Type of Uncertainties Faced by Air Aisa

air asia As for the input costs, Air Asia uses locational difference to lower costs. It chooses secondary airport as base and arrange short flights between secondary airports, which reduces costs. In this industry, fuel is a very important cost. The fuel crisis that happens is one of the major effects that affect many airlines, which lead them to shut down. Oasis airline of Hong Kong is an example of airlines that are forced to shut down due to the overwhelming fuel cost. Air Asia on the other hand has an adapted to this situation via its operational model, and by using a series of fuel-efficient fleet that helps them to survive during the fuel crisis. Unlike Air Asia, the carriers like zoom and oasis used old planes, some as old as 20 years old. As the fuel price goes higher and higher, this old planes can’t survive for large amount of fuel consuming. In addition, Air Asia’s customer services are minimal. Passengers need to pay for baggage, snacks and beverage, which can increase income and reduce cost at the same time. The airline also doesn't provide baggage transfer between airlines.

AirAsia has their weakness in on-time performance. Due to limited aircraft, AirAsia facing the absent of standby planes when operational problems occur. As a result, passengers will delay their flights and cannot reach their own destination on time. Indirectly, brand equity of AirAsia will be eroded. At the same time, confidence of passengers towards AirAsia will be affected extraordinary for those time conscious business traveler. To avoid and solved the problems, AirAsia need to improve its on-time performance consistently and aggressively.

Airlines operations touch every business environment that has influence in their business. Natural calamity such as tsunami and earthquake will impact the operation of airlines. Flight has to be cancelled, airlines need to pay compensation, demand drop very fast and will impact on airlines profit and loss. Other than