The aim of this analysis is to conduct a PEST and SWOT analysis in the context of AirAsia's international business operations, identifying the major variables. Pest Analysis (Air Asia) - Download as PDF File .pdf), Text File .txt) or read online. AirAsia Berhad- PESTLE Analysis of the Low Cost Carrier in the Asia. Download as DOCX, PDF, TXT or read online from Scribd. Flag for .. PESTEL ANALYSIS OF aracer.mobi Uploaded by. Faridah Analysis SWOT of AirAsia.
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Solved Airasia PESTEL Analysis, PEST Analysis, Transportation PESTEL Analysis, Political factors, Economic factors, Social Factors, Technological Factors. PESTEL analysis on AirAsia closely studies and examines the operations of the international airline in its external environment. It focuses on. The ascendance of AirAsia: Building a successful budget airline in Asia Pestle analysis of the AirAsia shows that liberalization in the air market of Asia Pacific.
Technology AirAsia offers airline online service that combines air ticketing with car hire, hotel bookings and travel insurance for enhanced AirAsia Travel Protection. To keep all costs in check, the company has further pushed its online or internet services.
This makes it easier for individuals served by poor rail and road infrastructure to board flights. AirAsia in became one of the first and best airlines to introduce SMS booking and guests can easily book for their flights, check schedules and get latest updates on AirAsia promotions at their comfort.
The airline also introduced GO Holiday and clients can book for holiday making it a reliable, better performance and reliable airline. Legal Malaysian government does not have a clearly written policy for commercial air transport. Demographic environment Population growth affects sales of AirAsia. Increasing population in the country increases sales of the airline bearing in mind that many clients prefer affordable services.
Demand for products and services have also increased. However, the company should take advantage of this to expand its operations.
It only needs to explore its macro environment and trade profitably. Do you need help with your academic papers? Additionally, strategic competition can be thought of as the process of perceiving new positions or draw new customers into the market Porter, The LCC business model 1 Storage costs in a manufacturing industry represent unsold products. In the airlines industry, storage costs represents flying a plane with empty seats that reduces the profitability of the flight. The following paragraphs will illustrate Porters Generic strategies that have been adopted by AirAsia on becoming one of the most successful LCCs in the world.
This overall cost leadership strategy is related to AirAsia as the business growth is focused on the vigorous pursuit of cost reductions in pertinent areas of the business and it is the central theme of the companys strategy. Additionally, AirAsia currently dominates the low cost airlines industry within the ASEAN region and have revolutionised the airline industry, as their competitors are illprepared economically to mitigate issues pertaining to cost minimization Porter, AirAsia operates a single-class service with no amenities such as complimentary in-flight meals and entertainment, loyalty programs and airport lounges.
AirAsias high frequency flights have made it more convenient for guests to travel as the airline implements a quick turnaround of 25 minutes, which is the fastest in the ASEAN region.
This has resulted in high aircraft utilisation, lower costs and greater airline and staff productivity AirAsia, Annual Report AirAsia offers a wide and innovative range of distribution channels to make booking and travelling amongst customers feasible for its guests. Its ticketless service provides a low cost alternative to issuing printed tickets. AirAsia streamlines administrative functions by hiring employees who are able to perform various roles.
Additionally, the carrier is working towards a single aircraft fleet, as this reduces duplicating manpower requirements drastically and stocking of maintenance parts.
By launching promotional fares of RM0. Based on the differentiation strategy, AirAsia developed new revenue streams within the group, to maintain its low cost fares and withstand the effects of the global financial crisis by expanding its range of services and products offered through its ancillary income. Additionally, as AirAsia has successfully implemented the low-cost carrier model within the ASEAN region, it receives regular coverage from regional media outlets. The carrier utilises such opportunities to promote and increase its brand awareness without incurring additional sales and marketing expenses.
AirAsia uses a revenue management system to optimize revenue from passenger seat sales, which constantly monitors and adjusts its fares based on the date of flight and the forecasted and actual demand of the flight. This enables the carrier to optimize its revenue from passenger seat sales while continuously offering fares that are lower than its competitors on similar routes. AirAsia has been expanding its ancillary income by capitalising on its strong, dynamic brand.
The combined traditional and new wings of ancillary products and services generated revenue of RM million in , growing by The ancillary income contributes to the bottom line of the company and also provides a buffer against rising fuel prices which enables Air Asia to maintain the low fares AirAsia Berhad, Annual Report AirAsia believes that its ability to generate publicity as well as marketing and public relations activities have been successful in establishing a high level of brand awareness within the ASEAN region as well as new markets such as India and China.
Arts 51 cost airline that provides high quality service. Additionally, the carrier also organizes and participates in events and promotions with celebrities to enhance its brand image and continues to refine its branding strategy to increase its customer base while entering new markets.
Although many new LCCs have emerged since the inception of AirAsia, at the financial year of , AirAsia was the only LCC in Asia that was making profits for 5 years consecutively and obtained the lowest cost on all measures compared to other global LCCs. AirAsias corporate slogan Now Everyone Can Fly embodied on providing affordable air travel to everyone, especially to first-time flyers and fare-conscious leisure and business travellers who may have used alternative modes of transportation.
Additionally, the carrier believes that certain segments of this market have been underserved historically and the Groups low fares have stimulated travel within these market segments.
By 30 June in less than 2 years after the relaunch of the airline AirAsias share of domestic departing passenger movements for airports in Malaysia increased to Furthermore, AirAsia has used its experience and expertise in Malaysia to expand into Thailand, Indonesia and presently to Vietnam, as the Management believed that the proven business model employed in Malaysia could be replicated in other countries within the region and would offer strategic market positioning for AirAsia outside Asia.
