Deepika Kaur 2010133 Dushyant Bhadauria 2010134 Edwin Sneham 2010135 Eshita Batta 2010136 Gaurav Golwalkar 2010137

The Asian Aviation Industry

By 2025, Asia will be the worlds largest aviation market

up from third place today.1 Airlines product include: On the ground services booking offices, paperwork, tickets In-Flight services Seating configuration, ambience, good interiors, hospitality Asia-Pacific carriers recorded demand improvement of 15.5% compared to June 2009.2 Business model followed The service marketing triangle

Case Overview
Study of a very successful LCC Air Asia Business Strategy followed by Air Asia The Air Asia Value Chain OCL & Product Differentiation at Air Asia Porters Five Forces Analysis Future Prospects

AirAsia
Now Everyone can Fly
Low cost carrier No-frills, hassle-free, low fare business concept A fleet of 84 aircrafts AirAsia flies to over 61 domestic and international destinations with 108 routes Operates over 400 flights daily3 Fourth Quarter results (Oct-Dec09):4 Net profit: RM 549 million Core operating profit: RM 447 million Passenger growth : 21% YoY

Net Income
Net Income (in 1 000's RM)
600000 400000 200000 0 -200000 -400000 -600000 2002 2003 2004 2005 2006 2007 2008 2009 Net Income (in 1 000's RMB)

BUSINESS STRATEGY
Current Products New Products

The Air Asia Advantage

Overall Cost Leadership Purchase of fuel efficient Airbus A320-300 Superior pilots Lower fuel consumption, longer tyre life Pay for meals on board Lesser weight to be carried Turnaround time between flights 25 minutes5 Route rationalization with MAS

The Air Asia Advantage

contd.
Product Differentiation Choose your seat Online Ticket reservation Online Check-in Citibank-Air Asia Credit Card On-time-guarantee & Air Asia e-gift vouchers Holiday packages

Value Chain
S E C O N D A R Y P R I M A R Y

Air Hubs, Legal Dept, Finance , Govt. Relations AirAsia Acad., Safety Procedures training, Baggage training Baggage systems, Online Booking systems, CRS Technical Advancement, Key skills procurement
Staff, Passenger s, Fuel, Aircrafts, Catering, Spares Baggage Systems, Security operations, Gate operations , Cargo Operations, Aircraft Mgmt Passengers( at destination), Baggage, Ground shuttles, Safety and Security procedures Targeted promo campaigns, Print media campaigns, Exciting offers, Online sales Lost and found, Baggage Claims, Follow up with existing customers

M ar g

in

Inbound Logistics

Operations

Outbound Logistics

Mktng & Sales

Service

M ar gi

SWOT Analysis
Strengths Strong management team Brand name Low cost leader in Asia Excellent utilization of IT Weaknesses Does not have its own maintenance, repair and overhaul (MRO) A lot of complaints from customers Threats Service rates beyond the control of airline operators Full service airlines have or planning to create a low cost subsidiary Users perception that budget airlines may compromise safety ASEAN Open Skies

Opportunities Increasing oil price ASEAN Open Skies Increasing population of Asian middle class

Porters Five Forces Analysis

Competition rivalry within the Industry MAS Golden Holidays Great Getaways Package, 20036 Malaysia Airlines Everyday Low Fare campaign 2008

Countered by Sub-Zero fare campaign Abolished Fuel Surcharges & Ticket booking fee in 20097

Threat of New Entrants Silverfly launched in Malaysia in Sep 20098 Happy Air (Thailand) took over Bangkok- Langkawi route8 Hawaiian Airlines plans to enter Asia9

Air Asia brand loyalty can retain customers New entrants will have high capital investment

Porters Five Forces Analysis contd.

Threat of Substitute products Tiger Airlines also modeled on Ryanair Firefly by Malaysia Airlines (10 routes common to Air Asia, 7 new routes) Bargaining Power of Suppliers
Ordered 175 airplanes from Airbus Uniformity in

fleet Hedged Aviation fuel prices for 3 years from 2008 to Dec 2010 Air Asia X signed MRO contract with Lufthansa Technik , Philippines

Porters Five Forces Analysis contd.

Bargaining Power of Customers Customers can switch to another airline Customer reviews on online forums

The Skies Ahead

Key attributes to help Air Asia sustain its competitive advantage in the long run : Better passenger experience Focus on customer feedback Advertising on TVs in planes Market safer travel due to newer aircrafts Purchase smaller planes for charter services and low-traffic routes

The Skies Ahead

Partner collaboration African skies

contd.

Projected growth Cities being promoted for travel Ties with domestic airlines Places for tourism and important Routes South Africa and Egypt South African air travel market is 50% bigger than any other in Africa (weekly seat capacity) Within central Africa the largest markets are Nigeria and Kenya followed by Ethiopia and Sudan. Ghanas capital Accra will soon be welcoming new international services from Virgin Atlantic to London Heathrow and United Airlines to Washington.

Thank You!

Service Marketing Triangle

Company Management Internal Marketing Enabling the promise Service environment External Marketing Setting the promise The service product

Employees

Customers Interactive Marketing Delivering the promise Service delivery

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