Air Asia Strategic Analysis

Low quality, no frills, lowest price base fare are features of the economy pricing model. Since Spirit Airline adopts 'the a la carte pricing model,' the basic fare paid buys only the flight itself and frills are charged separately. Furthermore, the airline asserts that customers should only pay for the services they request and should not subsidize other customers’ needs.More so, Spirit assumes that lower fares will stimulate the demand for air travel by attracting customers who would otherwise use other means of transportation. Hidden fees and questionable policies are dubious distinctions of Spirit Airlines.

Spirit Airlines business strategy is that they do not believe customers should have to pay for amenities unless they are absolutely going to utilize them and the services they chose shouldn’t subsidize other passengers. Spirit believes, they can offer a cheap flight with no amenities and each added amenity will be a cost. In the end, the lower fares will stimulate air travel by attracting customers who would have used on-ground

• Offer low fares and still maintain a high-quality distinguished product that offers friendly service and a comfortable and entertaining flight experience.

In conducting research on companies that are considered “low-cost providers”, three companies stand out amongst many. A low-cost provider is one that “strives to achieve lower overall costs than rivals and appeals to a broader spectrum of customers, usually by underpricing rivals”. The first company looked at was McDonald’s. McDonald’s offers basic fast-food meals at low prices. Its company structure of having mostly franchise stores allows it to offer lower prices without the overhead of traditional non-franchised stores. McDonald’s also doesn’t have traditional chefs and instead hires and trains inexperienced employees to cook its food, which further reduces its costs and allows the savings to be passed onto the consumer. Another low-cost provider would be Walmart. Walmart relies on everyday low prices rather than sales to attract its customers. Walmart relies on a massive supply chain and economy of scale based on bulk purchases that allow it to receive its product offerings at lower prices. It also sources its products from cheap domestic suppliers and low-wage foreign markets. The high volume of merchandise allows Walmart to sell their products at much lower prices and allows itself to make a profit through high volume discounts. A third example of a “low cost” provider is Southwest Airlines. Southwest Airlines “uses a point-to-point model as compared to the hub and spoke model of legacy carriers like American (AAL) and United (UAL).” This translates into shorter travel

Over the years, company sustained low operation costs and tickets prices following well-developed strategy. Among other measures, it was able to keep prices low by flying only one airplane type, minimizing service and maintenance expenses, and convincing employees to cut gate turn-around times and make the airline more efficient (Fitzpatrick, 2005).

carrier; the worst all-around carrier charges for every ancillary product. Established under Airline Segmentation, Spirit targets price sensitive, business-class, middle-class, students and solo travelers within psychographics (Zigu, 2017). Consequently, this paper will discuss the carrier; ticket distribution channels, pricing strategy, and product promotion.

The airline industry has always been a fiercely competitive sector. Since the invention of low-cost carriers, also known as no-frills or

It is a no-frill carrier. They were able to cut cost by operating a no-frill carrier i.e. they don't use tickets or travel agents.

Low-cost carriers pose a serious threat to traditional "full service" airlines, since the high cost structure of full-service carriers prevents them from competing

The future of the industry is in JetBlue’s “cheap chic” style. Airlines need to maintain a cost effective price point while also not appearing cheap. Small

Regional airlines such as SkyWest and Mesa generally operate smaller aircraft on lower volume routes. These airlines generally form alliances with the major carriers and provide service from their hubs to smaller cities in the region. Low cost carriers such as Southwest developed after deregulation in 1978. Southwest pioneered the low cost airline model, which many other airlines have tried to copy. Although there are currently four low cost major U.S. carriers (JetBlue Airways 2006 Annual Report, n.d.), major competitors according to market share include (Figures 1 and 2; JetBlue Airways Corporation Overview, n.d.):

Cathay Pacific Airways Ltd. (C.P.) was established in the 1940’s in Hong Kong and has been well-known as proficiency and security. Meanwhile, Cathay Pacific still remains significantly dedicating on its domestic market Hong Kong, besides, it will present other supplementary 72 brand-new aircraft by 2024 (Cathay Pacific Annual Report, 2015).

(Generic Business Strategies, 2010) Southwest Airlines, Wal-Mart and Nucor Corporation are some companies who use the low-cost strategy. Here are some of Southwest’s key characteristics of its low-cost strategy:

AirAsia believes in the hassle free, no frills, low fare business concept and feels that keeping costs low needs high efficiency in every part of the business. Efficiency creates savings which are then passed to the customers so that they will able to purchase on the affordable price but still with a high quality of air travel. AirAsia targets people who want to travel around Asia for leisure or business purposes. The fares of Air Asia are relatively known as a lower fares than the other airlines. Selected strategy used by Air Asia targeting to passengers who are willing to travel without frills of meals, airport lounges or frequent flyer miles in exchange for fares which is

The success of budget airlines forced traditional operators to lower their prices by adapting internet sales and yield management techniques. However they still struggle to compete with low prices offered by the LCCs. Further reductions in traditional airline ticket prices are expected.