1. 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

2. Introduction: AirAsia
Established in 1993 by HI COM Berhad & commenced its operations in 1996
In 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

3. 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

4. Nilesh

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

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

7. 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

8. 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

9. 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

10. Generic Strategy
Mitali

11. 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

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

13. 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

14. 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, )
High congestion at Indian Airports, leading to less utilization of Aircraft
High taxes on the facilities at Indian Airports in Metros

15. 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

16. 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

17. 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

18. Thank You
Pankaj