Analysis of Air Asia

Topics: Low-cost carrier, AirAsia, Strategic management Pages: 8 (1629 words) Published: April 25, 2009


1. a) AirAsia’s vision:
• To be established as the leading low-cost carrier in the Asian region.
AirAsia’s mission:
• A low cost airline carrier that offers five-star service with 95% of on-time performance. • To be able to provide affordable airfares, at the same time promoting Malaysian hospitality and the local food. • To focus on customer’s needs by stimulating demand and offers the lowest fares, comprehensive distribution channel and developing various products and services. AirAsia’s objective:

• Aims to carry 70 million passengers a year, within six years starting from 2014. • Turn the low-cost carrier terminal at the KL International Airport into the regional hub for budget travel. • Plans to introduce more routes, add frequencies and develop the existing ones.

b) AirAsia’s competence:
• A low-cost no frills airline, with an extensive regional network in Asia that caters people of all income levels. AirAsia’s core competence:
• Offers low-cost and affordable airfares
• Offers in-flight services that promote Malaysian hospitality and a huge variety of the local food. • Offers internet and mobile services as mediums for check-in and booking.

AirAsia’s distinctive competence:
• A low cost carrier which offers five-star service where everybody can fly.

c) Opportunities:
• AirAsia will have the opportunity to promote Malaysian tourism, which in return will increase the company’s revenue. • Within the South-East region, AirAsia can tap on a lot of opportunities since there is huge potential for customers that consist of foreign workers from neighbouring countries such as Indonesia, Myanmar and Vietnam. • AirAsia will be chosen as the first choice in the alternative of travelling especially during economic turmoil, since this company offers low-cost airfares. Threats:

• Economic recession reduces the urge for people to travel by air as it is the most costly alternative for travelling. • Emergence of new- entrance in the low-cost carrier sector like Firefly and Jetstar. • Inconsistent oil prices adversely affect the fuel surcharge.

d) Air Asia’s value chain activities:

e) i) Business model focuses on how to make money in a particular business and the capability of achieving good bottom line results. It also indicates whether revenues and costs came from the planned business strategy can be sufficiently profitable and feasible. ii) AirAsia’s business models:

• Fast turnaround times, for full utilization of aircrafts. • Land at smaller uncongested airports, which incur a lower landing fee. • Direct sales of tickets, to avoid fees and commissions charged by travel agents. • All passengers sit in the same class. • Free seating encourages passengers to board early and quickly. • Aggressive fuel hedging programs.

• Uses one type of aeroplane only (A320), thus reduces training and maintenance costs. • Minimal set of optional equipment on the aero plane, eliminating luxury and optional equipments to reduce costs. • Profit from in-flight sales/services such as ala carte food sales, and commission based products like AirAsia t-shirts and souvenirs. • Employees working multiple roles; flight attendants are also in charge of cleaning the aircraft and work as gate agents, hence personnel costs are reduced. • Offer various promotions frequently that attract customers like the RM 0.99 ticket...
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