NAVIGATING GLOBAL SKIES: AN ANALYSIS OF AIRASIA'S
INTERNATIONAL BUSINESS STRATEGY AND OPERATIONS
Introduction
Business is an activity of offering goods or services that is carried out to generate profits. A
business that has entered the international level is a business that has developed or is
expanding its market segment. International business can be an alternative done by an
entrepreneur to introduce his business to various countries in the world. Every business that
is run requires various strategic plans so that the company can operate smoothly and also
directed.
Strategy selection is considered as a means to the search for the company's future in the long
term (Prasodjo, 2021). Improper strategic planning can make business implementation
unstructured and reduce the optimality of business performance. This will make it difficult
for the business to develop and survive in competition, especially when expanding. In this
era of increasingly competitive business competition, profit-oriented business actors are also
required to always be proactive in finding ways and strategies to excel in facing competition
in their respective business entity fields (Kosasih, 2022). Therefore, good and appropriate
strategic planning is needed to support operations and support business continuity to achieve
company goals.
In this research, we use the case study of AirAsia. AirAsia is one of the airlines that has been
recognized by the world community including Indonesia, as the best low-cost carrier with
the slogan "now everyone can fly". As an international company, the strategy implemented
by AirAsia is able to maintain the company's performance. Thus, the operational activities
carried out will not interfere with AirAsia's path to be able to compete with similar local
companies in their business area. AirAsia as the company analyzed in this study was chosen
due to the success of their company which is well known in foreign countries and is often the
choice of many people to fly. This can be seen when AirAsia was awarded the World's Best
Low-Cost Airline in London in 2022 for the 13th consecutive year.
From the background mentioned above, this research will analyze how the business strategy
carried out by AirAsia as a company that does business internationally, how the business
operations carried out in it so that it can compete with local and international airlines, and
how AirAsia continues to maintain its consistency so that it is trusted by customers.
Literature Review
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
International Business Strategy
Strategy is a stage or long-term plan that has been prepared to achieve a goal (Syeron, 2019).
International business is all business activities that refer to trade in goods or services, capital,
technology, or knowledge on a global scale that crosses the borders of a country (Mawar &
Aslami, 2021). Thus, international business strategy can be interpreted as an approach
process used by companies in order to expand their business globally to various countries.
Here are 4 types of international business strategies:
International strategy, is a strategy that uses licensing and exporting in order to enter
the international market. This strategy is carried out so that the company can export
products to various regions and aims to increase sales and profits so that the company
can grow more rapidly (Wardhana, 2022).
Multidomestic strategy, is a strategy in which strategic decisions and operations are
decentralized for strategic business units in each country to adapt products to local
markets. Companies that use a multidomestic strategy do not focus on profits but focus
on adapting so that the products created can be accepted by the local market (Zulfikar
et al., 2020).
Transnational strategy, is a strategy used to achieve local responsiveness and global
efficiency, so that companies can create their products and services according to each
country's local preferences while not losing the core value of their business (Crewdible,
2023).
Global strategy, is a strategy that is carried out to make costs as low and efficient as
possible without regard to local conditions that exist in each country (Spada, 2020).
AirAsia Airline
An airline is a company that provides specialized air transportation services for public
passengers or goods, both scheduled and unscheduled. AirAsia is a Malaysia-based low-cost
carrier founded in 1993. The company started its operations in 1996 by serving domestic
flight routes in Malaysia.
Malaysia, and since then AirAsia has grown rapidly into one of Asia's largest airlines with
flights to destinations in Southeast Asia, East Asia and Oceania. AirAsia consists of several
business entities, including AirAsia Malaysia, AirAsia Indonesia, AirAsia Thailand and
AirAsia Philippines which are all owned by Capital A Berhad, a public company listed on
the Malaysian Stock Exchange. In recent years, AirAsia has also ventured into other business
sectors such as hotels, tours and travel, and e-commerce through its subsidiary Capital A
Berhad (AirAsia Group, 2018).
Low-Cost Strategy
Low cost strategy is a strategy carried out by companies by selling products cheaper than
competitors without reducing the profits generated (Bisnis, 2020). Companies that implement
a low-cost strategy must be able to design, produce, and offer their products efficiently with
strict cost control.
