1997-1998 financial crisis had futher worsen the situation for Air Asia to grow as a low cost carrier. During it dire stage, the company was taken over by Tune Air under the leadership of Dato Tony Fernandes with the help of Conor McCarthy, former Director of Group Operations, Ryanair. Based on Southwest Airlines and Ryanair’s business model, AirAsia offer “No frills” airlines with a catchy tagline of “Now Everybody Can Fly’’. Within 2 years Air Asia posted a net income of 18.8 million and broke the 100 million net income barriers in 2005. Since then nothing has stopped AirAsia from moving forward and setting milestones, notably the first Asian Airlines to go ticketless in 2002, first multi lingual Asian airlines website in 2003 and the world’s first airline to launch a mobile site. All these are aligned with Air Asia’s philosophy to make flying affordable, easy and convenient. Having flown 100 million’s guests Air Asia has been in the spotlights for all the rights reason, for aggressive marketing, for awards and achievements. Air Asia is one of the award winning and largest low fare airlines in the Asia expanding rapidly since 2001. With a fleet of 72 aircrafts, Air Asia 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. Today, Air Asia has flown...
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...Evaluation of air asias response to tourism Executive summary Air Asia, the market leader of low cost carriers in Asia, shown on the good record of bringing about innovative idea into the industry. The industry itself, especially in the Asian region, is observing a higher growth rate of passenger and profitability. The report examines the organization’s key business structure and operation, products and provides summary analysis of its key revenue lines and strategy. The analysis looks at the impact of external and internal factors on the organization, and evaluate it responses. Essentially SWOT and PESTLE analysis provide a simple framework through which strategic options can be identified in which Air Asia operate. The SWOT process will start by examining the strengths of the Air Asia of today. One of the most dominant strengths possessed by Air Asia is the adding of new Airbus A320 aircraft to its fleet. Airbus A320 gives Air Asia the largest, youngest and most modern fleet in the region. Another strength of Air Asia is the upgrading of the online booking system, in which will offer the ability to passenger to check in online and printing out boarding passes. An opportunity available to Air Asia is fastest growing market in China and India. Both countries give a huge opportunity for Air Asia to expand its business in the region. In the threat part of the analysis is concerned with identifying parts of the Air Asia that might affect its business performance. In recent years...
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...Introduction Air Asia has successfully been xpositioned itself in the market as one of the leaders in the airline industry in Asia with its technical strategies. It has a route network that spans through over 20 countries and is one of the low cost aviation services in Asia. The Business level strategy adopted by air Asia is cost leadership strategy. To gain its market share they focused on specific markets like domestic services, short and long haul regional services and selling their products below the average industry prices. Air Asia adopted a number of actions to compete in the industry. It launches the values added services which are to provide ticketless travel and implement a free seating policy. In 2007 air-Asia became the first airline in Malaysia to offer internet checking services that allowed all the passengers to print their own boarding passes and pay extra money to board first. So, by doing this the passengers can choose their seats easily. In addition, they can also pre-book their checked baggage and meals. This paper describes Air Asia’s each xstrategies that maintain its effective control of low cost/focus business level strategy. Air Asia’s structure, cultures and systems that are used to create loyalty of the customers and satisfied them to lead the organisation to be profitable. SWOT analysis is conducted to focus aspects of Air Asia and business sector. It also evaluates the current business, future prospects and the economic climate. Porter's five force...
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...Company – Air Asia Air Asia vision: To become a biggest low cost airline in Asia & serving the three billion of people who are presently underserved with poor connectivity and high fares. A vision is virtually comprises thinking strategically about the direction of the company in the future. After an assessment has been made on Air Asia original vision statement, there are some suggestion and improvement that needed. The new vision can be revised as: ‘To spearhead airlines industry and become most famous low-cost airline that provides the great flying experience in Asia’. Based on the revise vision statement, it showed that the formed is still within its scope as Air Asia is highlighting that they wanted to be the biggest low-cost airline in Asia. When the company expands larger, the more people will know more about Air Asia. And this will improve the strong brand identity to the consumers. Apart from that, the new vision statement shows that Air Asia wants to provide the great flying experience to the consumer or passenger. Other than that, Air Asia also can take noted that as consumers nowadays are more concern about the services quality rather than the facilities for an Airlines company. A vision statement is important to direct a company to be surviving in the future. If a company have a unreliable vision statement, it might lead a company to the wrong direction. The vision that created by Air Asia are achieving the expectations for its business. At the same time, Air Asia...
