...- Other Low cost Airlines- Compass, Tiger Airways, Cebu Pacific, Jetstar Asia Airways, Impulse, Virgin blue Airlines. The number of competitors is very high and with the emergence of low cost carrier and deregulation the internal competition has increased and the only reason that reduces it is the low and highly volatile profitability. Suppliers Power - 高油費->高供應商議價能力Fuel prices are ever increasing affecting the cost so the supplier power is high. - 買大量飛機-> 高供應商議價能力The Asian airline industry is very optimistic about the growth potential of the Asian aviation industry so is placing huge aircraft orders thereby increasing the bargaining power of the suppliers again - The civil aircraft industry is monopolized by two major aircrafts manufacturers - Large capital required so the leasing companies come into picture. - Highly specialized and professional employees are required to maintain the status of five star carrier services. - The recent crisis in the overall airline industry has to some extend lead to a reduction in the prices of the aircrafts. Buyer’s power - Local population (Malaysian) - Southeast population- Indonesia, Thailand, Singapore, etc. - There is no switching cost as the buyer can easily switch from one airline to another so the power of the buyers increases. - There is a very low product differentiation so to succeed providing either services at very low cost or give a five...
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...class. dustry will be low as there are high barriers to entry. Due to high cost of planes, entering airline industry requires high capital investment to commence operations. The airline industry is extremely capital intensive, due to the cost of buying and leasing aircrafts, safety and security measures, customer service and creating a brand people can trust. In order to achieve economic of scales, many airlines creates alliance with each other therefore creating efficiency in joint purchase of aircraft, cost of maintenance and parts thus save hundreds of millions of dollars such as the Jetstar/AirAsia alliance. This creates further barriers whereby new entrants will not be able to compete in term of cost and price. (1) Power of suppliers to the industry - Medium to High The airline supply business is mainly dominated by Boeing and Airbus therefore they have high supplier power. For this reason, there is not a lot of competition among suppliers. Also, it is also unlikely that of a supplier integrating vertically. Airlines are also unable to materially affect fuel prices from suppliers as the oil market dictates the fuel costs. They also aim to use their combined scale to help influence the design of the next generation of narrow-body aircraft from both major manufacturers Boeing and Airbus, and secure more purchasing power via joint procurement orders. Strategic alliance aim is to reduce supplier power. (2) Power of buyers - Low (Future increasing due to...
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...social changes may bring as well as the potential impact that they may have on Air Canada. Furthermore, we have also investigated the innovative practices that are currently being developed by your competitors which Air Canada should be aware of. Based on the strengths and weakness of Air Canada, we have come up with recommendation on ways that your company can best adapt to these changes. We hope that you and your senior management staff will find this detailed report to be useful and insighful. Thank you once again for choosing Sage Consulting Inc. Sincerely. Henry Fung Senior Consultant Sage Consultants Inc. 1055 Georgia Street – Suite 301 Vancouver, BC V6E 3H3 Telephone (604)-301-3001 Emerging Social Trends Growing Asian market Currently, the global airline industry continues to be impacted by the European debt crisis, which has substantially dampened the demand for flights taken by Europeans to Canada. The economic slowdown has seriously hurts Air Canada’s European market since approximately one-fifth of its revenues comes from transatlantic flights. On the other hand,...
