Retrieved from https://graduateway.com/air-asia-economic-analysis-mba/, This is just a sample. {text:bookmark-start} {text:bookmark-start} AirAsia pricing strategy {text:bookmark-end} {text:bookmark-end} There are many types of price strategies for firm with their market power to increase the market demand and maximize theirprofit. The taxes for the operation and the license to be paid by AirAsia also plays an important role since, AirAsia has to revenue its operational license in certain period unlike other airlines. Air Asia therefore, can provide an alternative route to travel to Bangkok, by using Senai Airport in Johor Bahru, in southern Malaysia. However, market participants tend to realize that price war is destructive for them thus they avoid direct price competition and they turn into ‘friendly’ competitors. they are non-cooperative and pursue profit-maximizing strategies based on the assumptions on competitor action. How the passengers` satisfaction and repurchase intentions can influence their word of mouth communication? In order to sustain its competitive advantage, AirAsia needs to leverage its competency in creating cost advantages across multiple value chains. With the average fare being 40-60 % lower than its full-service competitor, AirAsia has been able to achieve strong market stimulation in the domestic and international market. Furthermore, Air Asia’s growth strategy involves increasing the frequency of flights to markets that it currently serves and expanding its route network. Understanding and meeting customers’ expectations, and gaining the competitive advantages over the competitors are important in order to survive in today’s world of globalization. There is a need to investigate the Iranian perceptions of service quality so that AirAsia improve its service quality to remain different from its competitors in Iranian market and increase its market share in Iran. In 1966, airline’s name was changed to Malaysia-Singapore Airlines. We use cookies to give you the best experience possible. Malaysia’s domestic and international markets are expected to enjoy strong growth rates, with international activity growing more rapidly than domestic activity. However, the deregulation of aviation industry in Asia Pacific region has resulted in more competitors entering the market. The largest airline in Malaysia the business is known to be highly employee centric. With technology becoming the core competence of the businesses around the world, AirAsia has adapted to the situation via its online booking facility. text:bookmark-start} {text:bookmark-start} GDP with AirAsia {text:bookmark-end} {text:bookmark-end} From this table, we can see that the GDP in the first quarter of 2009 was negative 6. However, AirAsia was able to survive the situation with incurring much loss. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. The strategic analysis is imperative for a business since it is vital in the identification of critical success factors which AirAsia should leverage on to achieve competitive advantage in the aviation market (Kotler & Armstrong, 2012; Porter, 2013). SWOT analysis of Airasia Strengths Firstly, Air Asia has indeed a strong management team. 749 Words 3 Pages. 25%, this means that in this economic situation, people don’t want to spend their money. It is important that service companies measure and monitor service quality and satisfaction based on their customer needs and expectations (Saha and Theingi, 2009). The company was founded by Abdel Aziz bin Abu Bakar, Anthony Francis Fernandes, Conor John McCarthy, and Kamarudin bin Meranum in 1993 and is headquartered in Kuala Lumpur, Malaysia. This is aided by AirAsia X operating longer average stage lengths (about 5,000km) than other LCCs. Besides that Air Asia increasing the frequency of flights to markets that it currently serves and expanding the number of markets that it serves, ultimately the success of this growth depends upon obtaining additional traffic rights suitable airports located in AirAsia’s targeted geographic markets. In the wake up of increasing competition and improving tourism industry, there is a need for airline providers to recognize the importance of service improvement in order to establish competitive advantages. The power of buyer is moderately high due to almost no switching cost for customers to switch from one LCC to another. Sometimes firm A might be lowest and sometimes firm B might be lowest. The LCC industry attractiveness and profitability will attract many full service airlines to launch its LCC version adding the degree of rivalry in this industry. We're here to answer any questions you have about our services. This will be in line with global economic growth, which is estimated to reach between four and five percent in the next two to three