QUESTION 3 AirAsia: The Sky's the Limit Air Asia, as the second Malaysian National Airline, provides a totally different type of service in line with the nation's aspirations to benefit all citizens and worldwide travellers. Such service takes the form of a no frills - low airfares flight offering, 40%- 60% lower than what is currently offered in this part of Asia. Their vision is "Now Everyone Can Fly" and their mission is to provide 'Affordable Airfares' without any compromise to Flight Safety Standards. AirAsia was initially launched in 1996 as a full-service regional airline offering slightly cheaper fares than its main competitor, Malaysia Airlines. Before 2001, AirAsia fail to either sufficiently stimulate the market or attract enough passengers from Malaysia. Airlines to establish its own niche market. The turnaround point of AisAsia is in 2001, while it was up to sale and bought by Tony Fernandes. Tony Fernandes then enrolled some of the lending low-cost airline experts to restructure AirAsia's business model. He invited Connor McCarthy, the former director of group operation of Ryanair, to join the executive team. In late 2001, AirAsia was re-launched in Malaysia as a trendy, no-frills operation with three B737 aircraft as a low-fare, low-cost domestic airline. AirAsia focused on ensuring a competitive cost structure as its main business strategy. It has been able to achieve a cost per average seat kilometer (ASK) of 2.5 cents, half that of Malaysia Airlines and Ryanair and a third that of EasyJet. AirAsia can lease the B737-300s aircraft at a very competitive market rates due to the harsh global market conditions for the second-hand aircrafts because of the September 11th event in 2001. On the other hand, the operating cost of the company is also dropped drastically. AirAsia focus on Internet bookings and ticketless travel allowed it to lower the distribution cost. With the average fare being 40-60 % lower than its full-service competitor, AirAsia has been able to achieve strong market stimulation in the domestic Malaysian air market. For instance, the fare for the trip from Kuala Lumpur to Penang on AirAsia starts from 39 ringgit. Comparing to trip by bus charge 40 ringgit and 80 ringgit by car. The effect of attractive low fare is more travelers switching from bus to air, similar case as Ryanair in Europe. AirAsia value proposition is more sophisticated than Ryanair placing equal emphasis on brand reputation and customer service/people management, by a senior advisor to AisAsia's top management team. AirAsia pursue a Ryanair operational strategy. Southwest people strategy and an Easyjet branding strategy. (Adapted from: Philip Kotler et al (2009), Principles of Marketing - A Global Perspective, Pearson Education South Asia Pte Ltd.) a. Based on the case above, discuss any FIVE (5) factors that have contributed to the early success of AirAsia. b. Discuss in detail what kind of information did AirAsia discover in its benchmarking study. C. It is important for organizations to understand how customers define value. The value of a product or service is the sum of a customer's perceptions towards several factors. Discuss any FOUR (4) factors of customer-defined value for Air Asia. d. Explain any TWO (2) reasons why customer satisfaction is very important to Air Asia. Provide example for each.

QUESTION 3 AirAsia: The Sky's the Limit Air Asia, as the second Malaysian National Airline, provides a totally different type of service in line with the nation's aspirations to benefit all citizens and worldwide travellers. Such service takes the form of a no frills - low airfares flight offering, 40%- 60% lower than what is currently offered in this part of Asia. Their vision is "Now Everyone Can Fly" and their mission is to provide 'Affordable Airfares' without any compromise to Flight Safety Standards. AirAsia was initially launched in 1996 as a full-service regional airline offering slightly cheaper fares than its main competitor, Malaysia Airlines. Before 2001, AirAsia fail to either sufficiently stimulate the market or attract enough passengers from Malaysia. Airlines to establish its own niche market. The turnaround point of AisAsia is in 2001, while it was up to sale and bought by Tony Fernandes. Tony Fernandes then enrolled some of the lending low-cost airline experts to restructure AirAsia's business model. He invited Connor McCarthy, the former director of group operation of Ryanair, to join the executive team. In late 2001, AirAsia was re-launched in Malaysia as a trendy, no-frills operation with three B737 aircraft as a low-fare, low-cost domestic airline. AirAsia focused on ensuring a competitive cost structure as its main business strategy. It has been able to achieve a cost per average seat kilometer (ASK) of 2.5 cents, half that of Malaysia Airlines and Ryanair and a third that of EasyJet. AirAsia can lease the B737-300s aircraft at a very competitive market rates due to the harsh global market conditions for the second-hand aircrafts because of the September 11th event in 2001. On the other hand, the operating cost of the company is also dropped drastically. AirAsia focus on Internet bookings and ticketless travel allowed it to lower the distribution cost. With the average fare being 40-60 % lower than its full-service competitor, AirAsia has been able to achieve strong market stimulation in the domestic Malaysian air market. For instance, the fare for the trip from Kuala Lumpur to Penang on AirAsia starts from 39 ringgit. Comparing to trip by bus charge 40 ringgit and 80 ringgit by car. The effect of attractive low fare is more travelers switching from bus to air, similar case as Ryanair in Europe. AirAsia value proposition is more sophisticated than Ryanair placing equal emphasis on brand reputation and customer service/people management, by a senior advisor to AisAsia's top management team. AirAsia pursue a Ryanair operational strategy. Southwest people strategy and an Easyjet branding strategy. (Adapted from: Philip Kotler et al (2009), Principles of Marketing - A Global Perspective, Pearson Education South Asia Pte Ltd.) a. Based on the case above, discuss any FIVE (5) factors that have contributed to the early success of AirAsia. b. Discuss in detail what kind of information did AirAsia discover in its benchmarking study. C. It is important for organizations to understand how customers define value. The value of a product or service is the sum of a customer's perceptions towards several factors. Discuss any FOUR (4) factors of customer-defined value for Air Asia. d. Explain any TWO (2) reasons why customer satisfaction is very important to Air Asia. Provide example for each.

