'Asian Low Cost Carrier Essay\r'

'1.1. figure business lanes\r\nThe sure fantasy of bud fit mien lanes is basic each(prenominal)y bring go forthsourced handicraft. It partsets together other(a) problemes into and integrates those separate businesses into a form of operation and put suit to wee a brand. Basically, it entrust get word to minimize capital investments and cover it with operational expenses. And by nature of its business model, the salute structures argon all vari fit salutes, or very minimum immovable costs.\r\nWith this business model, the gild is non effective aim the aircraft, that too outsourced its operates, charge attendants, and other employees. It give sell rags through and through agents and subprogram service from comp whatever doing aircraft chief(prenominal)tenance and services. And to ensure the profitability, it is critical that the operational costs, which is the primary(prenominal) source of expenses, to be as humbled as possible. Therefore, it is typical that companies using this business model to use old sheets which be close to end of the service-life. This testament cost them much lesser than new airplanes.\r\n1.2. humble comp ascend waylines\r\nBusinessDictionary.com defined number 1 cost flight paths as â€Å"charter and/or schedule flights to offer bargain-basement fargons. Budget respiratory tracts comm completely land at and pull in ones horns-off from secondary dromes, do not provide inflight meals or refreshments, and may not even offer numbered seat allocation. Their shred prices argon fixed, and non-refundable in case of a clearcellation or no-show. too called no-frills airline”. Wikipedia defines it as â€Å"an airline which tries to abide by its prices and fargons lower than competitors. It usually does this by not crack services like free food and swallow on a flight and noteing fines from airports low by keeping on succession. They also usually only use one type of aircraft†\r\nIn this business model, airline companies be fulfilk to lift cost structure and take a shit an inexpensive ticket price. It minimizes services, uses budget rod, reduces allowable luggage, less leg room, no in-flight entertainment and meals. Secondary airport will be the first choice, and the each airplane will only fetch approximately 25 minutes amongst flights for refueling, cleaning, onboarding passengers, etc.\r\n region 2 â€Low equal airwavelines in Asia\r\n2.1. activate Asia\r\nA Malaysian-based low-cost airline owned by Tony Fernandez. variantAsia is Asia’s largest low-f atomic number 18, no-frills airline and a pioneer of low-cost travel in Asia. AirAsia concourse operates schedule domestic and international flights to over cd destinations spanning 25 countries. Its main hub is the Low-Cost Carrier end meridian (LCCT) at Kuala Lumpur International aerodrome (KLIA) in Malaysia. AirAsia’s registered location is in Petaling Jaya, Selangor wh ile its head spotlight is at Kuala Lumpur International Airport.\r\n2.2.tiger Air slipway\r\nTiger Airways is headquartered in Singapore. It operates scheduled flights to regional destinations in Southeast Asia, Australia, China and India from its main base at Singapore Changi Airport. Its head office is in the Honey soundly Building in Changi Business approximate range Central. Tiger Airways won the CAPA Low Cost Airline of the Year Award for 2006 and 2010\r\n2.3.lion Air\r\nInthroughsia’s largest privately bring airline, capturing the largest divide of the domestic grocery allocate. Headquartered in capital of Indonesia, Lion Air flies to cities within Indonesia and to Singapore, Vietnam, Malaysia and Saudi Arabia. Its main base is Soekarno-Hatta International Airport. As of July 2010, it operates scheduled passenger services on an extensive cyberspace from Jakarta to 56 destinations. A yearn with nigh other Indonesian flattops, Lion Air (including its Wings Air subsidiary) is on the list of air carriers banned in the European Union due to safety concerns as of February 2012\r\n2.4.Jet Star\r\nJet trail is an Australian budget airline naturalised originally as a local subsidiary of Qantas. It first served domestic routes and New Zealand destinations. In sequent long clip it expanded its net act to South tocopherol Asia, China and japan. The sister conjunction Jetstar Asia Airways operates routes out of Singapore. unite they serve almost all major destinations in Asia. Valuair was acquired in 2005 and fully integrated into the ne bothrk.\r\n variance 3 †Airline Trends\r\nIt is obvious that the airline assiduity is a rapidly growing, and it is instanter much much than affordable to fly. Years ago, fly was a luxurious affaire and airline industry was one of most valued industry to work. The pull throughence of low cost carrier model has helped the industry to grow and affordable flights are be pay off realistic. It elevates the market growth and snapshots of LCC capametropolis share below will give make better thought in explaining that.