Airasias Business Model Is Low Cost Carrier Marketing Essay

AirAsia ‘s concern theoretical account is Low Cost Carrier ( LCC ) that showed as above. There are 3 properties that contribute to LCC concern theoretical account, which are simple merchandise, placement, and low operating cost.

Simple Product property for AirAsia Company is mentioning to the plane seating that is narrow and with merely one category. So that, there is no seat assignment offered. Catering is non included on the measures unless there is particular demand excess payment must be made. As it is simple merchandise, so frequent circular programmes is omitted.

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Positioning property is average about aiming on particular mark market or on certain activities that helps the company to turn. AirAsia is aiming on non-business riders, particularly leisure traffic and price-conscious concern riders. In order to cut down the care cost for plane per twenty-four hours per trip, short-haul point to indicate traffic with high frequences is applied. Aggressive selling is conducted on its ain web site and besides on newssheet to excite the market to increase gross. AirAsia is turn uping on secondary airdromes as it helps to cut down the cost, and besides this is the manner AirAsia to vie with all conveyance bearers.

Low Operating Costss is chiefly to maintain the costs low but still keep the productiveness or even supply high resource productiveness. The costs are rewards, airdrome fees, care, cockpit preparation and standby crews due to homogeneous fleet. In such instance, simple embarkation procedures are applied such as short land delaies for clients. To increase the efficiency on work of staff, no air cargo is offered to cut down stop clip, no hub services, on board cleansing times is shorten and high per centum of on-line gross revenues is encourage to increase gross revenues and cut down sum of first line worker.

The Value Chain of AirAsia is showed at appendix. The Value Chain is briefly explain about the primary activities are carry out in sequence, start from inbound logistic, runing outbound logistic, selling and gross revenues and eventually services. Each of the primary activities can non stand entirely, so support activities are put into pattern to help primary activities, those support activities are steadfast substructure, human resource direction, engineering development and procurance. Every activity must rehearse good as if one of the activities is fail will set the company into problem.

Four Components of a Business Model

Core Scheme


To be the largest low cost air hose in Asia and functioning the 3 billion people who are presently underserved with hapless connectivity and high menus.


To be the best company to work for whereby employees are treated as portion of a large household.

Make a globally recognized ASEAN trade name.

To achieve the lowest cost so that everyone can wing with AirAsia.

Keep the highest quality merchandise, encompassing engineering to cut down cost and enhance service degrees.

Product/Market Scope

AirAsia merchandise is supplying client with the pick of custom-making services without compromising on quality and services. Therefore, the market range will be leisure traffic and price-conscious concern rider, or non-business rider. The merchandises can be short-haul flight, long-haul flight, hotel and Tourss, messenger, lading, amusement and online shopping.

Footing of Differentiation

AirAsia able to supply low menu and no frill services for client as all others air hose companies could n’t do it. AirAsia is besides able to keep the operating cost low while gives the high resource productiveness.

Strategic Resources

Core Competences

AirAsia ‘s nucleus competence is holding small direction degree, effectual, focused and aggressive direction. Dato ‘ Abdel Aziz @ Abdul Aziz bin Abu Bakar is one of the cardinal employees of the Company. He is appointed as Non-Executive Director of the Company on 20 April 2005 and on 16 June 2008, he was re-designated to Non-Executive Chairman. His place is chiefly to give support and audience to Group Chief Executive Officer Dato ‘ Sri Dr Tony Fernandes and Group Deputy Chief Executive officer Dato ‘ Kamarudin Meranun of the concern scheme. With the teamwork and unity of both CEO and Deputy CEO, Dato ‘ Sri Dr Tony Fernandes and Dato ‘ Kamarudin Meranun have driven the fiscal and operational success for the Company. Their outstanding leading has brought them undergoing the challenges of planetary economic lag and the menace of the A_H1N1 ) pandemic. As a consequence, AirAsia is now a recognized ASEAN trade name through its operational bases, through the diverseness of its 7,500-strong staff and through its committedness to the part. No uncertainty, with such a proud accomplishment, AirAsia is awarded with “ World ‘s Best Low-cost Airline 2010 ” by SKYTRAX, the specializer Research Advisors to the air conveyance industry.

Strategic Assetss

The Strategic Assets of AirAsia owned are the efficient and incentive work force, for all degree of direction and besides typical partnerships. Those work force is multi-skilled staffs that others air hose company did n’t hold. Their on the job range is ever altering from clip to clip and this make them experience fresh to the work and make non experience world-weary, therefore efficiency of work is increased, and do non necessitate excess work force to transport out merely a individual work.

The typical partnerships can be in supplier web or in common good web.

