INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA

KULLIYYAH OF ECONOMICS AND MANAGEMENT SCIENCES GRADUATE SCHOOL OF MANAGEMENT

AIR ASIA CASE STUDY

NAME KHING ME KYAW (G1239700)

COURSE TITLE Advance Corporate Strategy LECTURERS NAME DR. FIREND

Semester 2, 2014 / 2015

Question 1: Briefly describe the trends in the global airline industry.

When we look at the global airline industry, the airline industry exists in an intensely competitive market. According to Daniel Chan (2000) the airline industry is a unique and fascinating industry. Compare to the last few years, obviously the customers growth rate is keep increasing due the need of travel in an airline by following needs which is 1. Primary Need: to meet another person/ group or Tourism 2. Secondary Need: Transportation 3. Tertiary Need: faster means to travel. As there is the increasing growth in the global airlines industry these days, Each Of Airplanes Company in the world trying to conduct some strategies to compete with another competitor in their industry. A lot of airplane companies come out with different strategies to make their company better than their competitors such as a no-frills low cost concept in their business. A low-cost carrier or low-cost airline, also known as a nofrills, discount or budget carrier or airline or cheap flight is airlines that generally has lower fares and add on services for comforts. They try to offer the low price tickets and focusing more in large volume of ticket sales which to cover the variable costs and fixed cost with good return profit. To make up for revenue lost in decreased ticket prices, the airline may charge for extras like food, priority boarding, seat allocating, and baggage etc. Air Asia is one of the company that succeed in low cost carrier (LCC) business provides a full service regional airline that offered slightly lower fares than other airlines in Malaysia. Question 2: What is the business level strategy adopted by Air Asia?

In airline industry nowadays, customer not only looks at the service that airline company offered to them, but the price of the airline ticket also can influencing the customer to use an airline company. So AirAsia come out with the ordinary symbol but with strong brand, now everyone can fly nowadays has been phenomena in Airlines industry. By this statement, business level strategy adopted by AirAsia is a cost leadership strategy
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that target specific markets such as domestic services, short-haul regional services and long-haul regional services and selling their product below the average industry prices to gain market shares. AirAsia builds and sustains its competitive advantage by providing services at a price that simply lower than competitors price. Operation effectiveness and outstanding efficiency are the two main characteristics of low cost business including in AirAsia.

Question 3: How does Air Asia achieve cost leadership through differentiation?

AirAsia introduce the value-added services, which is to provide ticketless travel and implement a free seating policy. In early 2007, AirAsia was the first airline in Malaysia to offer an internet check-in service that allowing the passengers to print their own boarding passes and paid extra money to board first so as to choose their seats with ease. Passengers also can pre-book their checked baggage and meals. Besides, instead of free meal and flight entertainment, they prepare food and beverages ready for sale on board. By using this system, AirAsia can reduce the cost and eliminates the middleman (travel agents) and the sales commission to pay them. After that, this system are very customer friendly because the entire customer if want to buy or make a reservation a ticket directly via online, and no need to come to the ticket counter or pay the extra fees to the agent services. Moreover, the customers can keep checking on the web for promotion and if they buy early they can enjoy more on low cost fare. In conclusion, by using this system effectively, efficiency, customer satisfaction, fast and secure in buying a ticket already met. It means the lowest cost can possibly achieve. Question 4: Identify the ways Air Asia can sustain its competitiveness through the business level strategy that is adopted?

Air Asia can sustain its competitiveness by maintaining first mover advantage; costleadership remains a viable strategy for Air Asia to maintain its leadership position through operation effectiveness and outstanding efficiency in the budget airline industry.
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As this is the intense competitive industry, AirAsia should upgrade their offering services. Currently they get huge complaints on delaying flight schedule, baggage lost and etc. AirAsia should try to eliminate those kind of unsatisfactory matters and need to keep trying improve in their services to be sustained in the competitive market.

References:

http://www.investopedia.com/features/industryhandbook/airline.asp http://www.slideshare.net/ArunachalamR1/industry-analysis-airline-industry AirAsia Berhad: Strategic analysis of a leading low cost carrier in the Asian region Yasmin Yashodha Taylors University Lakeside Campus, No. 1 Jalan Taylor's, 47500 Subang Jaya, Selangor Darul Ehsan, Malaysia.