Description Of Key Stakeholders

Capital market stakeholders are shareholders and major suppliers of a firms capital. Tune Air Sdn Bhd – It is founded by Dato Sri Tony Fernandes and Dato’ Kamarudin Meranun who has a vision to make air travel service affordable for people. They begin their dream by taking over a poor performing airline with RM 1, and switching 2 operating aircraft into the largest low cost carrier in Asia. The company occupied 26.5 per cent of Air Asia shares. ( Tune Group , N.D. )

Employees Provident Fund Board – Air Asia placed part of their shares to various financial institutions such as Employees Provident Fund. It entitled 11 per cent of Air Asia shares.

Genesis Smaller Cos SICAV- Genesis is a fund which having 6.7 per cent shares of Air Asia. It invests in companies operating in emerging markets, emerged as a substantial shareholder of Air Asia.

Nomad Investment Partnership – This is an emergent as a substantial shareholder which contain 5 per cent of shares in Air Asia. (ECM Libra Capital Sdn Bhd, 2009 )

As of 9 August 2010, the top 5 shareholders of Air Asia are Tune Air Sdn Bhd,Employees Provident Fund Board, Genesis Smaller Companies, Wellington Management Company and The Nomad Investment Partnership Lp Cayman.

3.3.2 Product Market Stakeholders

Product market stakeholders are the firm’s primary customers, suppliers, host communities, and unions representing the workforce.

Air Bus – One of the biggest aircraft manufactures which provide large capacity airplane. Air Bus is also a major competitor of Boeing in gaining market share. Air Asia has strong working relationship with Airbus

Boeing – Boeing is an aircraft manufacturer with the supports from NASA and US Government for the technologies and taxation advantage, which allow them to operate their business all around the world and compete with the Air Bus.

Consumer – In last decade, most of the people are limited to have an opportunity to enjoy air travel due to the high cost incurred. After having Air Asia, getting more people in Asia have been trying the air service.

Corporate flight – This is a special offer with lower charges for corporate which is going to have group travel among within the company members.

3.3.3 Organisational stakeholders

Organizational stakeholders are all of a firm’s employees, including both non-managerial and managerial personnel.

CEO – The founder of Air Asia, Dato’ Sri Tony Fernandes, who is the CEO of the company since the year 2001. He started the business with the dream to allow common people to take air travel service with low cost.

Department Managers – Role of these managers are hired for managing specific department for usual function. In Air Asia X, there are more branches and offices have been set up in different countries. These managers will be distributed to the specific area to handle the operations.

Auditor – The job of the auditors is to verify the accuracy and validity of the business records.

Consultant- Consultant is a person who is expert in specific field which can provide professional advises to the company.

Pilot – The main task for pilots is to make sure the flight will be a good experience for their customers.

3.4.1 Capital Market Stakeholders

3.4.1.1 Strength

a) To attract travellers, they got partnership with other service providers such as hotels and hostels, car rental firms, hospitals (medical tourism) and Citibank (AirAsia Citibank card). Also, Air Asia does alliance with Galileo GDS that enable the travel agents all around the world to book and check for a flight.

b) 50% stake of AirAsia Thailand is held by Shin Corp. Shin Corp not only supports Air Asia internet and mobile phone booking, it also enable opening up of Thai market due to the ownership of family of Thailand’s prime minister, Thaksin Shinawatra in that company.

3.4.1.2 Weaknesses

a) Major shareholders have the authority to sell their shares to public which might dilute the share price. (The Star Online, 2008 )

3.4.1.3 Opportunity

a) For the sponsoring, Air Asia does provide services to one of the world famous football team, Manchester United for their flight.

b) Partnership with the others low cost airlines such as Virgin, can increase their competency and competitive advantages in the industry. The factors are like strong brand name, landing rights, and landing slots.

3.4.1.4 Threat

a) Changes of policies within partner financial institutions can distract the focus of the company.

Strength

Weakness

Opportunity

Threat

alliance with Galileo GDS

50% stake of AirAsia Thailand is held by Thaksin Shinawatra

Dilution of shareprice

Sponsorship for Manchester United for their flight.

Diversification strategy and joint ventures, for example the co-operation with Virgin Airline

Changes of situation within partner financial institution.

3.4.2 Product Market Stakeholders

3.4.2.1 Strength

a) Air Asia`s brand name reputable in Asia Pacific. They do have normal print media advertising & promotions; yet, the top management is willing to use news as the channel to distribute latest information of Air Asia, as well as the airline industry. To be a regional brand, they have created their base at Indonesia and Thailand, called Indonesia Air Asia and Thai Air Asia. So, this is how Air Asia heightens their image to greater extending beyond than the only region.

b) Air Asia is currently a leader in low cost airline in Asia. This is achieved by the help of Air Asia Academy. Those workforces from there, who is very flexible, highly committed and critical in making Air Asia the lowest cost airline has successfully created a “low cost airline mentality”. For the aircrafts, many airlines choose Boeing air plane whereby AirAsia built a strong relationship with Airbus in order to get discounts on fuel efficient new planes which can implicitly reduce costs for the fuel.

c) Air Asia is excellent in utilising IT. They do their promotional activities such as email alerts, brand building exercise, as well as keep the cost low by allowing direct purchase flight ticket online and voided agent fees. The company designed a multi-lingual web-site for the ease of user.

d) Development of information technology such as Internet and 3G allows customers to book flight tickets anytime, anywhere.

