Pricing Strategy

Associated companies

They also have associate companies such as Air Asia X, Fly AsiaXpress, Tune Hotels and Tune Money. Air Asia X is a service operated by Air Asia X sdn.Bhd. (previously known as Fly AsianXpress Sdn.Bhd.) as a franchise of AirAsia. It has started offering long-haul services from Kuala Lumpur to Australia and China using Airbus A330. The inaugural flight was on 2 November 2007 to Gold Coast, Australia.

The first AirAsia 'no-frills' hotel, Tune Hotels, is ready for occupancy in Kuala Lumpur and Kota Kinabalu and later in Penang, Johor Bahru, KLIA, Miri, Kuching and Sandakan.

Tune money is Asia's first 'no-frills' online financial service owned by Tune Air Sdn.Bhd. Modelled aftaer Virgin Money, it comprises life, home and motor vehicle insurance as well as prepaid cards.

Destination

Air Asia operates over 200 flights a day, to over 75 domestic and international routes covering Malaysia, Thailand, Indonesia, Singapore, Brunei, Myanmar, the People's Republic of China, Vietnam, Laos, Cambodia, Australia and the Philippines.

In 2007, 19 new routes had been introduced over the Air Asia wide network. These include routes from Kuala Lumpur to Gold Coast (Via Air Asia X), Vientiane and Banda Aceh and the connection of Southern China (Macau and Shenzhen) with different Malaysian hubs and Bangkok. In 2008, new routes were introduced which included destinations in India and China.

Air Asia future plan is seeking to set up a hub in Malacca serving Medan, Pekan Baru, Palembang, Padang, Penang and Langkawi. Air Asia has gained approval from India authorities to start flying to destinations in India such as Chennai, Madurai and Kochi.

Value Added Services

On 15 May 2007, a service named 'Xpress Boarding' was launched, enabling passengers to get priority boarding for a fee. This product is available in all hubs including Thai Air Asia and Indonesia Air Asia.

On Air Asia X flights, passengers are given a choice of purchasing extra baggage weight, meals, comfort kit and seat selection all with nominal fees.

On 26 November 2008, Air Asia has launched its Air Asia X London flights to London Stanstead Airport.

PRODUCT ANALYSIS

As with living organisms, products have a life cycle. For some, such as the Boeing 747, the life cycle is measured in decades whilst for others, for example the merchandising spin - offs from popular movies, the life cycle may be measured in mere weeks.

The Product Life Cycle (PLC)

A product enters the market in one of three ways. The first may be as an improvement on an existing product, in which case there will already be a customer base. The second is as a competitor to an existing product, in which case a customer base exists, but its loyalties may lie elsewhere. The third way is as a totally new product, in which case a customer base needs to be built up.

Research has shown that many new products never move out of the launch stage. In the 1960s it was stated that 96 per cent of all new product launches failed. By the 1980s this had improved to the extent that only 80 per cent of product launches failed.

Reasons for failure were given as:

* Incorrect segmentation - trying to reach the wrong market.

* Incorrect pricing - either too expensive to provide consumer value or

too cheap to sustain the costs of production and market activities.

* Incorrect communication mix - failure to create the required levels of

awareness, interest and action.

* Incorrect distribution - not in the right channels or if in the right

channels, not in enough of them.

* The product itself - by far the most common reason. The product does

not provide any new benefits or it provides benefits that are not sought

or valued by the customer. It has no beneficial differentiation to

existing products already established in the market.

Air Asia, Airlines Company with 58 flight destination is in the growth phase position of Product Life Cycle (PLC) stage. The growth phase is when loyalty begins to be built up. Some products or services can be taken up by the customer base very quickly and achieve rapid growth. Sales of Air Asia Airlines grew tremendously in every country in which they were available.

It is during the growth phase that the product will begin to recover its development and launch costs and slowly move through the break - even mark to begin to make a profit for the organization. During the growth stage of a new market or a new product, competitor will also enter the market with similar products or services and competition will become increasingly evident.

The characteristics of products or services in the growth phase are Gain market share instead of create awareness and promote trial as the objective, increasing the sales, moving from the non profits into profit, the competition is growing.

As Air Asia gain high market share begins to make a contribution