Airasia - Flying High with Low Cost Hopes

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Briefly describe the trends in the global airline industry. Firstly, cost pressures on airlines continue to be high. The industry is facing many challenges on the cost side. For instance, jet fuel costs, which are directly correlated with oil prices, continue to rise. Airlines are generally unable to pass these costs onto the consumer, especially in the face of growing competition and price-sensitive markets. Nevertheless, these high fuel prices have motivated manufacturers to create more fuel-efficient aircrafts. Secondly, airlines are becoming more environmentally conscious, partly (or mainly) due to stricter emission and noise regulations. Globally, governments are more concerned with the implications of air travel to issues such as…show more content…
Beyond competing on prices, AirAsia also introduced value-added services such as ticketless travel and a free seating policy. Under the guise of offering more choice to customers, they also monetized services that were previously taken for granted under full-service premium airlines. For instance, they offered an internet check-in service that allowing the passengers to print their own boarding passes; charging additional fees for early boarding and seat selection; pre-book their checked baggage and meals, and sale of F&B on board the flight. Recognizing that price and convenience are most important to their target audience, AirAsia achieved cost leadership through innovative strategies such as single class services and lower fares without preferable seats, meals, entertainment and other utilities. They also undertake regular fare promotions for specific travelling periods that encourage early booking, and increasing the avenues that customers could book the tickets e.g. by phone, sales offices, travel agents, local banks and post offices, alongside the web and mobile applications. Finally, strategic alliances with prominent associations have also helped to boost AirAsia’s profile as a leader in its market segment and be seen as an airline of high quality. Tie ups with Manchester United and the acquisition of Queens Park Rangers in the English Football Premier League, taking over of the F1 team Caterham, all which have been perceived to be done at significant

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