Introduction of Airasia

Introduction of Air Asia 1. 1 Corporate profile Air Asia since its foundation in 2001 with the vision to make “Everyone can fly” by focusing on the low cost aviation business sector through Air Asia’s own innovative solutions, efficient processes and a passionate approach to business as initially proposed and still facilitated now by the company’s original founder and the current CEO of the group, Tony Fernandes, it has successfully paved a viable way for its continual development in the aviation business.

And now base in its headquarter, Kuala Lumpur, Air Asia has expanded its route network by connecting more than 20 countries and regions with the recently open flights connecting Tokyo and Paris though still the intra Southeast Asia middle to short distance flights still are the core business of the group, below is the route map of Air Asia flights originated from Kuala Lumpur, Malaysia. Figure 1 Route map started from Kuala Lumpur Source: Airasia. com 2011 1. 2 Milestones achieved by Air Asia

Air Asia started to build its renowned brand as a quality low cost airline from the construction of its brand equity in the domestic market, for example in the single year of 2003 it had win the title of “Developing Airline of the Year 2003”, “CEO of the Year (Tony Fernandes)”, “the most popular website for online shopping in the 11th Malaysia” and so on; and since the next year, 2004, Air Asia had shown the fast growth trend and the potential to take the leadership in the Malaysian aviation industry and it win the “Market Leadership Award, 2005 Airline”, “Asia Pacific Low Cost Airline of the Year 2004” and other honors.

And in the years of 2007, 2009, 2010, Air Asia were all awarded the “World’s Best Low Cost Airline” (Smith & Milligan 2011, p. 53) and at the same period Air Asia had become the one of the most fast growing listed company and exhibited the power to be one of the best and most popular airlines in both the domestic and the international aviation industry.

In October 2010, eight and a half years after the humble start of its business operations with just two aircraft and 200 staff, Air Asia had achieved the milestone of having carried more than 100 million passengers to become the continent’s largest low-cost carrier (LCC) in terms of passenger numbers (Eturbonews. com 2010). 1. 3 Organizational structure Organizational structure is the formal apparatus through which organizations accomplish two core activities: the division of labor and the coordination of work (Mintzberg 1979, p. ). And for the group of Air Asia, it has a number of functioning subsidiaries and partners in the group hierarchy with a joint effort to perform the tasks in the large business. The following figure shows the corporate structure and principal operating companies for Air Asia. And regarding the core business, Air Asia has three major strategic partners with which long term coorporation relationship have been built: Air Asia X (Focusing on the low-cost, long-haul segment), Thai Air Asia and Indonesia Air Asia.

With the help of the functioning subsidiaries and strategic partners, Air Asia was able to make it known to the customers in a shorter period and also help it to save costs in a wide range of relative business activities. Figure 2 Organizational structure Source: Airasia. com 2011 1. 4 Air Asia’s financial performance Throughout the year of 2010, the overall financial performance of Air Asia group was very healthy and beyond people’s anticipation, in the single year it had achieved RM 1. 7 billion in term of profit after tax with a 111% year on year growth, and its core operating profit grew by 83 percent by reaching 828 million ringgit, on the other hand the short term solvency was also very good with the cash balance totaled RM 1. 5 billion in the end of 2009 to 2010 financial year. And in term of the financial leverage, the net gearing ratio had drop from 2. 57 to 1. 75 during the period from 2009 to 2010 representing a higher degree to which the company’s activities were funded by the company’s own funds rather than the creditor’s funds.

The evaluation of the company’s financial performance compared with the company’s objectives will be elaborated more specifically in the discussion later. 1. 5 Strategic orientation In term of the strategic orientation, Air Asia has founded its core competitiveness based on four key foundations: low cost, efficiency, stimulate new markets and strong cash flow, and each foundation comes with respective company strategy adopted to achieve the same vision of the company which is to continue to be the lowest cost airline in every market the company is serving and will be serving and making more and more people being able to fly.

And each foundation of the company’s core competitiveness comes with respective strategy to enhance the foundation and bring source of competitiveness to the company. Figure 3 Air Asia’s strategic orientation Source: Airasia. com 2011