ICT 2214: Air Asia

1.0 Introduction

AirAsia was initially launched on 18 November 1996 as a full-service regional airline

offering slightly cheaper fares than its main competitor, Malaysia Airlines. Before 2001, AirAsia

fail to either sufficiently stimulate the market or attract enough passengers from Malaysia

Airlines to establish its own niche market. The turnaround point of AisAsia is in 2001, while it

was up to sale and bought by Tony Fernandes. Tony Fernandes then enrolled some of the

lending low cost airline experts to restructure AirAsia’s business model. He invited Connor

McCarthy, the former director of group operation of Ryanair, to join the executive team. In late

2001, AirAsia was relaunched in Malaysia as a trendy, no-frills operation with three B737

aircraft as a low-fare, low-cost domestic airline.

In 2003, AirAsia opened a second hub at Senai Airport in Johor Bahru and launched its

first international flight to Bangkok. AirAsia main base is the Low Cost Carrier Terminal

(LCCT) at Kuala Lumpur International Airport (KLIA). Through their philosophy of ‘Now

Everyone Can Fly’, AirAsia has sparked a revolution in air travel with more and more people

around the region choosing AirAsia as their preferred choice of transport. Consequence, AirAsia

has successfully positioned itself in customers’ mind. Its net profit for the second quarter ending

31 December 2004 was reported RM 44.4 million, a 323% increase over the previous quarter

(AirAsia, 2005).

Vision of AirAsia is 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. Strategy of AirAsia

includes safety, low fare, service and simplicity.

Mission of AirAsia is creating a globally recognized ASEAN brand, maintain the highest

quality product, embracing technology to reduce cost and enhance service levels.

AirAsia has been a successful low cost carrier (LCC) operating in Asia region for these

past few years and information technology (IT) is one of the major enablers of AirAsia’s low

cost business model. Thus, in this assignment, I am going to analyze type of IT implemented by

AirAsia in their company. Besides that, competitive force, value chain models and business

strategy also one of the topic include in this assignment.

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ICT 2214: Air Asia

2.0 Competitive forces and competitive strategies of AirAsia

Kenneth C.Laudon and Jane P.Laudon, 2010 claim that, firm that ‘do better’ than others are

said to have a competitive advantage over others. They either have access to special resources

that other does not, or they are able to use commonly available resources more efficiently. In any

event, they do better in terms of revenue growth, profitability, or productivity growth, all in the

long run translate into higher stock market valuations than their competitors. Competition is a

positive and healthy characteristic in business.

AirAsia can survive and succeed in the long run is it successfully developed strategies to

confront five competitive forces. Michael Porter’s competitive forces model is information

systems contribute to strategic advantages. In Porter’s model, the strategic position of the firm

and its strategies are determined not only by competition with its traditional direct competitors

but also by four other forces in the AirAsia’s environment that include new market entrants,

substitute products, customers, and suppliers.

To succeed in the increasing competitive marketplace, Air Asia needed necessary to be

reached out globally by looking into five factors of competitive strategies, namely cost

leadership, innovation, growth, alliance, and differentiation strategy.

2.1 Rivalry among existing competitors

The rivalry among existing competitors in the Five Force model is high when competition is

fierce in a market and low when competition is more complacent. Visible dimensions on which

rivalry is based include quality, price and innovation. One of the existing competitors of AirAsia

is Malaysia Airline (MAS).

Product differentiate is a competitive strategy that adopted by AirAsia to confront with the

existing competitors. It uses information system to enable new product and services, or greatly

change the customer convenience. J’OT (September 2008) claimed that, E-ticketing is one of the

product differentiations for AirAsia.

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ICT 2214: Air Asia

In May 2002, AirAsia introduce a website that enabled online payment by users. In

comparison, AirAsia’s major competitor, Malaysia Airlines to-date has not done so, providing

only arrival and departure schedules on-line. E-ticketing or online booking system was the issue

of a booking code at the conclusion online transition that replaced the traditional airline ticket. E-

ticketing seemed to be a ‘win’ solution for AirAsia Company. It offered the company a chance to

make considerable saving in both trade terms as well as in invoicing and internal accountancy

procedures. It was very attractive to customers, who may benefit from a service offer both

technological advanced and provide a high intrinsic value.

