Abstract
By 2007, AirAsia had become one of the most successful budget airlines in the world. Having conquered Southeast Asia, and entered China and India, AirAsia was poised to solidify its place as one of the foremost budget airlines 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 successes under his belt, Fernandes was once again ready to tackle long haul. Despite persistent claims from industry insiders that low cost long haul flights would never be profitable, 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. X’s inaugural flight to Australia took place in November 2007. In early 2010, X 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, Darren Wright 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 12 months.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 masters programs that focus on strategy or marketing, or for senior undergraduate classes in strategic management, strategic marketing management and international business. Given that it has a strong innovation focus, it could also be incorporated into courses on innovation and creativity. Issues:Aerospace; strategic marketing management; competitive strategy; expansion; emerging markets; MalaysiaDisciplines:General Management/Strategy, International, Entrepreneurship Industries:Other Services Setting:Malaysia; , Large, 2011Intended Audience:Undergraduate/MBA.