Established in 1993 and commenced operations on 18 November 1996, AirAsir was originally founded by a government-owned conglomerate DRB-Hicom. On 2 December 2001, the heavily-indebted airline was purchased by former South East Asian regional vice-president Warner Music Group Tony Fernandes’s company Tune Air Sdn Bhd for one ringgit. AirAsia Berhad is a Malaysian low-cost airline. It operates scheduled domestic and international flights and is Asia’s largest low-fare, no-frills airline. AirAsia is a pioneer of low-cost flights in Asia and was also the first airline in the region to implement fully ticketless travel.
Its main base is the Low-Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport (KLIA). In 2010 AirAsia won the Skytrax World’s best low-cost airline award.
Air Asia budget with no-frills airline is introduced by Tony Fernandes with the tagline “Now everybody can fly” and the man himself is also the founder of Tune Group. No fuel surcharge and no admin fee. However, ticket fare and airport tax need to be paid.
This was after great deliberation as the initial offer was fifty sen. Fernandes proceeded to engineer a remarkable turnaround, turning a profit in 2002 and launching new routes from its hub in Kuala Lumpur International Airport at breakneck speed, undercutting former monopoly operator Malaysia Airlines with promotional fares as low as RM1 (US$0.27).
2. Identification of central issue
The main issue that will be discussed in the analysis will be Tony Fernandes’ set of values and beliefs that shaped the company corporate culture. In six words, corporate culture is ‘How we do things around here.
’ Corporate culture is the collective behaviour of people using common corporate vision, goals, shared values, beliefs, habits, working language, systems, and symbols. With the tagline introduced by CEO of AirAsia Tony Fernandes ‘Now everyone can fly’, AirAsia’s philosophy of low fares is aimed to make flying affordable for everyone. AirAsia also aims to make travel easy, convenient and fun for its guests. “A firm believer in big dreams”, can be found online (Profile-Tony Fernandes of AirAsia, 2006) Tony Fernandes famously once said, “We Asian have this habit of kicking ourselves and saying it can’t be done. Anything is possible when you put your mind to it.” (http://www.rdasia.com/a_dream_takes_flight/, no date). At AirAsia, there is a sense of being in a good family.
Tony Fernandes believes that his employees are his greatest assets and encourages a culture that emits positive vibes to ensure that every player in the team is committed and unified to set about achieving their shared goals. He once said in an interview, “We do every bit we can to succeed, including making sure that we have the right atmosphere at work. Keeping our culture intact entails a lot. We have to make sure that we stay true to winning values and traits: industry, appreciation for diversity, discipline, flexibility, honesty, friendliness, passion for learning and excellence, and a genuine concern for the welfare of all.” This shows that he began by setting the right foundation on which his company operates on. Maintaining the AirAsia culture is a lot of work, but it does not mean all work and no fun for the employees. According to Tony Fernandes, the AirAsia staffs are all quite happy to contribute towards keeping what they call “Culture All Stars”.
Organisational culture (hrm ASIA, 2010). It is what their success has been built on and what keeps their staff coming back for more. Tony Fernandes’s credo, “Believe the unbelievable. Dream the impossible. Never take ‘No’ for an answer” has clearly helped shape the AirAsia culture to what it is today. (http://www.rdasia.com/a_dream_takes_flight/, no date). “We’ve somehow managed to keep this uplifting atmosphere going for us, and we attribute our success to our collective faith in, and commitment to, our raison d’etre: Now everyone can fly.” Organisational culture (hrm ASIA, 2010) We will next delve deeper for a better understanding of how the values of the ‘Corporate culture’ turned AirAsia into one of the leading airlines in Asia.
3. Outline of the theoretical framework
We will be using the three levels of organizational culture as defined by Edgar Schein (2010) to analyse AirAsia. “Culture”, as formally defined by Schein (2010, p.18) is “a pattern of shared basic assumptions learned by a group as it solved its problems of external adaptation and internal integration, which has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems”. The three levels of culture are namely artifacts, espoused beliefs and values, and basic underlying assumptions. Artifacts are described by Schein (2010, p.23) as the surface level of culture, as they can include the things that a person see, hear and feel when they join a new group and are experiencing their culture for the first time. Artifacts are visible and ‘feelable’ structures and processes, and can also be an observed behavior. However, one drawback is that they can be difficult to understand and decipher (Schein, 2010, p.24). Thus, the true culture of the organization cannot be understood by solely looking at the artifacts.
