The Strategic Analysis of Air Asia, can be done with the help of Michael Porter’s five forces. It describes the internal affection of the industry with elaborating competitive rivalry amongst the firms in the industry to the bargaining power of customers and suppliers. It also explains the threats of new entrants and already existing firms. Aforementioned, Air Asia has been assessed with all these five forces.
The demand function for air travel is affected by price, income, route and the availability of the flight time. The airline industry is highly concentrated with more than 50 airliners operating in the market worldwide. But, the main competitors for Air Asia are Firefly, Malindo Air, Tiger Airways, Cebu Pacific Air and Lion Air; which competes within the same routes and destinations. According to IATA, Asia Pacific airlines are a major collective force in international aviation. In terms of profitability, Asia Pacific airlines account for half of the global industry’s profits even when the industry profits was affected by oil prices in 2011.
With all this concentration, Air Asia is the 6th largest airline in Asia and the largest LCC no-frill airline in Asia in terms of fleet and passenger carried. Currently Air Asia owns 169 airplanes, highest in Malaysian market. And in 2011, Air Asia order 323 more airplanes from which 200 will be delivered in 2015 and rest by 2016, BBC news. In terms of fleet Air Asia is known as the market leader in Malaysia’s aviation industry.
Within Malaysia, Air Asia constitute of 49% of domestic market and 43% of international market. As compared to major competitor within the Malaysian market, Firefly has a competitive edge that it is subsidiary of National airline of Malaysia, MAS. Due to MAS subsidiary, firefly has access to experience and monetary values. It focused on the areas that were neglected by Air Asia. They provided customers with near and privileged parking areas, better check-in...
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