Air Asia Strategic Management Recommendations Essay
Air Asia Strategic Management Recommendations
An analysis of the External Environment would be done so as to facilitate a direct comparison between the generic elements where AirAsia has been founded in. The report then would delve into an internal analysis whereby the Porter’s 5 Forces would reiterate the direct forces that would affect the Airline Industry and subsequently, AirAsia itself. The capabilities and core competencies of the firm would be explained in greater detail towards the latter part of the report before a series of analysis would be done to segregate the more influential ones from the rest. A series of strategies would be then recommended for AirAsia to undertake so as to continue building brand awareness and brand equity throughout the world as a low-cost carrier.
1.0 EXTERNAL ANALYSIS
1.1 Industry Identification
AirAsia belongs to the airline industry. Competition in the airline industry is very intense and is growing rapidly together with the increase in demand for budget fares across Asia. The different airlines are making use of several strategies to compete with one another in the airline industry and it is crucial for airline companies to identify their competitive advantages so as to be able to achieve profits and brand equity globally.
1.2 External Environment Analysis
Political factors such as changes in regulation and the global trend toward privatisation of government-owned or government-regulated firms have had implications on the general environment. Furthermore, taking budget flights out of Malaysia can be quite a challenge. Many governments have been instrumental in dabbling in the success of airline companies in Asia. Most airline companies in Asia have had full or substantial state ownership as well as management and control.
A prime example in Malaysia would be Malaysian Airlines System (MAS). Such companies are often well-subsidized by their governments and do not face much competition. Instead of being profit-oriented, they are more focused on fulfilling national objectives. As such, privatization and de-regulation have paved the way for new routes and airport deals via the use of open skies agreements between countries and permission of entry of private airlines (Dellit 2002) As such, they would give new airlines that are low-cost carriers such as AirAsia, Jetstar and Tiger Airways chances to access domestic routes and tapping into market share of the airline industry.
However, in light of globalization, the airline industry has also been hit by threats such as terrorism, accidents, attacks and disasters. A drop in customer confidence in a particular airline company would be detrimental to a company’s profits as well, hence a low cost carrier would be subjected to factors such as aviation restrictions, consumer preferences and geographical infrastructure of Asia (Steverman 2009). To combat such uncertainties, a budget airline company would have to be meticulous in selecting favourable routes in it’s day to day operations so as to avoid any form of possible negative impacts. (Dellit 2002)
Despite standard of living observed to be improving globally, there exist variations within and between countries. Economic downturns in the recent years have cost companies to lose profits in the industry. However, this proved to be an opportunity for budget airlines. The result of the recent global economic downturn which led to a worldwide stock market plunge also caused aircraft leasing costs to be reduced by 40%, and this led to an environment that had lesser competition in the airline industry. This then enabled many budget airlines to lease their aircraft at a cheaper rate, which resulted in cheaper ticket prices for their customers (AirAsia 2009).
However, the possible impact of fluctuating oil prices in the economy would take a toll on operation costs when fuel prices appreciate (Milmo 2011). Revenue and profitability of the company as a whole would fall if fuel prices become too high. As such economic factors are not within airline companies’ control and are unavoidable, the opportunities would outweigh the disadvantages, presenting further opportunities for them to continue in its expansion across Asia. During economic downturns, there would be an expected demand for affordable low airfares amongst budget-conscious buyers, especially for travellers who are travelling on leisure (Ernst & Young 2012).
The changing societal attitudes and cultures such as growing environmental awareness has implications on the emphasis placed on corporate social responsibility. Furthermore, in order to stay globally competitive, firms now have to consider placing more resources into sustaining competitive
advantage with being environmental friendly at the same time. Rapid economic growth has also paved the way for a growing middle class within Asia’s large population, especially so in Malaysia (Ernst & Young 2012). Together with the constant and gradual increase in trade and tourism activities within Asia, the demand for travel has also increased.
People are now keener on exploring places far away from home and are willing to fork out money for such experiences. In doing so, the idea of low cost airfares that would allow them to save more to spend at holiday destinations is appealing to them (Ernst & Young 2012). The attractiveness of budget airlines lie primarily with their low-ticket prices and hence would present itself as a major opportunity to budget airlines. For an airline to differentiate itself from its competitors, it has to be able to have value-added services apart from low fares to distinguish itself and outstand the rest. This works out to be a competitive advantage, which may present itself as an important factor for airline companies to have so as to succeed as a low cost carrier (DestinAsia 2012).
