The Low Cost Airline: Airasia 2

3407 Words Jun 19th, 2009 14 Pages
The Low Cost Airline: AirAsia
A study of opportunities, challenges and critical success factors

LGT 3007 Air Transport Logistics

History of low cost airlines
The low-cost concept became a moneymaker in the United States, where it was pioneered in the 1970s by Southwest Airlines, the model for budget carriers elsewhere like Ryanair and easyJet in Europe.

Definition of low cost airlines
A low cost airline generally has many features that differentiate it from the traditional carriers. These features include ticketless travel, online ticket sales, no international offices, no frequent flyer points, no free food and beverages, no inflight magazines, no club lounges, use of secondary city airports.

Not all low
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AirAsia with its politically powerful backer may well grow up to bite. This helps it open the Thailand market.

4.Malaysian government support
The Malaysian government supported the establishment of AirAsia in 2001 to help boost the under-used Kuala Lumpur International Airport. AirAsia 's flights from Senai are meant to develop Johor into a transport hub to rival Singapore. AirAsia, therefore, can provide an alternative route to travel to Bangkok, by using Senai Airport in Johor Bahru, in southern Malaysia.

Opportunities faced by AirAsia in light of internal development
1.Issue of IPO
Kamarudin Meranun, AirAsia 's Executive Director announced the appointment of Credit Suisse First Boston (CSFB) and RHB Sakura Merchant Bankers (RHB) as the bookrunners for the company 's upcoming Initial Public Offering (IPO).

The IPO strengthens AirAsia balance sheet, further cuts its existing low costs at 2.5 US cents per ASK and accelerates our growth plans throughout Asia. The IPO also allows AirAsia to expand its fleet of 18 Boeing 737-300s.

2.Political connections
Thai AirAsia is a join venture established by AirAsia with Shin Corp. Shin Corp. is owned by the family of Thailand 's prime minister, Thaksin Shinawatra, and about 900 million baht will be invested in Thai AirAsia over a five-year period. Shin Corp. oversees the finance and administration of Thai

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