E Commerce - AirAsia

TABLES OF CONTENTS

1.0 Introduction

2.0 Importance of e-Commerce and m-Commerce

3.0 Corporate Appraisal

4.0 Competitive Advantages

5.0 m–Commerce

5.1 Differences of m-Commerce & e-Commerce

6.0 Recommendations

6.1 Benefit of Microsoft Vista and m-Commerce to AirAsia

6.2 Benefit of Microsoft Vista and m-Commerce to Customers

7.0 Conclusions

APPENDIX

REFERENCES

Individual Coursework

Page 2 of 25 05Sep2009

1.0 Introduction

Purcel and Toland (2004, 241) said “Internet and Communication Technology offer

the opportunity to reduce the barriers of distance, and give…. countries better access

to global economy”. This is where e-Commerce comes into picture which covers

electronics trading of goods and services, electronic fund transfer, online procurement,

direct marketing, electronic billing, etc, through internet. It is very important for

businesses to embrace the latest technology to conduct their business, whereby

switching the traditional business models into a better model in terms of efficiency,

productivity, profitability and competitiveness.

This report intends to analysis how the technology of e-Commerce and revolution of

m-Commerce impacts airlines industry in worldwide, especially low cost carrier. The

report begins by examining the strength, weakness, opportunities and threats (SWOT)

for AirAsia by using Porter’s Value Chain; and analyses AirAsia’s competitive

advantages by using Porter’s Generic Strategies model. The discussion then moves to

review the characteristics of Mobile Commerce (m-Commerce), compare the

differences between m-Commerce and e-Commerce. The discussion continues to

review how Microsoft Vista can be applied to m-Commerce and the benefit to

AirAsia and its customer. Lastly, summary and recommendations will be made to

identify the strategies that AirAsia can stay competitive and maintain its market share.



2.0 Importance of e-Commerce and m-Commerce in Airlines Industry

According the finding of Gillan and Lall (2002), traditionally in airline industry,

majority of air tickets were purchase through travel agent or call centers. By 2003, the

numbers of population in Malaysia owning a personal computer has been increase to

18%, this technology enable the development of low cost carriers (LCC).

LCC pursued simplicity, efficiency, productivity and high utilization of assets to

offer low fares. E-commerce helps LCC to simplify the process of purchase by online

reservation and issuing of e-ticket, as such no middleman is required in this process.

In terms of efficiency, LCC are able to perform real time transaction to a global

customer for 24 hours a day and 7 days a week. The data provide in online booking

combine with the right software will ease the business administration task to stored

and categorized automatically, update in real time and accessed on demand. This is

whereby LCC save cost on manpower to data entry this information. LCC also can

fully utilize the resources of information such as booking seat, customer database to

plan ahead their business strategy; this will help to minimize the empty seat and

maximizes the sales of seat. E-commerce and m-Commerce also provide convenient

to customers, they can easily compare the airline company to choose before purchase

in terms of quality, price and availability. Customers will purchase upon their

satisfactory after comparison; this business strategy is to create customer loyalty. The

first successful and pioneered LCC was AirAsia in asia. It is also the first airline in

the region to implement online reservation and fully ticketless travel.



3.0 Corporate Appraisal

Porter’s (1985) Value Chain & SWOT analysis

In business, we can say that people take raw input (for example, resin) and “add

value” to convert it into something that customer are willing to pay money for (for

example, plastic container). The more value you added, more customers are ready to

pay a good price for you product or service, and keep buying from you. In year 1985,

Michael Porter introduces “Value Chain Analysis”, a concept from business

management to identify the ways of an organization create value to their customer and

how to optimum these activities to gain competitive advantage. Porter argued that the

organization can be divided into a series of primary value adding activities and

supporting activities. The primary activities include:- Inbound logistic, Operation,

Outbound logistic, Marketing and sales, and Services. The support activities include:-

Procurement, Technology development, Human resources management, and Firm

infrastructure.

Porter’s Value Chain will be used as internal scanning to analyze the strength and

weakness for AirAsia systematically by analyzing all 9 activities.

a) Inbound Logistics

AirAsia has placed an order of 175 units Airbus A320 to service its routes (AirAsia

Berhad 2007 Annual Report). Airbus A320 is less fuel consumption compared to

Boeing 737-300 aircraft. Ultimately Boeing 737-300 to be retired and replace with

Airbus A320 to overcome the increase of oil price by structurally reduce cost and

enhance customer services with better quality aircraft.



