Airasia Xs Business Environment Tourism Essay

Airasia Xs Business Environment Tourism Essay X targeted the less disposable income travelers who overlooked by traditional airlines even by some low cost carriers. The low price of ticket and abundant of destination network provided travelers more opportunities to fly. Moreover, X explored the new technology to reduce transaction cost for travelers – the cell phone sales of ticket. As Asia’s economic grew, people from Asia have higher spending power and they will select air transportation to travel more frequent than before. X should cater to a broader passengers segment across different needs categories. Back to a short time after the inception of X, the Malaysia Transport Ministry even refused to release the air route from Kuala Lumpur to Sydney for X in order to protect Malaysia Airlines which is the national airline. Afterward, X prepared for IPO but did not want to be list on the KLSE. Due to worry about the Malaysia government could slow down some of X’s expansion and continue to refuse some routes a pplication. X put off 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 requirement and governmental legal barriers, low cost long haul carriers are suffering strong competition. On one hand, most of low cost long haul carriers are launched by their parent company. For example, X is a sister company of AirAsia, Scoot Airline is a subsidiary of Singapore Airline. They can enter the industry because of the background of their parent company. On the other hand, the cost of aircraft, fuel and airport is the majority expense in airline company, the high bargain power of suppliers gave much pressure to them. Train and ship are the substitutes of airline, but they are hardly to take place of low cost long haul airline. Even though the price is more expensive than bus and ship, low cost long haul carriers provide variable, efficient and convenient transport service. Sometimes, l ow threat of substitutes indicates high competition in the industry. In Southeast Asia market, Jetstar from Australia and Scoot from Singapore are the main competitors of X. Jetstar is the earliest company to operated low cost model of them, it has much experience about low cost control. It has huge fleet and good quality service. Its fatal weakness is the highest ticket price provided among the three companies. Scoot is a new low cost long haul carrier in 2012. It has narrow route network and higher price than X. However, it has absolute cost advantages in route from Singapore to Australia currently. Compared to them, X has the lowest average ticket price and the largest passenger load. AirAsia X’s Strategy X successfully integrated low cost model in every organizational activities. It sharply griped the true needs of lower disposable income customers to attract new customer segments and created value to customers around low cost. Primary activities Activities Description In bound logistics Although X formally separated from AirAsia, they still jointly purchase important resources such as aircraft and fuel. It will strengthen their bargaining power towards suppliers. X reduced costly investment in terminal or non-airplane related infrastructure help to decrease the cost of flight for passengers. Meanwhile, X pays much attention to flight safety. It has a high standard aircraft maintenance team.