AirAsia Malaysia 2001

Abstract

This case presents the situation faced by Tony Fernandes, Vice-President of Warner Brothers, ASEAN region CEO, in 2001, when he had to decide whether he should be venturing into Aviation business by acquiring an existing airline or drop the idea altogether. Fernandes was interested in starting a budget airline in Malaysia on the lines of low-cost airlines in the USA and Europe. Along with two close associates he had presented a proposal to Mahathir bin Mohammad, the Prime Minister of Malaysia, to start a low-cost airline. Mohammad rejected the proposal and suggested that Fernandes could consider buying an existing airline. Conceptually it helps the participant to build the concept of entry through acquisition mode as opposed to entry through own creation. In the larger context, it involves the participants in evaluating a strategic opportunity for a new entrant.