AirAsia pursue simplicity in operation by operating a single aircraft fleet. All the

aircraft can share to use the same tool, spare parts and same skilled manpower for

maintenance and repair purpose; compared to maintaining different aircraft, it may

need many different special tool, spare part and required more manpower for different

aircraft. This will help to reduce the stock of part maintenance, less training for

employee and servicing cost.

b) Operation

AirAsia partners with the world famous maintenance providers – GE Aviation to

ensure that its fleet is always perform in safe and best condition. GE began servicing

jet engines more than 50 years ago; they have world class capabilities, technology and

manpower to provide best aviation services to AirAsia. The strength of AirAsia is to

maintain low cost; whereby they don’t have to provide benefits to their workers, but

still can maintain the best quality of their fleet.

On the other hand, it also weakness of AirAsia do not have own maintenance teams.

Partnership may caused some problem such as renewing contract, misunderstanding

of the contact, lack communication, poor quality and delayed services amongst others.

They also may not drive the same standards and mission that drives by AirAsia and

there is a risk that the confidentiality may be compromised.

Base on Table 1 below (AirAsia 2007 annual report), AirAsia implement high

frequency flights with a quick turnaround of 25 minutes which is the faster in the

region. They have optimize their operation by maximize the aircraft utilization at 12.0

block hours per day and load factor at 80%. Anyway, AirAsia’s utilization is still



lower than other LCC by 0.4 block hours per day due to they do not operate late night

flights.

In 2006, AirAsia has a poor On Time Performance (OTP) at 79%, whereby 21% of

the flights are delay. If based on the estimation for cost of delay USD74.10 per block

minutes (Table 2 http://www.airlines.org/economics/cost+of+delays/), cost of delay for

AirAsia on year 2006 is in huge amount. AirAsia not only loss in terms of money but

also customer’s confident and brand equity. With the improvement on operation by

using new aircraft -Airbus A320, OTP has gradually improved by 9% on 2008; And

to win back the customer’s confident, on 16 June 2008, AirAsia launched an On Time

Guarantee (OTG) champion where compensation will be given to customer for the

delay due to their fault.

c) Outbound logistic

The LCC adopts simple routes, emphasizing point to point network rather that transfer

at hubs as full services airline. Again this will enhance aircraft utilization and

eliminate disruption due to passengers or luggage missing connecting flights. But on

customer point of view, it’s very inconvenience for them because the luggage cannot

automatically transfer from one flight to another.

AirAsia take advantages of lower landing fees to landing at low cost terminal, which

is also without airport lounges’ charges. They also provide E-ticket rather than printed

ticket to customer which is cheaper.

d) Marketing and sales



AirAsia launched AirAsia Citibank card partner with Citbank on 12 July 2007. Point

collection on credit card can be converted into AirAsia vouchers to redeem free

flights, airport taxes, fuel charges, administrative fees and purchase of Xpress

Boarding. (The Star 12 July 2007). The credit card Exclusive promotion -fixed rebate

of RM36 on airport tax provided for those who sign up AirAsia Citibank card.

(http://www.airasia.com/creditcard/my/contest/citibank_promo_fares.htm)

AirAsia promote their brand and raise awareness of the airline being the sports

sponsors with many world famous names such as Manchester United, AT&T

Williams Formula 1 and English Premier League referees.

e) Services

Go Holiday is an expansion of AirAsia online reservation on www.airasia.com,

whereby they offers hotels, car rental, hostel and holiday packages at discounted rates.

Its value added services that compliments their low airfares with value for money

hotel rooms, car rental and etc.

