The Ascendance of Airasia Essay

Company’s Strategy: Southwest’s strategy is to improve efficiency in its operations and pass cost saving to its customers by offering them low and competitive prices. Southwest Airlines is dedicated to providing the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and company Spirit.

1 This essay will assess how globalisation has impacted on the airline industry using British Airways as an example to illustrate this change had on the industry as a whole. This essay will attempt to show how the airline industry and British Airways in particular coped with thesee change and how neoliberalism thinking allowed and supported this fundamental change to happen.

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.

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.

Southwest has been projected as a low-cost airline and has been a source of inspiration to other low-cost airlines because of its successful pricing strategies. The company has targeted middle-class society as its potential customers and has adopted variable-price as another pricing strategy. The company has also introduced innovative programs and offer incentives along with discounts to attract a larger customer base under its variable cost pricing strategy (Bhasin,

Flight Centre describes itself as a global discount flight specialist. Taking into consideration the relative size of the Australian and international operations as well as the availability of information on global environment and competitive factors, for this analysis, it is more appropriate to consider the Flight Centre’s industry environment as “The Australian international and domestic airline

The domestic airline industry transports 711 million souls a year. That translates into a staggering $709 billion a year revenue flow (statista.com). One firm, named Southwest Airlines, accounts for 18.3 percent of that market. That 18.3 percent market share places Southwest at the number two spot, behind American Airlines. How does Southwest Airlines successfully compete and thrive in this environment? How do they differentiate themselves from the hoards of legacy carriers? Southwest Airlines encapsulates its strategy in a simple statement: “Meet customers’ short-haul travel needs at fares competitive with the cost of automobile travel (Grant, p.23). As a pioneer in low cost air travel, Southwest has successfully brought down airfares through its short route point-to-point business model, “no-frills” service, single flight strategy, and highly productive employees (Cederholm, 2014). In the following analysis we will investigate Southwest Airlines standing within the industry as a whole and their differentiation models driving success. We will also identify the firm’s competitive advantages as they relate to similar firms in the industry.

This industry is heavily saturated with intense and rapidly evolving competition due to the relative ease of entry into the market. This accounts for why there are hundreds of airlines ranging from prominent well-known ones to virtually obscure and obsolete airlines. There are six primary airlines which compete fiercely and maintain the majority of the market share and total volume. The remaining fraction of the market share is then sub-divided and allocated amongst the hundreds of smaller, less relevant airlines. The only notable trend within the industry seems to be a total lack of consistency, as market shares and profits fluctuate regularly during any given time period.

Southwest Airlines: Culture, Values and Operating Practices (in Thompson, A. A., Strickland. A. J. and Gamble, J. (2005) Crafting and Executing Strategy (Fourteenth Edition), McGraw-Hill, New York, pages C-636– C-664).

The implications of this analysis are that the focus on the Chinese market is justified. The Chinese air travel industry is booming, and indeed this is fueled by that country's rapid growth and the increased demand for

In the case study all of the business models that Air Asia uses is matched with a Low cost carrier business model such as if the passenger need the food on board they need to pay an extra payment because no frill to serve, every passenger will sit in the same class. All of the business models will concern about the lowest cost as much as they can create: For instance: Reducing the personal cost by providing the multiple role to employees, not only work as a flight attendance but also work as gate agents. In addition Air Asia keeps operating costs low by uses one type of aircraft which is Airbus A320. The business model that Air Asia uses can be result in the benefits of an organization and thus called “Competitive Strategy of Air Asia”. Some of the business model that made is better than other airline, such the promotions that always attract customers, For instance; The price of the ticket start as 0.99 RM. This strategy is causing over the million of passengers. From all of above It can be referred that the type of competitive strategy which Air Asia use is ‘Cost leadership’ which is a process to serve customers at the lowest cost in order to fulfil the customer needs under the cost control in an organization. In this large of competitive market, Air Asia beginning in the right ways. The market positioning strategies and management of Low-Cost Airlines was clear from the beginning. According to the business model of Air Asia that shown in the case study indicated that the firm structure can result in Competitive advantage, Air Asia cut costs in every operation such as aircraft cost, but the performance still provide in a great ways, So Air Asia gain more profit than rival firms because their operation cost lower than other airlines and because cost reduction is another way to bring in revenue. Air Asia also find out how to maximize profit, such as sale Packages (a case study on Air Asia

Marketing of Thai AirAsia is evaluated by Marketing Mix, product, price, place, and promotion. The first point is product of Thai AirAsia that is services. The company provides the core service by providing air travel services along with various assisting services to the passengers, starting from the services before boarding, inflight services, and other services relatively to all air passenger services such as checked Baggage, travel insurance, sale of food and beverages on board, car rental and connecting flight (Fly-Thru) that allows passengers can connect flights with no bag collecting.

Presently, tough economy condition =s has enable AirAsia to attract new segment pf customers specially business traveler seeking cost reduction , as rising unemployment and lack of job security may lead customer to avoiding expensive leisure flights (Yasmin Yashodha. 2012). However, the expending route of AirAsia over the year

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

Airasia provides to its customers the basic flight carrier service and carry the customer ‘s purpose of traveling between different destinations, but at a lowest fare among other airlines.(AirAsia Annual Report, 2010) The customers of Airasia are mostly from low and middle class people in society. The