Opportunities- in Asia-Pacific region To take AirAsia as an example, and use PEST analysis to look over the airline industry in the Aisa-Pacific and the differ in the Asia-Pacific region and in North America and Europe 1. Political a)Malaysian government support The growth of low cost airlines in south-east Asia has a significant effect on which airports will dominate the regional aviation market. Low cost airlines are seen as helping funnel more passengers to airport hubs.
Therefore, there is a realization among regional governments that they need smashing airports and feisty carriers or they are going to miss out big time. Therefore, these governments are more willing to support low cost airlines. For example, the Malaysian government supported the establishment of AirAsian in 2001 to help boost the under-used Kuala Lumpur International Airport, and Thai premier’s Shin Corp. forms a join venture with AirAsia that would benefit Bangkok’s new airport and create a new hub at Chiang Mai. Therefore, under this situation, it helps AirAsia grow in Asia. )Political connections 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 airports. The budget airline industry in south-east Asia has been underdeveloped because the aviation market is tightly regulated by bilateral air rights agreements. 2. Economic
The growth of low fare carriers has great potential to spill over the broader tourist and business travel economy: more air passengers’ higher demand for more hotel rooms. In addition, low fare carriers may offer options for Asian American and European business travelers do, by extending trips or bringing family members to accompany them. Also, low cost airlines in Asia have an advantage in that Asia has almost no interregional highways and no high speed international rail, since Asia has a lot of sea in between, air travel is the only way to develop interconnectivity in Asia.
On the other hand, airline industry in Asia-Pacific region provides the opportunities and platform for mergers and alliances; it will be help to vigorously develop the airline industry. Several nations have contributed to the corresponding ‘open skies’ pacts across the Pacific, which will streamline international aviation accords by reducing the number of negotiations made between countries. The most significant alliance to affect the Asian region was Air New Zealand’s purchase of News Limited’s 50% stake in Ansett Australia.
Aiming to create a globally competitive Australasian airline group, Air New Zealand’s acquisition, undertaken in last February, will give both brands a wider range of aircraft deployment and financial backing, and present a powerful base to cater for the growing airline trade presenting itself in the Asia-Pacific region 3. Social The Asia-Pacific region offers many opportunities for the entrance of new low fare airlines. The low fares are often the deciding factors for budget-conscious travelers in Southeast Asia. The Pacific Asia region represents a huge population, which offers low fare airlines a vast market with promising profits.
China’s huge population alone offers a great market for low fare airlines. Demand may differ for low fare services between the Asia Pacific region and in North America and Europe. In the Asia Pacific region low airfare is the main driving force for choosing an airline which offers factors such as comfort, food, cleanliness etc. The potential of low-carrier airlines in Asia states that demographics do not support the low-carrier airlines because of the low levels of purchasing power, the existence of only few bilateral agreements that allows low-carrier airlines to operate between countries and too few satellite airports.
However, despite of the negativities of some viewpoint, the offering of affordable international travel fosters the integration of Asia-Pacific region in general. Contrary to the non-support of the opportunities of demographics, Axess Asia revealed that low fares are often the deciding factors for budget-conscious travelers in Southeast Asia. Moreover, the region’s low average incomes should boost rather than constrain cheap fares demands. With the emergence of low-cost carrier, it provides the less affluent Asians, an alternative means of traveling inexpensively.
The market of Pacific Asia region, specifically in terms of population, is vast such that the penetration of low-carrier airlines alone in China may generate promising great amount of profitability for any low-cost carrier airlines. 4. Technological AirAsia provides online service that combines air ticketing with hotel bookings, car hire and travel insurance. To help keep costs in check, Air Asia has pushed internet booking services. Particularly in parts of the region that are poorly served by road and rail infrastructure, people will prefer to travel by airplane.
In August 2003, AirAsia became the first airline in the world to introduce SMS booking where guests can now book their seats, check flight schedules and obtain latest updates on AirAsia promotions from the convenience of their mobile phones. AirAsia also recently introduced GO Holiday, the airline’s online programme where guests can book holiday packages online in real time AirAsia has bought in A320 to replace Boeing 737. The Airbus A320’s improved fuel efficiency and extra capacity which leads to better performance and reliability.