INTRODUCTION COMPANY BACKGROUND AIR ASIA AIRLINES COMPANY Air Asia company was established in 1993 by the Malaysian Government
AIR ASIA AIRLINES COMPANY
Air Asia company was established in 1993 by the Malaysian Government. It is the second airliner company which was established after the major national air company Malaysian Airlines (MAS). It’s core business is Logistic and Transportation Airlines Industry. AirAsia started to commenced operations after three years which were on 18th of November 1996. Due to certain circumstances and situation, Air Asia failed to generate profit and to achieve its vision and mission which results in debt about USD $ 37 million in 2001. Dato’ Sri Dr Tony Fernandes and his partners Dato’ Pahmin Rejab, Dato’ Kamarudin Meranun and Dato’ Aziz Bakar purchased the airliner company from Malaysian owner of HICOM Holdings Berhad which also known as DRB – HICOM Berhad for RM 1 (USD 0.25 cents) in 2001. Moreover, they also agreed to bear all the debts owed by the company.
After the acquisition, they started to implement strategies and innovation which claimed them as Malaysian’s low cost airline and also Asia’s largest low fare airline. Air Asia moved their operations and strategies towards their slogan “Now Everyone Can Fly”, by providing airline service which are cheaper and more affordable to customers. Air Asia’s first and main base was the Low Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport which follows by Kota Kinabalu International Airport, Senai International Airport and Penang International Airport. The LCCT considered being the home of Air Asia, opened in 23rd March 2006 was the budget terminal in KLIA and it also estimated to be carried about 10 million passengers per year.
According to the recent research and survey, it is summarized that after 10 years of business Air Asia has around 100 air planes, operates more than 3,500 flights a week, and flies more than 60 destinations from 23 countries.
COMPANY’S VISION, MISSION, VALUES AND STRATEGIES
To be the largest low cost airlines in Asia and serving with 3 billion peoples who currently underserved with poor connectivity and high fares.
To be the best company to work for whereby employees as treated as part of big family.
Create a globally recognized ASEAN brand.
To attain the lowest cost so that everyone can fly with Air Asia.
Maintain the highest quality product, embracing technology to reduce cost and enhance service levels.
Air Asia consider a safe airline is a happy airline, therefore customers’ safety becomes the main concern and Air Asia perform their jobs with care.
Air Asia take pleasure in caring for their customers’ in such a way that customers’ feel at home.
Air Asia concentrate on being passionate in going extra mile to achieve the target and a purpose because they believe in slogan ‘passionate people can change the world’.
Full of integrity
Air Asia believe that everything worth doing is worth doing right, therefore it’s all about doing the right things every time.
Air Asia believe in hardworking and it means as a team towards a common goal.
Air Asia confidence that fun means celebration of life therefore they enjoy sharing ideas and solution to make things better after all fun is meant to be shared.
Air Asia achieve their vision and mission, and also create company values by implementing and following certain strategies, which can be classified as below: –
Partnering with the world’s most renowned maintenance provider and complying with the world airlines operations.
High Aircraft Utilization
Implementing the regions fastest turnaround time at only 25 minutes, assuring lower costs and higher productivity.
Low Fare, No Frills
Providing guests with the choice of customizing services without compromising on quality and services.
Making sure that processes are simple as possible.
Lean Distribution System
Offering a wide and innovation range of distribution channels to make booking and traveling easier.
Point to Point Network
Applying the point to point keep operation simple and lower cost.
Based on the vision, mission and the strategies Air Asia largely played major roles in determining quality and productivity, input is transformed into good and service. Apart of that aligned with its mission statement, Air Asia business strategy is centered on cost leadership. However, its business strategy targets specific markets such as price sensitive customers including first time fliers needing short haul flights. Air Asia business strategies can be categorized into focused cost leadership, at same time build and sustain its competitive advantage by providing service at a price that is simply lower than competitor price. The operations effectiveness and outstanding efficiency are two main characteristic of low cost business in Air Asia. In low cost carrier industry cost is the competitive priority and its determine the market position therefore we can summarize that Air Asia do implement strategies which been fit to their vision and mission at the same time the strategies also help to create history in their airlines industry among market place.