2.2 Bargaining power of supplier

The market power of suppliers can have a significant impact on firm profits, especially

when the firm cannot raise prices as fast as supplier. Increasing prices and reducing the quality of

its products are potential means used by suppliers to exert power over firms competing within an

industry. The more different supplier a firm has the greater control it can exercise over suppliers

in terms of price, quality, and delivery schedule. (Kenneth C.Laudon and Jane P.Laudon , 2010).

The airline supply business is mainly dominated by Airbus and Boeing. For this reason, there is

not a lot of cutthroat competition among suppliers. Also, the likelihood of a supplier integrating

vertically is not very likely. In other words, we probably would not see suppliers starting to offer

flight service on top of building airlines. (Investopedia.com, 2009)

Innovation strategy used by AirAsia to create new product or services that include IT

components. It may involve radical changes to the business process with IT that dramatically cut

costs, improve quality and efficiency. AirAsia successfully adopted this strategy with fully

computerized system for its customers to book the air tickets through its website. The E-

commerce infrastructure developed by the company allowed collection and central storage of

sales and marketing data. Air Asia used these data to enable collection to drive decision support

tool for planning and marketing. Thus, the innovation of the technology in the company enables

them to have a strong ties and loyalty with the supplier.

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ICT 2214: Air Asia

2.3 Bargaining power of buyer

A profitable company depends in large measure on its ability to attract and retain

customers, and charge high price. The power of customers grows if they can easily switch to

another company because the widely use of internet. However, the bargaining power of buyers in

the airline industry is quite low. AirAsia has a competitive method which is changing the price

from time to time. For instance, the price for weekend is relatively expensive than weekday.

Every major airline has a loyalty program similar to that of low cost airline.

Competitive strategy that used by AirAsia is Low Cost Leadership. Air Asia generates

significant cost savings by sending information via internet, rather than by fax or post. It could

use its web site to publish in a cost effective way, which public domain information such as

product brochures, contact details, vacant seats, and other important information. The company

saves on the cost of running ‘bricks and mortar’ outlets and could reach national markets without

having to develop a physical distribution network. Most important was the company could save

cost on customer service by enabling customers to serve themselves. (J’OT, September 2008)

2.4 Threat of substitute products or services

The threat of substitute product or services is high when there are many alternatives to a

product or services, and low when there are few alternatives from which to choose. (Steven Hang

and Maeve Cummings 2008) The less substitute products and services, higher the powers for

AirAsia company to control pricing and higher their profit margins. Some of the substitute

service that customer can choose include railway, car, bus or other airline company that depends

on the convenient, time and money of the transportation consume.

To deal with the threat of substitute product or services, AirAsia become the low cost

producer among the airline industry. With the average fare being 40-60 % lower than its full-

service competitor, AirAsia has been able to achieve strong market stimulation in the domestic

Malaysian air market (Thomas 2003). For instance, the fare for the trip from Kuala Lumpur to

Penang on AirAsia starts from RM39 comparing to trip by bus charge RM40 and RM80 by car.

The effect of attractive low fare is more travelers switching from bus to air and loyalty to

AirAsia Company.

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ICT 2214: Air Asia

2.5 Threat of new entrants

In a free economy with mobile labor and financial resources, new companies are always

entering the marketplace. However, airline industry is significant block for entering because of

the high capital cost, requires special expertise, resources and knowledge that is hard to obtain.

Besides that, government also create barrier for new entrants. Government restricts competition

through the granting of monopoly and regulation. It is rarely to have new entrants into airline

industry. If there is a new entrants into airline industry, AirAsia will reduce their ticket’s price

and implement product differentiation in order to retain their customer. As a result, there is a

price war in the market to be the low cost producer whereas; it also could be an advantage in

innovation of product or services.

In a differentiation strategy, AirAsia seeks to be unique in its company along some

dimensions that are widely valued by customer. In August 2003, AirAsia became the first airline

in the world to introduce a new system for booking ticket by using SMS. They use SMS to book

their seat, check flight schedules, and obtain latest updates on AirAsia promotion by using

mobile phone. It is convenience to the entire guest and become the first choice for the customer.

