Assignment: AIR ASIA CASE STUDY
Group Members:
Brynelle Gomes
Hafiz Syed Tanzeel Ur Rehman
Haseeb Bhutto
Mohsin Waheed
Q1. Critically analyze the strategic decisions of Air Asia.
1) Buying the company at the time when one least expected to
put their foot in the aviation industry as it was very close to
the 9/11 incident and passengers were avoiding air travel.
2) This was a favorable decision for him as he got aircrafts at a
lesser leasing cost.
3) Due to the downfall experienced staff were easily available for
jobs therefore his main resources were expertise.
4) With Government Goodwill he was able to utilize the Kuala
Lumpur International Airport.
5) Air Asia has a very strong management team with strong
links with governments and airline industry leaders.
6) Their strategy for Low Cost Carrier was the most innovative
among all airlines, which caused them treats.
7) Tony Fernandes targeted the core concept of flying which was
with a motto “Now Everybody can fly” which eliminated
differences and had only one class.
8) There was a no frills concept where everything was simple.
There was no entertainment service, no food, no high class
therefore incase anyone would want an additional facility they
would need to pay for it.
9) Their main focus was on short haul flights, where each flight
would travel back and forth from one destination not wasting
time, human resources, allowances, and especially it was cost
efficient. They would travel to destinations that would be
approx. 04 hours and could come back on the same day with
the same crew.
10) They opted for secondary airports because slotting fees were
less.
11) They purchased fuel in advance in low costs.
12) They made a joint venture with citi-bank with co-branded
discount cards that one could gain points on and later utilize
them on hotel bookings, packages, flights etc.
Q2. Air Asia vs MAS
1) AirAsia was the first airline to launch low cost airline in
Asia.
2) Air Asia opted for small haul routes (Domestic).
3) Prices were 40-60% lesser.
4) Air Asia’s advertisements were eye catching.
5) Convenient check in from your mobile phone
6) They target customers were those that wanted value
services not high class.
7) They gave e-gift vouchers to their passengers incase of a
03 hour delayed flight.
8) Saving costs on unnecessary facilities such as airport
lounges.
9) They offered travel insurances.
10) Hotel/Car rentals available on website
MAS Airlines.
1) They catered to premium class.
2) Businessmen and high economy class.
3) Those who wanted extra service.
4) Long haul routes.
5) Decreased prices affected their profit rate.
6) Frequent Flyer Program.
7) Special student discount.
8) Golden Member Lounges.
9) Primary Airports as they travelled worldwide
10) Assigned Seating Arrangement/ Different Classes.
Q3. Competitive Profile Matrix (CPM) AIRASIA
Malaysia
AirAsia
Airlines
Critical Success
Weight Rating Score Rating Score
Factors
Innovative
1 0.03 2 0.07 3 0.1
Advertising
Low Operational
2 0.15 1 0.35 2 0.2
Cost
Global
3 0.05 2 0.09 3 0.1
Expansion
Service
4 0.08 2 0.15 3 0.15
Efficiency
Customer
5 0.13 2 0.02 2 0.13
Service
Highly Trained
8 0.06 3 0.2 4 0.23
Staff
Customer
9 0.08 3 0.14 2 0.1
Loyalty
Fleet
10 0.2 3 0.35 3 0.31
Maintenance
11 Online Ticketing 0.02 1 0.17 3 0.19
Price
12 0.2 3 0.31 4 0.4
Competitiveness
Total 1 2.48 2.58
As per the CPM Fleet maintenance and low operational cost are the
two defining element of Airasias business plan which are keeping
this airline not online profitable but also expanding into new
markets.
Q4. How can AirAsia maintain its lowcost & Differentiation
strategy?
Strategy 1.
Fleet Maintenance
Airasia can sustain and enhance its competitive advantage and
market share by maintaining its fleet upto date and in efficient
working condition.
Also it could keep its fleet classification category limited to a certain
model e.g Boeing 737 so as to evade variable overhead cost related
to aviation engineering.
Strategy 2.
Reducing Insurance Claims
By having its fleet upto date and in efficient condition, Airasia could
avoid any insurance claims and also a upto date fleet would
significantly reduce the insurance premium monthly being paid by
the airline.
Strategy 3.
Reducing Ticketing Cost
By directly selling tickets to its customer via online and its offices
regionally, Airasia would be reducing the ticketing price for its
customer and hence keeping a competitive advantage of its rivals.
