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Porter Five Forces of Air Asia

Porter’s Five Forces
Threat of new Entrants
Threat of new entry is moderate, because it requires high capital to support and government barrier is high such as the air service agreement can build barriers to those new entrants.
The degree of barriers to entry depends on the strength of:-
• Customers have a little bit of brand loyalty.
If customers of AirAsia do not have brand loyalty, then the threat of new entrants will be very high. But the higher numbers of competitors in the industry also will decrease AirAsia’s customer loyalty. Due to most of the travelers prefer low cost. New competitors which want to come in the industry need to spend a little to compete with AirAsia.
• Higher Capital Requirement
The airline industry needs large volume of start-up capital. The cost of setting up of offices, buying or leasing air craft, hiring pilots and others staffs like air stewardess and etc incur a high start-up cost. So that, the threat if AirAsia is low.

• Offered different product
AirAsia offer different product to compare with other competitors in Asia, for example, Bangkok Airways, Tiger Airways, and Air Philippines.
• Government Legislation
Air Asia very difficult gets a new route from government because Malaysian Airlines System (MAS) has been protected by Malaysia government on the route to Sydney and Seoul Incheon. Therefore, it will affect the time line set by AirAsia and the most important is also influence their profit. Thus, this is the limited of the new entrance duo to government policy.

Bargaining Power of Suppliers
The bargaining power of supplier is the ability to influence the setting of prices. That is concentrated and controlled the supply, the more it wields against the market. The area or location of the companies also plays an important role in the bargaining power. If the companies are all

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