6.

0 SWOT ANALYSIS
SWOT analysis is a framework used to evaluate a company's competitive position by
identifying its strengths, weaknesses, opportunities and threats. Specifically, SWOT analysis
is a foundational assessment model that measures what an organization can and cannot do, and
its potential opportunities and threats. It can be used effectively to build organizational strategy
and competitive strategy. (Gurel, 2017)

STRENGHTS WEAKNESSES
S1. Cooperative and strong management W1. Does not have its own maintenance,
team repair and overhaul (MRO) facility
S2. Strategy formulation and execution. W2. Lot complaints from customers on their
S3. Low cost leader in Asia service
S4. Provide good hospitality
S5. Strong promoter and media advertising
OPPORTUNITIES THREATS
O1. Promote Malaysia tourism T1. Facing certain rate charges
O2. Opening new routes around the region T2. Increasing of fuel and labour cost

6.1 Strengths

i. Cooperative and strong management team

Air Asia has a very cooperative and strong management team with strong
connections with the government and the airline industry leaders. This is because
Air Asia consists of different background of executive management members team
from different kinds of industry professionals and ex-top government officials. For
an example, Shin Corp in the past which owned by the family of former Thai Prime
minister which name ThaksinShinawatra have hold around a fifty percent of shares
in the Air Asia branch which situated in the Thailand. Due to this reason, it has help
to create and explore up yet attract a sizeable market in Thailand. Besides that, Air
Asia have a strong working relationship with Air bus which help them to purchase
aircraft for discount and this aircraft can save more fuel which is fuel efficient
compared to Boeing 737 planes that many airlines company are using currently.

ii. Strategy formulation and execution

 The strategy that they have created at the beginnings was a brilliant blend of
strategies that have proven by other low-cost airlines which situated in US and
Europe. Those strategies include Ryanair’s operational strategy which is mean no
frills or landing in secondary airport, second is the Southwest’s people strategy
which also named as employee comes first strategy, third is the Easyjet’s branding
strategy which mean a link between other service providers such as hotels, car rental
and so on. On the other hand, AirAsia’s brand name is well established in Asia
Pacific. Ignoring the common print media advertising and promotions, Air Asia’s
top executives also expert in making promotions through news with their slogan of
‘media friendly’ and provide free sharing and advertisement of the latest updated
information of Air Asia which include current packages, fees, discounts and the
others. On the other hand, Air Asia have a good partnership relationship with the
other service industries such as hotels, hostels, car rental firms, medical tourism
such as hospitals, buses, taxis and others. Meanwhile, Air Asia also have partner
with Citibank to create an Air Asia Citibank Card and have master and visa card.
This have really convenient the tourism and hence create a very special image
among the travelers. Air Asia also have alliance with Galileo Global Distribution
System that convenient the travel and tourism agents internationally to check the
flight information such as the flight fees and schedule and make booking which also
consequence strengthen Air Asia string brand name. Moreover, Air Asia have some
strong branch in other country such as Indonesia Air Asia and Thailand Air Asia
have successfully improved the brand to become a regional brand and can compete
with Malaysia branch of Air Asia. Air Asia also has invited one of the world’s
famous football team Manchester United and the AT&T Williams Formula One
team to advertise and increase the quality reorganization image to a greater extend.

iii. Low cost leader in Asia

AirAsia is the low-cost leader in Asia. Through Air Asia Academy, Air Asia has
successfully produced a low-cost airline mentality and image among their working
environment and workforce. This workforce is very important, flexible and high
competence and promises in letting Air Asia become the leadership of low cost
airlines in Asia. This low-cost leadership can let all various income customers to
have enjoyed the affordable air fees. With the excellent utilization of IT and
 technology, Air Asia can directly involve in their promotional activities which
include email to customers and desktop widget which was partner developed with
Microsoft for new promotions, with over three millions hits per month and the most
famous surfed booking engines internationally brand building activities and also
maintaining their low cost strategy through enable customers directly purchase
tickets and hence can save the airline agent fees. The main vision of the Air Asia
that have make Air Asia being successful is the logo of “A low cost carrier which
offers five-star service where everybody can fly.”

