Freight Forwarding Market growth, trends, forecasts, and the impact of COVID-19 have been captured in this report. American Airlines’ Asia Growth Strategy October 14, 2014 by Ben 19 The Centre For Aviation has an interesting article about American’s growth strategy in Asia, entitled US airlines) will go to more direct routes internationally instead of routing via a partner hub? The main target audiences of the strategy laid by the company are the customers who are generally price conscious and need short-haul flights to travel. But that’s not an Asia strategy – maybe a springboard into some future and as yet undefined Asia strategy. AA bean counters had some fantasy idea that they could pull ex-HKG traffic to Latin America via DFW. Air Canada has reported to the CDP for 10 years and in 2018 was recognized by CDP for our commitment to disclosure and transparency. 22. Northeast Asia. Within only four years, AirAsia managed to … Add in the limited mileage earning, and the relationship is almost starting to look like the one between Delta and Korean Air: Cathay’s website does not show its codeshare on American’s Hong Kong-Dallas service when ticketed non-stop, but does show it when booked as a connection. I think it’s a big “if” to Lucky’s last statement….”if” there is not a downturn. As posted in Lucky’s recent HKG-DFW thread on AA, J class pricing (10k USD, equivalent to CX HKG-JFK) is just ridiculous for those of us who don’t post miles to AA and actually buy full cash fares, so we care about the product. For this reason, Air Asia has developed a unique set of guiding principles - simplicity, cost-efficiency and effectiveness. PETALING JAYA: AirAsia Group Bhd is moving from the traditional model of owning aircraft to become an asset-light airline. 4. Please view our advertising policy page for additional details about our partners. Just does not make sense for both passengers who have to back-track, and fuel economics…especially given most Asia-based carriers have far products that have cash-ticket pricing power over AA’s premium cabins, which are filled with elites usually not paying cash fares for the seats they’re in. Cheap First Class Fares Out Of Colombo, Sri Lanka? Two major developments have helped these low-cost airlines flourish. The connections at DFW are strong but for someone coming from anywhere other than Texas, OK or the Southeastern USA, DFW is really out of the way. Asia has also seen a number of companies set up shop, including Tiger Air and Jetstar. Asian Development Bank. Authors. According to Porter’s generic strategies (1985), cost leadership is one of them. MISSION To be the best company to work for whereby employees are treated as part of a big family Create a globally recognized ASEAN brand To attain the lowest cost so that everyone can fly with Air Asia Maintain the highest quality product, embracing technology to reduce cost and enhance service levels Threats The emergent middle class is growing more rapidly in countries like India and China. Flying to 25 countries with 165 routes, their fleet of 89 planes serves more than half of Asian and Australasia. (American’s aircraft has a nearly 20-hour layover in Hong Kong, but this is done for scheduling and for maintenance work in Hong Kong.). Air Asia Vietnam – First of all, we have Air Asia Vietnam, the newest in the group launched in early 2018 Hong Kong is likely to receive additional service at some point, with Mr Perhirin noting its initial 14 local staff, including 10 in sales, were not placed to support a single daily service indefinitely. He chronicles his adventures, along with industry news, here at One Mile at a Time. A total of 349 planes have been purchased from Airbus. The International Air Transport Association surveyed that the growth rate of the airline industry is about 6.6% every year and it has been a growth more than 5% from the year 2000 – 2010. @Ivan Y Air Asia created a value innovation propositions to the customers by focusing on factors that are of great value to the customers such as point-to-point travel system, easy booking system, no frills, destinations where traditional airlines did not fly, etc. It’s an unusual one, and it seems to be more of a test rather than a full-fledged strategy shift. This is about to change in Malaysia, where Air Asia has been transformed by its CEO, Tony Fernandes, and now uses the tag–line quoted in the title above . Using DFW as the focal point of the Asia service is surprising. • Ensure all Allstars are provided with adequate aviation safety information and training hence are competent in safety matters and are allocated only tasks commensurate with their skills. Save my name, email, and website in this browser for the next time I comment. AirAsia Japan – Joint venture between Air Asia and Japanese network airline All Nippon Airways. On the basis of growth in the past quarter, AirAsia is on track to report a trebling of seats sold to corporate clients this financial year. Travel in the Time of COVID: The news, resources, & information you need. AirAsia Strategic Management 1. Since Norwegian started flying in 2002, Amadeus has been working closely with the carrier to facilitate its low-cost strategy which has evolved to include long haul in recent years. The three Gulf carriers see American’s position as having the largest domestic