Strategic Management for AirAsia

A Case Study Submitted to the Faculty of the

College of International Tourism and Hospitality Management
Lyceum of the Philippines University

In Partial fulfillment of the requirements for Strategic Management

Group Members:
Macapagal, Diane Christelle B.
Octubre, Angelogratz P.
Meguiso, John Josue B.
Buenafe, Andrei I.
Rendon, Ernest Brylle A.
Feliciano, Job Elijeah G.

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Table of Contents

I. Title Page
II. Table of Contents
III. Executive Summary
IV. Background of the Company
I. Brief History of the Company
II. Nature of the Businesses/Products/Services
III. Ownership and Management
IV. Vision and Mission, Objectives, Goals and Core
Values
V. Objectives
VI. Organizational Structure
VII. Financial Position
VIII. Analysis of the Company’s Vision and Mission
Statement
V. External Analysis
- PESTEL
- Poster’s Five Forces Analysis
- Competitive Profile Matrix (CPM)
- External Factor Evaluation (EFE) Matrix
VI. Internal Analysis
- Management
- Marketing
- Finance/Accounting
- Operations and Human Resources
- Research and Development
- Management Information System
- Internal Factor Evaluation (IFE)
VII. SWOT Matrix
VIII. SPACE Matrix
IX. QSPM

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 X. Action Plan

Background Of the Company

The company was established in 1993 but began its services on the 18 th of

November 1996. Philippines AirAsia, officially known as Philippines AirAsia, Inc., is a

low-cost airline headquartered at Ninoy Aquino International Airport in Metro Manila,

Philippines. It operates as the Philippine affiliate of AirAsia, a prominent low-cost airline

headquartered in Malaysia. Philippines AirAsia was established as a joint venture

between three Filipino investors and AirAsia International Ltd, which is a subsidiary of

AirAsia Berhad, the parent company of the AirAsia Group. Founding Investors are

Antonio O. Cojuangco, Jr.: He is the former owner of the Associated Broadcasting

Company and the owner of Dream Satellite TV. Mr. Cojuangco was one of the original

Filipino investors in the airline. Michael L. Romero: A real estate developer and port

operator, Michael L. Romero was also part of the initial Filipino investor group that

helped launch Philippines AirAsia. Marianne Hontiveros: Marianne Hontiveros is a

former music industry executive and TV host. She was another key figure among the

original Filipino investors. Philippines AirAsia was established as a collaboration

between Filipino investors and AirAsia International Ltd. It operates as a low-cost

carrier, offering budget-friendly air travel options to passengers from its base at Ninoy

Aquino International Airport in Metro Manila, Philippines. This airline is part of the larger

AirAsia Group, known for its extensive network of low-cost carriers across Asia.

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External Analysis

I. Nature of the business/products/services

● The AirAsia operators emphasize affordability for passengers despite the low

cost of the carrier, the airline includes in-flight meal and beverages as part of its

service. AirAsia aims to operate many flights on its routes, meaning that more

frequent departures throughout the day.

● Cargo Transportation

AirAsia's reception of Freight Train through its coordinated operations adventure,

Transport, offers a computerized answer for upgrading freight limit use and interline

freight administrations with different carriers. This advancement further develops

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effectiveness as well as results in significant expense reserve funds for organizations

engaged with freight transportation.

● Passenger Transportation

AirAsia operates as a low-cost airline in the Philippines. It primarily focuses on

passenger transportation within and from the Philippines to various domestic and

international destinations.

● Aircraft

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Airbus A320 Family

● Seats

a. Hot Seats–

Situated toward the front of the plane and crisis leave columns, Tough situations

accompanies up to 29" pitch and 16-17" width. You might in fact loosen up with no less

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than 20.3" of legroom on the first and crisis leave lines. In addition, you'll likewise get to

board first.

b. Standard Seats -

With a pitch of 28" and width of 16-17", our trendy calfskin seats will guarantee you

have an incredible excursion with us.

c. Premium Flatbed -

This 59" pitch and 19" wide seat situated in the Top-notch Flatbed lodge converts to a

full flatbed when wanted, as well as different elements that guarantee your most

extreme solace ready.

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Airbus A320-CEO: Type A

Airbus A320-CEO: Type B / Airbus A320-NEO: Type C

Airbus A321-NEO: Type D

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II. Ownership Management

● Founding Investors are Antonio O. Cojuangco, Jr.: He is the former owner of the

Associated Broadcasting Company and the owner of Dream Satellite TV. Mr.

Cojuangco was one of the original Filipino investors in the airline. Michael L.

Romero: A real estate developer and port operator, Michael L. Romero was also

part of the initial Filipino investor group that helped launch Philippines AirAsia.

Marianne Hontiveros: Marianne Hontiveros is a former music industry executive

and TV host. She was another key figure among the original Filipino investors.

Philippines AirAsia was established as a collaboration between Filipino investors

and AirAsia International Ltd. It operates as a low-cost carrier, offering budget-

9
 friendly air travel options to passengers from its base at Ninoy Aquino

International Airport in Metro Manila, Philippines.

III. Vision and mission, objectives, goals, and core values

Vision:

● To be the largest low-cost airline in Asia and serving the 3 billion people who are

currently underserved with poor connectivity and high fares.

Mission

● To be the best company to work for whereby employees as part of a big family.

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● Globally recognized by the ASEAN brand

● To offer cheaper fares so everyone can fly with Air Asia

● Maintaining quality products and services while embracing advancements when

it comes to technology.

Values

● Dare to Dream: This suggests a culture of innovation and encourages employees

to think creatively and push boundaries to achieve progress.

● People First: Emphasizing the importance of both employees and customers.

Taking care of the well-being and satisfaction of employees can lead to better

service for customers.

● Make it Happen: Encouraging a proactive and results-oriented mindset. This

principle suggests a focus on efficiency and productivity.

● Be Guest-Obsessed: Prioritizing customer satisfaction by deeply understanding

their needs and striving to exceed their expectations.

● One AirAsia: Emphasizing unity and a shared vision among all employees,

reinforcing a sense of belonging and purpose within the organization.

● Safety Always: Highlighting the importance of safety for all individuals within the

organization, emphasizing personal responsibility.

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 ● Sustainability Spirit: Acknowledging the significance of environmental and social

responsibility, indicating a commitment to sustainable practices for a better

future.

V. Objectives

Based on Air Asia Philippines annual report, following are the marketing

objectives that set by the organization:

• To be the lowest cost short haul airline in every market

• To continuously launch new routes under Air Asia.

AirAsia's primary corporate strategy revolves around positioning itself as the

most cost-effective short-haul airline across various markets. This strategic approach

has enabled AirAsia to establish a dominant presence in the Asian market and has

facilitated its steady expansion into global markets.

Implementing a strategy of consistently introducing new routes can be regarded

as a highly effective approach, as it has the potential to enhance customer value. The

allocation of services holds significant significance within any organizational framework.

By introducing new routes, organizations can effectively cater to a wider range of

customer requirements, thereby expanding their customer base and subsequently

fostering increased productivity. It is evident that the financial gains of a company are

directly proportional to the number of customers it serves, thus facilitating its growth.

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VI. Organizational Structure

VII. Financial Position

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 During the quarter, the Company reported a net profit of RM5.5 million, indicating a

significant improvement from a net loss of RM652.5 million recorded in the

corresponding period of the previous year. During the second quarter of 2023, the

Company experienced a significant increase in revenue, amounting to RM512.9 million.

This represents a year-on-year growth of over four times. The primary driver of this

growth was the recovery of the Company's scheduled flight operations, which saw an

increase in the number of aircraft being brought back into service. As of June 30, 2023,

the Company had a total of 11 activated aircraft, compared to only five aircraft during

the corresponding period in the previous year. In general, the turnover seen in the

current quarter demonstrates a significant recovery rate over 50% when compared to

the Company's performance in 2019. This is particularly noteworthy considering that the

Company's current operational fleet size is less than half of what it was in 2019.

The rise in profitability during the current period, in comparison to the corresponding

period in the previous year, can be primarily attributed to the significant growth in seat

capacity. This growth amounted to more than 26 times the previous year, resulting in a

total of 818,422 seats flown. The increase in seat capacity was facilitated by the

operationalization of additional aircraft and the optimization of the airline's network.

During the period being assessed, the Company transported a cumulative number of

621,984 individuals, resulting in a significant year-on-year increase of 70 times. As a

result, the Company achieved a favorable Passenger Load Factor ("PLF") of 76%,

which is 47 percentage points higher than the PLF of 29% reported for the

corresponding quarter ending on June 30, 2022. The Company experienced an

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 increase in seat capacity as its network recovered. This resulted in a significant year-on-

year growth of 25 times in Available Seat Kilometres (ASK), reaching a total of 3,509

million. The recovery rate against the equivalent period in 2019 was 42%.

