Economic Factors Of Air Asia

The Airline industry is a large and constantly growing industry. It facilitates economic growth, international investment and world trade and is therefore central to other industries as well for globalisation. There are various forces which lead to globalisation in airline industry. Key drivers of change are forces likely to affect the structure of an industry; sector or market. (1).

Based on these factors, we can conclude that with the strict safety and operational rules and regulations imposed by the regulators in current political environment, stiff competition from the budget “ No Frills” carriers, the evolution of the passenger profile and airline accidents ( missing planes / air plane crashes and environmental progresses have affected the viability and profitability of the global airline industry.

In today’s business industry, the globalization process has become an important aspect and fundamental force. The elements that contribute to globalization is the environment, culture, regulation and technology and production. While the advancements globalization has increased greatly, so has the advancements in airline industry with their aircraft (Shevell, 1999). Globalization also provides a great amount of potential profits to nations and their corporations (Button, 2008). Air transportation has evolved into a major industry (Kroo, 1999). The airline industry’s continuously grows and is facilitated through its international investment, tourism, world trade and economic growth (Kroo, 1999).

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

In this assignment I was assigned the task of comparing 2 different airlines, one being a full service carrier and the other being a lost cost carrier, from United States of America, namely the Delta Airlines and South West Airlines. The points of comparison were market strategies, financial benefits, load factors, contrasting yield, revenues and passenger/cargo loads. The analysis was done on the business model and a long term strategy. Through this it would be known that which airline is performing better than the other. The disruption of air travel through various incidents like the terrorist attacks and global downturn, which can be considered as economic, political and social conditions, effect airlines adversely.

American airline industry is steadily growing at an extremely strong rate. This growth comes with a number economic and social advantage. This contributes a great deal to the international inventory. The US airline industry is a major economic aspect in both the outcome on other related industries like tourism and manufacturing of aircraft and its own terms of operation. The airline industry is receiving massive media attention unlike other industries through participating and making of government policies. As Hoffman and Bateson (2011) show the major competitors include Southwest Airlines, Delta Airline, and United Airline.

Airlines Industry is large and growing, it is also the most fiercely competitive sector. It facilitates international trade, world economy growth, tourism and international investment. The airline industry has over time with the use of modern technology been able to take advantage of the short haul, high frequency and gained a competitive advantage over other forms of travel, such as buses and railroad travel. Additionally, the airline industry still holds the market for global travel at a low cost and convenient way to travel. The aviation industry gives a good contribution to the GDP which includes the following: airline services, general aviation, civil airport operations, aircraft manufacturing, and

The airline industry is interpreted as being very unstable due to the immediate reaction to tragedies. The airline industry was affected following the September 11th tragedy and it affected other industries indirectly. The airline industry plays a key role in

This paper discusses the external economic factors affecting the strategic decision of airline industry and how this decision in turn, affect the market forecast of the aircraft manufacturing industry. Various business issues affect airlines operation either directly and indirectly, and

On the other hand governments support aviation industry by building airports, roads and hotels near airports, because they recognize this industry as an important ingredient for economic well-being. In addition governments arrange security at the airports to ensure safe journey. The terrorist attacks of September 11, 2001 have had negative implications for the industry. Over the years, all the airlines have changed their routes, marketing tactics and prices; they are also making an effort to reduce the fear and negative image associated with air-planes. Governments have imposed strict security checks on air travel passengers in order to avoid any unforeseen terrorist activity.

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.

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

Legality plays a very important role in the performance of any business activity. Being a service provider in low-cost, Air Asia is subjected to aviations regulations, policies and restricted by the government on every transaction such as landing, flying and other rights of local airport. Also, it depends on geography and infrastructure of Asia, and passenger’s fondness. For instance, the government might favour certain airline than the others. With this major issue, it is difficult for the survival of the airline company.

The commercial passenger aviation industry currently supports over $2.4 trillion economic activity. Growth of aviation industry is highly correlated with GDP of the countries. Increase in GDP leads to the rise in disposable income levels and hence increasing the propensity to fly. With IHS predicting a 6.5 percent GDP CAGR till 2030, Indian aviation is one of the fastest growing industries in the world. (Exhibit1).

Air Asia was originally founded by government on 2nd December in year 2001 and was bought by Tony Fernandes. Air Asia was established in year 1993 and has travel around the world in the hope of ascending to become the worlds best in year 2001. Air Asia continues to increase alternatives for low-cost aviation through tremendous innovation, efficiency and passionate approach to business with a route a network that extent through over 20 countries. Air Asia X, Thai Air Asia, Philippines’ Air Asia Inc., Air Asia Japan and Indonesia are companies that link with Air Asia in Malaysia. In addition, for the vision part in Air Asia, it aims to be the largest low cost air line in Asia by serving the 3 billion of people who are currently underserved