Air Asia Marketing Analysis

breeze Asia marting Analysisairlines offer send come forth transport go for passengers or cargo, norm both in ally with a recognized direct license. Airlines name leased or makeed aircraft with which to supply these religious services. Airlines may public figure coalitions or alliances with opposite airlines for common benefit. Airlines differ from those with a single aircraft carrying hop out or freight, by broad(a)-service international airlines operating hundreds of aircraft. Airlines dismiss be classified ad as existence intercontinental, intra continental, domestic, or international and may be operated as planned services or charters.Many countries put one over national airlines that atomic issue forth 18 owned and operated by the government. Private airlines atomic number 18 down the stairs government regulation for economic, political, and unhurt issues. For example, governments often interfere to stop airline labor actions in target to guard the fre e f hapless of multitude, communications, and goods between different regions without compromising safety.Some countries pee deregulated or start deregulating their Airlines, for example The united States, Australia, and to a smaller result Brazil, Mexico, the United Kingdom and Japan. Beca put on of deregulation, airlines have been largely free to negotiate their own operating arrangements with different airports, enter and going routes easily, and to levy airf ares and supply flights according to mart demand.In a deregulated grocery, the intro barriers for late airlines are baseborner, so it creates capaciouser competition and average fares go to drop 20% or to a greater extent. The competition, to posither with pricing freedom, means that freshly entrants often take food market parting with highly cheap judge that, to a bound degree, full service airlines mustiness match. This is a principal(prenominal) limitation on profitability for established carriers, wh ich tend to have a higher exist base.Consequently profitability in a deregulated market is irregular for most airlines. These factors have caused some key airlines to go out of wrinkle, in addition to most of the poorly established pertly entrants. ground trifle TO AIRASIAThe world leading low fare airline in the Asia, Air Asia has been growing rapidly since 2001, to locomote an award winning and the major low follow carrier in Asia. AirAsia was founded by a government-owned conglomerate DRB-Hicom in 1993. On 2 declination 2001, former Time Warner executive Tony Fernandess follow Tune Air Sdn Bhd purchased the heavily-indebted airline for the token sum of one ringgit. Fernandes right to engineer an outstanding spin, turning a profit in 2002 and introducing parvenue routes from its hub in Kuala Lumpur International drome.Air Asia believes in the no-frills, hassle-free, low fare transmission line idea and feels that go along opening cost low needs high potentiality in ein truth part of the business. Efficiency generates savings which are so passed on to customers so that inexpensive air motivity plenty become a reality. Through its idea of Now Everyone Can Fly, Air Asia has introduced a revolution in air travel with more and more people around the region choosing Air Asia as their preferred choice of transport.The tally AirAsia fleet (including Thai AirAsia, AirAsia X and In dosia AirAsia) consists of the following aircraft as of 14 July 2010strategic DEVELOPMENTSAirAsia opened a 2nd hub in 2003 at Senai International Airport in Johor Bahru near Singapore and started its 1st international flight to capital of Thailand .In January 2004, airasia began its graduation exercise international service from KL to Phuket in Thailand.In 2006 A unfermented work out terminals, the 1st of its kind in Asia was opened in Kuala Lumpur International Airport.AirAsia is presently the largest customer of the Airbus A320.4 The announceer-up has placed an dr ess of clxxv units of the Airbus A320 plane to service its routes and at least 50 of these provide be ready by 2013.Tony Fernandes (chief operating officer) announced a five-year plan on 27 December 2006, to further improve its existence in Asia.5 In the plan, AirAsia testament build up and improve its route network by linking all the lively cities in the region and expanding further into Indochina, Indonesia, Southern China (Kun Ming, Xiamen, Shenzen) and India.AirAsia stated a three-year partnership on 5 April 2007, with the British mandate sensation team ATT Williams. The airline brand is displayed on the helmets of Nico Rosberg and Alexander Wurz, and on the bargeboards and look of the cars.6On 27 September 2008, AirAsia has on its list 106 new routes to be added to its current list of 60 over the next hardly a(prenominal) days 7SUBSIDIARIESNotesThai AirAsiaEstablished on 8 December 2003 as mutual venture with Shin CorporationIndonesia AirAsiaAirAsia acquired the then N on- practicable Awair in 2004 with a 49% stake in the airline. Full rebranding to Indonesia AirAsia was completed on 1 December 2005.VietJet AirAsiaAirAsia announced On February 2010 that it has purchased a 30% stake in VietJet and flipd the look up to VietJet AirAsia.AirAsia RetTixAirAsia launched their new event ticketing system called AirAsia RedTix On March 20, 2010, targeting on non-airline flight tickets such as events, sports, and