Case Study Oct 2009

Question 1

Identify five (5) of competitive advantages used by AirAsia.

Five of competitive advantages used by AirAsia are:

• launching new routes from its hub in Kuala Lumpur International Airport at breakneck speed.
• undercutting former monopoly operator Malaysia Airlines with promotional fares as low as RM1 (US$0.27).
• operates scheduled domestic and international flights and is Asia's largest low fare, no frills airlines
• pioneered low cost travelling in Asia which is then followed by Tiger Airways, Jetstar Asia, Nok Air, Lion Air and Cebu Pacific.
• the first airline in the region to implement fully ticket less travel and unassigned seats

Question 2

  which of the Porter's generic strategies were applied by AirAsia in the case study and explain with     examples.

The Porter's generic strategies that were applied by AirAsia in the case study is cost leadership, which is becoming a low-cost producer in the industry that allows the company to lower prices to customers. In this strategies the competitors with higher costs cannot afford to compete with the low-cost leader on price. For example Air Asia operates scheduled domestic and international flights and is Asia's low fare. Also, it was  a pioneer of low cost travelling in Asia.


Question 3
Based on Porter's five forces model, analyze AirAsia's buyer power and supplier power.

• Buyer power

Air Asia assessed by analyzing the ability of buyers to directly impact the price to pay for an item. As an example Air Asia giving  a low cost travelling to their customers and also with the world's lowest unit cost of US $0.023 (ASK). Usually airline industry has high buyer power because of customer have many choices.

• Supplier power

Air Asia assessed by the suppliers' ability to directly impact the price they are charging for suppliers. For example Air Asia is currently the main customer of the Airbus A320. The company has place an order of 175 units of the same plane to service its route network by connecting all the existing cities in the region and expanding further. Usually airline industry has high supplier power as there are limited plane and engine manufactures to choose from