Case Study - Air Asia

1029 Words Aug 22nd, 2012 5 Pages
Case Study: Air Asia
Identify the competitive advantages of Air Asia as a low cost carrier.
Air Asia has a number of competitive advantages as a low cost carrier that fall into the following general categories; low cost operations, efficiency of operations, proven business model and management expertise and finally a distinctive corporate culture.
Low cost operations:
Air Asia has gone to great lengths to ensure all of their operational costs are kept to an absolute minimum, and have passed on the savings to customers in the form of cheap ticket prices. One of their unique ways of doing this was by not ticketing through travel agents or other intermediaries. This reduced profit sharing and kept ticket prices as low as possible for
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Secondly an increasing passenger load factor which now stands at 77% shows that the fleet is being used effectively along competitive routes.
Competitor Analysis – Kotler and Miles & Snow
According to Kotler’s strategies for competitive advantage, a company can take on one of 4 approaches to competitively position themselves in the market, a leader, a challenger, a follower and a nicher. In Air Asia’s case they started as a follower and then became a challenger as they challenged conventional wisdom, found a point of differentiation and then once they became bigger tackled the competition by expanding market share and the market as a whole. Initially their competition was predominantly with Malaysian Airlines who attempted to shut them down by slashing prices on ticket sales by 50%. Labelled as “state sponsored economic terrorism” by Fernandes the company eventually backed off and allowed Air Asia to grow considerably.
According to Miles and Snow’s typology of competitors, there are 4 main types, namely prospector, analyser, reactor, defender. As a challenger to Malaysian Airlines, Air Asia was able to be a prospector as they had first mover advantage on launching new products and entering new markets. This strategy was not only preferred, but rather essential as being a start-up company they had to differentiate themselves in order to compete. Malaysian Airlines for example is more of an analyser in the market due to their already

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