Final answer:
Developing a Competitor Profile Matrix for Air Asia involves analyzing various factors like market share and product quality to understand its position compared to competitors. Practical examples in the airline industry illustrate strategic planning, competition, and the need for creative problem-solving in unprecedented situations.
Step-by-step explanation:
The question requires developing a Competitor Profile Matrix (CPM) for Air Asia, which is an analytical tool used to understand the position of a firm in relation to its competitors. To suggest areas for improvement, one would need to assess various critical success factors such as price competitiveness, customer service, route network, fleet modernization, and so forth. Unfortunately, without specific data on Air Asia and its competitors, we cannot create a detailed CPM here. However, when creating a CPM, factors such as market share, product quality, and management experience are often taken into account and each competitor is given a score based on how well they perform in each of these areas.
Regarding the given examples of airline issues and strategies, they point to different aspects of strategic planning and market competition. For instance, HighFlyer Airlines' desire to increase cabin space involves understanding the R&D costs and projecting potential returns. The scenario of a large airline undercutting prices to push out new entrants shows the competitive dynamics and possible predatory pricing strategies.
For an economist with an unprecedented issue, the suggestion is to approach it as a carpenter might approach a novel problem: by using existing tools and knowledge creatively. Similarly, when analyzing the airline industry, an economist can draw from existing economic theories and models to make best-guess predictions and recommendations.