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GITAM School of Business

GITAM (Deemed to be University), Visakhapatnam
MBA (A) 2022-24

Title of the Academic Project

A Report on Market Structure of Air Asia

as a part of the fulfilment of the Course

MMB 705 – MANAGERIAL ECONOMICS

I Semester, July- December, 2022

Submitted by Submitted to
Dr. Radha
Team: Raghuramapatruni
1. Bhargavi (204) Course Instructor, ME
2. Anjali (182)
3. Tarun (IMBA 03)
4. Suman (IMBA 06)
5. Srikala (42)
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Table of Content

Particulars Page Number

Abstract

Introduction 3-4

Objectives 5

Analysis 6-7

Findings 8

Conclusion 9

References 10
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INTRODUCTION

Back in the 1900’s Thai National Airlines was the only airline that could fly in the main
routes of Bangkok – Chiang Mai with non-stop flights. But in 1993, Air Asia was
established to finally connect Asia like no other airline company. Today it is one of the
most reputed Asia-based airline companies.

They have a vast network of operations around the world, flying domestically and
internationally. Their 5 main operational hubs are Singapore, Indonesia, Japan,
Malaysia, and Thailand.

In the AirAsia case study, we shall decode AirAsia’s marketing strategy, marketing
mix, SWOT analysis, social media presence, and analyse its competitors. Before we
get started, let us get to know the company a little more.

ABOUT AIR ASIA

AirAsia is headquartered in Malaysia and provides transportation services to its passengers

along with cargo and courier services. It was named as the “Best Low-Cost Airline Company”
in the world for 9 consecutive years at the Skytrax World Airline Awards. It offered a new
definition of affordable traveling with its Tagline – “Now Everyone Can Fly.”

Air Asia started with only 2 Boeing 737 – 300 series and started their first point-to-point flights.
Today, it connects domestic and international flights to more than 165 destinations within 25
countries. The company is constantly using innovative solutions to provide low-cost
transportation. Over the years Air Asia has broken the travel norms for Asian countries and is
known as the ‘pioneer’ of low-cost travel in Asia. Let us get into discussing their marketing
efforts, starting with their strategy.
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Marketing Strategy of AirAsia

In this section of the blog, we shall understand AirAsia’s marketing with the help of its STP
(segmentation, targeting, and positioning) strategy.
AirAsia segments its market based on three distinct, but overlapping factors:
• Geographic segmentation- AirAsia caters to mainly the Asian market, hence the name
Air Asia. They hence practice geographic segmentation by focusing their services
primarily in Asia
• Demographic segmentation- Being a low-cost airline, they cater to people in the low
to medium income group
• Psychographic segmentation- Their main customer is the cost-conscious traveller
AirAsia’s entire branding makes their target market quite self-explanatory. Their target
audience is- travellers looking for inexpensive flights. These are people ranging from those
who could not afford to fly previously, to corporate business employees whose employers are
looking to fly them while cutting costs.
Simply put, AirAsia’s target market is the people whose purchasing motivations are price and
simplicity. They have achieved effective targeting to this segment by making their brand
synonymous with low-cost services. This has been possible through excellent brand
positioning.
AirAsia’s positioning is very clear in being low-cost. This has been possible due to the
company’s relentless communication through various marketing channels. Their slogan “Now
Everyone Can Fly” itself sets the tone for the brand. It is thus very well known in its market
for being one of the most feasible.
Through its efficient STP, AirAsia has been able to successfully develop its marketing strategy
and make a name for itself in the market. But of course, there exist many competitors that
require constant evaluation of strategies. Let us understand AirAsia’s competitors better with
analysis.
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OBJECTIVES

• To be the best company to work for whereby employees are treated as part of a big
family
• Create a globally recognised ASEAN brand
• To attain the lowest cost so that everyone can fly with AirAsia
• Maintain the highest quality product, embracing technology to reduce cost and
enhance service levels.
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AIR ASIA COMPETITORS ANALYSIS