By utilizing information technology to aid companies in e-transactions and e-commerce activities, the traditional ticketing and travel agent systems were soon replaced by e-ticketing and internet booking systems (Mouawad 2010). This meant that alongside with globalization, even the process of booking tickets have gone through a massive restructuring. Airlines are now able to save the cost of issuing physical tickets and can now do away with large and expensive booking systems as well as tour agency commissions (PRLOG 2010). However, an airline must ensure that it is not over-reliant on the Internet systems as if it is not handled properly, the risk of system destruction and database overload can affect online sales heftily. The technological aspect of the airline business would pose to be a threat if systems are not properly backed up and maintained on a regular basis (Mouawad 2010).
Global warming has become an increasing issue facing businesses all around the world as there has been increasing number of evidence of rising dangers
from the ongoing buildup of human-related harmful greenhouse gases. Global emissions of carbon dioxide experienced a sharp increase peaking in 2010, hence having a greater impact on how most businesses are carried out (The New York Times 2012). Considering the fact that airplanes contribute to a large proportion of about 13% of transport-derived carbon dioxide emissions, is a cause for concern for the airline business (Whitelegg 2000).
1.3 The Industry Environment
In order to analyse the attractiveness of the airline industry, Porter’s five forces framework can be employed. This evaluation is crucial to determining the Air Asia’s best strategy later in the report.
Bargaining Power of Suppliers:
In the airline industry, the suppliers are namely aircraft suppliers and airline employees such as the flight crew and pilots. Depending on the switching costs that are associated with changing airplanes, the bargaining power of the aircraft suppliers will vary. The bargaining power of suppliers is higher when purchasing new airplanes while it is smaller for second-hand airplanes.
Labour unions specifically the pilots’ and mechanics’ unions have high bargaining power as their skills are hard to replace. In addition, there has been an observed trend whereby successful union strikes in the airline industry have led to negative abnormal returns (Finance Department Faculty Publications University of Nebraska Lincoln 1991). Furthermore, wage rates accounts for a larger proportion of costs in the airline industries as compared to other industries (Lehn 2000).
Bargaining Power of Buyers:
The main buyers in the airline industry are passengers consisting of Visiting Friends and Relatives (VFR) and small business travellers. As the majority of airline customers are unable to organize and coordinate, their bargaining power is low. Furthermore, with the need for organizations to negotiate well in advance and that discounts are dependent on airline expected demand, offers, and decisions forecasts and not so much on buyers, the corporate bargaining power stays low. Besides catering for passenger travel, there is also the cargo transportation whereby bargaining power is increasing with it
being one of the key drivers of revenue in the airline industry.
Threat of New Entrants:
Although there is deregulation and liberalization in the airline industry, there are still high operating costs and upfront costs that may deter entrants such as high fuel operating costs and purchasing price of airplanes (Mint 2012). However the trend of deregulation and liberalization in the airline industry has enabled for new entrants in the industry to enter easily despite the high costs associated with start-up and operating (Moorman 1993). Also, considering that there has been an increase in demand for low-budget air travel coupled with the deregulation, there is increased competition as a result. Hence, the threat of new entrants is moderately high despite the high barriers to entry.
Rivalry amongst Existing Firms:
As seen from the case, there was a rapid emergence of low cost carriers across Asia as well as the neighbouring regions in a fierce competition to succeed alongside established airlines (Lawton & Doh 2008). Hence, the rivalry amongst firms is observed to be very intense. In the Asia region, other competitors that dominate the airline industry include Scoot, Jetstar, Tiger Airways and in Malaysia itself, Malaysian Airlines (Wassener 2012). Firms can differentiate themselves based on factors such as differentiation and cost leadership. Hence, the choice of providing better service or choosing to lower prices on a further and continual basis are examples of strategies that firms have employed to differentiate themselves from their fellow competitiors. This further reiterates that price competition makes rivalry amongst existing firms very high.
Threat of Substitutes:
The threat of substitutes for the airline industry is medium as apart from transportation methods such as rail, ship and buses, there is no direct substitute for freight services. This is due to the geographical location of the Asian region in comparison to the United States and the United Kingdom that makes it time consuming to make use of other means of transport (Lawton & Doh 2008). Hence, ferrying customers via air would reiterate that the threat of substitutes for alternative modes of transport is fairly low. However, there are many other substitutes within the airline industry for alternative low budget airlines that offer the same services with no frills and at a low cost for customers (Sreenivasan 2010). In the case of a low-cost leadership strategy that has been adopted by the industry leaders such as AirAsia, other airlines would follow suit in lowering costs to entice their competitors’ customers.
