Product Overview

This case presents the situation in which Tony Fernandes, the chief executive officer (CEO) of AirAsia Group of Companies, had to decide whether to re-enter the Japanese aviation market. In August 2011, Fernandes entered Japan with his no-frills low-cost carrier (LCC) by establishing AirAsia Japan (AAJ) in partnership with All Nippon Airways (ANA), Japan's largest full-service carrier. With around 6,800 islands in Japan, there was potential for a large number of tourists to be drawn in, and air travel was the only link between these islands and the rest of the world. However, the partners ended their collaboration two years later because of growing conflicts and poor performance. The imperative for re-entry arose with the Japanese government's initiatives to bolster tourism, which was further augmented by its announcement of hosting the Olympics in 2020. This case provides information on the circumstances leading to AirAsia's initial entry and exit from the market, as well as the current situation in Japan. It offers an opportunity for MBA or executive education participants to put themselves in Fernandes' shoes and decide whether or not to re-enter the Japanese market.

Learning Objectives

This case aims to facilitate discussion of issues related to market re-entry. Firms may decide to exit a market for various reasons, such as changed regulations, initial assumptions about market opportunities, priorities of the management or competitive attack. However, new developments in the same market or inside the firm prompt the management to reconsider the exit and think of re-entry. After analysing and discussing the case, participants should be able to delineate the process and determinants of a firm's entry into and exit from a market; comprehend the factors prompting firms to review the exit decision and consider re-entry; identify the strengths and weaknesses of the firm and the new opportunities and threats for evaluating the re-entry question.