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...annual report,” Proletariat Capitalist TONY FERNANDES revolutionized Asia’s airline industry by introducing the region’s first low-cost carrier. Now he’s plotting more insurgencies in airlines, hotels and financial services. By Justin Doebele 30 F O R B E S A S I A JUNE 4, 2007 Malaysia’s 40 Richest Sleepover in Kuala Lumpur: Tune Hotels, with rooms costing as little as $3 a night, are Fernandes’ attempt to provide cheap, clean lodging. he boasts. “For others it’s a cost, but we made a $50,000 profit.” Fernandes, 43, relishes turning costs into cash. After all, he built a small fortune by being budget-conscious. Less than six years ago he and a partner paid a debt-ridden Malaysian company 27 cents for a troubled carrier and assumed its $11 million in debt. He relaunched AirAsia Berhad as Asia’s first low-fare airline and the region’s first carrier to allow customers to buy tickets online and through mobile phones. The no-frills outfit got rid of complimentary food and drinks, frequent-flier programs, airport lounges, even cleaning crews; flight attendants now clean the cabins after flights. Ads are sold on the airplanes’ overhead bins and tray tables. All this has helped AirAsia become one of the world’s lowest-cost carriers, according to ABN Amro, as measured by costs per seat flown: just 2 cents for each kilometer, about half what it costs U.S. airline Southwest. Its average ticket price is $37. Its net profits are expected to triple to $100 million on sales of $340...
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...11164 Yasmin Yashodha/ Elixir Mgmt. Arts 51 (2012) 11164-11171 Available online at www.elixirpublishers.com (Elixir International Journal) Management Arts Elixir Mgmt. Arts 51 (2012) 11164-11171 AirAsia Berhad: Strategic analysis of a leading low cost carrier in the Asian region Yasmin Yashodha Taylor’s University Lakeside Campus, No. 1 Jalan Taylor's, 47500 Subang Jaya, Selangor Darul Ehsan, Malaysia. A R TI C L E I N F O Art i c l e h i st ory : Received: 9 July 2012; Received in revised form: 13 October 2012; Accepted: 30 October 2012; K ey w or d s Strategic analysis, Region, Low cost, Extensive. ABSTRACT This study examines the extensive strategic analysis of AirAsia Berhad that has enabled it to sustain its competitive advantage as Asia’s leading low cost carrier (LCC). The study demonstrates the diverse business-level, corporate level and competitive strategies of AirAsia Berhad, played crucial roles in the LCC to successfully penetrate the under-served market segment of the airline industry within the ASEAN region. An in-depth analysis using a wide array of academic resources, relevant financial, legal and management resources and authorized websites, including face-to-face interviews were used to provide a more consequential comprehension on the varied business and international strategies that were implemented by AirAsia Berhad. This research exhibits critical analysis pertaining to the current macro environment of the aviation industry which includes...
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...MALAYSIA AIRLINES SYSTEM AND AIRASIA AIRLINES COLLABORATION TAKES PLACE. TABLE OF CONTENTS QUESTIONS 1:- Analyze the current situation facing MAS and AIRASIA using the internal and external strategic environmental analysis model. Discuss what aspects and why did their collaboration take place? INTRODUCTION Various industries, specifically in airline business are attempting to improve their services to draw new passengers and travellers and to retain old passengers and travellers, and this objective is part of their business as well as their marketing model. In order to adjust with the stiff competition in the airlines business, airlines industries tend to come up with various businesses models and model to be competitive. Additionally, because of increasing competition among substitute industries, firms like AIRASIA, AIRASIA X and MAS. Airlines adopt strategic model to marketing and expend their market reach as well give better and satisfying service delivery to their target market. To sustain the market position as well as advantage business market model to management and marketing are being developed and utilized. MAS, AirAsia share swap not a win-win deal From its inception, it has not been plain sailing for the planned share swap between two of the country's most bitter airline rivals — Malaysia Airlines (MAS) and AirAsia — given the many issues involved...
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...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 modifications in their strategy as well as partnering with some of other existing airlines...
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...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...