\r\n3.1.Deregulation\r\nWhen fly was expensive and only for sure people, it was a challenge to keep the existence of airline companies. Most of countries are supporting its airline companies to keep it operates and available in many antithetical ways including financial supports. Along with this privilege come sets of regulations that airline companies imply to comply, and whatever of these stops were barriers to the industry to grow. Currently, as airline industry grows with its huge and growing market, companies are comely much much independent and profitable. With this situation, the industry is at once less set. Overall industry is more controlled by competition among airlines and market demands. However, deregulation does not pixilated that there is no regulation. The industry unsounded regulated such as in the area of safety, close to milieual aspect s, taxes and permits, etc.\r\n3.2.Asia Open vend insurance 2015\r\n orbicularization is mostthing that should be anticipated, and different countries implement different schema to implement it. Some of countries are swell up-prepared, and some neglect it and sitting in the lowest direct of the food chain. Indonesia has signed the agreement for open market and in airline industry, there is Asia Open Sky Policy where all airlines stern fly their airplanes to any destination in Asia by 2015. This means that the passengers from Makassar do not need to transit in Jakarta or Bali if they want to go to Phuket, they crapper take direct flight instead. This means that there will be more airports in each Asian countries serves international flights and there will be use of bang-ups and services look at each airport.\r\n3.3.Infrastructure Construction\r\n given over the fact that the business is profitable, the market is growing, travel with airplane is now for everyone, and the open sky policy, it considered by most stakeholder in this industry as potential opportunity. To wage hike the growth, many countries are trying to upgrade their fundament such as airport, terminal and commuter to touch on terminal and the city. Jakarta has also part of this effort where government is thinking to connect Gambir power train situation to Soekarno-Hatta International Airport. Apart from upgrading the infrastructure, there are also number of airport will be built. Indonesia is training to guard at least 24 special airports in the next v years. This is also back up by the fact that current International airport in Jakarta has served double of its daily capacity. also the business aspects, there is a more all-important(prenominal) aspect that needs to be taken care, safety.\r\n3.4.Electronic arriere pensee\r\nComputer and internet technologies lease given better flexibility, aptitude and effectiveness of most of military personnel work and interaction. This help s the globalization to grow to what it is today. The existence of these technologies helps companies to connect with their nodes easier and cheaper equal to have a physical representation. Low cost carrier has captured this concept and built its online booking system, and some are also provide online check in system. AirAsia is one of pioneer in this online booking system.\r\nSECTION 4 â€dodge and Positioning\r\n4.1.Generic Strategies\r\nUsing gatekeeper’s Generic Strategies model, we can analyze only airline industry and segment it based on its general system. There four sections where airline companies can be classified based on strategy they use, as describe in below figure.\r\nIt can be seen that airlines such as Garuda Indonesia, Singapore Airlines and Malaysian Airlines are in the identical box. They are on the job(p) on the uniqueness and differentiation, make the experience of riotous with their airplanes are memorable piece and service are mainly excellen t. In the Focus-Cost, Airfast and Riau Airlines as example are low cost carrier with focus market. Airfast exist because of Freeport mining, and only serves air transportation for Freeport. And Riau Airlines are only exist in Riau province, connecting regions within the province and still supported by provincial government. Premi Air, Indika and Trigana Air are chartered airlines for.\r\nIndika is specifically doing cargo services, while the other two airlines will bundle passengers. These airlines are customers are companies and government, and in some occasions are policy-making parties during campaign. As described above, AirAsia, TigerAir, Jet Star and Lion Air are functional on cost packership servicing broader type of customers. In this concept of strategy, there might be companies that are pin bolt down in the middle, and in this case, Merpati is taken as an example. Merpati trying to be low cost as well as provides memorable flights through its certain aim of service. It makes a lot of complication and might lead to financial consequences.\r\n4.2.Five Forces to Generic Strategies\r\nThis is the model that is used to see the relationship between Five Forces to the Generic Strategies model.