1.0 Introduction of AirAsia
In Malaysia, there are 3 main airlines which are Malaysian Airline (MAS), AirAsia, and Firefly. AirAsia Berhad is starting its operation in November 2004, which is listed on the main board of Bursa Malaysia. It start developing a low cost airline model (LCC) in Asia since 2001, it has grown from a domestic flight in Malaysia for more than 55 destinations served for 5 leading airline hub in Malaysia which are Thai AirAsia, Indonesia AirAsia, Philippines AirAsia and Japan AirAsia. AirAsia Group is one of the lowest cost airlines in aircraft size and the number of passengers it can load.
2.0 Air Asia
AirAsia is the Malaysia’s low-cost airline. It operates the local and an international flight is planned and is a lowest cost airline in Asia without any addition service. As a cheapest airline, AirAsia is a pioneer in Asia. This is also the first airline in global to achieve full flight tickets and distributed seats. However, by 5 February 2009, AirAsia has implemented distributed seats on all flights of AirAsia affiliates airlines. The main base is at the Kuala Lumpur International Airport (KLIA) and Low Cost Carrier Terminal (LCCT). AirAsia’s registered office is in Petaling Jaya, Selangor, and its headquarters in KLIA, Sepang, Selangor. AirAsia won the Best Low Cost Airlines World Award 2010. This airline was founded in 1993, and start operated in November 18, 1996. It was firstly founded by a government-owned conglomerate DRB-HICOM. In December 2, 2001, the debt-laden airline bought by the former Time Warner chief executive Tony Fernandes’s company Tune Air Sdn Bhd for the token sum of RM1. Fernandes continued significant recovery engineers, earn profit in 2002, at the KLIA hub at breakneck speed introduction of new route, and act as a monopoly company in Malaysia Airlines fares as low as RM1. (History of AirAsia, June 2013) AirAsia slogan is ‘Now Everyone Can Fly’.
(Slogan of AirAsia, June 2013)
3.0 Porter’s five forces framework
3.1 The threat of entry –medium-low:
Capital requirements and economies of scale are two potential barriers to block the new competitors enter into the market. Under normal circumstances, the internet technology has made it easier for new companies to enter the industry through the reduction of the elements of other organizations such as establishment of effective sales, access an existing suppliers, sales distribution channels, physical assets such as building and machinery, or access an existing suppliers and sales distribution channels. There is a high barrier to enter the airline industry since it requires the high capital to set up everything. In Malaysia, there are 3 main airlines which are MAS, AirAsia, and Firefly. There are always possibilities that another airline will be formed to serve the existing market. AirAsia’s low cost strategy is to maintain the efficiencies to support the lowest air fares. In addition, brand awareness is a very important in the industry. So, to enter into market is not only capital intensive but also need to spend a little time to build their brand awareness. Customers always purchase the products or services which they totally believe are called brand loyalty. Example, many people like to choose AirAsia rather than MAS because of the lowest air fares or service. AirAsia is the first airline to let its customer book and purchase tickets online. This makes the AirAsia’s website very famous to many customers. Although the other competitors create their own website to compete with AirAsia’s website is quite difficult. The site is simple to use and user-friendly so the other competitors are hard to make their website famous to customers. Thus, there is a high barrier for other new entrants into this market. If other competitors want to compete with AirAsia, they have to fulfill and make sure their competitive advantage is better than AirAsia. 3.2 Bargaining power of supplier – high-medium:
Concentration of the...
Bibliography: Daft, D. S. (2009). Fundamentals of Management (Third Asia Pacific Edition ed.). Australia: Cegage Learning.
Williams, C. (2008). Effective Management. USA: Thomson Higher Education.
http://airlines-malaysia.com/tag/history-of-airasia/, History of AirAsia, June 2013
http://www.airasia.com/my/en/about-us/corporate-profile.page, Slogan of AirAsia, June 2013
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