Air Asia Berhad's Success

Analysis of Air Asia Berhad’s success and failures

Since its establishment in 1993, Air Asia Berhad has gained public acknowledgement as the leading low-cost carrier based in Malaysia. Over the course of 15 years since its acquisition by former Time Warner executive Tony Fernandes in 2001, it has stayed true to its core motto “Now Everyone Can Fly” by providing low-fare, no-frills flight for their guests. Originally a government owned airline that is in an enormous RM40 million debt, Air Asia Berhad managed to comeback from a huge loss in 2001 to making profit in as soon as 2002, which is another testimony to the marketing success of Air Asia Berhad.

Air Asia Berhad’s marketing success can be attributed to a plethora of strategies espoused

This can then hasten the communication process as the organisational hierarchy is simplified. Besides that, it has also provided a handful of incentives such as performance based bonuses, share offers, stock options and so on for its employees despite the wages of their employees being lower than that of Air Asia’s rivals. Part of the reasons why the wages offered is lower than average is due to Air Asia’s low crew requirement as they prefer fresh graduates who do not demand as much wages as established airline employees. Air Asia has an inclination to reward early bookings by running a simple price scheme where they set the starting prices low which will then gradually increases as the seats in a plane starts to fill up. Another point worth mentioning is that there is only a single passenger class, namely the economy class is available on all their flights. This means that the plane can afford to fill more seats in as there are no spacious business class seats

This is evident when Air Asia decides to empower their employees with multiple roles in the company. As much as it is cost effective, it also reduces the overall productivity and efficiency of their employees because of an overly wide job scope and not enough specialised, technical professionals to handle certain tasks. The workforce, if fully occupied could result in slow decision-making that will impact the overall productivity of Air Asia.

Heavy utilisation on the internet could easily be translated into over-reliance on internet as any sort of system interruption will stop the business operation in its track, which is not ideal when the heavy online sales of Air Asia is taken into account. When an LCC such as Air Asia with such great emphasis on online sales is hit with service disruption, this could drive away the customers and diminish the profitability as the airline is unable to function at its fullest. In order to circumvent this problem, Air Asia has to invest heavily on advanced technologies, which could in turn cost them a great