Low-Cost Carrier (LCC)
A low-cost carrier (LCC) is an airline that provides low fares but removes some of the usual
passenger services. This airline model refers to an operating structure with lower fares than
its competitors through various media, so it is able to provide low ticket prices and limited
services because it reduces or reduces its operating costs to capture a wider lower market
segment (Setyawati & Susanto, 2019).
Expansion
Expansion is an activity carried out by a company to expand its business by opening
businesses in various other places or countries (Qothrunnada, 2022). The purpose of
expansion is to be able to sell many products or services to generate profits and dominate a
larger market so that it can control the market. Expansion can be divided into several types
(Rizeki, 2022), namely:
Business expansion, the activity of expanding the company's business network to
increase profits, revenue, and total assets in the future.
Market expansion, company activities to reach new target markets, usually carried out
by large companies that have been successful in their home regions and want to further
expand their business areas.
Credit expansion, the activity of increasing the amount of credit charged by a person.
Economic expansion, is the development of the economy in a conjuncture pattern,
which is a process of alternating ups and downs or economic progress and decline.
SWOT Analysis
SWOT analysis is a technique used to determine the internal and external factors of the
company which include weaknesses, strengths, opportunities, and threats for the business
being run (Ananda, 2022). The existence of SWOT analysis can make it easier for companies
to plan in running a business to reduce risks or factors that can affect the business. Here is
what SWOT stands for:
Strengths, to see how far the factors that can be a strength in running a business.
Weaknesses, to see what factors are the weaknesses of the business and weaknesses that
can hinder the business we run.Opportunities, to find out how much opportunity there
is for the business being run.
Threats, to find out what threats can affect the business being run.
Outsourcing
Outsourcing is the activity of transferring a job to a third party or other company so that
business activities are more effective and efficient (Fathina, 2022). Through outsourcing, the
company only needs to think about how to do business, while all matters related to the
procurement of goods or services are left to other parties (outsourcing service provider
companies) (Suyoko & Ghufron AZ, 2021).
Research Methods Research Type
This research uses qualitative research. Qualitative research was chosen to identify and find
out what strategies are implemented by AirAsia so that it is able to run its business
successfully in the international market.
Object of Research (Population and Sample)
The population in this study is all companies that are included as low-cost airlines. While the
sample used in this study is AirAsia as an airline that has been awarded as the best low-cost
airline in the world for 13 consecutive years by Skytrax. The source of data required in this
research is secondary data, which is collected through historical data as well as careful
observation through previous articles, AirAsia's website, and other internet-based supporting
sources related to the aspects that affect AirAsia's success in the international market to
support the preparation of the analysis results.
Data Analysis Method
All data obtained from this research was analyzed using descriptive data analysis methods.
This method of analysis is suitable for processing the results of qualitative research so that it
describes a situation as it is and allows conclusions to be drawn based on the results of the
analysis.
Results and Discussion
AirAsia is a Malaysian low-cost airline founded in 1993 by Tony Fernandes. Initially, it
operated as a full service airline but faced stiff competition from Malaysia Airlines. In 2001,
Tony Fernandes transformed AirAsia into a low-cost carrier based on the successful
Southwest Airlines model in the United States. Today, AirAsia is one of the largest and best
low-cost airlines in the world, with a fleet of more than 250 aircraft operating to more than
165 destinations in 25 countries. Until 2022, AirAsia has also won the world's best low-cost
airline award for 13 consecutive years according to SkyTrax. As one of the world's leading
low-cost carriers (LCC), AirAsia has successfully expanded operations beyond its home
market of Malaysia to become a major player in the global aviation industry. This success
can be attributed to a combination of effective strategies and efficient operations that have
enabled the company to navigate the complex and highly competitive global aviation
landscape.
AirAsia's Business Model for Doing International Business
AirAsia's business model is based on the low-cost carrier (LCC) model, which emphasizes
cost efficiency and affordability of flight fares. AirAsia focuses on providing customers with
low fares, while maintaining high levels of safety and service quality. Here are some key
features of AirAsia's business model:
Efficient operation
Better aircraft model efficiency
AirAsia has 57 Airbus A320s, 2 Airbus A321neos and 10 Airbus A330s (on the AirAsia X
sub-airline). All three aircraft models have a low average age which makes each flight more
efficient. Moreover, the new aircraft variant from Airbus, the NEO (New Engine Option)
series, offers much better flight efficiency than the previous aircraft model, the CEO
(Current Engine Option) series. The A321neo series aircraft models are also capable of
medium-haul flights (up to 6 hours) to cover Asian routes, and longer routes can be reached
with the Airbus A330 which can travel up to 10 hours non-stop. AirAsia places great
emphasis on fuel efficiency and implements a range of environmentally conscious practices
to reduce its carbon footprint, including on reducing the amount of fuel carried on board.
