Airasia Pricing Strategies

AirAsia Pricing Strategies

Penetration pricing strategy is the most common pricing strategy employed by AirAsia. AirAsia usually set a low initial price for the air fares especially for those newly opened destination in order to capture a large mass of market share. AirAsia was the first airline in South-East Asia to launch a low cost carrier (LCC). LCC holding four set of principles: fly one type of aircraft to keep down engineering costs; keep overheads down; turnaround aircraft as quickly as possible; and abandon loyalty or air miles schemes. AirAsia believed if they can take their passenger to the destination they want on time, at the lowest fares and make sure they are enjoying the flight then consumer will fly with their airline.

Penetration pricing strategy is working best for AirAsia. In fact airline is a highly elastic demand services. The low fares provided by AirAsia are proficient to attract a large numbers of highly price sensitive consumers to pay close attention to them. This strategy is best suit to AirAsia that have low production and marketing cost which is conducting a large-scale operation and long run production. The strategy also appropriate since AirAsia is rapidly expanding its route, this may help the company to capture a large number of market share quickly within a short period.

Even though its major domestic competitor, Malaysia Airline (MAS) have launching the "Everyday Low Price" crusade by offering zero fares for domestic and short haul flights, AirAsia was still capable to provide a low fares flight for its customers. The penetration pricing strategy apply by AirAsia is extend over several stage such as extending and enhance their previous services by including the long haul routes. These actions are to maintain their company reputation as a low-price competitor.

Psychological pricing is the pricing policy adopt by AirAsia. Psychological pricing applies the belief that certain prices or price ranges make product more appealing than others to consumers. The psychological pricing techniques that AirAsia utilize are odd pricing and unit pricing. In odd pricing, marketers normally set their price end up with odd number (e.g RM5.95, RM9.99, RM5.00 etc.). AirAsia ordinary set its fares which is end up with odd number for instance for domestic flight from Kuala Lumpur International Airport to Penang is RM 49.00 which is appeals more strongly to consumer than RM50.00.

Unit pricing is set the prices in term of some recognized unit of measurement or standard numerical count. AirAsia provide a free cabin baggage for its customer with only one piece of cabin baggage that is not more than 7kg and not exceed the scale of 56cm x 36cm x 23cm. For the checked baggage, each customers is limited with the maximum weight of 15kg and is charged RM20 for those who checked online and RM30 when checked at the airport. Customers who take AirAsia's flight is