AirAsia: Malaysia’s Pioneering Low-Cost Airline

Company Background AirAsia Berhad as know as AirAsia is a Malaysian low-cost airline. It operates scheduled domestic and international uflights and is Asia's largest low fare, no frills airline. AirAsia pioneered low cost travelling in Asia. The airline was established in 1993 and started operations on 18 November 1996. A government-owned conglomerate DRB-Hicom originally founded it. On 2 December 2001, the heavily-indebted airline was purchased by former Time Warner executive Tony Fernandes's company Tune Air Sdn Bhd.

AirAsia is the first airline in the region to implement fully ticketless travel and unassigned seats. However, as of 5 February 2009, AirAsia has implemented allocated seatings across all AirAsia flights, including in their sister airlines, Indonesia AirAsia and Thai AirAsia. In 2003, AirAsia opened a second hub at Senai International Airport in Johor Bahru near Singapore and launched its first international flight to Bangkok. AirAsia has since started a Thai subsidiary, added Singapore itself to the destination list, and commenced flights to Indonesia.

Flights to Macau started in June 2004, while flights to Mainland China (Xiamen) and the Philippines (Manila) started in April 2005. Flights to Vietnam and Cambodia followed later in 2005 and to Brunei and Myanmar in 2006, the latter by Thai AirAsia. Its main base is the Low Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport (KLIA). LCCT will initially handle 10 million passengers a year. Its affiliate airlines Thai AirAsia and Indonesia AirAsia have hubs at Suvarnabhumi Airport, Thailand and Soekarno-Hatta International Airport, Indonesia, respectively.

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The airline is also considering founding Hong Kong AirAsia in the future. AirAsia's registered office is in Petaling Jaya, Selangor while its head office is on the grounds of Kuala Lumpur International Airport in Sepang, Selangor. AirAsia operates with the world’s lowest unit cost of US$0. 023/ASK and a passenger break-even load factor of 52%. It has hedged 100% of its fuel requirements for the next three years, achieves an aircraft turnaround time of 25 minutes, has a crew productivity level that is triple that of Malaysia

Airlines and achieves an average aircraft utilisation rate of 13 hours a day. AirAsia is currently the largest single customer of the Airbus A320. AirAsia “Rock India” Campaign This new development is subsequent to AirAsia's huge success of Tiruchirapplalli (Trichy) followed-by Kolkata, Kochi and Thiruvananthapuram (Trivandrum) recording an average of 80% load factor on all four existing routes. Thus, these new services will not only complement AirAsia's aggressive growth in India, but is also feeding more traffic into the country.

The reason why AirAsia is choosing India market is because India market is second only to China in growth, as the India market is booming AirAsia has decided extending its footprint with the launch of its direct flights to 6 new routes in the first quarter of 2010. This new services to key metro cities include Chennai, Bangalore, Hyderabad, Mumbai and New Delhi from Kuala Lumpur and from Penang to Chennai. It is also noteworthy to highlight that AirAsia is the only airline from Malaysia which will be flying to Bangalore and Hyderabad from Kuala Lumpur and from Penang to Chennai.

The Chennai, Bangalore and Hyderabad sectors will be serviced by AirAsia's A320 aircrafts, Mumbai and Delhi will be served by its long-haul affiliate, AirAsia X via its new Airbus A330 fleet. AirAsia is the only airline which connects to the most points in India from Malaysia with a total of 148 flights weekly. Segmentation To promote India tourism sport and stimulate new travel demands and further tap markets AirAsia is focus on working adult, families and backpackers.

Especially to young working adults and families, to travel to Malaysia and thereafter use Kuala Lumpur as a gateway to over 130 routes in Asia, that includes regional ASEAN cities or long-haul sectors serviced by AirAsia X. And to achieve AirAsia objective “Now everyone can fly” AirAsia will support this by liberalizing the air travel with undisputed low-fares, opening-up the India market to the world and support businesses and more. Database Marketing Approximately 60% of overall bookings are made online through AirAsia website.

The remaining 40% of bookings are done through Nationwide Call Centre, Preferred Travel Agents, AirAsia's Airport Stations and Sales Offices. Consumers who choose online purchase ticket have to fill up name, gender, occupation and others information and for consumers who wish to get latest news or promotion from AirAsia they can create an account and become a member of AirAsia. With all database that collect from online booking and sales office, AirAsia able to track their customer and segment them by Demographic segmentation. With these databases AirAsia able to retain consumer by sending E-gift voucher for them. The E-Gift Voucher is an innovative gift for all occasions as well as being a much-appreciated corporate gift for its high perceived value. ) Direct Marketing Offer Planning While everyone is focusing on China market, AirAsia develop and create a wonderful strategy and come out with special offering to their customer to successfully in their business by taken a first move advantage extends their business to India and have the advantage of being the first low cost airline in India with using Price Leadership Strategy to attract consumer form Malaysia or India.

This allow it to establish itself before competition increases in this low cost segment, apart from competition that already exists across segments (low cost vs full service carriers). This is a major strength, as AirAsia will be laying down the rules and frameworks for the industry in a manner that suits its business and operational model. This also bring cross selling to AirAsia. To add value, AirAsia, under GoHoliday at www. airasiago. com, also offers some great online hotel deals to stretch the dollar where guests can choose their holiday lodgings from over 50,000 hotels, tour packages and ground transfers.

Guests are also encouraged to purchase food, supersize their baggage, hot seats online to enjoy more discounts and savings through www. airasia. com. AirAsia's low-cost model, with its ultra low fares and modern fleet of comfortable and spacious aircraft, is undoubtedly an attractive consumer proposition, strong enough to compete with premium airlines. At any time after a booking has been made AirAsia may change their schedules or cancel, terminate, divert, postpone reschedule or delay any flight where they reasonably consider this to be justified by circumstances beyond their control or for reasons of safety or commercial reasons.

Unfortunately the Terms and Conditions of AirAsia don't allow for a refund but to protect consumers in the event of such flight cancellation, AirAsia shall at their option, either carry consumer’s at the earliest opportunity on another of AirAsia scheduled services on which space is available without additional charge and, where necessary, extend the validity of consumer’s booking or choose to travel at another time, retain the value of consumer’s fare in a credit account for future travel provided that consumers must re-book within three month.

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