VIII. Analysis of the Company’s Vision and Mission Statement

Vision

“To be the largest low-cost airline in Asia and serving the 3 billion people who are

currently underserved with poor connectivity and high fares.”

Parameter Yes/No Statement Ratings

Does it clearly answer the Yes “To be the largest low-cost 1

question what do we want to airline in Asia”
become?

Is it inspirational? Yes “To be the largest low-cost 1

airline in Asia”

Is it concise enough, and Yes The vision has a strong yet 1

inspirational? stable standing in the
particular field, it will direct
more people to recognize
AirAsia easily.

Does it give clear indication as No Their vision did not state 0

to when it can be attained? when it will be attained.

TOTAL 3 out of 4

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Critique for Mission Statement

Mission

“To be the best company to work for whereby employees are treated as part of a big

family.”

“Create a globally recognized ASEAN brand.”

“To attain the lowest cost so that everyone can fly with AirAsia.”

“Maintain the highest quality product, embracing technology to reduce cost and

enhance service level.”

Criteria Yes/No Inclusive Statement Rating

s

1. Customers Yes “To attain the lowest cost so that 1

everyone can fly with AirAsia“
Who are the firm’s customers?

2. Service Yes “Maintain the highest quality 1

product, embracing technology to
What are the firm’s major
reduce cost and enhance service
services?
levels”

3. Market Yes “Create a globally recognized 1

ASEAN brand”
Geographically, where does the
firm compete?

4. Technology Yes “Embracing technology to reduce 1

cost and enhance service levels”.
Is the firm Technology Current?

5. Concern for growth and Yes “To attain the lowest cost so that 1
profitability everyone can fly with AirAsia”

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Is the firm committed to growth
and financial soundness?

6. Philosophy Yes “To be the best company to work for 1

whereby employees are treated as
What are the basic beliefs,
part of a big family”
values, aspirations, and ethical
priorities of the firm?

7. Self-Concept Yes “Create a globally recognized 1

ASEAN brand”
What is the firm's distinctive
competence or major competitive
advantage?

8. Concern for Public Image Yes “Maintain the highest quality product, 1
embracing technology to reduce cost
Is the firm responsive to social,
and enhance service levels”
community, and environmental
concerns?

9. Concern for Employees Yes “To be the best company to work for 1
whereby employees are treated as
Are employees an asset of the
part of a big family”
firm?

TOTAL 9 out of 9

The AirAsia’s mission does not need any reconstruction as it answers every criterion.

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External Analysis

PESTLE ANALYSIS

● POLITICAL FACTORS

Tax Policy

Several tax policies and regulations affect how airline operates in the Philippines

and it is important for these airlines to be up to date regarding tax policies because

these can change over time. Tax policies such as Value Added Tax (VAT) and Common

Carrier’s Tax (CCT) are some of the policies that affect these airlines. Airlines are

subject to VAT where in the Philippines has 12% standard VAT rate that is applied to

the airline tickets and to most of the goods and services in the Philippines. CCT is

another tax policy in the Philippines where certain tax percentages is added to the gross

receipts of domestic and international air carriers. 3% tax to domestic cargo and

passenger operating air carriers and 2.5% tax rate to international air carriers. Also, the

airline industry affected by excise tax where aviation fuel for domestic flights is subject

to this tax. There is also the Income Tax that is imposed on businesses with regards to

their income. Philippines has a 30% Income Tax rate. This indicator is a THREAT to the

AirAsia company.

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Political Stability

This is the ability of the local government to impose and uphold the law in the

country to maintain peace and order and to provide a safe and secure environment for

business to operate. Philippines has different organizations or authorities and is a

member of international organizations that impose procedures, policies, regulations,

and certifications for aviation of the Philippines such as the Civil Aviation Authority of the

Philippines (CAAP) and International Civil Aviation Organization (ICAO). Philippines is

also in International Agreements between different countries to facilitate cooperation on

aviation safety and security such as regulating air traffic rights, routes, and frequencies.

Also, tourism in the Philippines affects the airline industry where the country welcomed

8 million international tourist arrivals that boosts the passenger numbers of local airlines

and helps in the load factor of airlines. Philippines are with strong ties with international

and local organizations thus creating a strong support to the aviation industry and

making this as an OPPORTUNITY for AirAsia.

Corruption

This involves the misuse of power, often for personal gain, and it can manifest in

various forms, including bribery, embezzlement, nepotism, and favoritism. Sadly, this is

widely evident in the Philippines in the country and when done in the airline industry, it

will gravely affect the industry negatively. When present in the airline industry there

would be an unfair competition where airlines that engage in corrupt practices, such as

bribing officials or avoiding taxes through illegal means, can gain a competitive

advantage over their more ethical competitors. This can distort the market and hinder

fair competition, potentially leading to market inefficiencies. Also, corrupt practices

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within regulatory bodies can lead to inconsistent and unpredictable enforcement of

aviation regulations. This can create an uneven playing field for airlines, with some

receiving preferential treatment while others face unnecessary obstacles. Safety

standards may also be compromised, posing risks to both passengers and the airline

industry's reputation. With the evident rise of corruption in the Philippines this become a

THREAT for the AirAsia.

● ECONOMIC FACTORS

Exchange Rate

Currently, Philippines is experiencing inflation rate and its international exchange

rate, or the value of peso is decreasing to other countries and the value of foreign

currency is increasing such as the Euro and US Dollars which is one of the main

currencies used internationally. These present situation affects greatly the airline

industry of the Philippines. Airline industries buy aviation fuels which are often priced in

USD and as we all know the value of USD is increasing thus cost for aviation fuel

increases. The rise of foreign currencies also affects not just the aviation fuel but also

the prices of the aircraft, which is also priced in USD. Because of this increase of

operating costs, the airline companies may also increase their tickets to for them to

catch up or maintain profitability which becomes a challenge for the company and

contributes to the decision-making of potential customers of aviation services. Currently,

the value of Philippine Peso is depreciating wherein 1-peso costs 0.018 US Dollars

while 1 US Dollar costs 56.7 pesos thus this becomes a THREAT to the AirAsia.

Inflation Rate

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 This country is experiencing a high inflation rate and is evident through the

increased price of goods and services in the market and service providers. Due to this,

the airline industry will not escape the effects of the country’s inflation. Because of the

increase of inflation rate, the aviation industry’s operating costs will also increase as

inflation also affects their various operational expenses such as fuel, labor,

maintenance, and airport fees. Fuel costs are sensitive to changes in oil prices, which

can be influenced by inflation. Airlines may adjust ticket prices in response to inflation. If

operating costs increase due to rising inflation, airlines may pass some of those costs

onto passengers in the form of higher fares. However, there's a limit to how much

airlines can raise prices without affecting demand for their services. High inflation can

impact consumer purchasing power, which may affect demand for air travel. When

inflation erodes the real income of consumers, they may cut back on discretionary

spending, including travel. This can lead to a slowdown in demand for airline tickets.

According to the latest data from Philippine Statistics Authority, inflation increased to

5.3% in August 2023 as compared to July of the same year with an inflation rate of

4.7%. This is a THREAT for AirAsia.

Unemployment Rate

High unemployment rates often lead to reduced consumer spending as

individuals and families cut back on discretionary expenses, including travel. When

people are worried about job security or are unemployed, they are less likely to travel

for leisure or business purposes. This can lead to a decrease in demand for airline

tickets. This can also lead to reduced business travel. Companies may cut back on

travel expenses, including airfare and accommodation, during economic downturns.

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Reduced business travel can affect the revenue of airlines, particularly for routes that

rely heavily on corporate travelers. In response to reduced demand, airlines may cut

back on certain routes or downsize their fleets. This can result in reduced capacity,

fewer flight options, and potential job losses within the airline industry itself. Airlines may

adjust their workforce in response to changes in demand. This can include measures

like layoffs, furloughs, or reduced hiring, directly impacting employment within the airline

industry. According to the latest data from PSA, the unemployment rate has dropped to

4.8% in the month of July 2023 as compared to last year’s data of the same month

which has 5.2% unemployment rate. This means that more citizens of the Philippines

are getting jobs that also increases their purchasing power thus creating an

OPPORTUNITY for AirAsia.

Gross Domestic Product

This is an indicator that a country’s economic health and growth. When a

country’s GDP is high it means that there is high economic activity and engagement,

high consumer spending, and great business investment. The current data shows that

the Philippines had a shrank of GDP in the month of July in this year 2023 having 4.3%

as compared to the 7.7% GDP growth during the same month last year. Meaning, there

is less economic activity and lower consumer spending this year, but there is still a 4.3%

GDP growth during the present year showing that there is still good economic activity

and stable consumer spending. Thus, this is an OPPORTUNITY for AirAsia.

