Air Asia SWOT & PESTLE Analysis
COMPANY PROFILE -Air Asia
Business Sector :Aviation
Operating Geography :Malaysia, South Asia and South-east Asia
About Air Asia :
Air Asia is the leading low cost carrier of Asia. The airline operates on 388 routes, 152 destinations in 22 countries. The company has 20000 employees. It has 24 hubs in 6 countries: Kuala Lumpur, Kota Kinabalu, Kuching, Penang, and Johor Bahru in Malaysia; Bangkok, Phuket, Chiang Mai, Krabi, U-Tapao (Pattaya) and Chiang Rai in Thailand; Jakarta, Bali, Medan, Surabaya and Lombok in Indonesia; Manila, Kalibo (Boracay) Cebu and Clark in the Philippines; Bengaluru, Delhi and Kolkata in India; and Nagoya in Japan. The business model of the company is based on low cost, which is achieved by efficient, lean and simple operations. The Air Asia Group includes Air Asia India, Air Asia Malaysia, Air Asia Philippines, Air Asia Indonesia, Air Asia Japan and Air Asia Thailand.Air Asia Revenue :
RM 10,638 million (FY 2018) (9.6% increase YoY)
RM 9,710 million (FY 2017)
Competitive Analysis of Air Asia
| 1. Low-cost business model with lean, simple and efficient operations 2. High focus on technology and innovation 3. Strong overall financial performance 4. Strong partnerships with third parties for new revenue streams | 1. Air Asia faltering in markets outside Malaysia |
| 1. Growing aviation market in Thailand 2. Ancillary source of revenues in the airline industry 3. Growing airline retailing market providing new opportunities | 1. Safety concerns and the risk of accidents in aviation 2. High competition in the southeast Asian aviation industry 3. Pilot shortage affecting Asia’s travel boom |
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Detailed SWOT Analysis of Air Asia
Strength
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Weakness
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Opportunity
1. Growing aviation market in Thailand: The aviation market in Thailand has been growing exponentially in recent years, the number of departure seats crossing 100 million to end 2018 at 103.1 million seats. This is a 152% increase from 10 years ago. During 2009-2018, the domestic capacity increased from 17 million to 49.5 million whereas the international capacity increased from 23.9 million to 53.6 million. The main drivers of the industry growth are low cost carriers. The number of low-cost carrier seats (52.6 million) is more than that of full-service carriers (50.6 million) for the first time in 2018. In 2009, there were less than 8 million seats in low cost carriers, which makes this growth a phenomenal achievement for the low-cost carriers. Thai Air Asia is the top player by domestic departure seats with a 31.2% capacity share. Thai Air Asia is the second largest player by international seats, with a 9.1% share that equals 4.87 million seats.
2. Ancillary source of revenues in the airline industry: Ancillary revenues mean revenues earned by airlines on services like food, extra leg room and check in bags. The ancillary revenues are estimated to be $50-55 billion per year, which exceeds the airline industry’s 10-year average annual operating profit of $31 billion. Thus, absence of ancillary revenues would mean no profit for the industry. Air Asia is the top airline in Asia and South Pacific in ancillary sales, which comprise 29% of the company’s revenues. The ancillary revenue earned per passenger for Air Asia is $34.38.
3. Growing airline retailing market providing new opportunities: The airline retailing market worldwide was $ 7.25 billion in 2018 and is expected to grow at 16.4% CAGR during 2019-2027, reaching $ 27.66 billion in 2027. The rising fuel costs and other operational costs have been affecting airline profitability; hence airlines have started selling merchandise in the air and on the ground. Air Asia is one of the established players in airline retail. They have launched an inflight e-marketplace Ourshop with an airport partner Plaza Bali Duty & Tax Free, Jakarta. The marketplace has been started with deep customer insights and logistics capabilities that have been enabled by the airline’s vast network and premium products. The marketplace connects 80 million customers of the airline to multiple airport, high street and local specialist retailers, enabling customers to buy at competitive prices.
Threat
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Major Competitors :
- Cathay Pacific
- Jetstar
- Silkair
- Indigo
- Garuda Indonesia
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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Air Asia Analysis Report
1. Air Asia Annual report 2018 - https://ir.airasia.com/misc/ar2018.pdf
2. Air Asia Corporate Profile - https://ir.airasia.com/corporate_profile.html)
3. Is AirAsia's Fernandes overdosing on optimism? - https://asia.nikkei.com/Opinion/Is-AirAsia-s-Fernandes-overdosing-on-optimism
4. Analysis: Low-cost carriers drive Thailand's rapid growth - https://www.routesonline.com/news/29/breaking-news/283224/analysis-low-cost-carriers-drive-thailands-rapid-growth/
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Air Asia SWOT & PESTLE Analysis - SWOT & PESTLE.COM
SWOT & PESTLE.com (2020). Air Asia SWOT & PESTLE Analysis - SWOT & PESTLE.com. [online] Available at: https://www.swotandpestle.com/air-asia/ [Accessed 14 Aug, 2020].
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Air Asia SWOT and PESTLE analysis has been conducted by Nipunn V and reviewed by senior analysts from Barakaat Consulting.
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