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Transcribed Image Text:QUESTION 3 AirAsia: The Sky's the Limit Air Asia, as the second Malaysian National Airline, provides a totally different type of service in line with the nation's aspirations to benefit all citizens and worldwide travellers. Such service takes the form of a no frills - low airfares flight offering, 40%- 60% lower than what is currently offered in this part of Asia. Their vision is "Now Everyone Can Fly" and their mission is to provide 'Affordable Airfares' without any compromise to Flight Safety Standards. AirAsia was initially launched in 1996 as a full-service regional airline offering slightly cheaper fares than its main competitor, Malaysia Airlines. Before 2001, AirAsia fail to either sufficiently stimulate the market or attract enough passengers from Malaysia Airlines to establish its own niche market. The turnaround point of AisAsia is in 2001, while it was up to sale and bought by Tony Fernandes. Tony Fernandes then enrolled some of the lending low-cost airline experts to restructure AirAsia's business model. He invited Connor McCarthy, the former director of group operation of Ryanair, to join the executive team. In late 2001, AirAsia was re-launched in Malaysia as a trendy, no-frills operation with three B737 aircraft as a low-fare, low-cost domestic airline. C. AirAsia focused on ensuring a competitive cost structure as its main business strategy. It has been able to achieve a cost per average seat kilometer (ASK) of 2.5 cents, half that of Malaysia Airlines and Ryanair and a third that of EasyJet. AirAsia can lease the B737-300s aircraft at a very competitive market rates due to the harsh global market conditions for the second-hand aircrafts because of the September 11th event in 2001. On the other hand, the operating cost of the company is also dropped drastically. AirAsia focus on Internet bookings and ticketless travel allowed it to lower the distribution cost. With the average fare being 40-60 % lower than its full-service competitor, AirAsia has been able to achieve strong market stimulation in the domestic Malaysian air market. For instance, the fare for the trip from Kuala Lumpur to Penang on AirAsia starts from 39 ringgit. Comparing to trip by bus charge 40 ringgit and 80 ringgit by car. The effect of attractive low fare more travelers switching from bus to air, similar case as Ryanair in Europe. AirAsia value proposition is more sophisticated than Ryanair placing equal emphasis on brand reputation and customer service/people management, by a senior advisor to AisAsia's top management team. AirAsia pursue a Ryanair operational strategy. Southwest people strategy and an Easyjet branding strategy. (Adapted from: Philip Kotler et al (2009). Principles of Marketing Perspective, Pearson Education South Asia Pte Ltd.) A Global a. Based on the case above, discuss any FIVE (5) factors that have contributed to the early success of AirAsia. b. Discuss in detail what kind of information did AirAsia discover in its benchmarking study. It is important for organizations to understand how customers define value. The value of a product or service is the sum of a customer's perceptions towards several factors. Discuss any FOUR (4) factors of customer-defined value for Air Asia. d. Explain any TWO (2) reasons why customer satisfaction is very important to Air Asia. Provide example for each.

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