Air Asia Essay

1250 WordsDec 18, 20135 Pages
Porter's 5 Forces Analysis on Air Asia Threat of New Entrants The entry barriers depend on the strength of the following factors: One factor we will discuss includes the brand loyalty of customers. If there is no brand loyalty with the clients of Air Asia, then the strength of the threat of new entrants is very high. The large number of competitors in the industry also decreases Air Asia’s customer loyalty. The high capital requirement is another factor. This industry demands a large amount of start-up costs. For example, the cost of purchasing or leasing aircraft, or employing pilots and other staffs like air stewardess, creates for a high start-up cost. So, this lowers the threat for Air Asia. Another factor includes the offering of distinctive products. Air Asia proposes unique products compared to other competitors in Asia like Air Philippines, Bangkok Airways, and Tiger Airways. Additional to the traveler sales ticket, holiday packages were also included by Air Asia which is easy to afford around Asia. Air Asia has good connections with hotels and tourism firms around Asia, which it is hard for new competitors to compete. Low switching costs are another factor. Consumers don’t need to spend more on switching to a different airline. The differences in price wouldn’t be very significant, depending on the availability of a competitor’s services as well as the suitability of the flight time that inspires them to switch. Having adequate access to a distribution channel is another factor. Air Asia is the 1st airline company to allow customers to book and buy their air tickets on the web in Malaysia. That makes its site www.airasia.com very well-known among frequent travelers. Even though new competitors can build a website for their enterprise, it is relatively challenging to compete with the Air Asia website. The website is recognized

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