1.

Opportunity And Treat Analysis

Opportunities

Statement Factor
1 Extra Income Economic Forces
The Cost of Living Aid (BSH) scheme introduced by the new
government under the Pakatan Harapan providing additional
income to the people and allow them to allocate part of their
income to travel within or outside the country. This will indirectly
increase the demand for airlines services by AirAsia.
2 National Economic Policy Economic Forces
The policy of the globalization of the Malaysian economy opens
up a wide and free market opportunity. This gives AirAsia an
opportunity to expand its wings to other countries such as India,
Indonesia, Japan and others.
3 Trend Social, cultural,
Traveling abroad is becoming an increasingly popular trend today demographic and
such as traveling to Korea, Hong Kong, Krabi and others. This natural
trend has been spurred by tourism promotion and exhibition environment
activities by the Malaysian Tourism and Travel Association forces
(MATTA). The increasing number of people traveling abroad has
supported the growth and development of the AirAsia airline
services.
4 Internet Users Technological
Internet Users Survey 2017 by the Malaysian Communications forces
and Multimedia Commission (MCMC) shows there are 24.5
million Internet users in 2016. The number of user that connected
to internet is expected to increase every year and they are the
prospects for AirAsia customers. It provides opportunities for
AirAsia to deliver its services more effectively because all of its
services are internet based and fully digital like online tickets,
online customer services, online promotions and many more.
5 Beautiful Destination Social, cultural,
There are many places of natural beauty such as beaches, tropical demographic and
island resorts, national parks, mountains, deserts and forests natural
found locally and internationally. Some of the example are Mount environment
Kinabalu, Perhentian Islands and Cameron Highlands in forces
Malaysia, the islands of Maldives, Kawah Putih and Tangkuban
in Indonesia, Mount Hallasan in Korea, Coron Island in the

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 Philippines, Elephant Nature Park in Thailand and many more.
All of these attractive natural resources will create tourism
demand and promote airline services.
6 The Growth Of Middle Class Population Social, cultural,
A forecast of the global middle class population shows as of demographic and
2015, the middle class population in the Asia-Pacific region natural
totaled to 1.38 billion people. By 2030, this population will have environment
increased to nearly 3.5 billion people. This creates a good forces
opportunity and huge market for all low cost carriers in this
region including AirAsia.
7 Geographical Structure Social, cultural,
Archipelago geographical structure of Asia continent contributes demographic and
to the importance of air transportation. For example, there is no natural
other viable and efficient mode of transportation between East environment
and West Malaysia other than by air. forces
8 Ringgit Decline Economic Forces
The ringgit decline allowed the aviation industry to grow as it
was cheaper for foreigners to visit Malaysia. Locals who now
can’t afford to travel abroad may also spend their holidays in the
country.

9 Religious Market Social, cultural,

The mosque expansion project and the high speed train of demographic and
Makkah – Madinah is expected to increase the number of Umrah natural
pilgrims to 30 million people a year by 2030, compared with environment
seven million at present, as well as adding pilgrims to 4.5 million forces
compared to three million as now for the same period. This is
beneficial to the aviation sector as it can increase its aircraft rental
segment.
10 Competitor Issues Competitive
Malaysia Airlines experienced three issues regarding technical forces
faults in the past nine months of 2018. These issues give
consumers less confidence with the airline and will make them
not hesitate to choose other flight services such as AirAsia (The
New Daily, 2018).

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Threats

Statement Factor
1 Termination of Employment Economic Forces
The Edge reported that 800 employees of the Utusan Melayu
Company which is owned by UMNO were offered a VSS scheme
to reduce the company's costs. This causes workers to lose their
income and reduce their purchasing power. This situation affected
all service sectors due to loss of customer prospects.
2 Airport Tax Economic Forces
The Malaysian Aviation Commission (MAVCOM) has raised the
Airport Tax for international flights at KLIA2 from RM50 to
RM73. This price change was implemented on January 1, 2018,
according to Free Malaysia Today. The price hike will reduce the
demand for aviation services.
3 Fluctuation in Fuel Price Economic Forces
Fluctuation in fuel price can destabilize the low cost business
model, causing airline to either increase their prices, or go
bankrupt.
4 Diseases Outbreaks Social, cultural,
Outbreak of the Severe Acute Respiratory Syndrome (SARS) and demographic and
Middle East Respiratory Syndrome (MERS) have scare people to natural
wing and this affects demand of airlines survices. environment
forces
5 Power of Social Media Viral Technological
Social media is one of the advances in communication forces
technology. The power of social media viral can affect the
reputation of AirAsia. Among the issues that become viral
through social media that related to AirAsia services are such as
flight delay, workers dump baggage, pregnant women are
prohibited from boarding and others.
6 Natural Disasters Social, cultural,
Natural disasters such as earthquake in Nepal on April 2015, demographic and
volcano eruption in Indonesia on February 2014 have affected the natural
operation of airlines. environment
forces
7 Industry Regulation Political,
Airlines in Malaysia are mandatory to audit by Department of governmental
Civil Aviation Malaysia (DCAM) which listed as one of the and legal forces
standard requirements of International Civil Aviation

