Premium Essay

Airasia Case Study

In: Business and Management

Submitted By bdt53
Words 1474
Pages 6
What is the macro and industry environment in the Southeast Asian region for the entrance of new budget airlines? What opportunities and challenges are associated with that environment?
The environment for new entrants into the budget or low cost carriers market in the Southeast Asian region has become very competitive in the last few years despite the fact that the low cost carrier industry is still young. One of the most appealing aspects for operating a low cast carrier in Southeast Asia is the size of the market. Moreover, the untapped potential for growth in many countries within the region is great. As stated in the case study, some government regulations have been adjusted, lifted or cancelled and this has brought about a flood of new entrants. While government deregulation is viewed as good news, there are some limitations to the potential of intra-Asia flights. “A major disadvantage of the LCCs in Asia is the smaller geographic areas of domestic economies. As LCCs turn their attention to international routes for expansion opportunities, they would confront regulatory constraints applying in international markets.” (Zhang, 2008). This is key to the development and continued growth of the low cost carriers in Southeast Asia. There are also many challenges and pitfalls when it comes to running an airline, especially if the profit margins are thin. With any airline, be it full service carrier or a low cost carrier, fuel cost is always going to be at the top of the list. Fuel costs for an airline, as a percentage of operating costs, typically runs from 20% to 40%, depending on the price of oil in any given time period (please refer to Appendix A).
The next biggest cost associated with running an airline would customer service and operations. The case study does indicate that AirAsia has entered into an alliance with another low cost carrier Jetstar from...

Similar Documents

Premium Essay

Airasia Case Study

...AIR ASIA Case Study Report Nikhil Singh Tomer Business Strategy, BMGT 43370 2nd individual Assignment Addressed to Bernard Faughey MSc Project Management FT I the undersigned confirm that the work submitted here is entirely my own work, and that any work of others which is included has been properly referenced and acknowledged according to normal academic guidelines. NAME: Nikhil Singh Tomer Student No. 14202643 Core concepts : Porter’s 5 forces, SWOT Analysis , Analysing the internal environment, Porter’s Value Chain, Competitive advantage within International context(cost analysis and differentiation) 1.0 Porter’s Five Forces: 1.1 Threat of new entrants There is a need of high initial investment to run an airline industry business. This high capital requirement is in the form of buying of aircrafts, staff hiring, pilot hiring, etc. Thus, the threats of new entrants for AirAsia are very low.  AirAsia uses a very simple and effective strategy of selling tickets. People have to buy tickets from AirAsia’s website which they do very easily. Thus, through this process, AirAsia saves a lot of money by not being liable to pay any travel agent. This Strategy of AirAsia is hard to imitate and makes them less vulnerable to new entrants. It also provides facilities to people like they can themselves print their ticket or boarding pass and thus competitors cannot easily copy this strategy of AirAsia.  AirAsia Also has very good relations with Government which a very......

Words: 2660 - Pages: 11

Premium Essay

Airasia Case Study

...AirAsia Case Study Abstract—This paper focuses on the company AirAsia. We will be talking about their strategy through out this paper and will also discuss their position in the global market. AirAsia’s strategy is to become the largest low cost airline in Asia; however, their coverage stays within south east Asia, which with our consultation and data presented in this paper we can analyze and seek a path towards a much larger coverage and becoming the leading largest low cost airline in the world. For the sake of this paper, we will be focusing on AiAsia’s partnership with Emirates in the middle east region. Keywords—AirAsia; Strategy; Sustainable Growth; Low-cost Airline; Alliance; Global Market Analysis; Introduction AirAsia, a successful global company based in Malaysia has been transporting people in Asian for over 15 years. The company is however thinking about expanding their coverage through out all Asia; currently they are covering and more focusing in East and Southeast Asia. Analyzing AirAsia’s strategy will help us understand any trends that is either helping them or decreasing their growth, hence, with proper recommendations we would be able to help AirAsia achieve its goal: Becoming the largest low-cost carrier in Asia. Having that said, by looking the global market and the growth rate of AirAsia; the company will be able to become the world’s largest low-cost carrier instead of only Asia. This requires the company to make a few smart......

