What Are the Strategic Dilemmas Facing Air Asia?

Aggressive, focused and effective management Simple business model that provides low prices Penetrate and stimulate to potential markets Multi-skilled staff means efficient and incentive workforce and reduced staff More seats per aircraft Single type fleet minimize maintenance fee Brand name Weakness Service resource is limited by lower costs Non-central location of secondary airports Brand is vital for market position and developing it is always a challenge Heavy reliance on outsourcingNew entrants to provide the price-sensitive services Limited human resources Government interference Regulation on airport Opportunities Long haul flight Differentiation from traditional LCC model by adding customer services or operation as full service airline with low fare Ongoing industry consolidation has opened up prospects for new routes and airport deals High fuel prices will squeeze out unprofitable competitors Large potential market Product differentiation Regional international flight New routes Threats Entrance of other LCCsAccident, terrorist attack, and disaster and affect customer confidence Aviation regulation and government policy Increase in operation cost in producing value-added services System disruption due to heavily reliance on online sales Other airlines start cut costs to compete High fuel price Government policy Security charges, landing charges, airport departure Key challenges Increasing competition because of increasing number of low cost airline competitors, and aggressive competition against the large or traditional airline companies Customer decrease because of poor economyRising of the fuel prices Higher labor cost Inadequate infrastructure Route and flight utilization Safety and security issues of aircraft crash or being attacked AIR ASIA VMOST ANALYSIS VMOST is an acronym for Vision, Mission, Objectives, Strategy, Tactics. It is an internal analysis business framework.

Using the VMOST analysis captures the current strategy of an organization and what it is trying to achieve by assessing it’s Vision, Mission, Objectives, Strategy and Tactics. It is essentially the definition of the business.The elements are: Vision. What we aspire to? Mission. What is our purpose? Objectives.

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What key goals do we have? Strategy. What options are there for proceeding forward? Tactics. Aligned and communicated. Vision: To be the largest low cost airline in Asia and serving the 3 billion people who are currently underserved with poor connectivity and high fares. Mission: • To be the best company to work for whereby employees are treated as part of a big family • Create a globally recognized ASEAN brand To attain the lowest cost so that everyone can fly with Airasia • Maintain the highest quality product, embracing technology to reduce cost and enhance service levels Strategy: We make the low fare model possible through the implementation of the following key strategies, • Safety First: Partnering with the world’s most renowned maintenance providers and complying with the with world airline operations.• High Aircraft Utilization: Implementing the regions fastest turnaround time at only 25 minutes, assuring lower costs and higher productivity. Low Fare, No Frills: Providing guests with the choice of customizing services without compromising on quality and services. • Streamline Operations: Making sure that processes are as simple as possible. • Lean Distribution System: Offering a wide and innovative range of distribution channels to make booking and travelling easier.

• Point to Point Network: Applying the point-to-point network keeps operations simple and costs low. Tactics Leanest Cost Structure • Efficient and simple point to point operations • Attracting and retaining hardworking and smart people Passion for continuous cost reduction Maximize Shareholders’ Value • Resilient profit growth through our lower cost base • Expansion of the AirAsia network in a prudent and disciplined manner • Invest and enhance the AirAsia brand to increase investors’ returns Safety• Comply with the highest International Aviation Safety Standards and practices • Keep operations simple and transparent • Ensure the security of our People and Guests Passion for Guests’ Satisfaction • Maintain simplicity in every application Practice the unique and friendly AirAsia experience at every opportunity • Recognise the linkage between guests’ satisfaction and long-term success Transparency • Transparency in decision-making and information sharing • Optimum disclosure – higher than industry norms • Timeliness in disclosing information Human Capital Development • Invest in both hard and soft skills • Recognise all our People as contributors to our success • Reward excellence and individual contributions • Maintaining one brand across the Group What are the strategic dilemmas facing Ari Asia?