network, key for beyond gateway access. Its cost strategy includes maximising utilisation at 17–18 hours a day by 24–hour scheduling, limiting aircraft parking at destination airports and staggering their schedules. About BenBen Schlappig (aka Lucky) is a travel consultant, blogger, and avid points collector. With so many different branches, costs remain low by sharing the same ticketing system, uniforms, equipment and more. It has hedged 100% of its fuel requirements for the next three years, achieves an aircraft turnaround time of 25 minutes, has a crew productivity level that is triple that of Malaysia Airlines and achieves an average aircraft utilization rate of 13 hours a day. I just dont see business travelers from anywhere other than Texas or the Southeastern USA flying to Dallas on the way to Asia. It just seems like they need business travelers to make this route work and yet the geography of this route is so unappealing for most of the affluent American markets. Serve Asia out of DFW?! STRATEGIC CORPORATE PLANNING OF AIRASIA: By September 2008 Airasia had 60 routes and was voted as ‘Worlds best New Airline for 2008’ at ‘World low cost Airline Congress in london’ inspite of tough competition it faced over Asian skies by brand which had committed fan following ,global recession and increased air fuel prices. While a strong foundation does not guarantee a solid house, it is the only basis upon which to build. 2. For Case Books Click Here >> For Case eBooks Click Here >> It will be interesting to see what happens between Qantas and American, Qantas seems to be getting more in bed with people outside OW than inside of it, so American might just be hedging for an eventual Qantas departure from OW and being ready to step in. One Mile at a Time is owned by PointsPros, Inc. The first is the reemergence of the package holiday. Parker said the same thing about Asia being unprofitable before the launch of the DFW-HKG flight, so I’m guessing they are using that quote instead of it being a new quote specifically referencing the profitability of the DFW-China flights. Starting its operations as a no-frills airline in Opinions expressed here are the author's alone, and have not been reviewed, approved or otherwise endorsed by any of these entities. The LCC concept continued to spread throughout the world with WestJet in Canada in 1996, Virgin Blue in Australia in 2000, GOL in Brazil in 2001, AirAsia in Malaysia in 2002, Kulula in South Africa in 2003 and Air … Frequent flyer arrangements are limited, whereas American is closer to Cathay via the oneworld alliance, although Cathay was the one which pushed for restrictions on economy fare classes that are mileage accruable. It looks like it’s not totally out of the question, though American’s agreement with Qantas is specifically based around them not operating their own flights to Australia and New Zealand. As a result, Asia is likely to be responsible for a bulk of the growth in the global fleet and MRO expenditures. AIRLINE REVENUE UP 17% TO RM3.0 BILLION PASSENGERS CARRIED GROWTH OF 18% RASK GROWTH OF 4% NON-AIRLINE EBITDA UP 147% TO RM36.2 mil. Working closely with AirAsia, Virgin Australia, Turkish Airlines and others, Nick provides unique insight and analysis on a variety of aviation topics. 2014. Malaysia's economy in 2014–2015 was one of the most competitive in Asia, ranking 6th in Asia and 20th in the world, higher than countries like Australia, France and South Korea. Lastly, American is actually better positioned for expansion in the Middle East than the other two US legacy carriers, though we’ll see if it actually materializes: With Asia addressed, there should be a strategic move on a Middle East hub. What Are The World’s Best Airline Brands? Perhaps they think there is enough of a market in Texas to support this route or hope that business flyers wont mind spending an extra 2-6 hours in the air to route through Texas. Advertiser Disclosure: Some links to credit cards and other products on this website will earn an affiliate commission. Air Asia has adopted a generic strategy of cost leadership by reducing the cost of operations and passing the savings through to customers with very low ticket prices. From the West Coast it makes even less sense to fly all the way back to Dallas. Outside of banner ads published through the Boarding Area network, this compensation does not impact how and where products appear on this site. I just hope they continue to grow out of Dallas versus their other hubs! The airline has several smaller AirAsia affiliate product lines for each region. The venture was to craft a new aviation product in Malaysia, which would revolutionise air travel and also provide exceptionally low fares that were affordable to the Malaysians.... Growth of Airasia Since its inception,AirAsia had imbibed a fewvital strategies in both its domestic as well as international operations to establish itself as a strong brand in the global low-cost carriermap. Mandaluyong City, Philippines: Asian Development Bank, 2012. The new routes start from July 1st and AirAsia growth show no signs of slowing down. They’re finally slowly changing that, between the Dallas to Hong Kong/Shanghai routes that launched earlier in the year, in addition to the Dallas to Beijing route that is launching next year. Air Asia operates with