2.0 ORGANIZATIONAL STRUCTURE
2.1 BOARD OF DIRECTORS
Tan Sri Dr. Tony Fernandez – Non-Independent Non-Executive Director of the Co Group Chief Executive Officer
Datuk Kamarudin Meranun – Non-Independent Non-Executive Director Group Chief Executive Officer
Tan Sri Rafidah – Independent Non-Executive Director and Chairman of the Board
Tan Sri Asmat- Independent Non-Executive Director of the Company
Lim Kian Onn – Non-Independent Non-Executive Director
Dato Fam Lee Ee- Non-Independent Non- Executive Director of the Company
Dato’ Yusli bin Mohammad Yusof – Independent Non-Executive Director of the Company
2.2 TOP MANAGEMENT TEAM
Figure 1 Air Asia Divisional Chart
Based on the Top Management Team chart, we can summarize that, Air Asia consist of 12 departments. Each and every department will be under of the head of the department and the departments are categorized into countries, quality and safety, information technology. Engineering, communication, commercial, operation, bus dev, finance and last but not least secretary.
Organizational structure actually designed to perform with the division of labor and for coordinates of task accordingly. There are few types of organizational structure which can be carried out by a company, the organizational structure implemented and followed by Air Asia is Functional Structure. Based on that, Functional Structure is an organizational structure which grouped together jobs or tasks according to their functional specialization. Moreover, this structure actually helps the organization to strengthen Air Asia’s vision and flexibility. Grouping members by specialization ensures a dependable level of departmental competence and it also ensures certain criteria is taken care by the experts. Other than that, it provides stability and efficiency in the job and responsibility structure and by segregating the department with a head, it tends to eliminate duplication of task and can reduce the cost and management problems. Furthermore, it also helps to improve the skills and enhance the future development of the organization.
From the discussion, we can summarize that, the organizational structure implemented by Air Asia is relevant with current business operation because Air Asia is a large and complex organization therefore they need a perfect organizational structure to avoid any complication in the business operation. Therefore, the organizational structure actually helps Air Asia to operate as per their vision and mission, achieve their targeted goals and also helps to keep competitive advantages over competitors.
3.0 EXTERNAL ENVIRONMENT
3.1 STEEP ANALYSIS
STEEP analysis is a tool which helps to understand the impact which caused by the external environmental forces that influences the business operation of an organization. The constant changes in external environment become one of the major influence in organization’s growth and development, by executing steep the influential factors can be identified, (Babette,Fleisher , 2012).
Air Asia owned objectives of low cost and high frequency business model which makes Air Asia as strong competitor in market. Steep analysis can help to analysis the external environment factors, which can be classified as below: –
Air Asia organization engaged in an immensely regulated and politic environment of the ASEAN region. Aviation industry across the Asian continent was governed by strict rules and regulations which provide priority for the passengers’ safety and also enforce least restrictions on migration licenses and other legal formalities. Therefore, attractive government support and encouragement for national aviation passenger airlines is essential for the growth of low cost airlines in the region of Asian.
Based on the economic analysis for the Aviation Industry across the ASEAN, the economic growth rate for the airline industry is increasing. Moreover, regionalized regional urbanization experience in the Asian continent led to the creation of new urban centers throughout the region. Therefore, it is anticipating that there will be an increase in the regional travel destinations and also it is expected to attract more businesses for Aviation competitors. However, rising in fuel prices and oil price volatility are the factors which give negative impact on the growth prospects of the Aviation Industry. Furthermore, volatility such as the loss of the recent Airline aircraft also become one of the factors which affects severe consumer sentiment, which affecting the overall demand for Aviation services.
As for the social analysis, increased disposable income in the hands of Asian Consumers is a positive overview for the growth of the Aviation business in the Asian continent. Besides, the Asian continent is becoming increasingly popular in the world for world class medical institutions and educational institutions and Asian region also gains more attention from its western partners for educational and medical tourism, which cause a positive reflection on social analysis for the Aviation Industry in Asia. Other than that, the important statement which highlights change in consumers have become increasingly demanding. Its resulted in various available options for consumers in the flight industry.
