TURBULENCE AT AIRASIA INDIA: CAN IT

TURNAROUND?
ABSTRACT
This case study, in the light of AirAsias Joint Venture operation in Indian domestic airline
market, can be used to highlight the challenges involved in running a joint venture airline
operation in India. It enables a discussion on the reasons for AirAsias less-than-expected
performance in India. Having launched AirAsia India (AAI) with great fanfare and expectation
of revolutionizing Indian domestic aviation, the airlines performance nearly after 2 years has
largely been anything but spectacular. A fairly successful low-cost airline in its home country
(Malaysia), AirAsia Berhad, exported its business model successfully to other countries like
Thailand, Indonesia and Philippines. With a view to repeat the same in India, it entered into a
tripartite joint venture (holding a majority stake of 49%) with Tata Sons (30%) and Telestra
Tradeplace (21%). However, after 20 months of its operations, AirAsia India was besieged with
a few but substantial problems like mounting losses, differences among shareholders, cash crunch
and exit of senior-level executives. Why could not the airline that succeeded with its low-cost
model in every country it entered fly successfully in India? With only AirAsia, Tata Sons and
two of Tata Sons ex-employees and currently AAIs board members coming to rescue (with a
restructured joint venture), would AAI finally have a success recipe for India?

Pedagogical Objectives

To discuss and debate on the efficacy of AirAsia Indias market entry (launch) strategy with
a tripartite joint venture

To analyze, given the nature and business dynamics of Indian Civil Aviation industry, the
reasons for AirAsia Indias questionable business performance vis--vis the potential and
debate on how much of such business performance was due to companys strategic missteps
and how much of it was due to systemic and structural reasons

To discuss and debate on all the possible ways for AirAsia India to regain its lost potential
and become a notable and profitable Indian low-cost carrier

Case Positioning and Setting

This case study can be used in the MBA Program for the following:
Strategy Course Market Entry Strategy Challenges in designing and executing a
well-intended and well-crafted market entry strategy of a joint venture in a regulated industry
like airlines.
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