Porter's Five Forces Framework: Competitive Analysis Of The Airline Industry
3.0 Micro environmental
3.1 Porter’s 5 Forces Framework (Competitive Analysis)
This key term is playing an important figure in order to develop corporate strategies and help Air Asia to assess the nature of an industry’s competitiveness (Martin, 2014). This framework may allow Air Asia companies to identify and analyze the significant forces that determine the profitability in the aviation industry so that the company may perform well in the long term operation.
3.1.1 Threat of New Entrants
Brand awareness is playing an important role in the airline industry. It is not only required with high capital to enter into this industry but also brand image. As consumer are more willing to choose a product or services that they trusted more. To make a brand loyalty with customer, new entrants must be able to create it in order to establish its company’s reputation in the long term operation. There is always a barrier to enter into this industry caused by the government legislation as it is not easy to get a new flight route from government (Cookson, 2015).
When it does not have any route may cause a profit reduction as Air Asia cannot extend on a network. Such as Tiger Airways is the dangerous competitor between Air Asia as it also has competed on international route from Australia to Bali (Freed, 2015). As new entrants come in, it may influence on Air Asia Indonesia’s reputation that it cannot be operated as well with another competitor. So, it stated high threat of new entrants
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