Download - Air asia presentation
Clement Ong Keita
Ivy WongZhang Cen
We proudly present to you…..
Please fasten your seat belts
Have you flown with AirAsia yet?
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Corporate Profile• Established in 1993 and commenced operation on 18 November 1996.
• 2 December 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.
• AirAsia is proud to be a truly ASEAN (Association of South East Asian Nation)
carrier.
• 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.
• Previously known as FlyAsianXpress Sdn Bhd.
• Focusing on the low-cost, haul segment.
• Established in 2007 to provide high-frequency and point-to-point networks to
the long haul-business.
• AirAsia X is spreading its wing to exciting destinations such as Australia, China,
India, Middle East and Europe.
AirAsia X
Tune Hotels
• Limited service hotel chain founded by AirAsia CEO Dato’s Tony Fernandes.
• Its hotel operates in Kuala Lumpur, Kota Kinabalu, Kuching, Penang, LCCT
Sepang and Westminster, London.
The Star Highlights of…Air Asia Founder & CEO- Dato' Sri Dr. Tony Fernandes
• Malaysian, aged 48.
• Appointed Group Chief Executive Officer of the Company in
December 2001.
• Financial Controller at Virgin Communication London (1987- 1989).
• Senior Financial Analyst at Warner Music International London (1992-
1996).
• Regional Managing Director, ASEAN (1996-1999).
• Vice President, ASEAN at Warner Music South East Asia (1999-2001).
• After graduating in London School of Economics, he worked with
Virgin Atlantic and Richard Branson became his boss and mentor.
• Under his leadership, AA broke even within a mere 12 months and
cleared its debt.
• Outperform Malaysia’s national carrier MAS, in terms of size,
revenue, profit and popularity.
Vision StatementTo be the largest low cost airline in Asia and serving the 3
billion people who are currently underserved with poor
connectivity and high fares.
Mission Statement• To be the best company to work for whereby employees are
treated as part of a big family.
• Create a globally recognized ASEAN brand.
• To attain the lowest cost so that everyone can fly with Air
Asia.
• Maintain the highest quality product, embracing technology
to reduce cost and enhance service levels.
Key Strategies• Safety First
• High Aircraft Utilization
• Low Fare, No Frills
• Streamline Operations
• Lean Distribution System
• Point to Point Network
Achievements: Year
20
03
-2
01
0
Internal 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.
• “Employees before customers”.
• 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.
Welcome to Air Asia Internet Homepage!
AirAsia Electronic Ticket Ordering Process
External Capabilities
• Partnerships- with Vietnam-Malaysia cooperation forming VietJet AirAsia.
• Strong branding strategy: AT&T Williams F1 team, Manchester United, Asean
Basketball League (ABL), EPL Referees, Oakland Raiders, NFL, The Amazing Race
Asia, Monsoon Cup 2006, etc.
• First landing of Air Asia X greeted by Prince Andrew from Kuala Lumpur to
Standsted, London.
• Linking with Virgin Airlines- landing right in overseas.
• Look for suppliers with good quality on certain prices, build long-term
relationship.
• Airports have low cost terminal hub.
• CSR, recently involve in providing flight services for evacuation of Malaysian
students in Egypt.
COMPETITVE ADVANTAGE 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 flightsmultiplied by the number of kilometers these seats were flown.
Cost per ASK: Total operating expenses (excluding finance costs and taxation) divided by ASK. In theairline industry, this is comparable to ‘unit cost’.
Air Asia.com, 2009
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
Air Asia.com, 2009
5- Frequent, Reliable schedules
7- High aircraft utilization
Space are well used in the airplanes to provide more site
No first class
8- No Fuel Surcharges Policy
despite hike in oil prices.
Fuel surcharge of RM20 will only be made if oil price is $100 per barrel
6- Short haul ( point to point ), often secondary airports
Less cost for the company
Air Asia.com, 2009
COMPARISON This diagram compare Air Asia with other company in terms of cost per unit.
Air Asia was the Best Low-Cost Airline for 2010
Air Asia.com, 2009
Too much to know? Stay Tuned… We will be back!
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Financial Performance
(Annual Report 2009)
•Operating profit margin at 29.1%
•Strong deposits, cash and bank balances of RM746 million
•Despite a economic downturn period, AirAsia revenue for the year
jumped 9.71% to RM3.1 billion and recorded a profit of RM506 million.
