AirAsia - Southeast Asia's Most Successful Low-cost Airline
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Case Details:
Case Code : BSTR157
Case Length : 17 Pages
Period : 2001 - 2005
Organization : Air Asia Airlines
Pub Date : 2005
Teaching Note : Available
Countries : Malaysia
Industry : Aviation
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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What Made Airasia Click?
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AirAsia was not the first budget carrier in Asia (although it was the first in
the Southeast Asian region). The low cost trend actually started in Asia in the
1990s, when two budget airlines - Air Do and Skymark Airlines were launched in
Japan. However, neither of the airlines succeeded as their operational model was
weak and they were soon 'out discounted' by Japan's major airlines - Japan
Airlines, All Nippon Airways and Japan Air System.
Another budget airline, Cebu Pacific Air, operated flights between Hong Kong and
Seoul to the Cebu Islands in the Philippines, but its operations were limited.
Otherwise, it was the national flag carriers that dominated the region...
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Can Success be Sustained in the Long Run?
According to analysts, AirAsia's main appeal was its low fares. By offering
fares that were a fraction of what major airlines charged, AirAsia created a
new market in the Southeast Asian region. People who could otherwise not
have afforded air travel began to fly AirAsia...
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The Outlook for Airasia
Analysts generally agreed that AirAsia's success had
significantly changed the dynamics of the Southeast Asian aviation
industry. However, they said it would be premature to call the airline
an unqualified success. AirAsia was set up in 2001, which was a bad time
for the global aviation industry. Despite this, it managed to develop a
successful business model.
However, the airline industry had witnessed a number of cases where
airlines started off well but later experienced a downturn... |
Exhibits
Exhibit I: Free Seats Offer - 2005
Exhibit II: Low Cost Airlines
Exhibit III: Destinations Served by Airasia
Exhibit IV: Airasia's Values
Exhibit V: Cost Per Available Seat Mile in Mid-2004
Exhibit VI: Online Reservations at Airasia
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