The competition between low cost carriers will be expanding their routes to more places, safety and on-time performance and low cost.
This can save up the cost of maintenance and reduce the cost of training. Airasia will continue to expand their market and carry on with the title of best low fare airlines in Asia and even the whole world.
More people would buy from Airasia thus, reducing the cost per flights. Even in certain promotions Air Asia travellers were offered to fly free, they only had to pay for the airport tax and fuel surcharge.
They will however have to avoid getting complacent, as they may in some point experience the law of diminishing returns, which can be defined as an extra input is added in the production, a point will eventually be reached at which additions of the input yield progressively, or diminishing, increases in output.
Demand The demand curve of Airasia is downward sloping from left to right. Then again, in the long run they have already been successful.
Even 12 years ago, he had the vision that flying would evolve into a necessity, and therefore would have an inelastic demand. However, firms could compete along other dimensions as well; such as by doing advertises to capture the market quickly; both of the firms Air Asia and MAS have advertised much kind of promotions or season seats price and promoting their brand value via internet and so forth nowadays.
This is due to the specialization that they have in their departments that they have developed after division of labor. One of them is that there is a possibility that a monopoly has been created due to the lack of competition in the industry.
In addition to the economies of scale that Air Asia benefits from, they have also benefitted from managerial expertise as Air Asia has implemented numerous cost savings plans such as the following. Liau, Y.