iv. Provide good hospitality

Air Asia has provided various local Malaysia foods for all the Malaysian customers
and offers in-flight services that promote Malaysian hospitality with their friendly
and warm welcoming service. Besides of providing a good hostility service, Air
Asia also has provided internet and mobile services as mediums for check-in and
booking. Customers can always use their mobile phone to serve internet and online
booking the seats or reserves. Moreover, it is quite convenience for customers is,
Air Asia provide fly schedule and the prices from Malaysia to other countries or
other countries to Malaysia price. Besides, customers can easily check out the time
of fly schedule of Air Asia. With all the convenient, Air Asia become the most
favorite airline in Malaysia for the customers. On the other hand, Air Asia provides
comfortable seats, secure safety and a cleanliness environment for the customer so
those customers feel comfortable during their fly times with the low price.

v. Strong promoter and media advertising

Air Asia always have promotions that attract customers interests. Besides that, Air
Asia have good marketing skills employees and technology of advertising which
can influence customers attractions and choice of purchase. Moreover, Air Asia is
a well-established LCC operating out of South East Asia and it has operations in
over 25 countries and over 400 international and national destinations, and the most
famous destination is Bali- Indonesia, Thailand – Bangkok, Korea-Seoul, Japan-
Tokyo and Nagasaki, Taiwan and the other. Meanwhile, it has subsidiaries in
Indonesia, Thai, Philippines, Japan and it has a fleet size of nearly 300 aircrafts.
6.2 Weaknesses

i. Does not have its own maintenance, repair and overhaul (MRO) facility
Although it is a good strategy with the hub and few planes only need to maintain
when Air Asia getting their first journey which only in Malaysia. However, with
those few hubs that only situated in Malaysia, Thailand and Indonesia with over
100 planes that owned by Air Asia currently and another 100 planes which intended
to be received in future next few years, Air Asia have to take proper actions of
confirmation such as continuous of maintenance of planes with maintaining the
overall costs low. This is a competitive disadvantage that Air Asia do not have its
own belonging of MRO facility which cause many difficulties.

ii. Lot complaints from customers on their service

Meanwhile, AirAsia receives lot complaints from customers on their service.
Examples of complaints are around flight delays, being charged for a lot of things
and not able to change flight or get a refund if customers could not make it. It is
crucial for Air Asia to have a good customer service and management when the
market competition is more and more intense. Besides, this is also due to do not
have too many routes as compared to market leader. Which mean Air Asia can’t
provide many fly schedules compared to the MAS for example. And Air Asia has
a very stiff competition in its sector.

6.3 Opportunities

i. Promote Malaysia tourism

Air Asia have the opportunity to promote Malaysian tourism, which in return will
increase the company’s revenue. This is due to Air Asia has a good government and
citizen relationship of Malaysia. During 2016, Air Asia have contract with Malaysia
in the ‘Cuti-Cuti Malaysia’ and the entire customer that relate to the ‘Cuti-Cuti
Malaysia’ will promote the Air Asia fly.

ii. Discovering new customers and routes around the region

 Within the South-East region there are lots of potential customers that consist of
foreign workers from neighboring countries which include Indonesia, Myanmar,
Philippines, and Vietnam which allow Air Asia to grab huge opportunities and
hence also increasing the travel from India and the Indians customers normally
prefer cheap and budget airlines as they are very particular about the airlines fees.
Besides, there are a lot of potential routes will be opened in future as Airasia has a
good reputation and also recognized with a well-known brand around South East
Asia.

6.4 Threat

i. Facing certain rate charges

Airasia faced certain rates like airport departure, security charges and landing
charges are beyond the control of airline operators. These costs that have been
mention is a serious threat towards the airlines that intention to maintain their low-
cost strategy. For example, Changi airport in Singapore charges SGD21 for every
person who departs from Singapore. Besides, AirAsia’s profit margin is about 30%
and this has already attracted many competitors. Furthermore, lots of the small
airlines competitors provide full service airlines have or planning to create a low
cost subsidiary to beat down AirAsia. For example, Singapore Airlines has created
a low-cost carrier Tiger Airways. On the other hand, Air Asia users’ perception that
budget airlines may compromise safety to keep costs low.

ii. Increasing of fuel and labour cost

Air Asia faced the threat of rising fuel cost and labour costs. The price of the fuel
that keep on increase caused the Air Asia can’t be able to have low cost production
and expense high, consequence either increase price or reduce the fly route.
Meanwhile, the employees of the Air Asia demand of the high salary and the
increase cost of the training and staff welfare cause Air Asia expenses have been
increased.