The Aviation industry should more focus on investing in the state of the art technology equipment to provide better flight experience for the consumers as well as to improve in safety management. Besides that, by adapting to the latest technology equipment and communication facilities will be added into advantages of airline’s business in terms of efficiency operation.
Concerning on environmental analysis, technology research which are related to the manufacture should be carried out by the Aviation Industry for more efficient fuel aircraft. These actions is to minimize the non – renewable fuel resources which will eventually benefits the airlines such as in cost control and also help to reduce carbon footprint on the planet. Actually the Aviation industry still has plenty of space to control the sound pollution and carbon emissions issues for environmental purposes.
Last but not the least, the legal environment for the Aviation Industry has been increasingly difficult and challenging in recent years and the number of lawsuits has been increased from the stakeholders on functioning airlines in Asia. Moreover, the regulations on passenger safety issues and related legal studies have become more rigid.
3.2 PORTER’S FIVE FORCES MODEL
Porters’ Five Forces model actually helps to analyze and experiment the structured and systematic analysis of market structure and competitive in market. The competitive analysis usually implemented by most of the organization to enhance their strategies in the competitive market, (Flouris, Oswald, 2006). The composition of porters five forces models for Air Asia can be classified as below: –
46672513335Threat of new Entrants
00Threat of new Entrants
In this airline business, customer loyalty is uncertain this is mainly because of the increase in the competitive in the market with airlines that also promote low fares which can reduce the cost of customer and switchover towards the decline in loyalty of Air Asia customers. Moreover, as the switching cost is low compared to competitor, customers do not have to spend more to shift to another airline. Even though, customer may not be loyal to one Airline however Air Asia have very good brand awareness, leading role in the market and favorable brand awareness has made Air Asia strong competitor. Other than that, the startup cost for airline industry is high which cause barrier for new entry due to high in capital requirement though. Besides, it is also hard for a new entrance apply for licensing and permit for operation airline company due to government rules and regulations have been tighten and protected. Based on the discussion, we can conclude that the threat of new entrants is low.
4857758890Rivalry among Existing Competitors
00Rivalry among Existing Competitors
There are high numbers of existing competitors in the industry which gives competition for Air Asia. Based on the statement, it is proven that Air Asia facing challenges from 59 low fares airline such as Tiger Airways, Air Arabia, Jet Star Airways and extra, however they may be competing in term of their route offering in which cases Air Asia does not fly. However, the main competitors of Air Asia can be identified as MAS and Firefly but it is agreed between Air Asia and MAS that, MAS will be more focusing on the strength and Firefly will be taken care of full abroad airline which summarize that there is no any direct competition. Other than that, Air Asia also engaged in the travelling business which might cause few competitions. Therefore, we can conclude that the rivalry among existing competitors is medium – high.
485775447675Threat of Substitutes
00Threat of Substitutes
As there are other alternative of airlines, based on the relative price there is possibilities
of customer to choose premium airline which might offer them more comfortable facility as the price offered by Air Asia is not fixed and it depends on the time so if the tickets were purchased at last minutes it will end up with high price. Other than that, when we consider alternatives or substitute methods, we can take into account of the public transport such as train, busses and cruise. However, the options are not available for every destination due to geographical factor and telecommunication and video conferencing can also be considered as the substitute. Based on that, we can summarize that the threat of substitutes is medium.
4476758890Bargaining Power of Supplier
00Bargaining Power of Supplier
In airline industry, there are few suppliers to be considered and the aircraft suppliers are the one who have strong bargaining power as there are only two suppliers in operation which are Boeing and Airbus. As for the other products suppliers such as for fuel, merchandise supplier, and food supplier is depend on market condition. Besides, nowadays most Air Asia aircraft use the Airbus model using the previous Boeing model and Air Asia then will rent it and replace it with Airbus mode however if Air Asia switch back to Boeing again, the cost of training workers in handling will be high. In addition, Airbus uses state of the art technology in designing aircraft, hence the high power provider as Air Asia relies on Airbus engineers to conduct aircraft maintenance and also for consultation. Whereas Airbus is a UK based airline therefore there are high chances of customers coming from all over the world. Based on that, Air Asia may only be small part of customers, which might be accounted for 2% of the entire Airbus order which cause of strong bargaining power over Air Asia. Therefore, as per discussion we can come up with result that the bargaining power of supplier is high.
