Air Asia Presentation, Strategic Management
Air Asia Presentation, Strategic Management
Air Asia Presentation, Strategic Management
Air
Asia
Company Culture
Training and Development
Non Traditional Marketing- KoolRed
Free Journalist Trips
Improving brand recognition
Innovative Advertising
Questions faced
How best to leverage on the extensive network
of the regiona sister company Airasiain
selecting new destinations for Airasia X?
Air
Asia
Expe
cted
Resp
onse
of
Com
petit
ors
Long
term
com
petiti
ve
and
mark
et
Prese
nce
Pass
enge
r
Prefe
renc
e for
multi
ple
conn
ectin
g
Air
Asia
Air
Existing Short Haul Network of Air
Asia
Asia
Feeder Network
Dense Network in South Asia.
More than 78 destinations can
feed passengers to Air Asia X
flights
Air Asia X passenger
profile
60% Malaysian nationals
40% originating from X
destination or transfer from
Air Asia or other flights in KL
Major focus on less
affluent Malaysian
passenger base
Between 1991 and 2011, the number of foreign tourist arrivals to Southeast Asia increased by
nearly
Rapidly300%.
growing new middle class through Asia. ( Income of low population group growing at
around 7% at this time)
Route Evaluation
Aircraft Specs
A330 : short medium range aircraft
Maximum range when full approx. 7000
km
Fuel Usage approx.3,000 gallons per hour
Cruise speed approx. 850 km/hr
Other Info
Aviation fuel Price : - approx. $2 per gallon
Industry Aircraft Utilization :- 11 hours a day vs Air
Asia Xs 16 hours a day
Load Factor Industry average for break even 65%69% (target should be around 80% for profitability)
Air
Asia
Route Evaluation
China
Air
Asia
Japan
Destination Appeal : High
Japan ranks 6th in tourist arrival, Malaysia ranks 3 in Asia
Number of tourists : approx. 12,18,400 in an year
Propensity to travel on this route : High (tourist arrival sustained over a period of years)
Incentives and Support from Japanese Tourism and AA : Industry Rates for taxes and airport charges
Australia
Destination Appeal : High
Australia ranks 9 in the world for international tourism receipts
Number of tourists : approx. 8,06,700 in an year
Propensity to travel is also High
Incentives and Support : No tax benefits but support by waiving off 50% of R&D tax expense. Industry rate of
airport charge
Air
Asia
Fuel Charge contributes to about 1/3 of the operating cost for an airline. Hence total
expense for one trip is around $90000 for this route
Profitability of Routes
Air
Asia
Japan
Tokyo <-> KL
Ticket price: approx. $331 (without differentiating business and economy; assuming 90% load factor)
Australia
Darwin <-> KL
Ticket Price: approx. $192 (without differentiating business and economy; assuming 90% load factor)
Saudi Arabia
Jeddha <-> KL
Ticket Price: approx. $437 (without differentiating business and economy; assuming 90% load factor)
Europe
London<-> KL
Ticket Price: approx. $400 (without differentiating business and economy; assuming 90% load factor)
These prices are on average lower than those charged by other airlines for
economic class the same route.
Air
Asia
SouthWest
(low cost,
short haul)
AirAsia
X
JetSar
8.59
3.5
1.52
79.30%
76.50%
60%
10.48 hr
15.7 hr
11 hr
130.2 USD
160.71
193.2 USD
USD
AirAsia X In 2009: Lowest cost Avg US Budget airline - US$0.09 per mile, AirAsia$0.02 per mile
Air
Asia
Air
Asia
Air
Asia
No frills
Faster turnaround of aircraft
Point-to-point markets only
Higher productivity with increased seat
density
Passenger load factor
Air
Asia
Cost Saving
Comparison
Air
Asia
High density long-haul services should offer at least 300 seats per flight
Need daily or five weekly frequencies.
a market share of at least 175,000 passengers.
Otherwise they would be restricted to leisure markets
LCCs have played a smaller role in stimulating traffic than attracting
passengers from other modes
Using economic sized aircraft, 80% loading factor would be possible because
of the simplified fare structure, one-way pricing and very transparent webbased distribution.
Corporate
culture
Factors
Leadership
Structural
features that
guide and
constrain
action
Organization
al systems
that foster
learning and
manage
rewards
Product or process
improvement
Xs sponsorship of Manchester
United
Sponsoring Oakland Raiders
National Football League team
in 2009
Sponsoring Lotus Formula One
Racing Team
Sponsoring Asian Basket Ball
League
Distinctive advertising
Explicit advertising
Sarcastic or humorous in
nature
No-Pro tour
Television commercials for
CNN
New Venture
Groups
Business
Incubators
Funding
Physical
Space
Business
services
Mentoring
Networkin
g
Same customer
demographic expected
a different comfort
level on long haul
flights compared to
short haul flights
Opening Up Skies
to Everyone
Business travellers
who book Xs flat
bed seats know X
only as Air Asia.
Customers didnt
understand that X is
a separate airline.
Global IPO
Decision to list in Stock Exchange
Credibility to Xs business model as Singapore airline announced its plan
to launch long haul budget carrier
KLSE
Pros:
Good books of Malaysian Govt and Ministry of Transport
Easier to get approvals and licenses to operate in different
routes
Credibility to Xs business model way to attract Malaysian
Investors
Projected Growth Figures of 56% by 2014 for air travel in Asian
Market
Cons:
Little value for Malaysian investors holding shares of Air Asia
Even after listing on KLSE, Govt may impose restrictions on
certain routes and exercise monopoly
Global IPO
Xs IPO scheduled for Late 2011 or Early 2012
Strategic action AirAsia X must tackle in order to effectively prepare for a global IPO
Thank You