the world"s lowest unit cost of US$0.023/ASK and a passenger breakeven load factor of 52%. For additional information on our carbon footprint, targets and our climate protection strategy, and to gain access to our CDP response, please visit our dedicated environment site here Well, Cathay’s website doesn’t show the American codeshare flight if searching flights just between Dallas and Hong Kong, while it does show it if searching with a connection. “We are pleased to continue strengthening our ASEAN footprint and the connectivity within the region. So something would need to change for that to happen: American’s growth in Asia-Pacific is not necessarily confined to Asia. Air New Zealand is a good example of how airlines are pulling all the levers available to survive the brutal revenue slump. How is air connectivity measured? Aviation remains an integral part of transportation systems around the world. Even eagles need a push. Follow these easy steps to disable AdBlock, Follow these easy steps to disable AdBlock Plus, Follow these easy steps to disable uBlock Origin, Follow these easy steps to disable uBlock, GlobalX Airlines Re-registers Its 1st Aircraft And Looks For More Planes. While I in theory understand why American’s Hong Kong flight originates in Dallas, it’s extremely difficult to turn a profit on ultra longhaul flights. AirAsia Thai – Air Asia Thai is a joint venture between Air Asia and Thailand’s Asia Aviation. The new […] Will Bitcoin Be The Future Of Flying And Aviation? www.songdo.com OECD Green Growth layout [Eng] [7a mono]:Layout 1 23/5/11 15:46 Page 2. Emirates growth strategy on track Emirates expects to fly 70 million passengers in 2020, and the airline together with its partners in Dubai are already progressing on plans to ensure the right infrastructure is in place to support and capitalise on this growth. Before the corporate restructuring, Air Asia was losing an average of US$ 1.5m per month. LAX, ORD and JFK should be the bases. Note: Please see my Advertiser Disclosure. Asia's leading airline was established with the dream of making flying possible for everyone. Expansion of the AirAsia network in a prudent and disciplined manner. And some of the first destinations Cathay is expected to launch with its new A350s in the next 18 months are likely to include additional North American cities and frequencies. Asia/Pacific Framework for Collaborative ATFM 1 SCOPE OF THE FRAMEWORK Regional Air Traffic Flow Management 1.1 The 24th Meeting of the Asia/Pacific Air Navigation Planning and Implementation Regional Group (APANPIRG/24), held in June 2013, considered that with the strong growth of air Southeast Asia embraced the LCC concept last, but the growth trajectory is the fastest. American has otherwise intentionally been conservative, rather than dismissive, with the Middle East operators. Low cost carriers (LCC) focus on cost reduction with the purpose of implementing a cost leadership strategy on the markets that they serve. Growth of LCCs in the region will also be motorized by an increase in the number of Asian desire travelers who would like to fly to nearby holiday destinations (Interavia 2004, pp. Spencer Lee, Head of Commercial, Air Asia Malaysia. Air Asia Vietnam – First of all, we have Air Asia Vietnam, the newest in the group launched in early 2018. Each one has its own financial partner. Air asia 1. I’m told the primary reason for the flight timings is to facilitate connections to Latin America, though those are made more difficult by the requirement for visas in order to transit the US: The US’ reluctance to offer transit visas does disadvantage American (and other US carriers) in the Asia-Latin America market. That seems like a huge potential growth area for them, especially since they cut service to India a few years back. I’m guessing the 20 hours has more to with scheduling than anything else in the same way that Iceland air keeps their 757’s on the ground in Seattle for example for long periods of time. There’s nothing terribly shocking in the article, though there are some interesting tidbits. STRATEGY Strategy-People AirAsia treats their officers as they are part of the firm. Transport. In conclusion, Air Asia is need to aware and consider with the strategic management. Well, that hasn’t happened. It may not be ultra-Long haul but united has very short turn around times on their ewr-tlv route. Asia and the Pacific has made great strides in poverty reduction and economic growth in the past 50 years, but there are unfinished development agendas. Maximise Shareholders' Value. There’s nothing terribly shocking here. Philippines. 