Tourism Marketing: the Example of AirAsia

1) Brief introduction of the company

Officially named AirAsia Berhad, the company is a Malaysian-based low-cost airline founded in 1933. AirAsia is Asia’s largest low-fare, no-frills airline and a pioneer of low-cost travel in Asia. AirAsia won the Skytrax World’s best low-cost airline award in 2007, 2009, 2010 and 2011. It has the world’s lowest operating costs at 0.035 US dollars per seat-kilometre in 2010. It is also the first airline in the region to implement fully ticketless air travel and unassigned seats. The group currently operates scheduled domestic and international flights to 80 destinations (including subsidiaries routes) across 25 countries and with over 400 daily flights covering Indonesia, Malaysia and Thailand and for international routes mostly from Kuala Lumpur to Australia, Bangladesh, Brunei, Cambodia, China, France, Iran, India, Japan, Laos, Myanmar, New Zealand, Philippines, South Korea, Singapore, Sri Lanka, Taiwan, the United Kingdom and Vietnam. AirAsia’s main hub is at Kuala Lumpur International Airport as well as the head office of the company and its affiliated airlines, Thai AirAsia and Indonesia AirAsia, have hubs in Suvarnabhumi Airport and Soekarno-Hatta International Airport. AirAsia has also acquired and created mainly thanks to joint-ventures a lot of subsidiaries: Established in 2007, AirAsia X is an associate company that offers “low-cost” long-haul services from Kuala Lumpur to Australia, China, France, India, Iran, Japan, New Zealand, South Korea, Taiwan and the United Kingdom. It is focused on providing high-frequency and point-to-point networks for the long-haul business.

2) Product design and management

a. Product mix (core, facilitating, and augmented product)

AirAsia’s core product is obviously the flight service. Their main business is the booking of flights for the region of Asia at low fares.  Facilitating products The facilitating products we could identify for a low-cost carrier product such as AirAsia mainly concern the ways of booking. AirAsia’s website (www.airasia.com) is the main booking system offered by the airline. Really easy to use, it permits to check flights schedules and to make bookings. It offers the possibility to register in entering all your personal information, thus the system keep them on memory and you are not obliged to enter them again for a further purchase. This website also allows customers to manage their bookings and to have more information on the flights. It is also possible to make online check-in to not lose time. The booking system is made in order that the latest updates promotions are suggested. Moreover, AirAsia also offers the possibility to book by SMS or by phone. A call centre has been launched in 2002 not only for booking but also having help or information. The facilitating ways of booking are also adapted for the payment. It is now possible to pay for their telephone bookings by credit card or by cash at any Alliance Bank branches. AirAsia also permits to make an easy and quick check-in at the airport thanks to computers. You just need the booking name and the booking number. You don’t have to queue for check-in (if you only have cabin luggage).  Augmented products The augmented products are numerous with AirAsia as their slogan is to be a “no-frills” airline. In fact, they buy a core product, a flight ticket, and you can choose to have added value on the service. First, you have in-flight services. AirAsia offers “Snack Attack,” a buy on board program offering food and drinks for purchase. Besides, the meals could be booked at the same time of ticket by internet. Moreover, during an AirAsia flight, you can buy different kind of stuff. There is a “shop on board”. Another service named ‘Xpress Boarding’ was launched, enabling passengers to get priority boarding for a fee. In the same way, on Air Asia flights, passengers are given a choice of purchasing extra baggage weight, comfort kit and seat selection all with nominal fees. Concerning the seat, they also created the innovative Empty Seat Option. It means that customer’s onboard Asia’s leading long-haul can purchase affordable options for the empty seat(s) next to them to spread out comfortably over a full row of 3 seats. Moreover, AirAsia also launched its own Frequent-flyer program to collect loyalty “BIG” points. These ones can then be used to redeem free AirAsia flights. Members also enjoy priority booking, special offers and discounts exclusively. Finally, AirAsia also offers augmented products which are not directly related to the flight. For example, it is possible to book a hotel room, to rent a car, or to book a tour package with GO holiday (airline’s online program where customers can book holiday packages online in real time).

b. Product width and depth

It is quite difficult to define the width and depth of a product as AirAsia’s one because the strategy of the group is to reduce their service to a core product and to concentrate on it. I would say that the width of the product is really restricted to flights tickets. Maybe it is possible to add car rentals, hotel bookings and package holidays bookings. Concerning the depth of the product, it could an international flight or a domestic flight (within the Asian region).

