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Business Strategy - Air Asia

In: Business and Management

Submitted By stevennyatekani
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Air Asia What are the sources of AirAsia’s cost advantage?
Value chain:
Operations: Single type of aircraft, short and medium distance flights, joint-venture (Thai airasia and Indonesia Airasia), High aircraft utilization (fastest turnaround time), low fare- no frills, complements (shuttle bus, hotels, financial services).
On board: no meals, snacks can be bought, only one class (more seats per plane), no aerobridges, no seating
Logistics:
Marketing/Sales: Advertising, co-branding, sponsorships. Sales only through website and call-center
Service:
IT: Integrated systems to calculate prices, allows passenger to print boarding passes, planning future passenger numbers
HR: High retention rate, strong corporate culture following Fernandes’ values. Multi-skilled employees.

High aircraft utilization: fastest turnaround time of 25 minutes. Utilize airplanes 11,8 hours a day, seat load factor of 75 %, low cost per available seat, higher (revenue-cost per available seat) ratio.
No frills flight: no meals, snack can be bought, minimal customer service, ticketless flights
Outsourcing: airplane maintenance outsourced to the lowest bidder.
IT: integrated IT-systems working together – reducing cost of logistics.

Should AirAsia expand its long haul business and to what extent should AirAsia and AirAsiaX be integrated operationally?
Overview of the Long-haul industry:
Rivalry: Intens rivalry, several competitors with many years experience. Emirates and BA are increasing their load factors. AirAisia provides the cheapest flight from KL to London and back with 36 % and otherwise 18 %.
Buyer: Individual buyers – Economy (fairly price sensitive) Premium (not price sensitive)
Supplier: Airbus – one of the biggest airplanes makers in the world. Intermediate threat in terms of their bargaining power.
Substitutes: No relevant intercontinental substitutes.…...

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