Words: 2197 - Pages: 9

Free Essay

Airasia Case Study

...THE RISE OF TONY FERNANDES AND AIRASIA IN MALAYSIA1 SHAHRIL EASHAK ISMAIL Monash Asia Institute, Monash University, Caulfield East Vic 3145, Australia Email: seism1@student.monash.edu                                                              1  This paper was presented to the 18 Biennial Conference of the Asian Studies Association th of Australia in Adelaide, 5-8 July 2010. It has been peer reviewed via a double referee process and appears on the Conference Proceedings Website by the permission of the author who retains copyright. This paper may be downloaded for fair use under the Copyright Act (1954), its later amendments and other relevant legislation.  2    The Rise of Tony Fernandes and AirAsia in Malaysia This article discusses the emergence of Tony Fernandes and AirAsia. At first, when AirAsia was relaunched as a Low-Cost Carrier (LCC) under the leadership of Fernandes, no one thought the airliner would survive, let alone become a symbol of the liberalisation of the aviation industry in Southeast Asia. Second, Fernandes, a Malaysian Indian of Portuguese Malaccan descent – obviously not a Bumiputra2 - was able to thrive as an entrepreneur in an environment where the government gave top priority to Bumiputra entrepreneurs. These issues are discussed in this paper. Malaysia’s New Economic Policy (NEP) The Malaysian Government has played a significant role in Malaysia’s rapid economic growth. After the independence in August 1957, the economy......

Words: 4100 - Pages: 17

Premium Essay

Airasia Case Study

...billion people who are currently being underserved due to poor connectivity and high fares. Air Asia mission is to attain the lowest cost so that everyone can fly with Air Asia and to maintain the highest quality product, embracing technology to reduce cost and enhance service levels. Air Asia has a well-developed strategy that encompasses several core ideas that make their company both unique and profitable. Safety first – AirAsia partners with renowned maintenance crews and complies with world airline regulations. The company does not own a maintenance shop. Everything with maintenance and repair is outsourced to keep costs down. High aircraft utilization – having the fastest turnaround time in the region, they assure lower costs and higher productivity. AirAsia has the newest and most efficient fleet flying in the Asia region. The planes have a single seating class and hold more passengers than competitors. This allows for more revenue per flight. Low fare, no frills – keeps ticket prices cheap. Customers have the ability to customize for an extra fee. AirAsia focuses on price sensitive customers. Keeping lower prices is better for both the passenger and the airline. Streamline operations – simple is good. Using all the same planes saves on training pilots, contracting mechanics, and replacing parts. Lean distribution system – book flights online or on the phone. No travel agents. Passengers do not even use tickets. They simply show photo identification and are......

Words: 2563 - Pages: 11

Premium Essay

Airasia Case Study

...1. Briefly describe the trends in the global airline industry. a) Increasing travel demand Two of the top six U.S. airlines saw their best traffic results in 18 months this past November. While Southwest recorded a 12 percent increase, Continental registered a 2.8 percent increase, respectively, in miles flown per passenger. These figures represent absolute increases in ‘warm bodies’ flown – a more reliable metric than passenger load factor. Clearly, the slump in air travel is ending. IATA has now revised its passenger traffic estimates for 2010 upwards by 4.5 percent (as against the previous forecast of 3.2 percent in September 2009). An estimated 2.28 billion people are expected to fly in 2010, bringing the total passenger numbers back in line with the peak recorded in 2007. b) Airline-supplier consolidation As airlines improve services while implementing aggressive pricing strategies, many plan to forge new links with distributors, including travel management agencies that don’t rely on the traditional GDS connections. A trend that first started two years ago, airlines are expected to continue to implement direct-connect models to manage products and inventories, and establish closer ties with their customers. For example, last October, American Airlines indicated its plans to move all indirect volume to direct connections. This will change the nature of Airline-GDS relationships. One notable potential by-product of this trend could be GDS / TMC......

