Air Asia is committed to serve passengers comfortably by offering luxury experience with low cost. With time, Air Asia launched Air Asia X which offers long haul flights and evolved to become integrated service provider who offers travel insurance, hotel, car rentals and other travelling products. Air Asia is offering competitive advantages comparing to its competitor in airline industry; unfortunately, the competition appears when the other airlines are offering low fare even though the segmentation markets are difference. The marketing strategy is aggressive by doing advertising, events and other promotional products.
2.Case Analysis a.Define the Problem : The competition is one of the major challenges that Air Asia is facing. Other airlines (in this case Malaysia Airlines) are lowering the price even though targeted market is different. With the increase of fuel price and higher labor cost, Air Asia has to keep the ambition of being low cost but high quality and innovative airlines. One of Air Asia mission is to be globally recognized as ASEAN brand. b.Outside concept that can be applied :
Air Asia position themselves as low cost carriers with low operating cost. In this regard, Air Asia is competing on low cost strategy. c.List relevant qualitative data : Air Asia is the leading low cost carrier in Asia and it provide inflight luxury services. d.List relevant quantitative data : In 2002 Air Asia owned 72 aircraft and served over 100 routes in the Asia Pacific region with more than 300 flights per day. In 2013 Air Asia operated more than 100 routes to 60 destinations with more than 400 flights per day (source : http://www.tunegroup.com/tuneair.html e.Describe the result of your analysis :
Air Asia is an LCC that is very strong in its online sales with their straightforward products. Customers enjoy their independency to order, check in and even ordering their food from website. The competition is the biggest disadvantages as the other regular airlines are trying to lower their fare while their service remains the same. f.Alternative actions :
Air Asia has to selectively choosing the destination of their service. In order to maximize the capacity, flying time per location has to be reviewed. More aircraft needs to be added to implement more destinations in order to fulfill customer’s demand while keeping track of each craft would be advantageous to learn the craft efficiency and effectiveness. On time arrival and departure have to be maintained to avoid the delay substitution cost. Attractive promotional program such as free baggage for regular customers can be considered, it is part of CRM program to increase customer’s satisfaction. g.
Describe your preferred action plan : Write a clear statement of what you would Short Term: Selectively choose the destination and that is profitable in order to have lean distribution system. Long Haul flight needs to be eliminated if not profitable. Medium Term: Air Asia has to personalize their service to their in-flight customers in order to win their heart of using the service in the future. In this regard, CRM needs to be improved. Human Resources have to be selectively chosen and trained. Long Term: Air Asia has to keep the value of being LCC. The operations needs to be simplified and replacing the aircraft into more efficient technology craft would be beneficial to keep the cost low.
3.Assignment 1.Important Cost Drivers for Air Asia is capacity utilization, innovation and product design, technology and input cost (fuel, human resources, etc). 2.Air Asia achieved cost leadership because they are focusing and concentrated on low cost carriers with no meals, no preferred seats, without entertainment system and not to mentioned, they have the same aircraft in order to minimize the cost of maintenance. 3.Air Asia differentiates themselves with other low cost carriers with its online and self check in. Customers have the freedom to choose the weight of the baggage they will bring and pay in advance. In Air Asia, meal services are feasible to be ordered online in advance. 4.The way Air Asia can sustain its competitiveness through the business level strategy it has adopted by maintaining its low fare and no frills. Air Asia implement low expensed but effective marketing strategy which directed to its targeted market.