CASE STUDY: AIRASIA THE LOW-COST CARRIER

STRENGTHS
1. First budget airlines in

Southeast Asian region

2. Offering low fares
3. Managed to develop a

successful business
model

OPPORTUNITIES

WEAKNESSES
1. Not the first budget

airlines in Asia.
2. Has a lot of competitors
3. Set up in the bad time

for global aviation

industries

THREAT

1. Identify and create new

1. Set up in the bad time

market strategies
2. People who could not
have afforded air travel
began to fly AirAsia
3. Concentrate on being
the market leader in the
Southeast Asian region

for global aviation

industries
2. Number of cases where
airlines started off well
but later experienced a
downturn
3. Internationally: Multiple
Languages

STRATEGIES TO REMAIN COMPETITIVE IN MARKET

THE SWOT ANALYSIS

Table: The SWOT Analysis

The table above shows the SWOT analysis that can be conclude based on the
case that we need to analyze. The strength of AirAsia is being the first
budget airlines in Southeast Asian region. AirAsia also offers fares that were
a fraction of what major airlines charged. Comparing to the traditional
airlines such as Malaysian Airline System (MAS), AirAsias cost can be
reduced by one-third of the price of conventional airline. This means that, the
middle income person can also have the opportunity to use airline. AirAsia
too, managed to develop a successful business model
Since AirAsia was set up in 2001, it shows that AirAsia was not the first
budget airlines in Asia. Japan had first launched its two budget airlines which
were Skymark Airlines and Air Do in 1990s. AirAsia also have a lot of
competitors in the low-cost airlines such as Cebu Pacific Air in Phillipines and
Sky Do in Japan. Next, AirAsia was actually being set up during the bad time
for global aviation industries.
Whereas the opportunities of AirAsia can be seen in their target customers.
When people who could not have afforded air travel began to fly AirAsia, this
shows that they already get their own loyal customer. Next is, AirAsia need to
identify and create new market strategies so that they can remain longer in
business. They also need to concentrate on being the market leader in the
Southeast Asian region.
Although the analyst said that the airline industry had witnessed a number of
cases where airlines started off well but later experienced a downturn, they
cannot be demotivated with those impression. AirAsia Company should use

that words to motivate themselves to become the best low-cost airlines.

When the Company was set up in the bad time for global aviation industries,
it is the biggest threats above all. Last issue that may become a threat to the
company is if the brand wanted to go internationally they will need to deal
with different culture and also multiple languages.

EXTERNAL MATRIX FACTORS FOR AIRASIA

KEY EXTERNAL FACTORS

RATING

WEIGHTED SCORE

0.25

1.00

2. Served routes to other

region

0.20

0.80

3. Concentrate on being
the market leader in the
Southeast Asian region

0.10

0.30

OPPORTUNITIES
1. Identify and create new
market strategies

THREATS

WEIGHT

1. Set up in the bad time

for global aviation
industries
2. Number of cases where
airlines started off well
but later experienced a
downturn
3. Internationally: Multiple
Languages
TOTAL

0.20

0.80

0.15

0.45

0.10

0.30

1.0

3.65

Table: External Matrix for AirAsia

Referring to the EFE table above, identifying and creating a new market
strategies is the most specific opportunities because it is important to create
a low-cost carrier. The weight is 0.25 and the rating is four. Second possible
opportunities is served routes to other region. The weight given is 0.20 and
the rating is four. Lastly, concentrate on being the market leader in the
Southeast Asian region. The given weight is 0.10 and it is rated by three.
The threats that can be identified is the business was set up in the bad time
for global aviation industries. The weight is 0.20 and the rating is four.
Eventhough the analyst comment that, The airlines industries had
witnessed a number of cases where airlines started off well but later
experienced a downturn, still, we need to trust on AirAsia so that they can
denied all those words when they can remain successful in business. The
weight given for this is 0.15 and the rating is three. Next, the limit of
languages and cultures that might be facing by AirAsia Company when they
wanted to expand the business internationally can also becoming the
threats. 0.10 weight was given with the rating of three.
Based on the table, the total weighted score is 3.65. The weighted is more
than 2.5, this indicates that AirAsia response to opportunities and threats. It
also means that AirAsia is a good company and able to use their
opportunities and identify the threats.

STRATEGIES TO ADOPT
1. Expanding the Route Network
At the present, ThaiAirAsia operates from nine cities and regions in China.
However the airline has a great future in China. The country with the
population of over 1.3 billion, rising middle class people and tourist attraction

is a great place for the company to expand more. The company should open
more low-cost, long haul routes in northern and western part of the China,
which has more tourist attractions. Furthermore the more expansion to China
will help the company to compete with its rivals such as Air China in that
region.
AirAsia also runs in four cities in India and offers the same low-cost long haul
flights to its passengers, which should be expanded further. It is time for
AirAsia to exploit the potentials of affordable air travel by Asias growing
middle class. India with the population around 1.15 billion people is the
second largest country in the world after China. By growing to India it will
help AirAsia to compete with its competitors such as IndiGo, GoAir and
SpiceJet in that region and gain more economics of scale.

2. Partnership with other low-cost carrier

AirAsia need to collaborate with other budget airlines in Southeast Asia.
Since the joint venture was established between AirAsia, Thailand and
Indonesia have proven to expand the markets by increasing the number of
passengers and increasing more profits from time to time, the efforts shall be
continued. AirAsia can also make collaboration with the Philippines and
Singapore. In addition, to increasing the number of passengers, it can also
increase the number of destinations as well as simply involves adding little
cost.
AirAsia should also put more effort to set up a pan-Asian low cost airline with
Virgin Blue, which is a low-cost carrier of Virgin Group serving Australia and
New Zealand mainly. Virgin Blue has suggested it may extend services to
Southeast Asia. Therefore, setting up a joint venture with Virgin Blue can
help AirAsia to grow in Asia even further, and help Virgin Blue to extend
services to Southeast Asia.

3. Marketing
Advertisements on television are expensive but effective to increase the
brand image. Therefore, AirAsia may advertise on the television Channels
like BBC and National Geographic. It will work a lot. To help reduce the cost,
advertisement time may be made shorter and advertisements may not be
aired very frequently. The best time for AirAsias advertisement to be aired is
during holidays when people are thinking to go on travelling. The promotion
also should be done not only during normal day but also for school break
when parents are actually thinking of bringing their children for holiday.

REFERENCES
n.d. (2010). Economic Analysis and Policy Section: List of LCC based on ICAO
definition.
Retrived

Oktober

21,

2014

from

www.icao.int_sustainability_Documents_LCC-List

Yose Rizal Damuri and Titik Anas. (2005). Strategic Directions for ASEAN
Airlines in a
Globalizing World: The Emergence of Low Cost Carriers in South East
Asia.

Retrieved

October

20,

2014

from

http://www.asean.org/archive/aadcp/repsf/docs/04-008-FinalLCCs.pdf