Airasia: the World's Lowest Cost Airline
INTRODUCTION AND HISTORY
AirAsia is a very successful low cost carrier. In a very short time, it became a market leader in the Asia region. The company successfully adopted cost leadership through operational efficiency and effectiveness. Using the slogan “Now Everyone Can Fly,” AirAsia positioned itself successfully in the niche LCC market.
AirAsia was the creation of former music publisher Tony Fernandes. After watching a television show in a pub about easyJet successfully competing against British Airways, Fernandes decided to start his own low cost airline. He then met with former Ryanair operations director, Conor McCarthy and the two developed a plan on starting up a LCC to serve South-East Asia.
The plan started with a meeting with the prime minister of Malaysia. Prime Minister Mahathir Mohammad suggested that Fernandes and McCarthy acquire AirAsia, a struggling government owned airline. With their own money, and support of investors, they purchased AirAsia for 1 Malaysian ringgit and assume debts of 40 million ringgits; approximately 11 million US dollars.
ORIGINAL STRATEGY
Tony Fernandes always had his sights on cheap long haul flights, but he knew AirAsia had to become successful on short hauls before his dream would be possible. He targeted a historically underserved segment to target with his low fares. His low fares would cover a geographical area less than three and a half hours flying time between hubs in an area populated by more than 500 million people.
A large emphasis was placed on marketing and brand development. AirAsia had to remove the images of a rundown government owed airline and replace them with images of a safe, reliable airline that cares for its customers. They had to show everyone that AirAsia is a low cost airline that places importance on customer service while providing an enjoyable flight experience.
AirAsia invested in a large advertising campaign. They paid for television, print, and internet advertisements. Press
AirAsia is a very successful low cost carrier. In a very short time, it became a market leader in the Asia region. The company successfully adopted cost leadership through operational efficiency and effectiveness. Using the slogan “Now Everyone Can Fly,” AirAsia positioned itself successfully in the niche LCC market.
AirAsia was the creation of former music publisher Tony Fernandes. After watching a television show in a pub about easyJet successfully competing against British Airways, Fernandes decided to start his own low cost airline. He then met with former Ryanair operations director, Conor McCarthy and the two developed a plan on starting up a LCC to serve South-East Asia.
The plan started with a meeting with the prime minister of Malaysia. Prime Minister Mahathir Mohammad suggested that Fernandes and McCarthy acquire AirAsia, a struggling government owned airline. With their own money, and support of investors, they purchased AirAsia for 1 Malaysian ringgit and assume debts of 40 million ringgits; approximately 11 million US dollars.
ORIGINAL STRATEGY
Tony Fernandes always had his sights on cheap long haul flights, but he knew AirAsia had to become successful on short hauls before his dream would be possible. He targeted a historically underserved segment to target with his low fares. His low fares would cover a geographical area less than three and a half hours flying time between hubs in an area populated by more than 500 million people.
A large emphasis was placed on marketing and brand development. AirAsia had to remove the images of a rundown government owed airline and replace them with images of a safe, reliable airline that cares for its customers. They had to show everyone that AirAsia is a low cost airline that places importance on customer service while providing an enjoyable flight experience.
AirAsia invested in a large advertising campaign. They paid for television, print, and internet advertisements. Press