1. Air Asia’ s Core Competencies
and its success Factors
MGT7144- Management Research Skills, Action & Strategy
Assignment 2 ( Group Discussion and Presentation)
By : Nasser ALDhahli
SEGi University
DBA 2012
SCM -020314

2. Introduction
Increasing liberalization of the regulatory environment in
which regional and global airlines compete has created
challenges for major carriers as well as opportunities for
carriers that are able to deliver high-quality services at the
lowest possible price.
As a result, low-cost airlines are an increasingly common
sight in airports around the world where no-frill air carriers
are providing reliable service at a fraction of the price
charged by full-price competitors. such as AirAsia

3. •
Air Asia , Profile
Established in 1993 and commenced operation on 18 November 1996.
• 2001, it was purchased by former Time Warner executive Tony Fernandes’s
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.
• 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).
• AirAsia’s associates companies- AirAsia X, Thai AirAsia (TAA), Indonesia (IAA)
and Malaysia AirAsia (MAA), and VietJet AirAsia.

4. Key Strategies
Safety First
•High Aircraft
Utilization
•Low Fare, No Frills
•Streamline
Operations
•Lean Distribution
System
•Point to Point
Network
Air Asia.com 2012

5. Root of Competitive advantage of Air Asia
Adapted from Study slide For Dr. Abang, 2013

6. 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.
 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.

7. CORE COMPETITVE 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’.

8. Air Asia.com 2012

9. CORE COMPETITVE OF AIR ASIA Cont,,,,
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

10. COMPETITVE ADVANTAGES LOW COST
Product and
skillful employees
Courteous,
and simple but limited
aggressive and passenger
focused service ( eg.
management
structure No Meals)
Short Haul ,
point-to- point
High aircraft routes, often
utilization to secondary
airports
Standardizatio Frequent,
n fleet of Reliable
aircraft Schedules
Developed for this presentation

11. Strengths Weaknesses
Strong management team consists of industry  Service resource is limited due to low costs
experts and ex-top government officials
( all the board of directors have outstanding  Government interference and regulation on
portfolio airport deals
 Low cost operations (ticketless, online  Non-central location of secondary airports
booking, online check-in, quick turnaround of
25 minutes, low fares and no frills)  Heavy reliance on outsourcing
 Using single aircraft fleet (reduce the  Complaint from customers regarding the
maintenance and training costs) current overcrowded LCCT (handled about 17
million passengers instead of its capability to
 Enter and focus on potential market (lower handle 15 million passengers)
and middle income group)
 Multi-skilled and well-trained staffs to
enhance the efficiency
Strong brand recognition, marketing approach
and awareness

12. Opportunities Threats
 Expansion to new routes based on low cost  Accident and disaster affect customer
philosophy (exploit growing markets like confidence (Example: an aircraft skidded off
China, India) the runway while landing at KCH
International Airport on Jan 2011)
 Higher fuel costs means less profitable
competitors may be forced out of business  Aviation regulation and government policy
(barriers in new routes expansion)
 Partnerships with Virgin airline to use
existing strengths (brand recognition, landing  Full service airlines start cut costs to
rights) compete (MAS offered discounted fares with
meals and comfortable seats)
 Differentiate from old LCC model (include Entrance of other low cost couriers (Firefly,
customer service and operation as full service Tiger Airways)
airline)
Long haul flight to approach undeveloped
market (Air Asia X to Europe)

13. Will Air Asia be able to
sustain its Core?

14. Success factors
• Combination of good timing, entrepreneurial vision and
some blind luck that may have run out
• Testament to Fernandes’s capabilities as a effective leader
in a wide range of settings.
• “The one thing the company managed to keep consistent
was its no-frills model and always offering value in low
fares” (Lawton and Doh, P435)

15. Conclusion
AirAsia’s air fleet has grown with routes servicing 400
destinations in 25 countries with hubs in Malaysia, Thailand
and Indonesia today. In addition, Tony Fernandes is
responsible for this impressive rate of growth, with many
analysts citing his no-frills, low-cost business model as
some of the best industry practices.

16. Thank You !
NOW EVERYONE CAN FLY

17. References:
Corporate profile. (2012). AirAsia. Retrieved from
http://www.airasia.com/ot/en/about-us/corporate-profile.page.
Clerment. Ong & Ivy Wong . Power Point Presentation on Air Aisa
Dr. Abang N Dahlan . (2013). Seminar 3 Topic 5 Strategy Research
Lawton, T. & Doh, J. The ascendance of AirAsia: building a successful
budget airline in Asia. Ivey Case Study No. 2.