Low-cost Carrier and External Analysis

7 July 2016

1. Introduction (111 words) AirAsia is a low cost airline company which was established in 1993 with its headquarter in Malaysia and found by government in 2001. The company has been growing and changing a lot with the title of ‘World’s Best Low Cost Airline’ in the annual world airline survey by Skytrax for continuous 5 years. Now they flight over 20 countries with associate companies AirAsia X, Thai AirAsia, Indonesia AirAsia and Philippines AirAsia Inc. AirAsia X was established in 2007 which flies long distance with low cost by reducing complex code sharing and extra expenses for non-essential services. They keep putting efforts to provide both reasonable price and great service to the customers.

2. SWOT Analysis (343 words – including the point forms) SWOT is a tool to figure out one company’s strength, weakness, opportunity and threats to identify company’s both positive and negative sides. SWOT can be divided into internal (strength, weakness) and external environment (opportunity, threats). The company should do this analysis because by using this method they can know whether their company is doing well or not and what they need to improve and change to be better. (David Fred R. 1993) The biggest strength of Airasia is “Lean products and services” because this factor is the main reason of providing low cost. If they include all products and extra services, this company is no longer low cost airline. The biggest weakness of Airasia is “Customers cannot get a refund” which is the biggest complaint from many customers every time. The biggest opportunity of Airasia is “Expanding the routes to western countries” that can attract much more customers and make great profits. The biggest threat of Airasia is “Fixed-cost for empty seats” which makes the reduction of their profits.

Low-cost Carrier and External Analysis Essay Example

3. External Analysis – PESTEL Analysis (370 words) PESTEL is a tool for analyzing the general environment information that affect to the company. PESTEL stands for Political, Economic, Social, Technological, Environmental, and Legal. The reason why company has to use this tool is to assess their opportunities and challenges. And they can set the strategic plan effectively. (Neil Kokemuller, 2007) 1) Political

– Some decisions such as the routes, services, insurance, and so on are made by the government. – Hiring staff members could be affected by politic based on the race.

2) Economical – Oil price fluctuation affects the company’s profit a lot. If the oil price increases, the company’s profits will be decreased. – If economic condition is bad, it will give negative effects to the company. For example, due to the bad economic condition, when personal income decreases, there will be fewer customers who fly overseas. Then, the company’s profits also decrease. – If there are more low cost competitors Airasia might lose some customers from them. – Since Airasia is an international company, they can be influenced by currency. 3) Social

– Airasis doesn’t really target based on the specific demographic. But they more likely consider social status and people’s budget. They target the low and middle income people who are willing to fly at the low price. – They mostly target Asian people.

– The Chief Executive Officer of Airasia explains that they are targeting people who want to meet their families often and periodically without big burden of the price. So it can be the international students or business men who are studying and working overseas. 4) Technological

– Airasia provides online booking service which means they can reach customers from all around the world. – Airasia is the first flight company who provides SMS booking services. So customers can reserve their flights, check schedules and adjust it with their phone anywhere anytime. – But on the other hand, they can lose some customers who are not used to use the Internet. – Airasia provides latest news, promotions and travel information on their Facebook which makes many people easily go and check them. As a result, they can attract more customers by showing them travel attractions and great price promotions. 5) Environment

– The weather is very significant factor to be considered for Airline industries. So whenever they set the flight schedules they always have to consider the weather conditions. If they fail to expect the right weather, they might delay the flights for few hours which give inconvenience to the customers. 6) Legal

4. External Analysis – Porter’s 5 Forces Analysis (350 words) 1) The threat of new entrance – Intensity of other low cost airline 2) The threat of substitutes – Many substitutes such as buses, cars, trains 3) Suppliers – Labor – Aircraft components 4) Customers – Since there are many other low cost airlines they can compare they price and services and choose what they want – If they are not satisfy with the services they can choose other airlines 5) Intensity of Rivalry

5. Internal Environment Analysis 6. Conclusion 7. APA

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