AirAsia – Implementation of Information Technology

By : Farah Najwa Md Isa

COMPANYBACKGROUND

• based in Kuala Lumpur, Malaysia• originally founded in 1993 and began operations

in November 1996 by the government-owned conglomerate DRB-Hicom

• in December 2001, Tony Fernandes was purchased AirAsia which in the heavily-indebted through his company Tune Air Sdn Bhd.

• Fernandes successfully hailed business circle by a remarkable turnaround and making first profit in 2002.

Vision

To be the largest low cost airline in Asia and serving the 3 billion

people who are currently underserved with poor

connectivity and high fares.

• 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

Mision

• Safety FirstPartnering with the world’s most renowned maintenance providers and complying with the with world airline operations.

• High Aircraft UtilizationImplementing 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.

ValuesAirAsia make the low fare model possible through the implementation of

the following key strategies,

The characters of the low cost carrier (LCC) business model that AirAsia follows in the airline industry shown as below :

LCC Business Model

LCC Business Model

Organization Structure

Information Technology and E-Commerce

Department

• Information technology has led fundamental changes in the application of technology in business.

• helps to reduce the operation cost and cut down unnecessary needs.

Information Technology

• Akamai Technologyhelps AirAsia to provide a premium online experience to their customers with the improvement of site speed and performance. This system very significant to support AirAsia ever expanding fleet and route network.

• Computer Reservation System (CRS)An integrated web-enabled reservation and inventory system observed by Navitaire’s Open Skies technology that includes Internet, call center, overbooking management, flexible inventory booking capability, customer information retained and generates confirmation numbers on all reservation.

• Yield Management System (YMS)By using this system as revenue management system, the operating costs and aids will be considered. It helps to allocate capacity and optimize prices to maximize expected revenues by seat and route.

Information System

• Enterprise Resource Planning System (ERP)Helps to integrate business process, reduce financial month-end closing processing time, speeds up reporting and data retrieval process. It increase efficiency and integrity and also saves operational costs.

• E-CommerceAirAsia provides, everything become easy and more comfortable, it can be used for anything that the customer wants such as searching for airline flights, entering his billing information and signing up for an e-mail confirmation in anywhere as long as customers have an internet.

Information System

• hosted by Navitaire Open Skies helps AirAsia track customers booking and their schedule flight activities with real time, on demand reporting feature by centralized customer data.

• integrates with the already implemented Yield Management System (YMS), thus the systems can be used in unison for pricing and revenue maximization (by providing information on bookings, schedules etc) and driving down the costs of operation at the same time. AirAsia could offer a good price to customers by reducing the costs.

Computer Reservation System

(CRS)

• how to achieve to be a lowest carrier in the world in Airplane industry.- the most successful carriers came to dominate their hub markets allowing them to exert greater control over pricing and capacity. - the very small price is needed for continued and greater access to the world’s most prospective air travel markets. AirAsia needs to offer the lowest possible fare.

Current issue

• facing internet treat in order to survive in cyberspace.- consumers don't need to pay anything by booking flights through travel agents. (This is because the airline pays the agent a fee for booking the consumer on one of its flights.)- but CRS provides direct service to customer, which means there are no middleman (travel agents). This will charge customers directly by using this system.

Challenge

• Increasing competition because of increasing number of low cost airline competitors, and aggressive

• Competition against the large or traditional airline companies

• Customer decrease because of poor economy• Rising of the fuel prices• Higher labor cost• Inadequate infrastructure• Route and flight utilization• Safety and security issues of aircraft crash or being attacked

Other Challenges

Customer Relationship Management (CRM)• that AirAsia can focus to achieve high values to both

shareholders and customers• AirAsia need to find other alternative in managing

customer relationships and suppliers or partners to optimize customer loyalty, supplier relationships, and revenue in order to gain market share and sustain its competitive advantages to be the low cost carrier in the high demanding environment.

Potential Strategic IT Implementation

The Strategy of Value Proposition

• Customer segmentationmileage-based segmentation is inadequate, rather should focused on value-based and needs-based approaches can guide investment decisions and drive greater insight into the needs of high value customers

• CRM initiative development to differentiate from other competitors, AirAsia should not adopt the “fast follower” approach to CRM initiative development. AirAsia should implement CRM program in favour of investing in initiatives with a high return, which respond to the needs and desires of their own customers.

• Organizational design and management AirAsia needs to train the employees, empowering them with a complete view of the customer and clearly articulating the employee’s role in the CRM strategy.

Approaches of CRM application

Customer Relationship Program Key Function

• Cost Savings Technology makes it easier to reach customers, to sell to them and to service them. CRM tools also produce cost savings by boosting employees’ productivity.

• Increased Profits Profits are the ultimate test and a consequence of both the cost savings and the increased customer loyalty.

• Customer Satisfaction and Loyalty Good CRM tools make it easier for customers to do business with an organization through flexibility of self-service, ability to get what they need faster or receiving target information that is immediately useful. Highly satisfied customers tend to buy more, cost less to service, less price-sensitive and are happy to spread the word about the organization.

Benefits of CRM

• Increased Internal AccountabilityBy assigning and tracking tasks, the CRM tools makes it possible for everyone in the organization to follow the flow of requests, to analyze adherence to SLAs (service-level agreements) and to note any delays or errors.

• Employee Satisfaction Good tools are essential to promote employees satisfaction. They tend to stay and reduce

costly turnover and are likely to be more productive.

• Better Business Intelligence means that an organization can get to know its customers better so that it can adapt the products, marketing strategies and support levels accordingly. CRM tools with better built-in analytics can really take advantage and exploit customer data.

Benefits of CRM

Thank You