Is the Airline Industry Attractive?
Investors may find that the airline industry is a slightly volatile investment, however if the airline has a good establishment in the market, and is cost effective and profit generating, this will highly improve industry attractiveness.
1.4 The Competitive Environment
There is a current trend of customers who favour low cost airline hence there is an increasingly number of airlines that are offering the same sort of services and products as AirAsia. This led to stiff competition in the airline industry. AirAsia’s direct competitor in this case would be other budget airlines such as Tiger Airways and Jetstar Asia (Sreenivasan 2010). This can be seen by their target market of customers being similar to their competitors across all of these firms and the strategies adopted are often identical to each other (Sreenivasan 2010). As AirAsia is deemed as the lowest cost airline in the world as of 2007, it sustained first-mover advantage, which stemmed from moving directly into undertaking a low-cost leadership initiative (Mahtani 2012). It was only after it happened that that other budget airlines begin to break into the market with replicated strategies.
1.5 Opportunities and Threats
Stimulated Market Growth: By having a plane ticket cost less than a bus ticket, bus passengers will probably want to switch to air travel. As a
result, the demand will increase significantly. This same kind of market stimulation occurred when Ryanair , an Irish low cost airline, was launched.
Liberalization of Geographic Markets: Full liberalization of the Asian market would open doors to AirAsia helping them expand their routes. Malaysia’s underdeveloped aviation market: Even though Malaysia’s geography may encourage air travel, a survey held in 2001 showed only 6% of the population was doing so. Therefore, it shows good opportunity for them to promote air travel in their home country.
Introduction of Biofuels: Following other airlines initiatives, it is an environmentally-friendly alternative to reduce carbon emissions.
Market of Potential Travelers in Indonesia, China and India: Indonesia which is located close to Malaysia has a population of 235 million. These are potential travelers specially with the joint venture already in place. India and China combined have 2.5 billion people. These sizeable markets create a potential to add new routes to and within those countries.
Further Expansion into Cargo Tansportation: An agreement with a cargo company was made in 2007 and as stated by AirAsia, it to section of their ancillary income, considerably contributing to the company’s bottom line. Perhaps AirAsia can reach other deals with other cargo companies.
Oakland airport: The airport is located on the west coast of the United States and may serve as an entry route into the American market. Passengers would be able to get a connecting flight to many other destinations within the US from there.
Firstly, a number of budget airlines would enter the market and become a threat as well existing ones who may become more competitive. At the moment there 50 budget airlines in South, East and Southeast Asia. Secondly, AirAsia may lack bilateral agreements with some counties thus deterring the optimal free flow of passengers. On the other hand, competition in the tourism industry might entice countries to open up their borders. Thirdly, important players from other regions may be willing to join the market posing a threat to AirAsia. Richard Brandson from Virgin Blue, for example, is interested in making investments in a low cost airline in Asia. Lastly, an increase in the cost of fuel may limit the company’s expansion plans as well as compromising the low cost fares brand position they hold.
2.0 INTERNAL ANALYSIS
2.1 The Firm’s Resources: Tangible and Intangible
AirAsia’s fuel efficient airbus 320 helps to maintain its low-fares brand position and at the same time being environmental friendly. Financially with the company’s IPO, there is capital available for further expansions. In addition, with the company’s hardware costs locked in coupled with the availability through the very strong surge orders that followed, AirAsia’s cost competitiveness and capacity are improved.
AirAsia has gained great favour with the Malaysian government and this enabled for easier business negotiations and relations in the country. Tony Fernandes, who had started AirAsia, is a valuable asset to the company considering his strong marketing and operational abilities. In addition, Fernandes hired leading low-cost airline experts to restructure the company’s business model and has acquired more valuable assets onboard as such.
With AirAsia’s established presence through sponsorship of sports teams such as Manchester United and market leadership in the Malaysian domestic market, they have an advantage over competitors with their brand recognition. The company’s strong relationship with cargo management company, Leisure Cargo, is another intangible resource. Lastly, the airline’s low start-up operating benefit and internet booking and ticketless travel allow for the lowest possible costs structure and low distribution costs respectively.
