Open University Malaysia
Faculty of Business and Management
ABCR 2103
Principles of Corporate Communications
Name: Adam Khaleel
Lecturer: Moosa Mohamed Manik
Learning Centre: Villa College
Trimester: May 2012
Table of Contents
Executive Summary
This assignment will give detail information about AirAsia and its operations. Meantime, changes faced by AirAsia as a multinational corporation during the last couple of decades and how these changes challenged its operations both at home and in the overseas markets will be discussed. In addition to this, an evaluation will be given on how AirAsia adapted its communication strategies successfully in line with its needs and challenges in the market. Finally, on how these challenges are interrelated with these communication strategies will be given.
Introduction
The multinational corporations such as AirAsia operating in different countries will face more challenges hence, it is very important to have good communication strategies to overcome these challenges. The main purpose of this assignment is to develop the ability of applying the principles and concepts of corporate communication to real business situations. This assignment will mainly focus on firstly, the introduction of AirAsia and its operations. Secondly, an analysis will be given on how its business environment challenged its operations. Thirdly, an evaluation will be given on how they have adapted its communication strategies successfully in line with their needs and challenges in the market. Finally, a comprehensive summary with how the challenges and communication strategies are interrelated each other will be given.
Lim, Mohamed, Ariffin and Guan (2009) have found that the AirAsia Berhard is an airline company which provides air transportation service which is established in 1993 and started its operations on 18 November 1996. AirAsia was founded by a government owned conglomerate, DRB-Hicom. Its airline had not been able to take off and was eventually sold to Tune Air on 02 December 2001 for a token sum of RM1.00 or US$0.26 together with an accumulated debt of RM40 million.
Lim, Mohamed, Ariffin and Guan (2009) have found Tune Air was formed by Tony Fernandes and four entrepreneurs. The enterprising groups quickly settled the airline’s debts and set about rebranding and relaunch the AirAsia as a low-fare carrier. After two years, Fernandes turned the AirAsia into a profit-making company after the successful operations of the United States-based Southwest Airlines, Dublin-based Ryanair and United Kingdom-based Virgin Air. AirAsia won many awards and Fernandes was awarded the Best Entrepreneur of the Year by Ernst & Young Entrepreneur Award in 2006. Mail online (2009) has found the following picture of Fernandes.
AirAsia Corporate Profile (2012) has found that the company’s headquarter is in Sepang, Selangor, Malaysia and its main base is the Low Cost Carrier Terminal at Kuala Lumpur International Airport with a route network that spans through to over 20 countries. AirAsia continues to focus the way for low-cost aviation through our innovative solutions, efficient processes and a passionate approach to business. Together with their associate companies, AirAsia is set to take low-cost flying to an all new high with their belief, "Now Everyone Can Fly".
About AirAsia (2012) has found AirAsia has tried in the last nine years to cover 65 destinations in 18 countries. Today, they employ more than 8,000 staff and with a market capitalisation of just over RM7.06 billion by 31 December 2010. It is the only ASEAN airline who is serving 600 million people from 10 hubs in three countries.
Meantime, About AirAsia (2012) has found Singapore functions as a virtual hub where AirAsia features among the top 10 airlines in terms of contribution to passenger traffic. The Group signed an agreement in December 2010 to establish a Philippine-based low-cost affiliate for further strengthening of its ASEAN network, which is expected to be operational by end 2011.
AirAsia Charter flight (2012) has found that they offer charter airline services to business travelers for the purpose of meeting, incentives, convention and exhibition or even for leisure with their fleet of Boeing 737-300 and Airbus 320 with superlative maintenance operations, and outstanding crews.
AirAsia Corporate Profile (2012) has found that for the purposes of having low-cost and long-haul segment the AirAsia X was established in 2007 to provide high-frequency and point-to-point networks to the long-haul business.
AirAsia investor relations (2012) have found the strategies, vision and goal etc of AirAsia from the following picture.
