AirAsia
AirAsia is a Malaysian airline established in 1993, primarily to compete with Malaysia Airlines. Initially struggling financially, it found success after being acquired in 2001 by entrepreneurs Tony Fernandes and Datuk Kamarudin, who turned the airline into a leading budget carrier in the Asia-Pacific region. AirAsia is known for its low-cost flights, with some promotional fares as low as $0.27, making air travel more accessible across various countries including China, the Philippines, and India.
The airline has also diversified its services, developing the AirAsia Super App and managing financial services through BigPay and BIG Rewards. While it has garnered a generally positive reputation, being named the Skytrax World's Best Low-Cost Airline multiple times, it faced criticism regarding safety practices, particularly during the COVID-19 pandemic when financial pressures led to allegations of compromised safety standards. In 2023, AirAsia consolidated its operations into a single AirAsia Aviation Group, reflecting its recovery as aviation markets rebound in Asia.
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AirAsia
- Date founded: 1993
- Industry: Air Travel and Financial Services
- Corporate headquarters: Sepang, Malaysia
- Type: Public
AirAsia is a Malaysian travel company that was founded in 1993 to compete with Malaysia Airlines. AirAsia was originally funded by the government-owned conglomerate DRB-Hicom but was not financially successful until 2001, when it was purchased by entrepreneurs Tony Fernandes and Datuk Kamarudin. Since then, AirAsia has grown into one of the leading airlines in the region and has expanded its services into several neighboring countries, including China, the Philippines, and India. The company has branched into app development, working to create the AirAsia Super App and managing the financial services application BigPay and BIG Rewards. AirAsia has a reputation as being an affordable economy airline. However, in 2020 it came under fire for cutting safety features and creating safety issues to reduce fuel expenses.
History
AirAsia was created in 1993 by the government-owned conglomerate DRB-Hicom. The company is one of the largest corporations in Malaysia and mostly involved in the manufacture and distribution of automobiles and automobile parts. The corporate giant also deals with vehicle inspections, banking, and property. The airline began launching flights in November 1996.
In its early days, AirAsia struggled to make a profit. The airline went heavily into debt and was unable to generate the revenue necessary to pay it off. On September 8, 2001, entrepreneurs Tony Fernandes and Datuk Kamarudin signed an agreement with DRB-Hicom to purchase 99.25 percent of the company’s shares in AirAsia. Though Fernandes and Kamarudin agreed to pay roughly $0.26 for all the shares, they also became responsible for its estimated $11 million in debt.
Despite the company’s debt, Fernandes and Kamarudin saw potential within the airline. They worked to turn the company around, and AirAsia began to generate a profit in the first year of their ownership. Prior to the inception of AirAsia, Malaysia Airlines held a monopoly on air travel in the region. To differentiate themselves from the powerful competitor, AirAsia offered extremely cheap rates on promotional flights from their primary hub at Kuala Lumpur—some as cheap as $0.27.
AirAsia opened its second major hub at Senai International Airport and then began launching international commercial flights to Bangkok. As the airline continued to rise in popularity, AirAsia was able to open more international destinations to its customers. These included China, the Philippines, Vietnam, Myanmar, Cambodia, Macau, and Brunei. In recognition of its success, the company was tasked with taking over several of the rural routes that had previously belonged to Malaysia Airlines.
AirAsia developed two sister companies: Thai AirAsia and Indonesia AirAsia, which increased the number of locations available to AirAsia flights. Additionally, AirAsia continued to foster its reputation as a reliable budget option for flights across Asia, which set it apart from Malaysia Airlines.
In 2007, AirAsia established its AirAsia X brand for highly traveled, long-distance air routes. It provided transportation along these routes at lower-than-average prices. To lower costs without compromising on safety standards, AirAsia X booked flights from smaller, low-cost airports and utilized simpler planes than its competitors.
In 2014, the airline made headlines when flight QZ8501 crashed into the Java Sea shortly after takeoff with no survivors. There were 162 people on the plane. Initially, bad weather was reported as the biggest factor in the crash. However, the official report released by transportation officials a year later found fault in the rudder control system of the plane and actions taken by the crew.
In 2020, the airline made international news when Captain Gaurav Taneja, an AirAsia India pilot, claimed that he had been suspended for insisting the AirAsia flights follow more stringent safety procedures. Taneja alleged that AirAsia pilots were instructed to complete the vast majority of their landings in “Flap 3” mode, which saves fuel. However, in many cases, this landing style increases the risk of a plane crash, risking passengers’ lives.