To sustain its competitive advantage amongst its rivals, the first-mover advantage of AirAsia has enabled the Group to gain a foothold in neighbouring countries such as Thailand, Indonesia and recently with Vietnam. Although this has inspired many other budget airlines to flourish within the region, the strategic cost structure of Asia and the growth of the Asian market would enable AirAsia to maintain its strategic position.
Additionally, AirAsia X the sister airline of AirAsia focusing on the low cost, long haul model achieved its first year of profitability in The combined short-haul and long-haul networks feeds each other with passengers using the Kuala Lumpur hub to connect to a wide range of routes. However, with the underserved potential customer base from AirAsia X, the Group has created a major competitive advantage over other low-cost carriers within the region that are limited by only having short-haul services.
Strategic Analysis Peter Drucker once said, When you see a successful business, someone once made a courageous decision.
Despite facing challenging obstacles, AirAsia has prospered with its deeply held values and the ability to achieve tangible results.
The business environment and competitive activities, plays an instrumental role in determining which strategic choice is most appropriate for a company and its impact on the selected choice of a firm's strategic options.
Market Penetration and Consolidation Market penetration occurs when a company penetrates a market with its existing product range and strategic capabilities and obtains increased market share David, For example, AirAsia, with its relatively low market share, succeeded at attacking MASs market share in the domestic airline industry.
This strategy begins with the existing customers of the organisation and is used by companies to increase sales without drifting from the original product-market strategy Ansoff, AirAsia penetrated the aviation industry by gaining the competitors customers, improving the product quality and its level of service, attracting non-users of the products or convincing current customers to use more of the company's products through its RM0.
However, an organization needs to be wary on new strategic capabilities such as mastering new technologies and project management risks delays of aircraft orders before employing this strategy. As maximising revenue is the core objective of AirAsia, the organization recognised that passenger seat revenue was not sufficient to sustain and grow the business.
The flight service from Kuala Lumpur to Balikpapan has increased from three times a week to once a day. Page 16 of 29 Market Development AirAsia uses their operating experience in Malaysia to expand their airline business to various countries such as Thailand, Philippine, Indonesia and India Yoshodha, From this, we can see that AirAsia has strong intention to continue expansion.
The expected increase income from RM46 to RM60 per passenger. Moreover, they also keep improving their website by helping to save the last search for the ease of searching experience of customers Corinne, From this, they are able to supply good coffees and also earned extra profits from the coffee retail shops Gho, Furthermore, the joint ventures with SATS company from Singapore who provide ground handling and in-flight catering services has helped AirAsia to save cost and produce additional profits.
Page 17 of 29 6. It makes maximum profit and comprise strong branding and marketing. For recommendation, AirAsia can provide special counter or express counter for who taking flight on this route. It has potential to become stars if the company has sufficient funds to invest and advertise on the particular routes or else it will fail and become a dog. For example, KL to Gold Coast is a potential flight routes as it provides the cheap options than flying a long haul flight to European countries.
For recommendations, AirAsia can increase the flight frequency and believes it will bring high profits for them. Page 18 of 29 Cash Cow Cash Cow will be high market shares but with no growth or little growth. In this case, AirAsia should not focus on advertising but on the retention on customers. For example, the flight route from KL to Singapore, the growth is slugging but the demand is aggressive. In cash cow, this route has great potential to become a star.
DOGS Dogs considered as low market shares and growth. It will become high in liabilities as company need more money to support it. For example, the flight route from KL to London. Consumers rather choose for better services flight company than go for low cost due to the long haul journey to London. Due to this reason, AirAsia has stopped this route from January This can reduce the competitive intention, at the same time help on the economical growth and maintain their position as market leader in low cost airline industry.
Page 19 of 29 7. Besides that, AirAsia successfully reduce their total debt from RM However, by developing good financial performances, they forecasted to make profit by Furthermore, AirAsia successfully gained satisfactory reactions of stakeholders with the rising of stock price at RM3. Page 20 of 29 7. Besides that, their total debt has dropped from RM Moreover, AirAsia practiced flat organization structure which help in cost saving on labor cost , adaptability in market change, promotes oneness among the staffs Deal Street Asia, To maintain as market leader, AirAsia has increased their flight frequencies, adding routes and boosting capital investment while other airlines are cutting down due to the raising of fuel price.
Airasia is strong in its branding and marketing strategies however due to they allow limited cost on their management and maintenance, customer satisfaction and reliance are low. Besides that, they have been too relay on Page 21 of 29 online sales which might be the threat for them when the system disruption happened.
Lastly, in VRIO analysis presents that Airasia should focus on promote and enhance its branding and image to sustain competitive advantage. For ANSOFF analysis, market penetration can be done by increasing the routes to more destinations so that can reach to more customers. Product development can be done by evolved to more digital services to ease the customer usage and market development to other countries can promote the branding name.
Through BCG matrices can be concluded that AirAsia need to focus more on cash cow development and try to improve or eliminate dogs to prevent loss. Lastly, SAFS evaluation can be concluded that sustainable strategy as market leader has to be made and evaluate time by time in order to maintain in market position.
Air Asia can build up their own MRO facilities and maintenance teams for repair and service airplanes. Besides that, on financial perspective, AirAsia has to ensure that they are able to achieve below following initiatives to be achieved in order to sustain the targets for the following years. AirAsia should work out to reduce the increasing rate of customer complaints on their service by allowing phone calling for easy reachable customer service.
They have comparatively bad reputation with Page 22 of 29 customers due to the frequent delay and cancellation of flights.
Moreover, AirAsia has to be aware of the internet system failures that would seriously effect the operations for such a technologically reliant company. AirAsia must always has back up facilities or IT staffs to stand by whenever there is system failure.