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...able of Content…………………………………………………………………2 1. Abstract……………………………………………………………………...3 1.1 Conclusions……………………………………………………………...3 1.2 Recommendations……………………………………………………….4 2. Introduction……………………………………………………………….…5 3. Background to AirAsia……………………………………………………..6 3.1. Organization Definition………………………………………………..6 3.2. Looking at the Organization…………………………………………… 4. Industry Framework Analysis……………………………………………….. 4.1. Porter’s 5-Forces Model………………………………………………… 4.2. External factors using a PEST analysis………………………………… 4.3. Internal factors using a SWOT analysis………………………………… 5. Conclusion and Recommendations………………………………………….. 5.1. PEST 5.2. Task 2: Technological Change……………………………….. 5.2.1 Analyze Policies and Decision Making 5.2.2 Evaluate Effectiveness and Response 5.2.3 Demonstrate Areas of Improvement 5.3. SWOT………………………………………………………………… 6. References…………………………………………………………………. 7. Appendices………………………………………………………………… Appendix 1 Porter’s 5 Forces Model………………………………………….. 1. Abstract This report consists of an internal and external analysis of AirAsia using various methods including a PEST, Organization analysis, SWOT analysis and Porter’s 5 forces model. The main outcomes of the report are: 1.1 Conclusions reached: 1.2 Recommendations reached: 2. Introduction The company chosen for this report was AirAsia. The assignment required that: • A management report of 3,500 to 4,000 words is written on an organization. The report should describe, analyze and assess...
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...Air Asia Berhad (Air Asia) is one of the leading low cost airlines in South East Asia which has expanded rapidly since 2001. AirAsia aims to establish itself as a leading low cost carrier in market by valuing its customers through cost advantages created by operational effectiveness and efficiency. The key of profitability for airlines is unit cost competitiveness because airlines know that it is difficult to increase their revenues in the current situation. The cost gap is the source of sustainable competitive advantage for Air Asia (low cost carriers). There are seven factors that determine firms unit costs compared to its competitors. They are also knows as cost drivers (Grant, 2014): Economics of scale: AirAsia does not use various types of aircraft, they use only limited types of aircraft in its fleet. They offer a single class which allows more seats per plane. As mentioned in the case, the Boeing 737 can be equipped 12 more seats per plane in the single class model compared to a traditional two class model. Although the company has replaced Boeing 737 with airbus 320, the new aircraft can also offers more seats with single class model. It creates the liquidity by moving pilots and cabin crews around to other same type’s aircraft and reducing training costs. Therefore, it generates economics of scale indirectly. Lean product: AirAsia’s products are basic, they do not provide hot meals, frequent flyer programmers, decent legroom, and a full complement of air-hostesses...
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...largest low-cost carrier in Asia. Today the airlines are operating in Malaysia, Thailand and Indonesia. With more than 6,000 talented, hardworking and committed employees and a market capitalization in excess of RM2billion, Air Asia has earned a reputation as a consistent performer no matter what the external environment. They have seen a future in which their success is not constrained by resources or opportunity. ORGANIZATIONAL ANALYSIS Company Background AirAsia is Malaysia’s second national airline was incorporated in 1993 as a full-service regional airline under DRB-Hicom. They started their operations on 1996. After starting their operations for few years, AirAsia failed to attract enough passengers to establish its own niche market. AirAsia was also facing problems such as the demise of Tan Sri Yahaya Ahmad and 1997-1998 Asian financial crisis. Due to 1997-1998 Asian financial crisis, AirAsia was heavily indebted. On 8 December 2001, music mogul Dato’ Seri Tony Fernandes decided to retire from music industry and purchased 99.25 per cent equity (51.68 million shares) in shares from DRB-Hicom via his company Tune Air Sdn. Bhd. with a token sum of one ringgit. Without looking back, Tony Fernandes transformed AirAsia as a low fare airline together with Conor McCarthy, the former Ryanair director of group operation. Known of its corporate tagline “Now everybody can fly”, AirAsia became the first successful low cost and ticket-less airline in the Southeast Asian region...
