Company Background and Analysis of Airasia

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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.

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Lean distribution system offering many creative range of distribution channels to make reservations.

The AirAsia brand is promoted by television, in tabloids and in the newspaper. It is also sponsoring various effects such the The Amazing Race Asia. It has signed a sponsorship deal with Manchester United(MU) to attract MU fans in Asia to travel with AirAsia( The airline sends newsletter by email to registered customers to inform free seats promotion for flights to some cities in Indonesia such as Surabaya, Bali and Lombok.

One of the characteristics of Airasia is the fuel hedging program. AirAsia purchases fuel well in advance at a fixed price for future delivery as rises in fuel prices may be anticipated(, 2010)

Applying point-to-point network to keep operations simple and low costs.

AirAsia has won many awards and recognitions adapting the above strategies in its business modes. The list of awards and recognitions in 2008 and 2009 are:

Airline of the Year by Centre Asia Pacific Avaition(CAPA)

Best Asia Low-Cost Carrier by TTG Travel Awards 2009

World’s Best Low Cost Airline by Skytrax.

AirAsia is leading way for developing low cost airlines and revolutionize the international market place. Many low cost airline companies have adopted the strategies

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