● SOCIOLOGICAL FACTOR

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Health Consciousness

Health-conscious individuals may be more cautious about traveling, particularly

during outbreaks of infectious diseases. This can lead to changes in travel behavior,

with potential travelers opting for fewer flights or avoiding air travel altogether during

health crises. Health-conscious travelers are more likely to prioritize airlines that have

robust sanitization and safety protocols in place. Health-conscious passengers may

prefer airlines that implement social distancing measures on flights or limit the number

of passengers on board to reduce crowding. These measures can impact airlines'

capacity planning and revenue. Airlines that proactively address health-conscious

passenger concerns can gain a competitive advantage. Effective health and safety

measures can build trust and loyalty among travelers. Currently, AirAsia has

implemented safety policies and measures to ensure passenger safety amidst the

pandemic such as: Requiring passengers to wear facemask for them to be permitted to

travel, they have temperature screening, they have floor markers at queuing areas for

social distancing, hand sanitizers are available all throughout the processing points.

They also have in-flight health and safety measures such as: Mask policy, crew hygiene

standards, and food safety. Lasty, they have 2 hours disinfection of the aircraft every

night stop and the aircraft are also sterilized by spraying aerosol spray before each

flight. With these, this becomes an OPPORTUNITY for AirAsia as they are complying

with and implementing health standards for their customers; health-conscious

individuals will most likely choose AirAsia.

Population Growth

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 Latest data shows that there is an increase of 1.54% of population in this year,

2023, compared to last year. This means that there will be more potential customers for

the aviation industry thus creating more profit for the company. This is an

OPPORTUNITY for AirAsia.

Career Attitude

This is the individual’s approach, mindset, and behavior toward their profession and

work, can have a direct and indirect impact on the Philippine airline industry. Positive

career attitudes are often associated with higher levels of motivation, engagement, and

productivity. According to the results of a survey conducted to 1,000 Filipino employees

by PwC, a multinational professional service company, titled “2023 Hopes and Fears

Global Workforce Survey” had shown the current career attitude of Filipinos. The survey

shows that; 70 percent are moderately satisfied with their jobs; 56 percent believe their

organization will be in business for more than 10 years if they remain on their current

path; and 71 percent believe their employers will provide them the opportunity to apply

the skills that are most important to their careers in the next five years. This just means

that there appears to be a high level of optimism among most Filipinos employed in the

private sector on the continuity of their employment and, correlatively, receipt of proper

compensation. Which also means that there will be more business trips, more people

with purchasing power, more vacations by these optimistic employees and thus benefits

the aviation industry. This is an OPPORTUNITY for AirAsia.

● TECHNOLOGICAL FACTORS

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Technological Change

Just like how humans evolve and grow through time, so does our technology,

which makes our life much easier. Through continuous improvement to technology the

airline industry can ensure and improve the safety of its customers or passengers

through improved navigation systems, weather forecasting tools, and aircraft design

have all contributed for a more effective and safer air travel. Aside from safety,

technological advancement adds operational efficiency to the airline industry through

better route planning, fuel efficiency, and maintenance scheduling. This also helps

airlines to remain competitive and reduce costs. This is an OPPORTUNITY for AirAsia.

Giving the company more advanced technology will help with more efficient and faster

processing and execution of the operation of the company.

Technological Awareness

When companies or industries are technologically aware they can become and

stay competitive in the industry. Technological knowledge enables airline executives

and decision-makers to identify and implement innovative ideas. They can keep up with

developing technologies and trends like improved booking systems, fuel-efficient

planes, and digital marketing tactics to improve company operations and services.

Airlines that understand technology can acquire a competitive advantage. They can use

low-cost technologies to improve operations, cut costs, and offer competitive pricing,

making them more appealing to travelers. With growing concerns about environmental

sustainability, technological awareness enables airlines to investigate and use

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environmentally beneficial solutions. This involves investing in more fuel-efficient

planes, researching alternative fuels, and implementing environmentally friendly

procedures to lessen their carbon footprint. Understanding technology risks, such as

cybersecurity threats and data breaches, enables airlines to put in place strong security

measures and risk mitigation methods to secure their operations and passenger data.

This is an OPPORTUNITY.

Research and Development Activity

This is of great importance to our everyday life for this improves and looks for

things to change or innovate to make our daily life much easier. This is also a great help

to the airline industry because this can be used in aircraft designing and manufacturing

that can lead to development of sustainable, environmentally friendly, and cost-efficient

aircrafts. Advanced training programs and simulations for pilots, cabin crew, and ground

employees can be developed through R&D. This ensures that airline employees are

well-equipped to operate and maintain cutting-edge technology. R&D helps to expand

foreign routes, codeshare agreements, and partnerships, allowing Philippine airlines to

connect with more destinations and provide passengers with additional travel options.

Continuing and further developments for AirAsia will be an OPPORTUNITY for them.

● LEGAL FACTORS

Employment Laws

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 These employment laws help in the regulation of labor practices and internal

relationship within the Philippine Airline Industry. Employment regulations establish

minimal working conditions, such as working hours, rest breaks, and overtime

compensation. These requirements apply to all airline employees, including pilots, cabin

crew, and ground personnel. Employment laws in the Philippines regulate minimum

salary levels as well as obligations for employee benefits such as health insurance,

social security, and retirement programs. These standards must be followed by airlines

in order to ensure that their employees are fairly compensated. Gender, age, religion,

handicap, and other characteristics are prohibited under employment legislation.

Airlines must guarantee that their hiring and employment procedures are in accordance

with anti-discrimination laws. Airlines must support employees' rights to organize, join

labor unions, and participate in collective actions, if these activities are carried out in

accordance with the law. We have the Labor Code of the Philippines, Occupational

Safety and Health Standards, SSS, PhilHealth, and many more that can help

employees. This is an OPPORTUNITY for AirAsia.

Civil Aviation Authority of the Philippines

This plays a crucial role in the aviation industry in the Philippines by regulating

and overseeing various aspects of civil aviation. CAAP's mission is to ensure the safety,

security, and efficiency of civil aviation operations in the country. This oversights safety,

creates regulatory framework, licensing and certification, air traffic management, safety

inspection, and many more that helps the aviation industry thus creating an

OPPORTUNITY for AirAsia.

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Consumer Protection Laws

Consumer protection rules are designed to safeguard passenger rights and

ensure fairness and transparency in corporate practices. Pricing strategies are

commonly regulated under these laws to prevent airlines from engaging in deceptive

pricing, including rules on transparent fares and disclosing all relevant charges upfront.

Philippine Airlines must adhere to these regulations to provide passengers with clear

and accurate pricing information. Similarly, refund and cancellation policies are typically

governed by these laws, obligating airlines like Philippine Airlines to inform passengers

of their entitlement to refunds and compensation in cases of flight disruptions.

Furthermore, data protection and privacy laws pertain to how airlines collect and handle

passenger data. This is an OPPORTUNITY for AirAsia.

● ENVIRONMENTAL FACTORS

Environmental Policies

These regulations primarily aim to reduce the environmental impact of air travel

by lowering carbon emissions and promoting sustainability. They often set targets for

reducing greenhouse gas emissions from aircraft. The Philippine airline industry is

obligated to achieve these goals by adopting more fuel-efficient aircraft, optimizing flight

routes, and exploring sustainable aviation fuels. Policies may also encourage or enforce

the use of sustainable aviation fuels (SAFs), necessitating investment in research,

procurement, and infrastructure. Additionally, the industry may face regulations related

to waste management and recycling, including the handling of waste generated during

flights and at airports. This is an OPPORTUNITY.

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Climate Change

Climate change is leading to more frequent and severe extreme weather events

like typhoons and storms, which can disrupt flight schedules, damage airports, and pose

risks to people and aircraft. Climate-induced weather disruptions, including heavy rain,

strong winds, and low visibility, often result in flight delays and cancellations,

inconveniencing passengers and causing financial losses for the airline industry.

Airlines may also face increased operational costs due to the need for more frequent

maintenance and repairs caused by extreme weather, as well as higher fuel costs when

taking longer routes to avoid severe weather systems. A THREAT.

