Alternative Strategies Selection process:

a) Build Strengths-Weaknesses-Opportunities Threats (SWOT) Matrix

SWOT ANALYSIS MATRIX – AIR ASIA AIRLINES

STRENGTH WEAKNESSES

1. Attractive business model – Low Cost 1. No heavy maintenance facility

Carrier (LCC) with lean, simple and Air Asia is currently outsourcing all of its
efficient operations. heavy maintenance – MRO facility
Three attributes that contributes to its (maintenance, repair and overhaul) to several
success which are simple product (which ranges of providers including Sepang Aircraft
offering to only one class and narrow Engineering (SAE).
seating), positioning (which generally
targeting on non-business passengers), and 2. Challenge in balancing service quality with
low operating costs (widen its margin while pricing
maintaining its productivity). Being low-cost airlines has put Air Asia’s
customers on position of not willing to
2. Well established LCC with international compromise on the service quality. With
subsidiaries 83.5 million passengers catered for the full
It has 8 international subsidiaries across Asia year of 2019, it is an ultimatum for Air Asia
region which are Indonesia, Thailand, to preserve a high quality service for all its
Philippines, India and Japan. passengers.

3. Broad destinations 3. Difficult in sustaining costs

Air Asia Group operates with route network Another challenge to tone the cost down is to
spanning 25 countries with 165 destinations. sustain the cost as low as possible. In the
case of crisis, where fluctuations in fuel and
4. Mass fleeting other prominent costs, and an increase in
It has an overall of 282 fleet size with service costs, it is hard for Air Asia to sustain
approximately a total of 266 is Airbus A320 its costs.
which accommodate 140 – 170 passengers.
4. Less routes provided as compared to
5. Strong Promoter market leaders in Asia
Air Asia invested a lot on marketing efforts Although Air Asia is listed among the top 10 of
which mostly can be seen through its big Asian airlines, it only covered 165 destinations
collaboration campaign with international globally compared to other Asia market leaders.
names such as Taylor Swift, Manchester
United, AT&T Williams Formula One team, 5. Stiff competition in its sector
etc. Most current airlines companies are expanding
their strategy from focusing a single segment to
6. Powerful brand offering several segmented services. For
Air Asia is a brand name wholly owned by example, national airlines are now providing
Tune Group. Indirectly, they were flying alternatives such as introducing the low-
announcing to the world that the main goal cost carriers through its subsidiaries (Lion Air,
is to conquer Asia, and the brand name itself Southwest, Ryanair, SilkAir).
explains the whole thing.
6. Difficult in retaining loyalty
7. Up to date with technology and Among the consequences of being a low-cost
 innovation
Among the key successes of Air Asia are its
adaptability towards innovation and
flexibility. Through integration of
digitalization into its management, Air Asia
has built new revenue stream such as BigPay
(digital banking and money application) and
Teleport (cargo and logistics service).
8. Outstanding stakeholders
Its team management comprises of
professionals from strong and various
industries and background. Air Asia also
obtained strong influence towards
governments and affiliates, for example,
strong working relationship with Airbus
company which assists them to purchase
aircraft with much reasonable price and also
designated airports at several regions.
airlines is that customers have little brand loyalty,
whereby airlines generally compete on price
rather than quality. Although Air Asia has
launched its loyalty programme known as “Big
Member”, as LCC, passengers are still priorities
fares over those.
7. No government intervention on the
regulation of airport deals
Air Asia has been voicing out towards Malaysian
Aviation Commission (Mavcom) regarding issues
on the standardization of the passenger service
charge (PCS) between KLIA and KLIA2. This is
due to high charges and poor infrastructure
provided at KLIA2 terminal, which it resisted a
regulatory ruling tat it should pay the same PCS
as airlines using the main terminal at KLIA.

9. Strong financial performance

Based on its 5-years financial and key
operating statistics (for year 2014 – 2018),
Air Asia has illustrated positive growth rates
in its margin, return on shareholders’ equity,
including its net cash flow.

10. Good return on ancillary sales

Air Asia is excellent on earning from its
ancillary sales which made up of 22% of their
total revenue in 2019.

