AirAsia Case

Executive Summary

SMO 441

Submitted: March 8, 2011

Abi Sanni

Aly Remtulla

Kelsey Gamble

Kendra Jocksch

Nancy Moke

Company background

Tony Fernandes, as the Chief Executive Officer of AirAsia, decided to pursue his dream to start an airline with the following vision: “To be an airline that flies long-hauls with low fares with a corporate culture that is flexible and functional”. In January of 2002, Tony re-launched AirAsia (previously a struggling government-owned airline) with only 3 planes and started serving the South-East Asian Market. In 2004, it began its first international service and in 2007, expanded into long-haul flights run by a different brand: AirAsia X. That year, the …show more content…

AirAsia also establishes cost advantage through its production techniques by being effective with their distribution methods. AirAsia flights use a point to point network instead of a hub and spoke system. The point to point network leaves out connecting flights, flight transfers and having to label luggage and move luggage from one flight to another.

Residual efficiency is another important component of cost advantage. AirAsia creates a team-oriented environment. Employees are selected based on their aptitudes, are multi-skilled, and have is a high level of job-flexibility, which fits nicely with AirAsia’s open management style. Employees are aware of the company’s core strategy and are also rewarded with bonuses based on individual performance.

Recommendation and Conclusion
Based on this analysis, our recommendation focuses on three main areas:
1) A Blending of Brands: AirAsia has established a great name and reputation, and should continue to add to its success by integrating the AirAsia X brand. This can be achieved by the “X” representing premium choices on long-haul flights. This will this ease brand confusion by having only one Air Asia brand with extra (X) options, and will present a strong united front.
2) Implement Long-Haul Flights Strategically: AirAsia has the ability to provide long-haul flight at lower costs than other airlines, and therefore Air Asia should expand its