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...Malaysia. The group now operates a network of low-cost carrier's including AirAsia, AirAsia X, AirAsia Philippines, Indonesia AirAsia, Thai AirAsia, and AirAsia Japan. Opportunity In recent years, rapid economic growth resulted in a burgeoning middle class within Asia’s large population. For the Indonesia AirAsia, Indonesia has 12 million people who travel by air every year against 3 million passengers who fly everyday in the United State. It would call for at least a 5-6-fold increase in capacity. It points to a huge opportunity for AirAsia. The attractiveness of budget airlines is primarily their low ticket prices, which can be as low as 10-20% of those charged by full-service airlines. AirAsia differentiates its no frills product by offering less features at substantially low fares. However, this strategy will become generic with the entry of low cost carriers waiting in the wings. At that stage, low cost competition will each need to try and “be different”. Limited product differentiation is an opportunity, but must be approached with extreme caution. Anything (like frills) that adds costs and reduces price competitiveness is a bad trade-off. Airasia has the provision of in-flight food and drinks, and online sales of hotel, car, and holiday reservations, as well as travel insurance, and corporate travel services, with its own branded credit card; further increasing brand awareness and value for customers. Increased in fuel cost is likely a threat to AirAsia. However, high...
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...The future and significance of CRM for low cost operators of South Asia: The increasingly competitive nature of the aviation industry from a global perspective in todays context has brought about the need to sustain profitability of ones venture in an environment that deems both competitive and economically demanding. Besides the emphasis on cost leadership and operational strategies, the requirements of managing customer relations addresses upon a new agenda of business strategy formation around this essential core element; customer value. With reference to successful “tried and tested” methods by major industry leaders in the globe today, the paper seeks to address the value of customer relations management as a major competitive strategy for low cost carriers such as Indigo Airlines within the southern regions of Asia. RESEARCH PROPOSAL Executive Summary The emergence of low cost carriers within the southern regions of Asia have brought about major success and reshaped the aviation industry within these regions. Though recent success have come about with the exploration of mass segments and low cost structures, this innovative business model is bound to mature with the external markets and consumers. With focus on India and Indigo Airlines, the issue of differentiation in a relatively highly matured market with relatively lower international barriers to entry have brought about the need to explore alternatives which create customer value. Customer relations management...
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... Lost Cost Carrier [LCC] Business Model----------------------------------------------------------------9 Current Issues / Problems---------------------------------------------------------------------------------13 Strategy to solve problems-------------------------------------------------------------------------------19 Conclusion-------------------------------------------------------------------------------------------------23 References-------------------------------------------------------------------------------------------------25 INTRODUCTION : BACKGROUND OF THE COMPANY AirAsia Berhad [Company No: 284669-W] [Incorporated in Malaysia with limited liability under the Companies Act, 1965] First Quarter Report Ended 30 September 2004. This is the first quarterly announcement made by AirAsia to the Bursa Malaysia Berhad since its listing on 22 November 2004. AirAsia is one of the award winning and largest low fare airlines in the Asia expanding rapidly since 2001. With a fleet of 72 aircrafts, AirAsia flies to over 61 domestic and international destinations with 108 routes, and operates over 400 flights daily from hubs located in Malaysia, Thailand, and Indonesia. Today, AirAsia has flown over 55 million guests across the region and continues to create more extensive route network through its associate companies. AirAsia believes in the no-frills, hassle-free, low fare business concept and feels that keeping costs low requires...
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...asia------------------------------------------------- the AirAsia Company strategic management: “ How AirAsia can be a leader in the lowest cost carrier in the airplane industry” August 31, 2009catatanraufmenduniaLeave a commentGo to comments 1.0 Introduction “Without a strategy the organization is like a ship without rudder, going around in circles”. (Joel Ross and Michael Kami) Nowadays, the competition among airplane industries is very tough. According to Daniel Chan (2000), with just about two years to go to the turn millennium, air wars over Asia are hotting up, with some of the world’s biggest airlines engaged in intense over Asian skies[1]. Each Of Airplanes Company in the world trying to conduct some strategies to compete with another competitor in their industry. A lot of airplane companies come out with different strategies to make their company better than their competitors. To compete with their competitor in the business environment, a company needs to make a strategy to achieve their long terms objective and can be successful for doing their business. Moreover, to be successful in their long terms objective and their business, company need to identify their strategic management, because with good strategic management company can be achieving their vision and mission to achieve the successfulness in their business. Regarding this issues, the strategic management becomes important due to the following reason such as globalization to survival their business, and...
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