AirAsia Porters 5 Forces
Air Asia: Flying Low Cost with High Hopes
A cost leadership strategy of Air Asia remains viable despite the changing external environment. Although competition and rivalry amongst budget airlines is high, and it is difficult to differentiate from other providers due to the nature of the industry and product, it still has a first mover advantage which makes cost-leadership remain viable. They must remember that a cost leadership strategy can be maintained by be being efficient in all aspects of business and not just getting low prices from suppliers. Since Air Asia has already invested in brand development strategies through strategic alliances with prominent associations (such as F1 and Manchester United) it needs to leverage this more to additionally build its brand.
However, the key is for Air Asia to strengthen other aspects of its positioning, such as convenience and integrated lifestyle packages, apart from just focusing on cost. This can be done by continuously focusing on innovation to make customer experience better. They should come out with additional value added services similar to online check in, such as ticketless travel and a free seating policy
Air Asia should also look at new short haul routes to better compete with LCC airlines of Malaysian airlines. Various destinations in India can be looked at as they are not long haul and Air Asia can maintain cost leadership here.
Forces
Description
Rivalry and Competition
Threat of new entrants is high
De-regulation by Asian governments, and growing demand for affordable low fares amongst budget conscious customers have increased competition and new entrants.
Many are subsidiary companies of full service premium airlines which allow them to leverage on the brand marketing, loyalty and other benefits from their parent companies.
Threat of New Entrants
Relatively low since entry into the aviation industry requires large capital.
There are also barriers for new entrants to establish brand name.
Threat of
A cost leadership strategy of Air Asia remains viable despite the changing external environment. Although competition and rivalry amongst budget airlines is high, and it is difficult to differentiate from other providers due to the nature of the industry and product, it still has a first mover advantage which makes cost-leadership remain viable. They must remember that a cost leadership strategy can be maintained by be being efficient in all aspects of business and not just getting low prices from suppliers. Since Air Asia has already invested in brand development strategies through strategic alliances with prominent associations (such as F1 and Manchester United) it needs to leverage this more to additionally build its brand.
However, the key is for Air Asia to strengthen other aspects of its positioning, such as convenience and integrated lifestyle packages, apart from just focusing on cost. This can be done by continuously focusing on innovation to make customer experience better. They should come out with additional value added services similar to online check in, such as ticketless travel and a free seating policy
Air Asia should also look at new short haul routes to better compete with LCC airlines of Malaysian airlines. Various destinations in India can be looked at as they are not long haul and Air Asia can maintain cost leadership here.
Forces
Description
Rivalry and Competition
Threat of new entrants is high
De-regulation by Asian governments, and growing demand for affordable low fares amongst budget conscious customers have increased competition and new entrants.
Many are subsidiary companies of full service premium airlines which allow them to leverage on the brand marketing, loyalty and other benefits from their parent companies.
Threat of New Entrants
Relatively low since entry into the aviation industry requires large capital.
There are also barriers for new entrants to establish brand name.
Threat of