Air Asia: The World’s Lowest Cost Airline

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infrastructure. In the same time Air Asia has to maintain its comparative cost advantage.

Introducing Air Asia X – Recommendations

By introducing a second airline within the Air Asia Group, Air Asia did a big step towards fulfilling the firms mission. It mitigated the risk of influencing Air Asia’s core business (short-haul flights) in a bad way and spread the risk among several investors. Partnering with the Virgin Group and other companies they could gather knowledge and expertise in long-haul operations.

Having reached economies of scale in the short-haul business, it is the right step forward to entry the long-haul business in order to achieve economies of scope. Synergies can be generated through shared administration and contracts with third parties (maintenance services, etc.). Furthermore, Air Asia X should adapt Air Asia’s way of conducting business in the airline industry: lean management, flexible working force, no frills, single aircraft type. Thus so far, Air Asia X could keep its comparative cost advantage. This and the above discussed facts lead to the conclusion that the comparative cost advantage is Air Asia’s key competitive advantage in the airline industry.

Facing further globalization and changes in corporates’ business travel policies pared with an increasing abolition of customer segmentation (business / economy class) there’s only limited doubt in the success of a LCC as competitor of so-called legacy carriers (U.S. Airline Industry 2009). Leisure long-haul travel will become more important in the future with higher demand. Air Asia’s competitive advantage allows them to focus on the economy class segment which helps Air Asia to transfer its competitive advantage to long-haul flights.

Strategic Management of the Firm, UAB Study Abroad 2015

Marvin Schieber