About AirAsia

AirAsia is Asia's largest low-fare, nofrills airline and a pioneer of low-cost travel in Asia Serve over 400 destinations spanning 25 countries AirAsia was established in 1993 and began operations on 18 November 1996 Was bought by former Time Warner 8/5/12 executive Tony Fernandes's company

About AirAsia

Fernandes turned the company around, producing a profit in 2002 and launching new routes from its hub in Kuala Lumpur, undercutting former monopoly operator Malaysia Airlines with promotional fares as low as MYR 1 Recently voted as the best low cost carrier in the world by SKYTRAX
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Ancillary Income

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Fleet Development

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Attractive Valuation among Airlines

(as at February 2011)

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5 Years Financial Highlights: Airasia Berhad

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Share Performance: Airasia Berhad Share Price & Volume Traded

2011 Monthly Trading Volume & Highest-Lowest Share Price

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Bursa Malaysia: Airasia Berhad

Symbol & Code : AIRASIA (5099) Board : Main Industry : Trading/Services Current Share Price as below (Y- August 2011 till July 2012):

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Selected Airlines Daily Share Price Movements (% change):

Achieve 6.7% of share price movement

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Share Performance: Airasia Berhad

Market Captalization As at 31 December 2011

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Contribution of GDP

Airasia Berhad Airlines Industry

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The BCG Matrix

AirAsia Business Units

AirAsia profit centre would be the sales of airlines fares, foods, gift and passenger luggage. But Air Asia business unit contributions will be best measured according to the popular routes and its sales figures. For the BCG Matrix, we have 8/5/12 identified five most popular routes

The BCG Matrix

Most Popular Airline Routes From KL 1. KL-London 2. KL-Gold Coast, Australia 3. KL-Singapore 4. KL-Penang 5. KL-Johore Bahru
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The BCG Matrix

Market Share Calculation Market Share = The no. of Air Asia Fleets (179) The No. of MAS Fleets (151) = 1.2 On Average, AirAsia market share is 20% more than MAS market share when it comes to the sales of that five 8/5/12

The BCG Matrix

Industries Sales Growth Rate Calculation ISGR = S&P Industry Survey Data or; Average annual increase in revenue of competitor or; Country Economic Growth (GDP) Rate
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The BCG Matrix

MAS is losing its market share due to its loss making financial performance. Their growth rate is zero or negative But since Malaysia GDP is expected to grow at 5.5% this year, we proposed that Industry Growth Rate to be set at 3.0%, after adjusting it for Inflation. In the worse case 8/5/12 scenario, the industry will shrink to

The BCG Matrix

AirAsia Business Unit
No Routes Average No of Cost Per Sales per Passenger Seat (MYR) Seat per Year (MYR) 1,500.00 328,000 Profits (MYR) Relative Market Share 0.30 Industry Growth Rate % -3.00 1,299.00 65,928,000. 00 700.00 44,000,000. 00 14,778,000. 00 5,932,500.0 0 4,880,000.0 0

KL- London KL-Gold Coast KL-Singapore

500.00

220,000

0.40

2.00

60.00

164,200

150.00

0.60

1.50

KL-Penang

60.00

118,650

110.00

0.85

3.00

KL-JB

60.00

97,600

110.00

0.80

3.00

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The BCG Matrix

2 3.0% 4&5 Invest 3 Click to edit Master subtitle style 1 Select a Few

-3.0%

Liquid ate 0.50

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The BCG Matrix for Air DOGS (Low Asia Market Share) Growth, Low

Have low market share, and the market itself is not growing Strong cause for exiting the market high liabilities as they needs more $$$

1.

2.

3.

4.

KL- London Route is the lease profitable route. AirAsia is losing as much as MYR 20 million a year to sustain this route Click to edit Master subtitle style Business Travelers prefer full service airline due to long haul flight Casual Travelers opted for MAS economy class as they can ride on excess baggage benefit and in flight meal and entertainment MAS is strong in this route. AirAsia decided to cancel this route starting on Jan 2012

8/5/12 Recommendation

The BCG Matrix for Air QUESTIONAsia (High Growth, Low MARKS
Market Share)

1. 2. 3.

Have low market share but operate in high growth market Potential either become stars, if sufficient cash is pumped into them, or KL- Gold Coast is the most promising destination else fizzle out into dogs
It is a cheap solution to long haul flight to Europe The Airport tax is lower in Coolanggata Airport, thus help AirAsia to reduce the style Click to edit Master subtitle price. MAS is landing in Brisbane, which caters for premium flight operations AirAsia has added its flight frequencies from once daily to thrice daily Currently, one of the most highly sought routes

4.

5.

Recommendation . Use the available resources and capital to increase the 8/5/12 frequency of this route. It has huge potential to return higher profitability.

The BCG Matrix for Air STARS (HighAsia Growth, High Market Share)

Diametric opposite of dogs, garnering high market share in a high growth market Generate maximum profitability - $$$ Involve strong marketing and branding

1.

2. 3.

KL-Penang and KL-JB are the two most profitable domestic routes Achieve 98% sold out rates Click to edit Master subtitle style Provide the highest profit margin of almost 90%

Recommendation . AirAsia must use the position to further strengthen its dominance. It can be done by providing additional service counter to serve this route. AirAsia can continue to offer excellence service and the best deals to all passengers flying this routes. To entice new passenger, 8/5/12 they can increase the baggage limits or offers a

The BCG Matrix for Air CASH COWS (Low Growth, High Market Asia
Share)

1.

High market share in a mature market with little or no Growth High revenue generators Should focus less on advertising and more stagnant but the demand for KLThe growth is on customer retention
Singapore route never ended High tax edit Master subtitle style Click to and administrative cost. Profit margin is the narrowest compares to other routes Highly competitive

2.

3.

Recommendation . AirAsia just need to focus on its core services, to ensure there will be no flight delays or any other mishap. Need not to invest for promotion as the sales will remain stagnant but strong. People already recognize AirAsia in 8/5/12 this area.

The End

Q & A Session

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