Words: 3654 - Pages: 15

Premium Essay

Air Asia Case Analysis

...AirAsia Case Study Analysis I. PROBLEM How to continue with its low-cost leadership strategy provided that market fuel prices are unstable and improve its competitiveness among competitors in the LCC segment II. OBJECTIVES To sustain its cost advantage and status as the top low-cost but high quality airline III. AREAS OF CONSIDERATION a. For the past 7 years, AirAsia has been the leading airline in the LCC segment b. In the mid-2008, fuel prices started to be unstable c. The competition became more intensive given that, after the relaunch of AirAsia in 2002, it soon inspired many LCC followers in the region. d. Malaysia Airline tried to penetrate the LCC segment with its “free ticket” strategy IV. ALTERNATIVE COURSE OF ACTION 1. Invest in having its own direct supply of oil through backward integration strategy. * Advantage: Minimized cost on fuel * Disadvantage: Very Costly type of investment 2. Do not expand its long haul business and do not divert its classic business. * Advantage: No additional cost for manpower and other costs related to expansion of its business. * Disadvantage: Only short haul flights will be catered V. RECOMMENDATION It is recommended that the first alternative be pursued which is to invest in having their own direct supply of oil to minimize the cost of fuel needed by the airline even if it will cause a need for a massive capital......

Words: 357 - Pages: 2

Premium Essay

Hbs Case Study

...Hikmi Syed AbdullahHaza Nuzly Abdull Hamed Aryati BakriNorasnita Ahmad | 32432/ N28-403-1532423/N28-403-0932426/N28-403-2132405/N28-402-1232421/N28-403-0732430/N28-403-1732433/N28-403-1432427/N28-403-20 | iskandar@utm.mymhafiz@utm.myhalina@utm.myhaslinah@utm.mynorris@utm.myhaza@utm.myaryati@utm.mynorasnita@utm.my | Synopsis | This 1-credit course will provide an extension to the existing 2-credit subject (UCD2762) on how to analyze and evaluate the business opportunities using the knowledge and skills acquired from the previous subject. Class members will consider business planning, self-assessment, idea generation, and operating strategies required to start a new small business. Students will also be exposed to Harvard Business School Case Method in order to give them exposure to the real world problems and their solutions. Active participation by students during class discussions and activities is encouraged & expected. Students successfully completing this course will be able to: * Research, recognize and access business opportunities. * Use analytical and critical thinking skills to determine the feasibility of a business concept. * Gained hands on experience with conducting research, develop, write, evaluate, presenting and defending segments of a business plan. | | Learning Outcomes | At the end of the semester, the student will have the: | CO | Course Outcomes | Related Program Outcome (PO) | Evaluation Method | 1. | Ability to think...

Words: 610 - Pages: 3

Premium Essay

Strategy Case Studies

...beginning of the 21st century, its CEO/ Chairman, Yang-Ho Cho undertook various transformation initiatives - for instance, improving service quality and safety standards, technology integration, upgrading pilot training, better business focus; putting in place a professional management team, improving corporate image through sponsorship marketing, etc. He gave a new corporate direction in the form of '10,10,10' goal. However, Korean Air is held up by a slew of challenges. Among which are inefficiencies of - Chaebol system of management, possible clash of its cargo business with its own shipping company, limited focus on the domestic market and growing competition from LCCs. How would Korean Air manage growth as a family-owned conglomerate? The case offers enriching scope for analysing a family business’s turnaround strategies, with all the legacy costs involved. Pedagogical Objectives • To discuss the (operational) dynamics of Korean Chaebols - their influence/ effects on the country’s industrial sector and the economy as a whole • To analyse how family-owned businesses manage the transition phase - from a supplier-driven economy to a demanddriven economy • To identify all the possible reasons for Korean Air ’s turbulent times and assessing whether they are controllable or not • To critically evaluate Korean Air ’s transformation efforts - in terms of growth, productivity and cost cuts, especially the efficacy of '10,10,10' goal in a family-run business • To identify various......