c. The values and qualities implied from the brand

After analysing corporate strategy of AirAsia, it is easily understandable that the aim of the company is to become the largest low-cost airline in Asia. In this purpose, the image of the brand focuses on two main objectives. First, they want to be recognized as a global ASEAN brand thanks to a development axed in the creation of diverse subsidiaries in the Asian region. Moreover, they reach to give the opportunity to the Asian 3 billion people who are not currently able to travel because of high fares and poor connectivity between destinations to become actual travellers. Finally, AirAsia has built its brand name with the slogan “Now everyone can fly”. It reaffirms this first objective and also insists on their main competitive advantage: a low price. Indeed, as a low-cost airline, AirAsia’s philosophy of low fares is aimed to make flying affordable for everyone. Around this core vision, AirAsia brand insists on six different values:  Safety First: AirAsia is partner with the world’s most renowned maintenance providers and complying with the with world airline operations.  High Aircraft Utilisation in implementing the regions fastest turnaround time at only 25 minutes, assuring lower costs and higher productivity.  Low Fare, No Frills in providing guests with the choice of customizing services without compromising on quality and services.  Streamline Operations in making sure that processes are as simple as possible.  Lean Distribution System in offering a wide and innovative range of distribution channels to make booking and travelling easier.  Point to Point Network because it keeps operations simple and costs low. d. Stage of the product life cycle The product life cycle is composed of four different stages such as we can see on the figure above: If we think about low-cost airline market in general, we could say that it is a mature global market as nowadays there are a lot of competitors on this segment and that the core product does not know any changes anymore and no additional services can be added. However, if we study only the Asian low-cost airline market, AirAsia seems to be in the growth stage. The core product is well-defined but the company is still making improvements particularly on the facilitating services such as on flight services. Moreover, the group is expanding and the sales and the revenue of AirAsia is growing each year and in every country where they do business. Then, in the growth phase, loyalty begins to be built up (ex: frequent flyers program BIG). The market mix elements during the growth phase are as follows:  Demand and Market The potential of the market is stable and at a high level. As the group is expanding in all Asia, the number of potential customers stays quite similar. In addition, the number of customers is supposed to increase and it is the case for the market of AirAsia with a number of sales which is booming. Moreover, the market is only composed of few companies and for example we can cite Lion Air, Merpati, etc. AirAsia seems to have a concrete oligopoly on the Asian market.  Product As an indicator of the growth phase, the increasing number of products is one of the most important. As we said previously, there are more and more competitors on the market offering similar products, so the customers have more opportunities. Concerning AirAsia, we can analyze that its product width is enlarging without any depth modifications.  Price Nowadays, AirAsia is offering the lowest fares on the market. This penetration pricing strategy is also a reason to say that AirAsia’s product is at the growth stage.  Communication The growth phase is characterized by a massive use of publicity. There are no more big promotions as in the launch phase when a company wants its product to be discovered. All the publicity actions are focused on a brand and corporate message. AirAsia is now well-known and recognized as a low-cost airline. In studying communication around AirAsia, we could notice that numerous articles are talking about the diverse actions of the company (expansion, partnership with a sport team, etc). That shows that the company tries to develop the awareness about the brand.  Sales Points and Distribution The distribution is the most distinctive in the growth stage because the company has to increase the number and the means of selling the product. In the same way, the distribution must become intensive. The fact the group is trying to create different joint-ventures in Asian countries and to develop partnerships with actors like Expedia shows that AirAsia is working to improve its distribution and selling channels. In this growth phase, the main objective is not anymore developing the demand for the product but developing the demand to the brand. e. Product modification AirAsia product has known a lot of modifications since its creation in 1933. Nowadays, the main modifications are concerning the additional and facilitating services offered by AirAsia. For example, the last one is that you can buy the seats near you to feel more comfortable. The strategy of AirAsia is to develop all around Asia in creating joint-ventures. It is not really a product modification but more an extension of the market in copying the same model in different Asian countries and in opening new routes. However, the creation of AirAsia X offering international flights was a big modification in the core product of the brand, even if we can notice that, even on this market, their prices are very low. Finally, we can add that AirAsia has to think about some modifications on their product concerning disabled people. II.

Product’s market segmentation

1) Geographic characteristics

The geographic characteristics of the target market of AirAsia are obviously Asian people. The name of the company, AirAsia, and its development in all the different countries of Asia is the proof that they target people from all Asia. They try to respond to a domestic demand. Concerning their subsidiary AirAsia X, the target market is not the same as they try to attract people from Australia, Europe and Middle-East who want to visit the Asian region.

2) Demographic characteristics

Concerning demographic characteristics, AirAsia is not targeting a specific demographic group. It is mostly based on the social status or the average budget of the customers. AirAsia mainly target workers or low pay salaries earners. It could also be categories like students who have not a lot of money.

