airasia project presentation
TRANSCRIPT
Airasia Berhad
AIRASIA BERHAD AIRASIA BERHAD MARKETING PLANMARKETING PLAN
Contents Introduction
Vision & Mission
Market Profile Analysis
- PEST Analysis
- Competitive Analysis
- Market Demographics Porter’s 5 Forces Market Segments and Market Positioning Marketing Mix Analysis Summary
OVERVIEW OFOVERVIEW OF
AIR ASIAAIR ASIA
Airline Industry
Airline Industry in MalaysiaNational Carrier – Malaysian Airlines System (MAS)
Low cost carrier – Air Asia Sdn Bhd
Airlines Industry in Malaysia
MAS Air AsiaOther Foreign
Airlines
AirAsia AirAsia Sdn Bhd (AirAsia) – Low cost airlines in
Malaysia Also known as low fare and no-frill – started the
operation in Dec 2001 Joint Venture with
1. Thailand – Thai AirAsia2. Indonesia – Indonesia AirAsia
Flies over 71 destinations (started with 6 in 2002 and currently 71 destinations)
AirAsia’s new destinations (products) : Singapore Goldcoast Hangzhou
Mission
To continue to be the lowest cost short-haul airline in every market we serve, delivering strong organic growth through offering the lowest airfares at a profit.
“Cost-efficiency, low complexity and profitability are always the cornerstones of building a strong business. While a strong foundation does not guarantee a solid house, it is the only basis upon which to build. AirAsia will not just be number one in size; it will be number one in the minds of consumers. This is the passion of AirAsia and trust me, we will never lose sight and passion of being the best ”
Dato' Tony FernandesCEO, AirAsia Berhad
Business Portfolio
Tagline : ‘Now everyone can fly’ Major Milestone – Operating in LCCT Countries – Thai, Indonesia, Macau,
China, Philippines, Cambodia, Vietnam, Myanmar
Aircraft – Boeing 737, Airbus A320 Ancillary products – Go Holiday,
GoInsure, Snack Attack, AirAsia Credit Card, Gift card
Business Portfolio
Key Strategies:1. Low fare, no frills2. Frequent flights3. Guest convenience
Nationwide call centre Ticketless service Easy payment channels Internet booking Reservations and sales offices
4. Safety first5. Cost optimization operations
LCC Penetration in Asia
PEST ANALYSISPEST ANALYSIS
Political Politic stability – no strikes, wars – people free to plan their
traveling Diplomatic relationship with other countries Government policy – All government and GLC business trip to
engage with MAS Government approval for domestic and international routes and
hubs
Economic
Fuel price increase – low profit margin for AirAsia (USD100++ per barrel) Good economic growth in Malaysia (2006 – GDP – 5.9% 2007 – GDP 6.0% (forecasted) Per capita income – RM19764 per annum in 2006) (sources from EPU)
People’s spending power increased – Business growth for AirAsia Hospitality and Tourism Malaysia – This programme has boost AirAsia
growth Economic interest of selected destinations Example: i) Hangzhou - on the east coast of China and very close to
Shanghai (known for tremendous business)ii) China – highest population rate – potential for AirAsia’s
passenger growth
PEST ANALYSISPEST ANALYSIS
International business expansion
a) Foreign franchise business – all sectors-
F&B, clothes, education, telecommunication, engineering
b) maid and labor services
This increased traveling needs.
Continued
Social People’s Awareness and exposure – towards holidays & travel Emphasis in education – abroad education Migrating to different countries – seeking different living
environment and culture Consumer’s sensitivity towards sales and promotion
- easily attracted with the tagline ‘Now everyone can fly’
PEST ANALYSIS
Technology New technology in aircraft sector – Air bus technology
IT world IT serves as middleman Online booking and ticketing Ease consumer convenience Offered in 6 languages
PEST ANALYSIS
SWOT Analysis
Strength1. Low cost
significantly lower than those of other operators 2. Online/sms booking
first airline in the world to introduce SMS booking 3. Management
high level of integration4. Go holiday program
guests can book holiday packages online in real time 5. Promotion
Manchester United, packages, credit card6. Largest customer for Airbus A320 in Asia Pacific
SWOT Analysis (continued)
Weakness1. Food has to be purchased on the flight
2. Limited service/ticketing counters
3. Still outsourcing cargo to third party
4. LCCT not comfortable
Opportunities1. More expansion to longer routes
Asia, Australia, Europe
2. Holiday packages3. Rising numbers of internet users4. Wide market
Local International (Asia, Australia, Europe)
SWOT Analysis (continued)
Threats1. Increase in oil price2. Government regulations
Safeguard of National carrier Restricted access of some routes (KL-Singapore, KL-Ho Chi
Minh3. Rising airport cost
Airport tax4. Sensitive to market
Quality issues Public perception towards low cost carrier
5. Internet accessibility low in rural areas
SWOT Analysis (continued)
COMPETITIVE COMPETITIVE ANALYSISANALYSIS
PORTER’S 5 FORCES
Industry Competitors Local competitor – Malaysian Airlines System (MAS), Firefly and
MAS Wings (MAS subsidiary)
International competitor – Singapore Airlines, Garuda, Cathay Pacific, Thai International Airways
Other Low Cost Airlines competitor – Compass, Tiger Airways, Cebu Pacific, Jetstar Asia Airways, Impulse, Virgin Blue Airlines
Asia’s Largest Airlines
Other LCC Airlines
Passenger Traffic Projection
Potential Entrants Airlines has high entry barriers and high exits
barriers Licensing is a major barrier for this industry Threat of entrants is High due to the high cost
to leave the industry during economy downturn.