Also in 2020, the COVID-19 pandemic swept across much of the world. To slow or stop the spread of COVID-19, many nations restricted or grounded flights, devastating airlines financially and causing them to have to lay off much of their staff. From October 2020 to December 2020 alone, AirAsia reported net losses of more than $590 million. Travel numbers were projected to remain low into 2021, so AirAsia turned to other business sectors to generate a profit. The airline began a food delivery business in Kuala Lumpur during the region’s pandemic lockdown, then quickly expanded that delivery business to other Malaysian cities. The airline also announced plans to develop drone delivery services and air taxis that deliver groceries. It also launched its app, AirAsia Move (formerly called airasia superapp), which allows customers to book flights, hotels, and other travel needs.
While AirAsia sought new ways to stay afloat during the pandemic, its state-sponsored competitor Malaysia Airlines continued to struggle. To save Malaysia Airlines, the Malaysian government considered merging it with another airline, in particular AirAsia. Though this merger never came to fruition, in 2023, with the rapid recovery of Asian aviation markets, AirAsia brought all four of its airlines—AirAsia Malaysia, AirAsia Thailand, AirAsia Indonesia, and AirAsia Philippines—into a single AirAsia Aviation Group. In April 2023, Fernandes announced he was leaving AirAsia.
Impact
AirAsia is one of the leading airlines in the Asia Pacific. It is known for providing low-cost flights in India, Malaysia, Thailand, Indonesia, and the Philippines. The airline’s reputation with consumers is generally positive. AirAsia has been named the Skytrax World’s Best Low-Cost Airline twelve times. The company claims to offer low-cost flights without compromising passengers’ safety. However, AirAsia has been accused of cutting flight safety procedures in order to cut prices.
The airline has also expanded into other travel-related industries, such as hotels, online shopping, and e-commerce. It has also branched into the developing and marketing of computer applications. AirAsia Move works to integrate travel logistics and deliveries with the AirAsia fleet. Additionally, the company manages the digital financial services application BigPay and BIG Rewards.
Bibliography
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“AirAsia.” Centre for Aviation, 2021, centreforaviation.com/data/profiles/airlines/airasia-ak. Accessed 16 Jan. 2025.
"Airasia Move Appoints Travel Industry Veteran Manfredi Lefebvre D'Ovidio as Chairman." Technode Global, 14 Jan. 2025, technode.global/2025/01/14/airasia-move-appoints-travel-industry-expert-manfredi-lefebvre-dovidio-as-chairman/. Accessed 16 Jan. 2025.
Das, Krishna N. “Exclusive: AirAsia, Malaysia Airlines Merger an Option as COVID-19 Hits Industry—Minister.” Reuters, 17 Apr. 2020, www.reuters.com/article/uk-health-coronavirus-malaysia-airlines-idUKKBN21Z169. Accessed 16 Jan. 2025.
Doran, Michael. “AirAsia Group Boosts International Capacity As China Market Rebounds.” Simple Flying, 28 Apr. 2023, simpleflying.com/airasia-boosts-international-china-rebounds. Accessed 16 Jan. 2025.
"Flight QZ8501: What We Know About the AirAsia Plane Crash." BBC, 1 Dec. 2015, www.bbc.com/news/world-asia-30632735. Accessed 16 Jan. 2025.
Kotoky, Anurag. “Asia's Low-Cost Airline Kingpin Tony Fernandes Prepares AirAsia Succession Plan.” Bloomberg.com, 24 Apr. 2023, www.bloomberg.com/news/articles/2023-04-24/asia-s-low-cost-airline-kingpin-tony-fernandes-prepares-airasia-succession-plan#xj4y7vzkg. Accessed 16 Jan. 2025.
“Malaysia’s AirAsia Aims to Be ‘More Than an Airline’ as Coronavirus Cripples Aviation.” SCMP, 2021, www.scmp.com/week-asia/economics/article/3129096/malaysias-airasia-aims-be-more-airline-aviation-struggles-amid. Accessed 16 Jan. 2025.
“Notice to AirAsia Over Pilot’s ‘Unsafe Landing’ Allegations: Report.” NDTV, 28 June 2020, www.ndtv.com/india-news/notice-to-airasia-over-pilot-captain-gaurav-tanejas-unsafe-landing-allegations-report-2253659. Accessed 16 Jan. 2025.
“Our History.” AirAsia, 2021, museum.airasia.com/history/. Accessed 16 Jan. 2025.
“Travel Advisory: AirAsia Guests with Cancelled Flights Can Make Flight Changes for New Flights Up to 30 November 2021.” AirAsia, 2021, newsroom.airasia.com/news/covid19-travel-advisory-update. Accessed 16 Jan. 2025.
“World's Top 100 Airlines 2022 - SKYTRAX.” World Airline Awards, www.worldairlineawards.com/worlds-top-100-airlines-2022. Accessed 16 Jan. 2025.