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PEST and SWOT research of AirAsias international business operations

1. 1Background

AirAsia was create by Dato' Tony Fernandes in 2001. In December 2001, Fernandes and his associates set up Melody Air Sdn Bhd (Tune Air), an air travel keeping company then bought over AirAsia. Now, AirAsia is becoming one of the very most successful airlines in the Southeast Asian region and the pioneer of low cost no frills travel in Malaysia.

The leading low fare air travel in the Asia - AirAsia has been broadening swiftly since 2001, to be an award winning and the largest low cost carrier in Asia. Using a fleet of 72 aircrafts, AirAsia flies to over 61 domestic and international places with 108 routes, and runs over 400 plane tickets daily from hubs found in Malaysia, Thailand and Indonesia. Currently, AirAsia has flown over 55 million friends across the region and continues to distributed its wings to create more extensive route network through its associate companies, Thai AirAsia and Indonesia AirAsia. AirAsia believes in the no-frills, hassle-free, low fare business strategy and seems that keeping costs low requires high efficiency atlanta divorce attorneys area of the business. Efficiency creates cost savings that happen to be then offered to guests so that affordable air travel can become possible. Through our viewpoint of 'Now Everyone Can Journey', AirAsia has sparked a trend in flights with more and more folks around the region choosing AirAsia as their preferred choice of transfer. As AirAsia continuously strives to market flights, we also seek to create enthusiasm amongst our guests with our array of innovative and customized service.

The goal of the investigation

The goal of this evaluation is to conduct a Infestation and SWOT examination in the context of AirAsia's international business functions, determining the major factors engaged and the impact of the specific risks and opportunities confronted by AirAsia. Besides that, The purpose of this survey is to recognize its stakeholders and central competencies, carry out a investigation of its exterior environment, review a proper examination of Airasia to identify opportunities and threats it could face, also to isolate key advantages and any weaknesses that need dealing with. In addition a SWOT analysis will be completed to evaluate the extent to which its strategies are appropriate to what is going on in its present environment. Finally, after figuring out competitive strategy a Strategic plan will be produced to gain competitive advantage.

Chapter 2


2. 1 Company Overview

AirAsia is currently one of the leading low cost airlines in South East Asia which includes expanded rapidly and it's still the second major air carrier in Malaysia. It strong characteristics of business is dependant on local and international flights, trip and business plans for its customers domestically and internationally around the region with the low fare, safe and convenience method of travel. (www. airasia. com).

AirAsia's vision

To be the greatest low cost air travel in Asia and providing the 3 billion individuals who are presently underserved with poor connection and high fares.

AirAsia's mission

To be the best company to work with whereby employees are treated as part of a major family

Create a globally accepted ASEAN brand

To attain the cheapest cost so that everyone can travel with AirAsia

Maintain the highest quality product, embracing technology to reduce cost and enhance service levels

AirAsia's values

AirAsia make the low fare model possible through the execution of the following key strategies:


Partnering with the world's most renowned maintenance providers and complying with the with world air travel operations.

High Aeroplanes Utilisation:

Implementing the parts most effective turnaround time of them costing only 25 minutes, guaranteeing lower costs and higher production.

Low Fare, No Frills:

Providing guests with the decision of customizing services without reducing on quality and services.

Streamline Operations:

Making sure processes are as easy as possible.

Lean Distribution System:

Offering a broad and innovative range of distribution programs to make arranging and travelling easier.

Point to Point Network:

Applying the point-to-point network maintains functions simple and costs, low.

Products and Services provided by Air Asia

In-flight services:

Air Asia offer food and drinks on board programme.

In-flight services customise dishes and merchandise offer upon request e. g. hats, T-shirts, and slacks.

Online services:

Online scheduling makes it far more convenient for its customers to reserve online anywhere anytime.

Air travel information is available to help customers make enquiries on journey schedules introduction and departure time and particular date.

Chatter -airfare: Designed for a group of people, business holidaymakers for purposes like conferences, conventions, leisure or even exhibition.

