This presentation is made by a group study in strategic management class. This file presenting about Air Asia x and their strategic management. Group Member: Grace, Onny, Sheby IMBA CLASS. National Kaohsiung University of Science and Technology.

1. STRATEGIC MANAGEMENT
Grace Carolina Malau
Onny Oktami Samosir
Nur Sabila Soraya Amalina

2. Focusing on the Low-Cost, Haul
segment
Air Asia X is spreading its wing to
exciting destinations such as
autralia, China, India, Middle East
and Europe
The seats on AirAsiaX planes
are all economy seats, there
is no first class. This leaves
room to accommodate more
passengers.
AirAsia utilizes secondary
airports that have less
congestionfor better
turnaround time.
AirAsia X uses only one type of aircraft cutting down
on aircrew and maintenance training, supply costs,
and many other resources needed to maintain
multiple aircraft types.
Most airlines use the hub and
spoke system, AirAsia X uses
a point to point system
1 (A) How would you describe the Air Asia X model?
AirAsia X is a low cost carrier

3. 1 (A) What elements of
its business model are
the same or different
from traditional airline?
What elements are the
same or different from a
traditional airline?

4. • The Difference business model of airasia x is the
features-the long haul budget airline model
developed by X was considered an innovation.
• Conventional aviation wisdom assumed an
airline could not sustain profitable operations
by charging low fares for long haul flights.
• Fernandes did not agree. He was certain his largely Asian
clientele would embrace the opportunity to travel to distant
locations if the price was right, despite the fact that some of
the comfort features associated with other airlines would
be lacking.
• Fernandes, together with Osman-Rani, built upon the belief
that many of their Asian clients would jump at the chance
to fly farther if it were more affordable".

5. LOW-COST AIRLINES TRADITIONAL AIRLINES

6. 1. (B)
Go to the X website and choose a
route and determine the fare for
that route on a specific day. Do
the same for one and two
competitors that fly the same
route on that day. How do the
fares compare?

7. • Round trip ticket for KHH ->
CGK
• Depart on January 22, 2018 &
Return on January 30, 2018
• Filter fare : lowest to highest
• Without any check in baggage
• No, ordered for special seat
and without order any food.
AIR ASIA X VS SCOOT

8. Fares Comparison Air ASIA
(TWD)
SCOOT
(TWD)
DEPART TICKET 6786,40 3420
RETURN TICKET 5284,40 4296
TOTAL FLIGHT TICKET 12070
Including:
• BIG Member of Air Asia (-80Ntd)
• Airport tax For KHH-CGK
• Passenger Services Charge for
CGK - KHH
7716
Including:
• Tax
• Singapore airport development
levy
• Airport Imposed Pax Service Fee
FARES COMPARISON

9. Return Flight AIR ASIA SCOOT
Flight duration 2h 05m 2h 00m
Transit time in 3h 55m 10h 15m
Flight duration 4h 30m 4h 15m
Total Hours 7h 30m 16h 30m
Depart Flight AIR ASIA SCOOT
Flight duration 4h 25m 4h 10m
Transit time in 4h 45m 7h 25m
Flight duration 2h 10m 2h 05m
Total Hours 11h 20m 13h 40m
TOTAL 18h 50m 30h 10m

10. TIME
COMPARISON
Depart Flight AIR ASIA SCOOT
Flight duration 4h 25m 4h 10m
Transit time in 4h 45m 7h 25m
Flight duration 2h 10m 2h 05m
Total Hours 11h 20m 13h 40m
Return Flight AIR ASIA SCOOT
Flight duration 2h 05m 2h 00m
Transit time in 3h 55m 10h 15m
Flight duration 4h 30m 4h 15m
Total Hours 7h 30m 16h 30m
TOTAL 18h 50m 30h 10m

11. We found that Air Asia Ticket
flight is more expensive than
Scoot because:
- Flight Duration
- Air Asia might be cheper if
we try to use the special
CODE
Conclusion

12. 1 ( c )
What is your
assessment of the
strength and the
weakness of the X
model?

13. • Low Cost Leader in ASIA
• Consisted position as a low cost
Airlines
• Weekly flights
• Extensive coverage in India
• Innovation in service,
streamlining cost by replacing
human effort with tech through
online service
• Successful cost-cutting.
Reducing cost and make self-
service for customers
• Fleet flexibility
• Service resource is limited due to
low costs
• Government interference and
regulation on airport deals
• Non-central location of secondary
airports Heavy reliance on
outsourcing
• Complaint from customers
regarding the current overcrowded
LCCT (handled about 17 million
passengers instead of its capability
to handle 15 million passengers)
STRENGTH WEAKNESS

14. 1 ( d )
What is the greatest
threats to X? Where
is the best
opportunities?

