Basic things to know before seeking help in assignment. But in 1993, Air Asia was established to finally connect Asia like no other airline company. After an in-depth study of the swot analysis of AirAsia, weve concluded that AirAsia is indeed the worlds leading low-cost airline. In the context of this fact, the loyalty of the customers of Air Asia has been decreased because of the increasing competitors of Air Asia in the airlines, such as Jet Star and Tiger Airways. Low switching costs. - Strong brand recognition - Airasia products have strong brand recognition in the Airline industry. The purpose of this report is to examine the market environment for AirAsia, which has established its business in Malaysia. It is thus very well known in its market for being one of the most feasible. Some factors like increased competitor activity, changing government policies, alternate products or services etc. It has operations in over 25 countries and over 400 international and national destinations, 4. Web- High margins compare to Airline industry's competitors - Even though Airasia is facing downward pressure on profitability, compare to competitors it is still racking in higher profit margins. Thai AirAsia faces new competitive threats in Thai Lion and Thai VietJet. Webprice wars with competitors, taxes and duty imposed on the firms products. The brand colours of Air Asia are red and white, which represent determination along with passion, perfection, and positivity to serve customers high-quality services at low prices (Mele, Pels and Storbacka, 2015). Relative Price. This section covers SWOT Analysis, Competitors, Segmentation, Target Market, Positioning & USP of more than 2500 brands from over 20 industry sectors. The company is observed to possess a significant reputation among the competitors, customers and the markets of the establishment. The strengths of Air Asia looks at the key aspects of its business which gives it competitive advantage in the market. The dynamic oil prices and service costs result into criticality for maintaining the low-cost flights as the organisation focuses on facilitating the most affordable costs to its customers (Daft, Murphy and Willmott, 2010). Thank you for reading this case study. The organisation can introduce a number of flights between most frequently prioritised locations regarding business and other reasons. The major issue with maintaining low ticket price is the increasing competition in the airline industry. Currently, the priority for the company is to maintain the fundamental principle of keeping travel fair as low as possible so that people with weak financial status can also afford to travel in flights. It follows vital certain strategies, which include safety first, high aircraft utilisation, streaming operations, lean distribution system and point-to-point network to amplify the working of its low-cost model (Zhang et al., 2017). The marketing mixs 7 Ps model is a marketing strategy tool that is used in a business in order to gain the feedback from the market in relation to marketing objectives. There is no product differentiation while the only different is the airlines packages offered. In 2002, AirAsia became the first airline company in the region that allowed passengers with the facility to pay for their bookings by using credit card. Like Manchester United, Queens Park Ranger, Jamshedpur FC, Singapore national football team, Malaysia national football team, and others. Fixed Cost is high. Since the airline brand follows the tight costing strategy and it allowed the company to offer cheap fare to the customers. Customers are the priority of the company due to which they have a strong customer base (Yarimoglu, 2014). In this context, Air Asia will be focusing on the use of the strategy of service innovation as it is the best strategy to effectively implement the factor of providing new and enhanced services to passengers at low cost. This marketing mix 7 Ps model is used to explain the marketing strategy of Air Asia. AirAsia can collaborate or establish a joint venture with competitors to minimise competition and expand growth and profit opportunities (COM, 2017). AirAsia is one of the largest low fare airline companies in Asia, which has been expanding its routes to different countries since 2001. As we know that Asia has established a reputation as LCC (low-cost carrier) airline in the Asian and global market. Furthermore, landing charges can be identified as the negative aspect resulting into underdevelopment of the airline industry as the aviation sector is strictly obligated to abide by precise air rights regulations and norms. If you did, be sure to share, comment, and let us know! As there are no significant differences in the price compare to Air Asias competitor such as Tiger Airway and Jet Star as mentioned earlier, their customer do not need to spend more to shift to another airline. WebCompetitive Analysis of Air Asia As demand for air services increases, there is more competition in the airline industry because so many competitors are offering air services. UNICEF collaborated with AirAsia to raise $ 128 million for the people who were affected by the earthquake in Haiti. Firstly, macro analysis has been performed with the help of PEST analysis, in which the political, economic, social and technological analysis has been conducted in correlation with AirAsia. AirAsia was bought over by Tony Fernandes, the current chief executive officer of AirAsia from DRB-Hicom on 2nd December, 2001 (Soon, 2017). Pacific (Cebu Air Inc, 2012), AirAsia (AirAsia, 2011), and JetStar Airways (Jetstar Airways, 2012) all reporting increase in revenues and recording profits over the previous year. Quizzes test your expertise in business and Skill tests evaluate your management traits. This involves a detailed analysis of their actions and how these would affect the future strategies of AirAsia Flying Low Cost with High Hopes. The company registered an annual turnover of USD 1.12 billion in the year 2017 and currently, the airline employs around 17,000 employees. The diversity results in critical issues and problems for AirAsia to manage and operate all its functions accordingly. Continue reading more about the brand/company. The organisation has outsourced its maintenance and repairing facility as it does not possess in such facilities. Since AirAsia is a low-cost airline and the Indian