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 Organisation (ICAO) (AirAsia Berhad, Annual Report, 2016). All
related regulations and restrictions, provide a challenge to
AirAsia to remain competitive in aviation industry.
8 Increasing Of Airline Competitors Competitive
There are approximately 59 low fares airline such as JAL forces
Express, Tiger Airways, Air Arabia, JetStar Airways and etc. The
increasing in the number of airline competitors can make it easier
for customers to find alternatives and this will reduce the loyalty
of Air Asia customers.
9 Plane Crash Social, cultural,
The MH370 incident on March 8, 2014 and the latest issue of demographic and
Lion Air aircraft on October 16, 2018 have negative impact on natural
the airlines. Frequent fliers have been scared away, and the airline environment
industry is at risk of losing customers. forces
10 Advancement of Technology Technological
The rise of worldwide e-commerce platforms such as Zalora, forces
Lazada, Shopee, Amazon, Alibaba, eBay and many others has
had an impact on the aviation industry. Customers do not have to
go abroad to make purchases of goods as online purchases save
time and cost. Customer can having experience shopping around
the world without leaving their home.

2. EFE Matrix

Key External Factors Weight Rating Weighted

Score
Opportunities
1. Extra Income 0.05 2 0.10
2. National Economic Policy 0.08 4 0.32
3. Trend 0.06 3 0.18
4. Internet Users 0.04 3 0.12
5. Beautiful Destination 0.05 2 0.10
6. The Growth Of Middle Class 0.04 3 0.12
Population
7. Geographical Structure 0.03 2 0.06
8. Ringgit Decline 0.04 2 0.08
9. Religious Market 0.06 3 0.18
10. Competitor Issues 0.04 2 0.08

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Threats
11. Termination of Employment 0.02 2 0.04
12. Airport Tax 0.06 4 0.24
13. Fluctuation in Fuel Price 0.07 3 0.21
14. Diseases Outbreaks 0.04 3 0.12
15. Power of Social Media Viral 0.03 3 0.09
16. Natural Disasters 0.07 2 0.14
17. Increasing Of Airline Competitors 0.07 2 0.14
18. Industry Regulation 0.06 2 0.12
19. Plane Crash 0.05 2 0.10
20. Advancement of Technology 0.04 3 0.12

Total 1 2.66

2.1 Analysis
The company total weighted score is 2.66 (higher then 2.5) which is considered as strong
in position.

2.2 Conclusion
AirAsia is responding above average to the external factors for exploiting opportunities
and to overcome threats.

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3. Competitive Profile Matrix (CPM)

AirAsia MAS Firefly

Critical Success Weight Rating Score Rating Score Rating Score
Factors
1. Advertising 0.06 2 0.12 3 0.18 4 0.24
2. Product Quality 0.04 2 0.08 4 0.16 3 0.12
3. Price 0.27 4 1.08 2 0.54 2 0.54
Competitiveness
4. Management 0.06 3 0.18 2 0.12 3 0.18
5. Financial Position 0.15 3 0.45 3 0.45 3 0.45
6. Customer Loyalty 0.08 2 0.16 3 0.24 3 0.24
7. Global Expansion 0.06 3 0.18 3 0.18 2 0.12
8. Market Share 0.20 3 0.60 2 0.40 1 0.40
9. E-Commerce 0.04 3 0.12 3 0.12 2 0.08
10. Employee 0.04 2 0.08 3 0.12 3 0.12
Dedication

Total 1 3.05 2.51 2.49

3.1 Analysis
As the matrix shows, AirAsia has the best price competitiveness. The MAS has the best
product quality and The Firefly has the best advertising. From the matrix also we can see
that Firefly has a major weakness in the aspect of market share. As indicated by the total
weighted score, AirAsia is ahead of other companies with 3.05 followed by MAS by 2.51
and Firefly is the weakest with total of 2.49.

3.2 Conclusion
It can be concluded that among all the two industrial players, AirAsia is in the strongest
position in the aviation industry compared to MAS and Firefly. However, AirAsia must
keep continue to focus on reducing operation costs to maintain its position as a leader in
low cost carrier services.

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Firefly is seen to have the potential to grow. It can improve its weaknesses by
benchmarking successful airline services such as AirAsia to enable gap identification and
know potential areas for increasing revenue and market share.
As a full service carrier, MAS also needs to maintain its strengths in offering high quality
service to travelers. To become more competitive, MAS needs to strengthen its
management lineup and implement a recovery strategy to "win over customers" and have
"endless cost focus."

