Malaysia Airlines

AirAsia startedd out as a Malaysian government-controlled, full-service regional airline that offered slightly lower fares than its number-one competitor, Malaysia Airlines ("MAS"). In December 2001, private entrepreneur Tony Femandes took oves the debt-ridden airline for the symbolic sum of $0,26. Despite the air-travel downturn following the 11 September 2001 terrorist attacks, Fernandes velieved that the timing for entering the airline market was just right, as aircraft leasing cost had dropped sharply and experienced staff were readily available due to airline layoffs. Moreover, the acquisition was welcomed by the Malaysian government, which hoped to boost the under-used Kuala Lumpur International Airport ("KLIA"). Fernandes restructure AirAsia into the first no-frills, low-cost carrier ("LCC") in Asia, and the new business model was a huge success. The company generated impressive profits after its relaunch un January 2002, and soon inspired many LCC followers in the region. Being innovative down to the corporate bone, AirAsia pioneered several new services for its operation and thretened the well being of full-service operators. In mid-2008, amid surging oil prices and intense competition, how could AirAsia increase its competitiveness?

in the mid-1990, Fernandes swa great potential for a no-frills LCC in Asia after witnessing the sucess of LCCs in the West. Upon acquisition of AirAsia in 2001, he invited Connor McCarthy, the former director of successful European LCC Ryanair, to join AirAsia´s executie team. They restured AirAsia´s business model (see Exhibit1) and made it the first airline operator in Asia to adopt the low-fare, no-frills concpt. AirAsia also became the region´s firts airline to introduce fully ticketless travel and implement a free seating policy. With the Lcc model, AirAsia offered only one standard-class cabin. It did not provide inflight entertainment or free meals, but instead had food and beveragers. Under the tagline "Now Everyone Can Fly", the airfares were 40% to 60% lower than those of its rival. Some even cost less than bus fare. Many domesticc leisure travellers were attracted to purchase air tickets througgh its multilingual website, which offered regular fare promotions for specific travelling periods to encourage early booking. In line with its "Easy to Book, Easy to Pay &Easy to Fly" approach, seat were also sold through a telephne booking centre, sales offices, travel agents, and partnershps with local banks and post offices.

Just seven months into its operations, AirAsia announced its first profit of approximately $6 million in December 2002. Research firm AC Nielsen revealed that AirAsia`s website was the most popular online shopping site for malaysia`s internet users in 2003. Adding to the convenience of customers, AirAsia was the word`s first airline to enable booking by mobile phone through Short Messaging Service

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