Airasia are now facing competition with approximately 59 low fares airline such as JAL Express, Tiger Airways, Air Arabia, JetStar Airways, and etc. It offered a new definition of affordable traveling with its Tagline Now Everyone Can Fly. As per the results of the survey, AirAsia has. The large fleet size and the high number of destinations help the company to diversify its resources and amplify its target market. Thank you very much Mr. Hitesh Bhasin for this SWOT analysis. If you did, be sure to share, comment, and let us know! Strong Promoter 2. 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. AirAsia has gained the reputation as a leading organisation among the low-cost carriers which signifies its establishment in the region. AirAsia uses anchor pricing to offer incredibly low rates on its services and fares, enticing consumers to consider traveling with the airline. Another important strategy that Air Asia will consider enhancing is improving Information Technology (IT) services in the company, as well as in the aeroplanes. Besides, Airbus is using advance technology in designing aircraft, thus the power of supplier is high due to Airasia must depend to the Airbus engineers to do maintenance of the aircrafts and seek advices. Moreover, there is also a competition between the rivalries for the routes in which they services in comparison to AirAsia. This is due to Airbus is a UK based aviation company and their customer may come from around the world. The market has confronted critical competition in the form of new competitors who have also introduced low-cost flights. But in 1993, Air Asia was established to finally connect Asia like no other airline company. The cost-cutting strategies of AirAsia are effective and beneficial in terms of financial growth and maintenance (Ahmad and Neal, 2006). Strengths. Competitive analysis is the process of researching and evaluating the competitive landscape of a business entity. Lets take a look at AirAsias marketing mix. 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%. The approach towards providing the lowest costs results into a low opportunity for gaining significant profits as the company abides by its approach of maintaining lowest flight costs. It would be a strong competitive edge to AirAsia after the pandemic ofcovid-19because the purchasing power of the people has dropped significantly. Liked our work? 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. The airline company has already got a subsidiary AirAsia India for the local market. The competition will be fiercer if there is high number of competitor, this is a normal phenomenon. In this section of the blog, we shall understand AirAsias marketing with the help of its STP (segmentation, targeting, and positioning) strategy. As per the past experiences and the feedback of the customers, Malaysia Airlines are found to react their destinations on time in comparison to AirAsia. Malindo will compete against AirAsia on all three routes. Since AirAsia is a low-cost airline and the Indian market is price-conscious, it would be a win-win situation for both. 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. The strengths of Air Asia looks at the key aspects of its business which gives it competitive advantage in the market. The Threat of Substitution The international airline market has sufficient low-priced airline options available for passengers to travel. 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. Air Asia uses direct sales methods, such as sales through the internet, call centres, and walk-in airport sales. Find useful insights on AirAsias company details, tech stack, news alerts, competitors and more. Step 3- Assess the Porter Five Forces in relation to the industry and assess which forces are strong and which forces are weak. Air Asia Revenue : RM 10,638 million (FY 2018) (9.6% increase YoY) RM 9,710 million (FY 2017) Competitive Analysis of Air Asia SWOT PESTLE The SWOT analysis of Air Asia is presented below: Service or performance may include accuracy of takeoff time, aircraft performance and staff services. Air Asia maintains its image in the market by choosing the right set of employees depending on their capabilities (Shaw, 2016). Airasia may be small portion of customer whom orders 200 aircraft from the total 9,113 aircraft order from other customer of Airbus. It is the largest airline company based on the concept of the Low-Cost Carrier (LCC) (Zhang et al., 2017). Itoffers a broad and innovative variety of distribution channels to ease the travelling and booking process. In the similar context, Air Arabia provides the facility of carrying extra baggage for passengers, and this makes Air Arabia a preferred choice over Air Asia. Lets see how they compare amongst a few key indicators. Required fields are marked *. Physical evidence encompasses the ways in which the company can maintain their position in the industry. Air Asia is known for its low pricing, as well as a no frill policy. The microenvironmental analysis for any company or organisation is performed using Porters Five force model. This has been possible through excellent brand positioning. 