Channels of distribution

A amount of alternate 'channels' of distribution may be accessible:

Selling direct:

Outbound sales forcer

Via mail order, Internet

Mobile phone sales

Selling indirect:

Agent, who typically sells direct on behalf of the producer

Distributor (also known as wholesaler), who provides to retailers

Dealer (also called supplier or reseller), who offers to end customers

Sales and Marketing

AirAsia can be an international company, and heading global invites a whole lot of competition. AirAsia has to deal with the competition of local companies in the same field- Airline services. Competition for AirAsia would also be came across in the virtual world-the internet. As they entered into the use of modern technology including the public area would request competition on the global level. Different localities and countries have different technical standards, and quality control guidelines, which AirAsia would have to abide by, by adherence to these regulations; certain intended improvements may be possible using communities however, not appropriate in others.

According to CEO's of the company, Mr. Fernandez, there are a lot workers or low pay earnings earners who would like to travel often to meet their own families especially during special occasions but scheduled to how expensive it was that time, their desire aren't fulfilled. By bringing out a minimal fare will give those people chance to travel or even more than once in a year. This permits them to recognize their target market. Reduced price sales is one of the basics of securing a marketplace for AirAsia. They reduce their price to suit their course of customers


AirAsia went into intensive Basic advertising and other visible activities, which added to the high offering of their company's image. They came with a brand " Now everyone can journey" These points of contact with their goal customer help them to build their image, which in turn created loyalty from their customers.

Group Special discounts and Offers

Discounts or other offers can help publicity business to clients, resulting in a sales increase. AirAsia is a ticketless Flight that allows customers to get their solution online with at a discounted rate. There is also a program of group discount which help to have more target market, especially online customers.

2. 2Core competencies:

Computer Reservation System (CRS)

AirAsia's CRS (Open Skies by Navitaire) has helped it to expand at a dramatic pace before year or two. Tony Fernandes, CEO AirAsia explained that Navitaire's Open up Skies technology has truly allowed Airasia's progress from 2 million passengers to 7. 7 million passengers in under two years. Start Skies scaled easily to accommodate our growth.

It is an integrated web-based reservation and inventory system. It offers Internet, call centre, airport departure control and even more. It is a primary sales engine that effectively removes the middleman (travel agents) and the sales commissions that require to be paid to them.

Enterprise Source of information Planning System (ERP)

AirAsia has recently (May 2005) opted for a full fledged ERP system carried out by Avanade consultants. By employing this bundle AirAsia is looking to successfully maintain process integrity, reduce financial month-end final processing times, and increase confirming and data retrieval processes.

Self Check In

With the use of the new self applied check operating a quicker and far more convenient way to check in using cell phones, laptops etc, attaching to the internet. This technique is easier and faster for customers and their family to check on in at or before they reach the airport and never have to queue up at the counter to check on in.

Air Asia credit card

Air Asia offers a choice of credit-based card facilities to fit in their customers travel life-style whether it be business, leisure, training or vacations. With an Air Asia mastercard a customer can purchase any goods or services while travelling all over the world online.

Go Holiday break services

Air Asia has something called Go Vacation, by making use of E-commerce Air Asia is able to screen their coverage maps, vacation resorts, first and average category hotels, car rentals services, and activities in various countries with their different rates and prices on Air Asia's web page. . Using E-commerce, customers are able to select and make a holiday and travel arrangement with a hotel with their choice and class, a pick up car and even medical services. And repayments for all this can be done on the internet using bank cards or other online E-payment methods before travel time.

Foreign personnel and Companies strategy

AirAsia also aim for most foreign workers from Indonesia, Singapore, Thailand, China, Macau who may well not spend the money for expensive flight home and provide them the cheap fare which fascinated most of them as would go back home very often without paying much.

2. 3 The Competitors

Companies in all industries have immediate as well as indirect challengers. Direct rivals in the aviation industry are companies that offer flights to similar places on comparable conditions of travel. Direct competitors include:

Malaysia Airlines: offering plane tickets in same routes.