99308 . Growth accelerated in the North America and Asia-Pacific regions, offset slightly slower growth in other regions. After all, that’s the biggest selling point of those planes. The airline has several smaller AirAsia affiliate product lines for each region. @ John — Assuming miles don’t matter and you don’t mind flying the long way then I’d probably go with Etihad, yes. Most interesting though is that they’re eying another Hong Kong flight eventually, and for the time being aren’t interested in a fifth freedom route out of Hong Kong: American’s growth in Asia is aimed around new cities (as seen with Hong Kong) and additional service to existing points (as seen with Dallas-Beijing/Shanghai). The low-cost airline strategy is new to the Japanese market and AirAsia suggested that corporate business mentality was at least part of the problem. GDP growth for 2001 as a whole was 0.4%, and economists expect that 2002 will see an improving positive growth. AirAsia ... empowering them with a complete view of the customer and clearly articulating the employee’s role in the CRM strategy.Professional Diploma Program in Logistics and Supplier Chain Management Project Studies ... Air Asia: Case study on Growth… Please Support us by turning off your adblocker. In the light of its mission statement, AirAsia has developed the business strategy on cost leadership. It has more to gain by allying with (one or more of) them than opposing their entry. Today, Budapest Airport (BUD) announced its new growth strategy for Asia, set to launch in the new year, which includes the addition of several direct freighter and belly cargo routes to China. Under Strategy 2030, ADB will expand its vision to achieve a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. US carriers can offer more Latin American destinations than the Gulf carriers and shorter connections than European carriers, and they are often competitively priced. It seems like Chicago would be a better option for them. There is no chance I’d pay the same price to fly AA premium class metal versus CX to North America or even connecting. As a result, the airline capacity increases from 17800 passengers to 87600. The firm was re-launched as a no-frills airline in … States, Airports and Airlines), can make strategic decisions on how to enable and unlock the air connectivity potential of a country. AirAsia shows no sign of slowing its aggressive expansion plans despite reporting a net loss in the July–September 2008 period – its first quarterly loss since going public in 2004. The Economic Outlook for Southeast Asia, China and India is a regular publication on regional economic growth, development and regional integration in Emerging Asia. By analyzing average household consumption within Asia, we can also confirm that the communication and transport spending category will increase from less than 10% in 1995 to 15% in 2015 and this will definitely increase the demand for air travel between Asian countries (see Appendix 7). What incentive is there for a business traveler to go with AA vs the other Asian or Gulf airlines. The market is segmented by Mode of Transport (Air, Sea), by Service (Freight Transport, Warehousing, Value-Added Services), and by Geography. Though to me it does not completely make sense for them to grow so many Asian Routes out of Dallas. Negotiations to operate the longer service did not produce a favorable outcome, with the union requesting conditions that affected the commercial viability of the service. It continues with its codeshare strategy after the unravelling of its equity investments. @ Ivan Y — Absolutely do think so. However, bankruptcy restructuring allowed American to change its contracts in ways that now permit longer flights without the commercial restraints American previously experienced. Rollin King and Herb Kelleher got together and decided to start a different kind of airline with four set of principles: fly one type of aircraft to keep down engineering costs; keep overheads down; turnaround aircraft as quickly as possible; and abandon loyalty or air … AirAsia was founded in 1993. The airline currently has a large number of new aircraft on order. There are several marketing strategies like product/service innovation, marketing investment, customer experience etc. Based in Sydney, Australia. The Centre For Aviation has an interesting article about American’s growth strategy in Asia, entitled “American Airlines’ triple play in greater China is part of long-haul rejuvenation, with more to come.” It’s well worth a read. I’m with Lucky that they are going to have a hard time making money on this ultra-long haul flight particularly having to pay to park the plane in HK for 20 hours. This strategy focusing in six main strategic thrusts: @ Lucky — with 787 and A350 coming online, are you thinking airlines (esp. The firm was founded in 1996 as a low cost domestic airline, and was purchased by Tony Fernandes in 2001. The airline does not believe fuel hedging can create a sustainable competitive advantage. To discuss the strategies followed by AirAsia to achieve an impressive growth within a short span of time. What Does USA Vaccine Timeline Mean For Travel? Stay connected via social media, or subscribe to our free email newsletter for tips on upgrading your travel and maximizing your miles! Another factor is that American has not set fire to bridges with Gulf carriers, unlike Delta and United – although CEO Doug Parker recently joined the other two CEOs in lobbying Washington to wind back the US open skies policies, with a specific goal of slowing the expansion of the Gulf carriers. Air Asia: Strategic management report Intoduction Air Asia was founded in 1993 and has since grown to be one of the biggest airlines in the world. Be in the know. In addition, flying from point to point can extremely reduce cost of the airline. @John If you fly Etihad they might run out of food, ☺, If you'd like to participate in the discussion, please adhere to our commenting guidelines. It’s nice to see American finally in a