4667258890Bargaining Power of Customer
00Bargaining Power of Customer
As for the bargaining power of customer, we can consider the similarity of products offered. There is no differentiating product while the only one is the airline package offered. Therefore, a small percentage of customers who are not interested in participating in travel agencies can look up for Air Asia which provides other services such as vacation packages including flight tickets, accommodation, flight airline guides and travel guides. The most important consideration is that consumers are looking to fly to a destination which indicates customers’ power is strong. Other than that, the bargaining power of the customer is strong when the carrier exchange rates are low. This is due to other competitors whose prices are offered is not much more differences therefore customers can choose the airline which is the best facility. Moreover, some of the income earned by individuals is a factor because when its share is high, more customers will find cheaper prices hence the customers bargaining power will be strong. Besides that, nowadays the customer has access to market information with the help of emergence of information technology therefore customers can access the current available airline information at all times, which eventually will reduce the negotiating power of the airline and resulted in strong customer bargaining power. As the most customers for airline are individual travelers compare to travelling within the group, which results in high sales on individual tickets rather than group customers which puts the concentration of customers’ power in many hands. Finally, we can come into conclusion that bargaining power of customer is high.
4.0 SWOT ANALYSIS
Strength- Advantages of organization
Weakness- Areas which organization need to be improved
Opportunities- External factors which contribute to organization
Threats- Problems or risks caused by external factors
SWOT analysis helps to understand the strategic capabilities of an organization and also the opportunities and threats that surrounded the business before evaluating strategic choices to counter market competition. The benefits of SWOT analysis are; it helps to concentrate on the important and necessary factors which affects the business therefore we will be able to understand the business better. Other than that, it also addresses weakness, threats and capitalize opportunities so that we can take advantages on organizational strengths to achieve business goals, vision and missions, (Sarsby, 2016). Organization like Air Asia can identify their capabilities and strengths to formulate their business strategies. The following SWOT analysis can be standardized for the Air Asia.
Air Asia has a strong management team with strong ties with industry leaders and airlines government. This is partly attributed to the background of various executive management teams comprising industry experts and government officials. Air Asia able to seizure large markets in Thailand due to Shin Corp holds 50% stake in Thai Air Asia. Moreover, with a strong working relationship with Airbus, they managed to get a large discount on the purchase of more efficient aircraft compared to Boeing 737 aircraft which are used by many other airlines.
Besides that, the management team also intensely good in the formulation of strategy and implementation. The strategies they have formulated at the outset are the blend of smart strategies proven by other low cost airlines to US and Europe. They have innovative and creative mind to implement and execute the strategies in excellent way.
Other than that, it is proven that Air Asia’s brand is well establish in Asia Pacific and they are really well adverse in brand advertising. In addition to regular print advertising and promotion, Air Asia top management also leverages promotions and advertisements through news with the help of social media, and shares the latest updates on Air Asia and the aviation industry. Besides that, their partnership with other organization such as hotels, car rental forms, hospitals and Citibank have created a unique image and status among tourists. Air Asia’s local presence in several countries like Indonesia (Indonesia Air Asia) and Thailand (Thai Air Asia) have successfully upgraded and explored the brands to become one of the regional brands outside Malaysia. In addition, relation with Manchester United and AT ; T Williams Formula One team have enhanced their brand as a wider direction beyond this territory.
Air Asia is considered as low cost leader in Asia, with the help from Air Asia Academy, it has successfully established a “low cost carrier mentality” among their workforce. Labor is very flexible and committed and also highly critical in making Air Asia as a low cost company in Asia.