NGO’s

NGOs often advocate for environmental, social, and ethical causes, impacting

airlines through advocacy and awareness campaigns. Environmental NGOs may push

airlines to reduce their carbon footprint by investing in fuel-efficient aircraft and exploring

sustainable fuels. NGOs can also offer partnership opportunities for airlines to engage

in sustainability projects, disaster relief, or community development, enhancing their

public image and societal contributions. One of the NGOs in the Philippine is the

Philippine Business for Social Progress (PBSP) that is foundation that collaborates with

various sectors, including aviation, to promote sustainable development. They work on

environmental conservation projects, which can indirectly benefit the aviation industry

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through their efforts to preserve natural resources and biodiversity. An OPPORTUNITY

for AirAsia.

Porter’s Five Forces Analysis

Threat of new entrants - LOW

There are a variety of low to high entry barriers to the sector. A brand-new, small airline

with one or two routes might enter with ease. Given the past, it could be more

challenging for a bigger airline to operate several routes. It is far more probable that

current small airlines, like AirAsia, will succeed in expanding into larger carriers. The

major obstacles for new entrants are access to labor and capital. Customer loyalty is the

main factor that determines how far the barrier can be extended. This is due to the

likelihood that AirAsia's dedicated customers will not switch to another airline. If the

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customer base is not engaged, the newcomer poses a risk because they may switch to

competitors. The degree to which a new competitor threatens AirAsia depends on how

expensive it was to start.

Rivalry among existing forms – HIGH

Even though not all of them are direct competitors, several airlines operate in the same

market as AirAsia. Due to the enormous costs involved in operating an aviation

company, businesses must boost revenue to make more than just a profit. The regular

price comparisons made by customers force AirAsia to compete with other airlines for

their business. Even though Cebu Pacific Airlines and AirAsia are the only two major

airlines, the market is still quite competitive. To Cebu Pacific' importance, however, a

threat from AirAsia now exists.

Threat of substitute product – MODERATE

Low-cost carriers represent concerns since passengers may pick other transportation

over AirAsia if they are given cheaper and larger discounts. In domestic locales similar

services are offered by other low-cost airlines, water transport and especially land

transport because land transportation is an essential component of the transportation

system because it provides people and goods with adaptation and easy access which

poses a problem for AirAsia because it runs the risk of losing clients to rivals.

Furthermore, International airlines remain a key enabler of global connectivity and

economic activity. Also, early booking increases the possibility that travelers would

select another airline, which might lose AirAsia customers.

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Bargaining power of buyers – HIGH

Considering the fact that not all of its clients are interested in these vacation packages,

AirAsia offers additional services that include travel incentives. Many passengers on

airplanes are only interested in getting to their destination, and both high-end and low-

cost airlines provide these services.

The economical airline AirAsia is popular by many people. The industry stands out by

limited purchasing power. It is quite improbable that any one group of purchasers will

have significant power over key industry players, much like suppliers do.

Bargaining power of suppliers – HIGH

Many competitors in the airline industry limit the selection from which airlines may select

their vendors. To produce their aircraft, Air Asia has access to just two suppliers.

Suppliers have more bargaining power because of the low supplier density in the sector.

Previously buying its aircraft from Boeing, AirAsia now purchases its aircraft from

Airbus. This sector differentiates because suppliers have little to modest determining

strength. It is uncommon for any one supplier group to have a significant influence on

industry stakeholders.

Competitive Profile Matrix (CPM)

Critical Success Factor Weight AIRASIA PH CEBU PHILIPPINE

PACIFIC AIRLINES

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 RATING RATING RATING SCORE
SCORE SCORE

Safety and Security 0.11 3 0.33 3 0.33 4 0.44

Customer Satisfaction 0.1 3 0.3 3 0.3 3 0.3

Customer Loyalty 0.1 2 0.2 4 0.4 3 0.3

Marketing and Branding

0.1 3 0.3 4 0.4 4 0.4
(Advertising)

Service Quality 0.1 3 0.3 4 0.4 4 0.4

Pricing 0.1 3 0.3 4 0.4 2 0.2

Operation Efficiency 0.09 2 0.18 4 0.36 3 0.27

Technology and Innovation 0.09 4 0.36 4 0.36 4 0.36

Environmental Sustainability 0.06 3 0.18 3 0.18 4 0.24

Regulatory Compliance 0.05 4 0.2 2 0.1 4 0.2

Financial Performance 0.05 2 0.1 4 0.2 3 0.15

Global Expansion 0.05 4 0.2 3 0.15 4 0.2

Total 1.00 - 2.95 - 3.58 - 3.46

Rating: 4= Major Strength 3= Minor Strength 2= Minor weakness 1=Major Weakness

CPM ANALYSIS:

The analysis evaluates critical success factors, including Safety and Security,

Customer Satisfaction, Customer Loyalty, Marketing and Branding, Service Quality,

Pricing, Operation Efficiency, Technology and Innovation, Environmental Sustainability,

33
Regulatory Compliance, Financial Performance, and Global Expansion, for three

airlines: AirAsia PH, Cebu Pacific, and Philippine Airlines. Cebu Pacific emerges as the

top performer with the highest overall total score of 3.58, excelling particularly in

Customer Loyalty, Marketing and Branding, Operation Efficiency, Pricing, and Financial

Performance. Philippine Airlines follows closely with a score of 3.46, leading in Safety

and Security, Environmental Sustainability, and Regulatory Compliance. AirAsia PH

trails with a score of 2.95. The analysis provides a comprehensive overview of the

airlines' strengths and weaknesses in key success factors.

External Factor Evaluation (EFE) Matrix

The EFE matrix process utilizes the same five stages from the IF matrix. The

initial step is to collect external factors. It is classified into two divisions which are

opportunities and threats. The second step is relegating weight to each key external

factor. The value of each weight is between in the range of 0 and 1. Zero stands for not

important factor. One implies that the factor is the most persuasive and significant one.

The sum value of all weight should be equal to 1. The third step is assigning a rating to

each key external factor. The rating should be between 1 and 4. Rating indicates how

efficient the companies present action responds towards the external factor (1 = poor

response, 2 = average response, 3 = Above average response, 4 = Superior response).

The fourth step is multiplying each key external factor weight with the rating.

It will be equal to the weighted score for each key external factor. The last step is to

34
 sum up all the weighted scores for the key external factor. This will compute all the

weighted

Weighted
OPPORTUNITIES Weight Rating
Score

1 Low Threats of new entrants (P1) 0.08 3 0.24

2 Political stability (PF2) 0.05 4 0.2

3 Population growth (SF2) 0.05 4 0.2

4 Consumer Protection law (LF3) 0.05 4 0.2

5 Technological change (TF1) 0.07 3 0.21

6 Technological awareness (TF2) 0.05 3 0.15

7 Research and development activity (TF3) 0.04 4 0.16

8 Decreasing of Unemployment Rate (EF3) 0.05 3 0.15

9 Safety Travel (SF1) 0.03 4 0.12

10 Positive Career attitude (SF3) 0.03 3 0.09

THREATS

1 Corruption (PF3) 0.07 2 0.14

2 High Inflation rate (EF2) 0.08 3 0.24

3 High Bargaining power of buyers (PF3) 0.05 3 0.15

4 Decrease of value of Peso (Exchange rate) 0.05 2 0.10

5 Threats of substitute products (PF3) 0.03 3 0.09

6 High tax percentage (SF1) 0.05 3 0.15

7 Health Consciousness (PF1) 0.04 4 016

2 High Bargaining power of Suppliers (PF5) 0.03 4 0.12

9 Gross domestic product (GDP) 0.05 3 0.15

Climate change that leads to cancellation of

10 0.05 4 0.20
flights (EF2)

35
TOTAL 1.0 3.4

scores for the organization.

In conclusion, the opportunities and threats have been assessed, taking into
account their respective weights and ratings. The total weighted score for opportunities
is 3.4. This score indicates that there are several favorable factors, such as low threats
of new entrants, political stability, and laws favorable to airlines, which could provide
opportunities for the business. On the other hand, the total weighted score for threats is
also 3.4, highlighting challenges like high inflation rate and the threat of climate change
leading to flight cancellations. It's essential for the business to leverage its strengths and
opportunities while actively addressing and mitigating the identified threats to ensure its
overall success and sustainability.

Internal Analysis

Management

● Joseph Omar A. Castillo (Chairman)

Lawyer Joseph Omar A. Castillo has been appointed as the new Chairman of the Board

for the Philippines, effective September 1. His role is crucial in steering the company's

growth. Atty. Castillo, who joined the board earlier in the year, has a wealth of

experience, having previously led the transport and business process outsourcing

practices at Puyat, Jacinto, and Santos Law firm. His expertise spans over a decade in

infrastructure, labor relations, contract support, immigration, and corporate matters.

