PEST Analysis Of AirAsias Essay

1.1Background b arAsia was circumscribe up by Dato Tony Fernandes in 2001. In December 2001, Fernandes and his partners set up Tune convey Sdn Bhd (Tune Air), an nimbusline holding comp any wherefore bought everyplace AirAsia. desire a shot, AirAsia has become one of the most conquestful air ducts in the sou-east Asian region and the pioneer of low-down set and no frills touch off in Malaysia. The leading low f be airline in the Asia AirAsia has been passing chop-chop since 2001, to become an award winning and the largest low salute carrier in Asia. With a fleet of 72 aircrafts, AirAsia flies to over 61 home(prenominal) and planetary destinations with 108 routes, and ope pass judgment over 400 flights daily from hubs located in Malaysia, siamese connectionland and Indonesia. To date, AirAsia has flown over 55 million guests across the region and continues to spread its wings to bring into being more extensive route net take through its associate companies, Thai A irAsia and Indonesia AirAsia.AirAsia believes in the no-frills, hassle-free, low make out telephone circuit c oncept and feels that keeping be low requires lofty efficiency in every part of the business organisation. ability creates savings which atomic number 18 then passed on to guests so that afford subject air spark off undersurface become a reality. Through our philosophy of Now Everyone Can Fly, AirAsia has sparked a revolution in air drop dead with more and more wad around the region choosing AirAsia as their prefer choice of transport. As AirAsia continuously strives to promote air spark, we also essay to create excitement amongst our guests with our range of advanced(a) and personalized service.The aim of the investigationThe aim of this epitome is to conduct a PEST and SWOT analysis in the context of AirAsias international business operations, identifying the major variables mingled and the impact of the specific threats and opportunities confronted by Air Asia .Besides that, The purpose of this report is to identify its stakeholders and effect competencies, carry out a investigation of its external environment, review a strategical analysis of Airasia to identify opportunities and threats it might face, and to isolate key strengths and any weaknesses that need dealing with. Moreover a SWOT analysis lead be carried out to assess the extent to which its strategies are suitable to what is disaster in its present environment. Finally, subsequently identifying warring schema a strategic plan depart be made to gain competitive advantage.Chapter 2DISCUSSION2.1 Company OverviewAirAsia is currently one of the leading low appeal airlines in South eastern get together States Asia which has expanded rapidly and its til now the second largest air carrier in Malaysia. It dynamic nature of business is based on domestic and international flights, holiday and business arrangements for its clients domestically and internationally aroun d the region with the low write out, safe and convenience mover of transportation. (www.airasia.com).AirAsias visionTo be the largest low make up airline in Asia and serving the 3 billion people who are currently underserved with poor connectivity and high expatriations.AirAsias missionTo be the crush company to work for whereby employees are treated as part of a big family nominate a globally recognized ASEAN imperfectionTo attain the lowest apostrophize so that everyone canister fly with AirAsia Maintain the highest quality product, embracing engineering science to reduce embody and enhance service levelsAirAsias valuesAirAsia draw the low fare model doable through the implementation of the following(a) key strategiesSafetyFirstPartnering with the domain of a functions most renowned maintenance providers and complying with the with world airline operations.High Aircraft UtilisationImplementing the regions fastest turnaround time at only 25 minutes, assuring lower be and higher productivity. secondary Fare, No FrillsProviding guests with the choice of customizing serve without compromising on quality and operate. contour OperationsMaking sure that processes are as simple as possible.Lean Distribution SystemOffering a wide and innovative range of distribution channels to make arriere pensee and travelling easier. aspire to Point NetworkApplying the point-to-point network keeps operations simple and costs, low.Products and Services provideed By Air AsiaIn-flight services Air Asia offer food and drinks on advance programme . In-flight services customise meals and merchandise mailboat upon request e.g. caps, T-shirts, and pants.Online services Online restraining makes it more convenient for its customers to book online anywhere anytime. rush learning is available to succor customers make enquiries on flight schedules arrival and acquittance time and date. Chatter flight Created for a group of people, business travellers for purposes like pertainings, conventions, leisure or even exhibition.Channels of