In its dynamic and competitive environment, Air Asia has reaped great benefit by applying low cost advantage in its business model. By the combination of technology advancement in its selling and marketing strategy and also strong recognition of various languages used by its world customers, AirAsia has successfully developed its business into a widely known best performance company in Southeast Asia airlines industry. Keyword:AirAsia, low cost carrier, web design, business model, strategy Analyzing Air Asia in Business Competition Era 2 FCU e-Paper (2009-2010)Table of Content Page A. Introduction 3 B. AirAsia Company 3 C.
AirAsia Financial Analysis 5 D. AirAsia Web Design 6 E. Customer Segmentation 8 F. Value Chain Analysis 9 G.
AirAsia SWOT Analysis 10 H. Porter’s five-forces analysis on AirAsia 10 I. Capabilities Analysis 13 J. Summary 14 References 15 List of Figures Figure 1: The Unaudited Condensed Consolidated Income Statement of AirAsia 5 Figure 2: AirAsia. com Homepage 6 Figure 3: Customer Segmentation 8 Figure 4: Value Chain Analysis of Airline Industry 9 Figure 5: Porter’s Five Forces 11 List of TablesTable 1: AirAsia SWOT Analysis 10 Analyzing Air Asia in Business Competition Era 3 FCU e-Paper (2009-2010) Analyzing Air Asia in Business Competition Era A.
Introduction Doing businesses has become harder in today’s competitive era. Businesses are not just facing higher pressure from increasing number of competitors, but they also have to compete in more dynamic and complex environment. The competition wave, that is mostly induced by the digitalization and finding of more advanced technology, has forced every single business to adapt the best business strategy.The heavy competition is also happening in airlines industry. There are increasing number of new carriers with new business model which has changed the competition pattern in the airlines industry. O’Connel and Williams (2005) said that direct competition between full service airlines and no-frills carriers is intensifying across the world.
The old business model of most airlines business focused on the full service, while the new business model focuses on using digital technology to make the business becomes more and more efficient, and thus, leading to cost advantage.Facing the digitalization era, Air Asia has emerged as one of the best performance company in airlines industry. In a 2007 article, Thomas discussed how, during the external and internal crises, Air Asia owns 51% market share of Malaysian airlines industry. This paper tries to analyze Air Asia as the rising star of today’s airlines industry. The analysis included the how Air Asia designs its web, and how it applies E-commerce issues on its business model.
B. Air Asia Company AirAsia Berhard which is also known as AirAsia, is an airline company which provides air transportation service.AirAsia was established in 1993 and started operations on 18 November 1996. AirAsia has a very long ownership history. At the very first, AirAsia was founded by a government-owned conglomerate, DRB-Hicom.
Later on, it was purchased by Tony Fernandez, former Time Warner executive on 2 December 2001. The company’s headquarter is in Sepang, Selangor, Malaysia. Its main base is the Low Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport. Their operations are carried out in Malaysia, with 3,474 employees. AirAsia is the leading low fare airline in the Asia and AirAsia is the pioneer of low cost fliying in Asia.
Analyzing Air Asia in Business Competition Era 4 FCU e-Paper (2009-2010) AirAsia has been experiencing tremendeous expansion since 2001 as the largest low cost carrier in Asia. It flies to over 61 domestic and international destinations with 108 routes, and operates over 400 flights daily and their subsidiary companies located in Thailand and Indonesia. In Thailand, AirAsia has hub in Suvarnabhumi Airport and in Indonesia at Soekarno-Hatta International Airport. AirAsia operates scheduled both in domestic and international flight and in Asia, AirAsia is the largest low fare and no frill airline.AirAsia philosophy, ‘Now Everyone Can Fly’, is related to their vision, that they want to be the largest low cost airline in Asia and serving 3 billion people who are underserved with poor connectivity and high fares.
Their mission is to be the best company to work for whereby employees are treated as part of a big family, to create a globally recognized ASEAN brand, to attain the lowest cost so that everyone can fly with AirAsia, to maintain the highest quality product, embracing technology to reduce cost and enhance service. AirAsia focuses on several major issues.First, it is partnering with the world’s most renowned maintenance providers and to comply with world airline operations to guarantee the passengers’ safety. Second, implementing the regions fastest turnaround time at only 25 minutes, to assure lower costs and higher productivity. Third, low fare without compromising on quality and services.
Fourth, streamline operations and lean distribution system. Fifth, applying the point-to-point network to keep operations simple and low costs. Adapting those strategies in its business model, AirAsia have won many awards and recognitions. ome lists of awards and recognition in 2008 and 2009. The recent awards are Airline of the Year by Centre Asia Pasific Aviation (CAPA), Best Asia Low-Cost Carrier by TTG Travel Awards 2009, and World’s Best Low-cost Airline By Skytrax In the competitive airline industry, AirAsia keep improving their supportive and constructive management by being supportive and responsive in listening to its employee for any ideas for reducing cost. And as their philosophy “Everyone Can Fly” AirAsia its weapon to corner its other competitor is effect in reducing cost boosted AirAsia to be one of the top in low cost air carrier competition.