36
AirAsia Group Executive Chairman Datuk Kamarudin Meranun expressed enthusiasm

about Atty. Castillo's appointment, citing his experience and strategic vision as valuable

assets for AirAsia during a period of significant growth. The board highlighted the

company's favorable business performance and emphasized its commitment to

prioritizing strategies for sustained growth under Atty. Castillo's leadership.

● Sheila Romero (vice Chairman)

Sheila Marie Bermudez Romero, the newly appointed chairman of AirAsia, embodies

the characteristics of a lioness — she is independent-minded, intense, loyal,

courageous, and at the same time, gracious and lively. Despite acknowledging her

husband, Rep. Michael "Mikee" Romero, as the family's primary breadwinner, Sheila

assumes the role of the primary "huntress," playing a pivotal role in maintaining

enduring family relationships and nurturing her children.

Mikee, having transferred the chairmanship of F&S Holdings to Sheila to focus on

politics, has entrusted her with significant responsibilities. As the chairman of AirAsia

Philippines, her primary objectives are to enhance revenues and elevate the overall

customer experience. AirAsia has ambitious plans, aiming to acquire seven planes

annually to open new routes and expand its market share.

The full story on Sheila Romero, along with inspiring narratives of individuals such as

Venus Tan from the Tourism Promotions Board, Dino Santos from KTM, Michael Harris

Conlin, CEO and master roaster at Henry and Sons, Vanessa Tanco from IACADEMY,

Dannah Majorocon from Lalamove, and Jardin Wong, COO of Golden Bay Fresh

37
Landholdings Inc., can be found in Asian Dragon's June-July issue, available now at

leading bookstores nationwide.

However, Ms. Romero Sold her Shares to AA com Travel Philippines as “We are

excited at the opportunity to consolidate our business enterprises, and realign them to

focus more on our core businesses in power and ports,”

● Chief Executive Officer, AirAsia Philippines

Ricardo P. Isla assumed the role of CEO for AirAsia in the Philippines in July 2019. A

graduate of the Ateneo de Manila University with a degree in Business Management,

Ricky is among the Top 5 graduates of the Basic and Advanced Management Program

at the Asian Institute Management. With over 40 years of experience in both domestic

and global operations, he has expertise in various areas such as retail and sales

distribution, business development, marketing and innovation, and general

management. Ricky has worked across diverse industries, including

telecommunications, property development, and consumer and retail companies.

Before joining AirAsia, Ricky contributed his skills and leadership to PLDT Global

Corporation Inc, a major telecommunications provider in the Philippines. Over a decade,

he played a pivotal role in leading the PLDT Group in international retail sales and

distribution, focusing on expanding the customer base, specifically targeting

telecommunications companies, retail distributors, private corporations, and government

agencies serving Filipino communities. Ricky also spearheaded the expansion of the

38
company's retail presence in regions such as Asia and the Pacific, North America, the

Middle East, and Europe.

In addition to his recent position as Regional Head of Operations for the UK and

Europe, Ricky has held General Manager roles in PLDT's international retail business in

the United States, Italy, and Singapore.

● Ronald Policarpio

Ronald D. Policarpio is a partner in the Banking & Finance department, where his

legal practice revolves around banking and finance, corporate law, and securities. He

specializes in providing guidance on legal and regulatory issues to both local and

foreign clients involved in a broad spectrum of commercial activities. These activities

span various sectors, including banking, finance, insurance, securities, investments,

real estate, utilities, manufacturing, pre-need, healthcare, and business process

outsourcing.

Ronald takes a leading role in various special projects across different industries.

His representation of clients extends to transactions and dealings with regulatory bodies

such as the Bangko Sentral ng Pilipinas, Securities and Exchange Commission,

Insurance Commission, Bureau of Internal Revenue, Department of Finance, Philippine

Economic Zone Authority, Board of Investments, Department of Environment and

39
Natural Resources, as well as other government agencies, local government units, and

self-regulatory organizations.

Within his capacity, Ronald engages in providing transactional advice,

participating in negotiations, and preparing relevant legal documents.

● Kamarudin Bin Meranun

Kamarudin bin Meranun, a Malaysian entrepreneur, currently serves as the Chairman of

AirAsia and holds the position of CEO at the Tune Group. Between 1988 and 1993,

Kamarudin was employed as a Portfolio Manager at the Arab-Malaysian Merchant

Bank. In 1994, he transitioned to Innosabah Executive Management, where he

assumed the role of executive director.

His journey with AirAsia began in 2001 when he was appointed as a Director, followed

by his promotion to Executive Director in 2004 and Deputy CEO in 2005. In 2012, he

took on the additional responsibility of Treasurer. Later in the same year, Kamarudin

transitioned to the role of Director, eventually becoming the Chairman of AirAsia in

2013, a position he continued to hold as of 2016. In 2015, he was appointed as the

CEO of AirAsia X.

Beyond his involvement in the aviation industry, Kamarudin bin Meranun is also a board

member of the Queens Park Rangers Football Club.

● Pattra Boosarawongse

40
Pattra Boosarawongse joined AirAsia in March 2014 as the Chief Financial Officer for

AirAsia Thailand and Asia Aviation PCL. Her exemplary performance led to her

appointment as the Group Chief Financial Officer on September 1, 2016. In this

relatively short period, she has demonstrated notable achievements in both financial

and operational aspects, particularly within the Finance Department of our Thai affiliate

and the company.

As the Group CFO, Pattra holds responsibility for Group Finance, Group Strategy,

Group Treasury, Group Investor Relations, and Group Procurement. Additionally, she

oversees AirAsia Global Shared Services (AGSS), our shared service unit located in

Penang. Pattra is a Certified Public Accountant, starting her career as a senior auditor

at Ernst & Young. She later joined Sony Music as Finance Director, progressing to the

role of General Manager. While there, she took on a regional leadership position to

implement a new financial system across ten countries.

In 2013, Pattra played a crucial role in the merger of Sony Music with BEC TERO and

subsequently led the BEC TERO music department. She holds a master’s in finance

and accounting from Thammasat University in Thailand.

As stated above, People from president to CEO being put to that position is because of

the specialization and qualities they can provide to have a better management for

AirAsia.

AirAsia PH management shows how competitive and Show strength and opportunities

they can provide for AirAsia Ph and its employees. These things can conclude that

41
AirAsia PH has a strong and willed mindset to give and provide quality services and

Provide quality care for its employees.

Marketing

The overall branding of AirAsia makes it clear who their target demographic is.

The people they are trying to reach are travelers looking for cheap airfares. These

individuals range from those who previously couldn't afford to travel to corporate

workers whose companies are eager to fly them while reducing costs. Simply said, the

customers who are most motivated by price and ease of use are AirAsia's target market.

By associating their brand with inexpensive services, they have successfully targeted

this market. Excellent brand positioning has made this feasible. The low-cost posture of

AirAsia is pretty obvious. The company's constant communication through numerous

marketing platforms has made this possible. "Now Everyone Can Fly" serves as the

brand's tagline. As one of the most practical, it is therefore well known in its market.

AirAsia has developed its marketing strategy and established a reputation in the market

thanks to its effective STP (segmentation, targeting, and positioning). Let's analyze the

rivals of AirAsia to better understand them.

● Product

- Cebu Pacific has 36 domestic destinations, including Manila, Cebu, Davao, Iloilo,

and Clark

42
 - AirAsia Philippines flies from Manila to 11 domestic destinations which include

Bacolod, Bohol, Caticlan, Cagayan De Oro, Cebu, Davao, Iloilo, Kalibo, Puerto

Princesa, Roxas, and Tacloban.

- Philippine Airlines has 33 domestic flights including Manila, Antique, Bacolod,

Basco and many more.

Therefore, it is a weakness to AirAsia Philippines because its only limited to 11

destinations while their competitors have more domestic flights which concludes more

profit or income.

● Price

Therefore, it is a weakness because Cebu Pacific offers the lowest or cheapest price.

Both Cebu Pacific and AirAsia prioritize promotional offers and discounts. Cebu Pacific

often provides discounts on its base fare. Currently, the airline offers a minimum base

rate of ₱499 for foreign travel. Additionally, there is a fixed fee of ₱88 for certain local

locations. Significantly, Cebu Pacific provides Piso Fare, a promotional deal that

solidified the airline's standing in the budget flight sector. AirAsia typically provides a

50% reduction on specific flights. At now, it is possible to reserve both domestic and

43
international flights at a single direction base ticket of ₱156. Additionally, it provides a

discount of 15% on all airline bookings. Please be aware that promotions and discounts

are subject to periodic changes. However, be confident that they are consistently

present. We recommend subscribing to the airlines' email in order to receive

notifications about impending deals. In general, we perceive Cebu Pacific's offers to be

significantly more cost-effective. If you have made reservations for flights with both

Cebu Pacific and AirAsia, you may have noticed that AirAsia's pricing can occasionally

be extremely high. In addition, AirAsia includes the flights of more expensive airlines,

such as Cathay Pacific and Emirates, in its listings. However, the total expense of your

journey will ultimately be determined by your chosen location and the charges levied by

the airline.