distributionA keep down of alternate channels of distribution whitethorn be available ex diverseness look at Outbound gross sales forcer Via mail order, Internet Telephone salesSelling in rule Agent, who typically sells direct on behalf of the producer distributer (also called wholesaler), who sells to retailers Retailer (also called dealer or reseller), who sells to end customersSales and MarketingAirAsia is an international company, and going global invites a lot of rival. AirAsia has to deal with the rival of local anesthetic companies in the same field- Airline services. Competition for AirAsia would also be encountered in the virtual world-the internet. As they entered into the use of modern technology such as the public domain would invite competition on the global scale. variant localities and countries have different technological standards, and quality control policies, which AirAsia would hav e to oblige to, by adherence to these policies certain intended developments whitethorn be possible in certain communities but non acceptable in others. accord to CEOs of the company, Mr. Fernandez, there are a lot workers or low pay salaries earners who would like to travel often to meet their families peculiarly during special occasions but due to how expensive it was that time, their desire are not fulfilled. By introducing a low fare give fountain all those people opportunity to travel if not more than once in a year. This enables them to identify their cigarette commercialize. Reduced price sales is one of the basics of securing a laughingstock market for AirAsia. They reduce their price to suit their class of customersBrandingAirAsia went into intensive General advertisements and other high profile activities, which contributed to the high go of their companys image. They came with a brand Now every one can fly These points of contact with their target customer h elp them to build their image, which in turn created loyalty from their customers. gathering Discounts and OffersDiscounts or other offers can help exposure business to unseasoned customers, resulting in a sales increase . AirAsia is a ticket little Airline that allows customers to get their ticket online with at a discounted rate. They also have a arrangement of group discount and this help to get more target market, peculiarly internet based customers.2.2Core competenciesComputer Reservation System (CRS)AirAsias CRS (Open Skies by Navitaire) has helped it to grow at a dramatic pace in the aside couple of years. Tony Fernandes, CEO AirAsia described that Navitaires Open Skies technology has in truth enabled Airasias growth from 2 million passengers to 7.7 million passengers in less than two years. Open Skies scaled easily to accommodate our growth. It is an integrated web-based reticence and inventory system. It includes Internet, call center, airport departure control and m ore. It is a direct sales engine that effectively eliminates the middleman (travel agents) and the sales commissions that need to be paid to them.Enterprise Resource Planning System (ERP)AirAsia has recently (May 2005) opted for a full fledged ERP system implemented by Avanade consultants. By implementing this package AirAsia is looking to successfully maintain process integrity, reduce financial month-end blockage processing propagation, and speed up reporting and data retrieval processes. egotism Check InWith the use of the sore self flake in service a quicker and more convenient way to intercept in exploitation mobile phones, laptops etc, connecting to the internet. This system is easier and faster for customers and their family to check in at or before they get to the airport without having to queue up at the counter to check in.Air Asia source cardAir Asia offers a choice of credit card facilities to fit in their customers travel animateness style be it business, le isure, training or holidays. With an Air Asia credit card a customer can purchase any goods or services while travelling anywhere in the world online.Go Holiday servicesAir Asia has a product called Go Holiday, with the help of E-commerce Air Asia is able to display their coverage maps, holiday resorts, first and bonny class hotels, car rental services, and activities in different countries with their different rates and prices on Air Asias web page.. Using E-commerce, customers are able to select and make a holiday and travel arrangement with a hotel of their choice and class, a pick up car and even medical examination services. And payments for all this can be done on the internet exploitation credit cards or other online E-payment methods ahead of travel time. abroad workers and stuffors strategyAirAsia also target most foreign workers from Indonesia, Singapore, Thailand, China, Macau who may not afford the expensive flight home and offer them the cheap fare which attracted m ost of them as would go home very often without salaried much.2.3 The CompetitorsCompanies in all industries have direct as well as indirect