JV and partnership is recent trend of threat for this industry
Continued
Buyers Local population (Malaysian) Southeast Population – Indonesia, Thailand, Singapore and
all the destination that AirAsia engaged with. Buyers can switch easily to other airlines
no switching cost – Buyer has the power However the low cost is the weapon for AirAsia to retain their
customer base. Package and promotion keep holding customers.
Loyalty programs – Air Asia Credit Card
Continued
Suppliers
Air Bus the main supplier for AirAsia – AirAsia has fewer type of aircraft to cut cost in training.
Oil Price – main concern is being cost effective Oil Hedging (Fuel hedge - making advance purchases of fuel at a fixed price for
future delivery to protect against the shock of anticipated rises in price)
Airports – Malaysian Airport Bhd
Supplier has bargaining power.
Continued
Suppliers:
1) GE Engineering service – engine maintenance –USD 20Million
2) VolvoAero – aircraft engine and aircraft frame parts leasing agreement – USD 3million
3) ST Aero – airline engineering components –USD 7 million
However Airasia can negotiate with suppliers :
a) Bulk orders to enable competitive pricing
b) Enhancing supply chain
Continued
Airbus Delivery Schedule
MARKETING STRATEGY
Leanest Cost Structure
Maximise Shareholders' Value
Safety
Passion for Guests' Satisfaction
Transparency
Human Capital Development
Objectives
Exercises 30 Options, Increase 20 firm orders and Acquired 50 Options. Among them :
50 aircraft delivered over a period of four years– September 2009 till September 2013
Increases passenger growth projection– FY2010 to 15%– FY2011 to 25%– FY2012 to 25%– FY2012 to 25%
Possibility of selling seven owned Boeing 737300 Maintain youngest fleet for Asian airlines Aids cost reduction efforts for future years
MARKET SEGMENTS
Market segmentation varies for each product but typically targets price oriented customers through their slogan “Now everyone can fly”AirAsia’s philosophy of low fares is aimed to make flying affordable for everyone. AirAsia also aims at making travel easy, convenient and fun for its guests
Full Market Coverage
Products offered to customers cover all areas of a budget traveler
Experiential marketing
The customer experiences the entire brand of Air Asia’s products right from its unique internet booking, self-check-in, boarding and in-flight services.
Geographic Segmentation
Air Asia targets the market segments who travel by air the least and mainly focused on 3rd world countries in Asia.
Demographic Segmentation
Age and Life Cycle
18 - 24 years•Budget Travel•Studies
25 - 40 years•Budget Travel•Work and career•Family
41 - 55 years•Work and Career•Family•Budget Travel
> 55 years•Budget Travels•Family
Market Positioning Air Asia aims to position itself as the one stop lowest
cost flight, hotel and holiday package in every market they serve
To achieve this : Benchmark against another successful LCC (Ryanair) High quality manpower (Air Asia Academy) Strong Branding Switching to 100% Airbus Efficient distribution that drives cost savings Efficient route network Dominating ASEAN with highest market share and flight frequency Domestic rationalization – 48% market share in 2006 Low Cost Airports Effective cost management
Operating Strategy The Essentials
AirAsia’s operations are based on the following key strategies:
Low fare, no frills Fares are significantly lower than those of other operators. This service targets
the guests who will do without the frills of meals, frequent flyer miles or airport lounges in exchange for fares up to 80% lower than those currently offered with equivalent convenience.
Guests instead have the choice of purchasing food and drinks on board through their ‘Snack Attack’ range of food and beverages on board the flights.