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. The approach towards technology assists the organisation in minimising risks and problems and facilitating enhancement in customer services. Sponsorship is also one of the great marketing tools. Well established LCC operating out of South East Asia, 3. WebAirAsia is largest player in June, with 35% capacity market share Indonesia: Easing restrictions as the country step into transition period. Below are the top 3 competitors of Air Asia: 1.Jetstar Airways 2.SilkAir 3.Tiger Airways. Just over 790 million shares were sold, including 592.6 million new shares, at MYR1.25 per share (USD39 cents), making it the largest IPO in Malaysia There are a lot of operations that are conducted by the company as it is spread across 25 countries in more than 160 destinations. Free resources to assist you with your university studies! In the increasing demand of the airline services, there is a tough competition in the airline industry because of the varied numbers of the competitors that are providing the airline services. AirAsia also acquired recognition for improving its supportive and constructive management, as it received rewarded by Center Asia Pacific Aviation (CAPA) as the best airline of the year. 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. Low Cost Model: Low cost operations and fixed costs . Points to consider while selecting a topic for dissertation help. Interested in learning more? Furthermore, Jet Star Airways has comparatively more number of payment options that are available for the convenience of the customers (Finder, 2018). Revenue performance has greatly improved with sales across the group up 57% this week versus the preceding week, supported by the latest Moderate Portion of buyers expend on airline. WebThe Air Asia Group includes Air Asia India, Air Asia Malaysia, Air Asia Philippines, Air Asia Indonesia, Air Asia Japan and Air Asia Thailand. It has a fleet of over 70 aircrafts, which fly to over 120 destinations and operates over 400 flights daily from its hubs situated in Thailand, Malaysia and Indonesia (AirAsia, 2018). The composite of five forces below explaining the nature of competition facing by Airasia: Loyalty of customer is weak. Your topic helped a lot, Your email address will not be published. *You can also browse our support articles here >. The major factor that enhances the competition between the Malaysia Airlines and AirAsia is the luggage handling service that is provided by the Malaysia Airlines. This pricing strategy helps the company to create a base for pricing all the operations that are carried by them. Learn how your comment data is processed. Relative Price. SIA introduced 2 budget airlines; ValuAir and Tiger Airways.. It seems as the destination and customer market share of AirAsia is only limited to the Asian countries. Strict regulation and prioritisation by the UMNO (United Malays National Organisation) authorities to implement uniforms for the hostess. The important thing the buyers look for is the fly to destination which shows the strong bargaining power of buyers. Has Positioned itself as the major LCC in SE Asia. WebAirAsias top competitors are Air India , American Airlines, Emirates Airlines , British Airways , Delta Airlines, Tiger Airways, Silk Air, Jetstar Airways, and many others. The bargaining power of buyers is strong because most of the customers for Airlines Company are individual travellers instead of travel in group. It employs an anchor pricing policy, which establishes a baseline for pricing all AirAsia-operated flights. See insights on AirAsia including office locations, competitors, revenue, financials, executives, subsidiaries and more at Craft. 2.1.2 Pest Analysis PEST analysis is a useful tool for scanning the general environment. Some more of these improvement areas can be found through its SWOT analysis. It provides an understanding of the company's strengths, weaknesses, opportunities, and threats (SWOT) in relation to its competition. The company is constantly using innovative solutions to provide low-cost transportation. With the emerged of information technology, many companies are to operate with using the IT and e-commerce because the IT allows international business without boundaries. According to a report by The New York Times in 2007, it described AirAsia is the low-cost pioneer in the airline industry. Features, such as improved WIFI and other entertainment facilities, can be improved with the help of latest trends and technologies in the IT industry. This LLC trend has saturated the customer market, and it has declined the overall profitability of AirAsia. Knowing the increase of competition in the market, AirAsia applied the adaptation process (Hanan & Freeman, 1984) by expanding its operation to long haul services to various destinations. This marketing mix 7 Ps model is used to explain the marketing strategy of Air Asia. The Air Asia X mainly focuses on the long-haul routes (Yarimoglu, 2014). There is no product differentiation while the only different is the airlines packages offered. AirAsia has won many awards over the years. AirAsia is known for its low fares and no-frills policy. Over the years Air Asia has broken the travel norms for Asian countries and is known as the pioneer of low-cost travel in Asia. Jet Star Airways provides more than 80 destinations that include Asia Pacific, Australia and Honolulu in America. Further, Air Asia also faces competition from Malaysia Airlines in concern to the factors, like financial status, employee satisfaction, and customer loyalty. As there are adequate options available for passengers to choose from, at the similar price as Air Asia, the company needs to focus on the amenities and hospitality services it provides to the customers. Human resource management undergoes significant political pressure as the recruitment process of AirAsia is focussed on the racial determination of the applicants rather than their merits. Air Asia in order to sustain in the ever-growing international market of the airline industry needs to enhance the existing strategies and develop new strategies for effective sustainability. The price offer by an airline company may not be fixed but it will depend on the time differences between the date of booking and flight. It offers scheduled flights and chartered flights for passengers, and also provides air cargo services (AirAsia, 2018). AirAsia participates in a lot of price-based promotions. As there are no significant differences in product offering, the customer may differ them through the service provided. The case involves the It must have a good relation with hotels and tourism companies around Asia. Your email address will not be published. Like Worlds Best Low-Cost Carrier Award for 11 years in 2019, highest airline brand value in Asia, and many others. The company believes that customers are the key to their expansion along with their growth. The companies are not associated with MBA Skool in any way.Edit the brand or add a new one to SWOT Analysis section : Contribute. 