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Frame Work Historical View Current Condition What Air Asia Should Do Next Establishment Mission & Vision Research Conduct Lucrative Offering Professional HR Support Existing Key Business Strategic Competitive Advantage Its Achievement The Challenge Key Success Factor SWOT Analysis Growth Strategy Strategy Formulation Recommended Air Asia Strategic Program .
Frame Work Historical View Current Condition What Air Asia Should Do Next Establishment Mission & Vision Research Conducted Lucrative Offering Professional HR Support Existing Key Business Strategic Competitive Advantage Its Achievement The Challenge Key Success Factor SWOT Analysis Strategy Formulation Strategy Prioritizing Recommended Air Asia Strategic Program .
Research Conducted Customer Preference Research Reason to Choose Air Asia Reason to Choose Carrier Type .
Factors Influencing Consumer Preferences while choosing between Budget Airlines. 2011 . Zarine Susan George.Customer Preferences* Most Important Factors according to Consumers Price Scheduling(time of flight) Punctuality Ease of booking tickets Seating and general in-flight cleanliness Baggage Capacity Rescheduling and Refund policy Ground handling services Customer Service Most Less Important Factors according to Consumers Quality of food available in-flight In-flight entertainment Baggage capacity Premium services such as priority boarding.seating etc Ground handling services * ) Sources : Thesis.
Reason to Choose Each Carrier Type Reason to Choose Full Carrier Services Punctuality Services Safety Reason to Choose Low Cost Services Attractive Fare Accessibility to Ticket Distribution Channel Safety .
Reason to Choose Air Asia Cheap Destination Travel Package Excellence Services Pre-Booking Advantage .
Key Success Factor Services Promotion (Attracting Customers) Efficient Management of Cost (Managing Finances) High Operational Efficiency (Managing the Fleet) High Core Service Standards (Managing the Services) Strong People and Management (Managing People) .
Five Forces Potential Entrants = LOW • • • • High barrier to entry and exit High investment Loyal toward major brand FSC enter LCC market Suppliers = HIGH • Few aircraft makers • Bulky aircraft purchases • Labor unions with negotiationpower. • national airlines : passengers can use ground travel like train or bus as substitute. low marginal cost Excess capacity Customers = MEDIUM – HIGH and INCREASING • Customers are highly price sensitive and have lot of power • No switching cost • Loyal toward major brand Substitutes = LOW • international airlines : airline is the only way for travelling to long destinations. • Aviation fuel • Uncontrollable airport related cost Industry Rivalry = HIGH • • • • Price competition is intense fixed cost is high. .
Air Asia vs Other LCC Function Inbound Logistics Operational Capabilities Aircraft Scheduling Quality of food Punctuality OM Facility Outbound Logistics Ground handling services Location on Airport Marketing & Sales Price Brand Distribution Channel General Services Cost Management Human Resources & Organization Customer Services Business Model Management Team x x x x x x x x x x Strength x x Weakness High utilization aircraft quality of food available in-flight need to be improved Better on time take-off. Easy to Access Many complaint from customer (didn’t answer. etc) Low cost philosophy Very strong management team with strong links with governments and airline industry leaders Flat organization structures and effective staff policy Note Organization x .Internal Analysis . less delay and cancellation Does not have own OM facility Better check-in process and baggage handling Caused by secondary airport used Cheaper than other LCC Brand name is well established in Asia Pacific.
Internal Analysis .Air Asia vs FCS Function Operational Capabilities Punctuality On-board services Outbound Logistics Ground handling services Location on Airport Marketing & Sales Distribution Channel Price Product Cost Management Premium services Business model x x x x Strength Weakness x x x x Note Worse on time take-off. less delay and cancellation Worse on-board services Related to baggage handling. free ckeck-in. etc Secondary vs primary airport used Easy to Access Cheaper Related to low fare no frill Low cost philosophy .
