The Development of AirAsia Airlines: How They Apply Blue Ocean Strategy

AirAsia airlines: How they apply Blue Ocean Strategy

From the article that I have read recently by Rizal Ahmad in Asian Journal of Management Cases, he described the development of Air Asia Malaysia from 2005 to 2008. Within only four years, AirAsia managed to expand its operations into another ten countries. This article also documents Air Asia's marketing strategy and its approach towards 'market development' and 'product development'. The Blue Ocean Strategy concept is used as a tool to examine Air Asia's strategic moves.

First of all, we will be going through AirAsia's management practices. They provide the low-cost carrier (LCC) business model, which AirAsia adopted, was grounded on the principles of creating and delivering passenger air travel solutions to customers at the lowest possible cost without compromising their safety. This was achieved;

1. By offering its basic or core product (available passenger seats) as single-class, no-frills air travel. Passengers had to pay for additional services or frills.

2. Secondly, AirAsia maximized the utilization rate of its aircrafts. The airline's aircrafts, on average, flew six and a half sectors or twelve hours every day. AirAsia continued to strive towards achieving a high level of efficiency.

3. Thirdly, AirAsia kept its fixed costs down by continuing to adopt management practices. A key strategy that AirAsia continued to use was to treat some of its fixed costs as variable cost. When serving a minor route (a small airport and a sector with non-frequent departures), such as Kuala Lumpur to Chiang Mai in North Thailand, AirAsia took its ground engineer abroad its flights instead of stationing him at Chiang Mai airport and subcontracted all other aircraft ground services at t...

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...asing transaction. Other alternatives are e-vouchers that help for customers to purchase tickets for someone else which was very effective step taken by AirAsia because anyone with a credit card can use the service to buy cash vouchers for their friends, family and beloved one. AirAsia clearly recognized the potential emotional appeal of its product. It did that by associating itself with the English Premier League Cup Competition and the Manchester United Football Club, which had a large number of football fans in Malaysia.

As for the conclusion, I can say that AirAsia did a good job by exploring and creating its own blue ocean. The changes they made for the past four years (2005-2008) have leaded them to achieve a great success in airline industry. They have proved that they can be the most chosen and trusted airlines by the Malaysians and even the foreigners.