Air Asia Case Study
Autor: Rachel • November 14, 2017 • 1,023 Words (5 Pages) • 945 Views
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1.2 Volatile Fuel Prices - Oil price hikes have a serious effect on an airline’s bottom line. Fernandes had foreseen the impact of fluctuating oil prices on Air Asia in the future, which is why he slowly phased out it’s existing fleet of Boeing 737-300s and replaced them with the fuel efficient Airbus A320-200s. These aircrafts have since then reduced the airline’s fuel expenditure considerably. Additionally the efficient and ethical pilots hired by Air Asia have also contributed by cutting fuel consumption significantly, nearly 20% in 2008.
2. Other Threats
However, there are still some potential economic and operational uncertainties facing Air Asia that Fernandes seemed to have overlooked while framing Air Asia’s business strategy.
2.1 Open Skies Policy - With globalisation, Asian governments are considering opening up their skies to foreign carriers. In case this happens, influx of global players in the regional market with long years of experience in markets abroad and financial strength will be a threat to AirAsia.
2.2 Lack of Infrastructure at Secondary Airports - LCCs like Air Asia use secondary airports to save up on high slotting fees levied by major airports, however most of these airports are small and don't have enough gates, counter space, or parking bays. This could pose as an operational threat for Air Asia, as more LCCs around the region start using these airports. Apart from that, the lack of amenities at these airports such as decent restaurants or duty free shopping also acts as a competitive disadvantage for Air Asia.
2.3 Overcapacity - During off peak periods airlines suffer from an overcapacity problem, which fuels an imminent price war in the hope of filling empty seats. Worldwide, overcapacity pressures have at times lowered ticket prices to unreasonable levels, eroding bottom lines. Air Asia’ competitive advantage lying in mainly its low airfares and its lack of a loyalty program could lead to their customers switching to its competitors offering fares as low as them.
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