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