2.2 Capabilities Identification
Use of Information Technology (IT):
Making bookings via the internet and having e-transactions for ticketless travels meant that it not only saved customers time but also gave them the convenience of being able to book their travel tickets anywhere and anytime (The Economist 2012). This also helped in reduction of costs when it comes to issuance of tickets and entertaining bookings via the phone or in person. Making use of IT made the overall process fuss-free and easier to handle for the company. Air tickets can also be purchased from designated Automated Teller Machines (ATM) as well as post offices, which showed how far Airasia went in making the purchase of tickets convenient for their patrons. Airasia’s ability to leverage on IT far surpassed its competitors in the field.
AirAsia also went forth to dominate the domestic market by enticing current and prospective customers to make the switch from road to air transport (Lawton & Doh 2008). This can be seen in low fares that were offered from Kuala Lumpur to Penang, this tactic allowed customers to experience the in-flight comfort of the low cost airlines and boosted publicity for AirAsia (Lawton & Doh 2008). Furthermore, their decision to go into cargo transportation was a significant move in their expansion plans.
AirAsia’s Brand Equity:
has been rising stealthily throughout the few years that it has established in the airline industry. Having established it’s reputation as the ‘World’s Best Low-Cost Airline’, it has also won many other awards throughout its time in the airline industry (AirAsia 2007). The company’s branding initiatives are deemed to be successful, as they have been continually pushing for aggressive marketing and sustaining their growth organization-wide. (Silverstein 2010) With the airline earning such a reputable name, it has gone into establishing alliances with other airports within and outside it’s geographical region, this further advertises their brand name on a global scale. (Khor et. al 2009)
The corporate structure of AirAsia is relatively simple and flat as it comprises of few levels of management so as to reduce cost and increase efficiency (AirAsia 2011). The levels of management are streamlined and together with the use of IT, employees are empowered with decision-making skills with only one or two people to report to in the organization structure. Employees are regarded as equals, and inputs are often encouraged regardless of hierarchical positions. Furthermore, as incentives are distributed based on performance of the company, employees are motivated to work harder cohesively.
Product development and Innovation:
Aircrafts were designed by the company to combat wear and tear as well as costs and reduction of cleaning time. Innovative ideas include setting up their own branded credit card as well as offering corporate travel loyalty points (The Economist 2012). Their aircrafts bear the logo and the name of the company, which makes it a form of advertisement and establishes it’s brand presence in the eyes of the customers (AirAsia 2007). The ‘Fly Thru’ program is an example of an innovative idea developed by the company. It reduces check in time for multiple flights and gives passenger ease of travel from the booking stage to the transit stage, reducing discomfort of having to re-check in at their transit destinations (Periabras 2012).
2.3 Core Competency Analysis
From the core competency analysis, it can be deduced that some of the firm’s capabilities outstand others. Brand Equity stands for having a strong brand image and this is deemed to be one of the most sustainable competitive advantage in the long run. Factors such as use of information technology, organizational structure and product development and innovation would also make AirAsia outstand like-minded firms in the airline industry. Whereas transportation switch may be a capability that AirAsia has but it would only sustain the firm on a temporary basis and may be similar to similar capabilities that other companies have. Identifying the more outstanding factors would aid the company in recognizing its sustainable capabilities as the returns would also be higher compared to other factors.
2.4 Value Chain Analysis
Business strategies; shareholder management; partnership management; relationship building Inbound logistics
Monitoring competitors; In-flight catering; flight scheduling Human resource management
Pilot and sales force training; in-flight training; career planning; operational training Operations
Check-in, baggage handling; bookings; cargo management; coordination of stations and hubs; on-board service; Technological development
Computer reservation systems; Flight scheduling system; market research; baggage tracing system Outbound logistics
Flight connections; security procedures; baggage systems; commission payments Procurement
Monitoring suppliers; branding (online); delivery instruction specification Marketing and sales
Advertising and promotion; loyalty card; group sales; online sales; travel agent programs
Baggage claim service; car and hotel reservation; customer profiling service; customer relationship management
At the moment AirAsia is disadvantaged in that they have a majority of wide body aircrafts that are not as economical for short haul flights. North American and European low-cost carriers have around 77% narrow-body planes compared to AirAsia’s 29%. In addition, the company is limited in their ability to expand services and volumes due to limited availability of suitable terminals. There needs to be a greater supply of low-cost airlines terminals at national and international airports. These terminals allow low-cost airlines to keep costs down through quick turnaround and taxi times and therefore charging customers cheaper fares.
