The headline “AirAsia’s decade of unbroken success and expansion ends” in the Aviation Section of Business Times on 8 Mar 2012 came as no surprise. Long-haul flights and budget carriers don’t mix very well. At least, we haven’t seen a good mix yet. Specialization seems to be the way to go, if we take a leaf out of Southwest Airlines’ approach. You can see a slideshare presentation from Harvard Business School on Southwest Airlines here. A similar presentation on Air Asia by Anthony Fenech can be found here. Air Asia, of course, has a different and more complex operating environment from that of Southwest Airlines, the Continental United States (CONUS) being far larger than all of Southeast Asia, and with no international boundaries. The strategies, however, have a great deal of overlap, and both airlines have managed to retain the lion’s share of their chosen market segment. There are problems, of course, but then problems come when you have people, and both airlines have plenty of people working for them.
While Southwest Airlines decided to stick to “sprinting”, Air Asia decided to make a foray into the domain of the Marathon and even the Decathlon. No mean feat when one considers that King Gustav V of Sweden called the winner of the Decathlon the “King of Athletes”. No offence to those who think that the “King of Athletes” title ought to be given to, say, the winner of the Tour de France, but the Decathlon is really the great all-rounder “something else”. On long-haul flights, low cost carriers not only have to contend with fuel costs, but the attendant services that must be provided to ensure passenger comfort as well. In addition, the profile of passengers who go on long-haul flights is different from that of those frequently using the services of short-haul flights. Ticketing, baggage handling, and a host of other concerns come into the picture as well. If Air Asia manages to find ways to make long-haul flights affordable to passengers and affordable for itself, then another first might be in the works. Who knows?
So, what is your approach to business strategy? Are you a sprinter, marathon runner or decathlete? Let me know!