Lastly, the excellent use of IT actually contributes to their personal promotional activities such as email notes and desktop widgets which developed together with Microsoft for new promotions, trademark training with more than 3 million hits per month as well as low cost by allowing direct ticket purchases by users which help to save on airline agent fees.
As for the weakness, Air Asia has no own maintenance, repair and
overhaul (MRO) facilities. At first this might be a good idea or strategy when they commence the business with only Malaysia as a hub and some aircraft to maintain however now with additional hubs and more than 100 aircraft and expected more 100 aircraft in coming years, it is important for Air Asia to ensure to have proper maintenance and sustainable aircraft which will enable them to keep the overall costs low. Therefore, it is a competitive disadvantage for not having an own MRO facility.
Other than that, Air Asia do receive a lot of complains on their services such as flight delays, being charges for unreasonable thigs, unable to change flight or get refund if customers not able to make it. Good customer services are very important to maintain or to further enhance in competitive market, as per the sayings ‘customers always right’, it is important to maintain good relation towards customers and also to get positive feedbacks.
It is expected that in few months the oil prices will increase, which
might seem like a threat to Air Asia at first glance however Air Asia will be in the safest side as the cost will still be the lowest when compare to all other regional airlines. Based on that, Air Asia actually poses an excellent chance in capturing some of its existing full service customers and other low cost carrier customers. However, there are also chances of some reduction in overall travel figures especially by casual or budget travelers.
Secondly, the “ASEAN Open Skies” signed agreement allows unlimited flights among the ASEAN regional airlines which begins in December 2008. Based on it, there will definitely be an increase in the competition of regional airlines. However, as Air Asia the first mover, it has upper hand of the management, strategy formulation, strategy execution, strong brand name and also low cost culture among the workforce which sees the agreement as more of an opportunity.
Besides, Air Asia can also seize an opportunity to partner up with other low cost carriers such as Virgin to leverage the existing strengths and also competitive advantages like brand name and awareness, landing rights and landing slots.
As per few research, it is estimated that middle class population of Asian will be reaching nearly few thousand million by 2020 which creates a huge market and opportunity for Air Asia to embrace its market advantage.
Where there are opportunities, there also will be threats, Air Asia will be facing certain threats which they have to take into consideration. Air Asia trying to keep their costs as low as possible however certain rates in airlines such as airport departures, security charges and also landing charges are beyond the control of airline operators which will be a huge threat for Air Asia.
Furthermore, as per analysis Air Asia’s profit margin is quite high which may attract many competitors, results in most of full service carriers will try to plan and create low cost subsidiaries to compete directly with Air Asia.
Other than that, there also a threat of customers’ perception on Air Asia. Based on that the perception of customers will be that budget airlines can jeopardize security and safety to keep costs as low as they promised.
We can summarize from SWOT analysis that the threats, opportunities and challenges identified will be useful for Air Asia to maintain and also to enhance the competitive advantage in the market. Air Asia also can use the strategic capabilities disclosed in the analysis for customers’ relation purpose such as maintaining good communication with the targeted customer and also to reinforce the brand awareness of the organization.
5.0 RACE MODEL
RACE model analysis can be defined or describe as communication planning process which involves four major steps which are useful for brands in managing their customers effectively throughout the lifecycle of customers, (David, 2009). The list four appropriate steps to maintain customers’ engagement over the brands lifespan can be identified as below: –
Reach – Air Asia offers a wide range of distribution channels and innovative point of contact to reach its customers. Air Asia ticket booking process is kept very easy and user friendly and also provides choices of ticketless service as low cost alternative to its customers.
Act – Air Asia manage to achieve audience’s attention through interactive web sites and leading social media platforms which helps to persuade its site visitors to book tickets for their travelling. Moreover, Air Asia encourages their customers to take action and make purchasing decisions by the presence of Air Asia at the leading e-ticketing websites.
Convert – Conversion of purchase decisions to sales, the main e-commerce travel website is a major selling point for the Air Asia brand. In addition, air tickets are also offered at the counter at all the leading Asian Airports.