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4. Strength and Weakness Analysis

Strengths

Statement Factor
1 Capable leader Management
The founder and CEO of AirAsia has received many recognition
such as Malaysian CEO of the Year 2003, 2010 Forbes Asia
Businessman Of The Year, Asia Pacific Leadership Awards 2009
2 Strong management Management
The executive management of AirAsia come from diverse
background which consists of industry experts and ex-top
government officials.
3 Strong vision and mission Management
AirAsia's goals and objectives are guided by clear and integrated
corporate vision and mission.
4 Various recognition Management
AirAsia has won many awards and recognition including the
World's Best Low Cost Airline for the tenth consecutive years,
Putra Brand Awards 2017, Gold in Transport, Travel and
Tourism 2017 and many others.
5 Lowest cost airline services Marketing
It provide airline services at a price that is lower than
competitors’ price.
6 Partnership with other service provider Marketing
Their partnership with other service providers such as hotels, car
rental firms, hospitals (medical tourism), Citibank (AirAsia
Citibank card) has created a very unique image among travellers.
7 Wide service distribution Marketing
AirAsia offers airline services to many destinations around the
world from the hubs in Malaysia, Thailand, Indonesia, India,
Philippines and Japan.
8 Outstanding tagline Marketing
AirAsia has successfully positioned its brand in customer's mind
through the simple slogan "Now Everyone Can Fly".
9 Links with popular names Marketing
The links with Manchester United (one of the world’s most
famous football teams) has boosted the image of AirAsia.
10 Utilization of IT MIS
Air Asia is the first airline in South east Asia to use e-ticketing.

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Weaknesses

Statement Factor
1 Outsourced maintenance, repair and overhaul facility. Management
2 No segment seat. Management
3 Increasing operating costs. Management
4 Fewer international flights. Management
5 Low profit margin. Management
6 Poor customer service support. Management
7 Service resource is limited by lower costs. Management
8 Apply autocratic management. Management
9 Limited facilities at the airport (example chairs at waiting area). Management
10 Heavily rely on online sales which exposed to a risk of system MIS
disruption.

5. IFE Matrix

Key Internal Factors Weight Rating Weighted

Score
Strengths
1. Capable leader 0.06 4 0.24
2. Strong management 0.06 4 0.24
3. Strong vision and mission 0.04 3 0.12
4. Various recognition 0.04 3 0.12
5. Lowest cost airline services 0.08 4 0.32
6. Partnership with other service provider 0.05 4 0.20
7. Wide service distribution 0.05 4 0.20
8. Outstanding tagline 0.03 3 0.09
9. Links with popular names 0.04 3 0.12
10. Utilization of IT 0.04 3 0.12

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Weaknesses
11. Outsourced maintenance, repair and 0.06 2 0.12
overhaul facility
12. No segment seat 0.04 1 0.04
13. Increasing operating costs 0.07 2 0.14
14. Fewer international flights 0.04 1 0.04
15. Low profit margin 0.05 1 0.05
16. Poor customer service support 0.07 2 0.14
17. Service resource is limited by lower 0.06 2 0.12
costs
18. Apply autocratic management 0.05 1 0.05
19. Limited facilities at the airport 0.03 1 0.03
(example chairs at waiting area)
20. Heavily rely on online sales which 0.04 2 0.08
exposed to a risk of system disruption

Total 1 2.58

5.1 Analysis
The company total weighted score is 2.58 (higher then 2.5) indicating that the firm is
above average in its overall internal strength.

5.2 Conclusion
AirAsia responds above average to the internal factors to maintain its strengths and
reduce weaknesses.

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 Reference

https://www.worldofbuzz.com/international-flights-klia2-will-cost-starting-january-2018/

http://www.utusan.com.my/rencana/utama/pemberhentian-kerja-vss-dan-anda-1.695371

https://newsroom.airasia.com/about-us/

https://www.statista.com/statistics/255591/forecast-on-the-worldwide-middle-class-population-
by-region/

http://www.utusan.com.my/rencana/utama/melayu-terokai-penerbangan-ibadah-bersama-mab-
1.341817

Internet User Surveys 2017

AirAsia Berhad, Annual Report, 2016

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 AIRASIA’S STRENGTHS AND WEAKNESSES