44
45
 ● Physical Evidence

Cebu Pacific: DOMESTIC

Fleet Size: 70 aircraft

Composition: Includes a mix of Airbus A320-family jets, A330s, and ATR 72

turboprops..

Philippine Airlines: DOMESTIC

Fleet Size: 75 aircraft

Composition: Specific details about the aircraft types are not provided.

AirAsia Philippines: DOMESTIC

Fleet Size: 25 aircraft

Composition: Primarily Airbus A320s.

It is a weakness because it cannot accommodate more guest like Cebu Pacific and

Philippine Airlines.

● Place

Cebu Pacific offers 36 domestic destinations, including Manila, Cebu, Davao,

Iloilo, and Clark

46
 AirAsia Philippines offers 11 domestic destinations which include Bacolod, Bohol,

Caticlan, Cagayan De Oro, Cebu, Davao, Iloilo, Kalibo, Puerto Princesa, Roxas, and

Tacloban.

Philippine Airlines offers 33 domestic flights including Manila, Antique, Bacolod,

Basco and many more.

● Promotion

AirAsia had limited promotions here in the Philippines since the main company is

from Malaysia and AirAsia is focused on international flights. AirAsia also has limited

flight destinations here in the Philippines, so their promotions are low and need

attention.

● Process

AirAsia is a low-cost carrier, which is why they aim to maintain short transit time

for boarding and disembarking. Their check-in, boarding and loading always has a short

time process because they utilize advanced technology and work efficiently. They also

only have a single hub for pilot and cabin crew, which makes them work efficiently

because they do not have to spend extra cost on the accommodation and expenses of

their pilots and cabin crews.

47
 ● People

AirAsia is well-known in the industry for how they treat they employees and

customer, they also use direct service development strategy which allows the

employees to be treated as an essential part of the organization. They provide their

employees trainings and motivational lectures so that they can maintain their positions

for a long time and AirAsia also ensures that they image is maintained by choosing the

right employees that possess the right capabilities fit for their company.

Management Information System

Last November 11 and 12 of 2022, Air Asia announced a data

breach. The use of an unapproved party led to the breach. USB device to

transfer files that contain personal information’s including names,

passports, numbers, flight details and contact numbers. AirAsia notifies all

affected passengers in accordance to General Data Protection Regulation

(GDPR). Approximately 2 million of their passengers was stolen their

information. Sophisticated phishing attacks may target employees,

highlighting the urgent need for cybersecurity awareness training in

contemporary institutions. To address this, Condition Zebra has partnered

with KnowBe4 to offer organizations current security awareness training. A

48
security lapse led to hackers gaining entry to essential staff and passenger

information in the Air Asia system. Exploiting a vulnerability in two online-

exchanged files, they have initiated the release of information. Malaysia’s

Communications and Digital Minister, Fahmi Fadzil, cautions all data users

to exercise increased vigilance and regularly enhance cybersecurity

measures for their information and computer infrastructure.

FINANCIAL AND ACCOUNTING

49
50
51
CURRENT RATIO

2021 Current Assets Current liabilities

654,435 36,656,855

=1.7%

2022 Current assets Current liabilities

1,220,712 3,857,940

=31%

In 2021 and 2022, AirAsia's current ratio increased from 1.7% to 31%, demonstrating

better liquidity. To determine its reasonable extent and financial health, additional

research is necessary as this could indicate excess investment in current assets or a

change in financial health.

PROFIT MARGIN

2021 33,675,158

Net Profit

52
Net Sales 1,132,624 =29.7%

2022 Net Profit Net Sales

33,282,611 825,860

=40.3%

Improved revenue was indicated by the company's profit margin, which increased from

29.7% in 2021 to 40.3% in 2022. It is necessary to conduct an accurate evaluation that

takes into account sales growth. Given that the pandemic affects the whole industry,

this indicates that AirAsia needs to implement certain strategies to maintain an effective

income cycle.

RETURN ON EQUITY

2021 Net Profit Ave. Stockholders

Equity
33,675,158
33,567,101

=1%

2022

Net Profit

53
33,282,611 285,203

Ave. Stockholders =116%

Equity

From 1% in 2021 to 116% in 2022, the company's profitability increased dramatically,

indicating the need for further research and evaluation. The return of shareholders is 1
in the year of 2021 to 116% in 2022 peso, showing that AirAsia’s efficiency in managing
its assets is a success.

In conclusion, although the financial indicators demonstrate positive trends, the

influence of outside variables, and the particular tactics adopted by AirAsia is essential.

The effects of the pandemic on the aviation industry grows issues and highlights the

importance of strategic planning in order to maintain and improve the financial

performance of AirAsia company.

Operations and Human Resource

- Health, Safety, Nature, and Environment

AirAsia strictly complies with the rules and regulations established by the aviation

authorities in the countries in which it conducts its operations. This encompasses

adherence to safety standards and protocols prescribed by international entities like the

International Civil Aviation Organization (ICAO). AirAsia diligently upholds a fleet of

54
aircraft that is comparatively young and adheres to tight maintenance schedules in

order to guarantee its safety. To ensure the optimal condition of their aircraft, regular

inspections, service, and repairs are conducted. AirAsia employs pilots that possess

extensive training and experience and are subjected to tough training programs and

regular examinations. The individuals comply to established protocols and principles to

ensure the safety of aircraft operations. AirAsia has successfully adopted Safety

Management Systems (SMS), encompassing proactive safety risk management,

incident reporting and investigation, and safety performance monitoring. These

technologies facilitate the identification of potential hazards and risks, hence enabling

the implementation of proactive interventions.

AirAsia has implemented a comprehensive set of emergency response protocols to

effectively manage a range of scenarios, encompassing medical emergencies,

equipment faults, and security concerns. The provided plans outline the requisite

protocols aimed at safeguarding the security and welfare of both passengers and crew

members. AirAsia cultivates a culture that prioritizes safety among its workforce,

underscoring the significance of safety across all facets of its operational activities. The

organization promotes the reporting of safety concerns and offers suitable training and

support to ensure the maintenance of a heightened degree of safety consciousness.

The AirAsia airline has been associated with just one fatal incident. The year 2014

witnessed the unfolding of a significant incident. Incidences of injuries related to AirAsia

aircraft have been infrequent, with few exceptions.

55
 - On – Time Performance (OTP)

The OTP (On-Time Performance) data pertains to the extent of punctuality exhibited by

AirAsia flights in relation to their planned schedule. The timeliness of a flight is

determined by its departure from the gate within a 15-minute window of the scheduled

departure time, sometimes referred to as D-15. Data is gathered for each airline on a

month-to-date basis.

The metrics of Flights Scheduled and Flights Completed provide insight into the number

of flight cancellations experienced by each airline throughout the current month.

56
 - Different Categories of Employee Training

AirAsia cabin crew undergo regular training sessions, which occur on a yearly basis.

These training sessions involve a variety of activities, including written and practical

examinations, as well as simulations of emergency scenarios. The purpose of these

training sessions is to provide the cabin crew with the necessary skills and knowledge to

effectively handle challenging situations in a methodical and composed manner.

In addition, as a routine procedure of AirAsia, the cabin crew engage in a

comprehensive briefing on safety protocols before to every flight. The airline's

Document structure serves as a platform for posting first aid and safety reports, which

can be conveniently accessed through mobile devices at any given moment.

- Employee Engagement

AirAsia continues to keep morale up despite pandemic restrictions and Working from

Home. We recognize that engaged employees are more invested in a company, feel a

greater sense of belonging and are more inspired to perform their best.

During the year, we had most of our employee engagement online which included

Allstars on Air it is a weekly programme on Workplace Live to share group updates,

connect Allstars to CEOs and share what other teams have been doing.

57
 - Allstars WFH Survey

A survey was sent to all non-operations Allstars across the Group on 16 May 2021 to

gauge their WFH experience. Responses were received from 62% of Allstars with 83%

noting an easy transition to Working from Home, 95% feeling engaged and informed

and only 14% feeling productivity was impacted due to hibernation. The respondents

also provided feedback on how their remote working experience could be improved.

58
Research and Development

The sudden emergence of the Covid-19 drastically heightened the health and

safety consciousness of everyone wherein people nowadays only avail themselves of a

product and service when they see or ensure that these are safe to use or consume.

