The paper "Beating Low-Cost Competition" is a great example of a Management Case Study. Steps that an established carrier such as MAS should take to counter the threats posed by low-cost competitors. Low-cost competitors pose the threat of offering highly discounted air travel that attracts price-conscious consumers and other travelers, who more often than not, become used to cheaper fares and opt not to use higher-priced, higher service airlines as indicated in Case4. As a result, they slash the profit margins and market shares for established firms such as MAS. To counter threats posed by low-cost competitors such as AirAsia, MAS among other established firms should develop and effective strategies that do not necessarily focus on pricing only but those that offer more value and service excellence to the customers.
Among the strategies, the established firms can implement includes Service differentiation; will entail offering air travel services that are not only competitive in terms of pricing but also, those that meet high-quality standards in terms of safety, comfort, and reliability (Kernchen, 2007). Delivery of service differentiation can be achieved by developing a reliable, competent, valuable, innovative and skilled human resource workforce that is able to meet the changing needs, demands, expectations and preferences of the customers as noted in Case4.
This will entail creating a synergy between the professional growth of each employee and the growth of the airline in the present and in the future. Investing in innovation; to create service differentiation and to promote sustainable competitive advantage, established airlines such as MAS must invest in innovation in order to deliver services that exceed the expectations of the customer. More importantly, such firms need innovation to aid in cost reduction and savings, enhancing operational excellence and attracting suitable strategic partners (Kernchen, 2007). To encourage innovation and development of new, better and differentiated services, established airlines such as MAS can invest in technology.
Technology is a suitable and reliable resource in managing service delivery by an airline. This is because, technology can be utilized to refine booking systems, automate procedures, facilitate the use of direct routing and facilitate simulator training all of which contribute a huge difference to the experiences of the customer. In addition, web-based marketing can be used to enhance service delivery, where the airline can effectively and promptly address every need and concerns of the customer and receive customer’ s feedback and more importantly, allowing the customer to take part in the decision making process in regards to what flight they take, where they sit, what they eat and even selecting their inflight entertainment as noted in Case4. Increasing passenger loads; low- cost airlines such as AirAsia has focused on increasing their savings by offering short routes only, which minimizes accommodation expenses for its cabin crew (Ayupp n. d).
Established airlines such as MAS can capitalize on this by covering long routes but increasing the passenger loads to counter the additional expenses. This can be achieved by the established airlines investing in large capacity, modern and long haul aircraft, which are costly for low-cost airlines to invest in owing to the high capital requirements needed to purchase them. These types of aircraft include the Airbus A380 (Ryans, 2009).