Therefore, it is difficult for new entrants enter into airline industry for competing with AirAsia.

3.0 Value Chain Model

Although the Porter model is very helpful for identifying competitive forces and

suggesting generic strategies, it is not very specific about what exactly to do, and it does not

provide a methodology to follow for achieving competitive advantage. However, the value chain

model highlights specific activities in the business where competitive strategies can best be

applied (Porter, 1985) and where information system are most likely to have a strategic impact.

This model identifies specific, critical leverage points where a firm can use information

technology most effectively to enhance its competitive position.

The value chain model views the firm as a series or chain of basic activities that add a

margin of value to a firm’s product or services. These activities can be categorized as either a

primary activities or support activities. Table 1 and table 2 is the analysis value chain model of

AirAsia Company (Sandy Hofman Aruan, 10 April 2005).

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ICT 2214: Air Asia

Activities Description

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ICT 2214: Air Asia

Inbo

und

logi

stic

Landing slots acquisition

Landing slots were scarce resources and also possessed critical value in airlines industry (OECD, 1997).

AirAsia needs to ensure that it had sufficient landing slots to support its flight schedules.

Aircraft leasing or purchasing

SEA market’s promising growth (Oum et al, 2000) would convince AirAsia to keep extending its fleet to capture more profits.

Aircraft parts and fuels purchasing

It is important to monitor the budget for this activity, as it affects around 30% to overall cost (Corporate financial report).

Ope

rati

on

Transporting passenger

These are the main resources to Air Asia for creating profits.

Aircraft ground maintenance

AirAsia various method in driving down the cost for this activity showed a great effect in suppressing the cost low.

Flight scheduling

Tight competition with other competitors in acquiring limited landing slots pushed AirAsia to plan its flight schedule carefully.

A well planned schedule and keeping it on time, enable AirAsia to add more value on its brand as on time delivery air carrier.

Out

boun

d L

ogis

tic AirAsia only provides transportation services; no significant outbound logistic process

can be identified.

Ser

vice Call center

systemTo tackle problems with customers enquiries.

Mar

keti

ng

and

Sal

es

Advertising and promotion

Important activities to popularize the brand of AirAsia. Intensive advertising and promotion has brought more than five million customers to use AirAsia services (Corporate website, 2005).

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ICT 2214: Air Asia

Computer Reservation System

This is a strategic enabler foe AirAsia to compete with other competitor. Online sales through this system captured more than 50%of AirAsia revenue (Corporate website, 2005).

By optimizing the system, AirAsia can develop more analytical tools in delivering precise and right decisions on time, such as Customer Relationship Management (CRM) or E-business (Taneja, 2002)

Table 1 Primary activities in AirAsia

Support Activities Description

Firm infrastructure Formulate strategic decision for AirAsia and encourage its employee in supporting the strategy.

HR Management Provide recruitment and training to employees to keep them highly skilled and efficient.

Technology Develop methods in operating and maintaining aircraft that suppress the cost lower.

Procurement Search the best quality product among suppliers without driving the cost high.

Table 2 Support activities in AirAsia

To summarize, AirAsia has developed a considerable value chain in its approach to the

strategy. The value for these activities really added a significant amount in its pursuit to provide

low price air transportation services. However, there is no evidence whether AirAsia has already

implemented further management information more analytical capabilities, such as Customer

Relationship Management or Business Intelligence, in its computerized system. By

implementing such technologies, AirAsia be able to bring better decision in proper time at proper

place. (Sheehan, 2003)

4.0 Types of Information technologies use in Airasia

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ICT 2214: Air Asia

Undeniable, AirAsia was among the most active in the adoption and application of

Information Technology (IT). Information Technology usage was expanding very fast, especially

with incorporation of computer technology in reservations and ticketing system since the mid

1970’s (Timmer, P., 1999).

AirAsia adopt internet reservation system to reduce its operating costs. After AirAsia

launching the internet reservation system, revenue increased from 167.8 million MYR in

financial year 2000/2001 to 222.3 million MYR in financial year 2001/2002. Revenue for the

period from July to December 2002 was 114 million MYR.

