AirAsia was originally launched to compete with Malaysian Airline by offering low-priced air travels. It was, however, unable to liberalize the market to beat its rival and win and maintain its own niche. In 2001, Fernades bought AirAsia and hired experts in low-cost airline business to restructure the business model in use at AirAsia airline. This was the turning point for AirAsia. AirAsia is currently the second largest Airline in Malaysia and offers low-cost airfares. This is in consistence with their mission of providing affordable airfares and their vision that claims that everyone can now fly.
Next, one of the strengths for AirAsia company would be it has a very strong management team and also significant links with government and airline industry leaders. This can be said so is because the executive management teams are mostly built up by relevant industry experts and ex-top government officials. In addition, without the protection of national airlines brought about by deregulation, building alliances as strategy became necessary for many airlines to stay competitive and gain access to a global market too huge for any existing airline to dominate. There was a case where Shin Corp which is formerly owned by the family of former Thai Prime Minister which named Thaksin Shinawatra holds a 50% stake in Thai AirAsia. This has successfully helped AirAsia to open up and capture a sizeable
This issue was born after of 9/11 and facing through the global financial crisis, it has faced some bad days in the airline industry. Its success today, it stands as a example to the power of great teamwork, passion, Innovation and well-executed ideas.
Every airline will has its cost advantages over its large overhead expenses. The airlines has well develop of technology infrastructure to support the low cost of its operation. This can be seen through the company use technology to automate customer processing and maximize load on flights. To minimize the expense for maintenance and parts inventory, the company strengthen operational cost containment through very low staff levels, lack of amenities on flights and standardisation of aircraft. The low cost of operation can help to boost up the business of Air Asia Company. Air Asia Company will continuously focus on maintaining a low cost base in order to keep its advantages and gain more
In addition to that Lin (2010) also specifies loyalconsumerspurchase more products and loyal consumers are less-price sensitive and pay less attention to competitors’ advertising. Therefore, when taking in to consideration of above mentioned benefits, it clearly represents the positive impacts of brand loyalty towards a firm. Furthermore Khraim (2011) also confirms that the brand loyalty is vital for afirm to make sure that its brand is kept in the minds of consumers and avoidconsumers from switching to other brands. There are many forces drawing consumers away such as competition, customers’ thirst for variety, etc. hence obtaining and maintaining loyalty for a particular brand is not an easy task thus marketers should clearly understand how loyalty factors can affect consumer buying behavior in the marketplace and find out ways and means to gain brand loyalty towards their productsKhraim (2011).
AirAsia is a strong company with several unique strengths that offer itself could not be defeated by others competitor companies.
The Airline industry today offers services to nearly every place of the globe. The following economic factors that include consumer behaviour, currency rate, purchasing power of consumers, oil price plus the inflation plays key role in deriving the country’s economy. According to (Macmillan & Tampoe 2000), Airline industry itself is a leading economic force in terms of both its effects on associated industries for example aircraft manufacturing, operations and tourism. In this regard, this paper discusses the economic factors that affect the decision, the board of Air Asia needs to consider before acquiring 10 units of Air Bus model A350-1000 to increase its fleet of long haul airplanes.
Airasia want try to be the largest low cost airline in Asia and serving the 3 billion people who currently underserved with poor connectivity and high fares.
Surcharges and baggage fees covered some of this but the airline was conscious that if it loaded on the full charge, it might find no demand on some flights due to a high base price (e.g. minimum or zero fare plus taxes, fees and surcharges). To offset this eventuality, AirAsia did a lot to improve operations and efficiency and also saw the benefits of the fuel efficient Airbus 320 help to maintain its low-fares brand position.
AirAsia can find new branches for their company in foreign country and hence, a great step for AirAsia to enter a new foreign market. Furthermore, it can increase the economic development of certain industry especially tourism by promote our country to other state. By having the low cost airlines that provides services there, the foreign tourist can come to visit our country during their vacation. This will increase the flow of foreign money into our
Remember that all airlines have the same price of air tickets. Major airlines often charge smaller companies. I suggest you go and check the prices of smaller airlines and can get a cheap airline, with more or less the same quality of service.
To be able to adjust with stiff competition that keep increasing in the airlines market, airlines industries tend to come up with different approaches and strategies to be more competitive. Air Asia, like any other airlines adopt strategic approach to marketing and expand their market reach and give better and satisfying service delivery to their target market. Being an industry that considers differentiation strategy, Air Asia continue to focus on their low cost approach, frequently flights approach, guest convenience, ticketless services, easy payment channels, internet booking, reservations and sales offices, and authorized travel
From the figure 2 It conclude that is competitive advantage of Air Asia Airline that have over than other competitors in the airline industry. Air Asia is not full services airline which using the low cost carrier business model. Air Asia have limited of passenger service (e.g. No meals) because almost of Air Asia flight is short-haul , point to point and have more frequency flight that can reliable. They can earn more money from passenger when passenger want special services (e.g. Baggage , Select seat). Air Asia have more standard fleet of aircraft and they can used high aircraft utilisation. Finally, Air Asia have many employees that have skilled full and they always focused on management
Particularly when new entrants are diversifying from other markets, they can leverage existing capabilities and cash flows to shake up competition like Apple did when it entered the music distribution business. The threat of new entry therefore, puts a cap on the profit potential of an industry. The threat to Air Asia is relatively less as the capital required to enter the industry is quite high. However, potential new entrants from full service carriers with a surplus capital could be threats in the future and long-term.
AirAsia focused on ensuring a competitive cost structure as its main business strategy. It has been able to achieve a cost per average seat kilometer (ASK) of 2.5 cents, half that of Malaysia Airlines and Ryanair and a third that of EasyJet. AirAsia can lease the B737-300s aircraft at a very competitive market rates due to the harsh global market conditions for the second-hand aircrafts because of the September 11th event in 2001.