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. In Kuala Lumpur. Here are the weaknesses in the Air Asia SWOT Analysis: 1.Not on too many routes as compared to market leaders 2.Stiff competition in its sector. The airline offers400destinations both local and international in25countries across the world. A recipient of numerous awards Air Asia has been consecutively designated as the leading low-cost carrier in the Asian region. Discover AirAsia alternatives or similar companies to benchmark and competitors' market analysis. Rising Labour Costs 3. The company makes use of Yield Management System (YMS), Customer Reservation System (CSR) and Enterprise Resource Planning (ERP) system, which makes it more effective in providing its services, reduces overall cost, and eliminates inefficiency in their business. The increasing fuel cost and the labor cost have amplified the overall expense of AirAsia. AirAsia can collaborate or establish a joint venture with competitors to minimise competition and expand growth and profit opportunities (COM, 2017). Let us start the Air Asia SWOT Analysis: For Air Asia, SWOT analysis can help the brand focus on building upon its strengths and opportunities while addressing its weaknesses as well as threats to improve its market position. This company also operates through affiliated airlines, such as Thai Air Asia, Indonesia Air Asia, Philippines Air Asia. Now, the brand should amplify its marketing and promotional campaigns to attract the Indian price-conscious market. No plagiarism, guaranteed! Competition: The company faces a lot of competition from brands such as Air India, Singapore Airlines, Virgin Airlines etc. AirAsia uses various media platforms for the marketing and promotion of its products and services. The two closest competitors that are considered against AirAsia include Jet Star Airways and Malaysia Airlines (AirAsia, 2018). As the rivalry is strong, Airasia may constant in price reduction to compete with them. The acronym refers to political, economic, social and technological factors. Hence this concludes the Air Asia SWOT analysis. Air Asia is a low-cost airline headquartered in Malaysia. Required fields are marked *. Air India, Emirates, and many other Asian airlines have also started following the low-cost carrier strategy to attract market share. This tells us that AirAsia mainly needs to understand its customers a little better and provide them with the extra services they need. AirAsia can be accounted to lack financial assistance from organisations or sponsors which consequently minimise the investment opportunities for the organisation (Abdullah, 2010). 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. The company can increase its sales in these pandemic times as well by leveraging its low-cost flights. However, the company has employed more than20,000employees to manage its worldwide operations. The opportunities for any brand can include areas of improvement to increase its business. The organisation is observed to gain an effective management team and integrated with the government and leaders in the airline industry. As increasing in the number of airline competitor such as Jet Star and Tiger Airways which are also promote low cost fare may decrease the shifting cost of the customer lead to decrease of Air Asias customer loyalty. In anchor pricing strategy, the company prices its services along with the tickets at a low price. AirAsiastop competitorsareAir India,American Airlines,Emirates Airlines,British Airways,Delta Airlines, Tiger Airways, Silk Air, Jetstar Airways, and many others. Hence the airlines companies have more sales on individuals tickets rather than the groups of customers. Considering the competitive characteristic of Malaysian airline market, AirAsia has comparatively gained significant customer attention from the customers due to its affordable tickets and additional services. February 2, 2019 By Hitesh Bhasin Filed Under: SWOT of Brands. This may makes the industry very competitive. Back in the 1900s Thai National Airlines was the only airline that could fly in the main routes of Bangkok Chiang Mai with non-stop flights. In order to build buzz, cheap flight tickets are given out based on demand in the form of promotional schemes. Air Asia can also implement a cost leadership business strategy. 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. Switching Cost is low. Business is my passion and i have established myself in multiple industries with a focus on sustainable growth. These are people ranging from those who could not afford to fly previously, to corporate business employees whose employers are looking to fly them while cutting costs. Air Asia Competitors There are several brands in the market which are competing for the same set of customers. 