+44 7743 307695
May 16, 2023
  • AirAsia is a reputed and leading Asian based airline company, which is headquartered in Malaysia by a government-owned corporation named DRB-Hicom. It is the largest airline company based on the concept of the Low-Cost Carrier (LCC) (Zhang et al., 2017). The company was established in 1993, and the official operation of the company was started on 18 November 1996. AirAsia offers transportation services to its passengers along with several other services, which includes courier services and cargo services. AirAsia was bought over by Tony Fernandes, the current chief executive officer of AirAsia from DRB-Hicom on 2nd December, 2001 (Soon, 2017). AirAsia managed to become one of the most popular and profitable airline companies in the world by implementing visionary leadership and innovative business approach. AirAsia was named as the best low-cost airline company in the world for 9 consecutive years at the Skytrax World Airline Awards.

    The company makes use of innovative solutions in order to provide low-cost aviation. The route network of AirAsia is one of the largest in the world, which covers more than 20 countries all around the world. In 2002, AirAsia became the first airline company in the region that allowed passengers with the facility to pay for their bookings by using credit card. Furthermore, AirAsia adopted a fare structure, according to which, the people who book tickets earlier will get a cheaper fare (AirAsia, 2018). The first main hub of AirAsia was launched in Kuala Lumpur and Malaysia, and it was known as Low-Cost Carrier Terminal (LCCT). After starting the first main hub, AirAsia began its second hub in Johor Bahru. AirAsia has expanded its routes to different countries all around the world including Indonesia, China, Singapore and the Philippines. AirAsia launched AirAsia Berhad in 2001, which provides air transportation services, particularly in Malaysia. It offers scheduled flights and chartered flights for passengers, and also provides air cargo services (AirAsia, 2018). AirAsia Berhad also facilitates in operating businesses, related financial services and airline operation services.

    The focus of AirAsia was on maintaining its low-cost policy and in context to that AirAsia X was launched in 2007. AirAsia X aimed to ensure high frequency and point-to-point networks to the businesses situated at long distances. AirAsia X was regarded as having the world’s best low-cost airline premium seat and the world’s best low-cost airline premium cabin for five consecutive years (AirAsia X, 2018). AirAsia X has amplified its profit-making routes to multiple countries such as Australia, France, Iran, South Korea and New Zealand. AirAsia is involved in many Corporate Social Responsibility (CSR) activities so that it can contribute towards the welfare of the community. UNICEF collaborated with AirAsia to raise $ 128 million for the people who were affected by the earthquake in Haiti. Tony Fernandes was recognised as for his outstanding work in AirAsia, and he was awarded by the International Herald Tribute Award and he also became the Malaysian CEO of the year in 2003 (Roy, 2014). AirAsia also acquired recognition for improving its supportive and constructive management, as it received rewarded by Center Asia Pacific Aviation (CAPA) as the best airline of the year.

    The purpose of this report is to examine the market environment for AirAsia, which has established its business in Malaysia. Specific analysis has been conducted in order to analyse the market environment for AirAsia. Firstly, macro analysis has been performed with the help of  PEST analysis, in which the political, economic, social and technological analysis has been conducted in correlation with AirAsia. Secondly, microanalysis has also been conducted for AirAsia with the help of PORTER’s five forces model. Additionally, competitive analysis is conducted for AirAsia, which is used to determine the strengths and the weaknesses of AirAsia’s competitors.

    Furthermore, competitive analysis has also been conducted for AirAsia in this report along with marketing mix 7 Ps’ and SWOT analysis. Marketing mix 7 Ps’ and SWOT analysis can improve the brand value of AirAsia and identify the strengths and weaknesses of AirAsia along with determining the future opportunities. At last, Strategic priorities are identified and analysed to provide the values that help AirAsia in fulfilling its aim.

    Company/Brand Background about Air Asia

    AirAsia is one of the largest low fare airline companies in Asia, which has been expanding its routes to different countries since 2001. It was started in 1993, and the operations began in 1996. It has a fleet of over 70 aircrafts, which fly to over 120 destinations and operates over 400 flights daily from its hubs situated in Thailand, Malaysia and Indonesia (AirAsia, 2018). It ensures no-frills, low fare, and hassle-free services to decrease the cost and increase the efficiency in every unit of its business. The airline claims ‘No Admin Fee’, but all the services provided by AirAsia are not free, it has some fees for some services. The company makes use of Yield Management System (YMS), Customer Reservation System (CSR) and Enterprise Resource Planning (ERP) system, which makes it more effective in providing its services, reduces overall cost, and eliminates inefficiency in their business.

    AirAsia is a Malaysian low cost and no-frills airline company, which has a unique slogan stated as “Now Everyone Can Fly.” AirAsia adopted the Computer Reservation System (CRS), which enabled it to introduce the first-ever ticket-less travel facility and also provides features such as advanced boarding passes and online ticket booking. AirAsia offers the cheapest flights to over 120 destinations across Asia and Australia (AirAsia, 2018). The company makes use of robust enterprise resource planning system, which allows it to successfully maintain process integrity, speeds up reporting, and data retrieval process. AirAsia has the vision to be one of the best and largest airlines that operates at a low cost. Furthermore, the company wants to serve the 3 billion people who are currently out of connectivity and cannot afford high fares. It works towards providing the highest quality products by making technological advancement to reduce cost and enhance service levels.

