AIR ASIA
Case Study
Mgt490-4
Company
Overview
One of the world’s best low-cost airline.
Established in 1993.
Started as a budget friendly airline in
2001.
Earning are expected to grow 119.06%
per year.
Current market cap over $46m.
Operates with the world's lowest unit
cost of US$0.023 per available seat Km.
High dependence on fuel
prices .
Security concerns.
High fixed costs.
Competition.
Profitability
of Airline
business
Profit Drivers
◦ Cheaper Tickets
◦ Low cost
◦ The developed management team and good quality
◦ Air Asia product strategy
◦ Marketing strategy of Air Asia
Higher number of Aircrafts and
utilisation.
Primary
sources of
advantages
Frequent and reliable
schedules.
Productive and skilled
employees.
Standardised air fleets.
Handling competition
ONLY ONE TYPE OF
PASSENGER CLASS
AND AIRCRAFT.
SHORT FLIGHTS
AND FASTER
TURNOVER TIMES.
LANDING ON
LOW-COST
TERMINALS.
NO FREE FOOD.
NO MOVIES.
Changing the low
cost approach
Changing the low-cost approach
won’t be beneficial for AirAsia because
◦ AirAsia will lose it’s target customer
◦ Might not be able to provide service
up to the competitors’ standard.
◦ Not being able to capitalize on their
brand image.
◦ Will lose the position of being the best
low-cost airline.
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