OCTOBER 2009

QUESTION 1

Identify five (5) of competitive advantages used by Air Asia.

• 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 airline.
• Pioneered low cost traveling 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 ticketless travel and unassigned seats.

QUESTION 2

Which of the Porter's generic strategies were applied by Air Asia in the case study and
explain with examples.

: The Porter's generic strategies that are applied by Air Asia is cost leadership. They reach a large market segment and low cost operator. The low cost operator saves on expenses and passes the costs on the customer in the form of low prices for example Air Asia operates scheduled domestic and international flights and is Asia's largest low fare. Air Asia also pioneered low cost traveling in Asia.

QUESTION 3

Based on Porter's Five force model, analyze Air Asia;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 traveling to their customers and also operate s 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 expending further. Usually airline industry has high supplier power has an there are limited plane and engine manufactures to choose from.