OPPORTUNITIES THREATS

1. Growth of middle income consumers 1. Global Pandemic

For all Asia developing countries, 80% of its 45COVID-19 has given a negative impact towards
economies in the World Bank classification are tourism and other related industry. Due to
middle income consumers. The share of the restriction in movement, less people are
lower middle income is higher than the upper commuting through airlines. This has also given
middle income in the region. an impact for Air Asia, as they have decided that
several staffs comprises of engineer, pilot and air
2. Increasing traffic from Asia crew will have to be retrenched to reduce the
Based on Travel and Tourism Competitiveness losses incurred due to COVID-19.
Report 2019, Asia-Pacific has the largest
aggregate domestic travel market. Such rise may 2. Alleged corruption and scandal
be factorized by lifestyle trend and cost- In the recent allegations which are the probing
conscious travellers. corruption on the aircraft purchase and also
sponsorship deal for a Formula One team, Air
3. Technological advances in airlines Asia shares has fell as much as 11% on February
industries 2020 - their lowest since May 2016.
Every transaction nowadays are made through
online. Each online marketing campaigns 3. Rising Fuel Costs
directly affect consumers purchasing power, The uncertainty in fuel prices, which swings
depending on its effectiveness in fascinating wildly based on oil price, will have a direct
potential customers. An interactive web and impact towards Air Asia future financial
friendly users interface are among the essential projection. As it offers low-cost pricing, fuels are
features to encourage spending. among the top supplies needed in its operation
and the price of fuels is directly affected its
4. Ancillary source of revenues in the airline pricing decision.
industry
Apart from flying service, other revenue streams 4. Rising Labor Costs
can also be ventured by the market players, such In 2016, labor costs had surpassed fuel as global
as merchandising, dining, hotel, etc. airlines’ biggest single expenses. As airlines
have been up in its margin, the workforce has
5. Tourism: One of the world’s fastest gained a market power which substantially
growing industry pushing up the cost of labor.
Due to emergence of nations such as China and
India, the newfound freedom of its citizens to 5. Internet Transparency
travel is finally lifted. Currently, the cost of flying continues to trend
lower as the internet has exposed price
6. Industry shifts transparency to consumers, which creates stiff
An industry consolidation in airlines allows to competition and pushing them to reduce its
open up prospects for new routes and airport margins or focus on volume.
deals, which leads to key productivity benefits.
Recently, it is an option for MAS and Air Asia to 6. Rise of other LCCs in the market
merge due to COVID-19 impact. The aviation Consumer’s trends and lifestyles tend to change
expert viewed that the low-cost air travel will over the years. Aside from Air Asia, other
remain largely unaffected if Air Asia were to airlines also tend to change its competitive
cease operations. Such consolidation will boost strategies by implying similar business model.
Air Asia’s value in the market in the long run.
7. Political Risk
7. Long haul flights Several countries in the world are facing series
With vast experience in running LLC business political issues, which put a risk on its nation’s
model, Air Asia may tap those into the long haul safety and government decisions.
flights option, as there is fewer airlines across
Asia that provides such service. 8. Accident, terrorist attack and natural
disaster
8. Higher fuel costs The following unforeseen incidents may be a
A fluctuated fuel costs may indicates less threat to customer confidence, for instance,
profitable competitors in the same business Malaysia Airlines flights MH 370 and MH 17
model. had put MAS credibility on jeopardy for several
period.
9. New route expansions
To venture and exploit growing markets across
Asia such as China and India, where there is
fewer competitors’ positioning. It also builds
good connection with that certain market by
helping them to boost its tourism industry.

10. Customer’s trend

The rapid changes in consumers’ trend based on
its lifestyle and exposure, especially among the
middle income class, most of them tend to travel
at least one a

SWOT ANALYSIS MATRIX – MALINDO AIRLINES

STRENGTH WEAKNESSES

1. Attractive business model - LCC 1. Small fleet size

Mutually owned by a Malaysian company and Malindo Air only consists of 38 fleets, which
Lion Air, the top discount carrier in Indonesia, mostly is Boeing 737 that can only accommodate
Malindo Air is tapping Malaysia’s market by maximum of 180 passengers at a time.
offering low fares with added values. This
eventually putting themselves at par and at 2. Unagressive marketing
competition with the dominant LCC, Air Asia. Unlike Air Asia, Malindo Air is not aggressive in
promoting its service. Even in social medias,
2. Powerful group company push notifications and emails, there is less
Lion Air is among the largest low cost airlines in activities and information provided by Malindo
Southeast Asia with astounding reputation. Air.
Although Malindo Air is just starting in Malaysia
on 2012, being a Lion Air does subsidiary 3. New kid on the block
perceive those existing and loyal passengers of Being relatively new to the market, it took several
Lion Air to have similar perception towards years more for Malindo Air to be at par as its
Malindo Air. prominent competitor, Air Asia.

3. Reasonable add-on services 4. Sustaining costs

The basic package is inclusive 30 kg baggage
allowance, which usually more reasonable than
other low-cost airlines. Malindowifi and also
sports gear allowance is certainly an advantage
over its competitors who usually charge extra for
this addition.
Another challenge to tone the cost down is to
sustain the cost as low as possible while
preserving its service quality. In the case of
crisis, where fluctuations in fuel and other
prominent costs, and an increase in service costs,
it is hard for Malindo Air to sustain its costs.