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...Company Background and analysis of AirAsia This report conducts an analysis of AirAsia, the world’s Lowest Cost Airline. AirAsia is a Malaysian low cost airline. AirAsia was found in 1993 and it started its operations from 18 Nov 1996. It was established initially by DRB-Hicom, a government owned- conglomerate. On 2 December 2001, the heavily- indebted airline was purchased Tony Fernandes former Time Warner Executive. Tony was inspired by the Low-Cost Carrier business model of Southwest Airlines and proposed to start a Low-Cost Carrier but the government refused to issue a new license and requested Tony to buy an existing airline. Hence Tune Air set up by Tony and his investors bought Air Asia for a token sum of RM1. Before 2001. AirAsia failed to attract enough passengers from Malaysia Airline to establish its own stand in the market. The turning point for AirAsia was in 2001 subsequent to its purchase by Tony Fernandes. Tony Fernandes enrolled low-cost airline experts to restructure the business model of AirAsia. He invited Connor McCarthy, formerly the director of the group operation Ryanair, to join his executive team. In the late 2001, AirAsia airline was re-launched in Malaysia as trendy, no-frills operation with three B737 aircraft as a lowfare, low-cost domestic airline. AirAsia’s simple slogan “Now Everyone Can Fly” has won the heart of customer’s. AirAsia’s profit for the second quarter (i.e.,ending 31 december 2004) was reported RM 44.4 million, which is a 323 %...
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...AIR ASIA AIRLINES COMPANY COMPANY BACKGROUND Air Asia Berhad is an established in 1993 with commenced operations in 1996. In 2001, Tune Air Sdn Bhd Tony Fernandes’s company purchased this airline from DRB-Hicom. Air Asia never look back after that. Air Asia’s first and main base is the Low Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport, while its secondary hubs are at Kota Kinabalu International Airport, Senai International Airport and Penang International Airport. Air Asia is well known as Malaysian low cost airline and even Asia’s largest low fare, no frills airline. The airlines claims ‘No Admin Fee’, but has some fees for services which are free on other airlines. Air Asia slogan is ‘Now Everyone Can Fly’. Being the home of Air Asia, the LCCT is the budget terminal in KLIA, opened on 23 March 2006. LCCT is said to be carried about 10 million passengers a year. The Air Asia subsidiaries are the likes of Thai Air Asia, Indonesia Air Asia, Viet Jet Air Asia and Air Asia Red Tix. Meanwhile, Air Asia associate companies are Air Asia X, Tune Hotel and Tune Money. MISSION AND VISION OF AIR ASIA Vision 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 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 ...
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...Asian Low Cost Airlines A Strategic Management Analysis Analysis is made from Strategic Alliances between Batch 20 and Batch 21 of SGU MBA Program Written by YopieRissa Pahlawan Arfianto RiaHutari RonyHariadi If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline. Rollin King and Herb Kelleher, founder of Southwest Airlines in 1971 SECTION 1 – Budget and Low Cost Airlines 1.1. Budget Airlines The original concept of budget airlines is basically outsourced business. It puts together other businesses into and integrates those separate businesses into a form of operation and put effort to create a brand. Basically, it will try to minimize capital investments and cover it with operational expenses. And by nature of its business model, the cost structures are all variable costs, or very minimum fixed costs. With this business model, the company is not only rent the aircraft, but also outsourced its pilots, flight attendants, and other employees. It will sell tickets through agents and use service from company doing aircraft maintenance and services. And to ensure the profitability, it is critical that the operational costs, which is the main source of expenses, to be as low as possible. Therefore, it is typical that companies using this business model to use old airplanes which are close to end of the service-life...