Prior this AirAsia has limited service to customers’ required special care. On 4

August 2007, AirAsia announces that they will enhance their facilities to

accommodate the needs of its disable guest. (Press release, 4 August 2007

http://www.airasia.com/site/my/en/pressRelease.jsp?id=4322bb92-ac1e00ae-

1ad0d890-a7d011e3) But the limitation is they can carry only a maximum 4 guests

per flight and failure of notification will results the service being unavailable. Under

certain circumstances they may require the guest to travel with a companion too.

http://www.airasia.com/creditcard/my/contest/citibank_promo_fares.htm

http://www.airasia.com/

http://www.airasia.com/site/my/en/pressRelease.jsp?id=4322bb92-ac1e00ae-1ad0d890-a7d011e3




f) Procurement

AirAsia bought into fuel hedges to protect the business from the unpredictable market

volatility when the experts and pundits prophesied that oil price would soon hit

US$200. The credit crisis unfolded in 2nd

half of 2008, AirAisa has decided to unwind

the hedges. Observe due measure, for right timing is in all things the most important

factor (Hesiod). Currently they purchase fuel at the low market price, while other

airlines continue to pay higher prices for their hedged oil.

g) Technology development

AirAsia boost their e-commerce business with launching of AirAsia Vista Gadget

with Microsoft on 31 January 2007. This gadget enables customers to keep update

with live travel information such as destinations, itineraries and pricing and latest

promotion. (http://www.microsoft.com/malaysia/pree/linkpage4327.mspx)

AirAsia enhance their service and maintain their low cost strategy by increasing use

of technology and new innovation. They launched self check-in machines on February

2009 (Press Release,18 Feb09), the technology introduce to eliminate long check-in

queues in counter and minimize the manpower.

h) Human resources management

Trained effectively, however, they can become your biggest asset (Bartram and

Gibson, 2000). AirAisa started their in-house Flight Attendant (FA) training in 2003.

Competent FA trainees to deliver better services; the training includes awareness on

safety standards, aviation terminology, in flight service procedures, product

knowledge and term and conditions.

http://www.microsoft.com/malaysia/pree/linkpage4327.mspx



AirAsia Academy is a TRTO (Tpye Rating Training Organization) to provide

necessary training to all the employees which includes pilots, engineers, cabin crew,

ramp support and guest services front –line staff. AirAsia join partnership with CAE

to manage TRTO training; and similar partnership with Aviation Australia to provide

aircraft maintenance engineering training.

i) Firm Infrastructure.

AirAsia currently operates from six hubs located at Low Cost Carrier Terminal

(KLIA), Johor Bahru, Kota Kinabalu, Bangkok (Thailand), Jarkata (Indonesia) and

Bali (Indonesia); it enables AirAsia to flies to over 60 domestic and international

destinations and operates over 500 domestic and international flights daily. AirAsia

also create a seamless bridge of unity across Asia by consistently adding new routes

which include city pairs that never exist.

After reviewing the strength and weakness in AirAsia, we must consider the

opportunities and threats in market place. During credit crisis on 2008, everyone is

having difficulties for the economy slow down. But it is an opportunities to AirAsia

as most of the company cut expenses on business travel by switching from full service

airline to low cost airline. On the other hand, ASEAN Open Skies allow unlimited

flights among ASEAN's regional air carriers beginning December 2008; it allow

AirAsia adding Singapore routes which has proven to be high yielding and is

expected to deliver sustained profit.


Page 10 of 25 05Sep2009

There are some other factors that beyond control that affecting AirAsia’s low fare

policy, such as airport departure, security charges and landing charges. The boom of

new establish competitor from full service airline on low cost subsidiary such as MAS

has created Firefly is a threat to AirAsia. The tightly regulated international intra-

Asian market is a major obstacle to the full-scale development of low cost carriers in

the region

I view today’s economy as the Value economy. Adding value has become more than

just a sound business principle; it is both the common denominator and the

competitive edge (Arthur Levitt, Jr) In summary, AirAsia has added value and

strength to maintain their low cost strategy and striving for continuous improvement

in terms of service, technology and new innovation. AirAsia positioning themselves

as the lowest fares, quality services and dependability LCC; with the unmistakable

tagline, “Now Everyone Can Fly”, AirAsia has made flying affordable for more than

61 million guests (Annual Report 2008).


Page 11 of 25 05Sep2009

4.0 Competitive Advantages

A competitive advantage is a “fundamentally advantageous position from which to

compete”, involving “substantial enough to make a difference” and “sustainable in the

face of changing conditions” (Walker 1992, p35). According to Michael Porter, the

three methods for creating a sustainable competitive advantage are through Cost

Leadership, Differentiation and Focus. The competitive advantage of a cost leadership

is more concerned with process efficiency, while cost differentiation strategy is

indeed based on the product’s characteristics. Focus strategies can be either based on

cost leadership or differentiation.

