AirAsia
Phew…I’ve had a good break recovering from my bronchitis condition.
For the full mind-boggling story, click this link –> Down But Not Out
I’m only glad there’s a tablet for suppressing my coughs instead of the liquid type most of us have taken at one time or another, which tastes truly awful.
The tablet is a very tiny one but it’s about 5 times more potent than the liquid variety - and it totally suppressed my coughing reflex like no other, without the need for my tastebuds to go berserk each time.
So the coughs have finally stopped, and I’m feeling like normal again since I’ve broken the vicious cough - throat irritation - cough some more - more throat irritation - cough even more - even more throat irration cycle.
Which means it’s playtime once more! 
As I laid in bed recovering from my condition (I did next to nothing all this time), I saw ads in the newspapers by low-cost airlines that are all the rage all over the world for the past few years now.
I’ve flown EasyJet and RyanAir when I was travelling in Europe (I bought my tickets over the Internet) at prices that were unheard of before these low-cost airlines came along.
And now in Asia, even more ridiculously low ticket prices screamed for my attention.
$1.99 to Jakarta (one-way). The return ticket costs the same.
$0.99 to Macau (one-way). The return ticket costs the same.
$2.99 to Bangkok (one-way). The return ticket costs the same.
How could these airlines, using new Airbuses as their planes, even make a profit with those prices?
But profit they do. Malaysia’s AirAsia, the No.1 low-budget airline in Asia, makes millions of dollars every year selling tickets at those prices.
Simple math and common sense tell us that it isn’t possible, even if we don’t know what their actual costs are - but it’s happening for them.
So what’s going on?
Think about it for a minute. How is this possible?
Ridiculously low ticket prices are not just a one-off marketing tactic for AirAsia - it regularly promotes its business this way.
In fact, it’s more a strategy than a tactic since it goes to the very mission of the airline, with its tagline being “Now Everyone Can Fly”.
And that’s totally true - since it’s even cheaper to fly AirAsia than to take a bus or drive on your own to get to those destinations.
AirAsia is a low-cost airline and it needs to constantly remind its Prospects and Customers of this fact.
Regular ads advertising ticket prices that are unbelievably low is one great way to do it, as they’ll surely generate word-of-mouth publicity long after the ads are history.
So how can AirAsia sell tickets at those prices and still make millions in the process?
The answer is simple.
AirAsia simply made lemonade out of lemons, where lemons are found.
You see, not every seat on the plane that are flown on a particular journey are taken up. AirAsia knows from its experience of flying its routes what its planes’ load is.
It could be 80%, or 75%, or 90%.
The remaining 10 - 25% of the seats are empty.
Now it could simply let the seats remain empty, in which case it doesn’t make any more money from them.
Or it could advertise them for sale at those ridiculously low prices seen above.
After all, what’s the big deal of selling a seat at $0.99 (one-way) and not make money from it, if that seat is going to be empty anyway?
So why not scream this price from the rooftops and benefit from it, even if the seats continue to remain unsold?
Because when this happens, and whether the seats are sold or not, AirAsia is entrenching its position in the minds of their Prospects as a true low-cost airline.
I mean, how much cheaper can it get, from $0.99 per ticket, other than giving it away for free (which it has also done in its million-dollar giveaways it conducts regularly!)?
AirAsia has successfully knocked its many competitors in this region out from the minds of its Prospects and Customers with its strategy and supporting tactics. There are many factors involved in its success and I’ll discuss them in future posts.
As for the ridiculously cheap tickets offer, AirAsia does state that limited seats are sold at those prices and the flyer will have to book their flight weeks in advance.
However, even at regular prices, we’re looking at a hundred to a few hundred bucks for a ticket depending on the destination - when the usual airlines would charge a thousand or two for the same journey.
So from the same ad it’ll likely get some customers buying the cheap seats, while at the same time it’ll get even more customers who couldn’t get the cheap seats on the dates they want (because they’re sold out), who then buy the regular seats at 50% - 80% cheaper than a regular airline’s seats.
In a nutshell, by advertising ridiculously cheap seats for certain destinations, AirAsia:
1. Sells its seats that would otherwise remain empty;
2. Sells those seats weeks in advance and thereby filling up the plane more than it could before;
3. Attracts enquiries from Prospects who otherwise wouldn’t even think of flying;
4. Converts some of those Prospects into regular paying Customers if the cheap seats are sold out;
5. Provides a good experience for first-time flyers of low-cost airlines that their service level is comparable to the regular airlines which will make them fly AirAsia in the future;
6. Entrenches its position as a low-cost airline further;
7. Creates word-of-mouth marketing through the ads and from its Customers’ experience;
8. Easily achieve top-of-mind awareness, knocking its many competitors out from the minds of its Prospects and Customers.
That’s a lot of value generated from taking the lemons in its business and making lemonade out of them very loudly - don’t you think?
Found any lemons in your business - Internet or otherwise?
Make lemonades out of them and do this loudly!
Warm Regards,
Sen Ze
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P.P.S. You can link to this post using the following URL:
http://www.SenZe.com/business-blog/airlines/AirAsia.htm
