Growth of AirAsia Berhad

Table of Content

AirAsia Berhad is well-known as Asia’s largest low-cost airline, offering scheduled domestic and international flights. The Malaysian company stands out for its low fares and no frills approach.

AirAsia, the pioneering airline in Asia, was the first to offer budget flights and ticketless travel without assigned seats. However, as of February 5th, 2009, AirAsia along with its sister airlines Indonesia AirAsia and Thai AirAsia have adopted assigned seating for all their flights. The main hub for this airline is located at the Low Cost Carrier Terminal (LCCT) in Kuala Lumpur International Airport (KLIA).

This essay could be plagiarized. Get your custom essay
“Dirty Pretty Things” Acts of Desperation: The State of Being Desperate
128 writers

ready to help you now

Get original paper

Without paying upfront

AirAsia, Thai AirAsia, and Indonesia AirAsia have hubs at Suvarnabhumi Airport in Thailand and Soekarno-Hatta International Airport in Indonesia. The registered office of AirAsia is located in Petaling Jaya, Selangor, while its head office is based on the premises of Kuala Lumpur International Airport in Sepang, Selangor. In 2010, Air Asia received the esteemed recognition as the world’s best low-cost airline. It was established in 1993 and began operations on November 18th, 1996.

Originally, the government-owned conglomerate DRB-Hicom founded the airline. However, on 2 December 2001, former Time Warner executive Tony Fernandes’s company Tune Air Sdn Bhd acquired the heavily-indebted airline for only one ringgit. This purchase followed careful consideration as the initial offer was fifty sen. Fernandes then orchestrated an impressive turnaround, achieving profitability in 2002 and rapidly introducing new routes from Kuala Lumpur International Airport. By offering promotional fares as low as RM1, AirAsia effectively competed with Malaysia Airlines, the former monopoly operator. Additionally, in 2003, AirAsia established a second hub at Senai International Airport in Johor Bahru, near Singapore, and commenced its first international flight to Bangkok.

AirAsia has expanded its operations by establishing a Thai subsidiary, including Singapore as a destination, and initiating flights to Indonesia. In June 2004, they commenced flights to Macau, while flights to Xiamen in Mainland China and Manila in the Philippines began in April 2005. Later in 2005, flights to Vietnam and Cambodia were introduced, followed by flights to Brunei and Myanmar in 2006, operated by Thai AirAsia. On 23 March 2006, Kuala Lumpur International Airport opened a pioneering budget terminal, the first of its kind in Asia.

The Low Cost Carrier Terminal (LCCT) was built for RM108 million and spans 35,000 square metres (116,000 square feet). It currently serves as Air Asia Bhd’s headquarters. Initially, the LCCT handled 10 million passengers each year. In 2007, it is estimated that Air Asia Group will transport 18 million passengers. However, the airline has not yet paid the collected airport taxes to the terminal owner for reasons unknown.

Air Asia is a low-cost airline that operates with an incredibly low unit cost of US$0.023 per ASK (Available Seat Kilometer). They have a passenger break-even load factor of 52%, meaning they need to fill 52% of their seats in order to cover costs. Air Asia has also hedged all of their fuel requirements for the next three years. Additionally, they have an impressive aircraft turnaround time of just 25 minutes and a crew productivity level that is three times higher than that of Malaysia Airlines. They also achieve an average aircraft utilization rate of 13 hours per day. It’s worth noting that Air Asia is currently the biggest purchaser of Airbus A320s, with a fleet consisting of this aircraft model.

The company has ordered 175 units of the A320 plane in order to service its routes. At least 50 of these planes will be operational by 2013. The first unit of the plane arrived on December 8, 2005. In August 2006, Air Asia took over Malaysia Airlines’ Rural Air Service routes in Sabah and Sarawak, operating under the Fly Asian Xpress brand. However, the routes were transferred back to a new Malaysia Airlines subsidiary in East Malaysia, MA Swings, in August 2007 due to their impact on profits.

Asian Expansion: On 27 December 2006, Air Asia’s CEO Tony Fernandes announced a five-year plan to strengthen its presence in Asia. This plan includes improving its route network by connecting existing cities in the region and expanding into Indochina, Indonesia, Southern China (Kun Ming, Xiamen, Shenzen), and India. Air Asia will focus on developing its hubs in Bangkok and Jakarta through its sister companies, Thai Air Asia and Indonesia Air Asia. As a result of increased frequency and new routes, Air Asia anticipates reaching a passenger volume of 18 million by the end of 2007.

In September 2007, Air Asia’s Kuala Lumpur hub started using only A320s. Thai Air Asia also got its first Airbus A320 in October 2007. Indonesia Air Asia received its initial Airbus by January 2008. Furthermore, on April 5, 2007, Air Asia formed a three-year partnership with the British Formula One team AT&T Williams. The airline brand is prominently displayed on the helmets of Nico Rosberg and Alexander Wurz, as well as on the bargeboards and nose of the cars.

In September 27, 2008, Air Asia revealed plans to expand its current list of 60 routes with the addition of 106 new routes in the future. The specific number of routes that will be discontinued is currently unknown. Additionally, on November 12, 2008, Air Asia achieved a significant milestone by becoming the first airline globally to eliminate fuel surcharges.

In May 2008, Air Asia achieved a major accomplishment of transporting 55 million passengers. By 2010, it had gained recognition as the most cost-effective airline worldwide, offering fares below 2 cents per seat per kilometer. This success naturally led to an increase in its popularity.
Nonetheless, Air Asia received criticism from disabled passengers associated with the BEAT ‘The Barrier-Free Environment and Accessible Transport Group.’ These individuals voiced their opposition to the airline’s practice of refusing boarding to passengers who are completely immobile.