    There are several companies associated with AirAsia including AirAsia X, Tun Hotel, Tune Monkey, AirAsia Berhad, Thai AirAsia Co. Ltd., AirAsia Japan Co., Ltd., PT Indonesia AirAsia (India) Limited. AirAsia’s mission is to be the best company, which ensures good relations between its management and employees, to make everyone fly with AirAsia by attaining the lowest cost, employ new technology to maintain highest quality products and enhance service levels. It follows vital certain strategies, which include safety first, high aircraft utilisation, streaming operations, lean distribution system and point-to-point network to amplify the working of its low-cost model (Zhang et al., 2017). The company has partnered with the world’s most famous maintenance providers to ensure its passengers’ safety. It allows its customers to choose the services they want without compromising on quality. Itoffers a broad and innovative variety of distribution channels to ease the travelling and booking process.

    Macro Analysis for Air Asia

    PEST Analysis


    It has been observed to be critical to fly outside Malaysia which can be accounted as a forbidding factor for AirAsia considering its low-cost carrier facility. Furthermore, landing charges can be identified as the negative aspect resulting into underdevelopment of the airline industry as the aviation sector is strictly obligated to abide by precise air rights regulations and norms. In addition to this, various political factors can be highlighted by influencing the operations and management of AirAsia which have been mentioned below.

    • Strict regulation and prioritisation by the UMNO (United Malays National Organisation) authorities to implement uniforms for the hostess.
    • Government regulations which target various aspects such as particular routes, landing permissions and share possession cause a drastic impact on the operations of the organisation. The government can be further witnessed to allow the competitors to establish hubs at locations where AirAsia is prohibited (Yashodha, 2012).
    • Human resource management undergoes significant political pressure as the recruitment process of AirAsia is focussed on the racial determination of the applicants rather than their merits.


    Considering the competitive characteristic of Malaysian airline market, AirAsia has comparatively gained significant customer attention from the customers due to its affordable tickets and additional services. The company was observed to initiate low-cost tickets during the recession which assisted in establishing a prioritised reputation for the organisation.

    • The increase in oil prices has critically impacted the operations of the organisation.
    • The market has confronted critical competition in the form of new competitors who have also introduced low-cost flights.
    • AirAsia can be accounted to lack financial assistance from organisations or sponsors which consequently minimise the investment opportunities for the organisation (Abdullah, 2010).


    The operational region of AirAsia comprises different countries which introduce diversity in religion, language, culture and approaches. The diversity results in critical issues and problems for AirAsia to manage and operate all its functions accordingly. Furthermore,

    • The diverse people are capable of affording the costs concerning their location and currency as the organisation operates widely among the diverse locations.
    • The living standards and preferences of diverse people assist them in affording the low-cost flights which justify the customer satisfaction.
    • The adaptable quality of the employees with changes and amendments ensures ease in amending and improvising the operations of the organisation (Lim et al., 2009).


    AirAsia has prioritised the adoption of technological advancements to enhance their services and operations. The approach towards technology assists the organisation in minimising risks and problems and facilitating enhancement in customer services. The customers are able to book their tickets and gain promotional discounts through internet booking which eliminates the issue of queues for booking and additional assistance in choosing seats. Technology is a major component of organisational structure which is completely analysed on the basis of IT framework of Airasia in particular region. In addition to this, the IT management of AirAsia adopts precise and effective approaches to ensuring the convenience of its customers (AIRASIA.COM, 2017).

    Micro Analysis for AirAsia

    The microenvironmental analysis for any company or organisation is performed using Porter’s Five force model. This model is widely implemented by various organisations for the development of their strategies in the industry. Porter’s five force analysis for Air Asia is as under:

    Bargaining power of Supplier– Analysis of the bargaining power of suppliers is crucial for any organisation, as with the help of this, an organisation manages the capital and makes decisions regarding financial management (Thomas and Housden, 2017). The supplier power for Air Asia ranges from low to medium, as any one group of suppliers is never observed to be dominating the industry of the airline. Although the two major suppliers of aeroplane structures are Airbus and Boeing, the suppliers of other facilities required in an aeroplane, for hospitality services including food and merchandise, are available in adequate amount in the market. Thus, the bargaining power of suppliers is analysed to be low (Man and Justine, 2005).

    Bargaining power of Buyers– The buyer power for Air Asia is analysed to be high as with increasing options in the international market and decreasing prices of air tickets, people of every category of society can afford flying, and hence, the bargaining power of buyers is also high. Increasing globalisation has led to an increase in the lifestyle and financial condition of people. This increases the probability of people to avail of airline services frequently. In accordance with the increased demands, the options available for flying has also increased, and hence, the bargaining power for buyers is examined to be high for Air Asia.