Engage – The main two key components which developed long term relationships with customers are the timely service and also pocket friendly fares. Air Asia also involved in few public relations management programs for brand building, customer engagement purposes and engages in social events and brand promotion activities.
The RACE model discuss on the overall targeted customers’ engagement of Air Asia.
6.0 TOWS ANALYSIS
TOWS analysis emphasizes more to the external environment. The purpose of this analysis is to analysis the factors which affects the organizations success. It will help to build a strategy, smoothen the process, enhance marketing campaign and also to improve the skills and experience. Air Asia can consider the following analysis to achieve its goals and objectives, (Sarsby, 2016).
Unavoidable Costs – Certain claims and costs such as landing charges, security charges and departure charges are not under control of Air Asia therefore it can be considered as threat to Air Asia due to most solid reason which is to maintain their costs as low as possible.
New Entrants – Air Asia’s success in the market has attracted many competitors to invest in airline business and there are also large number of airlines plan to create a low cost subsidiary to compete with Air Asia.
Terrorism – Violence affects tourism and confidence in airlines, even is it may occur in various ways of terrorism either in certain countries or it may occur in the aircraft itself. However, in the event of terrorism in the area where Air Asia operates, it stops their flights to ensure the safety of passengers and aircraft which reduces the customers confident and increase their fear.
Negative Perception – Customers usually will have different perception towards the airline and some might have a negative perception on low cost airlines, that Air Asia might compromise the safety to keep the cost low which eventually will become one of the threat.
Oil Price – Air Asia has the advantage as a low cost airline compare to other organization which increase of oil price is a good opportunity to capture some full service customers and other low cost carriers.
Flight Capacity – Air Asia actually enjoys a strong presence in Asian region compared to other low cost airlines. They operate from three countries of Malaysia, Thailand and Indonesia and they do cover several destinations in China, India, Sri Lanka and extra however there are opportunities for Air Asia to cover other part of the world. Based on that, Air Asia alone might not have what it takes but they can have a partnership which will provide a good opportunity to grow its business in Asia and elsewhere around the world.
Potential Future – Air Asia should continue its limited growth strategies such as market penetration and market development in the near future to remain competitive in the LCC market.
Active Events – Air Asia can seize the opportunity to improve and also to expand brand awareness by sponsoring worldwide events such as World Cup 2018.
Maintenance – The main and most probably one weakness of Air Asia would be not to have its own maintenance, repair and overhaul facilities. Air Asia have to ensure proper and continuous maintenance of the aircraft by maintaining its overall costs low.
One Aircraft Type – Air Asia operates one aircraft type, airbus model which helps offers economies in purchasing, pilot training, use of aircraft and repair and maintenance of it.
Direct Sales – Air Asia is involved in direct sales through its website and call centers which help to avoid paying a commission to the middleman. Direct selling has reduced Air Asia’s dependence on external sources for its outcome. Direct contact with customers actually provides an opportunity to ascertain their expected date and resolve their problems in a timely manner.
Strong Management Team – Air Asia actually have very powerful management team which comprising industry experts and ex-government officials therefore it helps Air Asia to embark on and capture significant market shares.
Well Established Brand – Air Asia have well established brand awareness due to partnership with other service providers, local presence in other countries and their links with famous sports have created a very unique and undeniable awareness among customers.
Based on the strategic tools (SWOT, RACE, TOWS) analysis, we can come up with few strategies which can be implemented by the organization to emphasis on both external and internal factors which affects or reduce business efficiency. Moreover, we also able to analysis to strengthen the organizations’ competitive position and future progress. The recommendations or proposal for Air Asia to step into a faster pace than higher competitiveness in the aviation industry and to sustain its success and to achieve its vision and mission in long run of progress can be discussed as below: –
Market penetration and market development strategies need less money than diversity strategies, market penetration and development strategies only grow existing resources to gain more profit or larger market share which usually the budget for this strategy is mostly derived from marketing budgets. Currently LCC market becomes very competitive because of its profit margin it attracts new competitors. Some full service carriers have plan to provide low cost subsidiaries to compete with Air Asia, in this case Air Asia should not consider about diversity and should focus more into airline business. Therefore, strategies such as market development and penetration will be considered.