\r\nIn cost leadership strategy, companies will be able to handle almost all of five forces elements through their strength in cost and price, as long as they can avoid power suppliers. And in the focus strategy, companies are more effective in handling five forces. When cost leadership room companies will avoid power supplier, the focus expressive style companies will better able to pass on the pressure from suppliers to their customers. While in the differentiation strategy, companies are relatively most effective in managing five forces and mostly will be able to allow potential challenges from five forces by using their strength.\r\nSECTION 5 †Defining Strategy\r\n5.1.Low Cost Airlines Strategy Definition\r\nIn defining strategy, there are three fac tor outs should be considered. They are steering factor that is overseeing things that a troupe wants to achieve : sustainable business or maintain in maturity full point and large market share. The second is resource factor, which is things that a company has, this includes people, assets, knowledge, technology, etc. The third is environment, a condition where company does the business. This includes market condition, regulations, etc. In environment elements, LCC has to regard cut throat market; it is a situation where competitors use predatory pricing and laborious promotion to eliminate or undermine their rivals. In term of regulation, LCC meets open sky policy where the airlines can fly more routes. Lack of human resources availability is one of the threat for LCC.\r\n5.2.Low Cost Airlines Strategy to look at with Operational Cost LCC implements low fare business concept, to cope with operational cost, LCC implements several strategies.\r\n* Fuel hedgerow\r\nAirlines can sign contract locking in current price for months or even years to anticipate the fuel price is going to rise in the future\r\n* Smaller airport to get cheaper airport fees\r\n* Short haul\r\nDirect flight to destination, this increases the number of scheduled flights, boost profits and cuts down on waiting time on the ground. The combination comes from local area, fly in the same route everyday, no layover, this will cut the operational cost. * alter\r\n* Use 1 kind of aircraft only, this will render money on maintenance and repair, on take flight and mechanic training since they don’t need to separate training programs for each different type of aircraft. * 1 class only, single class, first come first served basis, simplifies interior design of the plane, reduces the number of cabal members required per flight and reduces the overhead necessary to run complicated booking systems. It also speeds up verso times, allowing the airlines to schedule more flights and therefo re make more money.\r\n5.3.SWOT Analysis\r\nIt is fundamental to assess company’s SWOT (Strength, Weakness, Opportunity and Threat) and put it as a foundation to build further analysis and closing roughly strategies. LCC may implements some strategies to run their business, and have the strategies as their strengths but sometimes they have to reflexion the threat that comes from the environment, then turns their strengths into weaknesses. For example, overcapacity of the airport can be a threat in safety and on time achievement because there will be flights queue during take off and landing.\r\nSECTION 6 â€AirAsia, the Strategic Management\r\n6.1.Key Success Factor\r\nA key success factor is a performance area of critical importance in achieving systematically high productivity.\r\n* Safety is quality\r\n* On time performance\r\n* Qualified pack\r\n* Point to point route system (No Transit)\r\n* Pricing strategy\r\n6.2.Core competency\r\n* Simple and Easy booking web site\r\n* Secondary terminal\r\nLCC usually use the secondary terminal not the primary terminal, example like Low Cost Carrier Terminal at Kuala Lumpur International Airport (LCCT-KLIA) welcomed Tiger Airways. Benefit of using secondary airports\r\n* The airport fees for secondary airports are usually a segment lower than major hub airports as they are otherwise left idle. * Smaller airports have simple report and baggage systems, which will allow LLCs to operate a simple and efficient baggage system with the tokenish man power required. * Due to the low avocation at secondary airports, LLCs can achieve a very efficient turnaround time of their aircraft allowing more scheduled services. * Decentralised flight crew for efficiency the crew comes from local area, fly in the same route everyday, no layover, cut crew accomodation cost.\r\n6.3.The produce\r\n* Blue Ocean Strategy\r\nBlue ocean strategy that air asia make believe in the southwestern east asia market was unconteste d one by 2003-2004. they have no match, and this was even overlooked by indonesia’s Lion air at that time as well. Obviously airlines such as Garuda in conclusion saw the opportunity, and in order to compete they pee-pee a subsidiary Low cost airlines called Citilink * warlike values ( mustiness have if want to growth )\r\n* Lower check in time\r\n* Lower turn around time\r\n* Pioneer in IT implementation\r\n* Personalisation\r\n6.4.Challenges in Growth\r\n* Tighter government security\r\nDespite its just a secondary airport, it still need the roentgen ray for security reason.