music.Associate CompaniesAirAsia XIt is a service operated by AirAsia X Sdn. Bhd. as a franchise of AirAsia. It offers long-haul services from Kuala Lumpur to Australia and China utilise an Airbus A330-300.Tune HotelsTune Hotels.com is a hotel chain established by AirAsia CEO Tony Fernandes. Presently it has hotels in operation in Kuala Lumpur, Kota Kinabalu, Kuching, Penang, Sepang and Bali.Tune MoneyIt is Asias first no-frills online financial services portal. Same as Virgin Money, it includes life, syndicate and motor vehicle insurance as we ll as postpaid credit cards.PORTERS FIVE FORCESTo asses the attractiveness and identifying the sources of competition for Airline effort we use porters five forces model.1. affright of new Entrants in Airline IndustryThe tip of barriers to entry depends on following factors-DeregulationSome countries have deregulated or start deregulating their Airlines, for example The United States, Australia, and to a smaller extent Brazil, Mexico, the United Kingdom and Japan. In a deregulated market the entry barriers for new entrants are lower.Capital RequirementSetting up airline business requires huge enthronization. The cost of setting up of offices, leasing or buying aircraft, hiring pilots and different facultys incur a high cost. and then, the threat is low for the attention.Switching costIn airline attention customers do non need to pass along more on switching to an other(a) airline. The price would not be extremely significant in differences, which it depends on the access ibility of competitors services and suitableness of the flight time that prompts them to switch. So low switching cost attracts new entrants.2. Rivalry among brisk firmsFixed costIn airline diligence fixed cost are high, for example finance cost, lease cost, and staff costs. To cover these fixed costs airline companies have to gain more market share. In doing that, constant price reduction is done by them to compete with others. Thus, the rivalry is tight.Customers easily switchIn airline industry customers priority is to look at price and flight schedule that suits them the trounce when buying air tickets. The main purpose of using the services is to get to the destination planned. Customers can switch to other airline easily that makes the industry competitive.Similar ProductsAs discussed earlier, the main purpose of using airline services is to reach the destination. Every airline is providing similar services to customers. So it makes the industry highly competitive.Excess Capacity presently there has been excess capacity on many an(prenominal) routes as a result, airlines have to participate in price wars in order to attract customers at all costs.3. Threat of Substitute productsNo doubt Airline is the fastest way to travel from one destination to another thus there is no pure(a) Substitute getable. However, taking into consideration Domestic Airlines, there are options acquirable to the customers like by-road and train arrangements but again time consumption and devisal are the reasons which discourage customers to adopt any one of these two options. footing of Air Travel however is a hurdle which let customers to recover to take other available options. International Airlines have a very less or no threat regarding other options.4. Bargaining proponent of buyersInternet technology resulted in increasing the bargaining power of buyer. Because the buyers are flat able to compare the prices more easily and in sop up of no switching costs, they could choose whichever airline offers a low price. Thus the buyers may be able to influence the airlines to reduce their prices.5. Bargaining force-out of SuppliersNumber of suppliersThe suppliers for airlines are fuel suppliers, foods suppliers, merchandise suppliers, and aircraft suppliers. in that location are few suppliers in the market for aircrafts the companies are either Airbus or Boeing. So the power of supplier is substantive.High switching costsAirAsia use Airbus models aircraft. In the foregone it was using Boeing models, which they lease it and later they replaced Boeing models with Airbus. If Airasia change to Boeing again, then the cost forget be high, because training cost for staff to go well with the aircraft features must be offered. Other than that, the technology used by Airbus is the most advanced, so Airasia have to rely on the Airbus model. Thus, bargaining power of suppliers is solid.SWOT psychoanalysisThe purpose of this analysis is identifying external factors (opportunities and threats) and internal factors (strengths and weakness) that AirAsia needs to consider in achieving its goals and objectives to be low cost carrier in the airline industry. The strengths, weakness, opportunities and threats for AirAsia are as follow StrengthsSingle aircraft slipAirAsia operates a single type of aircraft, the airbus model. (It switched from Boeing 737s in 2005) A single aircraft type offers economies in purchasing, pilot training, sustenance and aircraft utilization. manoeuvre SalesAirAsia engages in direct sales through its sack site and call center. As a result it avoids paying commissions to middlemen. A direct sale has reduced AirAsias dependency on outside resources for its revenue. Direct contact with customers provides an opportunity to keep up to date of their expectations and solve their problems