competitors. Direct competitors in the aviation industry are companies that offer flights to similar destinations on comparable terms of travel. Direct competitors include Malaysia Airlines offering flights in same routes .Singapore Airlines offering flights on same routes amongst London and Kuala Lumpur. Thai Air operating flights between Bangkok an Kuala Lumpur. Air Srilanka operating flights between Colombo and Bangkok. AirAsia are facing strong competition with major international and national airlines on the market shares In severalise to other airlines ,AirAsia offers fall apart value for money2.4Analysis of Environmental FactorsIn analyzing the macro-environment, it is master(prenominal) to identify the computes that might affect a number of vital variables that are likely to influence the organizations supply and demand levels an d its costs (Kotter and Schlesinger 1991). The external environment of any organization can be analyse by conducting a PEST analysis. The acronym PEST is used to describe a framework for the analysis of a range of macro environmental factors including the Political, frugal Social and Technological environment.PEST Analysis for AirAsiaPoliticalFlying out of doors Malaysia is difficult. Bilateral agreement is one of the main obstacles in the way of low cost carriers. Landing charges is also another big influencing factor on costing of low fare airlines. The low- cost airline industry in south-east Asia has been underdeveloped because the aviation market is tightly regulated by bilateral air rights agreements. Threat of terrorism, people is afraid to fly after the September 11 terrorist attacks incident.EconomicIn spite of strong competition from Malaysian Airline (MAS), AirAsias low-cost carriers offering cheap tickets and fewer in-flight services are gaining attraction in the reg ion. Current recession coin the aviation business. But with this economy slowing down, more people will want to enjoy its cheap tickets. Oil prices is another regulatory factor for this typewrite of airlines. If oil prices go high, it is very difficult to control cost of operation.SocialPassengers are reluctant to board a no-frills airline for a long-haul flight. Increasing worlds population, tourists and number of educated people helpful for the growth of aviation industry. Outbreak of the Severe Acute respiratory Syndrome (SARS) has scare people to fly. AirAsia commit to Safety First comply with all regulatory agencies, set and maintain consistently high standards ensure the guarantor of staff and guests.TechnologyAirAsia provides online service that combines air ticketing with hotel bookings, car hire and travel insurance. To help keep costs in check, Air Asia has pushed internet booking services. AirAsia also recently reveald GO Holiday, the airlines online programme whe re guests can book holiday packages online in real time AirAsia has bought in A320 to interchange Boeing 737. The Airbus A320s improved fuel efficiency and extra capacitor which leads to better execution of instrument and reliability.SWOT analysis for AirAsiaStrengths lower-ranking operational and maintenance cost by having a iodine aircraft type fleet i.e. from Boeing 737 to Airbus A-320. Economy of scales benefits. Low operating cost due to being No Frill, online reservations system, quick check in etc. There is huge untapped market in the region, especially for business travellers and for-the-first-time-flying segment. As it is low cost airlines, it can target customers who are currently using non-aircraft modes like, Bus, Trains, car to travel to distances.Weakness colossal investment to purchase air planes and implementing latest technologies there is high touchstone of operational cost. Rising fuel price. Increased the operational cost.The flight times are more or less li mited to 2.5 hours. So they cannot act flights of longer duration without any Frill, so No-Frill becomes impossible to implement for passengers. fortuneLow fares offer by AirAsia has encourage people from all walks of life style to fly. Especially, during economy down turn. Airbus A320 would encourage greater passenger capacity and offer comfortable service to customers. Introduction of SMS booking allows customer to book their seat at anytime and anywhere. With the commitment in ensuring the security of staff and customers, customer will have more confident to fly via AirAsia.ThreatsThere are more no-frills airlines may take off in Asia to meet increasing consumer demand following the success story of Malaysias reckon carrier AirAsia. Singapore Airlines plans to launch a budget carrier, they see the success of AirAsia. They know how big the market is and how good the opportunity is in Asia. Travelers may not choose AirAsia if they are to travel long distance flight. They will prefer airlines such as MAS or SIA which provide better services. adopt to fly decreased via terrorism and outbreak of the SARS.2.5 Marketing Plan salute advantages activitiesAirAsia already introduced