Strengths

1. It offers low cost airline services. In 2007, The New York Times described the airline as a
pioneer of low-cost travel in Asia. This business model making flying possible for everyone
especially those with low income. No other airline in Southeast Asia can compare with
AirAsia's low ticket prices.
2. Low operational cost. The airline has been successful in ensuring that they consistently keep
their operating costs as low as possible for example by practicing the online reservation
system, no frill, quick checked in etc. and the benefits of this flow into the pricing.
3. Flights to many destination. AirAsia flies to almost every destination within Peninsular
Malaysia and Borneo (Sabah and Sarawak). Besides that the budget airliner also flies to
numerous big cities throughout Southeast Asia and even to Europe and Australia. It has 252
flights daily, that fly over to 130 destinations worldwide from the hub in Malaysia, Thailand,
Indonesia, Philippines, India and Japan.
4. AirAsia is the lowest leader in Asia (Operation). With the help of AirAsia Academy, AirAsia
has successfully created a “low cost airlines mentality” among their workforce. The
workforce is very flexible and high committed and very critical in making AirAsia the lowest
cost airlines in Asia
5. High Technologies. The utilization of IT have directly contributed to their promotional
activities (email alert and desktop widget which was jointly develop with Microsoft for new
promotion), brand building exercise (with over 3 million hits per month and the most widely
surfed booking engine in the world) as well keep the cost low by enabling direct purchase of
ticket by consumer thus saving on airlines agent fees.
6. Get mane awards such as “World’s Best Airlines” for the second year,
7. Asia Pacific’s Best Marketing Campaign (mktg). It shows AirAsia have good image and
performance since it got so many awards
8. The customer can pay their booking ticket by credit card over phone (operation).
9. Good marketing campaign such as making a year deal with Manchester United, one of the
English Football Club and recently had programmed at television “Travelog Asia”. This is
one of the examples of good marketing strategy.

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10. The current ratio is increase from 1.3 times to 1.47 times. It will make the company less risk.
11. AirAsia has very strong management team with strong links with government and airlines
industry leader. This is partly contributed by the diverse background of the executive
management team that consist of industry expert and ex-top government officials.
12. Increasing the profit 1061 million on year 2010 (fin)

Weaknesses

1. AirAsia receive a lot complaint from customer on their service. Examples of complaint are
around flight delays, being charged of things and not able to change flight or get a refund if
customer not make it. Good customer service and management is critically especially when
competition is getting intense.
2. The facilities at the airport (mgt). There has limited chairs at waiting area.
3. The waiting period between check in and depart is too long (sometimes it takes around 2
hours for international departure)
4. Apply autocratic management (mgt). They only considered opinion from top management to
make them decision without asking from the other worker opinion.
5. Rely on debt to much since ratio for year 2010 is 73.15%. It is more than half its capital gets
from borrower. It is risk of the company.
6. The average collection period is quite high which 76 days. It means the companies have to
wait until 76 days to collect from borrower.
7. There are no maintenance, repair and overhaul facility operation. Thus AirAsia cannot
maintain its own planes. With an increasing this is a competitive advantage.
8. No frills operation. They only provide the transportations services. The customer has make
pre-order for their heavy meal such as nasi lemak during their tickets. If not, they only can
buy the chip and beverages.

consumers can make a purchase from sellers around the world without having to leave their
home

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One of the economy treat is the increasing entrants of low cost airlines. Since there are many low
cost carriers joining the market, such as Emirates, Jetstar and Peach, competition occurs and
those with the lowest price attracts the customers. Having the increase in fuel prices and the need
to drop prices to compete might cause AirAsia to lose profit.

attractive natural resources

Attractive natural resources found locally and internationally promote tourism activities such as
Some of the example are Mount Kinabalu, Perhentian Islands and Cameron Highlands in
Malaysia, the islands of Maldives, Kawah Putih and Tangkuban in Indonesia, Mount Hallasan in
Korea, Coron Island in the Philippines, Elephant Nature Park in Thailand and many more.

There are many places of natural beauty such as beaches, tropical island resorts, national parks,
mountains, deserts and forests found locally and internationally. All of this attractive natural
resources will create tourism demand and promote airline services

Airlines in Malaysia are mandatory to audit by Department of Civil Aviation Malaysia (DCAM)
which listed as one of the standard requirements of International Civil Aviation Organisation
(ICAO) (AirAsia Berhad, Annual Report, 2016). All related regulations and restrictions, provide
a challenge to AirAsia to remain competitive in aviation industry.

AirAsia is subjected to aviation regulations, government policy and government restraints (i.e.
government protection in favor of full-service airlines. AirAsia can only minimize its negative
impacts by selecting routes (countries) that are favorable.

Airline services is subjected to aviation regulations, government policy and government

restraints (i.e. government protection in favor of full-service airlines). Government legislation
has limited new entrance in the industry, so AirAsia is already secure on the market.

A political threat for AirAsia is the continued increase in fuel prices. If the government were to
continue to increase fuel price, it can destabilize the business model, causing this airline to either
increase their prices, or go bankrupt.

the access to the internet allows customers to have close to full information on prices charged by
the LCCs.

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