Words: 71150 - Pages: 285

Free Essay

Role of Power

...contemporary organizational issue you find intriguing. Use one field site or example for the entire paper. Also, be explicit about the level issue. For example, if you are using the concept of personality then it is an individual level issue. A list of concepts and their related levels is provided in a separate document. Focus of paper-related requirements: Outline: Submit a formal outline for your paper, complete with references. The purpose of the outline is to help you organize your content, which also results in increased clarity, improved logic, and better structure of the paper. There may be adjustments from this document to your final paper, but at this stage the paper should not require major revisions. Final Paper: Use a case study format for the structure of your paper. Identify and analyze issues using course concepts, and propose recommendations for the organization you are focusing on. Use of course concepts 1. Use a minimum of 8 concepts for the paper. Include a list of the concepts you used at the beginning of the paper. 2. Briefly define each concept you use within the text (a paragraph or two). 3. For each concept, write a diagnosis at one level (e.g., the person level). For example, you might write “The employee misses work frequently due to stress from conflict with her supervisor.” Note, stress and conflict would require definitions.) 4. For each concept, write a solution or solutions. Identify the level(s) you addressed in......

Words: 594 - Pages: 3

Premium Essay

Ungs2050

...Calendar Overall for Case-Study Presentation & Mid-Term Exam – MGT 4760 (Strategic Management) Sem 1, 2012/2013 Sec 8 (M-W) No. | Week | Topics | Class Day | Date | Schedule | Details | | 1 | Chapter 1: The Nature of Strategic Management | 1- Mon 2- Wed | 10/912/9 | | | | 2 | Chapter 2: The Business Vision and Mission | 3- Mon 4- Wed | 17/919/9 | | | | 3 | Chapter 3: The External Assessment | 5- Mon 6- Wed | 24/926/9 | | | | 4 | Chapter 4: The Internal Assessment | 7- Mon 8- Wed | 1/103/10 | Quiz 1 (Chapter 1.2.3) | | | 5 | Chapter 4: The Internal Assessment | 9- Mon 10- Wed | 8/1010/10 | | | | 6 | Chapter 5: Strategies in Action | 11- Mon 12- Wed | 15/1017/10 | | | | | BREAK(22/10 – 28/10) | 13- Mon 14- Wed | 22/1024/10 | | | | 7 | Chapter 5: Strategies in Action | 15- Mon 16- Wed | 29/1031/10 | Case Presentation Session 1Case Presentation Session 2 | Group 1:L: Lia Hilaliah (Case Study 3)Group 2:L: Mas Syairah bte Mohamad (Case Study 5) | | 8 | Chapter 6: Strategy Analysis and Choice | 17- Mon 18- Wed | 5/117/11 | | (Mid-Term Exam 7/11 Wednesday)Seminar Room 1.1 | | 9 | Chapter 6: Strategy Analysis and Choice | 19- Mon 20- Wed | 12/1114/11 | Case Presentation Session 3Case Presentation Session 4 | Group 3:L: Mohamed Sheikh (Case Study 9) Group 4:L: Izzati Nor binti Salleh (Case Study 14) | | 10 | Chapter 7: Implementing Strategies: Management and......

Words: 418 - Pages: 2

Premium Essay

Ob, Arctic Minings Consultants, Case Study

...ARCTIC MINING CONSULTANTS Case Synopsis Arctic Mining Consultants is a mining company that deals with mineral exploration. In this case study, the project given is staking 15 claims in Eagle Lake, Alaska. The project Manager was Tom Parker, who has a wide experience and specialized knowledge in all nontechnical aspects of mineral exploration. He is a geological field technician and field coordinator for Arctic Mining Consultants. He assigned his previous field assistants John Talbot, Greg Boyce and Brian Millar to help him complete the project. The job required them to stake at least 7 lengths each day in order to be completed on time. However, the whole team has became very tense and agitated, especially Tom Parker, as the deadline was just around the corner and there’s still many to be finished within the limited time. The problem became worse with the way Tom managed and treated his team. The only motivation to the team was the $300 bonuses promised by the company when the job is done on time, otherwise, they might wished to give up already. This happened because working as a field assistant and in long-working hours only giving them low wages, which is considered unreasonable compared to what they have to do. During the eight hard days, everything had actually proved the strengths and weaknesses of each of the team members, including Tom. Case analysis symptoms 1) What symptom(s) exist in this case to suggest that something has gone wrong? The symptom(s) to......

