Air Asia: External Influences

This article analyzes the external influences on Air Asia using PESTEL analysis. It covers factors such as international competition, political issues, economic factors, socio-cultural aspects, technological advancements, environmental factors, and legal framework. The article also discusses present and future customers, competitors, opportunities, and threats for the organization.

Running head: AIR ASIA: EXTERNAL INFLUENCES
AIR ASIA: EXTERNAL INFLUENCES
Name of the Student
Name of the University
Author Note

1AIR ASIA: EXTERNAL INFLUENCES
PESTEL Analysis
AirAsia can be affected by many external factors. The factors are assessed in regards to
how much they can affect the company.
International Competition
International competition is a significant force that can affect the business of Air Asia.
The competition in the South East Asian Zone is mainly from Garuda Indonesia and Malaysian
Airlines. However, outside of the South East Asian zone, the company has strong competition
from other well established or growing low cost airline services. This include Indigo, Jet
Airways, Thai Airlines and other growing airline companies. Low cost airline services are
growing in the exact markets that are targeted for future growth of Air Asia. This is a significant
factor that can affect the business of Air Asia.
Political
The company is headquartered in Malaysia but has to fly to various international
destinations. The political issues that can affect the organization is related to international
agreements (Bowen Jr 2016). Moreover, there is significant underdevelopment in the low cost
airline services in the south East Asia. Terrorism is also a major threat. Hence, the effect of
political factor can be high on Air-Asia.
Economic
Air Asia offers cheap prices to the customers (Airasia.com 2019). This is a significant
advantage that it gains over main competitors Malaysian Airlines. Another significant factor that

2AIR ASIA: EXTERNAL INFLUENCES
can affect Air Asia is the cost of petroleum. The cost of petroleum is rising in Malaysia and can
end in the company bearing heavy fuel costs (Hirsh 2017).
Socio-Cultural
The socio cultural aspects that can affect the airlines is the reluctance of customers to use
low cost airlines for journeys that are long haul. Moreover, concerning the Malaysian passengers,
most people do not want to board flights that are no frills. There has been past incidences in Air
Asia where SARS have affected the passengers and the company has ever since followed strict
safety guidelines (Airasia.com 2019). Culturally, Air Asia accepts and promotes diversity and is
favored by people irrespective of cultural inclinations. Despite the past issues, the fact that the
company has made aviation affordable contributes to its popularity among consumers.
Technological
The company is offering services that provide all round services, starting from air travel,
to airport transport facilities to accommodation. Hence, it is technologically effective in
providing optimal levels of services to the customers. The company also offers online booking
services through which all kinds of services can be booked online. Moreover, the company also
offers SMS booking services and provides an updated mobile application to customers. The
company is technologically reliable and is stable in regards to this factor. The technology used is
at par with the competitors.
Environmental
The company is planning to use more eco-friendly technology in the future. Hence, Air
Asia can be said to be focused towards achieving sustainability. The demographic environmental

3AIR ASIA: EXTERNAL INFLUENCES
factors can affect the performance of the organization. The effect can be greatly positive and help
the organization to grow further. This factor is not very significant concerning AirAsia.
Legal
Legally, the company is bound by the aviation laws of Malaysia. The government of
Malaysia lacks clear documentation of the laws of commercial aviation. The government
however has taken steps to improve the legal framework for controlling Aviation and the laws
favor organizations like AirAsia.
Hence, it can be said that International competitive, Political and economic factors can
pose significant threats for the organization.
Present and Future customers
Air Asia operates flights across 165 destinations that cover 25 countries (Airasia.com
2019). The growth of Air Asia in South Asia is imminent. However, despite the expansion that is
taking place, there is a huge competition. Jet Airways, Indigo airlines and Thai airways are
strong competitors in this market. Presently the company is providing services across the South
East Asian countries. This is a significant market presently and the customer base it has garnered
across Malaysia and the neighboring countries.
The future consumers of the company are in countries of the South Asia and the growing
number of travel enthusiasts in Malaysia. The company has to capitalize on the growing number
of business tours that are happening between Malaysia and the South Asian countries, especially
India, Bangladesh and Sri Lanka. As mentioned previously there is a growing number of travel
enthusiasts in Malaysia. The company can utilize this growing customer base to attain greater

4AIR ASIA: EXTERNAL INFLUENCES
future profitability. The changing preferences of the customers can be addressed through
innovative methods.
Present and Future competitors
Malaysia Airlines are currently the largest competitors of Air Asia. The other principal
competitors are Tigerair, Jetstar, Sri lanka Airlines, Thai Airways and Indigo. Among the
competitors the largest are Malysia Airlines and Thai Airways. This is because these airlines
provide services that are similar in nature. A significant competitor can also be Garuda Airlines
due to its rising influence in south East Asia. The present competition is good, however, the chep
process that are offered by Air Asia serves to provide it with competitive edge.
The future can provide a greater competitive environment for the organization. This is
especially as Malaysia Airlines is making huge investments towards a restructuring program.
Indigo can become a strong international competitor of Air Asia. Airlines like Jetstar and Silkair
are focusing on providing similar services like AirAsia. In the future these companies can
provide tougher competition.
Opportunities and threats
Opportunities
The opportunity is to capitalize on the market of South Asia (Wong, Fujita and Lo 2019).
In this regards the largest competitors are Indigo and Jet Airways. It is important that the
organization takes part in better marketing in these areas. Moreover, the company can greatly
capitalize on the growing number of people that are availing flights. The south Asian market and
the Philippine market of the company has huge growth potential.

5AIR ASIA: EXTERNAL INFLUENCES
Threats
The threats can definitely be said to be the political environment across the world and the
rising fuel prices across the south East Asia. Moreover, the emergence of newer organizations
have made it important that the company takes innovative measures. The markets with growth
potentials already have new organizations that are entering which can make it further difficult for
the company in the future. Thai Airlines are increasing their consumer base along with Indigo
and Jet airways. It is important that the competitive threats, the political threats and the economic
threats are considered significantly by the organization.

6AIR ASIA: EXTERNAL INFLUENCES
References
Airasia.com. (2019). [online] Available at: https://www.airasia.com/booking/home/en/gb?
gclid=EAIaIQobChMIgI2L04bX4AIVU7aWCh3mdwwoEAAYASAAEgJHSvD_BwE&gclsrc=
aw.ds
Bowen Jr, J.T., 2016. “Now everyone can fly”? Scheduled airline services to secondary cities in
Southeast Asia. Journal of Air Transport Management, 53, pp.94-104.
Forsyth, P. (2016). Tourism and aviation policy: exploring the links. In Aviation and
Tourism (pp. 103-112). Routledge.
Hirsh, M. (2017). Emerging infrastructures of low-cost aviation in Southeast
Asia. Mobilities, 12(2), 259-276.
Ong, H.C., Mahlia, T.M.I. and Masjuki, H.H., 2012. A review on energy pattern and policy for
transportation sector in Malaysia. Renewable and Sustainable Energy Reviews, 16(1), pp.532-
542.
Wong, A., Fujita, A. and Lo, B. (2019). AirAsia has a 'master plan.' Here's what its CEO says is
in it. [online] CNBC. Available at: https://www.cnbc.com/2018/03/20/airasia-has-a-master-plan-
heres-what-its-ceo-says-is-in-it.html