Traveling has become an inevitable element of modern people’s lives, and airline companies are the ones capable of making long-distance commuting easier. However, while all of such organizations can offer speed, hardly any of them guarantees cheapness. AirAsia X is one of the newest low-cost airlines providing people with an opportunity to travel at moderate prices. The AirAsia X model can be described as a breakthrough one (“Corporate profile,” n.d.). The company is only 12 years old, but its span of services covers as many as 29 destinations across Asia, Australia, the Middle East, and the USA.
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AirAsia X’s business model
While some of AirAsia X’s business model elements resemble the traditional airline models, the company also has unique features to offer to its customers. The same details are the division between economic class and premium class seats, operational excellence, and a low distribution cost (“Annual report,” 2017). Innovations include the optimization of aircraft weight and flight operations, attractive fares, and economies of scale (“Annual report,” 2017).
Aircraft weight optimization is associated with meal inventory and in-flight service. Also, there is no heavy wiring for in-flight entertainment equipment. AirAsia X has customized water levels and is currently working on the paperless cockpit (“Annual report,” 2017). Besides, there is a Quiet Zone cabin on all flights of the company that features a more relaxed cabin atmosphere and soft lighting (“Corporate profile,” n.d.).
The X model is not void of some weaknesses, but it also has several strengths. The major advantage of AirAsia X is that its services are very cheap, making it “the king of low costs” (“AirAsia X SWOT,” 2014). Another strength is the fleet flexibility that is planned to be increased by seven aircraft annually and reaching 98 aircraft by 2024. The next asset of the company is the record-level transit traffic (“AirAsia X SWOT,” 2014). More than half of the airline’s traffic is now linked to other AirAsia or AirAsia X flights. Two other strengths are multiple hubs and the first-mover advantage (“AirAsia X SWOT,” 2014).
What concerns the weaknesses of the AirAsia X, they are few but considerable. The most disappointing aspect is the company’s lack of profitability (“AirAsia X SWOT,” 2014). The losses can be attributed to demanding market conditions and oil prices. Another weakness is the skepticism of investors since not many of them are willing to support the development of a low-cost long-haul model (“AirAsia X SWOT,” 2014). Finally, the relationship between AirAsia and AirAsia X has some restrictions, which leads to unfavorable conditions in the company’s development.
There are some threats and opportunities that the company could avoid or use to enhance its productivity. The major threats include intense competition, growing fuel prices, and the reversal of national flexibility (“AirAsia X SWOT,” 2014). The greatest opportunity is the restructuring of AirAsia X’s main competitor — Malaysia Airlines. Other favorable circumstances include the expansion possibility in China, good positioning, and the possibility of lowered fuel prices (“AirAsia X SWOT,” 2014).
Strategic recommendations to AirAsia X’s executive team are concerned with the results of SWOT analysis. The company should use the opportunities for expansion to reach out to more customers. Also, it is crucial to find the right balance between affordable prices for clients and profits for the airline. If AirAsia X improves its expansion rates, it is highly likely to become the most successful long-haul low-cost airline in the world.
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Annual report. (2017). Web.
Corporate profile. (n.d.). Web.