Problem Statement AirAsia’s attempts to expend its service offering into long-haul flights and gaining additional recognition and market share is consistent with owner Tony Fernades’ company goal; however, the strategy changes required to be a successful long-haul airline significantly differ from and conflict with its current resource base (i.e. aircraft types, hubs, employee skills) and core competencies and capabilities (i.e. cost and efficiency optimization/utilization) as a low-cost carrier (LCC) airline.
Analysis
The airline industry as a whole is quite competitive with multiple players and various elements effecting the industry environment. AirAsia has developed a specific set of resources and core competencies that it has
…show more content…
However, AirAsia will not be able to utilize its point-to-point cost reduction and aircraft utilization strategy. Long-haul flights will require more time in the sky with flyer layovers and a less streamlined flight schedule. Short regional flights allow AirAsia to serve a greater number of flyers over a shorter period of time at a lesser cost (example: 2 or 3 short-haul flights in the time it takes a single long flight).
Lastly, due to the highly competitive nature and over saturation of international airlines, AirAsia may not realize the same aircraft utilization in long-haul flights as it does with short flights. Regionally, South East Asia is densely populated with a large market segment consisting of budget leisure and business travelers that had been under served prior to AirAsia (pg.628). By implementing low cost strategies, AirAsia was able to capture and capitalize on the underutilized segment. Unfortunately, due to industry saturation in international long haul flights, AirAsia would have to fight to obtain a strong customer base from established airlines by providing actual or perceived value while trying to maintain cost and utilization optimization.
Another issue AirAsia may face should it overly focus on airline expansion is the fact that barriers to entry in South East Asia are relatively low. The main barrier to entry is the capital investment required to acquire aircrafts. South East Asia has
In the local region, Qantas managed to outweigh its competitor by gaining a toll of 65% compared to its competitor. Evidently this shows Qantas is the number one preferred airlines compared to other competitor airlines like Virgin, Tiger Airways and Emirates airlines. However the situation is not the same in South East Asian region as Qantas only managed to obtain about 15% of market share compared to likes of Air Asia who leads the market share with 60% in this region. Conversely, this is not a concern for the airlines as the airlines managed to generate revenue of 5 billion dollars, with a predicted passenger growth of 4.9% which is equivalent to 2.9 billion passengers by 2034.
In 2010, views on whether low-fare airlines would continue to flourish in Asia varied. Three factors regulation, population demographics, and socioeconomic trends -drove this calculus. Although the target consumer base for AirAsia was enormous -more than 500 million
The Overview of Airline Industry in China & the Analysis of Air China Limited (key player in the market)
The project requires the student to carry out a research, analysis and discussion on how a Singapore listed company can access to the country’s financial system and how it benefits the company in achieving its business objective. The research will cover the various types of financial services offered by financial intermediaries whom the corporation can access to.
Cathay Pacific, based in Hong Kong offers scheduled flights for passengers and cargo across 200 destinations in America, Australia, Asia, North America, Europe and Africa using a large fleet of varying sizes of planes focusing on widebody passenger airplanes, specifically inside the medium and small requirements set by Boeing. With 146 planes in their aircraft inventory, plus additional planes through orders, Cathay has made many investments, in order to build up Hong Kong as a global transport hub. As Cathay is one of the members of the oneworld alliance, they have member airlines with airberlin, American Airlines, British Airways, Finnair, Iberia, Japan Airlines, LATAM Airlines, Royal Jordanian, Sri Lankan Airlines,
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
After we have gone through the weakness of AirAsia, now we will discuss about the opportunities that AirAsia Company and their customer will get for being a low cost airlines in our country. The first opportunity is global exposition. The society in our country gets to explore the outside of the country at low cost despite of their financial status. Businesses can consider expanding their business by opening a new branch in foreign country while they are in vacation. They can use many ways to market their product for example by licensing, exporting, joint ventures and other method as long as it will bring profit for them. It is like a new step for our local businesses to enter international business. International businesses are “all business activities that involve exchanges across national boundaries” (Hughes, Kapoor, & Pride, 2012). It can increase our nation’s economic status when their product gains a lot of profit. They also can use these airlines if they have a meeting at farther place either in country or outside the country to save cost.
Certain rates and charges are beyond the control of airline operators. For example, the airport departure, landing charges and security charges. These rates and charges is a big serious threat to all airlines especially budget airlines which intend to maintain their low cost strategy. Besides that, changes of certain aviation regulations and government policies can negatively affect AirAsia. The rules and regulations will increase the operation costs in producing value-added services and lead to a decrease in profits.
Launched just 8 years ago, today, the Jetstar Group consists of a network of value-based air carriers that deliver high quality air passenger services for budget-minded travelers across Australia, New Zealand and the Asia Pacific region. Beginning with just 400 employees, the company currently employs more than 7,000 people and carries about 20 million passengers a year. To gain some insights into how the Jetstar Group achieved this impressive growth in such a short amount of time, this paper provides a review of the relevant literature concerning the air passenger industry in general and the business strategy used by the Jetstar Group in particular. A summary of the research and recommendations for this company are provided in the paper's conclusion.
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.
AirAsia is a strong company with several unique strengths that offer itself could not be defeated by others competitor companies.
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.
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.
The Project aims to study the Cathay Pacific Airways Limited (CX) in tourism and hospitality industry, and the report will critically analysis their strategy and development through the Cathay Pacific’s background information, the company culture, resources, capabilities and competitive advantage, and different strategies. Final, to sum up the company's strategy will give its competitive advantage over the next five years.
Harvey (2012) claims that his partner, Dato Kamarudin and he had no prior airline experience they transformed AirAsia into one of the fastest-growing and most successful low fare airline in the world. The unique culture and management style are the main keys to make AirAsia succeed. Tony Fernandes worked hard to create an environment where “Allstar” (what AirAsia calls its team members) can learn, grow and achieve his or her own dreams.