Comparative Analysis (Airasia - Southwest Airlines)

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AirAsia Company

1. Company Background:
AirAsia, as the second Malaysian National Airline, provides a totally different type of service in line with the nation's aspirations to benefit all citizens and worldwide travellers. Such service takes the form of a no frills - low airfares flight offering, 40%-60% lower than what is currently offered in this part of Asia. The story of emergence of AirAsia is similar to Ryanair, since both carriers underwent a remarkable transformation from a money-losing regional operator to a profitable, low cost airline. AirAsia was initially launched in 1996 as a full-service regional airline offering slightly cheaper fares than its main competitor, Malaysia Airlines. Before 2001, AirAsia fail to either sufficiently stimulate the market or attract enough passengers from Malaysia Airlines to establish its own niche market. The turnaround point of AisAsia is in 2001, while it was up to sale and bought by Tony Fernandes. Tony Fernandes then enrolled some of the lending low-cost airline experts to restructure AirAsia’s business model. He invited Connor McCarthy, the former director of group operation of Ryanair, to join the executive team. In late 2001, AirAsia was re-launched in Malaysia as a trendy, no-frills operation with three B737 aircraft as a low-fare, low-cost domestic airline.

2. Industry Background:

2.1. Vision Statement:
To be the largest low cost airline in Asia and serving the 3 billion people who are currently underserved with poor connectivity and high fares.

2.2. Mission Statements:
• To be the best company to work for whereby employees are treated as part of a big family. • Create a globally recognized ASEAN brand.
• To attain the lowest cost so that everyone can fly with Air Asia. • Maintain the highest quality product, embracing technology to reduce cost and enhance service levels.

2.3. Strategic objectives:
The strategic objectives of the company is as following: • Safety First: Partnering with the world’s most renowned maintenance providers and complying with the with world airline operations. • High Aircraft Utilization: Implementing the regions fastest turnaround time at only 25 minutes, assuring lower costs and higher productivity. • Low Fare, No Frills: Providing guests with the choice of customizing services without compromising on quality and services. • Streamline Operations: Making sure that processes are as simple as possible. • Lean Distribution System: Offering a wide and innovative range of distribution channels to make booking and travelling easier. • Point to Point Network: Applying the point-to-point network keeps operations simple and costs low.

2.4. Industry Analysis
In 2004, the airline industry flew 1.8 billion passengers, of which about 30% were in Asia. Airline traffic in Asia is projected to grow at 7.1% annually for the next 5 years and more than triple in the next 20 years. Given AirAsia’s strong presence in the region, this presents vast opportunities to enlarge the company’s market shares. The Airline businesses are closely linked to economic activities in Asia and the world. As such, AirAsia needs to be cognizant with the business cycle so that it can to take full advantage of such effects especially when there are changes in discretionary income and consumer spending patterns. AirAsia also needs to be mindful that increase in demand of fuel and limited supply can lead to higher fuel price that decrease yield. Last but not least, the impact of crisis such as 9/11 (2001) and SARS outbreak (2003) was able to hit the airline industry badly and as such they continue to pose serious threat to airlines.

3. SWOT Analysis
A SWOT analysis is done to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a AirAsia’s business. It involves specifying the objective of the business venture or...
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