AirAsia also minimizes aircraft weight through measures such as lightweight seats,
minimizing the amount of drinking water carried on board, and utilizing fuel-efficient
engines that meet international standards to reduce emissions. Furthermore, when it comes to
the efficiency model, almost the entire AirAsia aircraft fleet is configured with a maximum
configuration. For example, an average airline has 160 seats with a 2-class configuration on
the Airbus A320 model (business class and economy class), while an AirAsia aircraft of the
same model has 180 seats with a 1-class configuration (economy class only). In this case
AirAsia can reap more profits due to the better efficiency of the aircraft model.
Unvaried aircraft models and good utilization
AirAsia only has aircraft models from one manufacturer, Airbus. This saves AirAsia the cost
of training and familiarizing its crews, which in turn reduces costs and ensures that AirAsia's
flights are always at full efficiency as crews are experienced with the aircraft model. Not
only that, AirAsia also has good aircraft utilization. This means that AirAsia has a high
number of flights and a very fast turnaround time, which maximizes cost efficiency.
AirAsia's average turnaround time is only 25 minutes - the fastest in Southeast Asia.
Direct flight network and good airport efficiency
All of AirAsia's short-medium haul flights (flights with a travel time of six hours or less) are
non-stop. This reduces the use of ground crew, infrastructure and facilities at transit airports
which can be costly. AirAsia provides an online check-in feature for all its flights, so
passengers do not need to rush to the airport to check-in. Even if passengers have luggage to
check-in, they can proceed directly to the automatic check-in machines provided by AirAsia
at its major hub airports, such as Singapore Changi Airport, KLIA2 (Kuala Lumpur
International Airport 2), and Ngurah Rai International Airport in Denpasar. This helps reduce
the overhead costs incurred by AirAsia for airport staff. In addition, AirAsia flights usually
use gates that are relatively further away from the main terminal, hence the use of buses
which are more cost-effective than garbarata. AirAsia also operates some flights to secondary
airports, such as Don Mueang International Airport in Bangkok, which is an older airport and
not served by premium airlines such as Thai Airways. AirAsia launched routes to this airport
to enable lower cost operations.
Outsourcing and a lean organizational structure
AirAsia outsources some services to external companies to keep its operating costs low. For
example, ground handling services such as baggage handling and aircraft cleaning are often
outsourced to third-party providers. These services allow AirAsia to focus on its core
competencies such as flight operations and customer service, while reducing operating costs.
AirAsia's organizational structure is designed to be efficient and lean with fewer layers of
management and a focus on decision-making at lower levels of the organization. This allows
for faster and more efficient decision-making, as well as lower overhead costs. The company
also emphasizes cross-functional teams that work together to solve problems and achieve
common goals. This approach allows for greater agility and flexibility in responding to
changing market conditions and customer needs. AirAsia's lean organizational structure is
one of its key strengths, allowing the company to maintain low costs and a competitive edge
in the low-cost airline market.
Varied revenue streams
In general, conventional airlines only have a few revenue streams such as ticket sales,
baggage, and merchandise. But at AirAsia, they have multiple revenue streams ranging from
in-flight meals and snacks, extra baggage allowance, seat selection, travel insurance,
AirAsiaGo (flight, hotel and activity packages), in-flight advertising (opportunities for
brands to brand on AirAsia aircraft), to the AirAsia BIG Loyalty program. AirAsia's
ancillary revenue strategy is an important part of the company's business model that helps
maintain a low cost structure while offering a wide range of products and services to
customers. By offering these products and services, AirAsia is able to generate additional
revenue streams beyond airfare sales, allowing the company to remain profitable and
competitive in a tight aviation industry.
