Pest Analysis - Airasia

Pest Analysis- Air Asia

Introduction

Purpose

The purpose of this analysis is to conduct an environmental analysis in the context of AirAsia's international businessoperations, describing the major variables involved and the impact of the specific threats and opportunities confronted byAirAsia 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, Fernandesand 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 pioneer of low cost and no frills travel in Malaysia. The airline now flies to

over 40 destinations in Malaysia, Thailand, Indonesia, Macau, China, Philippines, Cambodia,Vietnam and Myanmar. AirAsiahas formed 2 successful joint ventures in Thailand through Thai AirAsia, and Indonesia through AWAIR. Starti ng from 2aircraft till now AirAsia owns 28 and has carried more than 223 millions guest through its low fares travel.

2.0 External Environment Analysis

2.1 Political

Flying outside Malaysia is difficult. Bilateral agreement is one of the obstacles in the way of truly pan-Asia budget carriers.Landing charges at so-called "gateway airports" and navigation charges are often prohibitively expensive, and in key destinations like Bangkok, Beijing, Hong Kong and Singapore there are no cheaper, secondary airpo rts. The budget airline industry in south-east Asia has been underdeveloped because the aviation market is tightly regulated by bilateral air rights agreements. Threat of terrorism, people is afraid to fly after the September 11 terrorist attacks incident.

2.2 Economic

In spite of stiff competition from Malaysian Airline (MAS), AirAsia's low-cost carriers offering cheap tickets and few in –flight services are gaining attraction in the region. In theory, Asia has most

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