The protesters, led by Christine Lee, the group’s coordinator, claimed that disabled people were being discriminated against when booking Air Asia tickets online. They stated that there was an icon on the website asking if the ticket purchaser needed “special assistance”. If the passenger clicked “yes”, they were unable to proceed with the booking. Additionally, Lee mentioned that Air Asia charged RM12 for renting a wheelchair, which disabled passengers could use from the ticketing counter to the departure hall. In an interview with Malaysia’s Daily Express, Air Asia CEO Datuk Tony Fernandes denied turning away wheelchair users.

Air Asia charges RM12 Malaysian Ringgit for wheelchair service fees. Multiple consumerist groups have supported disabled and wheelchair-using travelers, advocating for changes in Malaysia’s anti-discrimination laws. One of these groups, the ‘Fly Air Asia? Not Me’ website, employs viral advertising to urge lawmakers for action. In 2007, the activist group utilized Air Asia’s sponsorship of the Williams Formula One Team and owner Sir Frank Williams’ use of a wheelchair to gain public attention and influence legislators and the airline. The extent of these groups’ success remains unclear.

Despite Air Asia’s claims to have a strong presence in Asia with over 100 routes across 11 countries, the airline has only provided ambulifts for disabled passengers in two hubs – Kuala Lumpur and Kota Kinabalu. In their Annual Report, Air Asia states their commitment to purchasing 225 Airbus A320 aircraft, but it does not specify any plans to improve accessibility for disabled passengers beyond the current ambulifts. This lack of action is disappointing to Peter Tan, a former assistant coordinator of BEAT and advocate for inclusive and accessible Malaysia, who highlights that despite promises from Air Asia’s CEO, disabled passengers continue to face discrimination from the airline.

After being required to sign an indemnity at Kota Kinabalu International Airport’s Terminal 2, which releases Air Asia from all liabilities, the passenger agreed to relinquish any rights to hold the airline responsible for damages, injuries, or other claims. Although Air Asia claims to have ‘No Admin Fee’, they have introduced several fees for services that other airlines offer for free. These fees include a seating fee for pre-selecting seats, a higher fee for ‘hot seats’ near the front or exits with priority boarding, a ‘convenience fee’ imposed for all payment methods other than direct debit (only available for certain Malaysian bank customers), marked-up airport tax charges, a fee for in-flight entertainment and seat-back video use, a checked luggage fee based on weight rather than number of bags (with additional charges for exceeding 15 kg if not pre-booked), charges for food, wheelchair usage, and an amenity kit consisting of a pillow, blanket, and eyeshade. AirAsia X is an associated company of Air Asia X Sdn.

Bhd. (formerly Fly Asian Xpress Sdn. Bhd.) operates as a franchise of AirAsia and provides long-haul services from Kuala Lumpur to Australia and China utilizing an Airbus A330-300.

The inaugural flight of Fly Asian Xpress was on 2 November 2007 to Gold Coast, Australia. Fly Asian Xpress was contracted by AirAsia to operate the Rural Air Service within Sabah and Sarawak, which were previously operated by Malaysia Airlines. FlyAsianXpress (FAX), a new airline, was established on 1 August 2006 and is privately owned by the management team of AirAsia. However, with the establishment of MASwings by Malaysia Airlines, FAX ceased all its rural air services on 1 October 2007 and shifted its focus to long-haul routes operated by AirAsia X.

In August 2007, Sir Richard Branson announced his intention to acquire a 20% stake in AirAsia X. The current CEO of AirAsia X is Azran Osman Rani. After gaining recognition in Britain through sponsorship of the FA England Referees, AirAsia X entered into a sponsorship agreement with the Oakland Raiders American Football team on 15 September 2009. Tune Hotels also form part of the AirAsia X brand portfolio.

com is a hotel chain founded by Air Asia CEO Dato’ Tony Fernandes. Currently, Tune Hotels operates hotels in Kuala Lumpur, Kota Kinabalu, Kuching, Penang, the Low Cost Carrier Terminal in Sepang, and Bali. Tune Money is Asia’s first “no-frills” online financial services portal, similar to Virgin Money. It offers life, home, and motor vehicle insurance, as well as prepaid credit cards.

Destinations [pic] [pic] AirAsia introduced its domestic route map in 2007, offering over 400 daily flights. The airline operates both domestically and internationally, serving Indonesia, Malaysia, and Thailand. Its international routes primarily depart from Kuala Lumpur and connect to various countries including Australia, Bangladesh, Brunei, Cambodia, China, India, Laos, Myanmar, the Philippines, Singapore Sri Lanka Taiwan the UK and Vietnam.

AirAsia provides inflight services through its “Snack Attack” buy-on-board program for food and drinks. The airline is accredited by the KL Syariah Index and follows Shariah law regulations on regional Air Asia group flights. Therefore alcohol or pork is not served onboard these flights; however the policy does not apply to Air Asia X flights as they do offer wine and beer for sale.

Air Asia provides the option of reserving Skybus tickets in advance. These tickets are for a bus service from LCCT to Kuala Lumpur. If you decide to cancel your flight, the cost of purchased meals and Skybus tickets will not be refunded. It is important to note that passengers are not informed about this policy while purchasing these products. Additionally, Air Asia does not distribute any materials it deems as pornography.

• .

Cite this page

Growth of AirAsia Berhad. (2018, Jun 06). Retrieved from

Remember! This essay was written by a student

You can get a custom paper by one of our expert writers

Order custom paper Without paying upfront