Airasia Xs Business Environment Tourism Essay

X targeted the less disposable income travelers who forgotten by traditional airlines even by some low cost carriers. The low price of solution and numerous of vacation spot network provided travelers more opportunities to soar. In addition, X explored the new technology to reduce business deal cost for travelers - the cellular phone sales of ticket. As Asia's economic grew, folks from Asia have higher spending electric power and they'll select air travel to visit more repeated than before. X should cater to a broader travellers segment across different needs categories. Back again to a short time after the inception of X, the Malaysia Transfer Ministry even refused release a the air road from Kuala Lumpur to Sydney for X in order to protect Malaysia Airlines which is the nationwide air travel. Afterward, X ready for IPO but didn't want to be list on the KLSE. Due to get worried about the Malaysia federal could slow down some of X's enlargement and continue to refuse some routes application. X defer the IPO till the end of 2011 and early of 2012.

AirAsia X's industry environment

Although the entry barrier of airline industry is high such as huge capital necessity and governmental legal obstacles, low cost long haul carriers are troubled strong competition. Similarly, most of low cost long haul service providers are launched by their parent or guardian company. For instance, X is a sister company of AirAsia, Scoot Flight is a subsidiary of Singapore Air travel. They can type in the industry due to background with their parent company. Alternatively, the expense of aircraft, petrol and air port is the majority expense in flight company, the high discount electricity of suppliers offered much pressure to them.

Train and ship will be the substitutes of air travel, nevertheless they are hardly to take place of low cost long haul airline. Even though the purchase price is more expensive than bus and ship, low cost long term carriers provide varying, successful and convenient move service. Sometimes, low threat of substitutes suggests high competition on the market. In Southeast Asia market, Jetstar from Australia and Scoot from Singapore are the key competition of X. Jetstar is the initial company to run low cost model of them, it has much experience about low cost control. They have huge fleet and good quality service. Its fatal weakness is the highest solution price provided among the list of three companies. Scoot is a fresh low cost long haul carrier in 2012. It includes narrow option network and higher price than X. However, it includes utter cost advantages in route from Singapore to Australia presently. Compared to them, X has the lowest average solution price and the major passenger weight.

AirAsia X's Strategy

X successfully integrated low priced model atlanta divorce attorneys organizational activities. It sharply griped the real needs of lower disposable income customers to attract new customer sections and created value to customers around low cost.

Primary activities



Inbound logistics

Although X formally separated from AirAsia, they still jointly purchase important resources such as aeroplanes and fuel. It will enhance their bargaining electricity towards suppliers. X reduced costly investment in terminal or non-airplane related infrastructure help decrease the price tag on flight for passengers. Meanwhile, X compensates much attention to flight safety. It includes a high standard aircraft maintenance team.


Different from full service airlines, X should maximize its fill in each trip to attain the break-even point due to low enough price. Moreover, X arranges high efficient flight arranging to raise the profit.

Outbound logistics

X can be an flight company and accountable to long haul transportation. There is absolutely no more outbound logistics except the low cost long haul transportation.

Marketing and sales

In order to draw in new customer sections, X was differentiated around low cost and building he global brand. To reduce cost, X utilized 100 % online sales before. To create further attempts, X was discovering the cellular phone sales of ticket. In spite of the extra cost, X place sales point in at each airport and run call centers throughout the world. X also had contracts with travel agencies.


X made work to keep carefully the reservation process and rates model simple. The ticket price shown online including solution fees and related tax charge. It really is transparent to customers. X never billed any online, cell phone or personal reservation fees. In past due of 2010, X launched 'BIG' program to examine more advantage to loyal customers.

Support activities




X used 'smooth organization framework' in the company. The framework helped X to lessen the price of supervision and develop the efficiency among the list of employees.

One of the main activities is finding your way through global IPO. This move is the building blocks for X's global development.

Human reference management

Low cost real human source of information of X absolutely has advantages from the low labor cost of Malaysia. Furthermore, X and AirAsia set up their own training academy for new pilots, engineer and cabin crews. It kept big money for X again.