market is price-conscious, it would be a win-win situation for both. We hope you found what you were looking for. The portions of income of an individual earns is the factors because when the portion is high, the more customers will look for cheaper price, hence the bargaining power of buyers will be strong. Disclaimer: The reference paper provided by Student Life Saviour should be used as a model paper, and are not intended to be submitted to the universities. Air Asia is one of the leading brands in the airlines sector. The profits of the organisation have been observed to be remarkable which introduce an opportunity to new competitors causing a severe threat to AirAsia for sustainable profits. WebThe Competitors analysis of AirAsia Flying Low Cost with High Hopes looks at the direct and indirect competitors within the industry that it operates in. Bargaining power of Buyers The buyer power for Air Asia is analysed to be high as with increasing options in the international market and decreasing prices of air tickets, people of every category of society can afford flying, and hence, the bargaining power of buyers is also high. According to an estimate, theannual revenueof AirAsia in 2020 was2844million MYR, and it has declined by76.02%. SWOT analysis of Air Asia analyses the brand by its strengths, weaknesses, opportunities & threats. The major competitors for Air Asia as per the market analysis are Jet Star Airways, Tiger Airways, JAL Express, and Air Arabia. The complaints received by the organisation are identified to be the consequences of low prices as the organisation may face critical problems in ensuring service and assistance with the low-cost flights. Step 3- Assess the Porter Five Forces in relation to the Airline industry and assess which forces are strong in Airline and which forces are weak. Consistent complaints concerning services and facilities may result in a downfall for the organisational reputation and prioritisation. Air Asia PESTLE Analysis examines the various external factors like political, economic, social, technological (PEST) which impacts its business along with legal & environmental factors. Certain weaknesses can be defined as attributes which the company is lacking or in which the competitors are better. AirAsia has been facing the competition with the varied existing low fare airlines that include Jet Star Airways, Tiger Airways, JAL Express and Air Arabia. SIA introduced 2 budget airlines; ValuAir and Tiger Airways.. The company is over depending on the Asian market as its main source of earning and its a very risky business strategy. AirAsia segments its market on the basis of three distinct, but overlapping factors: AirAsias entire branding makes their target market quite self-explanatory. Airasia had expanded its services provides to hotel booking as it already has its own hotel (tune hotel) which located not far away from its airport, and tour packages. Step 4 - Determine overall industry structure and test analysis of consistency. As reported in The Edge Markets in 2019, Khazanahs managing director Datuk Shahril Redza Ridzuan claimed that the airlines CASK was only 15 per cent to 20 per cent higher than AirAsia and was in fact lower than regional airlines such as Singapore Airlines, Thai Airways and Cathay Pacific. Do check. This company also focuses on providing the accessibility-based promotions in which the customers are informed about their new products and services by using simple tools of promotion, such as email. The company engages in anchor pricing strategy in its marketing mix. The AirAsia Big Loyalty Program is one of the companys most popular campaigns, in which affluent customers win BIG points for any purchase they make and redeem those points for free airline tickets. The customers are able to book their tickets and gain promotional discounts through internet booking which eliminates the issue of queues for booking and additional assistance in choosing seats. The microenvironmental analysis for any company or organisation is performed using Porters Five force model. No plagiarism, guaranteed! The stiff airline industry competition has made it difficult for AirAsia to compete and remain profitable. Many airline companies have entered the airline industry and they have made the market very competitive. AirAsia is a global airline with operations in more than 160 destinations in 25 countries. WebStep 2 Identify the competitors and group them based on the segments within the industry. This increases the probability of people to avail of airline services frequently. Moreover, it also provides numerous opportunities to travel and explore overseas, developing skills for new cultures. Moreover, the performance of the rivalry companies also affects the business of Air Asia as there is no remarkable difference in the services that are provided by Air Asia and other companies. It is an international air travel carrier that started its flights in Malaysia and expanded its base globally. It constantly delivers on this promise of affordability, It is extremely difficult to keep costs as low as possible due to fluctuations in fuel prices and increases in service costs, AirAsia does not have its own MRO facility, Cut-throat competition in its sector. A recipient of numerous awards Air Asia has been consecutively designated as the leading low-cost carrier in the Asian region. The Essay Writing ExpertsUK Essay Experts. The operational region of AirAsia comprises different countries which introduce diversity in religion, language, culture and approaches. It employs an anchor pricing policy, which establishes a baseline for pricing all AirAsia-operated flights. Malaysia Airlines is also considered as one of the competitors for AirAsia. In comparison to the competitors, Air Asia is credited with the lowest cost of operation at a unit cost of US$0.023 per available seat kilometer (ASK) and a passenger breakeven load factor of 52%. Some of the threats include: If you liked this article, we bet that you will love the Marketing91 Academy, which provides you free access to 10+ marketing courses and 100s of Case studies. Well established LCC operating out of South East Asia, 3. 2.1.2 Pest Analysis PEST analysis is a useful tool for scanning the general environment. Analysis Pest analysis Pest analysis is a useful tool for scanning the environment. 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