Thankfully, AirAsia was able to respond quickly to this pandemic and innovated their

services. In 2020, AirAsia implemented new health and safety policies and procedures

such as temperature checks, social distancing, wearing of face mask, placing of

sanitizers all throughout the terminals and frequent sanitization of aircraft. AirAsia did

not also fail to recognize the great emotional or mental stress that the pandemic can

give to its Allstars (AirAsia employees) that’s why they invested to various channels

such as the “Allstar Peer Support”; provides emotional support to the employees who

experience distressing events onboard, and “Allstar Health Coach”; an online interactive

and educational program that provides professional coaching, financial planning, food

photo journaling, and online health assessments. About 2,000 AirAsia employees

signed up to these programs by the end of 2020. Also, wellness webinars and

workshops were held for their employees.

In addition to their pandemic response, AirAsia expanded their services through

launching various contactless technologies to further improve their services and make

59
flying safe. They invested technologies called SCAN2Fly; where guests can scan and

upload their medical certificates required during online-check-in process, FACES; the

very first facial recognition that AirAsia developed for their customers to have a

contactless travel experience, and lastly the Passenger Reconciliation System (PRS);

allows their guest to scan their boarding passes to limit or eliminate a customer to

employee contact from the time they check-in until they board the aircraft. AirAsia made

these possible by investing in efficient and effective technologies and by partnering to

large companies such as Google, GE, and Oracle that are now creating digital products

and systems at the AirAsia Software Engineering & Technology Centre in Bengaluru,

India.

Alongside the numerous service enhancements introduced by AirAsia, they have

recently unveiled the AirAsia Super App, now known as AirAsia MOVE. This travel and

lifestyle platform enables users to reserve flights, accommodations, transportation,

order food, book ride-hailing services, purchase duty-free products, and much more. It

was first launched in October 2020 in Malaysia and was launched in the Philippines last

April 2022. The efficiency and effectivity of this app was even further proved when it

was declared as the “Asia’s Best Travel Booking App” at the World Travel Tech

Awards 2023. The app also got the awards “World's Best Low-Cost Airline App” and

“World's Best Low-Cost Airline Website”.

60
David’s Checklist

Management

1. Does the firm use strategic management concepts? yes

2. Are company objectives and goals measurable and well yes
communicated?
3. Do managers at all hierarchical levels plan effectively? yes
4. Do managers delegate authority well? yes
5. Is the organization’s structure appropriate? yes
6. Are job descriptions and job specifications clear? yes
7. Is employee morale high? yes
8. Are employee turnover and absenteeism low? yes
9. Are organizational reward and control mechanisms effective? yes

Marketing
1. Are markets segmented effectively?
yes
2. Is the organization positioned well among competitors?
no
3. Has the firm’s market share been increasing?
no
4. Are present channels of distribution reliable and cost effective?
yes
5. Does the firm have an effective sales organization?
no
6. Does the firm conduct market research?
yes
7. Are product quality and customer service good?
yes
8. Are the firm’s products and services priced appropriately?
yes
9. Does the firm have an effective promotion, Advertising, and
publicity strategy? no
10. Are marketing, planning, and budgeting effective?
no

61
11. Do the firm’s marketing Managers have adequate experience and
training? yes
12. Is the firm’s Internet presence excellent as compared to rivals?
no

Finance and Accounting

1. Is the firm financially strong and weak as indicated by financial ratio
analysis? Yes

2. Can the firm raise needed long-term capital through debt and/or equity?
Yes
3. Does the firm have sufficient working capital?
Yes
4. Are capital budgeting procedures effective?
Yes
5. Are dividend payout policies reasonable?
Yes
6. Does the firm have good relations with its investors and stockholders?
Yes
7. Are the firm’s financial managers experienced and well trained?
Yes
8. Is the firm’s debt situation excellent?
No

Production and Operations

1. Are supplies of raw materials, parts, and subassemblies reliable and yes
reasonable?
2. Are facilities, equipment, machinery, and offices in good condition? yes
3. Are inventory-control policies and procedures effective? yes
4. Are quality-control policies and procedures effective? yes
5. Are facilities, resources, and markets strategically located? yes
6. Do the firms have technological competencies? yes

Research and Development

1. Does the firm have R&D facilities? Are they adequate? yes
2. If outside R&D firms are used, are they cost-effective? yes
3. Are the organization’s R&D personnel well qualified? yes
4. Are R&D resources allocated effectively? yes

62
5. Are management information and computer systems adequate? no
6. Does the firm have technological competencies? no

Management Information System

1. Do all managers in the firm use the information system to make decisions? Yes

2. Is there a chief information officer or director of information systems position in Yes

the firm?

3. Are data in the information system updated regularly? Yes

4. Do managers from all functional areas of the firm contribute input to the Yes
information system?

5. Are there effective passwords for entry into the firm's information system? No

6. Are strategists of the firm familiar with the information systems of rival firms? Yes

7. Is the information system user friendly? Yes

8. Do all users of the information system understand the competitive advantages Yes
that information can provide firms?

9. Are computer training workshops provided for users of the information Yes
system?

10. Is the firm's information system continually being improved in content and Yes
user friendliness?

63
 Internal Factor Analysis

Key Internal Factor Weigh Rati Weighte

t ng d
Scores
STRENGTHS
1. They have a goal to be a low-cost short haul airline in every market 0.05 2 0.1
2. AirAsia provide a Weekly Program Called AirAsia on Air for 0.05 2 0.1
Employee’s Engagement under Allstar program.
3. Adheres to Civil Aviation Organization tight maintenance to 0.04 3 0.12
guarantee safety.
4. Annual cabin staff practical, written examination and training 0.04 3 0.12
sessions.
5. Introduced and currently utilizing contactless and easy transaction 0.04 4 0.16
such as Scan2Fly, FACES, and PRS.
6. They Conduct Market Research to provide and achieve their goal 0.07 3 0.21
being the lowest fare cost
7. AirAsia provides seminars and training for their employees 0.1 3 0.3
8. Strategists in the firm are familiar with the rival's information system 0.04 3 0.12
9. Has a well-trained and effective employee 0.04 4 0.16
10. AirAsia demonstrates effective capital budgeting 0.04 2 0.8
WEAKNESS
1. The firm's passwords for entry are poor and not effective 0.07 3 0.21
2. Has weak MIS Security (MIS) 0.04 3 0.12
3. Has a low Market Share 0.05 3 0.15
4. AirAsia does not offer an adequate number of domestic flights 0.06 4 0.24
5. AirAsia’s marketing efforts are insufficient in promoting their company 0.04 3 0.12
6. Market Share is decreasing 0.07 0.28
4
7. The firm’s debt situation is below the average level 0.07 3 0.21
8. The organizations competitive standing may be invalid 0.03 2 0.06
9. AirAsia’s domestic flight has cheaper alternative 0.03 3 0.09
10. Offers fewer domestic flights as compared to competitors 0.03 4 0.12
TOTAL 1.0 3.79

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Analysis:

The total weighted score of 3.79 indicates that AirAsia has more strengths than

weaknesses based on the factors considered in this analysis. However, it's crucial for the

company to address the identified weaknesses, especially those related to security, market

share, and marketing efforts. Continuous improvement in these areas, coupled with leveraging

existing strengths, will be essential for sustained success in the highly competitive airline

industry.

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SWOT MATRIX

Strength Weaknesses

 They have a goal to be a low-cost  The firm's passwords for entry are
short haul airline in every market. poor and not effective.
 AirAsia provide a Weekly Program  Has weak MIS Security (MIS).
Called AirAsia on Air for  Has a low Market Share.
Employee’s Engagement under  AirAsia does not offer an adequate
Allstar program. number of domestic flights.
 Adheres to Civil Aviation  AirAsia’s marketing efforts are
Organization tight maintenance to insufficient in promoting their
guarantee safety. company.
 Annual cabin staff practical, written  Market Share is decreasing.
examination and training sessions.  The firm’s debt situation is below the
 Introduced and currently utilizing average level.
contactless and easy transaction  The organizations competitive
such as Scan2Fly, FACES, and standing may be invalid.
PRS.  AirAsia’s domestic flight has
 They Conduct Market Research to cheaper alternative.
provide and achieve their goal  Offers fewer domestic flights as
being the lowest fare cost. compared to competitors.
 AirAsia provides seminars and
training for their employees.
 Strategists in the firm are familiar
with the rival's information system.
 Has a well-trained and effective
employee.
 AirAsia demonstrates effective
capital budgeting.
Opportunity Threat

 Low Threats of new entrants  Corruption

 Political stability  High Inflation rate
 Population growth  High Bargaining power of buyers
 Technological change  Decrease of value of Peso
 Consumer Protection law  Threats of substitute products
 Technological awareness  High tax percentage
 Research and development activity  Health Consciousness
 Decreasing of Unemployment Rate  High Bargaining power of Suppliers
 Safety Travel  Gross domestic product
 Positive Career attitude  Climate change that leads to
cancellation of flights

