Air Asia: Strategic Management Report
Air Asia: Strategic management report
Intoduction
Air Asia was founded in 1993 and has since grown to be one of the biggest airlines in the world. It initially operated in Malaysia and currently operates in over 25 countries (Ricart and Wang 2005). It began operations in October 1996, operating out of Kuala Lumpur as its central location (Ricart and Wang 2005). The airline was bought by Tune Air in 2001 for one ringgit, the equivalent of 0.26 US cents, at a time when the company had $10.5 million debt (Ahmad 2010). Tune Air comprised of three initial Malaysian investors, Tony Fernandes and Connor McCarthy (Ricart and Wang 2005). With Fernandes, a former Time Warner executive, at the helm, and McCarthy, RyanAir’s former director of operations, the business almost immediately eradicated the debt with ambitious CEO, Fernandes, implementing aggressive low cost systems throughout the organisation(Ricart and Wang 2005). In October 2004, AirAsia attracted over $200US million in capital through an initial public offer (IPO) in shares (Ahmad and Neal 2006). In 2009, a year when most airlines made considerable losses due to the financial crisis, AirAsia posted a profit of $161.1US million, highlighting their ability to perform in testing market conditions (Unknown 2010). In 2009 they also finally negotiated with Sydney Airport to begin flights with initial costs to be offset by moving into the cargo carrying market (Bruce 2009). The low cost structure of Air Asia is entrenched in the organisation in their mission statement, which is to “To continue to be the lowest cost short-haul airline in every market we serve, delivering strong organic growth through offering the lowest airfares at a profit” (AirAsia 2011), and their vision statement “To be the largest low cost airline in Asia and serving the 3 billion people who are currently underserved with poor connectivity and high fares” (AirAsia 2011).. The industry for low cost carriers (LCC’s) in Asia is highly competitive.
Intoduction
Air Asia was founded in 1993 and has since grown to be one of the biggest airlines in the world. It initially operated in Malaysia and currently operates in over 25 countries (Ricart and Wang 2005). It began operations in October 1996, operating out of Kuala Lumpur as its central location (Ricart and Wang 2005). The airline was bought by Tune Air in 2001 for one ringgit, the equivalent of 0.26 US cents, at a time when the company had $10.5 million debt (Ahmad 2010). Tune Air comprised of three initial Malaysian investors, Tony Fernandes and Connor McCarthy (Ricart and Wang 2005). With Fernandes, a former Time Warner executive, at the helm, and McCarthy, RyanAir’s former director of operations, the business almost immediately eradicated the debt with ambitious CEO, Fernandes, implementing aggressive low cost systems throughout the organisation(Ricart and Wang 2005). In October 2004, AirAsia attracted over $200US million in capital through an initial public offer (IPO) in shares (Ahmad and Neal 2006). In 2009, a year when most airlines made considerable losses due to the financial crisis, AirAsia posted a profit of $161.1US million, highlighting their ability to perform in testing market conditions (Unknown 2010). In 2009 they also finally negotiated with Sydney Airport to begin flights with initial costs to be offset by moving into the cargo carrying market (Bruce 2009). The low cost structure of Air Asia is entrenched in the organisation in their mission statement, which is to “To continue to be the lowest cost short-haul airline in every market we serve, delivering strong organic growth through offering the lowest airfares at a profit” (AirAsia 2011), and their vision statement “To be the largest low cost airline in Asia and serving the 3 billion people who are currently underserved with poor connectivity and high fares” (AirAsia 2011).. The industry for low cost carriers (LCC’s) in Asia is highly competitive.
References: Ahmad, R. (2010). "AirAsia: Indeed Sky 's the Limit." Asian Journal of Management Cases 7(1): 7-31. Ahmad, R. and M. Neal (2006). "AirAsia: The Sky 's The Limit." Asian Journal of Management Cases 3(1): 25-50. AirAsia. (2011). "Air Asia: Corporate Strategy." Retrieved 19/05/2011, 2011, from http://www.airasia.com/my/en/corporate/irstrategy.html. Bruce, M. (2009). "AirAsia X closes in on Sydney deal." http://www.travelweekly.com.au/news/airasia-x-closes-in-on-sydney-deal. Costa, P. R., D. S. Harned, et al. (2002). "Rethinking the aviation industry." McKinsey Quarterly(2): 88-100. De Neufville, R. (2008). "Low-Cost Airports for Low-Cost Airlines: Flexible Design to Manage the Risks." Transportation Planning & Technology 31(1): 35-68. Dobbs, D. A. (2009). Aviation Industry Performance: A Review of the Aviation Industry in 2008. U. D. o. Transportation. Einav, O. (2003). "Understanding aviation terrorism." Interavia Business & Technology 58(670): 34. Fiorino, F., W. Dennis, et al. (2003). "SARS: A New Blow." Aviation Week & Space Technology 158(14): 59. Graham, B. and T. Vowles (2006). "Carriers within Carriers: A Strategic Response to Low cost Airline Competition." Transport Reviews 26(1): 105-126. Hanson, D., M. A. Hitt, et al. (2011). Strategic Management: Competitiveness and Globalisation. Melbourne, Cengage. Kho, C. and S. Aruan (2005). "AirAsia- Strategic IT Initiative." Faculty of Economics and Commerce University of Melbourne. Lawton, T. C. (1999). "The Limits of Price Leadership: Needs-based Positioning Strategy and the Long-term Competitiveness of Europe 's Low Fare Airlines." Long Range Planning 32(6): 573-586. Parkinson, G. (2005). "Airport IPOs set to soar." Asiamoney 16(8): 62-65. Porter, M. (1979). "How Competitive Forces Shape Strategy." Harvard Business Review(Mar-Apr, pp. 137-45.). Ricart, J. E. and D. Wang (2005). "Now Everyone Can Fly." Asian Journal of Management Cases 2(2): 231-255. Treitel, D. H. (2004). Growth of Low Cost Carriers in Europe and Asia. Eighteenth Annual Aircraft Finance Conference. Unknown (2008). "Open Skies talks begin in Asia." Airline Business 24(12): 26-26. Unknown. (2009). "AirAsia SWOT Analysis: Tough second quarter ahead, but fundamentals solid." Retrieved 10/05/2011, 2011, from http://www.centreforaviation.com/news/2009/05/29/airasia-swot-analysis-tough-second-quarter-ahead-but-fundamentals-solid/page1. Unknown (2010). "Asia/Pacific: WORLD AIRLINE REPORT Financial report." Air Transport World. Wang, Z. H. and M. Evans (2002). "The IMPACT OF MARKET LIBERALIZATION ON THE FORMATION OF AIRLINE ALLIANCES." Journal of Air Transportation 7(2): 25-52. Wemerfelt, B. (1984). "A Resource-based View of the Firm." Strategic Management Journal 5: 171-180. Wensveen, J. (2010). "THE AIRLINE INDUSTRY: Trends, Challenges, Strategies." Retrieved 15/05/2011, 2011, from http://sydney.edu.au/business/__data/assets/pdf_file/0010/67789/johnw-presentation.pdf. Yung-Hsiang, C. and Y. Chian-Yu (2007). "Core Competencies and Sustainable Competitive Advantage in Air-Cargo Forwarding: Evidence from Taiwan." Transportation Journal 46(3): 5-21. Zhang, A., S. Hanaoka, et al. (2009). "Low-Cost Carriers in Asia:Deregulation, Regional Liberalization and Secondary Airports." Research in Transport Economics 17.