AirAsia is leading the way for developing low cost airlines and its promises to revolutionize the international market palce. And for now, many low cost airline companies in some country have adopted the strategies inovated by AirAsia succesfully Analyzing Air Asia in Business Competition Era 5 FCU e-Paper (2009-2010) C. AirAsia Financial Analysis The Income Statement Report depicted financial condition of a company. Income Statement data from taken from the company’s first quarter report ended March 31, 2009 showed that there was increasing profit compared to last year performance (2008).Figure 1 The Unaudited Condensed Consolidated Income Statement of AirAsia Source:http://www.
airasia. com/storage/bo/aaportal. model. ContentFileUpload/864f116 a-7f000010-14ef2390-d427551c/name/AA_1Q09_Bursa%20Announcement. pdf Counting the profit from operation, AirAsia gained 281,432,000 RM, an increase of 217.
63% from 2008 data. After deducted with depreciation and all taxes, the Analyzing Air Asia in Business Competition Era 6 FCU e-Paper (2009-2010) company experienced 25. 96% increased of profit after tax in 2009 compared to 2008 data.Based on its impressive growth of financial performance, we can see that AirAsia has implemented the correct business model to win the competition within the industry. D. AirAsia’s Web Design Figure 2 - AirAsia.
com Home Page Source: www. airasia. com For analyzing the company’s web design, we will observe Air Asia’s website by using the 7C factors (Context, Content, Community, Communication, Customization, Analyzing Air Asia in Business Competition Era 7 FCU e-Paper (2009-2010) Connection, Commerce). 1. Context •Air Asia company has been using internet technology for its marketing and sales.
Air Asia has registered its domain name as airasia. com, it is quite easy to find or even guess the domain name to get to the air asia website (www. airasia. com). •The site was dominated by red and white color which represent the color of Air Asia itself and also the site is quite simple and easy to understand (user friendly). 2.
Content •Airasia. com provides many languages besides english, there are many different languages but mostly are asian countries because as we know Air Asia’s market is in ASIAN. •The information in this site is complete enough and news always updated. We can easily buy or booking ticket using the features on the website, also we can check the schedule of the flight. 3.
Community •This site does not offer a specific feature for community such as forum, but Air Asia has the other social network to provide the community such as Air Asia Blog, Facebook, Twitter as we can see at the bottom page of the website, so people can share their comment about Air Asia services. 4. Communication •The site all necessary information such as call centre, sales office, actually Air Asia also provides a magazine for their customer ( we can’t see magazine in the website) The site provides the up to date flight info, special promotion in their home page, it attracts customer to buy a ticket because most of them are in special price(cheap) 5. Customization •The site is quite simple (user friendly) and provides all necessary information that we need. •The site offer some languages 6.
Connection •Air Asia has been cooperating with a lot of company but from the website we can only see HSBC Bank in their website, because HSBC is their partner in order to pay the payment. Analyzing Air Asia in Business Competition Era 8 FCU e-Paper (2009-2010) 7. Commerce Online booking, air asia has been cooperating with HSBC for the payment. •The site does not provides other company’s advertisement which not related to air asia, they are really focusing for their marketing itself for this website. We still can make an advertising in Air Asia through other ways such as in magazine, meat tray table back, flying airboard etc.
E. Customer Segmentation As it expands, AirAsia also faces a challenge in filling up capacity as consumer spending slows and competition increases from flag carrier Malaysia Airlines, which recently offered zero fares on surplus seats.The airline companies have meet the increasing consumer demands and also face the demand to be efficient. Peter Harbison, executive chairman of the Center for Asia-Pacific Aviation in Sydney said that the more the companies compete then the more fares needed to go down. Figure 3 Distinct Customer Segmentation New Markets will be created through distinct customer segmentation.
This echoes the vision of AirAsia’s CEO, “We want people who had never boarded a plane or dreamt of flying to fly with us. ” Customers will continue to fall into segments with regard to demand for products on offer.Not every airline will be able to satisfy every customer. – The entrance of low-cost airlines will push customer segmentation – There will be a sharper focus on customer segments, especially for short routes. This is because the short routes are a “Dual Market” serviced by airlines for price conscious customers (low cost airlines) and for quality-conscious customers (full Analyzing Air Asia in Business Competition Era 9 FCU e-Paper (2009-2010) service airlines) – There will be stiffer competition for non-business passengers and price-conscious business passengers on short routes