Analysis of the changes in AirAsia’s business environment
The low cost Airline: AirAsia (n.d.) found that the low cost airlines are anticipated to have greater potential in Asia because there are many Asian cities with a population above one million people which provides a huge market potential for AirAsia to grow. So that the market is becoming larger and more airlines would like to get a piece of the action. For instance, Budget airlines, it is estimated, will capture at least 25% of Asia’s air travel market within next 10 years and a lot of that will be new, not diverted, traffic. Therefore, AirAsia will face more competitions due to the changes in population. Moreover, the low cost airlines like AirAsia still need to compete with the conventional carriers. Even though extra passengers of the low cost airlines will be coming from the new demand to be created by the low fares, the growth may not be entirely taken away from the big flag carriers.
The low cost Airline: AirAsia (n.d.) found that the AirAsia faces challenges finding open takeoff and landing slots at opportune times, and Thailand’s regulation that sets minimum air-fare rates. Although Transport Minister Suriya Jungrungreangkit said the current minimum air-fare regulations will be scrapped to open up the market, he couldn’t name a date when this will be done. This seems to be favoritism toward Thai Airways International’s domestic operations, and affects Thai AirAsia to compete in the Thailand market.
The low cost Airline: AirAsia (n.d.) found that when AirAsia wanted to start flights from the southern state of Johor near Singapore, to attract passengers by running a convenient bus service to the city-state the Singapore government quickly quashed that idea. The Singapore government said it would not approve a bus link for AirAsia because it was not ‘in her national interest’, reflecting fears that Singapore’s Changi airport would lose business to Johor’s new Senai airport. So that AirAsia cannot stop the use of Changi airport and therefore suffer from a higher cost.
The low cost Airline: AirAsia (n.d.) found that the AirAsia flying to Singapore suffer from flight congestion of Changi because Changi has disadvantage of flight congestion that could prevent the quick turnarounds essential to keeping down costs. As a result it has stuck between big planes and circling to wait for a slot to open up, which means extra fuel costs. Moreover, the departure and security tax of Changi is too high for AirAsia low-cost operation. AirAsia had asked the Singapore government to reduce the fees, but the request was not only rejected but also criticized.
The low cost Airline: AirAsia (n.d.) found that the AirAsia now provides an alternative route to travel to Bangkok, by using Senai Airport in Johor Bahru, in southern Malaysia. Seeking to cater to the different markets, fares for Johor Bahru- Bangkok are generally 20 % lower in comparison to Singapore - Bangkok. AirAsia currently operate daily flights to Bangkok from Johor Bahru. However, the choice proved unpopular, as the route failed to attract Singaporeans because of the additional cost and inconvenience of having to travel in and out of Malaysia by road. All these affect AirAsia external growth.
The low cost Airline: AirAsia (n.d.) found that the Indonesian passengers’ preferences are quite different from the concept of cheap air travel without extra service for the passengers and also their reluctance to bring light baggage. AirAsia prefers passengers with very light and minimum baggage and Indonesian domestic airline companies are able to provide value-added extras like food and beverages as part of their service to the passengers, although at a relatively higher cost. Hence, this has affected its operations.
Press release (2011) has found that the operating environment in the year 2011 has been challenging due to with weak macroeconomic indicators and high jet fuel prices. The price of fuel has gone up in last five years as a result they have faced difficulties in providing low cost service although they had profit in these years.
Warning: How AirAsia compromised passengers’ safety (2010) found that the globalization resulted in global uncertainty such as accidents, terrorist attacks, and disaster which can affect customer confidence hence this can affect its operation. On 7th February 2010 the AirAsia’s flight AK739 travelled from Bangkok to Kuala Lumpur faced a main electrical problem and the engine was stopped. These types of problems have arisen due to the changes in the business environment.
Evaluation of AirAsia’s communication strategies
International Business Research (2009) found that the AirAsia’s Website is fascinating and create fresh ambiance to the customers by welcoming them to browse further. The red colour plays as a major element in creating the appearance to be 100% appeal compared to the other website of airline service providers. The interactive buttons help the viewers to easily connect from one page to another. Information can be easily downloaded and provides accurate information as listed like flight booking, pricing, package offered etc. The Website is clearly shows the products and services offered. The basic information are shown as these always required for the first time viewers. It is also found that the element of promotions is always becoming the main factor to be advertised in the website as it creates sense of “knowing more” and the navigation is considered as “user friendly”. This leads into the potentiality of creating sales and up to making profit to the AirAsia. Although they have faced some challenges this is one of the key of becoming preferable airline service provider by the customers. The following picture is a screen shot of AirAsia’s website on 26th June 2012.