2.6 SWOT Analysis
· Lowest cost airline in the world
· Low distribution costs
· Market leader in Malaysia
· Being innovative
· High profit margins – 35%. Amongst highest in the airline industry · Good brand recognition
· Good management skills
· Too many wide body aircrafts instead of narrow body for shorter flights · Lack of low-cost carriers terminals at national and international airports
· Stimulated market growth
· Liberalization of geographic markets
· Underdeveloped geographic market in Malaysia
· Use of biofuels; reducing carbon emissions
· Further expansion into cargo transportation
· Large market of potential travelers in Indonesia, China and India · Oakland airport as a entrance route to the US market THREATS
· Competing budget airlines entering the market · Lack of bilateral agreement within countries enabling a free flow of passengers · Important players from other markets willing to join the market · Increase in fuel cost
3.0 Strategies and Recommendations
3.1 Current Strategies
Single Class, Low Fares and No Frills
Airasia adopts a single class and no frills service for its airline services. (Airasia 2012) This meant that unlike global airlines, Airasia does not provide meals, entertainment or amenities for its customers. Their sole purpose is charging the customers for the most basic airfreight experience, with the goal of the destination in mind. On the other hand, they do not compromise on customer service as a result of giving reduced cost services. The products offered onboard are also standardized with characteristics that are deemed acceptable to the customers. Establishing ticket prices that are deemed the lowest competitively,
Reduced Fixed Costs
AirAsia’s strategy is in line with its mission to be the world’s lowest cost airline. (AirAsia 2012) The low cost structure was attributed to the company’s good planning of resources such as fuel consumption and maintenance costs so as to give customers the best yet lowest prices they can offer. (AirAsia 2008)
Efficient Distribution System
Seats are deemed as single class which means that there is only one class seating and it is not assigned, passengers would seat themselves on a first come first serve basis. This is done so in fairness and to save the hassle of allocating seats on the company’s behalf. (AirAsia 2012) E-ticketing also aids in saving the cost of issuing hardcopy tickets, this makes it convenient for customers and saves costs for AirAsia. (AirAsia 2008)
Use of Secondary Airports
AirAsia typically operates from secondary airports which mean that they would benefit from lower parking, landing and ground handling fees. Secondary airports are also less busy than main airports with most of them having shorter runways, this in turn reduces fuel consumption during take-off, landing or taxi. Fuel consumption is one of the main expenses that AirAsia has hence this is a beneficial cost saving. (AirAsia 2012) Secondary airports are often closer to urban districts which makes it more appealing to some travellers and hence increases the number of potential customers for the airline. The use of secondary airports help in boosting sales and keeping operating costs low. (AirAsia 2012)
Point to Point Network
AirAsia adopts a point-to-point network model whereby the flights they embark on are short-haul ones within four-hour radius or less (AirAsia 2008) Their sister airline, AirAsia X would focus more on the longer flight routes, hence the point-to-point network is based on the goal of flying a customer from the origin to the destination.
Customer Loyalty Programme – ‘BIG’
AirAsia has implemented a Customer Loyalty Programme named BIG Loyalty Programme which enables for the accumulation of BIG Points and allows for the members to redeem free flights. This programme is also a collaborative approach with other BIG Partners where if customers spend their money at, they are also able to accumulate BIG points.
3.2 Future Strategies
Use of E-Commerce
AirAsia’s current electronic online booking system expanded to cater to different payment methods like billing and settlement plan (BSP) and computer reservation system (CRS) channels after they realized that sticking to the direct-sales only channel was a self-destructive strategy. This has created an ease of booking for customers. However, to further enhance the organization’s IT capabilities, AirAsia can hire an IT expert team to oversee the electronic commerce systems, improve web design, and include more payment methods as deemed fit. As AirAsia operates in a fast-moving services industry, the IT expert team will then meet up regularly to review the electronic commerce systems, gather the problems that surface, and provide consolidated solutions and recommendations to each problem.
In addition, AirAsia has adapted Revenue Management Systems, Inc. (RMS) as their revenue management partner and selected airRM as its revenue management system (Revenue Management Systems, Inc. 2012). This has led to the organization’s ability to analyze historical data and forecast demand in order to create efficiency and hence cost savings (AirAsia 2007). In addition to this already set up system, there could be a collaboration of the IT expert team with the financial and marketing team to determine the most effective way to management inventory and revenue besides just leaving it to the IT expert team.
