Porter's 5 Forces Analysis on Air Asia

The “ Battle Of The Air” has been used to describe current situation in the airline industry. The emergence of “ No Frills “ discount carriers such as Air Asia, Mahlindo, Firefly have threatened the survival of the traditional giants such as MAS, SIA, Thai Airways in the APAC regions and even the Big Boys across the continents such as United, Delta, Continental, Luftansa, Emirates and US Airway ( Myron J.Smith, 2012 ) face competition

Air Asia is the founder of low cost airlines in the Asia region since the advent of deregulation by Malaysian Government in late 90’s which in itself is a very important economic factor, without deregulation a low cost Airline cannot enter the market. For the reason that of Air Asia’s lower price, the factors affected are the

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.

Surcharges and baggage fees covered some of this but the airline was conscious that if it loaded on the full charge, it might find no demand on some flights due to a high base price (e.g. minimum or zero fare plus taxes, fees and surcharges). To offset this eventuality, AirAsia did a lot to improve operations and efficiency and also saw the benefits of the fuel efficient Airbus 320 help to maintain its low-fares brand position.

AirAsia X’s main strength is the low price that it offers for customers. For most airlines in the industry, it is extremely difficult to keep the price low for long-haul flights as the full services offered in most airlines increase the operating costs. In addition, X also benefited from the expansive network, infrastructure and customers that AirAsia already has that enabled them to grow fast with good financial outcomes. On the other hand, X’s main weakness is the technology. The website always crashes and the company doesn’t have its own database of customers. X also doesn’t enjoy from a strong relationship with the Malaysian Transport Ministry. This can be detrimental to the company as it finds competing with Malaysia Airlines in some profitable routes to be difficult. However, X has some opportunities. For example, in order to keep the low price ticket, cooperating with fuel companies which will offer low fuel price and increasing demand in low cost airlines will bring profits. The major threat for AirAsia X is the protectionist measures taken by the Malaysian government that prevented X from flying planes to some destinations with high demand. This would have been a very

The risk of entry into the airline industry by potential competitors is low due to the “liberalization of market access, a result of globalization. According to the IATA (International Air Transport Association), about 1,300 new airlines were established in the last 40 years,” (Cederholm, 2016). The cost structure of businesses in an industry is a determinant of rivalry. In the Airlines Industry, fixed costs are high, because before the organization can make any sales, they must invest in air crafts, fuel and service employees. These items come attached with hefty price tags. Industries that require such enormous amounts of start-up capital as predicted by many analysts

Another barrier the new entrances have to confront is the high capital requirement. The airline industry is tremendously capital intensive.

Air Asia leading airline was established with the dream of making flying possible for everyone. Since 2001, Air Asia has swiftly broken travel norms around the globe and has risen to become the world’s best. With a route network that spans through to over 20 countries, Air Asia continues to pave the way for low-cost aviation through our innovative solutions, efficient processes and a passionate approach to business. Together with our associate companies, Air Asia X, Thai Air Asia, Indonesia Air Asia, Philippines Air Asia and Japan Air Asia.

Airline Industry is 500 billion dollars, creative and dynamic industry. In early 2001, airline business was going through very rough patch because of economic crisis

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

There is also a high level of barriers to entry. Before entering to the airline industry, a company will face high capital and operating cost. New entrants would need to invest tremendously as a substantial amount of money is needed to start up in the aerospace industry. Majority of the cost are operating cost like air service, fuel, labor, IT services and equipment, engines, spare parts, insurance, airport handling services, catering and training. Another problem to start up a new aerospace company is trying to market the new company and to create clientele with airline companies. If a company does enter to the airline industry, it is a long term project. Not all airlines are making profit and that is why many airline companies fail.

One of the world’s most competitive and prominent industries is the airlines industry. It generates huge amounts of income as well as employment each year. Some of the common names in US air travel service providers are Alaska, Northwest, Southwest, US airways, American etc.

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.

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

Air Asia is one of main low cost airlines in the world. It’s based in Kuala Lampur Malaysia. It’s the biggest airline based in Malaysia and it has more affiliation in other airlines around the than another airline. They operate domestic and international services all around the world in more than 22 countries. Air Asia has been nominate as the cheapest to fly airlines in the world by New York Times Magazine, which as lowest as it’ll get.0.023 US dollars to be exact and it has been named as the “pioneer” of low cost airline in all over Asia. Plus they have sponsor Queens Park Rangers football team Barclay Premier League in the UK.