The Low Cost Airline: Airasia 2

The failure of bilateral agreements within the Asia-Pacific regions negatively impacts on low-cost carriers of that region leading to their underdevelopment (Hooper, Duangphastra & University of Sydney. 1998). In addition, landing charges imposed on AirAsia and other low-cost airlines negatively affect their growth within the region. Conversely, liberalization within Southeast Asia has greatly helped in eliminating air transport charges thus giving AirAsia and other airlines the reason to operate beyond

Air Asia’s success has been widely recognized. For instance, in 2003, it was named the “Developing Airline of the Year” (by Air finance Journal) and the “Asia Pacific Airline of the Year” (by Centre for Asia Pacific Aviation, CAPA). In

Particularly when new entrants are diversifying from other markets, they can leverage existing capabilities and cash flows to shake up competition like Apple did when it entered the music distribution business. The threat of new entry therefore, puts a cap on the profit potential of an industry. The threat to Air Asia is relatively less as the capital required to enter the industry is quite high. However, potential new entrants from full service carriers with a surplus capital could be threats in the future and long-term.

Strong brand equity - AirAsia’s brand name is well established in Asia Pacific (Learning Curve)

The first successful low-cost carrier was Pacific Southwest Airlines in the United States, which pioneered the concept when their first flight took place on May 6, 1949. However, Southwest Airlines that began service in 1971 and has been profitable every year since 1973. With the advent of aviation deregulation, the model spread to Europe as well, the most notable successes being Ireland 's Ryanair, which began low-fares operations in 1991, and easyJet, formed in 1995. Low cost carriers developed in Asia and Oceania from 2000 led by operators such as Malaysia 's AirAsia, and Australia 's Virgin Blue. The low-cost carrier model is applicable worldwide, although deregulated markets are most suited for its rapid spread. In 2006, new low-cost carriers were announced in Saudi Arabia and Mexico.

On the other hand close attention to costs produced its competitive advantage of having the nation’s lowest fares, and created a phenomenon in this industry known as “Southwest effect.”

Regional airlines such as SkyWest and Mesa generally operate smaller aircraft on lower volume routes. These airlines generally form alliances with the major carriers and provide service from their hubs to smaller cities in the region. Low cost carriers such as Southwest developed after deregulation in 1978. Southwest pioneered the low cost airline model, which many other airlines have tried to copy. Although there are currently four low cost major U.S. carriers (JetBlue Airways 2006 Annual Report, n.d.), major competitors according to market share include (Figures 1 and 2; JetBlue Airways Corporation Overview, n.d.):

ANA was required AirAsia and will continue run as their brand until the end of the October 2013. Airasia had announces to launch in Japan again in mid of year 2015. The announcement from AirAsia was made in July 1st 2014. AirAsia will relaunch the operation in Japan by signing the stakeholders agreement with several companies in Japan which is Octave Japan Infrastructure Fund I GK (Octave), Rakuten Inc. (Rakuten), Noevir Holdings Co. Ltd. (Noevir), and Alpen Co. Ltd. (Alpen) to establish AirAsia Japan. The team of Airasia Japan is now working hard with the relevant authorities to obtain necessary operational approvals. They have confidence AirAsia can successfully relaunch into Japan with new investors and strong partnership. Since that other Airasia counterpart in many countries such as Malaysia, Thailand, Indonesia, Philippines and India, and it has gained greats and encouraging responses in these countries. AirAsia will bring forward the same to the Japan and they believe that it can gain the greats responses

Marketing of Thai AirAsia is evaluated by Marketing Mix, product, price, place, and promotion. The first point is product of Thai AirAsia that is services. The company provides the core service by providing air travel services along with various assisting services to the passengers, starting from the services before boarding, inflight services, and other services relatively to all air passenger services such as checked Baggage, travel insurance, sale of food and beverages on board, car rental and connecting flight (Fly-Thru) that allows passengers can connect flights with no bag collecting.

Diversified in product offered. AirAsia has expanded their product line by not only sales ticket but also offering tourism package which is offering hotel booking while booking the ticket. It must have a good relation with hotels and tourism companies around Asia.

Air Asia Berhad is also known to be a profit seeking company that has been well known for gaining profit by establishing itself as a leading low cost carrier in Asia. Air Asia Berhad was listed on the main market of Bursa Malaysia Securities Berhad in November 2004. Since 2001, due to pioneering the short-haul low-cost carrier model in ASEAN, the airline company has grown from a domestic airline in Malaysia to the leading low-cost airline in Asia serving around 121 destinations from 16 hubs in

AirAsia can find new branches for their company in foreign country and hence, a great step for AirAsia to enter a new foreign market. Furthermore, it can increase the economic development of certain industry especially tourism by promote our country to other state. By having the low cost airlines that provides services there, the foreign tourist can come to visit our country during their vacation. This will increase the flow of foreign money into our

AirAsia focused on ensuring a competitive cost structure as its main business strategy. It has been able to achieve a cost per average seat kilometer (ASK) of 2.5 cents, half that of Malaysia Airlines and Ryanair and a third that of EasyJet. AirAsia can lease the B737-300s aircraft at a very competitive market rates due to the harsh global market conditions for the second-hand aircrafts because of the September 11th event in 2001.

To be able to adjust with stiff competition that keep increasing in the airlines market, airlines industries tend to come up with different approaches and strategies to be more competitive. Air Asia, like any other airlines adopt strategic approach to marketing and expand their market reach and give better and satisfying service delivery to their target market. Being an industry that considers differentiation strategy, Air Asia continue to focus on their low cost approach, frequently flights approach, guest convenience, ticketless services, easy payment channels, internet booking, reservations and sales offices, and authorized travel

With the advancement of technology, traveling around the world is no longer a privilege to wealthy people. Tony Fernandes, the owner of AirAisa, pointed out that the raising middle class in Asian countries starts to be able to afford air travel for the first time (Grant, 2013). To the people who often have budget constraint while traveling such as students and social freshmen, it is more likely for them to go for short-haul or medium-haul trip rather than the countries with longer flight length and higher prices. The low-cost carriers (LCC) capacity share boosts significantly in Southeast Asian countries such as Indonesia, Thailand, Malaysia, Singapore and the Philippines from 3% in 2001 to over 50% in 2012 (CAPA, 2013).