Business Model Low Cost Carrier has first implemented in Asia by Air Asia. Now Everyone Can Fly is Air Asia tag line, something that they want to achieve 11 years ago using a new and creative business model and I think more or less they already achieve their vision. Air Asia become a successful low cost airline in Asia, flying more than 100 million passenger across Asia, Australia and Europe. Below I’ve tried to sketch Business Model of Air Asia – Low Cost Carrier using Business Model Canvas created by Alex Osterwalder.
Business Model Low Cost Carrier
Business Model Low Cost Carrier (LCC) is based on the idea that people would fly a lot more often if they get an affordable fare. LCC make air travel the most simple, convenient and inexpensive form of transportation in the world so that they can move maximum number of passengers at the minimum of cost. It’s mean Low Airfare is Value Proposition of LCC.
Low Airfare will be match only for specific customer segment. I think businessman or people in leisure trip will prefer to flight with Full Service Airline. The right customer segment of LCC is Price-Conscious Traveler, a traveler who seek best or lowest price, because they only want to simple move from a place to another and have no tight time for their traveling . They will only flying if they get cheap or may be free ticket
LCC will keep cost of their channel and their customer relation as simple as possible and will cover all customer. Air Asia choosing Internet as the most cost effective channel. Passengers will book flight using their laptop, tablet or smartphone, pay with credit card and print at home their e-ticket before to go. More than 65% of their sales are electronic ticket and done via Airasia.com. To support website, Air Asia provide Call Centre and to get close with their customer they open Sales Office on some big cities.
Since Air Asia only provide the basic service of flying they will get Low Airfare from more and more passengers as their revenue stream. Beside that they also get Additional service fee from service such as food, drinks, over baggage, choosing seat in advance etc
Air Asia’s Key Resources is Single Type Aircraft, because Pilots, flight attendants, mechanics and operations personnel are specialized in a single type of aircraft, which means there is no need for costly re-training of staff, for maintaining a stock with parts for different types of aircraft, for knowledge and skills in order to operate and maintain different types of aircraft . Flight attendants responsible not only to serve customer, but also clean up of flight interior. Internet Transaction Platform is they key to effective channel cost.
Key Activities of Low Cost Carrier is to high utilize their aircraft which means aircraft more flying than parking, first flight on early morning, last flight on late midnight and fast turnaround. To keep cost from arrangement connecting flight, labeling luggage etc, LCC only provide point-to-point route. No-Frills on board and Single Class Seating is keep airline cost with simple activities.
Beyond internal resources and activities, LCC have to make a partner with secondary airport so they can fly to and from airports that cheaper than major airports and they are also a lot less congested and “turnaround times” for aircraft are a lot shorter.
Business model low cost carrier is new at recent years, many company implemented this strategy but not much that success like Air Asia. One of successfull LCC Company in Asia beside Air Asia is Lion Air from Indonesia.