Airasia Evolution
Essay Preview: Airasia Evolution
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1. Introduction.
Prior to its take-over by Tune Air Sdn. Bhd. in 2001, AirAsia was established in 1993 and started operations on 18 November 1996. It was originally founded by Government-owned conglomerate DRB-Hicom a government-linked company. It is airline had not been able to take off and was eventually sold to Tune Air, literally for a song, for a token sum of RM1.00 or US$0.27 together with an accumulated debt of RM40 million.
Tune Air was formed by Tony Fernandes and four entrepreneurs, some of whom had worked with the music industry which perhaps inspired the name of the company. According to Fernandes , it is not easy to sell the idea of operating an airline particularly
to the government. In fact, his request for a license to operate from the government was rejected on two previous attempts. Finally, with Datuk Pahamin A Rejab, the former Secretary General of the Ministry of Transportation, they presented their case to the then Prime Minister, Dr. Mahathir Mohamad, who eventually gave the green light, not for a new company, but to take over the ailing AirAsia from DRB-Hicom. Many were sceptical that Fernandes could succeed in transforming the ailing, capital-intensive company especially during the travel slump soon after the destruction of the World Trade Center in New York in 2001.
Within two years, Fernandes proved the critics wrong and was able to turn AirAsia into a profit-making company modelled after the successful operations of the United States-based Southwest Airlines, Dublin-based Ryanair and United Kingdom-based Virgin Air. AirAsia was listed in the Kuala Lumpur bourse within three years of operation, on 22 November 2004, with one of the largest IPO offer of RM717.4 million.
Converting a RM40 Million debt into a multimillion ringgit airline is unbelievable. AirAsia is Asias largest low-fare, no-frills airline and a pioneer of low-cost travel in Asia. AirAsia group operates scheduled domestic and international flights to over 65 domestic and international destinations in 18 countries successfully. Its main hub is the Low-Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport (KLIA). Its affiliate airlines Thai AirAsia hubs in Suvarnabhumi Airport and Chiang Mai, Indonesia AirAsia hubs in Soekarno-Hatta International Airport & Medan. Singapore is currently functions as virtual hub in term of contribution to passenger traffics
AirAsia initial operating started with two (2) Boeing 737-300s and only 250 staffs has tremendously growth its businesses with 90 aircrafts with 86 units of A 320 and significantly growth with 8119 employees with a market capitalisation of just over RM7.06 billion as at 31 December 2010. Looking at its growth, AirAsia is expecting new deal for its new affiliates Philippines, expected to fully operate by 2011 and also considering signing deal with ANA