Ordinary Resurrections
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AirAsia is a low-cost airline based in Kuala Lumpur, Malaysia. It operates scheduled domestic and international flights and is Asias leading low fare, no frills airline. It is also the first airline in the region to implement fully ticketless travel and unassigned seats. AirAsia has been expanding rapidly and is very popular among the travelling public thanks to its frequent low fare deals. Its main base is the Low Cost Carrier (LCC) terminal at Kuala Lumpur International Airport. AirAsia was re-launched in 2002 as Low Cost Carrier after takeover by Tony Fernandes. It operates scheduled domestic and international flights. AirAsia mission statement is to be the leading airline in Asia offering low fares and no frills.
One of the sources of AirAsia’s cost advantage is that they had low fare and no frills. AirAsia operated a single class service without frills and at significantly lower prices. Passengers were not allocated seats, did not receive meals, entertainment, pillows or blanks, loyalty program points, or access to airport lounges. Air Asia’s aircraft were designed to minimize wear and tear, cleaning time and cost. This reduced cleaning and maintenance expenses, loading and unloading times and costs. This also allowed quicker turnarounds between flights, improving process efficiencies and having lower costs, which is cost advantage. AirAsia believes that keeping costs low requires high efficiency. Efficiency creates savings, which are then passed on to guests so that affordable air travel can become a reality.
Another source of AirAsia cost advantage is that high aircraft utilization. Air Asia main focus is that they keep all its planes active at all times. They make the schedules of the flights in such a way which maximizes the time aircrafts where time can be spent on flying. As compared to the full services carriers and other airlines, the turnaround time of Air Asia is very short. After landing of one flight, the aircraft can be ready in twenty-five minutes time. On the other hand, the time for turnaround for full service carrier usually takes about one hour. Revenues are maximized with this rapid turnaround time. In the minimizing of Air Asias cost, high craft utilization plays a fundamental role. The aim of Air Asia is to keep the planes on air as much as possible because the more planes on air the more revenues are generated by the company. Also since AirAsia doesn’t provide food and drinks on the plane, it sells food, snacks, and beverages on the plane for higher price than grocery stores so that customers who want to eat or drink can buy what they want. This way, AirAsia make profit from sales of the food and beverages.
Another source of AirAsia cost advantage is that Air Asia has a very strong management team with strong links with airline industry leaders. This is partly contributed by the diverse background of the executive management teams, which consists of industry experts and government officials.