AirAsia Case Study Report

Topics: Airline, Low-cost carrier, AirAsia Pages: 8 (2472 words) Published: October 10, 2013

AirAsia Case Study Report

Assignment 1


Executive Summary
Strategic management has played a key role in the success of many business organisations in the world including airlines and AirAsia is no exception. Commencing in 1996, within fifteen years, AirAsia managed to expand its operations into another ten countries. In addition, through its associate company AsiaX, it launched long-haul low-cost air services from Malaysia to Australia and the United Kingdom. This paper will look at the award winning Malaysian low cost carrier- AirAsia’s by analysing its strengths and weaknesses using strategic tools such as PESTEL analysis, SWOT analysis, Porter’s five forces Model. Key to the success of AirAsia has been their ability to capitalise of the liberalisation of the Asian airline industry, this has significantly helped the airline grow. AirAsia needs to also address their threats and delve into new opportunities if it wishes to still remain profitable.  Introduction

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 AirAsia 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.(Habib, 2010) This paper will examine the external Political, Economic, Social, Technological and Legal factors influencing the airline. Carry out a SWOT analysis to evaluate the internal potential and identify areas that may contribute to future success. Conduct a Porter's five forces analysis to understand the attractiveness of the industry and potential for long lasting profitability. The market liberalisation of Asia will also be discussed, and look at how this impacted upon the growth of the airline.

PESTEL Analysis

Political
Flying outside Malaysia is difficult. Bilateral agreement is one of the obstacles in the way of Asian budget carriers. Landing charges at so-called gateway & airports; and navigation charges are often prohibitively expensive, and in key destinations like Bangkok, Beijing, Hong Kong and Singapore there are no cheaper, secondary airports. Threat of terrorism, people are afraid to fly after the September 11 terrorist attacks incident.

Economic
In spite of stiff competition from Malaysian Airline (MAS), AirAsia's low-cost carriers offer cheap tickets and few in-flight services are gaining attraction in the region. In theory, Asia has most of the ingredients for making a budget airline work which has a huge and dense population base, the emergence of underused regional airports, a growing propensity among some upwardly mobile people to travel, and relatively high Internet usage. Rising incomes and economic growth are empowering more Asians to board aircraft. With the economy slowing down, more people will want to enjoy its cheap tickets. Social

Passengers are reluctant to board a no-frills airline for a long-haul flight. The longer the route, the less price-sensitive the passenger becomes. They don't want to be crammed into a plane for six or eight hours. Especially, when there are limited or no in-flight services. AirAsia wanted to become a company that worked on the basis of the average man in the street being able to afford our air fares, and people who would not have considered flying, or would not fly as often as they as do now.

Technology
AirAsia provides online service that combines air ticketing with hotel bookings, car hire and...

References: Organisations and Management (2010), compiled by Mohshin Habib, Swinburne University of Technology. Pearson Australia Custom Publication
Peng Mike W, 2006, Global Strategy, Thompson, United States
Chee H and Harris R, 2008, Global Marketing Strategy, Financial Times Pitman Publishing, Great Britain
Singh, K, Pangarkar, N & Heracleous, L 2010, Business strategy in Asia a case book, 3rd edn, Cengage Learning Asia, Singapore
http://www.airasia.com/iwov-resources/my/common/pdf/AirAsia/IR/AirAsia_AR09.pdf
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