International Business Research (2009) found that the AirAsia Website is one of the best secured sites of doing internet transactions and this aspect is proven by looking into the whole processes of buying and doing payment for the services offered. Their website convinces the customer to become more relax about the transactions due to the availability of listed contact number and addresses as it connects the customer and potential customer to the AirAsia personal assistance which is a live person that can be contacted. It proves that AirAsia is always maintaining in building customer’s trust.
International Business Research (2009) found that the AirAsia always determine the customers as their first priority in every consideration because this can be seen in the first page of the AirAsia’s website which has stated the member log in button. Customer can always connect to the AirAsia programmes such as promotional booking offers etc. After becoming a member will bring customers to advance information that will ensure members are always one’s step ahead from others. The data of the customers are secured and will be guaranteed for personalization from AirAsia.
FCU epaper (2009-2010) found that the AirAsia provides many languages including English but most of the languages are Asian countries because know AirAsia’s market is in Asia. The information in their site is complete enough and news is always updated. People can easily buy or book ticket using the features on the website and can check the schedule of the flight.
FCU epaper (2009-2010) found that the AirAsia has the other social network to provide the community such as Air Asia Blog, Facebook, and Twitter which are found at the bottom page of the website, so that people can share their comment about Air Asia services. Meantime, they have introduced Short Messaging System (SMS) to book seats and obtain the latest promotions through the mobile phones.
Lim, Mohamed, Ariffin and Guan (2009) have found that the logo of AirAsia is written in big red cursive letterings against a white background meantime the colour and font used denote boldness, simplicity and fun. The tagline “Now everyone can fly” with the brand name clearly captures the company’s vision of offering the lowest fare to everyone. The new logo of AirAsia is more vivid and dynamic as compared to its previous logo. The following red colour picture is the new logo and the blue colour one was the old logo of the AirAsia.
Lim, Mohamed, Ariffin and Guan (2009) have found that the AirAsia’s Chief Executive Officer, Tony Fernandes, believes that every aspect of the business must be simplified so that the whole philosophy, vision, mission and objectives can be understood by all the stakeholders, especially the staff and customers. This style brings transparency on decision-making and high accessibility to media and investor community. Besides, he believes that management must keep talking to the staff about the brand. He tries to promote a sense of loyalty, dedication and commitment of the staff to the company in his daily interactions with the staff to protect the image. This opinion is promoted through a good staff and customer relations for consultations at anytime and an air of friendly atmosphere.
Summary of the report
AirAsia is a multinational company providing air transport. Initially they were not profitable and the company was purchased by Tune Air. After purchasing the company became profitable and has expended by creating hubs in different countries.
It has proven that the competition in the Airline industry has increased due to growth of the population and other airlines in the market. The introduction of new regulations and policies in some countries has challenged the AirAsia. The AirAsia faced the difficulties in operation due to congestion of environment. Sometimes they have compromised some customers in order to satisfy some other customer group as a result they have faced criticism. Since they are low cost airline, they have faced difficulties in operating in the market due to the different cultural and preference in some countries. The globalization and fluctuation of price of fuel also have huge impacts on their smooth operations.
In relation with these changes, they have adapted very good communication strategies successfully in line with their needs and challenges in the market. They have very attractive website and have provided online transactions to customers in more interactive ways as a result it maintained the customers trust on the brand. Since their first priority is given to their customers, they communicate the customers through different languages including English. They have different social networks like facebook to get feedback from the customers. Their logo is very attractive and their slogan also attracts the customers easily. They also have very good customer relations and their decision making is transparent to media and investors.
In conclusion, it has proven that they have implemented successful communication strategies to overcome or minimize the challenges they have faced due to change in the business environment. As a result they do not have much negative impact and still they are maintaining the position in the market by providing the services at low prices. At last, it is recommended to go for further improvements in the website such as changing the pictures into 3 dimensions (3D) to get more attraction from the customers in future.
