Strength Young Fleet Geographical diversification Strong Brand reputation Self-sustainable business model Bold and prudent management Highly competitive human resource Effective distribution channel – CARS – ABACUS Weakness No government subsidies Short of route network Too much service classification and pricey Opportunity Open Skies – government agreement between countries, bilateral or multilateral Strategic alliance Growth of alarm passenger service and cargo service Threats High volatile fuel price Fierce competition Prone to external effects such as economy downturn and natural disaster The rise of errors act Government restriction of foreign ownership SO (Self Sustainable Business + Growth In Industry) Upgrading of aircraft facilities How? ASIA having the practices in maintaining their aircraft with highest standards and that will contribute much to them when they deem the aircraft Is already up to the age for passenger service (average 6 years 3 months), they can however Integrate upgrading and modification works for passenger aircraft and convert it into cargo service. First, upgrading will enable the old aircraft equipped with latest technology and subsequently achieve the aim of safety and fuel saving strategy.Secondly, they enjoy further benefits in capital cost because of the massive amount of money they could save without buying new aircraft for cargo use. Yes! ASIA can be more effective in cost saving by doing aircraft upgrading and modification work, new aircraft is merely for passenger service because it is crucial to use the best for carrying people due to better comfort and safety. On the other hand, ASIA rejuvenate the old planes for cargo use and they can gain better reward in less cost of buying new aircraft and the move will not deviate from their current objectives to operate young fleet of enhanced safety and fuel efficient, thus the aim can be achieved with lesser cost for the entire commercial fleet regardless it is for passenger or cargo service.SO (Strong Brand Recognition + Alliance) Selective alliance partners ASIA with their Excellency in airline industry possess an iconic figure as an outstanding operator, hence they could utilize their strong brand recognition to penetrate specific region such as the area of Latin America and Asia pacific according to table 2 from IOTA forecast, by then the form of smaller strategic alliance group can further exploit the market in booming area.
Besides, smaller alliance group benefit each other in a better way as there will have less conflict of interest. Stem from the brand dominance and strategic location in South East Asia, ASIA can protect their best interest and have power to influence the alliance. Why not? ASIA exerting their influence in the industry will nevertheless bring negative impact to them; it will as well attract a more hostile situation from their current star alliance. Furthermore, star alliance already have a very comprehensive intercontinental network and ASIA can venture more into it.
Besides, economic condition in different rear will change, if ASIA only target booming area to exploit partner airlines then if the condition change, ASIA will end up in a deeper dilemma due to the cripple effect of neglecting other parts of the world. Other than that, ASIA image will tarnished due to the lack of integrity. SST (Wholly lease Young Fleet + Fuel Price) Only lease of aircraft ASIA can be more prudent by executing only lease new aircraft rather than buying it. Leasing aircraft will definitely have lesser capital outlay comparing to buying a new one.
Leasing new aircraft can make them more financial viable because they need not suffer loss of depreciation value.From this strategy they also can achieve their main aim of maintaining young fleet to strengthen their reputation in decent safety and fuel-efficiency. Despite cost saving, they also have no obligation in contractual terms since leasing tend to be more flexible as they can have a tenure term under their own discretion and optional for them to extend it. Leasing will make ASIA looks like they are unable to own a new aircraft and that will bring negative impact to the image of the company, leasing will also have a longer waiting time for new aircraft to arrive, and besides, although ASIA could negotiate untactful terms that suit them most but it is still depends on the aircraft maker to agree because bargaining power of supplier is too high due to limited choice in the market.SST ( Bold & Prudent Management + Volatile Fuel Price) Hedging against fuel risk The management of ASIA can have a better financial standing by curbing the volatile fuel price. They can seek for hedging against the risk by investing in the commodities market, such as forward buying of fuel.
This act can ensure the company is remain in control of the incoming fuel price and put them in strong situation to forecast and getting since the price is already a known figure. Furthermore, it can also reduce the risk of future goring high fuel price if there are any unexpected issues arise in global economy, ASIA can still survive. Forward buying of commodities market could make the company suffer more expensive fuel if the price has drop drastically and will make the firm to incur more cost in fuel.This action is wise in the way that the company only needs to advance in payment of the instrument premium to secure a future price, and promote stability, if the fuel price is not secured, any unexpected issues such as war or economy crisis will affect he entire ASIA fleet and the loss impact can be very dreadful. Furthermore, ASIA needs to be extremely careful because they have no privilege in government subsidies unlike others like MASS and British Airways, and therefore a prudent measure must be in place because fuel is about a third of ASIA operating cost.
Perhaps, it is more viable to quash uncertainties on fuel although the fuel price might end up cheaper on the designated future day, but it is more likely that the fuel price will hike up rather than dropping, and therefore a sensible hedging activity will enhance stability and promote better future planning for ASIA.