AirAsia : Indeed the Sky's the Limit!

ASIAN JOURNAL OF MANAGEMENT CASES, 7(1), 2010: 7–31 SAGE PUBLICATIONS LOS ANGELES/LONDON/NEW DELHI/SINGAPORE/WASHINGTON DC DOI: 10.1177/097282011000700103

Lead Article

AIRASIA: INDEED THE SKY’S THE LIMIT!
Rizal Ahmad
This article details the development of AirAsia Malaysia from 2005 to 2008 and builds on a prior case, ‘AirAsia: The Sky’s the Limit’. Within only four years, AirAsia managed to expand its operations into another ten countries. In addition, through its associate company AsiaX, it launched long-haul low-cost air services from Malaysia to Australia and the United Kingdom. The article documents AirAsia’s marketing strategy and discusses its approach towards ‘market development’ and ‘product development’. The Blue Ocean Strategy concept is used as a tool to examine AirAsia’s strategic moves. Keywords: Low-cost airlines, budget airlines, marketing strategy, Asian entrepreneurship

In the case study ‘AirAsia: The Sky’s the Limit’, the authors Ahmad and Neal (2006) discussed AirAsia’s comeback from a debt-laden scheduled airline (US$ 10.5 million in December 2001. The airline was bought by Tune Air for a token sum of one ringgit1 or 0.26 US cents) to a profitable low-cost or budget airline that managed to attract US$ 200 million in additional capital through its initial public offering in October 2004. AirAsia Berhad or Malaysia AirAsia (hereafter referred to as AirAsia) was credited for its efforts in enabling Malaysian people to travel by air to destinations in Southeast Asia at relatively low prices. AirAsia’s business model was a replication of Southwest Airlines’ low-cost model but was spruced with ‘local touches’ in terms of its marketing management practices. In December 2004, AirAsia formed a joint venture airline in
Ringgit is the Malaysian currency. It was pegged to the US dollar at the rate of 3.8