Ivey Publishing
AirAsia X: Can the Low Cost Model Go Long Haul?
Product Number:
9B12M013
Publication Date:
02/17/2012
Revised Date:
02/17/2012
Length:
22 pages (20 pages of text)
Product Type:
Case (Field)
Source:
Ivey
By 2007, AirAsia had become one of the most successful budget airlines in the world. Having dominated Southeast Asia and entered China and India, AirAsia was poised to solidify its place as a top budget airline and one of the most consistently profitable globally. But company founder Tony Fernandes had bigger plans. From the outset in 2001, Fernandes had intended to offer long-haul service, competing against the largest and most established airlines in the world. However, his advisors had urged him to focus on regional, short- to medium-distance service. With many previous successes, Fernandes was once again ready to attempt long-haul service. Despite warnings from industry insiders, Fernandes pushed forward with the expansion.

Hiring 36-year-old Azran Osman-Rani as the CEO for the new long-haul venture, nicknamed X, was a critical step in this process. By early 2010, X had received its eleventh aircraft and was flying to 15 destinations on three continents. However, over time the substantial differences between long-haul and short-haul operating requirements became more apparent. Consequently, the management decided to formally separate X from AirAsia. This separation, and the inherent challenges for X and its recently appointed head of commercial operations, included: (1) how best to leverage the extensive network of the regional sister company AirAsia in selecting new and profitable destinations for X, (2) how to increase revenues without raising ticket prices, (3) how best to globally position the airline’s brand in non-Asian markets, (4) how to shift his marketing team’s mentality away from a start-up mindset, and (5) how to prepare for a global initial public offering within the next year. See supplement 9B15M018.
Learning Objective:
This case is designed primarily for use in full-time and executive MBA program modules on strategic management, international strategy, strategic marketing management, entrepreneurship, or business policy. It could also be used in more specialized master’s programs that focus on strategy or marketing, or for senior undergraduate classes in strategic management, strategic marketing management, or international business. Given that it has a strong innovation focus, it could also be incorporated into courses on innovation and creativity.
Issues:
Disciplines:
Entrepreneurship,  General Management/Strategy,  International
Industries:
Other Services
Setting:
Malaysia;, Large, 2011
Intended Audience:
Undergraduate/MBA
Price:
$4.25 CAD / $4.25 USD Printed Copy
$3.75 CAD / $3.75 USD Permissions
$3.75 CAD / $3.75 USD Digital Download
Associated Materials
Supplements: 9B15M018 (5 pages)
Translations: Simplified Chinese (21 pages)
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