Strategic Business Development

Topics: Airline, AirAsia, Malaysia Airlines Pages: 9 (3029 words) Published: January 24, 2013



Submitted to : Prof. Dr. Zaini Abdullah


I/C NO:630617-02-5109

Choose a business story from the current business press that involves a firm or an industry in strategic change. Give an Executive Summary of the story, in 500-600 words, bringing out the significance dimension from a resource-based view or a Porter 5-forces view. The body of the assignment is to be given to an original analysis, not mere summary of events. Attach the article to the assignment. Answer

The article “ Air Asia aims high” and “Stiffer Competition with Malindo Flying” both was selected from Starbiz – STAR newspaper dated 17 Dec 2012 and 7 January 2013 are related to the paper.

This paper shall analyze the issues according to the Porter’s Five analysis which is derived into several categories such as threat of new entrance, threat of new substitutes, power of suppliers, power of buyers and rivalry amongst other carriers. [Please refer to Appendix - Porter’s Five Forces of Competitive Position]. Presenter wish to look into Air Asia airlines case for the paper discussion and shared how they survived in the low cost carrier mainstream beginning from their day as a new entrant in 1996 and successfully carved their brand name internationally.

There is not much competition in the airlines industry in Malaysia as the most dominant is Malaysia Airlines which is the legacy carrier and Air Asia which is the low cost carrier. Both airlines operates in a different model of business but in the same aviation sector. Air Asia Berhad is a Malaysian-based low-cost airline. Air Asia is Asia's largest low-fare, no-frills airline and a pioneer of low-cost travel in Asia. Air Asia group operates scheduled domestic and international flights to over 400 destinations spanning 25 countries. Its main hub is the Low-Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport (KLIA). Air Asia was established in 1993 and began operations on 18 November 1996. Air Asia operates with the world's lowest unit cost of USD 0.023/ASK and a passenger break-even load factor of 52%. It has hedged 100% of its fuel requirements for the next three years, achieves an aircraft turnaround time of 25 minutes, has a crew productivity level that is triple that of Malaysia Airlines, and achieves an average aircraft utilization rate of 13 hours a day. Air Asia currently operates more than 142 routes to 78 destinations, with over 400 daily flights covering Indonesia, Malaysia and Thailand and with domestic and international routes, primarily from Kuala Lumpur, to Australia, Brunei, Cambodia, People's Republic of China, India, Japan, Laos, Myanmar, Nepal, Philippines, South Korea, Singapore, Sri Lanka, Taiwan and Vietnam. Malaysia Airlines (MAS) uses KLIA as the hub where all flights transit Kuala Lumpur and the MAS network is now better described as mainly point-to-hub. The long-haul strategy now is built around Frankfurt, Zurich, Rome, Paris, Los Angeles, New York, Stockholm and London. MAS have increased frequencies on key routes such as Paris, which is now daily, and extra services were added to Yangon, Dhaka, Hanoi and Cebu. The airline also expanded its core network in Asia/Pacific, while strengthening the airline's hub-and-spoke connectivity in Europe, Australia, New Zealand and Africa via its new partnership agreements with KLM, Gulf Air, Virgin Blue and South African Airways. Middle East routes will be restructured and flight frequencies to non-trunk markets such as North America, South America and South Africa may be dropped. Currently, MAS operated 93 jet aircraft. The airline flies Boeing 747-400, Boeing 777-200ER and Airbus A330 aircraft mainly for medium to long haul international routes, while the Boeing 737-400 is often used for shorter...
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