years. Source: CAPA - Centre for Aviation, OAG. The concept of Air Asia is based on the belief that demands for short-haul air transport is price flexible. For example, a rise in corporation tax (on Air Asia’s profits) has the same effect as an increase in costs. Banks, through their web-based, online banking systems, do influence AirAsia businesses. Specific analysis has been conducted in order to analyse the market environment for AirAsia. MAS was born in this situation and led by government. If you need assistance with writing your essay, our professional essay writing service is here to help! AirAsia Group Berhad has recorded a decreased gross profit from RM1.9 billion in FY2017 to RM805.1 million in FY2018 equivalents to (-56.55%). Situational Analysis for Aviation Industry in general (Using PESTEL Analysis) Air Asia Berhad implemented its low-cost and high-service frequency business model in association with the ASEAN region. The Tastes and lifestyles of people play a key role in determining, if the people are willing to fly on low-cost airlines. In addition, the airport tax payable for Air Asia LCCT (low cost carrier terminal) is considerably high. In Kuala Lumpur. This is surprising since, Only a year earlier, in July 2001, the government had granted a request by MAS for an increase in the fares for domestic services within Peninsular Malaysia by about 52 percent. That means the total cost of product is lower. Published: 5th May 2017 in Business environments are often complex and require holistic solutions. As its element the air transportation market: Uses common world air space; Depends on the tendencies of development of the world economy; Becomes more active under the condition of world economy internationalization and consolidation of international cooperation; Depends on market condition an main world market; • it is greatly regulated by mega economic regulators. Thus AirAsia has to adapt to the business environment to help them sustain in the business for a long run. How do service quality dimensions (Airline tangibles, terminal tangibles, personnel, empathy and airline image) can influence the customers` satisfaction and repurchase intentions? As stated by Azran Osman Rani(AirasiaX), unlike AirAsia, the carriers like zoom and oasis used old planes, some as old as 20 years old. In the main predestination, macroeconomic regulation is aimed of anti cyclic influence on the economy of the country under the condition of activation of risky- forming factors in the world economy. In the first case in Figure below indicates a ordinary case where a lower price for good 1 leads to greater demand for the good so that the Law of Demand is satisfied; in the second case we have a situation where a decrease in the price of good 1 brings about a decreased demand for good 1. Its critical that the business continues to take modest fiscal approach to sustain the image gained in the market. The target audience of the AirAsia plays a vital role in the consumer behavior of the company. People perceive service quality differently. This dynamic branch of world economy is subjected to the influence, in the first place, of institutional subjects. {text:bookmark-start} {text:bookmark-start} The Business Environment Needed for the Firm to Adapt {text:bookmark-end} {text:bookmark-end} AirAsia is an Oligopoly market as there are only a few major players in the airline industry with substantial barriers to entry . Generally, the higher their price, the higher will be the costs of production. By conducting this analysis Air Asia would be able to get a better understanding on the growth and development of their organization. Do you have a 2:1 degree or higher? This is because these kinds of target market are likely purchase the service that is economy, valuable and affordable. AirAsia is considered as one of the most popular and successful budget airlines in South East Asia (Cassandra, J., 2007), that newly entered in Iranian market. The average fare offered by Air Asia in Malaysia is 40-60 % lower than its full-service competitor. According to Bank Negara Malaysia (BNM), Malaysian economy shrank 6. {text:bookmark-start} {text:bookmark-start} Firm effects {text:bookmark-end} {text:bookmark-end} {text:bookmark-start} {text:bookmark-start} Online Service {text:bookmark-end} {text:bookmark-end} These services, which were launched by the Company in September 2003, are expected to be assumed by the Company’s wholly owned subsidiary, AirAsia Go Holiday, by the end of 2004. From the hub in Kuala Lumpur, MAS has a worldwide network to 87 destinations across six continents. Registered Data Controller No: Z1821391. As the recession is likely to last for some more time, business travelers will keep an eye on their travel expenses. This kind of target market will easily shift to other competitor who also offers the lowest price or doing a sales promotion. The study also applied SERVQUAL model to measure service quality and customer satisfaction. When a firm decides the price of their products, they must be very careful. 