To understand more, it is necessary to look at the next level. Espoused beliefs and values are goals, values, aspirations and ideologies shared by everyone in an organization. Normally, these values are laid down by the leaders or founders of the organization (Schein, 2010, p.25). However, espoused beliefs and values can sometimes be mutually contradictory (Schein, 2010, p.27). Thus, the organization’s culture is only understood just on the surface level. Basic underlying assumptions, which are unconscious and taken-for-granted beliefs and values provide for a deeper understanding of an organization’s culture. Schein concluded that the essence of a culture lies in the pattern of basic underlying assumptions (Schein, 2010, p.32).
If the basic underlying assumptions are not deciphered, it will be hard to understand the artifacts and espoused beliefs and values correctly. As Schein (2010, p.32) himself had concluded, any group’s culture can be studied at the three levels. The three levels of culture allows for an analysis of AirAsia’s organizational cultural from an observational level. Information can be readily drawn from business reviews, news articles on AirAsia, interviews with AirAsia’s founder Toney Fernandes and AirAsia’s website, thus making Edgar Schein’s three levels of culture an ideal model for analysis of AirAsia’s culture.
It is a normal procedure to have an induction organized by the Human Resource Management team to welcome new employees into the AirAsia corporation. A corporate culture department in AirAsia was set up in August 2004 to promote the AirAsia spirit and family atmosphere through close communication and exciting activities designed especially for AirAsia employees. This act supports the statements made by Tony Fernandes; that his employees are the driving force behind the brand’s success. The objective is to ensure that the AirAsia employees across the world uphold the culture of ONE PEOPLE, ONE CULTURE, ONE AIR ASIA and ONE FAMILY to reach the goal of ensuring the best experience at ONE AirAsia wherever they fly. The people of AirAsia are their asset, and their dedication, determination and patience have made AirAsia a success story. They have built conducive and positive AirAsia culture that permeates all the line of operation. Annual report (AirAsia, 2006).
There are five published list of values at AirAsia that are inculcated in the employees – safety, passion, integrity, caring and fun. These values provide a frame of reference for AirAsia experience and a corporate culture in which they live and deliver peak performance. Tony Fernandes’ usual style of dressing at work also reflects the culture at AirAsia. He goes to work wearing his trade mark red AirAsia cap, short sleeved t-shirts and a pair of jeans which are sometimes older than his employees. By doing so, he is able to break the psychological barrier of communication between himself and his employees and get everybody to talk and give invaluable ideas. As mentioned earlier, “People are AirAsia’s best asset.” Tony Fernandes would like to create a flat structure, where everyone has access to the big boss and that allows him to get the best people and discover their potential and talent. A fine example of such discovery of talent would be Azmir Hashim, a former Guest Service staff who successfully graduated from AirAsia’s cadet pilot program.
This proves that Tony provides support that fulfils the dreams of his employees. In this way, Tony Fernandes has created a friendly and approachable working environment within his company. Tony Fernandes’ philosophy of low fares aimed to make flying affordable for everyone while providing convenience and fun for its guests across the region is reflected by the successful Airbus A320, which is known for its fuel efficiency, high reliability and low operating costs. The Airbus offers guests greater width space, a quieter ride and unrivalled comfort. In December 2007, AirAsia became the largest Airbus A320 customer in the world. The fleet consists of 56 Airbus A320 aircraft spread across Malaysia (44 aircraft), Thailand (8 aircraft) and Indonesia (4 aircraft) as of the end of 2008. Annual report (AirAsia, 2008). Through this approach, AirAsia has greater flexibility to meet the needs of each market while building on the cost efficiencies of operating one aircraft type.