Technology development

X explored cell phone sales of ticket to constitute 100 % online sales. It provided more convenient to customers in scheduling system.


X searched the cheapest price with appropriate quality of goods or procured with AirAsia to obtain more price advantage.

In the worthiness chain of AirAsia X, every activity is just about low cost to make value to customers. Some goes in value string make a decision the AirAsia X's cost per chair mile (US$0. 02 per chair mile) significantly less than one one fourth of the price tag on the common budget US 's low budget airlines (US$0. 09 per seats mile).

From the inception of X, it run as a straightforward organization composition. X used least staffs to complete journey tasks safely and efficiency. Also, the price tag on human resource saved a large sum of money for AirAsia X. Labor costs in Malaysia and the lack of unionization helped keep costs low. As wright said, people prefer to log off airplane directly onto the airport terminal tarmac rather than additional cost to the ticket price. To reduce costly investment in terminal or non-airplane related infrastructure help to decrease the cost of flight for people. It satisfied the true needs of X's marketplace.

Appraisal the strategies of AirAsia X

Sustaining development can't be created by operating business in exterior environment with high opportunity and low hazard. It must depend on resource and capacities and utilizes them to execute strategies in industry competition. In order to find out these tool and capability, management must find out reference of value, rareness, imitability and non-substitute from interior environment.

In the start of AirAsia X, it almost distributed all resources from AirAsia to ensure the successful kick off. As formally segregated AirAsia X from AirAsia this year 2010, AirAsia X already acquired its own value resources such as some suppliers. It provided infrastructure to administrate strategy and develop. Low cost control system but high safe practices aircraft and standard maintenance is the most effective resource in AirAsia X.

The flight time in AirAsia X altered from daily is an extremely different agenda in flight industry. The reason is to fulfill to break even through arrange aircrafts in the air as long as possible because the solution price was too low.

Low cost man source of information in Malaysia is some sort of imperfectly imitable resources. Scoot Airline from Singapore and Jetstar Air travel from Australia have no this resource. Low priced philosophy is important imperfectly imitable source of information. AirAsia X can perform very low cost per seat mile as US$0. 02 when the average budget airlines cost per couch mile is US$0. 09. That is mission impossible to AirAsia X's rivals.

As an air travel company, aircraft manufacturer is one of the center suppliers. Airplane selection is very important to air travel company; it must consider the size of airplane depended on fly distance and maintenance cost. AirAsia X utilizes one type of plane to simplify maintenance, reduce staff training needs and gain better purchasing term in negotiation.


Integrated above Porter's five causes analysis, value chain analysis and VRIN evaluation, the current competitive benefits in AirAsia X is cost management. Due to low enough price, AirAsia X can grip opportunity to be successful when other low cost carriers failed. In the mean time, the competitive edge offsets some weaknesses such as less diversification of service and differentiation from competitors. Together with the development of AirAsia X, some current talents maybe copy to weaknesses. These will effect sustaining development of AirAsia X. Therefore, AirAsia X should build sustaining competitive advantages in the foreseeable future.

Sustaining competitive advantages


Cost leadership

Low cost idea must techniques as the key competency throughout AirAsia X.

Low distribution cost

Currently, low circulation cost is still durability in AirAsia X, but it is closely relied on online sales. Once information system interruption, AirAsia X will suffer heavy damage, besides, online sales are a fairly easy kind of source of information imitated by challengers. Thus, AirAsia X should explore new low cost distribution.

High aircraft utilization and operation

AirAsia X is good at safe and reliable flight agenda. It balances low ticket price and company earnings. This capacity is ecological and imperfectly imitable.

Flat organization structure

This potential helped AirAsia X to save a lot of money. However, it is short-term competitive advantages. As AirAsia X expands, flat organization framework will influence the quality of decision making. AirAsia X should maintain this capacity to as ecological competitive advantage.

Strong branding and marketing

Strong branding and marketing is one of important capacity to against rivals' development. AirAsia X must build its strong branding and marketing.

As the conclusion of budget long term airlines become distinct daily. AirAsia X should maintain the capabilities that happen to be easy imitated such as distribution channel or short-term competitive advantages such as smooth organization composition.

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