    The Threat of Substitution– The international airline market has sufficient low-priced airline options available for passengers to travel. This is because of increased globalisation among industries and travelling, and the tourism industry has been severely affected by it. This has raised the threat of substitution for Air Asia, as in any case of customer dissatisfaction or unavailability of service, it will be easy for the passengers to shift to some other airline company. Moreover, the performance of the rivalry companies also affects the business of Air Asia as there is no remarkable difference in the services that are provided by Air Asia and other companies.

    The Threat of New Entrants– In the business of airlines, the loyalty of the customers is found to be weak. In the context of this fact, the loyalty of the customers of Air Asia has been decreased because of the increasing competitors of Air Asia in the airlines, such as Jet Star and Tiger Airways. However, there is also a barrier to the establishment of the new entrant in the airlines, which is the high start-up cost that is required for the airline services. In order to establish a new airlines company, high amount of capital along with risk-bearing capabilities and monetary funds to cope up with the challenges faced while sustaining in the airline industry are required. This reduces the chances of small or medium enterprises to enter this industry, and hence, the threat of new entrants for Air Asia is very low. Another reason for the threat of new entrants being low is government laws and regulations which pose restrictions on applying for permissions and license for operating an airline company.

    Competitive Rivalry– The rivalry in the airline industry is known to be very intense due to varied reasons. The major reason is that the number and type of competitors remain the same for a long time, and this reduces the chance of an airline company at a lower level coming higher in the market.Different airline brands are known for various services, for instance, JetBlue is known for the quality of services and amenities and Air Asia is known for its low cost. The major competitors for Air Asia as per the market analysis are Jet Star Airways, Tiger Airways, JAL Express, and Air Arabia. Brands, such as Jet Star Airways and Tiger Airways, are sustaining in the competition as they also provide air transportation at cheap costs to people along with enhanced in-flight services and varied options for passengers.This directly affects the customer strength of Air Asia, and these companies pose a threat to the company. In the similar context, Air Arabia provides the facility of carrying extra baggage for passengers, and this makes Air Arabia a preferred choice over Air Asia. Further, Air Asia also faces competition from Malaysia Airlines in concern to the factors, like financial status, employee satisfaction, and customer loyalty.

    Competitive Analysis of Air Asia

    In the increasing demand of the airline services, there is a tough competition in the airline industry because of the varied numbers of the competitors that are providing the airline services. Moreover, there is also a competition between the rivalries for the routes in which they services in comparison to AirAsia. With the increasing number of services by different competitors, AirAsia has also expanded its facilities including the tour packages and hotel booking services that help the company to sustain in the market. AirAsia has been facing the competition with the varied existing low fare airlines that include Jet Star Airways, Tiger Airways, JAL Express and Air Arabia. The two closest competitors that are considered against AirAsia include Jet Star Airways and Malaysia Airlines (AirAsia, 2018).

    Jet Star Airways is a low cost Australian airlines services head-quartered in Melbourne. Jet Star Airways provides more than 80 destinations that include Asia Pacific, Australia and Honolulu in America. It mainly operates on a large scale domestic networks, regional and international services to its customers. In contrast to this, AirAsia is offering more than 130 destinations that include the Middle East, Honolulu and the Asia Pacific. Moreover, it also provides numerous opportunities to travel and explore overseas, developing skills for new cultures. Jet Star Airways are considered as the safest low cost carriers among the 10 safest carriers in the airline industry of Australia. in the world Therefore, in the increasingly competitive market, AirAsia flies to more number of destinations in comparison to its competitors. However, AirAsia provides service packages to its customers at a very reasonable charge that is affordable to the customers in comparison to the competitors in the airline industries. In contrast to this, Jet Star Airways has more types of planes that are provided to its customers that includes A320, Bombardier Q300, A321 and Boeing 787 Dream Liner; whereas AirAsia offers only two types of planes to its customers, which are A330 and A320. Furthermore, Jet Star Airways has comparatively more number of payment options that are available for the convenience of the customers (Finder, 2018).

    Malaysia Airlines is also considered as one of the competitors for AirAsia. Malaysia Airlines is a member of the oneworld airline alliance and it is also considered as the flag carrier of Malaysia which is head-quartered in Kuala Lumpur International Airport. It mainly constitutes of two major subsidiary airlines that includes MASwings and Firefly. As compared to the services of the AirAsia, Malaysia Airlines provides better services and gain efficient customer satisfaction. Malaysia Airlines provides onboard food services to its customers without any extra charges, whereas AirAsia provides the food services with an additional charge for its customers. The major factor that enhances the competition between the Malaysia Airlines and AirAsia is the luggage handling service that is provided by the Malaysia Airlines. Luggage handling is the major factor that is considered by the customer as well as the airlines industries and in context to this fact, Malaysia Airlines provides average 15 kg of luggage, and it does not include any additional charges in case there is few more luggage than the normal capacity provided by the airlines. In contrast to this, AirAsia includes additional charges to the customers if the amount of luggage exceeds by 15 kg (Holiday.My, 2018).

    As per the past experiences and the feedback of the customers, Malaysia Airlines are found to react their destinations on time in comparison to AirAsia. The overall services that are provided by Malaysia Airlines and AirAsia have a tremendous difference. The check-in services in Malaysia Airlines are very

Order this Assignment now

Total: GBP120

fables template