Air Asia : the World's Lowest Cost Airline

4779 Words Aug 5th, 2012 20 Pages
Grant, Robert M.

Case Studies Section : case 9, Air Asia : The world's lowest cost airline

Grant, Robert M., (2010) "Case Studies Section : case 9, Air Asia : The world's lowest cost airline" from Grant, Robert M., Contemporary strategy analysis : text and cases pp.625-635, Hoboken: Wiley ©

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The conventional wisdom was that the efficiency of the LCC model was dependent upon short- and medium-distance flights with a single type of aircraft and minimal customer amenities—intercontinental flights required contravening these basic conditions. Very few LCCs had ventured into long-haul; even fewer had made a success of it. To evaluate AirAsia’s potential to expand from being a regional carrier to an international airline would require a careful analysis of the basis of its existing cost advantage and an evaluation of the transferability of these cost advantages to the long-haul market.

The History of AirAsia
The growth of AirAsia is closely associated with the entrepreneurial effort of Tony Fernandes. Son of a Malaysian doctor, Tony was sent to boarding school in Britain with a view to following in his father’s footsteps into the medical profession. The



son had other ideas and, after an accounting degree at the London School of Economics, went into music publishing, first with Virgin, then Time Warner. He describes his decision to start an airline as follows:
I was watching the telly in a pub and I saw Stelios [Haji-Ioannou] on air talking about easyJet and running down the national carrier, British Airways. (Sound familiar? Hahaha.) I was intrigued as I didn’t know what a low cost

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