Air Asia Case:
Q 1) Comment on business level strategy adopted by Air Asia? How has Air Asia achieved cost leadership?
Answer 1) High aircraft utilization: Air Asia uses the aircraft in very high frequency and high turnover of flights; these add value to customer convenience and enable low cost. Air Asia has the fastest turnover in its region; is 25 minutes.
a) Low fare no frills: Air Asia does not have frequent flyer miles program and private airport lounge. No free foods and beverages even snack in flight, additional meal and service required passenger to pay more.
b) Point to point network: All Air Asia both short-haul (4 hours or less radius) and medium to long-haul are ...view middle of the document...
Air Asia applies cost leadership strategy on its operations. It employs staff with low wages (most of the secondary important staffs are from Indonesia, Bangladesh, Nepal, and China which has low wages). The main hub is in Low Cost Carrier Terminal in Malaysia and in any other secondary airport across countries which allowed Air Asia has low airport fees.
The following makes Air Asia gain cost leadership:
1) High Aircraft Utilization
2) No Frills
3) Modernize Operations
4) Basic Amenities
5) Point to Point Network
6) Lean Distribution System
7) Effective Positioning
8) Value Chain Analysis of Airline Industry
2. Identify the ways Air Asia can sustain its competitiveness through the business level strategy it has adopted.
Answer 2) Air Asia is a successful company in applying low-cost leadership strategy; it is proven by its performance. Air Asia should provide better service but still in very low cost; some services are very easy to do and will not affect much on price. Here are some services that might be done by Air Asia.
(1) Air Asia needs to provide an improved customer service; as it is directly related with the customers. Even applying low-cost leadership industry, service industry needs good service.
(2) All the booked flights are inflexible; passengers are unable to change the flight details (personal detail, change person, date and time). On the other hand, other airlines offer this service. It is one of the considerations of uncertain customers. This...