AirAsia's digital innovation
AirAsia has been at the forefront of digital innovation in the aviation industry by leveraging
technology to improve customer experience, streamline operations and reduce costs. The
company's focus on digital innovation has also helped AirAsia remain competitive in the
aviation industry by providing customers with a range of convenient and seamless digital
services. Here are some examples of AirAsia's digital innovations:
AirAsia mobile app
The AirAsia mobile app allows customers to book flights, manage their bookings, and
check-in for flights, as well as other features such as flight status updates, travel advice,
and access to the AirAsia BIG Loyalty program.
Self-service kiosk
AirAsia has installed self-service kiosks at many of its airports that allow customers to
check-in for their flights, print boarding passes, and purchase additional products and
services.
Chatbots
AirAsia has developed chatbots that can answer customer queries and provide support
through messaging platforms such as Facebook Messenger.
Data analytics
AirAsia uses data analytics to optimize its operations and improve its customer
experience. The company uses data to analyze customer preferences and behavior, and
track the performance of its flights and operations.
AirAsia RedTix
AirAsia also ventured into the digital ticketing industry by launching AirAsia RedTix, a
platform for customers to purchase tickets for events such as concerts, sports and theater
performances.
AirAsia's International Expansion Strategy
AirAsia's international expansion strategy includes identifying new high-growth markets,
establishing a strong presence, and forming partnerships with local businesses and
governments. AirAsia focuses on Southeast Asia as a region with great air travel potential
and has expanded its operations to countries such as Thailand, Indonesia, the Philippines, and
Vietnam. In addition, AirAsia also focuses on long-haul flights through AirAsia X to
destinations in Australia, Japan, South Korea, China, Middle East, The strategy has
successfully made AirAsia one of the largest low-cost airlines in the world.
To support its international expansion efforts, AirAsia is also investing in new technology
and infrastructure, including the development of a new digital platform to enhance the
booking experience for customers and the construction of a new hub in China to support its
operations in the region. This expansion is evidenced by supporting data from AirAsia's
annual reports. Despite a decline in the 2020-2021 period due to the COVID-19 pandemic,
AirAsia was able to return to form in 2022 with a load factor of 83 percent.
AirAsia's Competitor Landscape in International Business
AirAsia's main competitor landscape consists of other low-cost carriers (LCCs) operating in
similar markets AirAsia also competes with other airlines that offer the following cheap
flights in certain regions, such as:
Low-cost carriers (LCCs):
Lion Air, an Indonesian airline that operates a massive domestic network.
Cebu Pacific, a Philippine airline that operates flights to domestic and international
destinations.
Jetstar, a subsidiary of Qantas Airways that operates flights to destinations in Australia,
New Zealand, and Asia.
Scoot, a Singapore-based low-cost carrier that is a subsidiary of Singapore Airlines,
offers flights to destinations across Asia, Europe and Australia.
Full service operators (FSC): AirAsia also faces competition from full-service carriers
that offer a wider range of services and facilities, including:
Singapore Airlines, one of the world's leading airlines, offers flights to destinations
across Asia and beyond.
Malaysia Airlines, the national airline of Malaysia that offers flights to domestic and
international destinations.
Thai Airways, the national airline of Thailand that offers flights to destinations
throughout Asia and beyond.
Garuda Indonesia, Indonesia's national airline that offers flights to domestic and
international destinations.
Conclusion
Based on the results of the analysis, it can be concluded that AirAsia's business model and
combination of strategies are the main points that stimulate their success in the international
market to become one of the market leaders in the low-cost carrier (LCC) market. AirAsia's
success in the global aviation industry is a testament to its ability to navigate complex and
highly competitive markets with innovative strategies and efficient operations. Overall,
AirAsia's international expansion strategy is focused on identifying new growth opportunities
in Southeast Asia and beyond, strengthening its market presence through partnerships and
investments, and leveraging technology and infrastructure to support its operations. The
company's commitment to cost efficiency, strong branding, digital innovation, and strategic
initiatives are the strengths that enable AirAsia to maintain its competitive advantage,
especially in expanding in international markets. This allows AirAsia to stay ahead of the
competition and continue to grow in an ever-evolving industry. As AirAsia continues to
expand its range and services, it will be interesting to see how the company adapts to new
challenges and opportunities in the ever-changing global aviation landscape.
