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Case Study On Air Asia
Transcript of Case Study On Air Asia
Asma Mohammed Case Study on: Introduction AirAsia is one of the leading Low Cost Carriers (LCC).
It was established in 2001 by CEO Tony Fernandes and his 3 partners.
The Airline was then bought by a Malaysian government linked airline called Tune Asia. The Micro environmental factors that have contributed to the EARLY success of AirAsia The Macro environmental factors that have contributed to the EARLY success of AirAsia The macro factors that would affect AirAsia's performance in the current competitive environment The Company: The Company: consists of the top management, operations, finance and other parts of the company
Fernandes is a strong believer in leading by example.
He is humble person that is often seen working alongside his team. This allows him to get to know his staff better and to listen to customers’ feedback.
As a CEO he makes sure that he is accessible by giving his staff his mobile phone number. The Suppliers and Marketing intermediaries: The Suppliers which provides resources to a company to produce goods and services and Marketing intermediaries they help the company to sell and distribute its products to final buyers.
Although it has limited resources, AirAsia has been able to fulfill its customers’ needs by collaborating with partners.
it used marketing services agencies such as authorized travel agents to serve travelers who are uncomfortable with making their bookings over the internet.
They also deal with Financial intermediaries where travelers without credit cards can also pay for their tickets by cash at any Alliance bank branch in Malaysia. The Competitors: AirAsia gained strategic advantage by positioning their offerings against competitors’ offerings.
they managed to be the first airline in Asia to introduce the budget, no-frills airline concept.
AirAsia offered savings up to 60 percent compared to Malaysian Airline System prices. Since then, the growth of this Low Cost Carrier (LCC) has been the envy of many. The Publics: Publics are any group that has interest in or impact on an organization’s ability to achieve its objectives.
Media publics and increased media coverage on LCC’s helped consumers understand the no-frills concept.
Their internal publics which are the employees who work in a cooperative environment with no problems; the plots cook breakfast for engineers each quarter to thank them for looking after their aircraft.
Local publics were pleased by AirAsia since they were concerned about long-distance travel due to the 2001 terrorist attacks and Airasia started flying regional countries to nearby countries The Demographic environment The Demographic environment: it is the study of human populations,includes size, density, location age and gender
AirAsia started with two old Boeing 737s serving the domestic market in Malaysia, it then expanded to include domestic and international destinations, this way the served the markets that are becoming more diverse both nationally and internationally. The Economic environment AirAsia also took in consideration the changes in income. In 2001 the timing worked to the advantage of AirAsia since Asians were enjoying the benefits of rising incomes and good economic growth and although many could not afford long distance holidays, they were open to the idea of travelling to nearby countries. Technological environment The airline responded to the fast growth of internet usage during that time, and so they were able to reach more customers through online booking Political environment Political environment: consists of laws, government agencies that influence or limit various organizations.
AirAsia faced some problems due the heavily regulated air travel in Asia. Fernandes engaged the support of the former prime minister of Malaysia, Tun Dr. Mahathir Mohamad, to network with neighboring countries in an effort to develop an open-skies agreement. Since then, Indonesia, India, Thailand, and Singapore have granted landing rights to AirAsia. The micro factors that would affect AirAsia's performance in the current competitive environment Publics : AirAsia maintained a customer friendly relationship through offers as well. For example, they offered 1 million free seats to all their major destinations, customers having to pay only for the airport tax. This was a super-smart idea as during many flights, some seats remain empty, and AirAsia had just the right plan to use it in order to promote themselves. The company : By keeping costs down and insuring a quick aircraft turnaround of 25 minutes its cabin crew multitasks by serving costumers and helping clean, AirAsia's workers are being cooporative Suppliers: To counter the increase in fuel prices problem, AirAsia has introduced fuel surcharges. They have also considered using more fuel-efficient carriers to reduce the fuel consumptions. Here, the airlines can use a secondary airport as well in order to reduce the landing charges. Competitors: Another step to keep up with the prices is to offer more flight options for the customers in order to fill up all the seats. For instance, if an airline cannot reach very long distances, then agreements can be made with other airlines who can offer customers a flight for the rest of the journey.
The growth of LCCs has been a threat to full service carriers Economical environment Economical environment:which consists of factors that affect consumer purchasing power and spending patterns
AirAsia managed to keep its costs low and hence keep the fares low as well. Due to the recession, many giant corporations and organizations took different approaches to reduce the costs for themselves. Among these approaches was to reduce the number of flights taken by the staff, and the flights taken by the higher grade employees should be degraded from business or first class to economy class. Such a trend helped AirAsia massively as it was already operating low budget flights, which was especially suitable for situation like current economic recession. Political environment: One of the challenges for airlines like AirAsia can be the uncontrollable factors such as fuel prices or political changes. Having an increase in the fuel prices means the airlines cannot maintain the low fares, which are already supplying less profit. Technological environment: AirAsia maintained a low distribution costs by offering online booking to customers, making their website user friendly and easy to use. Has AirAsia pursued the best strategy? The logo of the air Asia airlines is (now everyone can travel), we think that it has a really successful strategy including many goals for make traveling easy, low cost and good brand experience. The main target of the company is traveling with low budget so the CEO Tony Fernands and his partners start to put sharp plans to achieve this goal such as the offerings reach up to sixty percent.
Also Tony doesn’t stop after this but he tries to expand so he contacted many neighboring countries (Indonesia, India, Thailand and Singapore) to open offices and travel agencies. The bright strategy developed during the global financial crisis in mid 2008 which effect many industries, Air Asia grow their market share over twenty one percent in the first quarter of 2009 and by 2010 the company profit increased up to 23,2 percent, keeping costs low while maintain a high of aircraft utilization The main challenge was Rising fuel prices and landing charges are putting pressure on the company ability to keep costs low furthermore the company are employing fuel hedging and fuel surcharges and are using fuel efficient aircrafts, using secondary airports helps to reduce the costs using more creative approach in their marketing communicates such as television commercials, series of music themed from the popular star channel Thank you all for listening Conclusion We reached the end of our presentation, we mentioned the main points about how air asia reacted and worked with all the marketing environmental factors earlier and also now, and how the airline used the best strategy to suit its situation. Outline 1-introduction
2- The micro and macro environmental factors that affected Airasia in its early success
3-The micro and macro environmental factors that affected Airasia in its current success
4-Has air aisa pursued the best strategy?