air asia: entry in india group details: mitali desai – 13 nilesh dodani – 14 swati kadam – 22...

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

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Air Asia: Entry in India

Group Details:Mitali Desai – 13

Nilesh Dodani – 14Swati Kadam – 22

Pankaj Mahajan - 27

Group 8

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

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.

Key Strategies• Safety First• High Aircraft

Utilization• Low Fare, No

Frills• Streamline

Operations• Lean Distribution

System• Point to Point

Network

Elements in International Strategy

Arenas

VehiclesStaging

Arenas

Vehicles

Differentiation

Staging & Packaging

Economic Logic

AirAsia’s International Strategy

Arenas

VehiclesStaging

Arenas

Vehicles

Differentiation

Staging & Pacing

Economic Logic

• Thailand, Indonesia, Japan, Philippines, India

• Lean Distribution System• Low cost, Standardized

Service, Less Turn Around time.

• JV• Acquisitions• Secondary Airports

• Untapped & poor connectivity routes

• Point to Point N/w• Simplicity in Operations• Low-cost, No frills Model

• 2nd largest growing economy in Asia

• Connectivity b/w India & Malaysia

• 100% Load factor• Entry strategy

with 3 subsidiaries

• High Margins• Sustainable Growth• Customer Satisfaction

PESTLEPoliticalHighly regulated political environment where passengers are favored the airlinesStrict regulations for Safety FurthermoreEconomicDeclining 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.SocialConsumers 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.TechnologicalWith 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.

SWOTGrowth 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

Opportunities Threats

Generic Strategy

Differential BenchmarkingAi

r Asi

a • Most successful LCC in World

• Prefers to take on World

• Avoids metro destinations in India

• Mainly booking through Internet

• Aggressive price promotions

Indi

go

• Biggest airline in India• Prefers to work in

India• Pan India operation• Strong back offices in

India• Stable fare prices

Sales & Distribution

Early Bird OffersDistribution through InternetAggressive price promotionPromotion of AirAsia.com on flight

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

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.

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

Q & A

• 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

Learning and Conclusion

Thank You