AirAsia has been a successful part of the airline industry for over a decade. They have been a
major player in the low-fare airline industry and have connected over 88 countries together.
This comes with a lot of competition. The biggest competitors of AirAsia though, are
Malaysian Airlines and JetStar Airways. Let us see how they compare amongst a few key
indicators.
• AirAsia provides service packages to its customers at a very reasonable charge that is
affordable to the customers in comparison to JetStar Airlines
• JetStar is providing more payment options or gateways to its customers
• AirAsia provides services to 130 destinations as compared to JetStar which provides
services only to 80 destinations
• Malaysia Airlines generates 113% of AirAsia’s revenue
• Malaysia Airlines also has fewer employees, at 7,159 compared to AirAsia’s 20,000
This tells us that AirAsia mainly needs to understand its customers a little better and provide
them with the extra services they need. AirAsia 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. Some more of these improvement areas can be found
through its SWOT analysis.
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AIRASIA SWOT ANALYSIS

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. SWOT Analysis is a
technique for analysing these four aspects for a business for better decision making and
judgement of its current position.
Following is the SWOT analysis of AirAsia:

AirAsia Strengths
• AirAsia is the low-cost airline leader in the Asian market
• The company has subsidiaries in Indonesia, Thailand, the Philippines, and Japan
• It boasts a fleet of nearly 300 aircrafts
• AirAsia’s positioning is steady and consistent in being a low-cost airline. It constantly
delivers on this promise of affordability

AirAsia Weaknesses
• It is extremely difficult to keep costs as low as possible due to fluctuations in fuel
prices and increases in service costs
• AirAsia does not have its own MRO facility
• Cut-throat competition in its sector. As compared to industry leaders, they don’t
operate on as many routes

AirAsia Opportunities
• Merging with other low-cost airline companies
• They can introduce more flights for popular and busy destinations
• The increasing traffic from India as Indians prefer budget airlines. And thus Indians
meet their target requirements perfectly

AirAsia Threats
• Government charges and costs that are not in the control of the company may lead to
severe losses in the future
• With dynamic management and other operational costs, it becomes difficult to
manage low-cost flights
• The rise in fuel prices

Lastly, let us look at AirAsia’s social media marketing presence as digital marketing is also a
very important part of any company’s marketing strategy.
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FINDINGS

• This case study aims at evaluating the rationale of AirAsia's strategic plan and how
have these strategies been associated with its structure and system. It further aims at
assessing the sustainability of the business model and its competitive advantage.
AirAsia's performance and business process management will also be discussed in
details.
• Air Asia, an ailing debt government, owned airline was purchased by tony Fernandes a
Malaysian Indian entrepreneur in 2001.
• The broad term mission of Air Asia to gain global recognition as an ASEAN
(Association of south east Asian Nations) brand and provide high quality products to
its customers by reducing cost and enhancing the levels of service provided.
• Low-cost carriers (LCCs) offer low-cost services to the passengers and in return
provide no-frills.
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CONCLUSION

AirAsia’s marketing strategy has worked wonders for the company in communicating exactly
what they wanted to the customers. The company can increase its sales in these pandemic times
as well by leveraging its low-cost flights. Given the current situation, in-flight experience,
especially hygiene matters a lot to customers so AirAsia should heavily market its hospitality
and put customers at ease in availing their services.
In order to stay ahead of the competition, the company needs to constantly invest in improving
the additional facilities that make a difference to customers in today’s times such as disposable
in-flight meals, complimentary Wi-Fi, entertainment facilities, and varied seat options. Along
with these improvements, if AirAsia continues to deliver to its target market effectively, it will
surely maintain its differentiated position in the industry.
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REFERENCES

2021-Air Asia-Case Study-Prof. Khaliq Ahmad (researchgate.net)

(PDF) Case Study 14: Air Asia: Using Social Media to Reach Out to New Customers (researchgate.net)

https://www.bing.com/search?q=REFRENCES+OF+AIR+ASIA+STUDY&qs=n&form=QB
RE&sp=-1&pq=refrences+of+air+asia+study&sc=7-
27&sk=&cvid=EEBF75C7F5E44695B4B1734D23774A96&ghsh=0&ghacc=0&ghpl=

Case Study on AirAsia | Case Study Template (acasestudy.com)

https://www.bing.com/search?q=REFRENCES+OF+AIR+ASIA+STUDY&qs=n&form=QB
RE&sp=-1&pq=refrences+of+air+asia+study&sc=7-
27&sk=&cvid=EEBF75C7F5E44695B4B1734D23774A96&ghsh=0&ghacc=0&ghpl=