There is tremendous camaraderie here (at AirAsia) – with no hierarchy
and a family environment. We cannot ever change that. As
soon as we change it we will lose our focus.
Fernandes’s biggest challenges will be to manage growth, and to
avoid both a destructive price war and the temptation to enter markets
with fundamentally different economics, such as long-haul
flights. For now, his lead over competitors looks unassailable.
In early 2005, AirAsia Sdn Berhad
(AirAsia) announced that it would
give away 10,000 free seats on its
flights to select Southeast Asian destinations.
The airline said that was its
way of celebrating the completion of
three years of successful flying and of
saying thank you to the people for
their support. “AirAsia’s accomplishments
and success today is a reflection
of the public’s trust and faith in
the company,” said Tony Fernandes
(Fernandes), CEO of AirAsia3. The
airline also wanted to thank the public
for making its late-2004 shares issue
a huge success (Refer Exhibit I for
AirAsia’s Free Seats Offer).
One of the most successful airlines
in the Southeast Asian region
and the pioneer of low-cost, no frills
travel in Malaysia, AirAsia was often
in the news for its low fares and fast
growing operations (Refer Exhibit II
on Low Cost Airlines). Until AirAsia
proved them wrong, airline analysts
believed that budget carriers would
not find a market in Asia. They said
the Asian airline industry was different
from the industries of the US and
Europe – airline passengers in Asia
looked on air travel as a luxury, and
expected to be pampered by the airlines.
For this reason, no-frills travel
would not appeal to them. In addition,
Asian countries had a great
amount of red tapism, which made it
difficult to start any new venture, not
least of all, an airline. Major national
airlines in most of the countries also
enjoyed government backing and
were too powerful to allow competition
to flourish. |