Firm following cost leadership strategy accept cheaper components, use standard

production processes, and seeks high market share in order to reduce unit cost (Philips

et al 1983). Cost leaders typically concentrate on delivering a product of competitive

quality at the lowest price with saving on the particular feature or facility that

customers do not care. Most popular no frills strategy is pursued by LCC whereby

customer is clearly understanding that they will be serve by operating the flight

services at lowest fare, prompt schedules and keeping clear of facilities like baggage

transfers, meals, seat arrangement etc, which anyway the customers were not bothered

about. AsiaAsia is one company that continuously strives to reduce cost and in the

market place it has got the image of “World’s best low cost Airline” and “Now

everyone can fly” with the affordable airfare they offered. The key strategies

contributing AirAsia as cost leadership are:-

Safety First by complies with the condition set by regulators and partner with

renowned maintenance provides to ensure its fleet is always in best condition.


Page 12 of 25 05Sep2009

High Aircraft Utilization with quick turnaround of 25 minutes and increase

staff productivity.

Low Fare, No Frills by keeping clear of facilities like baggage transfer, meals

seat arrangement etc., which any way the customer were not bothered about.

Streamline Operations by working with single aircraft fleet to reduce

manpower and stocking of maintenance parts.

Lean Distribution System by issuing of e-ticket.

Point to point network

AirAsia has awarded as “Best Asian Low-Cost Carrier” by TTG Travel Awards 2008

and “Aisa’s Best Budget Airline” under Best In Travel Poll 2008 by Smart Travel

Asia.com. Following AirAsia’s success, many others have followed and expending

their market share like the Malaysia-based Firefly, Singapore-based Tiger Airways

and Jestar Asia and Thailand-based One-Two-Go, Bangkok Airways and Nok Air.

Kotler argue that differentiation is the process of adding a set of meaningful and

valued differences to distinguish the company’s offering from competitors (Kotler,

2003, p.315). Differentiation provides excess returns by permitting higher prices for a

unique product offering, and most often characterized by superior quality of product

(Philips et al 1983). In this industry environment, Singapore Airlines has consistently

outperformed its competitors throughout its history. Singapore Airlines has achieved

its outstanding performance and sustained its competitive advantage, through

effectively differentiation in service excellent and innovation. Singapore airlines

position its image as “Stretch out. Luxuriate. Rejuvenate” in the Asian market. The

customers for Singapore Airlines will enjoy the highest standard of quality service

and innovation across all classes. The cuisine provided is created by their


Page 13 of 25 05Sep2009

International Culinary Panel of world-renowned chefs. Singapore Airlines has

awarded the “Best Airline” in Asia and South East Asia by Skytrax World Airline

Awards (UK) in 2008.

Focus strategy also called as segmentation strategy or niche strategy, the firm

concentrates on a few selected target markets rather than across the entire market. The

opportunities may exist because the firm may able to serve a narrow market segment

more effectively than industry wide competitors and the small niches that large

companies overlook. AirAsia X extends AirAsia’s proven business model and brand

into narrow market for long-haul distances over 4 hours flight time across Asia

Pacific region; through use of the focused cost leadership strategy. The key strategies

contributing AirAsia X as focused cost leadership are exactly same as AirAsia; the

differences is AirAsia adopt a broad competitive scope while Airsia X use their core

competencies to serve the needs of a particular customer group in airline industry.

The focused differentiation strategy applies the principle of added value within a

small segment of a market rather than across the entire market. In order to be

successful in the differentiation sector it has always been necessary for airline to be

innovative and brand building. Eva Air is the brand that won Trusted Brands Awards

in terms of trustworthiness, credibility of image, quality, value, understanding of

customers’ needs, and the ability to innovative. Eva airline differentiate their service

by launching a new concept fleet incorporating Hello Kitty especially for Hello Kitty

lover and children.