15. • Long haul flight to approach
undeveloped market (Air Asia X to
Europe)
• Expansion to new routes based on low
cost philosophy (exploit growing
markets like China, India)
• Higher fuel costs means less profitable
competitors may be forced out of
business
• Partnerships with Virgin airline to use
existing strengths (brand recognition,
landing rights)
• Differentiate from old LCC model
(include customer service and
operation as full service airline)
• Entrance of other low cost couriers
(Firefly, Tiger Airways)
• Accident and disaster affect customer
confidence (Example: an aircraft
skidded off the runway while landing
at KCH International Airport on Jan
2011)
• Aviation regulation and government
policy (barriers in new routes
expansion)
• Full service airlines start cut costs to
compete (MAS offered discounted
fares with meals and comfortable
seats)
OPPORTUNITIES TREATS

16. 1 (e)
What strategic
recommendations
would you make to
X’s executive team
• investing in the future.
• purchasing newer more fuel efficient
aircraft
• expending with more routes in China and
India
• providing more options that would
attract business travelers
• All senior executives and department
heads worked in one large open office
space without any patition walls or
closed meeting rooms.
• Everybody was addressed by first name,
even the CEO
• The chief pilot sits right next to the chief
engineer and the head of marketing to
make sure that plane on the control.

17. 2.
Can the low-cost
model work in long-
haul travel? What do
you think of Fernandes
as a strategic thinker?
What assumptions is
he making?
Tony Fernandes wants to move to
long haul from long time, he had to
wait because the strategies which he
had applied to AirAsia was different ,
so after he got the positive response
from AirAsia then he decided to
move to long haul but with the same
elements like low cost and
differentiation, at that time
Singapore based airline was
providing the low cost fare in long
haul but they were not as much as
low like the AirAsia X so in short time
they became the market leader by
capturing the huge market share.

18. 1. Usage of one type of aircraft
2. Synergy between the AA management
and the employees
3. Productive and Skillful employee
4. Limited Passenger Service
5. Frequent, Reliable schedule
6. Short Haul (point to point), often
secondary airports
7. High aircraft utilization
8. No fuel surcharges policy
3. In conceptual terms, what are the drivers of X’s
cost advantage?

19. 4. What are the risks in
this ultra-lean model?
Risk of the ultra-lean model is that direct costs were largely dependent on external factors
including maintenance costs, airport landing, terminal fees and fuel prices, AirAsia X’s is well
positioned to win any fare war given its low cost structure but Fuel prices will always be a
concern for long-haul LCCs Fuel accounts for 49% of AirAsia X’s costs.
• Fuel prices have increased since AirAsia X was established, making longer routes
challenging and reducing the portion of costs that can be controlled. If fuel prices
increase further the portion of controllable costs will slip and the gap with full-service
airlines will narrow.
• These direct costs extremely difficult to influence and created a much higher
vulnerability for budget airlines since those additional costs could often not easily
transferred to customers.
• If ticket prices were too high, leisure travellers would simply not fly or migrate to full-
service airlines since price gaps would be lower during these periodsAirAsia X has
discovered that at the current price of fuel the medium/long-haul model generally
works at flights of up to eight or nine hours.
• Higher fuel prices could change the economics of routes that are now profitable. They
would also make it nearly impossible to resume services to Europe as efficiency
improvements that come with new generation aircraft would be offset.

20. 5. To what extent is the X
model valuable? Rare?
• X model rare because separate business from
AirAsia, shows that the low-cost long-haul
model can be successful, operationally and
profitably, but only when deployed sensibly
where is The low-cost model is ideally suited to
Asia's price sensitive, high growth environment
and AirAsia X's symbiotic relationship with
Asia's biggest LCC, AirAsia, makes it a
formidable model.
• X model valuable because the
resources and capabilities are able to
meet market demand. X relies on its
human resources and management
capabilities wherein these two
components have satisfied the value
requirement, as it has been able to
meet the demand for the Low-Cost
Carrier (LCC) market.

21. 6. How sustainable are the advantage that X has?
AirAsia took advantage from the existence of e-commerce which is
easier technique in providing information. The cost related to web is
very low compared to other methods like advertisement on
television. AirAsia has taken advantage from this method to reduce
the cost of operations make the better logistic planning.
AirAsia should reduce cost effectively which is difficult
for the competitors to copy.
To outperform rivals, an x need to
deliver greater value to customers
and build comparative value at a
lower cost.
To provide the advantage that AirAsia X has, AirAsia X
needs to leverage its competency in creating cost
advantages. At present, AirAsia differentiates by
providing substantially low fares with no frills concept
and by offering innovative routes.
AirAsia had some advantages over its competitors by the advantage of
experience and its brand enjoyed good recognition. AirAsia has the
strength to lay down and develop the rules and framework in the
industry for business and operational suitability in future.

22. 7. To what extent
are the elements
of this model
mutually
consistent?

23. • Another method used by Air Asia to keep
prices affordable is, with their website.
• Opening of the LCC terminal at Kuala
Lumpur International Airport so that it
will help reduce logistics planning costs
for Air Asia X.• Airasia has applied the focused cost
leadership strategy wherein it targets
on specific markets;
• Consist with low cost carrier, They
sell others services ex: meal to get
other profit
• Operating efficiency is very
important to help in cost advantages.

24. What
recommenda
tions would
you make to
X going
forward ? As X is currently enjoying the huge market
share, their future could be more profitable if
they could explore some new locations, they
should position themselves as the market
leader among the low budget airlines so they
could ripe the revenue from the brand image
as well, they should also get political support
from the government as X bringing huge
revenue and also promoting the tourism,

25. THANK YOU