To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: Our academic writing and marking services can help you! This strategy would address the problem of low market share in the business segment of the market and diversify the market base if competition in the low cost segment increases. It may be a good strategy when they first started with only Malaysia as the hub and few planes to maintain. The lower staffing creates issues such as delays in turnaround time that result in delays in departures, with inadequate communications and support for delayed passengers. To increase its share of the market in East Asia, Air Asia requires additional aircraft, additional staff, and additional access to airport gates. […], In this short guide we aim to highlight some of the common areas in which conflict arises with a particular focus on early stage startups. ... the geographical structure of Asia has made air travel an efficient, viable, and convenient mode of transportation. In contrast, recreational travellers are more sensitive to price and the cost of the airfare relative to the total cost of recreation (Talluri & van Ryzan, 2004, p. 17). Economic: The rate of economic growth in the ASEAN nations is variable, with the ASEAN member nations experiencing a growth rate of only 1.5% in 2009 because of the global economic crisis. From the Abu Dhabi hub, the airline could offer flights to India and Southeast Asia. The airline has been successful because it has taken an entrepreneurial and innovative approach to the market, leveraging its competencies to create automated ticketing processes and to reduce other operational costs. Hence, it can be categorized into focused cost leadership. The biggest mistake most early stage startups do is implementing user profile pictures. Aircraft are expensive to purchase and operate, with a high load capacity necessary to cover costs. The airline would use its marketing competencies to differentiate between low cost fares and business class fares. Invest and enhance the AirAsia brand to increase investors' returns. The firm would also require additional human resources to meet the operational and customer care needs with expansion, particularly to attract business customers. Also, after typhoon Yolanda destroyed Tacloban City, Fernandes reportedly sought out one of his employees whose home was wiped out and I heard the tycoon will help rebuild the house. Conor Mc Carthy (Director, AirAsia; Director, former Director of Tune Air Sdn Bhd and former Director of Group Operations, Ryanair), AirAsia was remodeled into a low cost carrier and by January 2002, their vision to make air travel more affordable for Malaysians took flight. Generosity — Fernandes is legendary for his personal and corporate generosity. Besides that, AirAsia’s management has a very good strategy by educating their staffs to work hard to fulfil the mission and vision of the company. The manufacturers of aircraft have moderate bargaining power because of the high cost to airlines for switching aircraft types because of the need to carry additional parts inventory. He said: “If you have a great product but no one knows about it, it’s history.” Fernandes reminds me of his former boss, Virgin Group’s colorful Richard Branson and America’s high-profile realty developer Donald Trump. Buyers can be segmented into business travellers and recreational travellers with different price sensitivities. Outbound logistics in the context of an airline involves factors such as airport turnaround time, which are related to operations. If you need assistance with writing your essay, our professional essay writing service is here to help! The low cost segment of the airline industry in East Asia can be viewed as at the point of emerging from the market penetration phase of growth. Passengers can switch airlines at a relatively low cost despite the use of incentive programmes by some airlines to increase customer loyalty. Funding could be obtained from a seasoned equity offering, with the airline’s historic performance supporting the offering. This article was written by WilsonLeeFlores. In contrast China’s GDP grew at 8.9% in 2009 while India’s GDP grew at 6.8%. Nations in the region such as India and China that are not members of ASEAN are also liberalising air transportation regulations (O’Connell & Williams, 2006, p. 362). Disclaimer: This is an example of a student written essay.Click here for sample essays written by our professional writers. AirAsia approaches to prevent this occurring and to generate continued growth is to frequently re-assess its strategy so that they build strong businesses in the attractive industries of the future Company overview – Air Asia Berhad AirAsia’s leading airline was established with the dream that everyone can fly. Political: The trend is toward liberalisation of the airline markets in East Asia to allow airlines access to markets without the need for a specific bilateral agreement concerning air transportation between nations. The focus of the analysis is on the East Asian region, which is the primary market for Air Asia. On Dec. 12, Fernandes gave 263 Chopard watches totaling five million ringgit as gifts to 263 staff members who’ve been with the company 10 years. Air Asia is positioned at the low cost end of the spectrum of competitors that fly internationally. If the competition in the industry is high, there is less likelihood that a firm in the industry such as Air Asia will gain competitive advantage through a strategic initiative. The low cost airline industry is comparatively new in East Asia, with independent airlines entering this market segment in 2001 (O’Connell & Williams, 2005, p. 260). The firm was re-launched as a no-frills airline in 2001 with three aircraft. Implementing this strategy would require modified A320s to provide passengers with additional seating space and may require additional staff for customer care. While a strong foundation does not guarantee a solid house, it is the only basis upon which to build. It has also adopted the innovative strategy in the low cost segment of the market of forming joint ventures with competitors to gain entry into new markets and to reduce operational costs. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. Buyer Power: Buyer power in the airline industry is weak because of fragmentation of buyers and the large numbers of potential buyers. Page 1 Microeconomics & Strategy Case study: AirAsia 2. The firm was founded in 1996 as a low cost domestic airline, and was purchased by Tony Fernandes in 2001. The airline is vulnerable to the threat of an increase in fuel prices and the possibility of disruptions to travel caused by terrorist attacks. AirAsia has been named the “World’s Best Low Cost Airline” in the annual World Airline Survey by Skytrax for five consecutive years from 2009 to 2013. The airline’s business model also reduces its ability to attract the business market that values flight scheduling, on time flights, and convenience. Fernandes was formerly Southeast Asian regional vice president for Warner Music Group from 1992-2001. No plagiarism, guaranteed! Gap analysis involves determining the discrepancies between the current resources of the firm and the resources necessary to achieve the desired future state (Grant, 2008, p. 162). The culture that we have stems from the fact that we want openness and we want people to be creative and passionate about what they do. We deliberately decided that we wanted a company where people can pursue their passion and we wanted to make use of all the talent that we have in-house. Mailbird will be using a platform specially designed for the purpose by the TV Channel effective February 9, 2015. Full service airlines are large firms that have been in the industry for an extended period of time, with many of these airlines enjoying a monopoly or quasi monopoly on certain national routes prior to the gradual liberalisation of the airline industry in the ASEAN market, with full liberalisation taking place by 2015.
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