Pest Analysis On AirAsia - December 1st, 2010

AirAsia Berhad dba AirAsia MYX: 5099 is a Malaysian low-cost airline. It operates scheduled
domestic and international flights and is Asia's largest low-fare, no-frills airline. AirAsia is a pioneer of
low-cost flights in Asia,[1] and was also the first airline in the region to implement fully ticketless
travel. Its main base is the Low-Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport
(KLIA). Its affiliate airlines Thai AirAsia and Indonesia AirAsia have hubs at Suvarnabhumi Airport,
Thailand and Soekarno-Hatta International Airport, Indonesia, respectively. AirAsia's registered office
is in Petaling Jaya, Selangor while its head office is on the grounds of Kuala Lumpur International
Airport in Sepang, Selangor

In 2010 AirAsia won the Skytrax World's best low-cost airline award.[4

External factors using PEST

PEST breaks down the external influences on a business, which a company will have some influence
on, but in the majority of the time will have to project, plan, adapt and react to with its own strategy, in
order to anticipate and analyze forces within the general environment and their impact.

PEST Analysis

POLITICAL ASPECTS ECONOMIC ASPECTS

• Political uncertainty in Malaysia with Prime Minister Abdullah Badawi set to step down in March
2009.
• Deputy Prime Minister Najib Razak is expected to take over the ruling-coalition party, but with a
cloud of allegations.
• Political unrest in Thailand recently when anti-government protesters recently blocked flights for a
week at Bangkok's main airports.
• ASEAN nations have been pushing Indonesia to scrap its Rp.1 million ‘Fiscal’ charge to all
Indonesian citizens and expatriates when leaving the Republic of Indonesia either for business or
tourism.
• Resurgence of violence in Southern Thailand – Northern Malaysian border.
• Malaysia granted exploration rights in oil-rich waters off the coast of Borneo; increased tensions with
Indonesia.
• Terrorism has occurred in Thailand and Indonesia; most notably the Bali bomb of 2002.

• AirAsia holds 49% of Thai AirAsia with 1% held by a Thai individual. The remaining 50% is held by
Shin Corp., owned by the former Thailand prime minister, Thaksin Shinawatra. Shin Corp. has
financial strength, synergy in information technology and telecommunications, which support AirAsia
Internet and mobile phone bookings. • National trends:
- Malaysia's economy may expand as little as 4 percent in 2009, growth will probably be between 5
percent and 5.5 percent this year, below the official 2008 forecast of 5.7 percent. (v)
- Real GDP % Growth forecast is from 5.1 in 2008 to 1.4 in 2009. (vi)
- Interest rates % dropped from 3.5 in Jan.2008 to 2% in Jan.2009. (vii)
- The inflation rate may fall below 4 percent before the second half of 2009. (viii)
- Unemployment has remained constant at an average of 3.6% in July 2008 to 3.1% in Oct.2008.
However, the global credit crisis has raised fears that “the unemployment rate could double to 6 per
cent by 2010 if global demand remains weak”. (ix)
• International trends:
- Malaysia ranks 20th for its ease of doing business out of a total of 181 economies surveyed in the
World Bank Doing Business 2009 report. (x)
- International global credit crisis has resulted in increasing unemployment and ‘global trade will shrink
by 9 percent this year’ (xi)
- Asian governments are defending less national-flag carriers; in order to revitalize under used airports
and increase tourism spending.
SOCIAL ASPECTS TECHNOLOGICAL ASPECTS
• Demographics:

- Ethnic :Malay 50.4%, Chinese 23.7%, indigenous 11%, Indian 7.1%, others 7.8%. (xii)

- Religions: Muslim 60.4%, Buddhist 19.2%, Christian 9.1%, Hindu 6.3%, Confucianism, Taoism,
other traditional Chinese religions 2.6%, other or unknown 1.5%, none 0.8%. (xiii)

- Languages: Bahasa Malaysia (official), English, Chinese (Cantonese, Mandarin, Hokkien, Hakka,
Hainan, Foochow), Tamil, Telugu, Malayalam, Panjabi, Thai.

• AirAsia operates in SE Asia with many countries and languages.

• SE Asian countries have diverse cultures and religions; troubles continue particularly on the Thai-
Malaysian border and Indonesia.

• Individualism is less common than cooperation in Asian business values.

• Acceptance of laws and rules can vary; many Indonesians, for example, rarely abide to baggage
allowance rules and these rules are seldom enforced due to corruption and indolence.

• Urbanization: 7 out of the top 10 most populated cities in the world (>14 million) are predicted to be
in Asia by 2015, according to the UN.(xv) • Over 80% of AirAsia’s tickets are sold on-line; thus,
eliminating travel agent fees.

• Ticket-less travel and ‘e-tickets’ have lowered distribution costs.

• AirAsia has the youngest fleet in Asia with the new Airbus A330-300; allowing state-of-the-art
technology and high fuel efficiency.

• Information and communications technology (ICT) has allowed AirAsia to reduce operating costs and
provide fast, efficient service in areas including: check flight schedules, book seats, electronic check-in,
and pre-order meals.

• New low cost terminal to be opened in Labu, Malaysia by 2011 will incorporate modern technology,
more shops and be privately owned, resulting inn lower airport taxes and fares and reduced government
bureaucracy.
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