Why The Price Of Airasia Is So Low? Essay

The airlines do not focus on the combination of quality and good service at a fair price; its focus is instead only on providing ultra low cost. It also charges customers for value added features and services. Thus the pricing is value added pricing. When compared to the competitors of Spirit for operating costs per seat mile; it is lower compared to other major airlines. The important points like encouragement to demand stimulation and preference for its low-cost model makes it successful for its low-cost pricing strategy.

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

Airasia is Malaysia low cost airline. Airasia company try to make the lowest cost of air ticket so that everyone can try to sit fly travel to everywhere with Airasia because in

AirAsia had played the game very well and had ambitious growth plans to keep ahead of the pack. Time would tell if Fernandes and his team could maintain the company 's position as Asia 's -or perhaps the globe 's -most successful budget airline.

In 2001, AirAsia was founded by Tony Fernandes. After six years, Fernandes realized the company should create a airline separated from AirAsia to focus on the low cost long-haul market which he called AirAsia X. Azran Osman-Rani was appointed to the become the CEO of the newly established company. The company had an initial success by being the first mover. However, there were some problems that they had to face along the way as they were in a completely new market using an untried business model. One of the main challenges for the company is the protectionist measures taken by the Malaysian government to protect the national airline, Malaysia Airlines (MAS). The other major problem is the limitations on the general

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.

These examples allowed Fernandes to become closer with his staffs as he could directly know about their satisfactions, concerns, and many more. The second and third factors are suppliers and marketing intermediaries. For example, the company joined with authorized travel agents (marketing services agencies), to serve the customers who were having difficulty booking their flights over the Internet. Also, customers who wanted to pay their tickets in cash were able to do so at any Alliance Bank branch in Malaysia (financial intermediaries). The fourth factor is competitor. AirAsia gained strategic advantage by positioning its offerings against competitors' offerings. It was the first to

In the year 2001, Dato’Sri Tony Fernandes and Dota Kamarudin Meranun had bought over Air asia for RM 1.00 with a RM 40 million debt. Airasia has been expanding rapidly ever since and become the leader of low cost airline in Asia and the pioneer of low cost. Airasia continues to expand worldwide through the innovation, efficient, passionate and right strategy.

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.

Airline ticket prices can vary from day to day, from airline to airline; with the most important variable being competition. Industry pricing for a market of such a magnitude is a micro-, and macro-economic decision. Its affects will in-turn effect the entire economy of the industry. We all know that when shopping for the cheapest price for an airline ticket, depending on various factors, Seaney (2011) you will pay hundreds of dollars more, or less, than the passenger seated right next to you. That being, the airlines primary goal is to maximize profit(s) on every seat, -on every plane, -on every route. This is the result of supply, demand, and price curve working cohesively

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

With a network spanning over 20 countries, Air Asia leads the way for low-cost air service through efficient processes, innovative solutions and a steady business plan. Along with its subsidiaries in other countries, it is ready to propel low-cost flying into newer markets and newer destinations.

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

AirAsia’s philosophy “Now Everyone Can Fly” is related to their vision of becoming the largest low fare airliner in Asia and serving 3 billion customers who are underserved with poor connectivity and high fares. Their mission is to become the best company to work for; thus employees are being treated as part of a big family, to create a globally recognized ASEAN brand, to offer the lowest fare so that everyone can fly with AirAsia, to maintain the highest quality product, and innovative technology as a measure to reduce cost and enhance service.

Air Asia is a Malaysian economic airline acquired by Tune Group in 2001. Before acquisition it was underperforming, but Shuk-Ching Poon and Waring (2010) state that in 2006 the airline company had a fleet of 35 Boeing and Airbus aircraft. The major success of the company is due to the low-cost carrier (LCC) business model. Major features of this business model include low service, point to point mode of travel, heavy utilisation of aircraft, ticketless reservation and flexibility in staff services. The airline company has carried 45.6 million passengers across 199 routes to 98 destinations across 17 countries (AirAsia Berhad, 2014). Furthermore, the various other services offered include flight bookings, low fair finder, customised travel, travel insurance and premium membership options (AirAsia.com, 2016a). The main market of Air Asia is in Malaysia, the market share in Malaysia is 46%, 19% in Thailand, 11% in Indonesia and 1% India (AirAsia Berhad, 2014). According to CAPA (2016a) the major competitors of Air Asia include Malindo Air, Cebu Pacific, Thai Lion Air and Thai VietJet. Furthermore, AirAsia Berhad (2014) show that the company has operations in countries such as Mauritius, Malaysia, Phillipines and India. This essay will briefly describe the profit and revenue situation of AirAsia, and then it will analyse the effect of the external environment factors. Finally a recommendation is provided to reduce the effect of such