SITUATION ANALYSIS

SWOT ANALYSIS

(i) Strengths
AirAsia is the low cost leader in Asia. AirAsia has the opportunity to lead all the
flight and also having the first move advantage as a first low cost airline in Asia.
With the help of AirAsia Academy, AirAsia has successfully created a “low-cost
airline mentality” among their workforce. The workforce is very flexible and high
committed and very critical in making AirAsia the lowest cost airline in Asia. In
this new advertisement, one of our ‘C’ is cheap. This is ‘C’ is represent the cheap
word. By enlarging one of this ‘C’, we can attract more customer attraction.
Secondly, another ‘C’ is comfortable. On late of the 2010, AirAsia X has
cooperation with Japan and has the new name which is call as JETRO. For
example, while minimizing costs, AirAsia introduce a Premium Flat Bed Seat that
reclines to the full-flat position and also has a power socket, and a screen for
privacy. This is especially suitable for the long-haul guests. Besides that, AirAsia
also introduce a new design that is ‘fixed-back shell’ seats. This type of seats can
give better personal space management, so that customers are not disturbed when
the customer in front leas back. This can be done by do not letting the seat recline
backwards, but it also can achieve the same recline-angle by the seat bottom
gliding forward and the seat back moving along too.The company pursues cost
reductions, but makes no compromise on travels comfort for passengers.
 Next, the third ‘C’ is clean. The flight of AirAsia is good in condition. The
flight cleanliness is quite good. The crew of AirAsia take care the cleanliness
every flight before the flight is depart. By having a good cleanliness of flight, this
will let the passengers feel comfort when they travel with AirAsia.
Fourthly, the ‘C’ represents courtesy. The ladies in the cabin are dressed in
chili red AirAsia suits, perfectly applied makeup, walk in confidence in fine court
shoes and also smell good. Furthermore, the guys all are smartly clad, hair in
perfect place and also their shoes are well-polished and shinning. All of this will
give a very good impression for the customers while they first meet each other.
AirAsia’s cabin crews are not just good looks. Superior quality comes with the
aesthetics, and every crew demonstrates skill and talent in carrying out his or her
tasks efficiently. Besides, the cabin crew is friendly, excellent and helpful too. As
in the check-in counters, they will welcome the customers politely and help them
to check-in kindly. They will also help the customers to carry their luggage and
also help the mothers to carry their children too. The cabin crews always smile to
their customer. A winning smile will promise impeccable service.
The last ‘C’ is compatibility. AirAsia has offers “Snack Attack”, a buy on
board program offering food and drinks for customer purchase. Air Asia is
accredited by the KL Syariah Index, and as Syariah law, it does not serve alcohol
and pork. However, this only applicable on the regional AirAsia groups flights
and not applicable to the AirAsia X flight as it does sell wine and beers on board.

(ii) Weaknesses
AirAsia at a glance would appear to be a weakness-free enterprise, but there are
underlying weaknesses inherent at AirAsia. One of such includes minimal
technical staff workers and Overdependence on few key staff. AirAsia would need
an enormous number of technical professionals, especially in the implementation
of their internet booking and distributors.
Air Asia does not have its own maintenance, repair and overhaul (MRO)
facility, thus, AirAsia cannot maintain its own planes. It may be a good strategy
when they first started with only Malaysia as the hub and few planes to maintain.
But now, with few hubs (Malaysia, Thailand and Indonesia) and over 100 planes
currently owned and about another 100 planes to be received in the next few
years, AirAsia have to ensure proper and continuous maintenance of the planes
 which will also help to keep the overall costs low. It is a competitive disadvantage
not to have its own MRO facility.
AirAsia receives a lot complaint from customers on their service. Examples of
complaints are around flight delays, being charged for a lot of things and not able
to change flight or get a refund if customers could not make it. Good customer
service and management is critical especially when competition is getting intense.
Looking at the organization structure of AirAsia Inc, their Board of Directors
is too narrow and that could cause the shallow decision-making. AirAsia Sdn Bhd
is having weakness also in their absence of strong sales/marketing expertise,
which causes lack of awareness amongst prospective customers

(iii) Opportunities
There are 2 major events that are taking place now or going to take place in less
than 6 months from now. First event is the ever increasing oil price. Second event
is the “ASEAN Open Skies” agreement that has been reached.
The increasing oil price at the first glance may appear like a threat for AirAsia.
But being a low cost leader, AirAsia an upper hand because its cost will be still
the lowest among all the regional airlines. Thus, AirAsia has a great opportunity
to capture some of the existing customers of full service and other low cost
airline’s customers. However, there will be also some reduction in overall travel
especially by casual or budget travellers. Low costs sustainable philosophy allows
new routes to be opened and exploit growing markets due to surging middle-
classes in China and India.
The “ASEAN Open Skies” allows unlimited flights among ASEAN’s regional
air carriers beginning December 2008. This will definitely increase the
competition among the regional airlines. However, with the “first mover”
advantage as well as its strengths in management, strategy formulation, strategy
execution, strong brand and “low-cost” culture among its workforce, this
agreement can be seen as more of an opportunity.
AirAsia stands at the gate of profitable opportunities, their recent
developments and intended expansions will give them a global exposition. As they
venture into internet booking and ticketless services for their marketing processes,
they would be open to electronic commerce business solutions for their enterprise,
 such as SCM, ERP, and EDI etc. AirAsia stands to encounter a lot more
opportunities than outlined above, but as they progressively emerge into their
various facets of developmental processes, numerous opportunities would be
foreseen like.
There is also some opportunity to partner with other low cost airlines as Virgin
to tap into their existing strengths or competitive advantages such as brand name,
landing rights and landing slots (time to land). Besides that, AirAsia have the
opportunity with their strength which is the low cost leader in Asia to open their
market not just in Asia but also to the America and British as well. This is because
AirAsia has two type of flight which is AirAsia and AirAsia X. This can let the
customer to choose the flight.
Furthermore, the use of internet services for their services would open more
opportunities for AirAsia in the process of solving network, communication, and
information related problems that could be inherent in the organization and their
market segment is poised for rapid growth. Export markets offering great
potential. Distribution channels seeking new products. Scope to diversify into
related market segments. By having the internet service, we can let the customer
feel easier to book the flight ticket as the technology advancement increasingly
day to day.

