Post on 14-Dec-2014
description
Welcome on board!
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The Entry Strategy of in Dubai
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About Air Asia
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Air Asia: Company HistoryFriday, July 4, 14
Air Asia in Brief
AirAsia is one of the award winning and largest low fare airlines in Asia.Has a fleet of 165 aircra8s and flies to 100 des:na:ons spanning over 22 countries.Operates from hubs located in Malaysia, Thailand, Indonesia, Philippines and India.Affiliate airlines:
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Air Asia: Revenue (26 February 2014)
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Characteristic of Air Asia
Boss
No#extra#charges�
Above#80%####
on45me#departur
es�
High#safety#&#quality#
standards�
Low#fares�
132#routes,#40#offered#by#no#other#
airline�
Easy4check#in#online�
Frequent#flyers#
offerings�
Now$Everyone$can$Fly�
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Entry Strategy to Dubai 2016!
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Dubai: Introduction
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INTRODUCTION
Demographics Popula:on 2106177 (1 January 2013) Indian (51%), Emira: (17%), Pakistani (16%), Bangladeshis (9%),
Filipinos (3%), Others (4%)
Area: 4,114 km2 Average household income (monthly): $3186 (2009)Average household income (yearly): $35910 (2009)
Economic CriteriaGDPDisposable Income
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INTRODUCTION
Poli%cal & Legal Environment1.Federal presiden:al elected monarchy.
2.No poli:cal par:es, poli:cal par:es are forbidden. 3.Dubai is subject to the federal law of the UAE but retains the right to
administer its own internal affairs and enjoys certain other exclusive rights.
Legal representa:on1.Easy legal representa:on. 2.The full spectrum of regional and interna:onal law firms operate in Dubai, with many of the larger interna:onal firms choosing to operate from the DIFC
Corporate governanceWith the mission to develop corporate transparency and principles of good corporate governance and an:-‐money laundering Hawkamah Corporate Governance Ins:tute, has been established.
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INTRODUCTION
Tax System1.No federal corporate or income tax levied in the UAE (except on oil companies and foreign banks).
2.Free zone en::es are subject to a number of tax concessions.3.There is no value added tax or sales tax in Dubai or the UAE.4.There are no exchange controls on the remieance of profits or repatria:on of capital and there are virtually no restric:ons on foreign trade.
The Court System1.Dubai has retained its own independent courts (and judges), which are not a part of the UAE Federal Judicial Authority. 2.Dubai’s courts will first apply federal laws, such as the Companies Law or the Civil Code, as well as the laws and decrees enacted by the Ruler of Dubai, where federal law is absent or silent.
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INTRODUCTION
Structuring and licensing for interna%onal businesses wishing to do business in Dubai(FDI Regula%ons)
1.Register a local en:ty under the Companies Law or the Civil Code2.51% of the share capital must be held by UAE na:onals3.Register a branch or representa:ve office of a foreign company4.Must appoint a UAE na:onal to sponsor the office for its license applica:on and for various other maeers.5.Enter into a commercial agency rela:onship with a UAE na:onal.
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Landmark developments in Dubai in terms of law and regula:on, most notably, in the crea:on of the many free zones in Dubai (Dubai Interna:onal Financial Centre (DIFC))
Condi:ons for doing business in free zones1.Businesses wishing to set up in the free zones are required to establish places of business physically within the geographical boundaries of the par:cular free zone.
2.100 percent foreign ownership of companies allowed (compared to 49 percent for most companies incorporated outside the free zones).
3.Tax concessions, no restric:ons on the repatria:on of capital and profits.Freedom from currency restric:ons and import du:es.
Why Dubai?
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Why Air Asia drew back from Dubai on 2010?
“We will resume once we are able to have a more economical aircra8” “We believe with the right aircra8, it can be very promising”
“Underwhelming demand for :cket, uneconomical aircra8”
“Could have reached out more to local travel agents, many UAE are s:ll unable to purchase :ckets online via credit card”
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Entry Strategy of AirAsia in Dubai
Joint venture agreement with Citibank UAE
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Why Citibank?Since 1812.A global bank with 3,777 branch loca:ons in 36 countries.Provides insurance, credit cards and investment products.Its online services division is among the most successful in the field claiming about 15 million users.
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Market Analysis
Market growth ratesForecasted demandCompetitorsPotential barriers to entry
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Market Analysis: Market Growth Rate
Dubai Interna%onal Airport-‐Over 7,000 weekly flights operated by 140 airlines to over 230 des:na:ons across every con:nent except Antarc:ca. (February 2014)-‐7th busiest airport in the world by passenger traffic. (Passenger Traffic Hub)-‐2nd busiest airport in the world by interna:onal passenger traffic.-‐5th busiest cargo airport in world handled 2.44 million tons of cargo.(2013) (Cargo Traffic Hub)
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Market Analysis: Forecast Demand
Interna%onal Passenger DevelopmentUAE will add 29.2 million passengers (6.6% CAGR). Routes between the Middle East and Asia-‐Pacific will see the strongest growth.
