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AirAsia


  AirAsia
high flyer
by Barry Silverstein
April 23, 2010

When British entrepreneur Richard Branson started Virgin in 1970, he expanded from record stores to an upstart airline called Virgin Atlantic that was, in many ways, as brash as its founder. A cheeky challenger to British Airways, Branson offered first-class extras at economy prices. Now Virgin Atlantic is an established international player that has spun off Virgin Blue (in Australia and New Zealand) and Virgin America.
 
 

The story of AirAsia is strikingly similar to Virgin. The upstart Malaysian airline once challenged Malaysia Airlines in much the same way Virgin challenged British Airways – with great service and low fares – to become Asia’s fastest growing airline.

AirAsia’s logo looks a lot like Virgin’s, from its script typeface to its red color (which, one notices, is also reversed out of red to white when appropriate). Like Virgin, AirAsia has rapidly expanded, spinning off Indonesia AirAsia, Thai AirAsia, and AirAsia X, a low-cost, long-haul airline. The AirAsia Group also owns a low-cost hotel chain, Tune Hotels, and Tune Money, an Asian online financial services portal.

It is no accident that the Air Asia juggernaut is similar to the Virgin Group. AirAsia’s CEO, 45-year old Tony Fernandes, once worked for Richard Branson (although not in the airline business). Branson, in fact, owns a piece of AirAsia X. “I am flattered that people should call him the Richard Branson of Asia," Branson commented to Bloomberg. "He’s built a great airline that has transformed millions of people’s lives by enabling them to travel affordably.”

According to BusinessWeek, when Asia was still reeling from a financial crisis in 2001, Fernandes “took a bankrupt carrier and relaunched it with just two planes flying out of Kuala Lumpur. Since then Fernandes has ramped up to 81 aircraft and 122 destinations in 16 countries – often smaller cities others had ignored, pioneering budget aviation in Asia.”

Apparently, there are several lessons Fernandes has learned from Branson, including Branson’s penchant for off-beat promotions. Last June, Fernandes surprised the aviation industry by striking a sponsorship deal with the National Football League’s Oakland Raiders – made all the more unusual because AirAsia doesn’t fly to the United States. That didn’t seem to matter to Fernandes, who had a plane in the AirAsia fleet redesigned to carry the Raiders name and team logo.

“We always disrupt, innovate and do something that no one ever thought of – and sponsoring an NFL team is all about becoming a global brand,” Fernandes told Bloomberg. But there is method to his madness – AirAsia is said to soon be applying for permission to fly to the West Coast of the U.S. – and Oakland is likely to be the airline’s initial destination.

AirAsia is a promotional innovator in the online world as well. AirAsiaGo.com, the airline’s fast-growing travel portal, offers flights, of course, but also flight services, like a discount for pre-booking meals online. The portal also promotes deals on hotels, activities and travel services. When AirAsia created its first-ever brand campaign last October, the airline also launched a hip microsite to support it.

More recently, AirAsia began “AirAsiaRedTix,” an online global ticketing service that the airline calls “the hottest, smartest new way to discover, discuss, review and book tickets to an international line-up of concerts, sporting events, musicals, theatre performances and more.” The airline is an active user of social media: Last November, AirAsia did a promotion to its 178,000 Facebook fans and ended up distributing nearly one million free tickets.

AirAsia does something else on the promotional side that’s pretty unique: The carrier sells ad space on just about every interior surface of its airplanes and its disposables. Creative advertisers can buy ads on meal-tray table backs, seat backs, overhead bins, lavatory decals, trolley carts, napkins, beverage cups, and those ubiquitous air sickness bags.

But it is AirAsia’s business model that really sets the airline apart. Despite new Airbus planes and in-flight entertainment, fares are extremely low because travelers “customize” their experience by purchasing the add-ons they want, such as “Hot Seats” with extra legroom, “comfort kits,” and hot meals. It’s a combination no other Asian airline has been able to duplicate. Remarkably, AirAsia is managing to do it all at a profit. After a $147 million loss in 2008, the airline reported a $161 million profit for 2009.

AirAsia now moves about 25 million passengers annually – pretty impressive for an airline founded less than ten years ago. As AirAsia expands it routes throughout Asia, into Australia, and soon into India, it looks to other continents. Tony Fernandes, who’s also a Formula One racer, makes no secret of the fact that he wants to win the ultimate race by building a global airline brand. That seems to be one more lesson he’s learned from Richard Branson.

 
     
  

Barry Silverstein has been a frequent brandchannel contributor since 2007. He has thirty years of advertising and marketing experience and is currently a freelance writer and marketing consultant. He founded and ran his own direct marketing agency and held executive positions with Epsilon, a leading database marketing firm and Arnold, a major ad agency. Silverstein is the author of three marketing books, including the McGraw-Hill book, The Breakaway Brand, which he co-authored with Arnold CEO Fran Kelly.

  
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AirAsia - high flyer
 
 I think that Air Asia is good in value added creating, because it could diversify its business to become a one stop solution for traveler. May be it is not able to get the premium segment in the airline industry, but it could get in another different sector by providing low budget hotel, or something else. This wholly part could be a good point in value chain creation and it has a bigger opportunity to be a trademark leader in that such of the industry. 
Robert, marketing manager - April 25, 2010
 
 Air Asia can do wonders in India if they have their game paln right. Infact what deccan did to aviation industry in India in domestiuc sector can be anticipated in intl sector with Air Asia. India can be the No1 contry for the arilines. Good Luck. 
seshagiri, GM-Mktg - April 25, 2010
 
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