Abstract

The case is about the entry strategy of Malaysia-based AirAsia Berhad (AirAsia), Asia’s largest budget carrier, in India. In February 2013, AirAsia announced its plans to launch a regional airline in India in association with Tata Sons Ltd. and Telestra Tradeplace Pvt. Ltd. The new airline would be managed by AirAsia and operate from Chennai. It would target tier II and tier III cities in India. The case discusses the low cost business model of AirAsia and its target market. It also includes a detailed note on the Indian aviation industry, India’s civil aviation policy, and the legal requirements to be fulfilled by a foreign company to enter and operate in this highly regulated industry. The case describes the joint venture in detail. It highlights the process of forming a new airline. The case ends with a discussion on the challenges that lie ahead for the company and on whether AirAsia will be able to replicate its business model in India or not.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Study and analyze the structure of the Indian civil aviation industry
• Understand the issues and challenges of low cost business model in the Indian aviation industry
• Analyze the target market and the differentiating strategy of a low cost airline in India in comparison with that of a full service airline

Keywords

Diversification, Internationalization, Mode of entry, Joint venture, Industry structure, India's civil aviation policy, Competition, Legal requirements, Low cost, Low cost business model, strategic disinvestment, brand licensing, financial investor, business model