Market Overview

Before the Covid-19 pandemic, low-cost airlines market growth rapidly worldwide, is
owing to rise in economic activity, ease of travel, travel & tourism industry,
urbanization, changes in lifestyle, consumers preference for low-cost service,
increase in purchasing power of middle-class households especially in the developing
regions as well as high internet penetration countries.

➢ Volatile crude oil price and increase in terrorism & crime rate, political
uncertainty, and natural calamities hinder the market growth.

➢ Conversely, sustainable airport governance, operational & financial improvement

is anticipated to leverage the growth of the market.

➢ High investment & operational cost but low profitability is anticipated to be a

major challenge of the low cost airlines industry.

We summarized a figure about the Low-Cost Airlines Market by Purpose from the
report as you can see below, we can find that the leisure travel accounted for the
majority of the LCC market by purpose, followed by visiting Friends & Relatives.
Besides, we can also image that the business travel would be a potential market in
following couple years because companies are gradually accepting LCCs to save the
expenditure of their business trips.
Competitor Analysis
Air Asia has been a major player in the low-fare airline industry and has connected
over 88 countries together. However, there are a lot of competitors followed behind
such as scoot, Jetstar, IndiGo, Lion Air, NOK AIR, VietJet Air, Tiger Air and Malaysian
Airlines, etc. And we’re going to further discuss about its two biggest competitors,
Malaysian Airlines and Jet Star Airways in the following contents.

The comparisons among Air Asia, Malaysian Airlines and Jet Star Airways

1. Compared to JetStar Airlines, AirAsia offers service packages to its consumers at a

price that is quite reasonable and economical.
2. JetStar provides its customers with more payment options and gateways against
to the other two companies.
3. In terms of destinations, AirAsia provides services to 130 destinations in
comparison with JetStar which provides services only to 80 destinations.
4. AirAsia has more employees (20,000) than Malaysia Airlines’ 7,159.

These comparisons above tell us that Air Asia mainly needs to understand its
customers better and provide them with the extra services they need. However, Air
Asia is already trying to achieve that by expanding their facilities to hotel bookings,
tour packages, etc. to try and gain some competitive edge along with diversifying
their product portfolio.

Air Asia SWOT:

<Strengths>

1) Market Leadership Position – Air Asia has a strong market leadership

position in the Airline industry. It has helped the company to rapidly scale
new products successes.
2) Low-cost Business Model - with lean, simple, and efficient operation so that they
can keep providing customers low price tickets.
3) Strong Sponsorship - AirAsia has sponsored many international events and teams
to give exposure to its brand name.
4) Political connections - AirAsia is joining venture with Shin Corp, where Shin Corp
is owned by the family of Prime Minister in Thailand. Shin Corp has the financial
strength to support AirAsia to grow their organization. This is the reason why
AirAsia grows up faster and easier in the airline market with the powerful
politically.

<Weaknesses>

1) Limited services resources - Due to their low-cost business model they

implement, AirAsia cannot provide additional service to the customers as they
require.
2) Customer Complaints - AirAsia’s service perspective has often received
complaints from its consumers, especially at the beginning of COVID-19 outbreak
about the refund issues.
3) High turnover of employees - At the lower levels is also a concern for the Air
Asia. It can lead to higher salaries to maintain the talent within the firm.
4) Extra cost of building new supply chain and logistics network - Internet and
Artificial Intelligence has significantly altered the business model in the
Transportation industry and given the decreasing significance of the dealer
network, so Air Asia must build a new robust supply chain network and that will
be extremely expensive.

<Opportunities>

1) LLC Position - As we know that Asia has established a reputation as LCC (low-cost
carrier) airline in the Asian and global market. It would be a strong competitive
edge to AirAsia after the pandemic of covid-19 because the purchasing power of
the people has dropped significantly. The airline brand should exploit these
circumstances.
2) Opportunities in Online Space - Increasing adoption of online services by
customers will also enable Air Asia to provide new offerings to the customers in
Airline industry.
3) Indian Market - The Indian market is highly price-conscious. The airline company
has already got a subsidiary AirAsia India for the local market. Now, the brand
should amplify its marketing and promotional campaigns to attract the Indian
price-conscious market. Since AirAsia is a low-cost airline and the Indian market is
price-conscious, it would be a win-win situation for both.
4) Recovering airline retailing market providing new opportunities – The
recovering from pandemic will bring the airline business more new opportunities.

<Threats>

1) Other LCCs in the Market - Air India, Emirates, and many other Asian airlines
have also started following the low-cost carrier strategy to attract market share.
This LLC trend has saturated the customer market, and it has declined the overall
profitability of AirAsia.
2) Increasing Cost (Fluctuating price of fuel & labor cost) - The increasing fuel cost
and the labor cost have amplified the overall expense of AirAsia. Since the airline
brand follows the tight costing strategy and it allowed the company to offer
cheap fare to the customers. The increasing cost has made it impossible for the
company to always offer low prices and remain profitable. So, they must have
some flexible plans to deal with this issue.
3) Irresistible Factors: Accidents & Bad weather – Accidents will cause consumers
lose faith and confidence. Besides, bad weather will cause less income due to the
cancel of flight.

CONCLUSION: AIRASIA SWOT ANALYSIS

To conclusion the SWOT analysis, we would say that Air Asia is indeed the Asia’s
leading low-cost airline. However, the increasing cost, competitors, limited-service
resources, and customer complaints are becoming the main challenges. So, Air Asia
should expand into more countries, such as India and the United States, increase the
market, and target new customers. Meanwhile, they should also keep improving
their weakness, enhance their after-sales service to reduce customer complaints,
otherwise it may easily lead the customers switch to other competitors.