Air Asia Essay

2334 words - 10 pages

Case Study on Air Asia
I. A full Strategic Appraisal

In the year 1993, Air Asia was founded by the Malaysian Government as a sister airline to the major Malaysian Cargo airline known as MAS. After its establishment Air Asia started its operation in 1996 and early 2002 Air Asia was less recognised as MAS aviation was dominating the market. There was a complete support from the Government as a part of State Own Enterprise focusing on the national objective in-lieu of giving attention to commercialization. Due to the partial support from the Government towards to MAS operation, Air Asia was suffering from loss even after being in profit for its last year. Which was totally not served from MAS even if Air Asia a sister concern airlines to cater the domestic routes. In the year 2001 Air Asia was suffering from a huge debt of USD 37 million, and that very moment Fernandes introduce a revolutionary plan of Low – Cost Aviation.
Later, Government was looking as this as an another opportunity to get back in pace, as Government was trying to bring it above from last two year Pesek (2003) and Ranawana (2001)( Pesek Jr, W. (2003, July 9 2003). The Richard Branson of Asia Shakes Things Up. The
Manila Times. Retrieved April 12 2010, from Ranawana, A. (2001, November 30 2001). No Fear Of Flying. AsiaWeek.) A detail study is shown which will investigate about the technical up-bringing of Air Asia as a biggest contender in Aviation industry.

Marco Environment Analysis
PESTEL Analysis
Political Factor: Political interference plays a vital role in the Airline industry more particularly in Asia-Pacific and ASEAN counties. About 69% of Malaysian Airline is owned by the Government. They proctect there Airline travel to routes like Singapore, Sydney, and Inchoen (Korea). To more stream line Air Asia put up a Swap deal to MAlayasian Airline to boost each other’s growth while enjoying mutual benefits. Malaysian Airline will convert its Firefly Airline to Full service to their customer to eliminate competition for Air Asia and to focus on their area of specialisation. (BBC, 2011 (

Economic Factor: It’s been observe, there I a considerable increase in the urbanisation development in the ASEAN countires creating new urban centre, creating place for tour-travel. With the increase of the economic growth rate ASEAN countries has boost the airline industry to new height. Gross domestic Product (GDP) of ASEAN countries has cross USD 1.5 Trillion (AirAsia, Annual Report 2009). Apart from the this, Air Asia going through the global market fluctuation in Foreign currencny and much more impact by Fuel Price Hike. Appedix 1 = ( Jet Fuel Price Momvment over past 5 years) The Chart shows a huge fluctuation in the price of fuel in Nov 08 and keeping a pace of increase in the corresponding years. With this unpredictable fuel price, Air Asia’s new A380 fuel effiecent flienght will save around...

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