Undoubtedly, there will be risks and barriers that will be faced when implementing these suggested strategies. One of the potential risks of E-Commerce is the fact that it increases the possibility of making wrong decisions and the impact is usually huge and swift (International Symposium on Government in E-Commerce Development 2001). Another barrier could be the culture barrier between the different functional teams (i.e. marketing, financial, IT team) that could possibly cause the collaboration of the teams to be unsuccessful. As a result, this could lead to wastage of resources.
In-Flight Advertising Initiatives
It is essential for AirAsia to continue building on its brand image and brand equity as it is deemed to be a capability that would not only bring in the revenue but would also establish AirAsia as a niche budget airline across households. This can only be done through further advertising and marketing initiatives. In-flight marketing is an ideal way for AirAsia to reach out to its first-timer flyers and possible returners to continue flying with AirAsia (Kirby 2010). Discounted tickets, package holidays and credit points brought forward from previous travels with AirAsia would entice customers into flying more with AirAsia.
This can be done within the aircraft where customers would not be able to leave the premises (Leslie n.d). Such marketing initiatives can be incorporated into mini leaflets or flyers so that customers can explore their future holiday options on board the flight to their current holiday destination. Furthermore, flyers onboard have a receptive mindset which is due to the fact that they are excited about the new destination that they would be heading to therefore advertising to such a target audience would bring forth more responsive results (Leslie n.d).
Implementing this initiative would require documents to be printed in precise and bold as well as eye-catching manner that would seize the attention of the flyers on board. It has to be attractive so that customers would enquire about it and not just take a quick glance before chucking it aside. Further reiteration can be done by in-flight staff, which could bring personal marketing into this initiative by offering their knowledge upon request. It is an inexpensive procedure for certain in-flight advertising products and it would require more initiation from interested customers. This method is ideal compared to the more expensive ideas that would require mass media for advertising purposes. In-flight advertising can take the form of magazines, radio, video or catalogs.
The downside of running this strategy an in-flight marketing initiative would be the reduced target audience, which stems from having an outreach that is only aircraft wide. Limited availability of flyers on flights that are emptier compared to other flights would make the advertising initiatives redundant. Furthermore, it could incur the irritation of customers who may wish to rest and not have to deal with anything else on the flight. In-flight initiatives such as radio and videos would incur higher costs as compared to paper advertising on catalogs and magazines. Furthermore, if the advertising placement is too intrusive, consumers may in return develop negative attitudes towards AirAsia’s marketing regimes.
Use of Biofuels
Brazilian airlines as well as American, Canadian, German, French, Australian within many others around the world have started using or have plans on using biofuels (Lane 2012). In Asia, specifically, Thailand and Indonesia announced plans of moving towards aviation biofuels (Lane 2012). AirAsia
could join the group: Sustainable Aviation Fuel Users Group (SAFUG) formed in 2008. It may be an alternative when oil prices will likely continue to rise and it is environmentally friendly, therefore they will be able to increase the number of passengers without increasing carbon emissions (Wassener 2011).
Since many airlines have started or plan on switching to this kind of fuel, perhaps supply may not be enough and prices go up with high demand (Wassener 2011). Another risk would be the fact that if you are using edible crops to produce biofuel, food prices may go up. Moreover, in an attempt to increase production getting more land, natural habitats might be destroyed by deforestation (Gao, Skutsch, Masera & Pacheco 2011). Finally, a proportion of the market may be skeptical of flying on aircrafts utilizing aviation biofuels.
Aggressive Promotional Campaigns
AirAsia can continue creating aggressive promotional campaigns as ‘Malaysia with love’. It will make them standout in the competitive airline market. Due to the fact that social media is so widely used nowadays, social media campaigns and efforts are an excellent idea to increase brand awareness and recognition. Statistics show that 58% of firms who have used social media for over 3 years have reported an increase in sales over that period and 85% of businesses say they have had an increase in market exposure (Forbes 2012). Delta Airlines, for example, has introduced bookings through Facebook perhaps AirAsia can do the same or simple create an innovative campaign (The Independent 2010).
Risks to the implementation of social media promotional campaigns is the fact that rival low cost-carriers may decide to copy this strategy allowing them to gain market exposure as well and consequently steal market share if their efforts prove to be more successful. In addition, customers who may have had bad experiences with the company will have the story quickly spread in social media networks, making it more harder for firms to contain negative publicity.
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