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...9/25/13 Air Asia Assignment - Term Papers - Haixzzz Get Access to over 1,148,422 More Essays. Upgrade Your Account Now. Upgrade Essays Book Notes AP Notes Citation Generator More | Hi ilaanabila Search essays Home » Business & Economy Air Asia Assignment By haixzzz, september 2011 | 9 Pages (2048 Words) | 2984 Views| | | Upgrade to access full essay This is a Premium essay for upgraded members Air Asia A. Introduction 1. Objective and scope This paper will analyze the internal and external environment of Air Asia and will look into how it uses Management Information System ( MIS ), specifically its online reservation system to gain competitive advantage. And also discuss why and how important is MIS to Air Asia in running its business. 2. The Important of MIS Low Cost Carriers (LCC) business model is based on no frills service. This means that cost savings is a critical success factor in their operations. Air Asia is no different. And Aie Asia uses MIS to runc this LCC business model. So, what is MIS? MIS is the useful information to support management in an organization so that we get what we want. And MIS tool in Air Asia is the Air Asia booking system. In the competition in the airline business, booking system is the advantage for Air Asia. “The early you book the tickets, the cheaper it will be.” This early booking promotion kills two birds with one stone. It gives customers opportunity for cost savings and encourages a lof of people to plan...
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...Firstly, cost pressures on airlines continue to be high. The industry is facing many challenges on the cost side. For instance, jet fuel costs, which are directly correlated with oil prices, continue to rise. Airlines are generally unable to pass these costs onto the consumer, especially in the face of growing competition and price-sensitive markets. Nevertheless, these high fuel prices have motivated manufacturers to create more fuel-efficient aircrafts. Secondly, airlines are becoming more environmentally conscious, partly (or mainly) due to stricter emission and noise regulations. Globally, governments are more concerned with the implications of air travel to issues such as global warming and climate change. This is seen by Australia being one of the first countries to implement a carbon emissions tax, and the EU’s plans to implement a similar initiative. Thirdly, customers have greater choice and bargaining power. This is due to deregulation and emergence of new carriers especially the low-cost carriers. More innovative pricing models and services are now available to compete for the consumers’ dollar. With growing affluence of regions such as Asia-Pacific, manufacturers such as Airbus have predicted passengers to double over the next 20years.Finally, the use of technology (such as mobile applications and social media) to advertise, engage consumers, build customer databases, and sell travel deals/fares is becoming increasingly prevalent. Beyond just providing air travel,...
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...analysis at air asia Air Asia is the second Malaysian national airline which provides a totally different types of service called low cost no frills. Their vision is to provide affordable price to all worldwide travellers with minimum in-flight service.thier price is slightly lower than to any other full service airlines. Before 2001 Air Asia fails to capture market or attract new customer due to its poor operation against the full fledge service given by Malaysian airlines which was supported by Malaysian government. Turning point of Air Asia was in 2001 when this loss making company bought by Tony Fernandez. Air Asia re-launched in Malaysia in late Air Asia re-launched in Malaysia in late 2001, with low cost domestic airlines. Value Chain Analysis: PRIMARY ACTIVITIES: The primary activities in Porter’s Value Chain are as follows INBOUND LOGISTICS: As inbound logistics involves different categories in air line industry for example how to schedule flights, keeping an eye on their competitors that what strategy they are adopting how to sustain in market, and how to cut off their price as they manage fuel efficiency by purchasing it advance when prices are low, and how to plan routes as they mostly plan short routes so that their costs are low. OUTBOUND LOGISTICS: As air Asia mostly uses their operations through online as their ticketing process is totally online and customer can get their tickets book online and they can also print their boarding card from their homes, Air Asia...
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