The Sky’s the Limit
AirAsia The Sky’s the Limit
Question 1
Air Asia was established in 2001 by CEO Tony Fernandes and his three partners. It is an Asia’s leading low fare airline. By using a strong slogan “Now Everyone Can Fly” AirAsia has successful created its image in passengers’ mind.
Gerry, J., et al. (1993, pg 148), SWOT analysis is a valuable approach for AirAsia to review its strengths, weaknesses, opportunities and threats, aiming to identify the current strategy of AirAsia’s organization and hence target for developing new strategies in the aviation industry.
Strengths
Low-cost carriers per ASK First low-cost airline introduces “no-frills” airline concept Trademark Minimal staff available Quick aircraft turnaround of 25 minutes Weaknesses Limited resource by lower cost Minimal technical staff worker Low technological equipment Lack of marketing expertise Consumer’s complaint on delay schedule
Opportunities Great potential market Diversification of market segment Regional routes Low fares as point to point network New routes to never-served destination
Threats High competition Increased in fuel price Network security Government policy
According to Philip, K., et al. (1988, pg 70) “a business unit must manage key macro-environment forces and significant micro-environment factors that affects its ability to earn profits.”
Environmental scanning – figure 1
Micro-environment
Porter’s five forces are employed to analyse the microenvironment of LCCs industry in Asia. The threat of new entry is low due to high capital investment and government barrier for service approval. Yet the deregulation of Asia Pacific Aviation (APA) industry has allowed more competitors entering the market. Many full service airlines launch their LCCs version, for instance, Singapore airlines and Qantas launched Tiger and Jetstar Airways. The threat of substitution is low; there are several substitutions such as
Question 1
Air Asia was established in 2001 by CEO Tony Fernandes and his three partners. It is an Asia’s leading low fare airline. By using a strong slogan “Now Everyone Can Fly” AirAsia has successful created its image in passengers’ mind.
Gerry, J., et al. (1993, pg 148), SWOT analysis is a valuable approach for AirAsia to review its strengths, weaknesses, opportunities and threats, aiming to identify the current strategy of AirAsia’s organization and hence target for developing new strategies in the aviation industry.
Strengths
Low-cost carriers per ASK First low-cost airline introduces “no-frills” airline concept Trademark Minimal staff available Quick aircraft turnaround of 25 minutes Weaknesses Limited resource by lower cost Minimal technical staff worker Low technological equipment Lack of marketing expertise Consumer’s complaint on delay schedule
Opportunities Great potential market Diversification of market segment Regional routes Low fares as point to point network New routes to never-served destination
Threats High competition Increased in fuel price Network security Government policy
According to Philip, K., et al. (1988, pg 70) “a business unit must manage key macro-environment forces and significant micro-environment factors that affects its ability to earn profits.”
Environmental scanning – figure 1
Micro-environment
Porter’s five forces are employed to analyse the microenvironment of LCCs industry in Asia. The threat of new entry is low due to high capital investment and government barrier for service approval. Yet the deregulation of Asia Pacific Aviation (APA) industry has allowed more competitors entering the market. Many full service airlines launch their LCCs version, for instance, Singapore airlines and Qantas launched Tiger and Jetstar Airways. The threat of substitution is low; there are several substitutions such as
References: Gerry, J., & Kevan, S. (1993). Exploring corporate strategy. 3rd ed. Cambridge: Prentice Hall International (UK) Ltd. Loizos, H., Jochen, W., Nitin, P Philip, K., & Kevin, L.K, (1988), Marketing Management: Global 14 edn. England: Pearson Education Limited. R. Duane, I., Robert E. H., & Michael A. H. (2007). The management of strategy (Concepts and cases). 8th ed. USA: South-Western Cengage Learning. Sen,., Jayne, Ng Miles, Raymond (2003). Organizational Strategy, Structure, and Process. Stanford: Stanford University Website Center for Asia Pacific Aviation. (2011). Airlines increase capacity by 10% growth for LCCs. Retrieved from http://www.centreforaviation.com/new/. Google The wall street journal. (26 May 2011). AirAsia’s growth plan. Retrieved from http://online.wsj.com/article/SB10001424052702303654804576344974079236708.html. AirAsia