Air Asia choosing the right entry mode for international expansion is a critical managerial decision that could impact its survival and performance. Air Asia could expand and enter new markets by adopting collaborative agreements (Chan, 2000). Through air agreements and air alignments in new markets, Air Asia could collaborate with its competitors instead of wasting energy on competing (Chan, 2000). This would allow both companies to focus on their core competencies and grow faster.where each benefits from the strengths of the other. A strategic alliance is an agreement between two or more organizations that could be actual or potential competitors. This would be the optimum entry mode into a new market for Air Asia. This form of entry has been adopted by several airlines and has proven successful.
A good strategic option for Air Asia is to enter the African market, with the deregulation and liberalization of African skies, namely in North Africa (Egypt, Tunisia, and Morocco), and Southern Africa (South Africa) would bring about new opportunities for companies like Air Asia.
Africa is a vast and diverse continent that is a home to almost 1 billion people, spread across more than 50 countries. The African market only has 5 low cost airlines that operate either in North Africa or South Africa. South Africa is the largest and most sophisticated African economy with a well-developed transport and manufacturing infrastructure. It has a 2.5% GDP growth rate, and makes up 30% of Africa's entire GDP (Southafrica-newyork.net, 2014). Moreover, there is an expected increase in tourism to reach around 36 million people (World Bank, 2014), which would make Africa a fertile market for Air Asia to enter.
Air Asia could penetrate the South African market and enter into an alliance with companies like Mango Airline, which is owned by South African Airways...