Note
Group Company
2009RM’000
2008RM’000
2009RM’000
2008RM’000
Revenue 4 3,132,901 2,854,970 3,072,049 2,815,262
Operating expenses- Staff costs- Depreciation of property, plant and equipment- Aircraft fuel expenses- Maintenance, overhaul, user charges and other related expenses - Aircraft operating lease expenses- Travel and tour operating expenses- Gain/(loss) on unwinding of derivatives- Provision for loss on unwinding of derivatives- Other operating expensesOther incomeOperating profit/(loss)Finance incomeFinance costsProfit/(loss) before taxationTaxation- Current taxation- Deferred taxationNet profit/(loss) for the financial year
51125678899
(306,002)(447,644)(927,795)(410,583)(107,251)(53,524)
22,457-
(92,188)102,383
(236,793)(346,954)
(1,389,841)(307,205)(92,649)(37,945)
(678,503)(151,713)
(46,570)81,545
(304,551)(447,637)(927,795)(410,583)(107,251)
-22,457
-(90,543)102,383
(235,773)(346,946)
(1,389,841)(307,205)(92,649)
-(678,503)(151,713)(44,627)
81,545
912,75484,505
(374,971)
(351,658)35,245
(552,785)
908,53984,462
(374,971)
(350,450)35,245
(552,782)
622,288(11,186)
(104,835)
(869,198)(3,769)
376,404
618,020(11,186)
(104,835)
(867,987)(3,769)
376,404
(116,021) 372,635 (116,021) 372,635
506,267 (496,563) 501,999 (495,352)
(Air Asia Press Release Q3 2010)
•Revenue: RM988 Million (34% growth year-on-year from RM740 million)
•Profit after Tax: RM327 million
•Had been described as outstanding performance
• Looking forward to 2011 → driving down the costs → raising the yields → increase productivity → expand the route network
Strengths Weaknesses Strong brand recognition, marketing approach and awareness
Strong management team consists of industry experts and ex-top government officials( all the board of directors have outstanding portfolio
Low cost operations (ticketless, online booking, online check-in, quick turnaround of 25 minutes, low fares and no frills)
Using single aircraft fleet (reduce the maintenance and training costs)
Enter and focus on potential market (lower and middle income group)
Multi-skilled and well-trained staffs to enhance the efficiency
Service resource is limited due to low costs
Government interference and regulation on airport deals
Non-central location of secondary airports
Heavy reliance on outsourcing
Complaint from customers regarding the current overcrowded LCCT (handled about 17 million passengers instead of its capability to handle 15 million passengers)
Opportunities Threats Long haul flight to approach undeveloped market (Air Asia X to Europe)
Expansion to new routes based on low cost philosophy (exploit growing markets like China, India)
Higher fuel costs means less profitable competitors may be forced out of business
Partnerships with Virgin airline to use existing strengths (brand recognition, landing rights)
Differentiate from old LCC model (include customer service and operation as full service airline)
Entrance of other low cost couriers (Firefly, Tiger Airways)
Accident and disaster affect customer confidence (Example: an aircraft skidded off the runway while landing at KCH International Airport on Jan 2011)
Aviation regulation and government policy (barriers in new routes expansion)
Full service airlines start cut costs to compete (MAS offered discounted fares with meals and comfortable seats)
BIG SALE: 1,000,000 seats up for grab now!
Air Asia RM1 Promotion
Special Day Promotions
Passport of love – Fly with your loved ones this Valentine’s
~ Does not meet every customer’s demand for convenience in terms e-ticketing. (Eg. Not possessing any related card services for transaction, emergency booking (before 24 hours fight)
Problems Faced by AirAsia
~ Problems with crowded seating~ Problems with the long distance walk between the airplane stop and the terminal entrance.
Recommendations:
• Failure of internet system
• Leverage competency in creating cost advantage across multiple
value chain.
• Emphasis on more effective safety & security to avoid accidents.
(Eg. demonstrations and procedures for passengers, avoid crash
landings)
• Punctuality should be their main concern especially AA wants to
penetrate into the business travelers market.
• Arrangement of seating should be organized.
In summary,
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Thank You!
NOW EVERYONE CAN FLY