Regional Outlook over the 2013-‐2017 forecast periodThe Middle East will report the strongest interna:onal passenger growth with 6.3% CAGR.
15 Million tourists by 2015 (40,000 visitors per day)Airline Industry Forecast 2012-‐2016
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Market Analysis: Competitors
CompetitorsPassenger!Emirates (64%)!Flydubai (LCC) (10.4%)Iran Aseman AirlinesQantas
CargoAl Rais CargoEmirates Skycargo
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Market Analysis: Potential Barries to Entry
-‐Highly compe::ve market-‐Excellent infrastructure-‐Joint-‐venture with the local partner holding at least 51% of the equity. -‐100% foreign ownership permieed in the many free-‐trade zones.-‐-‐Only one LCC (flydubai).
However,Exis:ng airlines highly cost compe::ve.Most of the airlines are state owned hence can be quite difficult to enter the market
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Market Analysis: Potential Barries to Entry
-‐Highly compe::ve market-‐Excellent infrastructure-‐Joint-‐venture with the local partner holding at least 51% of the equity. -‐100% foreign ownership permieed in the many free-‐trade zones.-‐-‐Only one LCC (flydubai).
However,Exis:ng airlines highly cost compe::ve.Most of the airlines are state owned hence can be quite difficult to enter the market
UAE ranked 46 Ease of doing business survey
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Risk Analysis
1.Regulatory risks(unan:cipated government interven:on) 2.Unan:cipated environmental or social impacts as a result of the venture 3.Market risks (compe::on) 4.Opera:onal (maintenance, suitability, safety)5.Currency fluctua:ons6.Infla:on7.Changes to taxa:on8.Credit card debt problems
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Profit Potential Estimates
Produc've*&*skilled*employees,*simple,*
aggressive*and*focused*management*structure�
High*aircra;*u'liza'on�
Standard*fleet*of*aircra;�
Frequent*reliable*schedules�
Short*haul,*pointBtoBpoint*routes,*o;en*to*secondary*airports�
Courteous*but*limited*passenger*service****(e.g.*no*meal)�
Compe''ve*Advantage*LOW$COST�
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Porter Strategy
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Porter Strategy
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Porter Strategy
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TOWS AnalysisS1.Limited Type of Aircraft2.Established Brand3.First Mover Advantage4.Low Cost5.Strong Management Team6.Excellent Utilization of IT
W1.Problems in punctuality2.No own maintenance, repair & overhaul facility3.Secondary Airport location4.New market5.Depends too much on IT
O1.World Expo 2020 Dubai2.`Asia Pacific Labor` Market3.Open Skies Regulation4.High Cost Competitors5.Increase in fuel price may eliminate unprofitable competitor
T1.Oil price fluctuation2.Tax & Subsidies regulations3.Strong competition4.Political & Economic Situation
SxO1.Promotion Package for World Expo 2020 Dubai2.Special package for labor workers/ groups 3.Establishing Dubai Tour Package & keep the price low
WxO1.Expanding fleet, purchase bigger aircraft3. Keep the price low
SxT1. Maintain a good relationship with government officials2.Allow seat allocation for groups
TxW1.Training ground staffs2.Recruiting Staffs for maintenance, repair, and overhaul facility
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BCG Matrix
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BCG Matrix
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BCG Matrix
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Marketing Strategy
Promotion Package for Labor worker/ group
Promotion of Air Asia-Citibank
Establishing good network with local travel agent
Becoming an official partner for EXPO 2020 Dubai
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Concluding Remarks
Why do we think AirAsia Dubai will work?
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1.New land of opportuni:es: Strategic loca:on2.One of the inspira:onal, exci:ng and successful countries in the world with huge growth poten:al.3.Immensely aerac:ve des:na:on for tourists and business alike.4.Expo 2020 in Dubai ( increase in visitors of at least 25 million and up to 100 million) and the 2022 FIFA World Cup in Qatar.
5.Poli:cal and economic stability.6.Fewer compe::on.
Dubai
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Ci:bank Dubai is the branch of interna:onal financial group – Ci:bank Group in the United Arab Emirates, the leading bank in the country’s credit card market.One of the oldest banks with diversified services and a very strong online banking network.
Perks on ground and in the air -‐ a world full of privileges. Beau:ful Harmony
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Internet&users&and&its&&penetra-on�
Country&or&area� Internet&users� Rank� Penetra-on� Rank�
!United!Arab!Emirates! 4,517,169� 64� 85.0%� 20�
Internet&users&by®ion!�� 2005b! 2010b! 2013a,b!