5.2 Espoused Beliefs and Values
At AirAsia, where Tony Fernandes aims to create the best environment within the company to work in, employees are treated as part of a big family, and being family, safety always comes first. AirAsia has committed itself to a programme of reducing risks and hazards normally associated with the aviation industry through a Safety Management System. This commitment is extended to ensure the full integration of a safety culture, safety policy and safety objectives in a proactive approach to aviation safety. In short, the Safety Management System is not just an add-on but a core part of AirAsia’s business process. A Safety Management System relies on the development of a reporting culture by all employees and is a vehicle for ensuring that hazards and safety deficiencies are brought to the attention of those who have the authority to make changes. CEO Tony Fernandes has pledged that he would not take disciplinary action against any employee who dared to make a stand and report a safety hazard to the company’s management, and no staff member will be asked to compromise AirAsia’s safety standards just to get the job done.
“Training of employees to ensure they can perform their tasks in a safe and efficient manner is an essential ingredient of AirAsia’s Safety Management System. It is management’s responsibility to make available and carry out this training, and it is the employee’s responsibility to follow safe working practices”, said Tony Fernandes, who highlighted that safety is a core value of his company. Annual report (AirAsia, 2010). To Tony Fernandes, the staff members are the pillars of his company, where everyone has a chance to shine regardless of their race, gender, creed, age, disability religion and sexual orientation. The vital thing is to ensure quality work from the staff, and Tony Fernandes believes all these start from providing a happy workplace for them. The Junior Wings Club was set up in 2008 to encourage interaction and friendship between the families of AirAsians.
The objectives of this Club is to allow the children of the AirAsia staff members to understand their parents’ jobs, hone their characters and leadership skills, impart them with knowledge on various subjects and tap on their creativity by participating in activities together. The aim is to maintain a healthy balance between work and personal life so that it will result in higher efficiency in work performance at AirAsia. This is an example of how AirAsia lives up to its promise of “Valuing Our People”. Annual report (AirAsia, 2008). Another main value at AirAsia is to enhance the guests’ experience by improving speed and efficiency at every interface between the guests and the airline. A comprehensive Microsoft-based Customer Relationship Management (CRM) system was deployed since 1 April 2010. This Customer Relationship Management (CRM) system integrates its various sales, service and marketing initiatives onto a single platform which allows AirAsia to interact with guests on a more informed basis and tailor its services to meet individual guests’ needs.
From reservations and check-ins, to baggage handling, boarding and in-flight Customer Relationship Management (CRM) takes care of them all. AirAsia supervisory staff members are strategically located at the airports to provide on-the-spot assistance to the guests. There are also Service Counters in the departure halls to handle enquiries. In 2010, AirAsia introduced new mobile phone apps for smart phones which makes booking-on-the-go more convenient. In January 2011, AirAsia also introduced the concept of web and self check-in. This allows guests to check in from their laptop or computers days before their departure dates. Guests can also quickly key in their flight details at kiosks at the terminal airports to obtain a boarding pass without having to queue up at a counter when they do self check-in. All these new implementations serve to make good its promise “to make travel easy, convenient and fun for its guests.” The Board of Directors of AirAsia is committed in ensuring the highest standards of corporate governance are applied throughout the Group.
Reviewing adequacy and integrity of the Company’s internal controls is one of the duties and responsibilities of the Board. The Board is made up of Non-Executive Directors, and they are persons of high calibre and integrity who collectively possess rich experience. It is required that all Non-Executive Directors are independent in character and judgement who do not participate in the day-to-day management of the company and do not involve themselves in business transactions or relationships with the Group in order not to compromise their objectivity. In order to improve the overall organizational effectiveness and to uphold the integrity of the Company in the eyes of the public, the Company has updated the whistleblowing program during the year which acts as a formal communication channel where all stakeholders can communicate their concerns in cases where the Company’s business conduct is deemed to be contrary to the Company’s common values.
All concerns will be addressed to the Chief Audit Executive (Audit & Consulting Services), who will then assess all concerns reported and recommend the appropriate action and all details pertaining to the name and position of the whistleblower will be kept strictly confidential throughout the investigation proceedings. Mazliana Mohamad was appointed the Regional Head of Audit and Consulting Services in 2010. Her main roles include providing independent and objective assurance and consulting services designed to improve the effectiveness and efficiency of AirAsia’s operations and integrity of the financial reporting and to ensure compliance with applicable laws and regulations. Practicing the highest standards of ethical behavior and demonstrating honesty in all the line of work is vital to gain trust and command mutual respect at AirAsia, and this is in line with Tony Fernandes’ beliefs of his company’s “winning values”.