on time.Strong management teamThis is the strength of AirAsia that it has a very strong management team that consists of indus try experts and ex-government officials. For example, Shin Corporation (formerly owned by the family of former Thai Prime Minister- Thaksin Shinawatra) holds a 50% stake in Thai AirAsia. This has facilitated AirAsia to start up and capture significant market share in Thailand.Well established BrandAirAsias partnership with other service providers such as hotels, hospitals (medical tourism), car rental firms, Citibank (AirAsia Citibank card) has created a very unequalled picture among travelers.AirAsias local heraldic bearing in countries such as Indonesia (Indonesia AirAsia) and Thailand (Thai AirAsia) has in effect elevated the brand to become a regional brand. Their links with ATT Williams Formula One team and Manchester United (one of the worlds most famous football teams) have further improved their image to a greater extend beyond just Asia. WeaknessesAt start, it may be a good dodging for AirAsia not to have its own maintenance, repair and overhaul facilities. But now with hubs in Malaysia, Thailand and Indonesia and 97 planes currently owned and over 100 planes to be received in the next few years, AirAsia have to make authentic proper and continuous maintenance of the planes which result also help to keep the overall costs low. It is becoming disadvantage not to have its own repair maintenance facilities. Opportunities profit in oil priceIncrease in oil price may become an opportunity for AirAsia, being a low cost carrier AirAsia has an upper hand because its cost will be still the lowest among others. Thus it has a great opportunity to capture some of the existing customers of full service and other low cost airlines customers.Partnership with other LCCAirAsia can partnership with other low cost operators such as virgin to tap into their existing strengths or competitive advantages like brand name, landing rights and landing slots. racePopulation of Asian middle class is increasing. It will be 700 million by the end of 2010. This creates an exc ellent opportunity and huge market for all low cost carriers in this region including AirAsia.New destinationsAirAsia has strong figurehead in Asian region. Currently they are operating from three countries Malaysia, Thailand, Indonesia and application several destinations in China, India, Sri-lanka etc. but still most separate of these countries are under served. So AirAsia can add more destinations. Threats uncorrectable costsCertain charges like landing charges, security charges and departure charges are beyond the control of airline operators. This is a threat to all airlines oddly low cost airlines that tries to keep their cost as low as possible.New entrantsAirAsias profit margin has attracted many competitors. A good number of the full service airlines have or planning to create a low cost subsidiary to compete with AirAsia and other low cost carriers. For example, Singapore Airlines has created a low cost carrier Tiger Airways. act of terrorismTerrorism is affecting touri sm and confidence in the airlines. It might take place in many ways of terrorism either in definite countries or it might happen in the plane itself. If there is terrorism happen in the area where AirAsia operates, it results in stopping their flights to ensure safety of passengers as well as the plane.Negative loresPassengers have some ostracise perception about low cost carriers. One common perception is that they may compromise safety to keep costs low.AVAILABLE STRATEGIES FOR AIRASIA on that point are three strategies that Air Asia can follow in order to be a major player in the Low woo Carrier market. These strategies are Diversification (substantive growth strategy), market brainstorm and market education (limited growth strategies).DiversificationThere are kinds of variegation such as horizontal, vertical integration, and conglomeration.Ansoff Matrix source wikipedia.comIn horizontal diversification, the company developed activities that are this instant complementar y to a companys present activities. AirAsia has done horizontal diversification when entering into Indonesian market by partnering with Awair, which is an Indonesian airline. The partnering with Awair helps AirAsia to understand the condition of local market, so the company will have direction on how to enter and survive in the market by the help of an experienced partner (Awair).AirAsia has done vertical diversification as well, for example it is give awaying flight tickets without the help of agents through its own website and call centre.Through unrelated diversification (conglomeration), AirAsia might spread risk if unawares airline industry is having difficulties and have elevated profit opportunity from the new business. But, to establish new business, open up a new company, strong management and financial ability is required to make it successful, but if it is not successful, it might create unbalanced circumstances for Air Asia because of loss of capital and resources.Mar ket PenetrationIn Market Penetration company will not introduce new products. It will go with the same(p) products in the same market. The way to gain more market share with the same product is to attract competitors customers and get more loyal customers by marketing.Market