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Air Asia is a case of classical management, where the company competes as a low cost producer, in this case of airline service, using the discount airline model. There are many elements of the AirAsia business model that mirror the discount carrier pioneers like RyanAir and EasyJet in Europe. This case will discuss AirAsia's business model.
Issue Identification
The management issue for AirAsia is to maintain their low cost business model going forward, while handling intense competition and expanding their footprint. Recent expansions outside of SouthEast Asia have been necessary for the growth of the company but they have also stretched the company thin. Additionally, such moves may require larger aircraft, and may affect how the branding is perceived. But AirAsia has developed a strong route network from its KL hub and needs to find growth somewhere.
Another issue that the company is facing is that with its rapid growth, now 8000 employees, it can be difficult to maintain successfully...
The flat structure aligns with the classical management theory, but at the same time the bigger a company gets, the harder it is to maintain such a structure.
Lastly, there are challenges not listed in the case relating to safety. Low cost carriers try to cut costs, and there are risks that such cost-cutting can compromise safety, something that is an existential threat to any airline. The company lost a plane over the Java Sea, killing all on board. While such incidents happen sometimes in air travel, there is also the fact that the company's rival, Air Malaysia, suffered safety issues at this time as well, creating a negative cloud over the industry, and likely bringing about stricter safety regulations.
3.0 Conclusion
AirAsia has been successful so far, but faces significant challenges for the future. The big question for AirAsia is whether the classical management philosophy that has guided them so far can still be applied going…
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