Setting goals beyond the best and reinforcing high quality performance standards is to support AirAsia’s values of “Excellence in Performance”. In its endeavor to be a full-fledged self-sufficient airline, AirAsia has set up its own Academy which commenced operations in April 2005 with a vision to provide and fulfill training needs that would support their mission to deliver low-cost, high quality benefits to their customers across the region. The Academy is a one-stop, comprehensive learning centre and caters to all the important and necessary needs for all its employees. This includes pilots, engineers, cabin crew, ramp support and guest services front-line staff. The curriculum undertaken conforms to international standards and this training facility complies to all the regulations of the Malaysian Department of Civil Aviation, Thai Department of Civil Aviation, Indonesian Department of Civil Aviation and Civil Aviation Safety Authority Australia. Annual report (AirAsia, 2008).
5.3 Basic Underlying Assumption
There is a great sense of empowerment of AirAsia enhanced by an open office layout which encourages easy interaction between everyone and flat hierarchy that breaks down psychological and cultural barriers. All staff (All Star) can approach any member of the management team to voice out an opinion or share an idea. Good ideas, proposed by anyone, can be implemented quickly because there is little bureaucracy. At the same time, bad ideas can be scrapped just as fast. The AirAsia staff members understand that generating ideas is not limited to the directors and executives of the company and that everyone can contribute ideas regardless of their rank in the company.
This informal structure means not only that there are more than 8,000 brains (of All Star) contributing to the company performance as opposed to just 20 or so at management level. It also helps to keep costs down by tapping on internal resources as opposed to paying for outsourced external help. Human capital development at AirAsia is about providing opportunities to their people (All Star); opportunities such as fulfilling the dreams of the cabin crew and ground officers to become pilots. This helps to develop talents within the company and saves cost on hiring a brand new employee who needs to be trained from scratch. With the basic assumption of ‘Now Everyone Can Fly’, AirAsia is operating in a cost optimization philosophy to make flying affordable for everyone.
With the foundation that Tony Fernandes has created, the AirAsia staff members are currently in a friendly workplace with a flat hierarchy. This creates a conducive working environment where everyone can perform at their best. With the low cost implementations in place, AirAsia has continued to deliver its promise of affordable airfares with reliable services. As a company previously with almost RM40 millions in debt, AirAsia has made tremendous progressive steps to where it is today, thanks to the leadership of CEO Tony Fernandes. With the growth that sees AirAsia currently in 18 countries, it has potential to progress even more. Continued success creates strongly held shared assumptions, and thus a strong corporate culture core. If the internal and external environments remain stable, this continues to be an advantage.
However, if there is a change in the environment, some of those shared core assumptions can become liabilities, precisely because of their strength. An example is a change of leadership in the company. Tony Fernandes created the very environment AirAsia is right now. But when the time comes for him to leave the company, the culture may diminish along with his departure. “New leaders who come into the organization who do not share or value the core assumptions on which the organization was built may result either from the departure of the key culture carriers and the inability to find replacements with the same values and assumptions, or because the board wants to change the core culture and deliberately brings in outsiders with different values and assumptions.” Schein (2009, p.171).
From the analysis so far, we can see that AirAsia values its employees as much as its customers. The evidence is the environment created for its staff and its fulfillment of promises made to its customers. However, the leadership for AirAsia should not be taken for granted. In the face of the possible threat that Tony Fernandes may relinquish his role one day, career development programs can be rolled out to protect and preserve AirAsia’s culture. Top performing staff such as directors and executives could undergo training to prepare themselves for this potential role in the future. An internal candidate would be more suitable as this person would have been exposed to the AirAsia culture and familiar with the way AirAsia operates.
This program in place would likely ensure that the AirAsia culture can be preserved, and AirAsia will also retain its position in the aviation industry. Aside from this, regional meetings and team building sessions are recommended to be held periodically to keep the region abreast of each other’s activities internally, and it would also strengthen relationships between employees from different countries. This will also ensure that AirAsia is consistent in their visions and beliefs regardless of their location. In conclusion, AirAsia is doing a great job and they should preserve their culture and continue with their mode of operation to enjoy success in the future.
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