4. Bundling strategy 5. Less routes

Apart from flights, Malindo Air also uses a Currently, Malindo Air is only covered a total of
strategy to bundle its products at promotional 65 destinations, providing limited alternatives to
price, for instance, 10% off promotion of the passengers.
flights and hotels that are booked together.
6. Stiff competition in its sector
5. Creative branding Although there is a range of other LCC in Asia
Similar to other product, branding is one of the region, Air Asia is relatively known to be a
key factors for higher long-term and short term dominant player in this market sector.
returns for the company. It’s tagline of “Smarter
way to travel”, which gives a meaning of paying 7. Difficult to retain loyalty
a cheap fare while getting a quality of service, Among the consequences of being a low-cost
has provided customers with flying alternatives. airlines is that customers have little brand loyalty,
Such tagline also meant to encourage passengers whereby airlines generally compete on price
to travel smart and getting the best flight rather than quality.
experience with affordable prices.
8. Slow response on technology advance
6. Culture preservation There is room of improvement for Malindo Air
Malindo Air is among those airlines that on enhancing technology usage in its operation,
preserved cultural value in its service, through its for example, providing a check in kiosk in
batik design and flight crews’ attire. terminal or e-boarding pass.

7. Good reputation on safety, accidents and

incidents
Unlike Air Asia, there are no major incidents or
bad press yet to be reported. Most of its fleets are
well-maintained and service operation is
smoothly managed.

8. Seating class alternatives

Malindo Air also provides alternatives for
passengers to travel on either economy or
business class, with extremely reasonable price.

9. Inflight entertainment
One of the best features is that each seat is
provided with in-flight screen, which allow
passengers to access entertainments such as
movies, music, books, and games.

10. Makes business class popular to travellers

Malindo Air has introduced the new Business
Class fare grouping by providing the option of
Business Class Flexi (maintain the full-fledged
fare features) and Business Class Promo (for
those who want to fly business class on budget).
Such decision allows opportunities for passengers
who are cost-conscious to experience the comfort
of flying in Business Class

11. Smart interline partnership with

international airlines
Malindo air has inked an interline partnership
with few international airlines such as Turkish
Airlines, Qatar Airways, ANA, Etihad Airways,
Oman Air, Pakistan International Airlines, and
XiamenAir. This is for the purpose of tapping
new market as well as enables passengers to find
connection easier when travelling between Asean
to destination listed in their networks. This
eventually helps to increase the traffic from all
over those destinations.
OPPORTUNITIES THREATS

1. Growth of middle income consumers 1. Global Pandemic

For all Asia developing countries, 80% of its 45 COVID-19 has given a negative impact towards
economies in the World Bank classification are tourism and other related industry. Due to
middle income consumers. The share of the restriction in movement, less people are
lower middle income is higher than the upper commuting through airlines.
middle income in the region.
2. Rising Fuel Costs
2. Technological advances in airlines The uncertainty in fuel prices, which swings
industries wildly based on oil price, will have a direct
Every transaction nowadays are made through impact towards Malindo Air future financial
online. Each online marketing campaign directly projection. As it offers low-cost pricing, fuels are
affects consumer’s purchasing power, depending among the top supplies needed in its operation
on its effectiveness in fascinating potential and the price of fuels is directly affected its
customers. An interactive web and friendly users pricing decision.
interface are among the essential features to
encourage spending. 3. Rising Labor Costs
In 2016, labor costs had surpassed fuel as global
3. Ancillary source of revenues in the airline airlines’ biggest single expenses. As an airline
industry has been up in its margin, the workforce has
Apart from flying service, other revenue streams gained a market power which substantially
can also be ventured by the market players, such pushing up the cost of labor.
as merchandising, dining, hotel, etc.
4. Internet Transparency
4. Tourism: One of the world’s fastest Currently, the cost of flying continues to trend
growing industry lower as the internet has exposed price
Due to emergence of nations such as China and transparency to consumers, which creates stiff
India, the newfound freedom of its citizens to competition and pushing them to reduce its
travel is finally lifted. margins or focus on volume.

5. Long haul flights 5. Rise of other LCCs in the market

Malindo Air may tap those into the long haul Consumer’s trends and lifestyles tend to change
flights option, as there is fewer airlines across over the years. Plus, other airlines also tend to
Asia that provides such service. change its competitive strategies by implying
similar business model.
6. New route expansions
To venture and exploit growing markets across 6. Political Risk
Asia such as China and India, where there is Several countries in the world are facing series
fewer competitors’ positioning. It also builds political issues, which put a risk on its nation’s
good connection with that certain market by safety and government decisions.
helping them to boost its tourism industry.
7. Accident, terrorrist attack and natural
7. New market segment disaster
This would be an opportunity for Malindo Air to Although there is no news reported on these
capture and set its footing to a new market causes yet, it would jeopardize the airlines
segment, which will boost their level of credibility and public confidence.
competitiveness with other LCC market players.

8. Creative promotions
In order to capture a new market segment,
Malindo Air should re-strategies its promotional
and marketing piece and broaden its exposure.

9. Fleet expansions and upgrade

Currently, the average domestic flights provided
by Malindo Air are lesser than its LCC
competitor, Air Asia. One of the reasons is due
to lack capacity to operate due to smaller number
and smaller types of fleets.

10. Enhancing loyalty programme

Unlike Air Asia, Malindo Air provides
alternative to fly business class which service
quality is at par as other established airlines (i.e.
Malaysia Airlines). Having an attractive business
model in which focusing both economy and
business class in low fares, Malindo Air could
gain brand retention from existing passengers.