3) Psychographic and behaviour characteristics

AirAsia targets people who want to travel in Asia for leisure or business purposes. Their main purchasing motivations are the price and the simplicity for buying and check-in. Moreover, as the Chief Executive Officer of AirAsia explained, they target people who would like to travel often to meet their families especially during special occasions but due to how expensive it was that time, their desire are not fulfilled. By introducing a low fare will give all those people opportunity to travel if not more than once in a year. They mostly create a specific target market. III. The corporation’s brand positioning comparing with other similar organizations In order to map and measure the AirAsia’s brand positioning, I have first decided to compare it with two similar organizations, Lion Air and EasyJet.

Then, I will conclude on the brand positioning of AirAsia. 1) A regional opponent: Lion Air PT Lion Mentari Airlines, operating as Lion Air, is Indonesia’s largest privately-run airline. Based in Jakarta, Indonesia, Lion Air flies to cities within Indonesia and to Singapore, Vietnam, Malaysia and Saudi Arabia. It operates scheduled passenger flights on an extensive network from Jakarta to 56 destinations. Lion Air is one of the main competitors of AirAsia and they are on the same market (Asia). I also decided to make the comparison because I have myself hesitated between these two airlines to make a purchase because they both offer the lowest fares for a flight between Jakarta and Bali.

First, Lion Air’s positioning is not as clear as AirAsia’s one for diverse reasons. Primarily, I thought Lion Air was a low-cost airline because of the cheap prices the airline could offer but in analyzing it seems that Lion Air was composed of different subsidiaries like Wings Air which those could be considered as low-cost airline. So, we easily understand that their slogan was not focused on the price like for AirAsia: “We make people fly”. In fact, they insist on their core product: flight services. Even if we could imagine that the positioning is completely different, these two organizations are well similar. So, these remarks can lead us to understand many things about AirAsia’s positioning.

First, their strategy is to emphasis on their advantage, the low price; and they succeed to create a strong brand, even though their diverse subsidiaries, around a unique name and an only image. 2) An European example: EasyJet EasyJet Airline Company is a British airline headquartered at London Airport. It is the largest airline of the United Kingdom, measured by number of passengers carried, operating domestic and international scheduled services over 500 routes in Europe, North Africa, and West Asia. The airline has been characterised by its rapid expansion, a result of the deregulation of the aviation industry in Europe, and the success of its low-cost business model. In 2010, EasyJet carried approximately 43 million passengers and is the second-largest low-cost carrier in Europe. So nowadays, EasyJet is one of the major actors of the airline industry in Europe and one of the most famous low-cost airline companies.

I chose to make the comparison between these two companies for diverse reasons. First, AirAsia is based on the same business model than EasyJet in being positioned on the segment of low fares. They offer the same core product (flight) and a range of similar services (on-flight services, hotel booking, car rental, etc.). The groups have known identical developments by acquisitions and alliances. In fact, the main differences between these two corporations are their markets in geographical terms (Europe/Asia) and their position in the product life cycle. EasyJet is now a mature product whereas AirAsia is still in the growth phase because the Asian market is fuelled by a consumer demand for low-cost air travel but we will see if there is an incidence on the brand positioning. As far as brand positioning is concerned, the two brands are well-known and recognized on their respective markets. EasyJet’s first marketing strategy was based on “making flying as affordable as a pair of jeans” so there is an obvious similarity with the AirAsia’s slogan “Now Everyone Can Fly”. The criteria price is the core of their business model. These are low-cost airlines and they have to communicate on that. Now, the EasyJet slogans have evolved to focus on the brand itself. The current slogans are for example “Europe by easyJet” or “Business by easyJet”. They also used “The web’s Favourite Airline” in order to create a customer’s affiliation to the brand and to make the brand EasyJet something particular.

Concerning AirAsia’s positioning, they still use slogans focused on their main assets: the price and the quality of service (“Now Everyone Can Fly”, “The best low-cost airline”). We can conclude that these similar organizations are not at the same stage of their brand positioning as the model of EasyJet is more mature. 3) AirAsia’s Brand positioning From the two previous comparisons, we could profile the brand positioning of AirAsia. First, their marketing strategy is to create a strong brand with a unique image and logo for all their companies. They build a slogan around the asset of their core product: the low price making affordable flight travel for everyone. It is also a means to target everyone. From the analysis with EasyJet, we also understand that the brand positioning is not at a mature point even if AirAsia is well-known on their market. However, their strategy is to show that the group is a leader in their product category in Asia by making in emphasis that they are “the best low-cost airline”.

By: Stephanie Muchert