Airasia
AirAsia Case
Executive Summary
SMO 441
Submitted: March 8, 2011
Abi Sanni
Aly Remtulla
Kelsey Gamble
Kendra Jocksch
Nancy Moke
Company background
Tony Fernandes, as the Chief Executive Officer of AirAsia, decided to pursue his dream to start an airline with the following vision: “To be an airline that flies long-hauls with low fares with a corporate culture that is flexible and functional”. In January of 2002, Tony re-launched AirAsia (previously a struggling government-owned airline) with only 3 planes and started serving the South-East Asian Market. In 2004, it began its first international service and in 2007, expanded into long-haul flights run by a different brand: AirAsia X. That year, the company achieved its title as “The World Lowest Cost Airline,” and was also one of the world’s most profitable airlines. AirAsia was still able to earn 4% ROA during the recession in 2008. Between 2002 and 2009, AirAsia had expanded from 2 aircrafts and 200,000 passenger journeys to 79 aircrafts and 11.8 million passengers.
Problem The focus of our research is to determine if AirAsia should expand its long haul business and to what extent AirAsia and AirAsia X should be integrated operationally. Currently, AirAsia is the brand of its short-haul flights, with AirAsia X encompassing flights over 4 hours in length. There are several advantages to expanding into long-hauls, with the most prominent being the ability to expand into new markets, gain increased market share and take advantage of growth opportunities. These expansions would also aid in establishing trunk routes to increase traffic on AirAsia’s local flights. Some of the notable disadvantages are that AirAsia could be moving away from their successful low-cost carrier (LCC) strategy. Other disadvantages include the need to expand acquire different planes and potential brand confusion between AirAsia X and AirAsia, whether in
Executive Summary
SMO 441
Submitted: March 8, 2011
Abi Sanni
Aly Remtulla
Kelsey Gamble
Kendra Jocksch
Nancy Moke
Company background
Tony Fernandes, as the Chief Executive Officer of AirAsia, decided to pursue his dream to start an airline with the following vision: “To be an airline that flies long-hauls with low fares with a corporate culture that is flexible and functional”. In January of 2002, Tony re-launched AirAsia (previously a struggling government-owned airline) with only 3 planes and started serving the South-East Asian Market. In 2004, it began its first international service and in 2007, expanded into long-haul flights run by a different brand: AirAsia X. That year, the company achieved its title as “The World Lowest Cost Airline,” and was also one of the world’s most profitable airlines. AirAsia was still able to earn 4% ROA during the recession in 2008. Between 2002 and 2009, AirAsia had expanded from 2 aircrafts and 200,000 passenger journeys to 79 aircrafts and 11.8 million passengers.
Problem The focus of our research is to determine if AirAsia should expand its long haul business and to what extent AirAsia and AirAsia X should be integrated operationally. Currently, AirAsia is the brand of its short-haul flights, with AirAsia X encompassing flights over 4 hours in length. There are several advantages to expanding into long-hauls, with the most prominent being the ability to expand into new markets, gain increased market share and take advantage of growth opportunities. These expansions would also aid in establishing trunk routes to increase traffic on AirAsia’s local flights. Some of the notable disadvantages are that AirAsia could be moving away from their successful low-cost carrier (LCC) strategy. Other disadvantages include the need to expand acquire different planes and potential brand confusion between AirAsia X and AirAsia, whether in