AirAsia takes the lead among companies in Malaysia in the effective use of information

and communications technology (ICT) to advance business operations and offer superior

services. AirAsia’s extensive and successful use of modern ICT to support operations across all

10 ASEAN countries and China earned for the airline recognition from The Association of

Computer and Multimedia Industry, Malaysia (PIKOM), the country’s largest and foremost ICT

industry association. On 14 November 2008, Airasia received a PIKOM ICT leadership Awards.

Besides that, Airasia also received CIO Top 100 Honoree for excellence in strategic IT

deployment awards in Year 2003.

There are many types of IT that implemented by AirAsia include Akamai technology,

Computer Reservation System (CRS), Enterprise Resource Planning System (ERP), Advance

Planning & Scheduling (APS), E-commerce and vista gadget.

4.1 Akamai technologies

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ICT 2214: Air Asia

On Apr 30, 2009 AirAsia and Akamai Technologies, Inc. announced a long term

partnership that is expected to further strengthen AirAsia's market share in the highly

competitive aviation industry. Akamai is the global leader in powering rich media, dynamic

transactions and enterprise applications online.

Akamai's Dynamic Site Acceleration solutions deliver website performance up to five

times faster than the origin web infrastructure and handles the specific requirements of

dynamically generated content without a costly hardware build out. By leveraging Akamai's

globally distributed delivery network of 48,000 secure servers equipped with specialized

software and deployed in 70 countries. AirAsia will provide a premium online experience to

their customers with improved site speed and performance. It is very crucial to support their ever

expanding fleet and route network. (Akamai Technologies, Inc., Apr 30, 2009)

4.2 Enterprise Resource Planning System (ERP)

In order to increase the efficiency of operational performance and manage its supply

chain, AirAsia had implemented the ERP system. It is a system focusing on capturing

transactions in daily operations and helping AirAsia to save its operational costs as well as to

increase the efficiency and integrity in its operation (Microsoft Press Pass, 2005). However,

conventional ERP system implemented by AirAsia does not provide flexibility and intelligence

required to analyze data for better supply chain management.

4.3 Advance Planning & Scheduling (APS)

APS system optimizes AirAsia’s supply chain management. It works as the brain of

supply chain activities (Ahmed, 2004) by gearing activities in relation with suppliers and

customers requirements. APS system clusters and classifies customer orders, forecasts future

fulfillment requirements, checks resources availability and sets order priorities. The inventory

planning, demand forecasting, and maintenance management capabilities functions enable

airlines and aircraft manufacturers and other suppliers to have collaboration strategy in managing

inventory, maintenance schedule, and design collaboration.

4.4 Computer Reservation System (CRS)

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ICT 2214: Air Asia

AirAsia had been investing much massive automation into its business. In the past of

couple year, AirAsia developed CRS (Open Skies software by Navitaire) to automate ticket

handling. It has helped the company to growth at a dramatic pace. "Navitaire's Open Skies

technology has truly enabled AirAsia's 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, AirAsia CEO)

Open Skies is an integrated web-based reservation and inventory system. It includes

internet, call center, airport departure control and more. It is a direct sales engine that effectively

eliminates the middleman (such as travel agents) and the sales commissions that need to be paid

to them. Centralized customer data is also maintained by Open Skies and this helps AirAsia to

track booking and schedule flight activities with real time, on demand reporting feature. The vast

booking information that is provided online to the guest acts as a force that brings more

customers to use the web site thus reducing the customer support costs. An important feature is

that Open Skies seamlessly integrates with the already implemented Yield Management System

YMS so that the systems can be used in unison for pricing and revenue maximization and driving

down the costs of operation at the same time. This CRS enabled AirAsia to introduce the first

ticketless travel option and also provides features such as advanced boarding passes. In addition

to online booking that enabled the growth of AirAsia as these features attracted customers that

did not have the time for purchasing tickets from counters and coming early for securing a seat

on the aircraft. (Charles Kho, Sandy Hofman Aruan, Christian Tijitrahardja, and Ramaratnam

Narayanaswamy, 2005)

AirAsia have proposed to implement a Wireless Delivery System (WDS) to expand its

reach via mobile phones. With this method, potential customers will be able to book tickets via

their mobile phones. This is a strategic move for growth as the Asia Pacific region has a larger

population of mobile phone users rather than internet users.