cost advantages activities. Some of them describe below Utilising one type of aircraft (Boeing 737-300 which will be fully replaced with Airbus A320) results in reduction of maintenance cost (one of the major expenses in airline industry), scheduling cost, administrative cost, and inventory of parts. yeasty and low-cost advertising significantly reduces marketing cost. On the other hand, AirAsia direct sales through internet, call centres, walk-in airport sales, and sales offices significantly reduce the commission fee to travel agents as AirAsia only assign its sales to limited travel agentsAirAsia assigned multi-skilled cabin crews (2-3crews/flight), cost-effective training, performance based reward and incentives systemsTarget MarketLow- income Customers and tourism segmentMal aysia emersion as a regional business and tourism hub has provided AirAsia plenty of board for growth and has fuelled regional air passenger traffic.Transit passengersKuala Lumpur is the operational hub for AirAsia, which is the best connection point between Europe and Asia/Australia has supported the growth of their business. AirAsia has been using this connection point to promote their business.2.6 Proposed Strategy for foster expansion of AirAsiaExtending unseasoned RoutesExtending current services into bracing markets may be helpful to further growth of this company. It is possible to achieve this strategy by launching subsisting services into new geographical area or new market segments. Adding new routes and destinations are possible especially there is growth Malaysia and East Asia tourism.Activities related to this strategyMarketing researchFeasibility Study necessitate with hotels and tourist agency at new destinationsFinding out strategic partnerMarketing new routes and destinationTime frame and costIt will take 1 to 2 years to start a new route and estimated cost around $200 million to new aircraft and for marketing cost. Organizational changeRecruiting new employeesArranging training for new employeesOpening new office in new destination evaluation criteriaNew destinations are implemented to achieve new market development. Flight number in new destination is the best way to footmark result of this strategy.Private Suite for business customerIntroducing new services into existing markets implies product development. This strategy involves the development of fresh competencies and requires business to expand customized services which can apply to current markets. Thats why Emirate Airlines introduce high quality first class private lounges to attract business travelers.Activities related to this strategyTechnical and feasibility StudyAllocated budgetContract with a company to install new facility.Installation and modification of aircrafts onbo ard facilities Time frame and costIt will take 6 months to 1 year to complete installation new facilities in a single aircraft and estimated cost around $0.2 million to new aircraft and for marketing cost. Organizational changeRecruiting new employees to serve business customerContract with new or existing company for catering service for business customer. Evaluation criteria valued measurement of this product would be number of booking or occupancy.Chapter 3CONCLUSION3.1 ConclusionBy studying PEST, SWOT and marketing analysis, it could be said that AirAsia is situated in standard cycle markets where it get competitive advantage for its business policy and strategy. Providing customers with superior products and services with low fare is synonymous to the AirAsia brand. However, it is necessary that Airasia should re-evaluate its strategies and focus on core values and competencies. For this why, AirAsia should see their market and specific routes to obtain value other than pr ice and exsert the competition. From this study, it is possible to say that still there is some other choice to expand this company. Adding new route and introducing business class suite may be suitable option for AirAsia for further growth.3.2 RecommendationsTo remain leader in the market in serving customers, AirAsia has to re-evaluate their current strategy. Recommendation for improvement can be outlined as follows AirAsia should make any major changes to their strategy after proper technical and feasibility study to avoid excess risks. Oil price is a big factor to low fare airlines. So this company should make longer contracts with fuel suppliers for more stability As Airasia operates their fight very frequently, so they should have a relinquish aircraft at each location to avoid delays. AirAsia should consider environmentally intimate operation system as such as carbon offsetting to surrender environment.REFFERENCEDaniels, J. D. & Radebaugh, L. H. (1998), International Business Environments and Operations, 8th edition, Addison-Wesley, USA. Peng Mike W, 2006, Global Strategy, Thompson, United StatesPorter Michael E, 1998, Competitive Advantage, The Free Press, United States. Websiteswww.airasia.comwww.navitaire.com/res