The provider web spouses are International Society of Transport Aircraft Trading ( ISTAT ) , Avitas, Airfax, Boeing, Airbus, and General Electrics Aircraft Engines. The common good web spouses are Jetstar, Tune Talk, F1 Lotus Racing and MOFAZFortec Motorsport. Partnership is doing benefits for AirAsia from a peculiar field, largely are used as selling scheme to excite the flight gross revenues market or to do certain uninterrupted supply of parts or services for care affair.

Partnership Network


ISTAT, Avitas and Airfax are the confer withing house for AirAsia. ISTAT is the organisation that accredits all the aircraft valuators, controls the full commercial conveyance aircraft secondary market place and establishes and promotes purchase or sale of commercial conveyance aircraft. Avitas is a full-service air power consulting house for all aspects of the air power industry and is one of the taking adviser to air hoses, fiscal establishments, care installations, makers, authorities bureaus and jurisprudence houses. Airfax is an air power market missive provides up-to-date, accurate and comprehensive information on the world-wide handiness of commercial conveyance aircraft. Airfax produces two market letters, “ Jet Transport Aircraft ” and “ regional & A ; commuter Aircraft ” which provides information for propjet and regional jet aircraft.

Boeing, Airbus and General Electrics Aircraft Engines are the aircraft maker. Airbus is the market leader for commercial aircraft fabrication and Boeing is the 2nd largest aircraft maker of the universe. By the manner, General Electrics Aircraft Engines is the universe ‘s prima manufacturer of big and little jet engines for commercial and military aircraft. The current fleet of AirAsia holding is Boeing 737-300 and the future fleet is latest Airbus A320 while Boeing 737-300 utilizes engines are supply from General Electrics.

Other cardinal Relationships

Strategic Alliance

AirAsia is holding strategic confederation partnership with Jetstar, Australia low cost air hose on 6 of January 2010. This confederation will enable both companies to acquire resources and expertness, purchase new aircraft and revenue-sharing trades which could take to important cost nest eggs. They besides able to negociate on purchase the fuel in majority for demands of both bearers in market as to salvage cost.


AirAsia is spouse pool with Tune Talk Sdn Bhd on 29 of July 2009 with the intent of addition excess gross and farther boosting AirAsia Brand. Tune Talk fundamentally owned by tune ventures Sdn Bhd at 35.75 % portion while Group Chief Executive Officer Dato ‘ Sri Dr Tony Fernandes and Group Deputy Chief Executive officer Dato ‘ Kamarudin Meranun are significant stockholders. Tune Talk is a telecommunication company and merely provides other related services and AirAsia is merely want to bring forth excess gross through gross revenues of Tune Talk SIM cards and Top Up voucher.


AirAsia is a patron to MOFAZFortec Motorsport while AirAsia X is sponsor partnership to F1 Lotus Racing. This sort of sponsorships is an indispensable manner in order to spread out flight path web and construct the planetary platform as this is one of the selling scheme to excite the market by following the rushing agenda. Besides, this is another manner to show the AirAsia committedness to hiking Malayan athleticss and buffing “ Brand Malaysia ” across the Earth.

Customer Interface

Target Market

AirAsia is aiming on the leisure traffic and price-conscious concern rider, or non-business rider. Their ultimate purpose is merely to salvage money while going with low cost flight. In fact, this group of people is acquiring bigger and bigger as AirAsia can supply low menu bearer with Five Star service. The most of import thing is, the AirAsia slogan “ Everyone Can Fly ” is pulling tonss of low income and moderate income citizen to go utilizing its low menu bearer.

Fulfillment and Support

AirAsia is carry throughing the client with assorted merchandises such as hotel and circuit, courier, lading, online shopping, and amusement. Besides, for the easiness of client, AirAsia has its ain home page to allow people involvement to look into on the flight info, arrange their ain agenda of traveling and booking air brush. Any questions about the engagement, they can happen the frequenly ask inquiry on the home page, or reach the AirAsia with peculiar location and phone call. They can besides make the Web Check-In or Mobile Check-In as they can salvage the clip for line uping at the airdrome counter. For client comfort, they can even take their place, increase the luggage size and engagement or purchase repasts on board. Of cause, they need to pay more for their particular demand. Now, AirAsia web site is available for nomadic use such as BlackBerry, Android and Iphone, the service is so called AirAsia Mobile. AirAsia is besides provided the ambulifts and aisle chair for wheelchair-bound rider or disable rider as to accommodate to the slogan “ Everyone Can Fly ” with no cost added into the menu.

Pricing Structure

AirAsia is utilizing randomised pricing scheme to increase the market demand and net income maximize. This scheme enable AirAsia varies its monetary value from clip to clip, even more accurately is from twenty-four hours to twenty-four hours. Indirectly, this scheme is giving surprise for client for each clip of publicity, and the client can non larn from experience on the lowest monetary value charge in the market. As a consequence, this influence the client to pay attending on the monetary value every minute, merely to acquire the coveted monetary value they want.



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