Strategies to Ensure Sustainability in Current Economy Climate for Budget Airlines

Essay by pgislanderUniversity, Master's December 2009

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TABLE OF CONTENTExecutive Summary......................................................................................................................................... 41.0 Introduction................................................................................................................................................ 52.0 Low Cost Carriers Industry In A Glance .................................................................................................... 62.1 Present Outlook of The Industries .......................................................................................................... 73.0 AirAsia's Strategic Capabilities.................................................................................................................. 83.1 Strategic Capabilities - High Aircraft Utilization .................................................................................. 83.2 Strategic Capabilities - No Frill ............................................................................................................. 93.3 Strategic Capabilities - Streamline Operations ...................................................................................... 93.4 Strategic Capabilities - Secondary Airports ......................................................................................... 103.5 Strategic Capabilities - Lean Distribution Systems.............................................................................. 104.0 Competitive Strategy Analysis ................................................................................................................. 115.0 Budget Airlines - Industry Structure Analysis ......................................................................................... 136.0 AirAsia - Internal & External Analysis.................................................................................................... 157.0 AirAsia - Identifying Strategic Options ................................................................................................... 178.0 Proposal of Short Term Strategic Plan...................................................................................................... 198.1 Corporate & Business Travelers ........................................................................................................... 198.2 Promoting AirAsia Network Connectivity ........................................................................................... 198.3 Innovative in Achieving Customer Satisfaction ................................................................................... 208.4 Innovative in Cost Efficient .................................................................................................................. 209.0 Conclusion ............................................................................................................................................... 2210.0 References.............................................................................................................................................. 2310.1 Books ................................................................................................................................................. 2310.2 Journal, Articles and Research Publications ....................................................................................... 2310.3 Electronic and Printed Media.............................................................................................................. 23Appendix........................................................................................................................................................ 24Appendix 1................................................................................................................................................. 24Ranking Table of Scheduled Passengers Carried by Airlines ....................................................................

24Appendix 2a............................................................................................................................................... 25Europe Low Cost Carrier Share.................................................................................................................. 25Appendix 2b............................................................................................................................................... 25Europe Low Cost Carrier Share.................................................................................................................. 25Appendix 3................................................................................................................................................. 26MAS & AirAsia Passenger Numbers Growth Comparison........................................................................ 26Appendix 4................................................................................................................................................. 26Jet Fuel and Crude Oil Price ....................................................................................................................... 26Appendix 5................................................................................................................................................. 27Fares & Passenger Kilometer Flown on International Market ................................................................... 27Appendix 5................................................................................................................................................. 28Awards & Accolades of AirAsia ................................................................................................................ 284Executive Summary"Demand continues to improve, but profitability remains ever distant," said Giovanni Bisignani, IATA'sDirector General and CEO. "Fares have stabilized, but at profitless levels. Meanwhile cost pressures aremounting from reduced aircraft utilization and rising oil prices. The industry is not out of the woods yet,"said Bisignani during presenting IATA 2nd quarter results in Geneva on 24th September 2009. A goodsummary on the present situation of airlines industries.

Fuel price hiking in early 2008, recession & Influenza A(H1N1) outbreak, and one after another had struckAirline industries hard for the last 18 months. Most of the airlines...