Marketing Principles
Spring 2013
Case Study: Air Asia
Name:
Abdulrhman Adel Al-Musailet
ID:
201002195
What are the micro and the macro environment factors that have contributed to the
early success of Air Asia?
Micro Factors:
Air Asia started the strategy of the low cost carriers (LCCs), which provided them the
meet of the people needs. Also Air Asia focus on many flight daily wish give the
consumers more option to travel in a day in there reign. In addition, the access to the
internet allows customers to have close to full information on prices charged by the
LCCs. Threat of substitutes is moderately low; there are several substitutes such as
cruises, rail, bus, and car. However, the archipelago geographical structure of Asia
has made air travel the viable, efficient, and convenient mode of transportation.
Threat of new entry is moderate; high capital requirement and government barrier
such as air service agreement can act as barriers to entry.
Macro Factors:
According to Sachs (1997), large populations, rising middle classes with
increasing, combined with the lack of competitive forms of transportation, paint an
extremely encouraging demand picture in the long run. Air Asia travel market is
bound to continue to grow due to the central of the location of Malaysia of East Asia.
For example, there is no other viable and efficient mode of transportation between
East and West Malaysia other than by air (Lawton and Solomko, 2003).
2. Discuss the micro and macro factors that would affect Air Asia’s
performance in the current competitive environment described in the case?
Macro-environment:
While the impact of terrorism and can be negative for the growth of LCCs, the long
run forecast continues to be very positive. Also the Airline lunched on the turbulent
period when people were hesitant to travel due to the aftermath of the 2001
terrorist attack. Which make people less interest in long distance flight, which
helped AirAsia to attract more customers to their strategy.
Micro-environment:
As Air Asia focus on the low cost carrier the competitors also start do the same
marketing of the low fear. But Air Asia’s still able to face to raising of the fuel price
by employing fuel hedging and fuel surcharges, and are using fuel-efficient aircraft.
Using secondary airport also helps to re-duce landing charges. Air Asia makes profit
by keeping costs low while maintain a high rate of aircraft utilization, quick
turnarounds, low distribution costs using online booking, and ancillary income such
as its “supersize” charge for excess baggage. Also to keep the costs down and ensure
a quick aircraft turnaround of 25 minutes, its cabin crew is expected to multitask by
serving customers and helping clean. These I think reason that affect
microenvironment.
3. By focusing on the low prices, has Air Asia pursued the best strategy? Why
or why not?
On 2010 the company Air Asia was able to turnover a marginal profit of 23% as
profit of 14 millions. Also it continuously growing like in October 2010 Air Asia flew
hundred millionth passengers, which show a great grow of the company. In over all,
I think the focus in the low cost carrier the company was able to success and reach
their aim of the profit. Also the culture and the established of the company after the
terrorist attack which helped them with the large middle class citizens of Malaysia
and the foreigners around their reign, to grow rapidly and to reach the level of
growth that they are now. So in the end I think they have successfully worked with
their strategy and that why they got the reward of the best low cost carrier airline in
2010.
4. Give Air Asia current situation with bigger competitors following its
business model, what other recommendations would you make to CEO Tony
Fernandes for the future of his company?
On my opinion, Air Asia used the low cost carrier which now used by most the
airlines, which now Air Asia need to increase the quality of their services and the
passengers convince to increase the customers interests to fly with Air Asia.