AIR ASIA Started as: Malaysian govt controlled, Full service regional, Lower fares than no 1 competitor Dec

2001- Tony Fernandes took over- USD 0.26(debt ridden) Y he entered inspite of sep 11? Aircraft leasing costs dropped, exp. Staff easily available due to layoffs Welcomed by malay. Govt to boost kuala lumpur airport. After Fernanded takeover: Restructure: Asias first no frills, low cost carrier (LCC)- HUGE SUCCESS

NO FRILLS, LOW COST Invited Connor McCarthy- former director of eur. Lcc RYANAIR. Fully Ticketless travel and free seating policy One standard class cabin, no inflight ent. Or free meals, food & BEV. For sale, lucky draws on board. TAGLINE- NOW EVERYONE CAN FLY Fares 40-60% lower than rivals Multilingual websites, regular fare promos EASY TO BOOK, EASY TO Pay, EASY TO FLY. Seats sold through telephone, sales office, travel ag. And local banks and PO DEC 2002- PROFIT = $6mn A.C. Neison: website most popular online shopping for malay users First to enable booking thru sms- Aug 2003 DOMESTIC & SHORT HAUL SERVICES

3 hubs + KLIA 2004- expand- regional flights to neighboring countries JV with Thailands Shin Corp to form subsidiary co. THAI AIRASIA Jv enable AA to gain easier and cheaper access to other SE Asian countries and Chinese mkt. Shin Corp- 51% s/h helped support AAs electronic booking sys. 2005- Indonesia Air Asia- Indonesian airline- Awair, hubs in Jakarta and Bali No of passengers grew, broadened destination selection March 2006- main hub KLIA to LCC built by Govt. Aug 2006- domestic route agreement with MAS Took ovr 2/3rd of MASs loss making routes. Largest domestic national mn 2007- expected passengers 18mn Short haul- less than 4 hrs- return same day- reduce cost ( crew accom. & allowances) Focus on sec. airports- save large sorting fees Many LCCs followed in Asia pacific region Innovative sevices to compete VALUE ADDED SERVICES: 2007- 1st in malay to offer int. chk in Benefits- o/l chk in, print own boarding passes. Plans chk in service with cust. handheld devices in future. Express boarding service- allows passengers to board first to choose seats. Pre book checked luggage for lower rate. 2008- checked baggage handling fees- travel lighter- less fuel- less pollution. REAL 5 STAR offering- cozy leather seats, hot meals, sel. of delicacies, buy food/ pre order meals at disc. On time guarantee- $61 to each passenger- flight delayed >3 hrs. also planning for flights delayed >1hr. LONG HAUL REGIONAL SERVICE Late 2007: 1st long haul flight to australias Gold coast- AirAsia X( 20% owned by Richard branson)

2008: Announced it wld commence flights to Stansted Airport on outskirts of London.. VALUE CHAIN Low frills air tickets + financial services( travel insurance)+ holiday products. Citibank AIR ASIA credit card- reward points- free flight. Dynamic layered hedge strategy to pay for fuel in advance and qualify for lower prices. +Ve attitude of the staff- instrumental in lowering fuel costs and op. costs. New Airbus A320-200 to replace fleet of Boeing 737-300s. 2020- wld become Asias single largest airbus A320 operator. DISTINCTIVE IMAGE AND LEADERSHIP 2002- 3 aircrafts 2008- 72 aircrafts and 100 routes in AP region with 300+ flights/ day ADS- projected Air Asia as low cost but high quality. Newspaper AD in Singapore- theres a new girl in town: twice the fun, half the price (Singapore Airlines iconic Singapore Girls) Relaxed cabin crew. Official airline sponsor- Manchester United football club and AT&T Williams Formula 1 team- painted some aircrafts with club colors. Tie up with malay tourism. Philanthropic activities- transporting aid to cyclone hit Myanmar, free seats to chinas red cross to raise funds for Sichuan earthquake recovery. Concern about carbon emissions- ticketless system. Fernandes- walking advertisement. Wore t-shirt to every off. Func. Mobile no to all media reps. Free publicity on many occs.- 2003-2008 many local and int. accolades for service excellence, success in brand building, bus. Mgmt and leadership. Break even 56% cap, MAS 70% cap. COMPETITION- Price war with malay airline

AIR ASIA target sement- budget segment Full service al- businessmen or upper middle class consumer. Threat to former monopoly operator emergence of more value conscious customer. MAS- everday lowfare- 1mn free seats Campaign opposed by fernandes- unfair & unhealthy competition- alleged subsidized by govt. Sub Zero Fare campaign May 2008- 25th profitable quarter