Singapore Airlines: offering flights on same routes between London and Kuala Lumpur.

Thai Air : functioning plane tickets between Bangkok an Kuala Lumpur.

Air Srilanka: working plane tickets between Colombo and Bangkok.

AirAsia are facing strong competition with major international and nationwide airlines on the marketplace shares In contrast to other airlines, AirAsia offers better value for money

2. 4Analysis of Environmental Factors

In examining the macro-environment, it is important to recognize the factors that may affect a number of vital factors that are likely to affect the organization's resource and demand levels and its costs (Kotter and Schlesinger 1991).

The external environment of any business can be analyzed by performing a PEST evaluation. The acronym PEST is used to describe a framework for the examination of a variety of macro environmental factors like the Political, Economical Public and Technological environment.

PEST Analysis for AirAsia:


Flying outside Malaysia is difficult. Bilateral arrangement is one of the key obstacles in the form of low cost carriers. Getting charges is also another big influencing factor on costing of low fare airlines. The low- cost airline industry in south-east Asia has been underdeveloped because the aviation market is firmly regulated by bilateral air protection under the law agreements.

Threat of terrorism, people is worried to fly following the Sept 11 terrorist disorders incident.


In spite of strong competition from Malaysian Air travel (MAS), AirAsia's low-cost providers offering cheap seat tickets and few in-flight services are increasing attraction in your community.

Current recession hit the aviation business. But with this market slowing, more people will want to enjoy its cheap seat tickets.

Oil prices is another regulatory factor for this kind of airlines. If essential oil prices go high, it's very difficult to control cost of procedure.


Passengers are unwilling to board a no-frills airline for a long-haul trip.

Increasing world's society, tourists and range of educated people helpful for the growth of aviation industry.

Outbreak of the Severe Acute Respiratory Symptoms (SARS) has scare visitors to fly. AirAsia commit to "Safety First"; comply with all regulatory agencies, set and keep maintaining consistently high requirements; ensure the security of staff and friends.


AirAsia provides online service that combines air ticketing with hotel bookings, car seek the services of and travel insurance. To keep costs in balance, Air Asia has forced internet booking services.

AirAsia also recently introduced GO Holiday break, the airline's online programme where friends can book holiday packages online in real time

AirAsia has bought in A320 to displace Boeing 737. The Airbus A320's better fuel efficiency and extra capacity which brings about better performance and reliability.

SWOT analysis for AirAsia


Low operational and maintenance cost insurance firms a single airplane type fleet i. e. from Boeing 737 to Airbus A-320. Economy of scales benefits.

Low operating cost due to being No Frill, online reservations system, quick check in etc.

There is huge untapped market in the region, specifically for business tourists and "for-the-first-time-flying" section.

As it is low cost airlines, it can aim for customers who are currently using non-aircraft methods like, Bus, Trains, car to go to distances.


Huge investment to purchase air planes and implementing latest technologies there is high amount of functional cost.

Rising gas price. Increased the operational cost.

The airfare times are pretty much limited by 2. 5 time. So they cannot operate flights of longer duration without the Frill, so No-Frill becomes impossible to use for passengers.


Low fares offer by AirAsia has encourage folks from all walks of life style to fly. Especially, during current economic climate down change.

Airbus A320 would encourage better passenger capacity and offer comfortable service to customers.

Introduction of SMS reservation allows customer to reserve their seat whenever and anywhere.

With the commitment in guaranteeing the security of staff and customers, customer will have significantly more confident to take flight via AirAsia.


There are more no-frills airlines might take off in Asia to meet increasing consumer demand following a success history of Malaysia's budget carrier AirAsia.

Singapore Airlines projects to establish a budget carrier, they see the success of AirAsia. They know how big the marketplace is and how good the opportunity is at Asia.

Travelers may not choose AirAsia if they're to visit long distance air travel. They will favor airlines such as MAS or SIA which provide better services.

Demand to soar reduced via terrorism and outbreak of the SARS.

