BLUE OCEAN STRATEGY Of AIR ASIA

Topics: Airline, AirAsia, Low-cost carrier Pages: 2 (338 words) Published: May 10, 2015
BLUE OCEAN STRATEGY OF AIR ASIA

Air travel remains a large and growing industry. It facilitates economic growth, world trade, international investment and tourism and is therefore central to the globalization taking place in many other industries. The international airline industry has its services spread across every corner of the globe and plays an integral part in the creation of global economy.

Today, the global airline industry consists of over 2000 airlines operating more than 23,000 aircraft, providing service to over 3700 airports. The growth of the global airline industry has grown every year but there have been variations in its growth due to changing economic conditions. The economic importance of the airline industry and, in turn, its repercussions for aircraft manufacturers, makes the volatility of airline profits and their dependence on good economic conditions a serious concern for both industries. This concern has grown dramatically since airline deregulation.

AirAsia was established in 1994 and began operations on 18 November 1996. It was originally founded by a government-owned conglomerate. In 2001, Time Warner executive Tony Fernandes brought the debt-ridden, government-owned company. Fernandes engineered a remarkable turnaround, turning a profit in 2002 and swiftly opening multiple new routes whilst under cutting Malaysia Airlines and demolishing its monopoly.

AirAsia followed a value innovation model to establish its low cost airline which allowed the company to reconstruct its market boundaries, to reach demand beyond the existing demand and make the red oceans of the industry’s competition irrelevant. They established a compelling service offering that created a leap in value in passenger and company value by breaking the value or low cost trade-off and pursuing value innovation.

ELIMINATE
Over the counter booking system
Complimentary food/beverage on the plane
Seating class booking system
Price...
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