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. All work is written to order. AirAsia focuses on providing guests with comfort through competent facilities that meet industry standards, as well as regular flights and secure point-to-point connectivity. 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 is observed to possess a significant reputation among the competitors, customers and the markets of the establishment. Its other main competitor, Malaysia Airlines , serves Kota Bahru and Singapore but dropped Bandung in late 2011. Some factors like increased competitor activity, changing government policies, alternate products or services etc. Hi, I am an MBA and the CEO of Marketing91. And thus Indians meet their target requirements perfectly, Government charges and costs that are not in the control of the company may lead to severe losses in the future, With dynamic management and other operational costs, it becomes difficult to manage low-cost flights, AirAsia has 62.K followers on Instagram, 93.5K followers on Twitter, and 12M likes on Facebook, They post regularly on their pages, at least a couple of times a week, and maintain this consistency, They post a variety of content that aims at staying relevant in the minds of the customers, Their main strategy seems to be posting about exotic travel destinations with Call-to-Action, encouraging customers to avail their services in exploring these locations, The company also posts environmentally friendly content to echo the ethos of its brand. AirAsia launched AirAsia Berhad in 2001, which provides air transportation services, particularly in Malaysia. 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. Market segmentation is the concept where the potential target customers for any organisation are divided into groups or segments based on various characteristics. Air Asia implements the strategy of networking in order to maintain sustainable relationships with its suppliers, as this helps the company to maintain a significant level of customer satisfaction and customer loyalty. The company confronts various complaints and issues from the customers who are numerous to resolve instantly and result in customer dissatisfaction. The biggest competitors of AirAsia though, are Malaysian Airlines and JetStar Airways. Aircraft supplier could be the one who gaining most bargaining power as there are only two in operation, Boeing or Airbus. Furthermore. 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. Moreover, it also provides numerous opportunities to travel and explore overseas, developing skills for new cultures. Luggage handling is the major factor that is considered by the customer as well as the airlines industries and in context to this fact, Malaysia Airlines provides average 15 kg of luggage, and it does not include any additional charges in case there is few more luggage than the normal capacity provided by the airlines. Heres the swot analysis of AirAsia as follows; AirAsia has a large fleet size comprising300aircraft. The weaknesses of a brand are certain aspects of its business which are it can improve to increase its position further. Kamarudin Meranun and Tony Fernandes bought the airline on Sep 08, 2001. Webprice wars with competitors, taxes and duty imposed on the firms products. Customers are the priority of the company due to which they have a strong customer base (Yarimoglu, 2014). The company maintains its logo by providing high-quality exterior services of the aircraft along with the interior seats and the uniforms. Although the two major suppliers of aeroplane structures are Airbus and Boeing, the suppliers of other facilities required in an aeroplane, for hospitality services including food and merchandise, are available in adequate amount in the market. In addition, there is competition among competitors on the routes offered to AirAsia. Porter five forces analysis of Airasia will help in understanding and providing solution to nature & level of competition, and Their target audience is- travelers looking for inexpensive flights. Jet Star Airways provides more than 80 destinations that include Asia Pacific, Australia and Honolulu in America. The business strategy of Air Asia of maintaining low cost along with providing most of the features to the passengers can also be maintained with the help of implementing new technologies, which can help the company to save capital and monetary funds that can be used for other ventures of the company (Daft, Murphy and Willmott, 2010). This strategy encourages the customers to choose Air Asia over any other airline company. Tony Fernandes was recognised as for his outstanding work in AirAsia, and he was awarded by the International Herald Tribute Award and he also became the Malaysian CEO of the year in 2003 (Roy, 2014). Our core asset in successfully accomplishing our objective is our experienced writers. This article has been researched & authored by the Content & Research Team. Management of costs: Air Asia is finding it immensely difficult to manage the fluctuations in costs of The cost leadership business strategy helps the company to maintain service quality, hospitality, and in-flight services and maintenance cost, within the specified budget as the company has to maintain a low-cost price for air tickets. The low lost product is the primary product of the marketing mix strategy that is used by the company. UNICEF collaborated with AirAsia to raise $ 128 million for the people who were affected by the earthquake in Haiti. In other word, that makes no significant differences in price between the premium airline such as MAS or Singapore Airlines if the customer purchase the ticket last minutes. Your email address will not be published. Marketing mix 7 Ps and SWOT analysis can improve the brand value of AirAsia and identify the strengths and weaknesses of AirAsia along with determining the future opportunities. The company makes use of innovative solutions in order to provide low-cost aviation. As there are approximately 59 low cost airline operating in the industry,it is always easily for the customer to look for alternative. 