The report is about Air Asia Indonesia and strategies to make it a major player in the Indonesian airline market.

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Table of Contents

Introduction............................................................................... 2

Air Asia Current Business Strategies..................................................3

Possible Alternative Strategies Evaluation........................................... 7

Air Asia Resources Evaluation....................................................... 11

Possible Future Strategies For Air Asia Indonesia................................. 12

Air Asia Indonesia vs. Adam Air..................................................... 14

Targets For Achievements of The Strategies....................................... 16

Appendix................................................................................. 17

Bibliography............................................................................. 18

Introduction

Air Asia Indonesia is an originally Malaysian airline company, which started to operate in Indonesia in year 2006. The report is about Air Asia Indonesia and strategies to make it a major player in the Indonesian airline market.

Air Asia Current Business Strategies

Air Asia wants to be the lowest short-haul airline in every market it goes in. To achieve the goal, it has some strategies such as lean cost structure, different ways of promotion, keeping safety, satisfying guests, and developing human resources (AirAsia.com, 2007, Internet).

Air Asia always tries to keep the operations simple and efficient to keep the costs low, for example by simple and efficient online ticket booking. According to Fu Sen, an ex employee of Awair - the airline company bought by Air Asia, the tickets that have been booked online can printed by the customers or the customers can just remember the booking code and show their identity card for checking-in, so Air Asia can also save some amount of money that it should spend on thick ticket material, like what other airlines do, which cost approximately IDR 5000,00 each, and on ticket printing which may cost more money.

Another Air Asia's way to save costs is not to provide food and drinks on the plane, as the goal of the airline is just to 'move someone from one to another place' cheaply. It sells food, snacks, and beverages, on the plane, so customers who want to eat or drink can just buy what they want. By implementing this strategy, Air Asia can gain profit from the sales of the food and beverages because it sells the products for higher prices than supermarket or wholesaler prices.

A source said, Air Asia Indonesia may do retrenchment by cutting day-to-day cost, such as providing only drinking water in the office and not coffee or tea. Providing coffee or tea cost more because coffee or tea also needs sugar or creamer to drink with, so cutting cost on drinks may be possible. Employees who want to drink coffee or tea might bring it from their homes.

Fu Sen said, Air Asia also tries to keep the costs low by recruiting only numbers of workers needed and selecting only capable and hard workers, so each worker will have works to do and the company does not have to pay workers who do not work efficiently. The company also gives multiple task to some of the employees, for example, Air Asia does not hire cleaners to clean used planes that stop in airports. Instead, the stewardess or stewards of the planes have to clean the used plane. So, other than saving another amount of money, it also can make maximum use of the human resources available.

Air Asia does promotions by television, in tabloids, and in the newspaper, but other than that, Air Asia also promote the brand by sponsoring The Amazing Race Asia along the show and to have a sponsorship deal with Manchester United (MU). By having the sponsorship deal with Manchester United, Air Asia tries to attract loyal MU fans in Asia to travel with Air Asia (AsiaTravelTips.com, 2005, Internet). It also send newsletter by email to registered customers to inform free seats promotion for flights to some cities in Indonesia such as Surabaya, Bali, and Lombok.
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One of the characteristics of no frill airlines is to do fuel hedging program, where advance purchase of fuel at fixed price for future delivery is done to anticipate rises in prices (Wikipedia.com, 2007, Internet). Rises in prices will hit oil prices at the first time because it is the most important material in most industries.

Air Asia also maintains the safety of the airplanes by complying with the highest International Aviation Safety Standards and practices. To guarantee the safety of the airplanes, all Air Asia's airplanes machines are taken care by GE Engine Service since July ...

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