Other than that, Air Asia should consider on reducing additional charges or can be explained as no more add on fees to avoid any dissatisfactions with customers. For an example, several airlines charging for the first piece of checked luggage which eventually results in passengers try to check in less and carry on more.
Moreover, it is advisable to maintain a simpler pricing structure to avoid any misconception towards customers. This is because if customers do not understand how the pricing system works, they might feel like they are getting ripped off therefore it is preferable to set prices to the route, though it means higher fares, will make things much less complicated.
Other than that, it is important to maintain better airport amenities therefore Air Asia should be extra careful with problems arise with social media which can seriously damage their business because Air Asia engages in direct sale through web site and call center.
Besides that, it is important for Air Asia to form a business collaboration and strategic alliances which will help them to sustain their success in long run of progress. Air Asia should form business collaboration with the local Airline players of the respective international destinations which will be beneficial strategy to sustain their place in future. Based on that, it will be beneficial for Air Asia, they can combine the resources and knowledge to gain upper hand in the market. This strategy also will gain benefits in handling international regulatory authorities.
Furthermore, Air Asia should attain the economics of scale. The economic scale may be effectively achieved by the organization if it continues with resources sharing and mass buying strategy with Air Asia X airline. Strategies of Air Asia such as the backward integration, forward integration and horizontal integration may also help in to achieve growth in economic growth of scale for its business operations.
In addition, Air Asia also can implement a strategy which is to maintain their low pricing strategy and also reducing in the total travel time. The effectiveness of affordable cost and pricing structure offered by Air Asia has attracted few customers towards their brand. The brand in its slogan has stated that anyone can fly which creates a huge brand awareness among the customers therefore the low pricing strategy maintained by the brand results in increased visibility for its services that offer even in middle and low income group targeting segments. Based on the discussion, it is advisable for Air Asia to continue the competitive pricing strategy with minimum travel time, which would be a competitive cutter. It will help Air Asia to multiply their turnover of the brand awareness.
It is important for Air Asia to take care of their customers in order to captured their loyalty, due to that Air Asia should focus on better improvisation of the e service facilities and also the web based customer relationship management. Progress and innovation in this technology has caused most Air Ticket reservations to be booked online therefore e service facilities such as user interface screens or website speeds that facilitate air ticket bookings are a minute factors which provides in high customer satisfaction while utilizing booking facilities. Improvements in this first hand interface with users will improve customer relationship management eventually. Other than that, Air Asia should consider in enhancing IT capabilities by hiring an IT expert team. Air Asia can use the IT team to improve their web design, be in charge of commerce systems and also can consider to include more payment methods as deemed fit. Based on the advanced IT technology, Air Asia will be able to review the advance system and gather few recommendations on improving the systems.
Other than that, Air Asia can still make a move for advertising and marketing their brand. Even though their brand awareness is already high however Air Asia should continue its market penetration and development in future to remain as one of the biggest competitor in the market. For an example, Air Asia can consider to expand their brand awareness worldwide by sponsoring for World Cup 2018.
Last but not the least, Air Asia can consider on the use of Biofuels. Since the oil prices will likely to increase therefore use of biofuels will be an alternative choice and it is also environmental friendly. It may be help to increase the number of customers without the need of increasing carbon emission, (Wassewner, 2011).
Air Asia has proven its success and achievements as a leading low cost airline. Based on the Porter’s Five Forces and SWOT analysis enclosed, we can identify the innovative and proactive strategies developed by Air Asia in order to achieve its vision and mission. It is always an inspirational story on how RM 1 organization have achieved this much of success currently. It shows that, the strategies imply by Air Asia are really out of the box and the management were really strong and intelligent to implement it successfully. The development of urban centers and growing demand for tourism in Asian region expected to be favor to Air Asia. Therefore, based on our strategic tools, it is advisable to Air Asia to expand their market worldwide by creating brand awareness with updated technologies. As a conclusion, Air Asia should make few adaptions to the strategies to go through turbulent times ahead of competiveness in the airline industry.