Porter's 5 Forces Analysis on Air Asia
Porter's 5 forces analysis on Air Asia
1. Threat of new Entrants The extent of barriers to entry depends on the strength of:
Customer has little brand loyalty. If consumers of Air asia do not have brand loyalty, then the strength of the threat of new entrants is very high. The high numbers of competitors in the industry also decrease Air asia’s customer loyalty. Most of the travelers prefer low cost. New competitors which want to come in the industry have to spend little to compete with Air asia. High capital requirement. The industry of airline needs large volume of start-up capital. The cost of setting up of offices, buying or leasing aircraft, hiring pilots and other staffs like air stewardess and etc incur a high start-up cost. Thus, the threat is low for Air asia. Different product offered. Air asia offers different product compared to other competitors in Asia like Bangkok Airways, Tiger Airways, and Air Philippines. Other than the passenger sales ticket, Air asia also include holiday packages which is affordable around Asia. Air asia has good connection with hotels and tourism companies around Asia, which it is hard for new competitors to compete. Low switching costs. Customers do not need to spend more on switching to another airline. The price would not be very significant in differences, which it depends on the availability of competitor’s services and suitability of the flight time that prompts them to switch. Moderate access to distribution channel. Airasia is the first airline company to enable customer book and purchase air tickets online in Malaysia. This makes its website www.airasia.com very famous among frequent travelers. Although new competitors can create a website for their company, it is quite difficult to compete with Airasia’s website. The website is known of its simplicity and user friendly. Thus, new competitors are difficult to make known their websites to travelers. Strict government regulations.
1. Threat of new Entrants The extent of barriers to entry depends on the strength of:
Customer has little brand loyalty. If consumers of Air asia do not have brand loyalty, then the strength of the threat of new entrants is very high. The high numbers of competitors in the industry also decrease Air asia’s customer loyalty. Most of the travelers prefer low cost. New competitors which want to come in the industry have to spend little to compete with Air asia. High capital requirement. The industry of airline needs large volume of start-up capital. The cost of setting up of offices, buying or leasing aircraft, hiring pilots and other staffs like air stewardess and etc incur a high start-up cost. Thus, the threat is low for Air asia. Different product offered. Air asia offers different product compared to other competitors in Asia like Bangkok Airways, Tiger Airways, and Air Philippines. Other than the passenger sales ticket, Air asia also include holiday packages which is affordable around Asia. Air asia has good connection with hotels and tourism companies around Asia, which it is hard for new competitors to compete. Low switching costs. Customers do not need to spend more on switching to another airline. The price would not be very significant in differences, which it depends on the availability of competitor’s services and suitability of the flight time that prompts them to switch. Moderate access to distribution channel. Airasia is the first airline company to enable customer book and purchase air tickets online in Malaysia. This makes its website www.airasia.com very famous among frequent travelers. Although new competitors can create a website for their company, it is quite difficult to compete with Airasia’s website. The website is known of its simplicity and user friendly. Thus, new competitors are difficult to make known their websites to travelers. Strict government regulations.