Case Study: Air Asia

1648 Words Dec 19th, 2013 7 Pages
Problem Statement AirAsia’s attempts to expend its service offering into long-haul flights and gaining additional recognition and market share is consistent with owner Tony Fernades’ company goal; however, the strategy changes required to be a successful long-haul airline significantly differ from and conflict with its current resource base (i.e. aircraft types, hubs, employee skills) and core competencies and capabilities (i.e. cost and efficiency optimization/utilization) as a low-cost carrier (LCC) airline.
Analysis
The airline industry as a whole is quite competitive with multiple players and various elements effecting the industry environment. AirAsia has developed a specific set of resources and core competencies that it has
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However, AirAsia will not be able to utilize its point-to-point cost reduction and aircraft utilization strategy. Long-haul flights will require more time in the sky with flyer layovers and a less streamlined flight schedule. Short regional flights allow AirAsia to serve a greater number of flyers over a shorter period of time at a lesser cost (example: 2 or 3 short-haul flights in the time it takes a single long flight).
Lastly, due to the highly competitive nature and over saturation of international airlines, AirAsia may not realize the same aircraft utilization in long-haul flights as it does with short flights. Regionally, South East Asia is densely populated with a large market segment consisting of budget leisure and business travelers that had been under served prior to AirAsia (pg.628). By implementing low cost strategies, AirAsia was able to capture and capitalize on the underutilized segment. Unfortunately, due to industry saturation in international long haul flights, AirAsia would have to fight to obtain a strong customer base from established airlines by providing actual or perceived value while trying to maintain cost and utilization optimization.
Another issue AirAsia may face should it overly focus on airline expansion is the fact that barriers to entry in South East Asia are relatively low. The main barrier to entry is the capital investment required to acquire aircrafts. South East Asia has

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