4.5 E-commerce

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ICT 2214: Air Asia

In May 2002, 5 months after it changed its operating model, AirAsia implemented an

internet reservation system, which allowed on-line payment. AirAsia made a bold move to

introduce a website that enabled payment by users. There are only a small number of Malaysian

businesses having electronic commerce websites and even fewer having web sites which enabled

on-line payment. In comparison, AirAsia’s major competitor, Malaysia Airlines to-date has not

done so, providing only arrival and departure schedules on-line.

As we know, E-Commerce had a many types such as Business-to-Business (B2B),

Business-to-Customer (B2C), and other types. In e-Commerce, AirAsia belong in B2C because

that company tries to directly sell they service for customer. AirAsia has progressively launched

value added services into the flight options. In 2007, AirAsia had introduced the web check in.

This made AirAsia the first airline in Malaysia to offer the ability to check in online and print out

boarding passes. This service enables the passengers to get a low price and choose seats at ease.

(Chan, September 23, 2008) Devasahayam, 2003 state that advantage of AirAsia’s use of

electronic commerce is that customers from other parts of the world are able to use the airline

services as noted by Tony Fernandes, the CEO about passengers from the US and UK, who did

their bookings on the Internet.

After launching web check in and kiosk check in, Chan claim that AirAsia will later

introduce PDA check in. With an e-commerce web site, anything that the customer does for

themselves, like searching for airline flights, entering his billing information and signing up for

an e-mail confirmation. In August 2003, AirAsia went a step further with a new e-commerce

initiative, when it introduced reservation and payment of tickets via Short Messaging System

(SMS) through mobile phone services (M-commerce). The airline claimed that the initiative was

the first of its kind in the world.

Accordingly, we can conclude that AirAsia had achieved a creditable turnaround to

become a profit-making airline from a loss-making one. However, the airline recently reported

that since launching the internet reservation system, it had obtained more than 50 million MYR

in revenue through the services. AirAsia also reported that 40% of sales are from the internet,

with the remainder coming from the other channels.

4.6 Vista Gadget

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ICT 2214: Air Asia

Vista Gadget is a gadget or application that sits on your computer desktop delivering ‘live

updates’ of our fare promotions as and when they are introduced on airasia.com. In 1 February

2007, AirAsia has launched its new AirAsia Vista Gadget that will allow customers to instantly

manage and access live travel information and web based services directly from their Windows

Vista desktop computers. The AirAsia sidebar gadget was developed by The Media Shoppe

Berhad (TMS), a Microsoft certified independent solutions provider, for the Windows Vista

platform. The gadget will allow AirAsia customers to access live travel information, such as

itineraries, destinations and pricing directly from the Windows Vista interface. (Asia Travel

Tips.com, 1 February 2007)

The Windows Vista gadget is only more than a hundred kilobytes in size, TMS CEO

Chris Chan said. He added that the gadget was developed in less than a week, and allows

AirAsia to gather customer preferences that are useful in targeted marketing campaign. TMS also

developed the carrier's airline management system that includes a customer online booking

portal. Aaron Tan added, the Vista gadget will allow AirAsia to create greater brand awareness

among customers, while supplementing its existing marketing channels through its web site,

print media and e-mail lists.

Kathleen Tan - AirAsia Executive Vice President, (1 February 2007) mentioned that this

gadget will also help them boost their e-commerce business. The Vista powered AirAsia gadget

will enable their customers to keep up to date with latest news and travel promotions, and

continue to drive traffic back to AirAsia website. Windows Vista making it easier than ever for

peoples to find and connect to their information. Windows Vista will help generate commercial

and economic opportunities in Malaysia by creating jobs, enabling organizational efficiencies

and helping to solve business challenges for their customers, partners and the IT industry as a

whole. AirAsia’s Tan said they are confident that this strategic collaboration with Windows

Vista technology will stimulate even more people to fly.

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ICT 2214: Air Asia

5.0 Competitive advantages or disadvantages of E-commerce strategy

On the internet, customers can easily collect information without travelling to AirAsia

counter. There were some factors that form the competitive advantage and disadvantage for

AirAsia implemented e-commerce in providing low cost air transportation services.

The usage of e-commerce is to increase the competitiveness of business, promoted online

booking, and helped people dispel of the afraid to shop online because of the network security.

Competitive in the business allow AirAsia to improve technological innovation in the

information technology industry besides business objective. Advance software such as

encryption used by AirAsia ensures the security of payment and detail of the customer. By using

e-commerce, company can access to customer to collect information and introduce service to

meet customer’s needs.

As an airline competing in the low cost market, price becomes the most influencing

factor in AirAsia’s strategy. E-commerce will reduce the administrative cost by selling the flight

ticket on internet. Customer can make price and quality comparison between AirAsia and its

competitor. To manage e-commerce effectively and efficiently, AirAsia have to employ

promotion strategies different from those used by its competitors. AirAsia used a simply way for

customer to access into the website for information searching. AirAsia offer promotions to

customer for locked them to meet the competitive advantage. It can also improve their

relationship with customer.

Disadvantage of e-commerce is the effective of employee. With the support of

technology, employee will be less motivated in their work running and eventually will affect the

company’s performance. Employee is bored to work because they are more depending on the

technology working. Thus, their creation in the operation process becomes low. Besides that,

implementing e-commerce will lead to some people loss their job because they do not understand

how to function the computer.

Other disadvantage of e-commerce is server. The company needs to invest higher cost for

the server and hardware. If the server falls into trouble, it will influence the business. Some of

the time, AirAsia’s web site is showing “timed out”. Thus, many customers even other country’s

customer difficult to connect the web page.

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ICT 2214: Air Asia

6.0 WebSite

6.1 Values where Web site has provided for customers and business

AirAsia has created an environment that speed up the use of ICT across all segments of

the community. It provides extensively value for all customers and business after it introduces

the use of web site or e-commerce. Usage of web site encourages the company to improve the

innovation and profit of the business in order to become a most preference web site among the e-

business industry.

Usage of web site is very convenience for businessman or those people who are busy in

their working. They do not need to drive and queue up at the counter to book the flight ticket. So,

the customer does not cost too much of time and money for buying the flight ticket. Convenient

of the web site allow people look for the promotion anytime and everywhere. It can increase the

potential customer to make transaction if it is cheaper than their competitors. AirAsia provide a

premium online experience to their customers with enhanced site speed and performance.

Existing customers can also keep in touch with the latest offers or promotion through the

web site. It can reduce the man power for promoting in traditional method. Value of the business

with using the web site is innovation and effectively in organization. Web site helps the business

to progress the technology and the data in marketing. It also introduced the ticketless ticketing

system with the means of reduce the cost of resources or paper recycle.

AirAsia Group CEO Dato’ Sri Tony Fernandes said that ICT has enabled them to offer

cutting edge products and to continue to offer quality service to their constantly expanding

passenger base. AirAsia’s use of ICT is second to none in the airline industry. All areas of their

business are supported by ICT, which allows them to be fast and efficient in servicing the guests,

who use the technological tools to, among others, book seats, check flight schedules, pre-order

meals and buy holiday packages. ICT has been instrumental in the success of AirAsia.

“Over 80 percent of Airasia’s flight bookings are done via the internet. We also utilize

mobile technology to disseminate information to our guests via handheld devices. Guests could

look forward to further convenience through the services of our self check-in kiosks and web

check-in facility,” he added.

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ICT 2214: Air Asia

6.2 Impact on AirAsia’s business if the Web site was not available

Life in the 21st century is full of technological advancement and in this technological age

it is very difficult for a business to survive without a web site. Businesses without a web site in

today's date tend to lose large number of its potential customers. Each and every individual

prefer the internet to look out for their desired products or services. The number of search

engines is increasing day by day and if the business is not on these engines it tends to lose their

customers to the competitors. As we can see that the case study shows the internet reservations

grew from 0% in financial year 2000/2001 to 25% in financial year 2001/2002.

There is a huge impact on AirAsia’s business if the web site was not available. It will

increase the number of customer loyalty switching cost to another company. If there is no web

site, customer will totally move to their competitor company due to the web site conveniently.

Customer needs a web site for checking the seat available, price, promotion and others

information. Without a web site, customer will take time and money for receive the information

at the counter and it is very inconvenient for them.

Second, the business is a low cost producer, without web site, the company need to pay

higher cost on the operation. They need to employ more man powers like traditional marketing in

controlling data, promoting and selling the service. Besides that, it also wastes the paper to send

the information to the customer and less efficiency in time consuming. It also reduces the

revenue of AirAsia because of the higher cost that need to pay.

Third, there is no product differentiation compare to the competitors. Competitors of

AirAsia will take all their business because the advance in technology. While of the web site not

available, customer cannot receive up to date information, hence all the possible transaction will

be replaced by the competitors. Besides that, it can also lead to increase new entrants into airline

industry with advance technology than AirAsia. So, it reduces the profit and customer loyalty.

Nowadays, web site is the essential for most of the people to get information. When the

web site was not available, it is direct affected the business of AirAsia in selling the fight ticket.

The business of AirAsia is become less concentrated by all the people and it will be forget after a

time period. AirAsia without a web site, it is like a salesman without his business card.

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7.0 Conclusion

AirAsia has exposed us an insightful example in showing how a keen and critical

strategic movement may drive a company that was almost bankrupt back into shape. While

AirAsia management was providing a suitable business environment, its employees

demonstrated a highly productive on using uniform aircraft also put into account.

By implement the mission and vision of the company, AirAsia is entered a market with

great success. It introduces ticketless ticket system, automation with IT, reduced cost and

improved the quality of service. With those entire factors combined together, AirAsia has shown

how synergies between management, employee and its environment can develop a competitive

advantage that brought AirAsia to be the contender as market leader in the competition.

With the above type of IT implementations, it is clear that the business strategy and the

IT strategy are aligned to for AirAsia to operate on a low cost model. Implementation of IT in

AirAsia Company brings a lot of advantages towards the technology industry and airline

industry. AirAsia innovate a lot of IT that reduce the cost and higher the profit. Besides that, it

also brings benefit to people that pay for less money to receive the airline services and also

increase the standard of living for all the people with the slogan that “everyone can fly”.

In the invisible society, web site has been take place in the human transaction place. It

changes the characteristic of people with using the advantage of e-commerce to purchase the

flight ticket. Without the web site, there would be a huge impact on the business and the

convenient of the customer for online transaction. It is because people are too depending on the

use of technology and prefer to acquire the promotion by the company. AirAsia Company wills

loss a massive profit if the web site is not available. Web site that creates by the AirAsia

Company brings a lot of value and competitive advantage to business and also customer.

Consequently, AirAsia is become the most preference and first choice of the airline

industry among Asian country. Successful of AirAsia Company is a pride occasion for the

country. It will also continue to innovated new technology in order to improve the economic and

technology progress.

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ICT 2214: Air Asia

8.0 References:

1) James A. O’Brien and George M. Marakas (2007), Enterprise Information Systems, 13 th

Ed, The McGraw-Hill Companies, Inc, NY. Chapter 2.

2) Steven Hang and Maeve Cummings (2008), Management Information System, 7 th Ed,

The McGraw-Hill Companies, Inc, NY. Chapter 1.

3) Kenneth C.Laudon and Jane P.Laudon (2010), Management Information System, 11 th Ed,

Pearson Education, Inc., Upper Saddle River, New Jersey. Chapter 3.

4) Sandy Hofman Aruan (10 April, 2005), Might of AirAsia: Internal Analysis perspective,

University of Melbourne.

