4th Week : Introduction to Air Asia (Part 1) ~ Air Asia

AirAsia Berhad, is a Malaysian low-cost airline. It operates scheduled domestic and international flights and is Asia's largest low fare, no frills airline. AirAsia was a pioneer of low cost flights in Asia. It is also the first airline in the region to implement fully ticketless travel and unassigned seats. However, as of 5 February 2009, AirAsia has implemented allocated seatings across all AirAsia flights, including in their sister airlines, Indonesia AirAsia and Thai AirAsia. Its main base is the Low Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport (KLIA). Its affiliate airlines Thai AirAsia and Indonesia AirAsia have hubs at Suvarnabhumi Airport, Thailand and Soekarno-Hatta International Airport, Indonesia, respectively. AirAsia's registered office is in Petaling Jaya, Selangor while its head office is on the grounds of Kuala Lumpur International Airport in Sepang, Selangor. In 2010 Air Asia won an award for the world best low cost airline.

Focusing on the low-cost, long-haul segment - AirAsia X was established in 2007 to provide high-frequency and point-to-point networks to the long-haul business. AirAsia X’s cost efficiencies are derived from maintaining a simple aircraft fleet and a route network based on low-cost airports, without complex code-sharing and other legacy overheads that weigh down traditional airlines without compromising on safety. Guests continue to enjoy low fares, through cost savings that we pass on to our guests. AirAsia X’s efficient and reliable operations are fully licensed and monitored by Malaysian and international regulators, and adhere to full international standards. AirAsia X is committed in offering X-citing low fares, X-emplary levels of safety and care, and an X-traordinary in-flight and service experience to all our guests - spreading the amazing AirAsia experience to X-citing destinations in Australia, New Zealand, China, Taiwan, Japan, Korea, India, Middle East and Europe.

Vision

To be the largest low cost airline in Asia and serving the 3 billion people who are currently undeserved with poor connectivity and high fares.

Mission

To be the best company to work for whereby employees are treated as part of a big family
Create a globally recognized ASEAN brand
To attain the lowest cost so that everyone can fly with AirAsia
Maintain the highest quality product, embracing technology to reduce cost and enhance service levels

Values

We make the low fare model possible through the implementation of the following key strategies,

Safety First:

Partnering with the world’s most renowned maintenance providers and complying with the with world airline operations.

High Aircraft Utilisation:

Implementing the regions fastest turnaround time at only 25 minutes, assuring lower costs and higher productivity.

Low Fare, No Frills:
Providing guests with the choice of customizing services without compromising on quality and services.

Streamline Operations:
Making sure that processes are as simple as possible.

Lean Distribution System:
Offering a wide and innovative range of distribution channels to make booking and travelling easier.

Point to Point Network:
Applying the point-to-point network keeps operations simple and costs low.

IT IMPLEMENTATIONS AND STRATEGIC ALIGNMENT

In todays globalize economy; information technology has driven fundamental changes in the nature and application of technology in business. The implementation of information technology in its value chain provides powerful strategic and tactical tools for AirAsia, which if properly applied and used, could bring great advantages in promoting and strengthening the competitive advantages.

Current Strategic IT Implementation

Air Asia has currently adopted information technologies strategically to integrate the operations and coordinate all the business and management function. The following are few system implementations that Air Asia has done in its marketing and sales activities as well as operation activity in the value chain.

Yield management system (YMS)

Anticipates and react to the behavior of customers to maximize the revenue- taking into account the operating cost and aids Air Asia to optimize price and allocate capacity to maximize the expected revenues by 2 levels.

a) seat- seats are available at various prices in different points of time. A reservation done at a later date will be charged more than the one done at a later date will be charged more than the one done earlier for the same seat.

b) Route- by adjusting price for routes/ destinations that have a higher demand when compare to others.

Results increase revenue (3-4%) by taking advantage of the forecast of the high/low demand patterns, lower prices as YMS has aided Air Asia to increase the revenue by offering higher discounts, more frequently during off-peak times while raising prices only marginally for peak times.

Computer reservation system ( CRS)

An integrated web-enabled reservation and inventory system suite powered by Navitaires open skies technologies that include internet, call center, and airport departure control functionality.
Satisfy the unique needs of Air Asia implementing a low-cost business model to transform the business process to efficiently streamline operations.
Helps Air Asia to grow at a dramatic pace in the past few years as started below “ navitares open skies technology has truly enable Air Asia growth from 2 million passengers to 7.7 million passengers in less than two years. Open skies scaled easily to accommodate our growth.” Tony Fernandes, CEO Air Asia.

Enterprise resource planning system ( ERP)

An integrated ERP solution powered by Microsoft Busniess solutions ( MBS) on Microsoft technology platform which is implemented by Avanade consultants in MA 2005.
With the robust ERP technology platform, Air Asia is able to successfully maintain process integrity, reduce financial month-end closing processing time, speeds up reporting and data retrieval process.

BUSINESS PROCESS AND OPERATION

AirAsia has fostered a dependency on Internet technology for its operational and strategic management, and provides an online ticket booking services to traveler online. The following shows the home page of AirAsia.com as the company key channel of marketing and sales.

To book a flight with AirAsia, customers can either choose the following channels or simply visit the AirAsia.com home page and follow the below 5 steps:

1. Call centre

2. Sales office and airport sales counter

3. Authorized travel agents

4. Mobile booking via mobile.airasia.com or

5. Online (http://www.airasia.com) in 5 easy steps as shown below.

The following diagram shows the online electronic ticket ordering process:

In management of AirAsia Company, they have the system in terms of inputs, processes and outputs in businesses process and operation.

Business Model

Low-Cost-Carrier (LCC) Business Model
Simple Product	• Catering on demand for extra payment • Planes with narrow seating and only a single class • No seat assignment • No frequent flyer programmes
Positioning	• Non-business passengers, especially leisure traffic and price conscious business passengers • Short-haul point to point traffic with high frequencies • Aggressive marketing • Secondary airports • Competition with all transport carriers
Low Operating Costs	• Low wages • Low airport fees • Low costs for maintenance, cockpit training and standby crews due to homogeneous fleet • High resource productivity • Short ground waits due to simple boarding processes • No air freight, no hub services, short cleaning times, and high percentage of online sales