References
AirAsia. (2012). About AirAsia. Retrieved June 08, 2012, from http://www.airasia.com/my/en/corporate/iraboutairasia.page
AirAsia. (2012). Charter flight. Retrieved June 08, 2012, from http://www.airasia.com/my/en/booking/charteraflight.page
AirAsia. (2012). Corporate Profile. Retrieved June 07, 2012, from http://www.airasia.com/my/en/corporate/corporateprofile.page
AirAsia. (2012). Investor Relations: Strategy. Retrieved June 08, 2012, from http://www.airasia.com/my/en/corporate/irstrategy.page
FCU epaper. (2009-2010). Analyzing AirAsia in Business Competition Era. Retrieved June 06, 2012, from http://wenku.baidu.com/view/a39628f4f61fb7360b4c6557.html
International Business Research. (2009). Analyzing and Discussion. Retrieved June 07, 2012, from http://www.google.mv/url?sa=t&rct=j&q=Differentiation+Strategies+of+Internet+Retailing+%28Unique%2C+Value+and+Return%29%3A+A+Focused+Web+Evaluation+into+Airline+Service+Provider&source=web&cd=2&ved=0CFIQFjAB&url=http%3A%2F%2Fjournal.ccsenet.org%2Findex.php%2Fibr%2Farticle%2Fdownload%2F1115%2F1118&ei=NJPpT76FDMrVrQe-3MD-DQ&usg=AFQjCNFSYQqfsH6F_KTRv_Wr3gZIBoorDQ
Lim, K. Y., Mohamed, R., Ariffin, A., Guan, G. G. (2009). Branding an Airline: A case study of AirAsia: Branding of AirAsia. Retrieved June 07, 2012, from http://umrefjournal.um.edu.my/filebank/published_article/630/JPMM%202009%20KHOR%20YOKE%20LIM,%20RAMLI%20MOHAMED,%20AZEMAN%20ARIFFIN.pdf
Mail online. (2009). Misery for West Ham as Air Asia entrepreneur Tony Fernandes rules out making a bid for Premier League strugglers. Retrieved June 07, 2012, from http://www.dailymail.co.uk/sport/football/article-1237745/Misery-West-Ham-Air-Asia-entrepreneur-Tony-Fernandes-rules-making-bid-Premier-League-strugglers.html
Press release. (2011). AirAsia post strong performance despite high fuel price. Retrieved June 08, 2012, from http://www.airasia.com/iwov-resources/my/common/pdf/AirAsia/IR/AA_3Q11_Press_Release.pdf
The low cost Airline: AirAsia. (n.d.). A study of opportunities, challenges and critical success factors. Retrieved June 09, 2012, from http://www.google.mv/url?sa=t&rct=j&q=However%2C%20as%20the%20market%20is%20becoming%20larger%2C%20more%20airlines%20or%20new%20comers%20would%20like%20to%20get%20a%20piece%20of%20the%20action.%20%20For%20example%2C%20Budget%20airlines%2C%20it%20is%20estimated%2C%20will%20capture%20at%20least%2025%25%20of%20Asia%E2%80%99s%20air%20travel%20market%20within%20next%2010%20years%20and%20a%20lot%20of%20that%20will%20be%20new%2C%20not%20diverted%2C%20traffic.%20%20Therefore%2C%20AirAsia%20will%20face%20more%20competitions%20at%20the%20same%20time.%20%20&source=web&cd=1&ved=0CFMQFjAA&url=http%3A%2F%2Felc.polyu.edu.hk%2Fsubjects%2FELC2202%2FAir_Asia_Report.doc&ei=oojpT7DIIYrprAe9zPiaDg&usg=AFQjCNE40J1QZqaC0uY9gPzpXaJJE86O2w
Warning: How AirAsia compromised passengers’ safety. (2010). Retrieved June 08, 2012, from http://imbinitchy.blogspot.com/2010/03/how-air-asia-compromised-passengers.html
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