Words: 2346 - Pages: 10

Premium Essay

Case Study Sample

...Running head: CASE STUDY XYZ Case Study XYZ: An Examination of Project Procurement Management Practices Group 12 John Doe Jane Smith Bobbie Sue University of Maryland University College Project Procurement Management, Semester XXXX, Section XXXX Professor Stephen R. Guth MMMM DD, YYYY [No Abstract or Introduction required for this assignment] The Inception Phase Rating Scale: 5—Excellent, 4—Very Good, 3—Good, 2—Poor, 1—Very Poor |Project Management Area |Inception Phase | |Scope Management | | |Time Management | | |Cost Management | | |Quality Management | | |Human Resource Management | | |Communication Management | | |Risk Management | | |Procurement Management | ...

Words: 804 - Pages: 4

Premium Essay

Organizations Conflicts

...policy. 2) Employee conditions: a. Lack of motivation  b. Compensate for low wages by over indulgence of free food allowance c. High turnover rate due to availability of high application rates. d. Employees are mostly college and high school students e. Lack of respect for managers. f. No incentive to increase motivation. In the case study Perfect Pizzeria, the area supervisor has many problems that need his attention. The largest appears to be the organization. In this case study I will assume that the area supervisor has the authority to affect change within his organization (i.e. he is the franchise owner). Being in an area with few job opportunities should give him the perfect opportunity to recruit bright, ambitious, and motivated people to staff his pizzerias. How can the area supervisor change his organization to achieve a more fluid corporate culture? I think this change can be achieved by human resource changes, structure changes, motivational changes, and reward for good performance as well as accountability for poor performance. Each one of these areas will require a change from the corporate level. For the sake of my case study I am going to assume that the area supervisor (franchise owner) can lobby to achieve this change within the organization. The first area to look...

Words: 445 - Pages: 2

Free Essay

Why Financial Intermediaries Exist

...letters in industry or for a class, knowing your purpose and audience will help determine what information to include. Generally, business letters follow a particular format, although your instructor or company may require you to use alternative formats. This guide provides writers with an introduction to writing business letters. Case Studies: This guide examines case studies, a form of qualitative descriptive research that is used to look at individuals, a small group of participants, or a group as a whole. Researchers collect data about participants using participant and direct observations, interviews, protocols, tests, examinations of records, and collections of writing samples. Starting with a definition of the case study, the guide moves to a brief history of this research method. Using several well documented case studies, the guide then looks at applications and methods including data collection and analysis. A discussion of ways to handle validity, reliability, and generalizability follows, with special attention to case studies as they are applied to composition studies. Finally, this guide examines the strengths and weaknesses of case studies. Desktop Publishing: Desktop publishing is the process of laying out and designing pages with your desktop computer. With software programs such as PageMaker and Quark Xpress, you can assemble anything from a one-page document to a...

Words: 795 - Pages: 4

Premium Essay

Brussels and Bradshaw

...Brussels and Bradshaw In response to the case study, Brussels and Bradshaw is a well-established financial institution that offers their clients competitive and innovative solutions for their community and work environments. The banking institution offers a summer internship to bright and driven individuals. The internship includes 14 weeks of very intense training and long hours. Interns are paid $20,000 for the contract. During the screening process, out of all the possible candidates Audrey Locke was selected. Audrey has some experience as an assistant, assurance analyst and financial planning analyst. Brussels and Bradshaw is operating in more than 25 countries globally; this case study takes place in Toronto. Many behavioral issues in the Brussels and Bradshaw institution are unprofessional and stressful. Job stress is defined as feeling one’s capabilities, resources, or needs that do not match the demands or requirements of the job (Hitt, Miller, & Colella, 2011 p. 249). Working 70 and 80 hours per week or possibly 120 hours will put a major burden on anyone, especially someone new to the working environment. Audrey is excited with her internship and very eager to learn. She is assigned a mentor and buddy by the business development manager, Kelly Richards. Kelly has 10 years of experience. Although associates consider her human resources, Kelly’s job is strictly administrative. Audrey is never introduced to her mentor and her buddy, Christine Page is......

Words: 509 - Pages: 3