Frequent flights AirAsia’s high frequency service ensures guest convenience is met. The airline practices a quick turnaround of 25 minutes, which is the fastest in the region, resulting in high aircraft utilization, lower costs and greater airline and staff productivity.
Operating Strategy…cont’d Guest Convenience
Guests can make bookings through a combination of the following:
Nationwide call centre - 180 lines and takes an average of 6,000 calls daily.
Ticketless service – A low cost alternative to issuing printed tickets.
Easy payment channels - “ Easy to Book, Easy to Pay & Easy to Fly” approach to enable their guests to pay for their telephone bookings by credit card or by cash at any Alliance Bank branches.
Internet booking – As Asia’s first online airline, available in 6 languages is a
hassle free alternative to queuing up at counters and agent offices.
Reservations and sales offices - Available at airports and town centers for walk-in customers.
Authorised travel agents – AirAsia also introduced a direct B2B engine to its agents. The internet-based real time inventory booking engine is the first in Asia. The agents make immediate payment via a virtual AirAsia credit card, developed through one of its strategic partners, Alliance Bank.
Improving customer service - Customer feedback options available at the website www.airasia.com in 6 languages
Marketing Mix Strategy
Product1) Flight Services
To introduce 15 to 20 routes every year (Domestic and International)
Kuala Lumpur - Hangzhou Kuala Lumpur - Guangzhou Kuala Lumpur - Singapore Kuala Lumpur - Yogyakarta Singapore - Phuket Currently 71 routes with 50 aircrafts, 6 bases and potential new bases
Product
2) Ancillary Product
a) Go Holiday Package
b) GoInsure
c) Gift Cards
d) Snack Attack
e) AirAsia Credit Card
Marketing Mix Strategy
Product Expansion Plans
DomesticMarket
InternationalMarket
ASEANMarket
Ancillary Products
Long Haul Flights
Domestic Flights
International Flights
Marketing Mix Strategy
Place
1. Internet sale The bulk of sales (±65%) are done via the airline’s website,
whereby the fares are paid using a credit card. This is the most cost effective distribution channel
Growth of Internet Booking
0%10%20%30%40%50%60%70%80%
Year2003
Year2004
Year2005
Year2006
Year2007
Year
Percen
tag
e
Place2. Travel agents
Agents make immediate payment via a virtual AirAsia credit card, developed through one of its strategic partners
3. Sales office AirAsia only has a few sales offices and only
establish a call centre if they are confident the sales derived from the centre will be worth it
Marketing Mix Strategy
4. Call centers Ticket sales can be done via telephonically; this
is a simple and cost effective method
5. Mobile phone First airline to offer comprehensive booking
system via wireless devices
Marketing Mix Strategy
Product Life CycleAirasia is currently in the Introductory and Growth phase of the PLC. Most of the product offerings, promotions and advertising revolve around building a strong Brand Image and Brand Awareness. Spending is focused on product distribution, promotions, improving quality and lowering costs.
Lower Price for new routes
New market segments : Asian and international market
MAS
Promotions and Distribution Offering lower prices in a limited time offer Customer loyalty through alliances with credit cards Offering free products for early bookings Aggressive and creative advertising campaigns
Now Everyone Can Fly
Brand Equity ModelBrand Equity Model
1.1. Brand loyalty Brand loyalty
Loyalty programs (credit cards)Loyalty programs (credit cards)
2.2. Brand awarenessBrand awareness
Aggressive advertising / promotions / campaignsAggressive advertising / promotions / campaigns
3.3. Perceived qualityPerceived quality
Consistent pricing and on-time flight departure, frequent flights, convenienceConsistent pricing and on-time flight departure, frequent flights, convenience
4.4. Brand AssociationsBrand Associations
F1, Manchester United, Tune HotelsF1, Manchester United, Tune Hotels
Marketing MixPrice Air Asia flight ticket pricing based on minimum conditions. Based on time-value relationship for seats (early booking ensures cheaper fares) Bottom tier targets price oriented customers, mid tier targets the captive market and
is also where the costs are recovered. Top tier targets customers who are desperate to fly and is where profits grow.
Impact of LCCWhen an LCC was introduced in Malaysia, competitors were forced to lower their fares. Difference is that Airasia fares remain low and lowest. Airasia passenger growth was 11% between 2002 and 2005 in Malaysia
Conclusion
First LCC company in the world to utilize wide-bodied aircrafts for long-haul flights
Airasia is currently the domestic Leader in LCC operations
Their products are highly price sensitive Their strategies for marketing are on track to
becoming an LCC Leader in the International Market