4.1 Porter’s 5-Forces Model (Appendix 1) From the analysis model, it is possible to conclude that supplier power is high due to monopolization of the industry by Boeing and Airbus. {text:bookmark-start} {text:bookmark-start} Business Environment {text:bookmark-end} {text:bookmark-end} {text:bookmark-start} {text:bookmark-start} {text:bookmark-start} Macro environment {text:bookmark-end} {text:bookmark-end} {text:bookmark-end} The major macro-environmental factors suggest a very conductive environment for the growth of LCCs in Asia. SWOT ANALYSIS FOR AIR ASIA Strengths, Weaknesses, Opportunities and Threats Analysis for AirAsia Strengths The first phase of the swot analysis is the strengths analysis for Air Asia. /km was 5,2 % . The Air Asia being a low cost airline, whose target audience is the all people whose salary falls in the middle or lower income of Malaysia. In addition, the same situation happened in Indonesia, whereby AirAsia bought the firm that was facing losses that converted it to indo-AirAsia. AirAsia until today has flown more than 55 million passengers in and around Asia (Air Asia, 2005). Some of the staff is former employees of other full-service airlines; some of the old habits/norms are still with them. Air Asia can pass some of this tax on to consumers in higher prices, but it will also affect the bottom line. In the event that MAS or any other full-service carriers were to reduce their fares to levels at which Air Asia could not match while sustaining profitable operations, and were to maintain such reduced fares for an extended period, there can be no assurance that Air Asia would be able to maintain such reduced fares for an equivalent period of time. Thus, measuring customers’ expectations, and their service quality is difficult because customer satisfaction is measured by many intangible factors such as atmosphere and condition of the cabin, crews behaviors, etc. So the growing population provides an attractive market for the Air Asia to stimulate air travel among a population that previously could not afford to travel by air or lives in areas not serviced by other airlines. {text:bookmark-start} {text:bookmark-start} Pricing strategies, costing and the consumers’ behavior {text:bookmark-end} {text:bookmark-end} “Price is a very important element to decide a business success. This service of AirAsia basically under the form of air travel, and the critical success factor for its product are as follows Low cost airlines strive to achieve the lowest possible price for their products and services. By operating the low cost text:bookmark-start} {text:bookmark-start} Firefly {text:bookmark-end} {text:bookmark-end} {text:bookmark-start} {text:bookmark-start} Competitors Analysis {text:bookmark-end} {text:bookmark-end} Air Asia’s goal is to establish itself as a leading low cost carrier in Asia. Additionally, economic growth in the region and improved cost of living has empowered many Asians to board flights to different destinations hence, a… Easy visa, high educational standards, freedom, low cost of living and great transportation facilities are among Malaysia’s attractions for Iranian people. Its net profit for the second quarter ending 31 December 2004 was reported RM 44. Air Asia is a low-cost airline headquartered in Malaysia. Secondly, it also targets the age groups, who are young adult and above because this kind of age group have the ability to spending and may be always need a flight to other far destination in shorter time. Further analysis using the Ansoff The main idea of the paper is about the industry analysis applied to generic strategies thus generate competitive advantages. (Gordon Tullock, 1998) {text:bookmark-start} {text:bookmark-start} Price Changes and Consumption Choice {text:bookmark-end} {text:bookmark-end} The relationship between price changes and consumption choice are interdependent. For example, International Air Transport Association statistics show full-service airlines Cathay Pacific carried 18.1 million passengers last year, Thai Airways International 17.9 million, Singapore Airlines 16.3 million and Malaysia Airlines 11.9 million (Fernandes, 2010). High service quality fosters customer satisfaction, stimulates intention to return and encourages recommendations (Nadiri and Hussain, 2005). The major customer base of AirAsia is the middle and low-income group whose main preference is to get from one place to another in a efficient and cost efficient manner. With the introduction of the ‘no-frills’ concept to the Malaysian market, Air Asia has proven this theory wrong and goes from strength to strength by actually increasing the size of the market and more recently by taking away passengers from the major airline competitors. However, the archipelago geographical structure of Asia has made air travel the viable, efficient, and convenient mode of transportation. draw:g} When government tax is at the level t0 the ticket price charged is p0 at the same time quantity demanded will be at q0. