Summary of Evaluation Outcome of AirAsias Resource

Tangible Resources
Financial Resources - AirAsias net profit ending Jun 2005 was reported US$ 29.2 million, a 126% increase year on -year. - Possess huge reserve of US$86.6 million in mid 2005 and debt-to-asset was merely 0.14. - With a huge reserve and low debt-to-asset ratio, AirAsia is thus capable to generate internal funds as well as afford high demand of debt and equity to finance any expansion. Organisational Resources - Organisational was simple and flat; allows AirAsia to focus more intensely on areas like marketing, services and customers. - A larger span of control; many people in the company reporting to one manager which translates to fewer levels of management. This helps enhance consistency and reduce costs which augur well with the cost leadership strategy that the company has adopted. Physical Resources - Operated a large fleet of Boeing 737 aircraft - Continued to invest heavily in acquiring more fuel-efficient aircraft so that the company has sufficient capacity to meet the growing needs and demands of their customers while continue to keep costs low. For example, the company placed an order for 100 A320 aircraft. - New aircraft would lower fuel usage by about 12%. - Operating a single aircraft type also could lead to substantial cost savings. Technological Resources - AirAsia was the first airline in Southeast Asia to utilise e-ticketing and bypass traditional travel agents. These two measures saved the cost of issuing physical tickets, which were estimated at US$10 per ticket, and agents commissions, and eliminated the need for large and expensive booking and reservation systems. - In May 2002, internet bookings increased from 5% to approximately 50% in August 2004. - AirAsia tickets could be purchased from post offices and selected ATM machines.

Intangible Resources
Human Resources - Although the employees were not unionised and the salaries offered by the company were below those of its rivals, AirAsia was still able to keep its work force motivated and incentivised by providing a remuneration policy that is competitive and attractive. - All employees were offered a wide range of incentives that include productivity and performance-based bonuses, share offers and stock options. All these not only helped to incentivise and improve productivity, it further strengthened relationships. Innovation Resources - AirAsia adopted a modified version of the low-cost airline model in order to keep costs low (or lower) than its rivals. For instance, the companys aircraft cabins were designed to minimise wear and tear, cleaning time and cost. - AirAsia reconfigured the seating configurations of their 148-seat Boeing 737-300 aircraft to maximise capacity. A standard configuration has only 132 seats. Reputational Resources - AirAsias success was widely recognised with a series of awards accorded to the company. - AirAsias CEO also received numerous many awards in recognition of his ability to make the company successful in a short period of time. - With just 3 years of operations, the AirAsia was listed publicly in November 2004. The companys IPO raised US$210 million for the airline and US$42 million for its owners. - Venture Capitalists and financial institutions provided finances support.