PESTEL Analysis on Airasia

Airasia is a low cost Malaysian airline that operates scheduled international and domestic flights. It is the largest no frill, low fare airline in Asia and it was the first airline to implement ticketless travel in the region. This analysis breaks down the external influences that affect the company and the strategy it used in order to get the most from the same.

Political

It has proven difficult to fly outside Malaysia and this is because of bilateral agreement which is a major obstacle in the path of carriers that charge low costs such as Airasia. Another influencing factor is landing charges which have led to underdevelopment as the aviation market remains tightly regulated by air rights agreements. Other political factors that affect this airline include:

• Disagreement about the uniform worn by the hostess with the UMNO members preferring one that is more ‘Islamic’
• Government decisions such as service to specific routes, landing rights as well as equity ownership have affected the operations of the company. For instance, the government turned down the company’s decision to use Subang as its hub while allowing its rivalry, to operate from the same location.
• Human resource policies are also affected by political influences as it means the selection and recruitment of staff is not based on merit but rather, racial composition.

Economic

Despite the competition the company receives from Malaysian Airline, Airasia has low cost carriers that offer cheap tickets and its in-flight services have attracted great attention in the region. Because the company offered cheap tickets, when recession hit, majority of travelers preferred to use the company’s services

• The rising oil costs have however impacted the operations of the company
• Increasing competition from new airlines that also offer low cost flights
• Airasia lacks the financing that is needed to make investments and most of the financial institutions are not willing to avail the same.

Social

The company operates in a region that has many languages and countries. Because of the diverse religions and cultures, trouble continues to brew especially on the Indonesia and Thai-Malaysian border. In addition to this:

• The people who live in the region where the airline operates are well able to afford costs of air travel
• The lifestyles and tastes of the people make it easy for them to pay for low cost air travel
• The nature of the workforce makes it easy to cope with changes implemented by the company.

Technology

The company has advanced technologically making it possible for people to make bookings through use of the internet. Technology in the region is dependent on the overall performance of the IT infrastructure though the company has at some point, lost customers because of technological problems.

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Online sources:

 

https://answers.yahoo.com/question/index?qid=20071113233605AAdAlMO

http://www.managementparadise.com/forums/principles-management-p-o-m/208665-pest-analysis-airasia.html