PEST Analysis Of Air Asia

1987 Words 8 Pages
1. Objectives of the Report
This task’s objective is to analyze and investigate AirAsia on how it has managed its competitive advantage to become a top budget airline in Asia.

2. Purpose of the Report
The purposes of this report is to know how AirAsia works, to know the strength, weakness, opportunity, and the treatments on Air Asia analysis, and to overcome the lowest strategy on the analysis.

3. Scope of the Report
Scopes on the analysis are:
- The internal analysis for the internal strengths and weaknesses by Porter Value Chain Model.
- PESTEL Analysis for external opportunities and threats.
- Porter’s 5 Forces Analysis for intensity of competition.
- SWOT Analysis of how AirAsia manages its Strategic Fit.

4. Importance of Budget Airline
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AirAsia’s PESTEL ANALYSIS

Political
Flying outside Malaysia is difficult. Bilateral agreement is one of the obstacles in the way of truly pan-Asia budget carriers. Landing charges at so-called "gateway airports" and navigation charges are often prohibitively expensive, and in key destinations like Bangkok, Beijing, Hong Kong and Singapore there are no cheaper, secondary airports. The budget 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.
Economic
Opportunities: Although, economic downturns (e.g. global financial crisis) would result in a downturn in the industry, it can prove to be an opportunity for AirAsia. For example, as a result of the global economic downturn (i.e. worldwide stock market plunge), aircraft leasing costs were reduced by about 40%; creating an environment with lesser competition and enabled AirAsia to lease their aircraft at a cheaper rate (leading to cheaper ticket prices for customers).
Threats: Fluctuating oil prices would have an impact on operation costs when fuel prices are too high. Yield and profitability would decrease for AirAsia if fuel prices become too
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Together with increased in trade and tourism within and into Asia, demand for air travel increased; more people were willing to compromise on food and other services in exchange for lower prices. The attractiveness of budget airlines is primarily their low ticket prices, which can be as low as 10-20% of those charged by full-service airlines. This presents AirAsia with opportunities to differentiate itself from competitors by adding customer services or operation as full service airline with low fare, giving it a competitive advantage (i.e. provision of in-flight food and drinks, and online sales of hotel, car, and holiday reservations, as well as travel insurance), and corporate travel services, with its own branded credit card; further increasing brand awareness and value for

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