Abstract
In February 2009, Tony Fernandez, the founder of AirAsia was not bothered by the company’s mass order of 175 new aircraft for its AirAsia-X long-haul services. He could not resist the concern over the aircraft deferment to Thailand and Indonesia in 2011 because of the relocation of the low-cost carrier terminal in Sepang before AirAsia was forced to move to KLIA2. Such a situation would surely increase its operating costs exponentially. He also knew he was facing an economic downturn and the high competition, particularly for his AirAsia-X business. Major rivals of AirAsia-X in the region were Singapore Tiger Airways, Cebu Pacific Air of the Philippines and a global competitor was EasyJet in Europe had just launched aggressive campaigns and promotions which would affect its long-haul business. He was certain that the company would achieve his dream to spread its wings all over the world. However, he realized that the company’s operating costs and competition with other airliners that joined the club of no-frills airlines based on a national and international level presently had escalated. He knew he had to act now. If you were Tony Fernandez, what would you do in this scenario was a question that needs an answer? This is an issue of strategic choice of divesting or integration as the strategic options are limited in the short as well as long run. The AirAsia case study has the main objective of sharing impact of the covid-19 pandemic devastating impact on the airliners. It is a significant study in terms of impact on economy, tourism and hospitality industry in general and Malaysia in particular.
Highlights
Under the stewardship of Sunil Bhaskaran AirAsia India, commenced operation on 12 June 2014. This is a joint venture between Indian conglomerate Tata for 51% and Air Asia keeping 49% as an investment beyond the region to enjoy operation connecting major Indian cities Mumbai, Calcutta and New Delhi from its hub in Bengaluru
Air Asia originated from Malaysia for one ringgit company with the debt-ridden entity sold by the government to transform it as a private carrier to answer an increasing demand for promoting the tourism industry
This case study objective is to compare prior and after the expansion, the effectiveness of the old strategy of centralized and remote control from Kuala Lumpur, with the new realities and airline industry future as old direction was set by Air Asia including AirAsia-X and the affiliates
Summary
Tony’s style is always to have full control. This situation coupled with the present political dispensation of India’s unfriendly attitudes with a Malaysian entrepreneur, Tony Fernandes, turned out to become a major concern in the board room that needs attention. Years before AirAsia India was conceptualized, Fernandes had wanted to start a car company and had approached Ratan Tata an Indian conglomerate, for a tie-up with Jaguar Land Rover. AirAsia India took off to the Indian sky as a partnership between Ratan Tata and Tony Fernandes. Friendship and trust between Tatas and Tony Fernandes existed but the former wanted to replicate the success of the Malaysian and South East Asian aviation experience of AirAsia in Indian sky. Tony’s style of staying in control is AirAsia’s integral part of business plan created storm in a cup of tea
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