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com. The good thing is that AirAsia offers cheap flight services and highly affordable tickets that attract many clients in the region. Service offerings are changing increasingly in recent years within the airline industry (Atilgan et al., 2008). Each market demands its service quality based on the customers` expectations and needs. (2018, Feb 22). Since it is the only low cost carrier in Malaysia, such government spending attracting foreigners will have a direct impact by raising demand for flight tickets of Air Asia at large. This is also impact the most airline industries, so one of low fare carriers airline company, Air Asia lower fare ticket and large volume passenger that delivery large demand to Air Asia while bring the huge profit to Air Asia which has strong power to facing the economic downward. SWOT ANALYSIS Strength AirAsia’s brand name is well established in Asia Pacific AirAsia is the low cost leader in Asia. The first flight was a charter flight from Singapore to Kuala Lumpur on 2 April 1947. With its expanding strategy as objectives to reach excellent standard around the world, marketing in Asia has been the key player to achieve success. In case you can’t find a sample example, our professional writers are ready to help you with writing This might differ from Iranian customers in terms of culture and background. 8% from 2003 to 2008. Air Asia Economic Analysis -Mba. The MAS vs. AirAsia case clearly highlights the impact of market entry on competition in the services sector. Air Asia’s flights from Senai are meant to develop Johor into a transport hub to rival Singapore. Kalthom , Noor and Kamariah (2007) conducted a study to measure the service quality of airline services in Malaysia examining the effect of ethnicity on expectations and perceptions of service quality. Technological is a dynamic entity that has been changing in and around the globalized situation. During recession, people hesitate to travel; this generally does not favor the transportation industry, especially airlines. With AirAsia providing ticket fares as low as 0. By studying PEST, SWOT and marketing analysis, it could be said that AirAsia is situated in standard cycle markets where it get competitive advantage for its business policy and strategy. AirAsia was established in year 1993. For instance, Ryan air in Europe is almost half of the ASK price comparing with the full services airline. To examine how customers` satisfaction and repurchase intentions influence their word of mouth communication. By June 2004, Thai Air Asia and another Thailand- based low-fare carrier, Orient Thai Airlines accounted for approximately 20% of all domestic passenger movements in Thailand. Unfavorable allocations of slots to the Group may reduce the attractiveness of its flight which would materially and adversely affect its revenues. This is drastic in Air Asia’s perspective as allowing a free entry will make the market look less attractive because there is always a tendency of price war. Get Your Custom Essay on, By clicking “Write my paper”, you agree to our, By clicking Send Me The Sample you agree on the, https://graduateway.com/air-asia-economic-analysis-mba/, Get your custom The brand operates in an extremely volatile and competitive market conditions. VAT is actually passed down the line to the final consumer but the administration of the VAT system is a cost for business. Global Airline Industry Analysis 2698 Words | 11 Pages. Eurasia Bertha is starting its operation in November 2004, which is listed on the main board of Bursa Malaysia. 1. Furthermore, AirAsia key to success is its online e-ticketing system, with the tickets sold in the internet reducing cost for agents and service sectors for purchase. A low cost airline generally has many features that differentiate it from the traditional carriers. AirAsia reaches to more than 20 destinations worldwide including Iran. Therefore, this study is seeking to determine service quality perceptions of AirAsia Iranian passengers, and then associate these perceptions to their satisfaction and repurchase intentions by applying the AIRQUAL model.
Cat Arthritis Fish Oil, Killer Lion Movies List, Glorious Panda Vs Zealios, Herobrine Mod Xbox One, Art Forms Of Kerala Ppt, My Dog Ate Ketchup, Guy's Grocery Games Carl Ruiz Episodes, Hotel Management And Operations, Luluchat Premium Apk,