3. Better in punctuality than Other LCC 4. security charges and landing charges are beyond the control of airline operators 3. Increasing of oil price 2. Users’ perception that budget airlines may compromise safety to keep costs low. Effective cost management through wellproven business model 3. 1. Higher fuel costs means less profitable competitors may be forced out of business. Premium services need additional cost Support Barrier Threat 1. Certain rates like airport departure.Air Asia Weakness Strength 1. Worse in on-board services than FSC 8. High competition among other LCC (especially in term of price war) . Entance of new rivalry from FSC (lower cost offering from FSC) 5. Well-establish brand name in APAC through business group 6. Better in ground services than Other LCC 5. Strong management team with strong links with governments and airline industry leaders 8. mobile internet iand e-payment is growing rapidly 4. quality of food available in-flight need to be improved 4. Effective distribution channel (via IT and partnership) 7. High utilization aircraft 2. 2. ASEAN open skies and other region in East Asia 2. Lack of customer services quality 5. Technology in term of Internet use. 4.SWOT Analysis . Worse in Punctuality than FSC 6. The population of Asian middle class will be reaching almost 700 million by 2010 3. Flat organization structures and effective staff policy Opportunity 1. Worse in ground services than FSC 7. repair and overhaul (MRO) facility. Non central location on secondary airports. Does not have its own maintenance.
Deploy aggressive campaigne to increase more customer confidence regarding LCC safety Focus on profitable route and exit from unprofitable route • • • THREATS (T) • • .Strategy Formulation – TOWS Matrix STRENGTH (S) WEAKNESS (W) SO Strategy • • • • • Enhance route system to new potential destination city in ASEAN and East Asia and Australia (market penetration) Enhance the use of internet by implementing mobile ticketing & check-in Build partnership with e-money provider to facilitate the payment Maintain price at the same level to give pressure to less profitable competitor Continue develop add-on services & bundling services with travel and tour company • • WO Strategy Develop internet and mobility based customer relationship management to improve customer services quality Build own MRO to ensure proper and continuous maintenance of the planes which will also help to keep the overall costs low OPPORTUNITIES (O) WT Strategy • Build own MRO to ensure proper and continuous maintenance of the planes which will also help to keep the overall costs low and increase customer confidence regarding LCC safety Improve customer services quality by deploying contact center services to increase customer satisfaction Re-define integrated planning process to improve punctuality to compete with FSC Improve the rest with as is effort (with no significant extra cost) ST Strategy • Maintain cost leadership business model as the rising of oil price and uncertainty airport cost related will lead to decreasing profit.
5 3 3. ASEAN open skies 2.5 3 Total 30 80 35 30 35 45 70 22. Effective distribution channel 7.5 Total 90 105 60 50 Weakness MRO Facility Location at Secondary airports Quality of food Lack of customer services quality Punctuality (versus FSC) In Ground services (versus FSC) On board services (versus FSC) Permium services TOTAL Weakness Oil Price Airport rates Users’ perception of safety in LCC Competition from FSC Price War Weight 15 10 10 30 15 7.5 Total 75 30 37. Organization & Staff policy TOTAL Strength 1.5 3 3.5 60 87. Brand name in APAC 6.5 20 10 10 10 15 20 7.Strategy Prioritizing Strength 1.5 15 270 2. Cost management 3. Trend for IT use 4.5 5 100 Weight 25 15 15 20 25 100 Score 2 2 2.5 3 3 3 3 3 Total 30 20 25 90 45 22.5 347. Punctuality (versus LCC) 4.5 290 TOTAL 100 305 TOTAL . Elimination of competition Score 3 2 2. Asian middle class population 3. Strong management team 8.5 22. Aircraft utilization Weight 7.5 3 3. In Ground services (LCC) 5.5 Score 4 4 3.5 100 Weight 30 30 20 20 Score 3 3.5 3 2.5 7.
5 OT = 15 O Pertumbuhan Mengoptimalkan kekuatan untuk menangkap peluang yang ada W S Bertahan T Diversifikasi .Strategy Prioritizing – TOWS Mapping Stabilisasi SW = 77.
without giving extra frill to customer • For a short period of time.Recommended Strategic Program • Keep existing competitive advantage “low fare no frills” to compete with Full Carrier Services. bundling with flight services • Implementing outsourcing contact center for outbund and inbound services to facilitate communication with customer • Evaluate exsiting integrated planning process and improve business process in managing the flight . television and newspaper about safety factor in LCC especially in AirAsia • Develop supply – demand analysis to choose new route system for market penetration and retention • Develop mobile application for reservation. keep price as is for giving pressure to less profitable competitor • Advertise in any media like internet. cancellation and for CRM • Add more partner in travel packaging services.