Teaching Cases: AIR ASIA
a. How did AirAsia become one of the leading Asia’s airlines? What distinctive resources
and competencies did the company build and attempt to sustain for this position?
b. What were the distinctive competencies/incompetencies compared to competitors?
c. How do you evaluate AirAsia’s strategic direction to enter the long-haul/international
flight business?
a. How did AirAsia become one of the leading Asia’s airlines? What distinctive resources
and competencies did the company build and attempt to sustain for this position?
AirAsia was actually started as a subsidiary of a Malaysian, governmental-controlled
company. When this unprofitable entity was acquired by Tony Fernandez, he completely
repositioned the company by introducing the “low-cost carrier” concept in Asia. Therefore,
he applied the already well-replicated business concept of the American “Southeast
Airlines”, the first working low-cost airline in existence.
Trough adapting this model to the requirements of the Asian market, AirAsia built up
several competences which made them successful. The overriding goal and major
competence is their cost leadership. The lowest overall cost per kilometre was achieved
through several competencies.
Superior cost management:
Standardization (one jet type in use)
No frills (extra services are not mandatory)
Low labor expenses, no unnecessary cost
Adaption to Asian market:
Accessibility of services (extensive use of mobiles in Asia)
A low-cost strategy meets high demand
Barely competition within short-haul, low-cost segment
Marketing strategy:
Comparatively low marketing efforts
Anti-cyclical marketing (to keep demand stable)
Brand building through sponsoring (Williams Formula 1, soccer teams)
Enforcing coverage in the media
Sales:
