Malaysias Leading Low Cost Carrier Marketing Essay

Internet has brought about a paradigm displacement in the mode we do our banking, carry out shopping, book our vacations or air tickets. Internet is going an built-in portion of concern operations, enabling companies to keep a competitory border. The entry of low cost air hoses further resulted in shrinkage of net income borders in air power sector, but at the same clip, air travel became rather low-cost for the travellers in general. Effective usage of IT has become a resource for the air hoses industry. AirAsia is Malaysia ‘s taking low cost bearer ( LCC ) . This is known as Asia ‘s first low menu, no frills air hose, offering frequent, dependable flights and advanced Internet-based engagement ( AirAsia, 2003b ) , these systems have been resources that have become their cardinal merchandising points and a agency of offering concern distinction. The acceptance of e-Reservations is a major factor in the development of their operation, doing AirAsia a more sophisticated LCC.

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Study Aim and Objective

This research paper will analyze the socio-technical impact of the e-Reservation system on AirAsia since its execution in 2002 and concentrate on the benefits of the system, and how the usage of the cyberspace has enhanced AirAsia ‘s fight and led to high gross coevals. In general, aims of the survey include ;

Measuring how IT has brought about alterations in the corporate universe and to what extent the promotions in engineering have resulted in altering the life style of people.

Analyzing the air power sector in general and how AirAsia has been able to set up itself in the sector.

CHAPTER-2: LITERATURE REVIEW

The undermentioned literature reappraisal will analyze the growing scheme of AirAsia every bit good as the overall impact on the e-Reservations system.

The mission statement of AirAsia proudly announces that, “ keeping the highest quality merchandise by encompassing engineering while cut downing cost and heightening service degrees ” is one of the cardinal schemes for the air hose. It was in line with such a scheme that AirAsia offered the services like e-Reservation ( AirAsia 2010b ) .

2.1 Impact of Internet on AirAsia ‘s e-Reservation Systems

Supporting the Growth Strategy

In May 2010, the CEO of AirAsia group was awarded the esteemed Nikkei Asia Prize for registering impressive growing figures in Asia ( AirAsia 2010c ) . That a testimonial to the advanced thoughts and stairss taken towards making user-friendly engineering substructure for the air-travellers. The e-Reservations system is chiefly focused on deriving a competitory border and keeping the position of the premiere LCC in the Asia-Pacific part. Profitability figures of the company have seen a dramatic rise after the execution of the e-Reservations system. The growing scheme ( Appendix-2b ) of AirAsia stands on the foundation of low cost, efficiency, stimulated new market and strong hard currency flow. In fact while on the one manus the e-reservation system is being seen as latest engineering enterprise, it can really good be termed as a measure towards supplying efficient services with a simple and user friendly interface.

The power of e-Reservation: AnyTime-AnyWhere-AnyComputer

AirAsia was the first air hose in Asia which offered Internet booking to its clients, allowed on-line payment and ‘ticketless ‘ travel ( AirAsia 2006 ) . The air hose was speedy to capitalise on this tendency, and could further trade name trueness among consumers merely by offering the convenience. AirAsia modified its “ website ( Appendix-1 ) to take engagements for its operations of 43 paths across 5 states ” ( Delfmann 2005, p.149 ) . This improved their client service bringing ( CSD ) and allowed employees to concentrate on functioning each consumer more efficaciously.

Real-time Information for Timely Decision Making

AirAsia ‘s integrated e-Reservation system is an first-class tool for direction to see real-time statistics, centralized client informations. The incorporate interface besides helps in engagement and scheduling flight activities with real-time on-demand coverage characteristics ( Kho et al. 2005 ) . This helps in doing prompt determinations on CSD.

Integrated Systems

Kho et Al. ( 2005, p.11 ) province that seamless integrating with the already implemented Yield Management System is one of the distinguishing characteristics of this system. This is used in unison for pricing and gross maximization. With the aid of information on engagements, agendas, etc. In add-on, it helps in driving down the costs of operation at the same clip. After having the Nikkei Asia Prize the CEO emphasized that, AirAsia created Sky Bridgess within the Asiatic part, which linked the communities of ASEAN part with many metropoliss in Asia, Australia and Europe. It was underlined that the “ sky Bridgess, ” utilized by more than 92 million invitees to day of the month, have greatly contributed to the economic growing and societal integrating in the part ( AirAsia, 2010 ) .

Increasing Leisure and Corporate Travelers

There have been studies proposing that travellers heading for leisure trips take maximal advantage of e-Reservations, as it allows them to compare menus and agendas with other air hoses ( GAO 2003, p.30 ) . As the bulk of corporate travellers are limited to utilize company-contracted travel bureaus, who typically take a big committee on their engagements, there is a clear division between the leisure and corporate travel clients.

Operationss Cost Decrease

For a low-priced air hose, the biggest challenge is to increase the volume of repetition concern by developing or heightening the strategies like a client trueness strategies. In order to hold a profound consequence on consumer behavior cyberspace became a ready to hand tool for AirAsia to make out to the clients. The air hose is salvaging gross revenues distribution costs by non utilizing traditional reserve systems. For illustration, alternatively of supplying the printed tickets, the riders are provided with an path, which includes the engagement figure, payment and travel inside informations ( Delfmann 2005 ) . These paperss can later be printed at the consumer ‘s place. Operational costs related to reserves have besides been trimmed. In the traditional system, every clip a consumer purchases a ticket from travel agents, the planetary distribution system would bear down the air hose a fix sum as booking fee ( GAO 2003, p.5 ) . However, by utilizing the e-Reservation system, AirAsia has been able to salvage on the associated costs. If an air hose sold a place and made money, that would intend that everyone in the concatenation would do money, but all this has changed with the e-reservation system ( Harrell Associates 2002 ) .

CHAPTER-3: Methodology

Research Method

This research paper explores Case Studies and other research stuffs to find the impact of the Internet and e-Reservation system on AirAsia. The type of research chosen is a representation of the current events and history of Internet use within Malaysia, and offers a clear lineation of the implicit in grounds that have led to the development and execution of the e-Reservation system. It besides provides the model being used in analysing the impact of Internet on AirAsia and air-traveler, both technically and socially.

Type of Research

Qualitative method requires that a research worker should depict the features of people and events without doing a comparing of events in footings of informations, measuring or sums. In contrast, quantitative method of research requires that more attending be focused on measurings and sums of the features displayed by people and events, so that these measurings can be compared with each other or with some benchmark measurings in order to get at a decision ( Thomas, 2003 ) .

In this research paper, Qualitative Research will be used to decode the events that led to the usage and popularity of the e-Reservations system tool to better service bringing and addition market distinction.

Type of Datas

This research paper uses chiefly secondary informations. The cardinal beginnings of secondary informations are the research surveies undertaken, on the related subjects, in the recent yesteryear about LCC and the use of cyberspace in the air power industry. In add-on, intelligence points looking in newspapers and diaries during these yearss besides provide equal penetration into the societal and proficient impact of IT. Harmonizing to Rose ( 2004, p.50 ) , the information, which exists already, is defined as secondary informations, while primary informations is required to be gathered from different beginnings.

Secondary Datas

Numerous writers and research workers have completed analysis on the usage of Internet as the anchor for e-Reservation system. This information is readily available and gives deep penetration into the nucleus events and grounds that led to the popularity of the Internet use in the air-travel industry. In add-on, extended research has been done on AirAsia ‘s internal Internet use. This information helps in organizing the sentiments and statements presented in Chapter-4.

CHAPTER-4: Determination, DISCUSSIONS and CONCERNS

Findingss and Discussion

The undermentioned statements are nowadayss in favour of the e-Reservations system and how its offers assorted benefits to AirAsia and the consumers the air hose serves.

AirAsia ‘s Growth Strategy

AirAsia ‘s growing is marked by their prompt response to technological promotions and inventions in on-line engagement to heighten client service bringing, and offer inducements. The volume of travellers that AirAsia handles generates high gross returns and ensures that the aircraft are expeditiously used.

Temporal ( 2006, p.21 ) notes that AirAsia became Asia ‘s first on-line air hose offering a new convenience in reserving seats by logging onto www.airasia.com, this implied that “ No more phone calls, no more queuing ” . The study indicates that AirAsia has registered RM89million in gross revenues or approximately 45 % of its entire grosss through the e-Reservation, surpassed the air hose ‘s other distribution channels ( AirAsia 2003a ) . As figure-1 indicates, AirAsia ‘s gross per centum from the Internet is turning exponentially year-on-year. This tendency serves to exemplify AirAsia ‘s success in their online engagement scheme.

Centre for Asia Pacific Aviation ( 2009 ) pointed that Malaysia Airlines registered USD88.6 Million losingss in 3Q2009, while AirAsia registered a net income worth RM506 million ( USD153.3 Million ) for FY2009, and continued to spread out its market quickly ( AirAsia 2009, p.9 ) .

The rider Numberss continue to mount, as depicted in figure-2, in comparing to Malaysia Airlines, which has enabled AirAsia to turn its Ancillary Income, such as extra luggage handling, place choice and onboard repast service ; by offering rider an option to pre-book and bask greater salvaging through the e-Reservation. As figure-3 shows, AirAsia ‘s accessory income now represents 12.8 % of grosss ( AirAsiaQ1 2009 ) , and has contributed RM413million in FY2009 or a 34.4 % growing from FY2008 ( AirAsia 2009 ) . It served as a buffer against lifting fuel monetary values, which allow AirAsia to maintain the airfares low ( AirAsia 2010a ) . This demonstrates that the e-Reservations system has been strategically back uping the AirAsia ‘s concern theoretical account ( Appendix-2a ) and its growing scheme.

Real-time Information

AirAsia makes usage of the Internet as a “ engagement and payment channel ” ( AirAsia 2004 ) . Through the e-Reservation systems, clients are able to book and pay for their flight, look into the air hose ‘s agendas and get existent clip information. AirAsia can maintain client informations in a cardinal topographic point for air hose direction to track engagements and agendas. The centralisation of informations allows AirAsia ‘s direction, intelligently analyses the paths that are lower-demand, leting extra selling attending in the appropriate state of affairss. This information will besides let direction to strategically fill-up the flights ; by maximising the burden factors ( Appendix-4 ) , thereby cut downing the mean ASK cost per flight ( as figure-4 ) .

State-of-art characteristics ( Self Check-in )

The e-Reservation system includes characteristics such as sophisticated travel paths, which have enhanced the air hose ‘s concern and trade name growing in the past few old ages. Sulaiman et Al. ( 2008 ) point out that e-ticketing in Malaysia is pioneered by AirAsia, a tendency that AirAsia was capitalized on, and increase their consumer base merely by being the leader in invention and first to offer the convenience to air-travelers. Passengers can check-in through the web site, prior to even go forthing for the airdrome, or they may take to utilize the self-check-in booths ; their embarkation base on balls will be issued and riders can continue straight to the security checkpoint. These characteristic non merely salvage rider line uping clip ; it besides allows a company to streamline the human resource demand to manage long waiting lines, therefore the turnaround clip is reduced to 25 proceedingss, and it gave the high aircraft use of 12 hours block per-day ( AirAsia 2010 ) .

Addition of Leisure and Corporate Travelers

The characteristics of the e-Reservation system are outlined in figure-6, provides travellers the ability to book their trip, modesty seats, petition specific repasts, look into their baggage and look into into the flight, decreasing the fuss many travellers experience when winging, therefore increasing the overall tendency of booking travel online. With AirAsia ‘s multi-languages web site, customizable paths and the endless options for holiday activities, travellers have been given, a manner to do their ain vacation programs at their convenience. With the easiness of the e-Reservations, travellers can distribute with the commissioned agents, jumping the committee wholly. A direct anecdotal correlativity appears between the addition in the usage of the e-Reservations and the figure of leisure travellers in the air hose industry.

In the corporate sector excessively, e-Reservation has enabled the direction squads to recover historical fining informations, track their overall outgo, bring forth real-time studies, and uphold their air travel policies more efficaciously. More corporations are happening the e-Reservations more convenient in travel direction while cut downing the committees paid to traditional travel agents. In 2008, AirAsia recorded 184 % increased on total-number-of-seats sold to its corporate-clients, as illustrates in figure-5, one of the successful tactics AirAsia is utilizing to drive extra corporate concern, to back up to their growing scheme in making out the corporate-clients. While, on the one manus, the company has been adjudged as ‘World ‘s Best Low Cost Airline ‘ , it has besides been conferred with the Air Cargo Industry Newcomer Award at the ACW World Air Cargo Awards 2010 ( AirAsia 2010d ) .

Features

Benefits

Choose a place

Control over siting penchants gives travellers a sense of control over their ain air travel. In add-on, every consumer has their ain peculiar penchants when it comes to where they sit on a flight. The e-Reservations allows riders to take their ain seats on their flight as they are doing their on-line reserve. Along with the power of pick, this gives consumers a feeling of control over their ain travel.

Pre-book repasts

More and more travellers have meal limitations or particular demands. While clients are booking their flight online, they can besides choose their repast options, salvaging 20 % on their in-flight repast disbursals. This pre-order besides allows the air hose to salvage clip and money in their repast services, by cognizing precisely what each rider has requested.

Pre-check baggage

With luggage limitations acquiring tighter and tighter across the full air hose industry, fees are an inevitable portion of travel. Leting clients to pre-check their baggage through to their finish and giving them the chance to bespeak outsize baggage helps the air hose to administer weight equally and rapidly. The e-Reservations can salvage clients up to 50 % on their existing baggage charges, which encourage rider to utilize the system and besides promotes trade name trueness.

Self Check-in

Self check-in non merely allows travellers to avoid long line ups at the airdrome, it besides frees up employee clip to manage other responsibilities that may otherwise require overtime hours to finish. This simple alteration can salvage the air hoses 100s of 1000s of dollars in employee wages.

( Beginnings: Adopted from www.airasia.com )

One-Stop Reservations

AirAsia is working hard to change over its site into a practical travel bazar. In 2004, AirAsia was “ recognized in the CIO Top 100 ” ( AirAsia 2004 ) . This award was awarded to company as a direct consequence of their attempts to better on CSD through the usage of cyberspace and execution of the e-Reservations system. AirAsia ‘s incorporate systems depicted in figure-7, allow clients to bask one-stop reserve and take advantage of deeper price reductions on bundled services. The e-Reservations system allows clients to do their flights reserve and vacation activity up to one twelvemonth in progress at one-stop, without of all time holding to go forth the www.airasia.com, which has led to enormous alterations in societal travel forms. Sulaiman et Al. ( 2008 ) point out that convenience happens to be at the bosom of the factors driving the demand for the Internet.

Online Purchase Trends

Numerous research workers have studied the on-line behaviours of consumers as they engage in service analysis and pick. Sulaiman et Al. ( 2008, p.71 ) found out that the demographic, economic, societal, situational and technological factors strongly influence the purchase determinations. In add-on to some of the obvious factors like gender, instruction, age and income act uponing the on-line purchasing procedure, it has besides been found that being technically savvy is the key when it comes to buying air-travel online. Internet accomplishments and cognition will find if a traveller would prefer to utilize the e-Reservation system or traditional agents.

As figure-8a shows, 57.9 % of respondents indicated they accessed the e-Reservation system from place, in contrast to 37.2 % and 4.9 % of users who accessed them from work and Internet cafes severally – an indicant that most on-line reserve users are in-between category. A large bulk users ( 83.5 % ) ( in figure-8b ) revealed that they used the system when necessary and this seems to be an indicant that they take cautiousness because of the fright for the security of personal informations required in on-line reserve ( Sulaiman, et al. , 2008 ) .

When analyzing the turning tendency of on-line shopping wonts, Sulaiman et al. , ( 2008 ) discovered that clients visit on-line portals non merely to do purchases, but besides to compare monetary values, merchandise characteristics and after gross revenues services. Once they are satisfied about the characteristics, monetary values and the services, so merely they may buy. In air hose industry, AirAsia has used the cyberspace as a agency of offering merchandise distinction. The company has used other on-line channels like Blogs and Social Media ( Appendix-9 ) to link its communities to do differences in people ‘s lives, to pass on the characteristics of their services and to derive client trueness and growing in concern. AirAsia has a repute for the debut and execution of new engineerings into the direction procedure, guaranting they will systematically hold the latest bleeding-edge engineerings to prolong on-going growing.

Cost Decrease

AirAsia has been able to cut down costs through the investing in e-Reservation with strategic confederation spouses like Bankss and fiscal establishments, avoiding immense amounts of payout to go bureau as committees, and no physical printing of tickets is the cardinal factors helping the company in salvaging onto the resources. These nest eggs by so passed onto their consumers. By utilizing the e-Reservation system, clients are besides able to book early to acquire price reductions or happen lower airfares. Due to this policy, AirAsia is successfully collecting future incomes to back up their current operating demands. The consequence of commanding their hard currency flow implies that the company may non necessitate extra capital to finance their operating costs. This consequences in salvaging on high involvement charges.

Concerns

There are several concerns center on planetary information unity and security. The populace is hesitating to give all of their personal information including banking information to a company over the Internet. The hazards in informations security can compromise CSD and lead to eventual high costs through cases. AirAsia has besides been honored for its “ extended and successful usage of modern ICT to back up operations ” ( AirAsia 2008, p.45 ) . AirAsia needs to do investings to guarantee their client ‘s information will stay unafraid. Propagating such message would take to publicity of increased security steps to their consumers so that the perceptual experience begins to alter.

Many smaller markets in the AirAsia mark market do non yet have equal Internet entree to utilize the e-Reservations system efficaciously. This could come in the manner of AirAsia ‘s enlargement schemes. In the Asia Pacific part, Internet entree is progressively going more and more popular with the promotions in IT substructure ; yet the optimum potency of e-Reservation has non been attained.

AirAsia being the universe ‘s first to present the mobile-commerce reserve through its mobile.airasia.com ; by leveraging on EDGE, GPRS and 3G engineerings ( AirAsia 2005, p.10 ) . This substituted the low-computer use and low-internet incursion market. However, this scheme may take to another restraint that restricted to high-end nomadic devices and sophisticated users.

Challenges may happen for AirAsia if they are looking to cut costs through the usage of the e-Reservation system. Many clients feel that giving their personal information to a company online is hazardous ; the company may necessitate to see additions in the figure of head count in its call Centres for offline phone supports. Making so would weaken AirAsia ‘s attempts to streamline operations and thrust higher traffic ( Appendix-6 ) towards their e-Reservation systems. However, if a Premium Customer Service Line fee is imposed on client for utilizing the call-centre installations ; this will endanger the client service relationship in general. This manner the air hose runs an even greater hazard of losing a big part of their concern.

CHAPTER-5: CONCLUSIONS AND RECOMMENDATIONS

Decisions

The purpose and focal point of this research were to analyses and carry on an in-depth survey of the impact and effects of the manner AirAsia has been able to do usage of cyberspace in beef uping its concern theoretical account. The nucleus perceptual experiences of Malayan Internet users towards e-Reservation were besides surveies. The initial phases of the survey were aimed at analyzing the use of e-Reservation among air-travelers in the Asiatic continent, particularly in Malaysia.

It was found that more and more consumers are traveling towards an progressively networked life style. AirAsia ‘s e-Reservation system is altering the manner that the air hose operates. It is AirAsia ‘s vision to “ be the largest low cost air hose in Asia and functioning the 3 billion people who are presently underserved with hapless connectivity and high menus. ” ( AirAsia 2010 ) . The company is cognizant of its mark market and how these consumers are utilizing the Internet and other nomadic connectivity devices. This increasing tendency is bound to guarantee their hereafter growing for old ages to come, provided, they remain true to this vision.

The research conducted proves unambiguously that the motive for the bulk of e-Reservation utilizations is a convenience and streamlining the travel procedure. This is one of the most of import factors savvy users look for in an on-line procedure. The e-Reservations system has provided a tool to do travel more convenient, and offers some control over the costs associated. This gloss of control creates trade name trueness among riders and gives AirAsia a wealth of information on consumer disbursement wonts and travel forms. The promotional attempts ( Appendix-8 ) of AirAsia specifically may hold been conducive to the high traffic to www.airasia.com ( Appendix-5 ) .

The two chief barriers AirAsia is confronting sing the acceptance of the e-Reservation are the dealing security concerns, and the velocity and handiness of cyberspace.

Recommendations for Further Study

While the consequences of this research paper demonstrate a clear challenge for AirAsia, besides a figure of benefits, there is ever room for farther survey. Internet engineerings are progressing quickly, and as such, AirAsia should be prepared to alter with the engineerings. Every clip a alteration is made, extra survey can be completed to find the impact of the alterations.

In add-on, other LCC in the planetary air-travel industry may wish to go on this research and utilize it as a footing for on-line reserve execution. In some markets, such as those with hapless Internet substructure, on-line systems may non be effectual in achieving the optimum gross revenues consequences ; nevertheless, more survey can be undertaken in the nomadic application and bringing systems, utilizing the nomadic device as a baseline.

Despite the findings in this research and the restriction of instance surveies ‘ method applied as the information gathered is frequently non comparable ( Kothari 2004 ) , more in-depth research out to be done to unveil the existent image of the substructure in the cardinal countries, Internet and web-enabled systems in the Asia Pacific part.

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