5) AirAsia.com (12 December 2008), ICT Award Testimony to AirAsia’s Technology

Excellence, http://www.airasia.com.my/site/bn/en/pressRelease.jsp?id=3883d155-

7f000010-1c2ec050-a1d3ce28

6) J’OT (19 September 2008), Organizational Cases,

http://organizationalcases.blogspot.com/2008/09/case-air-asia.html

7) AirAsia In The Press (13 May 2004), New kid AirAsia in CIO Top 100 honours list, The

Star, In Tech http://www.airasia.com/site/my/en/pressRelease.jsp?id=10d720f7-

c0a8c85d-eb784700-875848d4&type=read

8) Navitaire (2005), Open Skies by Navitaire, Navitaire.com

http://www.navitaire.com/res_and_dist/openskies.asp

9) Asia Travel Tips.com, (1 February 2007), Air Asia launches AirAsia Vista Gadget,

http://www.asiatraveltips.com/news07/12-WindowsVista.shtml

10) Charles Kho, Sandy Hofman Aruan, Christian Tijitrahardja, and Ramaratnam

Narayanaswamy (2005), Air Asia- Strategic IT, University of Melbourne,

http://sandygarink.tripod.com/papers/AA_SITA.pdf

11) Chan (September 23, 2008), E-commerce Review of AirAsia.com, http://digital-

hack.blogspot.com/2008/09/e-commerce-review-of-airasiacom.html

12) Aaron Tan (January 31, 2007), AirAsia rolls out Vista 'gadget', ZDNet Asia,

http://www.zdnetasia.com/news/software/0,39044164,61985996,00.htm

13) The Connors Group, Inc. (Apr 30, 2009) AirAsia Signs 10-Year Deal with Akamai to

Boost Online Performance and Reliability, Source: Akamai Technologies, Inc,

http://www.tradingmarkets.com/.site/news/Stock%20News/2299532/

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9.0 Appendix

9.1 Article

12 December 2008

ICT Award Testimony to AirAsia’s Technology Excellence

KUALA LUMPUR, 12 DECEMBER 2008 – AirAsia takes the lead among companies in Malaysia in the effective use of information and communications technology (ICT) to advance business operations and offer superior services.

AirAsia’s extensive and successful use of modern ICT to support operations across all ten ASEAN countries and China earned for the airline recognition from The Association of Computer and Multimedia Industry, Malaysia (PIKOM), the country’s largest and foremost ICT industry association.

The association conferred on AirAsia the PIKOM ICT Organization Excellence Award. AirAsia Group CEO Dato’ Sri Tony Fernandes received the award from Datuk Dr. Maximus Johnity Ongkili, Minister of Science, Technology and Innovation, during the association’s recent annual leadership awards ceremony in Kuala Lumpur.

The association conferred on AirAsia the PIKOM ICT Organization Excellence Award. AirAsia Group CEO Dato’ Sri Tony Fernandes received the award from Datuk Dr. Maximus Johnity Ongkili, Minister of Science, Technology and Innovation, during the association’s recent annual leadership awards ceremony in Kuala Lumpur.

“Our investment in technology to grow the business across all fronts is bearing fruit. ICT has enabled us to offer cutting edge products and to continue to offer quality service to our constantly expanding passenger base. AirAsia’s use of ICT is second to none in the airline industry. All areas of our business are supported by ICT, which allows us to be fast and efficient in servicing our guests, who use our technological tools to, among others, check flight schedules, book seats, pre-order meals and buy holiday packages. ICT has been instrumental in the success of AirAsia”

“Over 80 percent of AirAsia’s flight bookings are done via the internet. We also utilize mobile technology to disseminate information to our guests via handheld devices. Guests could look forward to further convenience through the services of our self check-in kiosks and web check-in facility,” he added.

PIKOM noted that AirAsia has “created an environment that accelerates the all-pervasive use of ICT across all segments of the community.”

PIKOM also said that “AirAsia has, almost literally overnight in corporate terms,

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demonstrated the strategic value of ICT to increase the competitiveness of businesses, promoted online booking, and helped dispel the myth that people are afraid to shop online because of network security fears.”

PIKOM’s annual awards recognize outstanding ICT industry leaders and users. PIKOM counts among its members over 1,000 companies engaged in the whole range of ICT products and services. PIKOM’s member companies account for 80% of Malaysia’s ICT trade.

9.2 Plagiarism

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