66
Space Matrix

● -1= high stable to -7= Highly unstable (SP, CP)

● +1= Worst to +7=Best (FP, IP)

Financial Position (F.P) (Internal) Stability Position (S.P) (External)

1. Cash Flow 6 1. Technological Change -2
2. Working Capital 5 2. Technological Awareness -2
3. Liquidity 5 3. Decreasing of Unemployment Rate -1
4. Return on Investment (ROI) 2 4. Research and Development of -2
Activity
Average 4.5 Average -1.75

Total axis Y score: 2.75

Competitive Position (C.P) (Internal) Industry Position (I.P) (External)

1. Market Share -7 1. Profit Potential 5
2. Product Quality -3 2. Growth Potential 4
3. Technological know-how -2 3. Resource Utilization 6
4. Capacity Utilization -5 4. Ease of entry into Market 3
Average -4.25 Average 4.5
Total axis X score: 0.25

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 (0.25,2.75)

On the Y axis, the result of the Financial Position Average is 4.5 while the Stability

Position Average is -1.7.5. When combined, the Y axis resulted in 2.75. On the X axis, the

Competitive Position Average is --4.25 while the Industry Position Average is 4.5, therefore, the

X axis resulted in 0.25. The Internal Strategic Dimension is in Aggressive.

68
 STRATEGIC ALTERNATIVES
1 2
Market Development Market Penetration
Key Factors

OPPORTUNITIES Weight AS TAS AS TAS

Low Threats of new entrants 0.08 1 0.08 1 0.08

Political stability 0.05

Population growth 0.05 2 0.10 1 0.05

Consumer Protection law 0.05

Technological change 0.07 1 0.07 1 0.07

Technological awareness 0.05 3 0.15 2 0.10

Research and development activity 0.04 2 0.16 1 0.04

Decreasing of Unemployment Rate 0.05 1 0.05 1 0.05

69
Safety Travel 0.03

Positive Career attitude 0.03

THREATS

Corruption 0.07

High Inflation rate 0.08

High Bargaining power of buyers 0.05

Decrease of value of Peso 0.05

Threats of substitute products 0.03

High tax percentage 0.05

Health Consciousness 0.04

High Bargaining power of Suppliers 0.03

Gross domestic product 0.05

Climate change that leads to cancellation of

0.05
flights

TOTAL 1.0 0.61 0.39

STRATEGIC ALTERNATIVES
1 2
Market Development Market Penetration
Key Factors

Strengths Weight AS TAS AS TAS

They have a goal to be a low-cost short haul

0.05
airline in every market

70
AirAsia provide a Weekly Program Called
AirAsia on Air for Employee’s Engagement 0.05 1 0.05 1 0.05
under Allstar program.
Adheres to Civil Aviation Organization tight
0.04
maintenance to guarantee safety.
Annual cabin staff practical, written 2 0.08 2 0.08
0.04
examination and training sessions.
Introduced and currently utilizing contactless
and easy transaction such as Scan2Fly, 0.04
FACES, and PRS.
They Conduct Market Research to provide
and achieve their goal being the lowest fare 0.07
cost
AirAsia provides seminars and training for 2 0.2 3 0.3
0.1
their employees
Strategists in the firm are familiar with the
0.04
rival's information system
Has a well-trained and effective employee 0.04 2 0.08 3 0.12

AirAsia demonstrates effective capital 2 0.08 2 0.08

0.04
budgeting
WEAKNESS
The firm's passwords for entry are poor and 3 0.21 4 0.28
0.07
not effective
Has weak MIS Security (MIS) 0.04 3 0.12 4 0.16

Has a low Market Share 0.05 4 0.20 4 0.20

AirAsia does not offer an adequate number of 4 0.24 2 0.08

0.06
domestic flights
AirAsia’s marketing efforts are insufficient in
0.04
promoting their company
Market Share is decreasing 0.07 4 0.28 3 0.21

The firm’s debt situation is below the average

0.07
level
The organizations competitive standing may
0.03
be invalid
AirAsia’s domestic flight has cheaper
0.03
alternative

71
 Offers fewer domestic flights as compared to 4 0.12 2 0.06
0.03
competitors
TOTAL 1.0 1.66 1.62

STRATEGY AND OBJECTIVES

After a thorough analysis as to the position of the company in the market.

The company aims to achieve the following objectives:

a. To add more domestic flights.

b. To tighten their technological security

c. To increase promotion advertisement domestically.

COURSES OF ACTION

We recommend the following alternative courses of action to meet the objectives of the

company and concentrate more on the following strategically.

Market Development: to develop new locations, to add more domestic

flights, to add more promotion and advertisement domestically.to have a firm

and strong security system where it can adhere to malicious malware in the

future.

72
 Action Plan

Strategic Objectives Action Plan Lead Timeline Budget

Person/Unit
To add more domestic flights Conduct a comprehensive Marketing 2024-2025 1 billion
market analysis to identify Manager
high-demand routes and
potential underserved
markets within the
Philippines.
Evaluate the current fleet Marketing 2024-2025 1,000,000
and assess the need for Manager
additional aircraft to support
increased domestic
operations.
Optimize existing routes and Marketing 2024-2025
schedule to maximize Manager
efficiency and minimize
operational costs.
Work closely with airports to Marketing 2024-2025
streamline processes, Manager
reduce turnaround times,
and improve overall
operational efficiency.
Collect and analyze Marketing 2024-2025 100,000
customer feedback to Manager
understand preferences and
expectations, ensuring that
new flights align with market
demands.

73
To tighten their technological Conduct a thorough Technical January - June 100,000
assessment of the current Manager 2024
security technological infrastructure
to identify potential
vulnerabilities.
Partner with cybersecurity Technical January - June 100
experts to implement the Manager 2024 million
latest security measures,
including encryption,
firewalls, and intrusion
detection systems.
Provide comprehensive Technical January - June 500,000
cybersecurity training to all Manager 2024
employees to enhance
awareness and ensure
adherence to security
protocols.
Implement regular security Technical January - June 300,000
audits and vulnerability Manager 2024
assessments to identify and
address any emerging
threats promptly.
Develop and regularly Technical January - June
update an incident response Manager 2024
plan to minimize the impact
of any potential security
breaches.
To increase promotion Develop targeted marketing Marketing January - March
advertisement domestically campaigns focused on key Manager 2024
domestic markets,
highlighting special
promotions, discounts, and
new routes.
Leverage digital channels, Marketing January - March
including social media, email Manager 2024
marketing, and online
advertising, to reach a wide
audience and increase
brand visibility.
Form partnerships with local Marketing January - March 1,000,000
businesses, travel agencies, Manager 2024
and tourism boards to
amplify promotional efforts
and reach a broader
audience.
Enhance and promote Marketing January - March 1,000,000

74
 customer loyalty programs Manager 2024
to encourage repeat
business and foster brand
loyalty.
Utilize data analytics to track Marketing January - March
the effectiveness of Manager 2024
promotional campaigns and
make data-driven
adjustments to maximize
ROI.

References:

https://www.airasia.com/aa/about-us/en/gb/airasia-philippine-organizational-
structure.html
https://www.airasia.com/aa/inflight-comforts/en/gb/seats.html
https://aviationforaviators.com/2022/02/16/a-brief-history-of-the-airasia-group/
https://newsroom.airasia.com/news/airasia-welcomes-new-board-chairman-in-the-
philippines#gsc.tab=0
https://newsroom.airasia.com/news/2022/1/3/airasia-philippines-optimistic-of-improved-
2022-performance-shares-forecast-on-local-aviation#gsc.tab=0
https://ph.indeed.com/cmp/Airasia/reviews
https://www.moneymax.ph/personal-finance/articles/cebu-pacific-vs-airasia
https://support.airasia.com/s/article/Airports-and-Terminals?language=en_GB
https://newsroom.airasia.com/ops-stats#gsc.tab=0
https://airasiainformationsystem.weebly.com/company-background.html#:~:text=Air
%20Asia%20has%20carry%20out,resource%20planning%20(ERP)%20system.
https://www.nst.com.my/business/2020/04/588567/cost-cutting-save-least-30pct-airasias-
expenses#:~:text=The%20measures%20include%20a%20voluntary,Kamarudin%20in%20a
%20statement%20today
https://www.planespotters.net/airline/Philippine-Airlines?refresh=1
https://www.airasia.com/flights/philippines
https://www.philippineairlines.com/
https://www.cebupacificair.com/

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