Air Asia: Entry in India Group 8 Air Asia: Entry in India Nilesh Group Details: Mitali Desai – 13 Nilesh Dodani – 14 Swati Kadam – 22 Pankaj Mahajan - 27

Introduction: AirAsia Established in 1993 by HI COM Berhad & commenced its operations in 1996 In 2001 - AirAsia was bought by Tune Air Sdn. Bhd. In 2003 – Internationalization of AirAsia started In 2004 – JV with Shin Corporation & established Thai AirAsia In 2004 – AirAsia acquired 49% stake in Awair (Indonesia based airline) – renamed as Indonesia AirAsia In 2006 – AirAsia took over Malaysian Airlines rural routes – Fly Asian Express In 2007 – Fly Asian Express renamed as AirAsia X – started low cost, long haul services Nilesh

Introduction… In 2008 – AirAsia started its services in India Started with 3 of its subsidiaries: AirAsia Bhd., Thai AirAsia & AirAsia X In 2010 – Philippines AirAsia Inc. established In 2011 – Entered in JV with All Nippon Airways(ANA, Japan) – formed AirAsia Japan In 2011 – Withdrew services from Hyderabad In 2012 – Stopped services from Delhi & Mumbai In 2013 – JV with Tata Group & Telstra Tradeplace – established AirAsia (India) Pvt. Ltd. Nilesh

Nilesh

Key Strategies Safety First High Aircraft Utilization Low Fare, No Frills Streamline Operations Lean Distribution System Point to Point Network Swati

Elements in International Strategy Arenas Vehicles Differentiation Staging & Packaging Economic Logic Arenas Staging Vehicles Swati

AirAsia’s International Strategy 2nd largest growing economy in Asia Connectivity b/w India & Malaysia 100% Load factor Entry strategy with 3 subsidiaries Arenas Vehicles Differentiation Staging & Pacing Economic Logic Thailand, Indonesia, Japan, Philippines, India Lean Distribution System Low cost, Standardized Service, Less Turn Around time. Arenas Staging Vehicles Swati JV Acquisitions Secondary Airports Untapped & poor connectivity routes Point to Point N/w Simplicity in Operations Low-cost, No frills Model High Margins Sustainable Growth Customer Satisfaction

PESTLE Political Highly regulated political environment where passengers are favored the airlines Strict regulations for Safety Furthermore Economic Declining passengers, high fuel prices, competition from low-cost airliners, labor demands and soaring operating and maintenance costs. In addition, events such as the recent Malaysian airline disappearance, is also adversely affecting the global airline industry. Social Consumers have become much more demanding. Passenger profile has changed as well with there being more economically minded passengers. Business class passengers, improved communication facilities have reduced the need to fly down for meetings. Technological With intense competition in the airline industry, latest technology must be adapted by airliners in order to survive in the already tough environment. Additionally, the use of latest technology in aircrafts would not only lower fuel consumption, but also the cost of airline operations and improve efficiency. Pankaj

SWOT Strengths Weaknesses Opportunities Threats Growth in revenue Low distribution cost Low operational cost Attractive ticket price Strong brand presence in Asia Malaysian government support JV with Tata AirAsia Academy Heavy reliance on IT Non-operational in busy sector Long haul flight – New routes Industry consolidations - new routes & airport deals Recycling routes abandoned by struggling rivals Increase in competition Increase in fuel price Increase in maintenance cost Customer confidence affected by accidents System disruption on IT Strengths Weaknesses Pankaj Opportunities Threats

Generic Strategy Mitali

Differential Benchmarking Air Asia Most successful LCC in World Prefers to take on World Avoids metro destinations in India Mainly booking through Internet Aggressive price promotions Indigo Biggest airline in India Prefers to work in India Pan India operation Strong back offices in India Stable fare prices Mitali

Sales & Distribution Early Bird Offers Distribution through Internet Aggressive price promotion Promotion of AirAsia.com on flight Mitali

Q & A Q1: Enumerate the factors contributing to growth of aviation sector in India. Rising incomes and propensity to spend Setting up of new airports Modernizations of airport infrastructure Increase in business & leisure travels Govt. allowed 49% foreign investment in local airlines Easy online booking and attractive & unique fare offering Mitali

Q & A Q2: What factors contributed to failure of Low Cost Model or LCC model in India? Impact of Rise in Fuel prices (YTD 2007, Source: IATA) Less than 3% Indians fly (Source: Forbes, 2013) Long turnaround time in India. Europe has 1 hour. India has 1.5 hour (Source: Business Standard Edition, 5.8.2008) High congestion at Indian Airports, leading to less utilization of Aircraft High taxes on the facilities at Indian Airports in Metros

Q & A Q3: Evaluate AirAsia decision of selecting India in geographical expansion strategies. India is 2nd fastest growing economy in Asia Increasing trend of domestic airline passengers in India 2006: 26.1mn & 2011: 60.7mn India is 9th largest aviation market in world As per 2011: 60.7mn passengers India is expected to be 3rd largest aviation market by 2020 India’s air travel market is projected to be 159mn passenger by 2021. Mitali

Q & A Q4: How will AirAsia extend its core strategy in India? Expand further into Northern Tier I & Tier II cities in India with rest of Asia Connect Tier I & Tier II cities with each other Launch Express service in India for courier alongwith passenger segment Become Pan-India player Pankaj

Learning and Conclusion Low cost carriers (LCC) focus on cost reduction Utilization of a young and homogenous fleet of medium-size of aircraft lessening of fuel, upkeep, staff, maintenance, overheads High occupancy seating accelerates lower unit cost AirAsia applies low-cost leadership Primary and secondary activities, AirAsia’s success to create competitive advantage AirAsia needs to improved customer service AirAsia should do more promotion AirAsia does not have its personal maintenance, repair and overhaul (MRO) facility Pankaj

Thank You Pankaj