MARKET STRUCTURE OF AIR ASIA

Air Asia is considered to be operating in an oligopoly. A market that is dominated by a limited

number of companies is called an oligopoly. Due to the market's small number of enterprises, they are
interdependent and close to one another. Because both companies produce practically identical goods,
any action taken by one will have an impact on the other. For instance, it is thought that if one
company lowers its pricing, the competition would most likely do the same. Because there are only a
few companies selling nearly identical types of products, there is a high level of competition in this
type of market. Furthermore, oligopoly businesses establish prices rather than accepting them.
Additionally, under an oligopoly, the firms produce goods that are practically identical to one another.
As one of the few airlines that predominates the market for low-cost flights out of many, AirAsia is
regarded as an oligopoly corporation. (2012) Sloman and Wrideet A.
One of the obstacles to entry into the aviation business is economies of scale, which are defined as the
rise in production efficiency. Economies of scale are anything that inhibits or blocks any new firm
from entering the market and hence limits the rivalry faced by current enterprises. When production is
effective, a company's average cost is reduced. The company can then put the potential new entrant
out of business by selling its goods or services for very little money or for less than its cost. AirAsia
can also carry out the same action because of the airline's relatively low production cost as a result of
the volume supplied.
The holding company for Capital A's airline group, AirAsia Aviation Group Limited (AAAGL),
announced on Wednesday that it had sold its remaining interest in the airline's India operations to Air
India, a subsidiary of Tata Sons Private Limited, for around $19 million. AirAsia Investment Ltd.
(AAIL), a subsidiary of Malaysia's AirAsia Group, owned the remaining ownership in AirAsia India
until recently. Tata Sons formerly owned 83.67 percent of the company.
The low-cost carrier was established in 2014 and floated with Tata Sons owning 51% of the company
and AirAsia Berhad holding the remaining 49%. The joint venture encountered difficulties as a result
of legal issues regarding ownership and practical control. A little over two years ago, Tatas acquired
83.67% by purchasing out 32.67% of AirAsia Berhad for a sum of Rs 286 crore.