(iv) Threats
Even though AirAsia is currently on the peaks of success, they would be careful
and not nonchalant to the threats they are bound to encounter.
Certain rates like airport departure, security charges and landing charges are
beyond the control of airline operators and this is a threat to all airlines especially
low cost airlines which tries to keep their cost as low as possible. For example,
Changi airport in Singapore charges SGD21 for every person who departs from
Singapore.
One of such threats would be security of their networks. The internet is a
public domain and as such is vulnerable to attacks from hackers and viruses,
AirAsia ought to be conscious of these threats and have proper plans and control
to counter any of these.
AirAsia’s profit margin is about 30% and this has already attracted many
competitors. Most of the full service airlines have or planning to create a low to
 compete directly with AirAsia. For example, Singapore Airlines has created a low
cost carrier Tiger Airways.
Another threat to AirAsia is from the local competitors in the various countries
they are having affiliates or subsidiaries. AirAsia needs to be in accurate pace with
the market demands and policies for these local territories, because economic
slowdown could reduce demand. Local Airlines would have easy access to certain
information that could aid them; therefore, AirAsia needs to be on constant market
audit, market researches and control to keep up with such competition.
The users’ perception about the budget airlines may compromise safety to
keep costs low. Owning to the facts that most organization are struggling for
survival, major players may enter targeted market segment. Alternatively, Market
segment's growth could attract major competition.

Target Market Specification

Target market is a set of buyers sharing common needs or characteristics that the company
decides to serve. Targeting specific audiences can be considered the starting point for all
marcom decisions.

1.1 Demographic Targeting

Demographics reflect measureable population characteristics such as age, income, and
ethnicity.
1.1.1 Income
Our target markets are people who salary is fall in the middle for lower
income in Malaysia. This is because it will not bring them financial problem
upon their purchase on our service which offers a moderate price which is in
accordance to the quality of the products. That is also the reason why AirAsia
always use the low price strategic to position it always cheap than their
competitors. According to CEO’s of the company, Mr. Fernandez, he knew
there are a lot workers or low pay salaries earners who would like to travel
often to meet their families especially during special occasions but due to how
expensive it was that time, their desire are not fulfilled. By introducing a low
 fare will give all those people opportunity to travel if not more than once in a
year. This enables them to identify their target market.
1.1.2 Age
Our target market should be people from the age. This is because these group
groups who are young adult and above. This people have the ability to
spending and maybe always need a flight to other far destination in shorter
time. This can help the people especially the busy businessman. Recently,
AirAsia also have introduced the Premium Flat Bed Seat. This is especially
suitable for the long-haul guests. By this way, they can save a lot of time to
travel from one place to another place that is far.
1.1.3 Gender
Our product is a multi-gender product which means it is suitable for all types
of gender. This is because in today’s world, people disregards of male or
female are starting to involve in outdoor activities such as travelling. So, with
our product concept which is low cost, people will be attracted to our services.
Besides that, our cabin crews also include both genders that are male and
female. Customer won’t feel uncomfortable that there is too much male or
female on the flight.

1.2 Behavioral Targeting

1.2.1 Benefits sought

Benefit segmentation requires finding the major benefits people look for in the
product class, the kinds of people who look for each benefit, and the major
brands that deliver each benefit. So, our target market is the people who are
benefit sought, sensitive to price or doing a sales promotion. This kind of
target market is likely purchase the service which is economy, valuable and
affordable. As a result, AirAsia as a low cost leader in Asia leading the flight
attract this kind of customers.

1.2.2 Occasions
Buyers can be grouped according to occasions when they get the idea to buy,
actually make their purchase, or use the purchased item. Occasion
segmentation can help firms build up product usage. Some school holidays
 and special event such as Lunar New Year and Christmas were originally
promoted partly to increase the sales.

1.2.3 Usage rate

Our markets can also be segmented into light, medium and heavy product
users. Heavy users are often a small percentage of the market but it account
for a high percentage of total consumption. AirAsia targets the businessmans
who always travel to other country to manage their business. Most of the
businessman will take the flight of AirAsia because of their prices is more
cheap compare with the others. They think that they just need a comfortable
seat and arrive safely to their destination. As a result, they much more prefer
AirAsia.