2. 5 Marketing Plan

Cost advantages activities:

AirAsia already unveiled cost advantages activities. Some of them identify below:

Utilising one type of plane (Boeing 737-300 which is fully changed with Airbus A320) ends in reduction of maintenance cost (one of the major expenses in flight industry), arranging cost, administrative cost, and inventory of parts.

Creative and low-cost advertising significantly reduces marketing cost. On the other hand, AirAsia direct selling through internet, call centres, walk-in air-port sales, and sales offices significantly reduce the commission fee to travel real estate agents as AirAsia only given its sales to

limited travel agents

AirAsia given multi-skilled cabin crews (2-3crews/trip), cost-effective training, performance centered reward and incentives systems

Target Market:

Low- income Customers and travel and leisure segment

Malaysia introduction as a local business and travel and leisure hub has provided AirAsia plenty of room for expansion and has fuelled regional air passenger traffic.

Transit passengers

Kuala Lumpur is the operational hub for AirAsia, which is the greatest interconnection point between European countries and Asia/Australia has supported the growth of the business. AirAsia has been using this "connection point" to promote their business.

2. 6 Proposed Strategy for further growth of AirAsia

Extending New Routes:

Extending current services into new market segments may be helpful to further growth of this company. You'll be able to accomplish that strategy by starting existing services into new geographical area or new market sections.

Adding new routes and vacation spots are possible; especially there is growth Malaysia and East Asia travel and leisure.

Activities related to the strategy:

Marketing research

Feasibility Study

Contract with hotels and vacationer company at new destinations

Finding out proper partner

Marketing new routes and destination

Time shape and cost:

It will take 1 to 2 2 years to get started on a new option and approximated cost around $200 million to new aeroplanes and for marketing cost.

Organizational change:

Recruiting new employees

Arranging training for new employees

Opening new office in new destination

Evaluation standards:

New destinations are implemented to accomplish new market development. Airline flight number in new destination is the ultimate way to measure consequence of this strategy.

Private Suite for business customer:

Introducing new services into existing market segments indicates product development. This plan involves the introduction of fresh competencies and requires business to broaden personalized services which can apply to current markets. That's why Emirate Airlines bring in high quality first class private lounges to catch the attention of business travelers.

Activities related to the strategy:

Technical and feasibility Study

Allocated budget

Contract with a corporation to install new center.

Installation and modification of aircraft's onboard facilities

Time framework and cost:

It will need 6 months to 1 1 year to complete assembly new facilities in a single aircraft and projected cost around $0. 2 million to new aircraft and then for marketing cost.

Organizational change:

Recruiting new employees to provide business customer

Contract with new or existing company for providing service for business customer.

Evaluation conditions:

Quantitative measurement of this product would be number of booking or occupancy.

Chapter 3


3. 1 Conclusion

By studying Infestation, SWOT and marketing research, maybe it's said that AirAsia is situated in standard circuit markets where it get competitive advantage because of its business policy and strategy. Providing customers with superior products and services with low fare is synonymous to the AirAsia brand. However, it's important that Airasia should re-evaluate its strategies and concentrate on core worth and competencies. For this why, AirAsia should reconsider their market and specific routes to acquire value apart from price and endure the competition. From this study, it is possible to say that still there exists various other option to increase the corporation. Adding new path and producing business class suite may be suited option for AirAsia for further growth.

3. 2 Recommendations

To remain leader on the market in serving customers, AirAsia has to re-evaluate their current strategy. Advice for improvement can be layed out as follows:

AirAsia should make any major changes to their strategy after proper complex and feasibility study to avoid pointless risks.

Oil price is a large factor to low fare airlines. Which means this company should make longer deals with fuel suppliers to get more stability

As Airasia runs their fight very frequently, so they must have a spare plane at each location to avoid delays.

AirAsia should think about environmentally friendly procedure system as such as carbon offsetting to save lots of environment.


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Peng Mike W, 2006, Global Strategy, Thompson, United States

Porter Michael E, 1998, Competitive Benefits, The Free Press, United States.


www. airasia. com

www. navitaire. com/res

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