position to grow in Asia. The owner of this site is not an investment advisor, financial planner, nor legal or tax professional and articles here are of an opinion and general nature and should not be relied upon for individual circumstances. Flight to value: Focus on Singapore : AirAsia ’s plans to double its network from Singapore from its current 26 flights per day to 56 within 12 months are central to its corporate growth strategy. The Middle East remained the world’s fastest growing region with 9.6% growth driven by continued growth of the Gulf areas megahub airports, while the slowest growth … First, it looks like American’s routes to Asia are for the most part loss-making and investments in the long term: The growth is dampened by financial performance, with American CEO Doug Parker remarking American’s Asia services are loss-making and “investments for the long term”. People would far rather connect on CX via LAX or JFK to Latam. American is just enjoying the short-lived high of their restructuring; picking DFW as one of their Asia hubs, or as a showcase for their Asia “investment” or whatever they’re calling it, shows their heads are still in the sand. The carrier reported an overall 10% increase in their full-year profit to €1.45 billion. As a resident of the Dallas area, It is very exciting to hear about American’s plans for Dallas. Moreover, Etihad and Air Arabia are planning a new LCC for Abu Dhabi, and Etihad’s working relationship with Emirates seems closer than ever before. This was also a factor delaying American’s entry into Hong Kong. Strategic Growth of AirAsia With Respect to Time: Cost-efficiency, low complexity and profitability are always the cornerstones of building a strong business. 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. Each plane can carry almost 200 passengers on average. Earn 85,000 Membership Reward® points | Terms Apply. Although details on schedules and frequency are still to be determined, the new flights are expected to begin operations next summer. Air Asia X – The only international AirAsia affiliate that operates long-haul routes to Europe and Australia. So, Boston to Hong Kong is $5484 on American and $5612 on Etihad. Seeing as QF pulled out of AKL-LAX, it would be nice to see a 787 run AKL-DFW… pipe dream I know. It focuses on the economic conditions of Association of Southeast Asian Nations (ASEAN) member countries: Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam. Gulf Cooperation Council. Please check your email to confirm your subscription. It’s going to be very hard for them to build, compete and be profitable to Asia. • Establish and measure our performance against realistic safety performance indicators and targets. Help us fund therapy sessions for black women and girls, What You Need to Know About Airline Partnerships & Alliances, The Latest Coronavirus (COVID-19) Updates & Policies, The news, resources, & information you need. 1b. Resilient profit growth through our lower cost base. Add in the fact that the plane sits on the ground in Hong Kong for 20 hours, and the prospects of profitability look even more grim. I tried it once – never again. As others have noted, the only part of the US that it serves well is the southeast. By the end of the decade, China will become the biggest global market for air travel, and as a region, Asia is expected to increase its share of the global fleet by almost nine percent. AA simply doesn’t have any good hub locations for Asia service. The most recent of these awards held by the airline is from 2017. There will certainly be some financial pain until the recovery kicks in, though. Air Asia’s backward, forward and horizontal integration is an attempt for diversification for increased growth of the organization. It’s worth remembering that the reason American was restricted on the most lucrative Asia routes for so long was because of their pilot contracts which prohibited such long flights, along with inefficient aircraft and an all around unsustainable cost structure. Business Collaborations and strategic … Asia File posts 52% growth in Q3 net profit Censof bags RM17.86mil job from Transport Ministry FBM KLCI gains for fourth straight session Southwest Employee Goes The Extra Mile To Return Missing Buzz Lightyear, Reports Suggest Airbus Is Exploring An A350 Freighter Model. Total commitment to these principles makes the airline services of Air Asia very user-friendly to its customers. By understanding how air connectivity is measured, how it has changed, how it relates to economic growth, and what drives it, key aviation stakeholders (i.e. With the perfectly set goals, mission and listed strategy ensures the well functioning of the corporation. For west coast, east coast or upper midwest travelers it seems like there are too many other good options to/from Asia for AA to really compete. which ultimately aided Air Asia to reduce cost and increase the value to the customers. Is there any reason to go with AA other than existing loyalty/points? Required fields are marked *. Notify me of follow-up comments by email. Airbus aircraft are actually single aisle narrow body aircraft and are therefore able to land at airports others cannot. As a first step, APEC is implementing a strategic study on issues related to the realization of a Free Trade Area of the Asia-Pacific.