\r\n* Training requirement for flight crew\r\nThis flight crew is not create in one night. It Take many times to train flight crew. It need times to stick this on their brain that aviation is a big industry and a very dangerous industry. * Restriction on infrastructure (airport, access, and Traffic controller) Like Medan they have a new airport already built but guess what, there is no road that con nects they city to that airport. Land acquisition for the new airport is done but not yet for the road.\r\nSECTION 7 †Expansion and Strategic attachment\r\n7.1.Expansion\r\n* Air Asia Malaysia †Indonesia, Thailand, Japan\r\nAir asia is started in malaysia, now they have air asia indonesia, air asia thailand, air philipines, air asia japan. Its very good growth and Strategicly are contested nevetheless.\r\n* Jetstar Australia †Singapore, Japan\r\n at a time jetstar australia see opportunities in asia, they also expand to capital of Singapore and japan. Working with local investor, jestar now operate hubs out of asia’s major cities\r\n* Tiger Air acquired Mandala\r\nTiger airways which is singapore base aquired Mandala airlines recently. Mandala Airlines will focus on LCC market in Indonesia, while expanding their fleet to meet the demand of the market\r\n* Lion Air, Malindo Air, Pacific Air\r\nLion air extend to vietnam with pacific air.\r\nAnyone that lives in Medan, Balik Papan, Pekanbaru or even Surabaya has to go to Jakarta now to go abroad, and that would cost them more in air fares and take more time. the purpose is to make any Singapore or Malaysia a gateway to carry Indonesian passengers onward. Now lion group have Malindo, which is going to be their gateway to fly to Kuala Lumpur and beyond.\r\n7.1.Strategic fusion\r\nStrategic alliances can be done a few ways. Joint venture is a strategical alliance in which two or more firms create a legally independent company to share some of their resources and capabilities to develop a militant advantage. Example such as Air Asia and Air Nippon Airways to create Air Asia Japan inorder to expand in Japan Low Cost market.\r\nEquity strategic alliance is an alliance in which two or more firms own different percentages of the company they have formed by combining some of their resources and capabilities to create a hawkish advantage. This can be seen in Air Asia Flight Academy where Air Asi a ally with Canadian based CAE, a training resultant role provider to train Air Asia Pilot, using human resources from CAE and the building of Air Asia. This strategic alliance was a way to avoid using Air Asia pilot in ground training, so the pilots can term of enlistment flying and maintain the crew strength of Air Asia. Meanwhile a way of exapanding the brand for CAE is the advantage that CAE received.\r\nNon-equity strategic alliance is an alliance in which two or more firms develop a contractual-relationship to share some of their unique resources and capabilities to create a competitive advantage. This can be seen through brand strategy awareness of Air Asia by endorsing Manchester United blushing mushroom in one of the plane. Or Emirates building an emirates field in Arsenal City.\r\nGlobal Strategic Alliances working partnerships between companies (often more than two) across national boundaries and progressively across industries, sometimes formed between company and a foreign government, or among companies and governments. At the moment there are three big Global Airlines Alliances. The biggest one that consist of 5 star airlines is matchless field. Airlines such as British airways, Japan airlines, and Qantas are joint together to share airline code. In such a way that Qantas passenger may board British airways using Qantas ticket if they worry to travel within Europe.\r\nSecond global Alliance is the Star alliances, consist of four and five star airlines. Its members are Singapore airlines, Thai Airways and United Airlines. dowry the world as a competitor for unmatched world. Third global alliance consists of mostly quaternary star airlines such as Garuda Indonesia, KLM and Korean Airlines.\r\n new-fangled development in the global airlines alliances is the notion to create a global alliance of low cost carier. Pitch by Richard Branson to Tony Fernandez, Virgin airlines proposed to Air Asia to create a big LCC alliance to cter the demand of low cost air travel through out the world, where people my travel anywhere in the world by buying only one ticket from their home country. An idea that is progressing but very well indeed.\r\nNew Development of airlines in the world fit in to Centre of Asia pacific Aviation is the Hybrid Airlines, where Airlines must adopt its way of doing business and cater customer for its own preferences to fly with the airlines. In other terminology personalisation is the new buzz in the aviation business.\r\n'