Africa! ������2%!!!!!!! ������10%!!!!!!! ������16%!!!!!!!
Americas! 36%! 49%! 61%!
Arab&States! 8%! 26%! 38%!
Asia&and&Pacific! 9%! 23%! 32%!
Europe! 46%! 67%! 75%!a!Es<mate.!b!Per!100!inhabitants.!
Sustainability of AirAsia Dubai
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Internet&users&and&its&&penetra-on�
Country&or&area� Internet&users� Rank� Penetra-on� Rank�
!United!Arab!Emirates! 4,517,169� 64� 85.0%� 20�
Internet&users&by®ion!�� 2005b! 2010b! 2013a,b!
Africa! ������2%!!!!!!! ������10%!!!!!!! ������16%!!!!!!!
Americas! 36%! 49%! 61%!
Arab&States! 8%! 26%! 38%!
Asia&and&Pacific! 9%! 23%! 32%!
Europe! 46%! 67%! 75%!a!Es<mate.!b!Per!100!inhabitants.!
Sustainability of AirAsia Dubai
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See you on 2016!
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TOWS AnalysisStar%ng(a(Joint(Venture(in(Dubai�
Perhaps(the(easiest(way(for(a(foreign(investor(to(establish(a(business(presence(in(the(UAE(is(to(enter( into(a( Joint(Venture( (JV)(with(a(UAE(Na>onal( (Local)(or(a(company(100%(owned(by(UAE(Na>onals.(((A(Joint(Venture(can(be(arranged(on(the(following(basis:(((• All(aspects(of(the(business(and(stock(of(products(remain(the(property(of(the(foreign(investor.(• The( foreign( investor( controls( the(management( of( the( business( including( opera>ons( of( its(
bank(accounts.(• The(foreign(investor(effec>vely(receives(all(profits(except(for(an(agreed(fee(paid(to(the(Local.(• The( UAE( Na>onal( provides( sponsorship( to( the( foreign( investor’s( employees( for( residence(
visas(and(work(permits.(• The( UAE( Na>onal( must( have( a( license( to( operate( the( Joint( Venture( in( the( name( of( the(
foreign(investor.(• Licenses(are( issued(by( the(Municipality(or(Economic(department(of( the(Emirate(where( the(
business(will(be(set(up.(• A(Joint(Venture(is(not(suitable(for(manufacturing,(contrac>ng(or(similar(businesses.((�
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Star%ng(a(Joint(Venture(in(Dubai�Perhaps(the(easiest(way(for(a(foreign(investor(to(establish(a(business(presence(in(the(UAE(is(to(enter( into(a( Joint(Venture( (JV)(with(a(UAE(Na>onal( (Local)(or(a(company(100%(owned(by(UAE(Na>onals.(((A(Joint(Venture(can(be(arranged(on(the(following(basis:(((• All(aspects(of(the(business(and(stock(of(products(remain(the(property(of(the(foreign(investor.(• The( foreign( investor( controls( the(management( of( the( business( including( opera>ons( of( its(
bank(accounts.(• The(foreign(investor(effec>vely(receives(all(profits(except(for(an(agreed(fee(paid(to(the(Local.(• The( UAE( Na>onal( provides( sponsorship( to( the( foreign( investor’s( employees( for( residence(
visas(and(work(permits.(• The( UAE( Na>onal( must( have( a( license( to( operate( the( Joint( Venture( in( the( name( of( the(
foreign(investor.(• Licenses(are( issued(by( the(Municipality(or(Economic(department(of( the(Emirate(where( the(
business(will(be(set(up.(• A(Joint(Venture(is(not(suitable(for(manufacturing,(contrac>ng(or(similar(businesses.((�
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Al Maktoum Interna:onal Airport DWC Jebel Ali, Dubai Emirate, United Arab Emirates No airline service | Pilot info | 1 comment | 1 visitor
Al Minhad Air Base NHD Dubai, Dubai Emirate, United Arab Emirates No airline service | Pilot info | 2 comments | 4 visitors
Dubai Creek SPB DCG Dubai, Dubai Emirate, United Arab Emirates No airline service | Pilot info | 1 comment
Dubai Interna:onal Airport DXB Dubai, Dubai Emirate, United Arab Emirates Routes | Flights | Pilot info | 7 comments | 120 visitors
Dubai Skydive AE-‐0003 Dubai Emirate, United Arab Emirates No airline service | Pilot info
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flydubai(annual(seat(capacity:(200942014� flydubai(annual(ASK(capacity:(200942014�
flydubai des%na%ons and overlap with Emirates: 2009-‐2014
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