Penetration will not cost as much as Diversification. AirAsia can peruse this strategy by using marketing budget and using the existing marketing department.Market DevelopmentAnother strategy that AirAsia can pursue is Market Development. Market development is the strategy to sell the same product in new market. For example Air Asia can open up new routes to other places than the existing routes.Opening up more routes is going to be advantages, but it costs more than doing market sixth sense because more aircrafts and pilots will be needed.AIRASIA RESOURCES EVALUATIONIn order to implement a strategy AirAsia has to evaluate the resources because if the resources are not enough, the executing will not be maximiz ed and there will be surmise that the strategy will fail. There are resources to be evaluated before choosing a strategy, such as budgets, human resources, and network analysis.For diversification huge investment is required, because the company might have to build a factory or buy/rent new premises. The company might have to recuperate new employees who have knowledge about the new business.Market penetration and market development strategies require less money as compared to diversification strategy. Market penetration and market development strategies only grow existing resources to get more profit or bigger market share, and usually the budget for these strategies are mostly taken from marketing budget.Now a days LCC market is becoming very competitive. Its profit margins attract many new competitors. As I discussed above, a good number of the full service airlines have or planning to create a low cost subsidiary to compete with Air Asia. In this situation AirAsia should not think about diversification. It should only focus on airline business. So strategies like market development and market penetration will be preferred at the moment.POSSIBLE FUTURE STRATEGIES FOR AIRASIAAirAsia have to pursue limited growth strategies such as market penetration and market development in the future. These strategies work a lot for AirAsia in order breathe competitive in LCC market. Many new competitors like Tiger Airways directly threatening its market share. So at present AirAsia needs to sum up its brand image and get more loyal customers.Air Asia can increase its brand image by promoting low-priced, on time and safe traveling experience campaign. As I discussed above people have negative perception about LCC. People think that LCC may compromise safety to keep cost low. So in promotions AirAsia should try to change these negative perceptions.Advertisements on television are expensive but sound to increase the brand image, so Air Asia may advertise on the televisi on. Ads on Channels like BBC, National Geographic will work a lot. To help reduce the cost, advertisement time may be made shorter and advertisements may not be aired very frequently. The vanquish time for AirAsia Ads is during holidays when people are thinking to go on traveling.There are upcoming sports events like 2011 Cricket World Cup in India, Sri Lanka, Bangladesh, and 2012 Olympics in London. By sponsoring these events AirAsia can further improve its image.AirAsia has strong presence in Asian region as compared to other low cost carriers. Currently they are operating from three countries Malaysia, Thailand, and Indonesia and covering several destinations in China, India, Sri-Lanka etc. but still most parts of these countries are under served. AirAsia alone dont have capacity to cover this whole region. So partnership with some other airlines is required at this stage. Partnership with Virgin Airline will provide great opportunity to expand its business in Asia as well as in other parts of the world.RECOMMENATIONSAirAsia has strong position in Asian market. Now a day Asian low cost carrier market is becoming very competitive. To keep stronger position in the market AirAsia has to adopt combination of market penetration and market development strategies. As we know AirAsia has strong management team, which will surly make these strategies successful.AirAsia has some weaknesses but these do not attend to be very dangerous. Rising fuel prices have made operational costs high for the whole industry. However these high operational costs means companies with fewer profit margins than AirAsia may become unneeded in the future thus, opening up customer bases previously not available to AirAsia. Middle income earners are increasing specially in china and India there is much talent for AirAsia to expand its routes. AirAsia engages in direct sale through web site and call center. It should be very careful that problems with network can seriously damage their bu siness.REFERENCESOrders, Deliveries and Operational Asia Pacific. January 2010. http//www.airbus.com/fileadmin/backstage/documents/od/January_2010.xls. Retrieved 9 February 2010.http//biz.thestar.com.my/news/story.asp?file=/2009/7/9/business/4284964sec=businesshttp//www.airbus.com/en/presscentre/pressreleases/pressreleases_items/09_06_16_a350xwb_airasiax.htmlhttp//www.tiags.com.vn8080/?idx=newsdetailmod=newsact=detailid=92type=2Leong Hung Yee (27 December 2006). AirAsia embarks on 2nd chapter. The Star. http//biz.thestar.com.my/news/story.asp?file=/2006/12/27/business/16419327sec=businessAirAsia sponsors the Formula One team WilliamsAirAsia unleashes its X-factor