Airasia Case

Meike Hopman s3046710

Olivier Schnitzeler s3004848

Table of contents

1. Introduction 150 p. 2

2. History (M) 600 p. 3

3. Organizational structure (O) 500 p. 4

4. Corporate culture (O) 350 p. 6

5. Environment (M) 900 p. 7

6. Strategy (M) 600 p. 9

7. Financial situation (O) 550 p. 11

8. Cost cutting versus developing new services + conclusion 850 p. 13

9. References p. 14

1. Introduction

In this report we will analyze the company AirAsia, a low-cost air travel company in Southeast Asia. We start by giving a short history of the company to get some background information. After that we will discuss the organizational structure and the corporate culture, this gives us some more insight in the internal organization of the company. Then we will continue discussing the external environment of the company, including its competition and responsibilities. This leads us to the analysis of the company’s current strategy. To complete the analysis of AirAsia we will talk about its financial position, based on the latest information presented by the company.

In the final part of this report we will discuss whether cost cutting or developing new services is the highest priority for AirAsia now. This discussion is based on the first part of this report: the analysis of the company.  

2. History

AirAsia is a low-cost carrier in Southeast Asia and was incorporated in 1993. AirAsia is based in Kuala Lumpur, the capital of Malaysia. In 2001 AirAsia was acquired for only 0,26 USD and 10,5 million USD of debt by Tune Air. AirAsia started as a full-service domestic airline, but after the acquisition in 2001 its CEO Tony Fernandes transformed the company into a low-cost carrier. The idea of low-cost airlines already existed at that time, but was not yet implemented in the Southeast Asia air travel market.1 In the 1970s the low-cost concept was introduced for the first time by Southwest Airlines in the United States. This new concept was a big success and the budget carriers like Ryanair and EasyJest started operating in Europe.2

AirAsia was the first low-cost carrier in Southeast Asia. The principle of a low-cost carrier is minimizing operating costs and maximizing sales revenues. This does not imply that its goods and services are of low quality, because a