Purpose The purpose of this analysis is to conduct an environmental analysis in the context of AirAsia's international business operations, describing the major variables involved and the impact of the specific threats and opportunities confronted by AirAsia besides that, this analysis also helps to identify AirAsia's competitive strategy and analyse how the strategy is implemented to gain competitive advantage.
Background on AirAsia AirAsia was set up by Dato' Tony Fernandes in 2001. In December 2001, Fernandes and his partners set up Tune Air Sdn Bhd (Tune Air), an airline holding company then bought over AirAsia. Now, AirAsia has become one of the most successful airlines in the Southeast Asian region and the Cost leadership is a low cost competitive strategy that is targeted at the broad mass market. Under this strategy, AirAsia has lower overall costs than its competitors such as Malaysia airline (MAS) and Singapore airline (SIA). AirAsia, Asia's leading low fair airline has under-price its competitors and has gain a big market share in Malaysia and in Asia region as well. In the event of a price war, AirAsia who offers fares as low as RM0.99 (excluded airport tax) is in a position to withstand the competition better. Although AirAsia offers such a low fares, it is still likely to earn above average returns. To achieve a cost advantage, AirAsias cumulative cost across its activity cost chain must be lower than its rivals. AirAsia increases its efficiency in its existing operating activities. AirAsia uses new and innovative cost optimizing techniques such as quicker turnaround times and maximising of flight utilisation for their aircrafts. AirAsia achieve cost leadership by eliminating unnecessary cost-producing activities, as well as restructuring their value chain activities to gain their distinctive competencies and hence competitive advantage. Fares can be offered at such low value because of limited passenger services. Firstly, it needs no ticket. Traditional tickets cost a lot of money to print process and deliver to the customers. Instead of ticket, AirAsia will provide an itinerary which includes booking number, payment and travel details