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. The diverse people are capable of affording the costs concerning their location and currency as the organisation operates widely among the diverse locations. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); This site uses Akismet to reduce spam. Tiger Airways. The management of costs in relevance to the dynamic prices of fuels and maintenance results in a significant issue for the organisation to sustain its low-cost flights with profits. He has been a guest speaker at prominent colleges in India including IIMs[Read full bio], Your email address will not be published. The Essay Writing ExpertsUK Essay Experts. The importance of pricing strategy is to know the strategies that are used in the market and to analyse the rivals that are present for Air Asia n the airline industry (Shaw, 2016). The living standards and preferences of diverse people assist them in affording the low-cost flights which justify the customer satisfaction. Another strategy that the company will implement in the future is networking. Due to few suppliers in market, this has increasing the bargaining power of supplier. Get best assignment helper in Malaysia as offered by Student Life Saviour to ensure best grades in all Malaysian assignments. Below are the Strengths in the SWOT Analysis of Air Asia : 1. WebCompare AirAsia against competitors. Do essay writing needs professional writers? Hence, customer may access to the current airlines information which are available at all time, this has reduced the power of negotiation for airlines and producing a strong customers bargaining power. Concentration of Buyers power in many hands. In contrast to this, AirAsia is offering more than 130 destinations that include the Middle East, Honolulu and the Asia Pacific. Airlines allowed to increase ight operations, with strict Maximising revenue in a reduced capacity/ competition 2020 environment 14 74,642 mil 45-60% of 2019 85% of 2019 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. Technology is a major component of organisational structure which is completely analysed on the basis of IT framework of Airasia in particular region. However, there is also a barrier to the establishment of the new entrant in the airlines, which is the high start-up cost that is required for the airline services. High Switching Cost. Thai AirAsia faces new competitive threats in Thai Lion and Thai VietJet. Multiple ticket distribution networks exist, including internet booking, exclusive reservations, sales offices, and company-approved agents. AirAsia X has amplified its profit-making routes to multiple countries such as Australia, France, Iran, South Korea and New Zealand. AirAsia has 5 employees at their 1 location and RM1.84 b in annual revenue in FY 2021. 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. Rise of Other LCCs in Market. This model is widely implemented by various organisations for the development of their strategies in the industry. There are several companies associated with AirAsia including AirAsia X, Tun Hotel, Tune Monkey, AirAsia Berhad, Thai AirAsia Co. Ltd., AirAsia Japan Co., Ltd., PT Indonesia AirAsia (India) Limited. The Threat of New Entrants In the business of airlines, the loyalty of the customers is found to be weak. In order to establish a new airlines company, high amount of capital along with risk-bearing capabilities and monetary funds to cope up with the challenges faced while sustaining in the airline industryare required. Performance of rivalry. The threats for any business can be factors which can negatively impact its business. The 7 Ps of the model are price, product, promotion, place, people, process, and physical environment (Fine, 2017). 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. Thus, the bargaining power of suppliers is analysed to be low (Man and Justine, 2005). Some important factors in a brand's strengths include its financial position, experienced workforce, product uniqueness & intangible assets like brand value. The Marketing mix refers to the set of actions and tactics which a company uses to promote its brand. Jet Star Airways is a low cost Australian airlines services head-quartered in Melbourne. The branding of the logo of Air Asia is essential for them. They hence practice geographic segmentation by focusing their services primarily in Asia, Demographic segmentation- Being a low-cost airline, they cater to people in the low to medium income group, Psychographic segmentation- Their main customer is the cost-conscious traveler, AirAsia provides service packages to its customers at a very reasonable charge that is affordable to the customers in comparison to JetStar Airlines, JetStar is providing more payment options or gateways to its customers, AirAsia provides services to 130 destinations as compared to JetStar which provides services only to 80 destinations, Malaysia Airlines generates 113% of AirAsias revenue, Malaysia Airlines also has fewer employees, at 7,159 compared to AirAsias 20,000, AirAsia is the low-cost airline leader in the Asian market, The company has subsidiaries in Indonesia, Thailand, the Philippines, and Japan, It boasts a fleet of nearly 300 aircrafts, AirAsias positioning is steady and consistent in being a low-cost airline. 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