3.4.2.2 Weaknesses

a) Air Asia lack of facility for its own maintenance, repair and overhaul (MRO). At the beginning of the business, this might not be a matter due to the little amount of aircraft owned. However, with few hubs at Malaysia, Indonesia, and Thailand, it has more than 100 planes now and there will be more in the future. Air Asia has to ensure the servicing aircrafts are always in the good condition.

b) Air Asia faces challenge on customer`s complain on their services. The matters like punctuality of flights, flight changes and cancelation, and chargeable belongings will be the factors to affect their competency in the market.

c) Human resource within Air Asia is limited due to the low cost strategy applied. The shortage is obvious when dealing with some irregular situation.

3.4.2.3 Opportunity

a) The increment of oil price in the world is normally being treated as a threat to businesses but Air Asia. As a low cost leader, they still can be the lowest among compared to the other airlines. It will be the time to capture current exist customer of full service and the other low cost airlines customers.

b) The “ASEAN Open Skies” which have been executed at the beginning of December 2008. The objective of the program is to allow the air carriers provide their services freely within the ASEAN region. With the complementation, Air Asia will definitely increase the competition among the airlines in the region.

c) To obtain more sales and market share, new routes have been carried out by AirAsiaX, specially design for long-haul routes to Europe, Australia and United States.

d) By the emergence of Economic transformation programme (ETP) that supports liberalisation, Air Asia will be in a position favourable to concepts of maximum freedom possible, especially as guaranteed by law and secured by governmental protection. It gives a bigger opportunity for them in getting routes and not stopped by MAS. (Sidhu, 2010)

3.4.2.4 Threats

a) Certain charges like airport departure, security charges and landing charges are not in the control of airline operators. This can cause extra huge impact to the low cost airlines due to their strategy to keep their cost low. For instance, Changi airport in Singapore will charge SGD $21 for every airline departs from Singapore.

b) Users` might perceive that budget airlines will have less concern for the flight safety since the cost is low. They might feel the insecurity to take Air Asia`s service.

c) Uncertainties such as terrorist attack, accident, and natural disaster may affect the customers` confidence on travelling with airlines.

d) Government policy and aviation regulation will affect expansion of airlines.

e) Air Asia have low profit margin at 30% and it attracts many competitors. They are low cost subsidiary airlines from those full service airlines to compete with Air Asia directly. For example, in Malaysia, Malaysia Airlines has created low cost carrier Firefly.

Strength

Weakness

Opportunity

Threat

Big capacity of airplane

Fuel-saving

Cooperation with hotels and hostels, car rental firms, hospitals

Great IT supports

Lack of facilities for maintainance

Poor Service

Shortage in HR

Routes to Europe, Australia and United States.

ASEAN Open Skies

Economic Transformation Programme (ETP) which supports liberalisation

New competitors with similar strategy

Changes of government policies

Uncertainties such as terrorist attack, accident, and natural disaster

Customers feel unsecure due to the lower cost

3.4.3 Organisational stakeholders

3.4.3.1 Strength

a) Air Asia has less management level in its organisation structure for having a better communication. The company has a very strong management team which maintains a firm relationship with governments and airline industry leaders. Part of the team is made up from experts in airline industry and ex-top government officials. The main task for them is to build and sustain the alliances with the parties related in the industry for remain their competitiveness. For instance, Shin Corporation, which is owned by family members of former Thai Prime Minister, Thaksin Shinawatra, holds 50% stake in Thai Air Asia. This helped Air Asia to penetrate their business to the market of Thailand. For example, Shin Corp (formerly owned by the family of former Thai Prime Minister – Thaksin Shinawatra) holds a 50% stake in Thai AirAsia. This has helped AirAsia to open up and capture a sizeable market in Thailand. With their strong working relationship with Airbus, they managed to get big discount for aircraft purchase which is also more fuel efficient compared to Boeing 737 planes which is being used by many other airlines.

b) Air Asia management team has very good strategy formulation and execution. The strategy that they have implemented in the early stage was a brilliant strategy which is confirmed by other low cost airlines in US and Europe. They are Ryanair’s operational strategy (landing in secondary airport and no extra service provided), Southwest’s people strategy (employee is important) and Easyjet’s branding strategy (involving the other service providers like hotels, car rental).

3.4.3.2 Weakness

a) The quality maintenance of employees in carrying out their job. Previously, many customers voiced complain about poor attitude of frontline service workers like air attendances.

3.4.3.3 Opportunity

a) The growth of the industry attracts people to have their career in this field.

3.4.3.4 Threat

a) Compensation plans and benefits for the employees among the industry makes human resource department of Air Asia hard to recruit new blood.

Strength

Weakness

Opportunity

Threat

Ex-government officers

good strategy formulation and execution

Employees` quality, especially frontline workers

Growth of industry.

Various compensation plans and benefits offered by competitors.

ECM Libra Capital Sdn Bhd. ( 2009, February ). Air Asia : Seek listing in Thailand .Investment research. Retrieved December 24, 2011, from http://baby.boom.com.hk/portfolio/research/Malaysia/AIRA_091120_Seeks_listing_in_Thai.pdf

Nomad Investment substantial shareholder in AirAsia. (2008, May 29). The Star Online. Retrieved, December 26, 2011 from http://biz.thestar.com.my/news/story.asp?file=/2008/5/29/business/20080529113009&sec=business

Sidhu, B.K. ( 2010, December 25 ). Work on a win-win formula, MAS and AirAsia told. The Star Online. Retrieved 10 January, 2011, from

http://biz.thestar.com.my/news/story.asp?file=/2010/12/25/business/7685564&sec=business

Tune Group. Retrieved January 3, 2011, from http://www.tunegroup.com/tuneair.html. N.D.

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