Page 14 of 25 05Sep2009

5.0 m-Commerce

Durlacher (1999) defines m-Commerce as “any transaction with monetary value that

is conducted vis a mobile telecommunication networks.” M-Commerce or mobile

commerce is known as next generation’s of E-Commerce; its means that use of

wireless handheld devices or wireless mobile computing devices to perform trade. M-

commerce is the blessing for everyone in this modern era where everyone needs fast

and reliable access to internet regardless of time and space. The wireless handheld

devices that use for M-commerce are palmtops, smart phones with WAP, cell phones

with GPRS, video game consoles (example MS Xbox), Personal Digital Assistants

(PDAs) and etc.

According statistic provided by e-marketer on 2009, the mobile phone subscribers in

US will be increase from 270.3 million at 2008 to 308.7miilion in 2013 (Table 3). On

the other hand, Billing Revolution survey conducted by Harris Interactive shows that

71% of US adults felt that it’s safe to make a purchase via their mobile phone (Table

3). Andy Kleitsch, CEO of Billing Revolution comment that “There clearly a large

US population of consumers opens to the ideal of making purchase via their cell

phone.” There is wide speculation that M-commerce will surpass E-commerce as the

method of choice for digital commerce transaction as the content delivery over

wireless devices becomes faster, reliable, more secure and scalable. Mobile phone

users have more than quadrupled in the pass few years, even surpassing the growth

rate of computer / internet users (Tony Fernandes, 2005). “Mobile.airasia.com would

enable AirAsia to reach out to even more consumers, cut down operating cost and

expand our services to market with low computer / internet penetration” said Tony

Fernandes during launching of m-Commerce on Press Release.


Page 15 of 25 05Sep2009

5.1 Differences of e-Commerce and m-Commerce

Without doubts that there are similarity between e-Commerce and m-Commerce, but

m-commerce has it own unique characteristics, functions and advantages. The

differences of e-Commerce and m-Commerce can be categorizes into devices used,

operating system, presentation standards, browser and bearer networks as below.

Technology E-Commerce M-Commerce

Device PC Palmtops , Smart phones with WAP , Cell phones

with GPRS , Video game consoles (example MS

Xbox) , Personal Digital Assistants (PDAs)

Operating

System

Windows , Unix , Linux Symbian (EPOC) , PalmOS , Pocket PC ,

Proprietary platforms

Presentation

Standards

HTML HTML , WML . HDML , i-Mode

Browser Microsoft Explorer Netscape Phone.com UP browser , Nokia browser , MS

Mobile explorer and other

Bearer

Networks

TCP / IP & Fixed Wireline

Internet

GSM , GSM/GPRS , TDMA , CDMA , CDPD ,

Paging networks

http://www.mobileinfo.com/mcommerce/differences.htm

Basically the devices used for m-Commerce is mobile in convenience size and can be

accessible to the internet through satellite at anywhere and anytime; unlike e-

Commerce is only limited in those area where we have internet connectivity with PC

at bigger size.

Each mobile device has certain characteristics that influence its usability, such as size

and color of display screen, input device, memory, bandwidth capacity, supporting

operating systems and availability of internal smart card reader. For example if the

display screen is too small, we may not view the screen as whole and miss out some


Page 16 of 25 05Sep2009

important information. While we may not face this problem in e-Commerce as the

devices used – PC or laptop has full accessory to support its function.

E-Commerce and m- Commerce also have different application to capture

opportunities in different perspective. Basically we are getting information through

m-Commerce rather than of transaction-based as e-Commerce. For example

information on flight schedules, travel directions, dinning guide, online banking

information and others. Purchase of ring tones, mobile screen savers, games and

voting through SMS technology is growing in market too.

There are various e-payment systems that implement such as eCash, NetCash and

MiliCent in e-Commerce. But due to storage and processing constrains of mobile

devices, m-payment system required special software to run the full-fledged payment

system and it is problematic. Customer may prefer to use m-payment or traditional

systems such as direct debit, cheque, cash or credit card.

There may have some differences between e-Commerce or m-Commerce as discussed

above, but finally it provide the same result as Chaffey (2004) and Kotler (2003) said

“ its has reached millions of homes bring enough information, entertainment and

created a lot of new convenience in marketing of product and services.


Page 17 of 25 05Sep2009

6.0 Recommendations

The competitive environment has gone awry amid confusion. Many airline have

terminated under-performing services; legacy carriers also slashing fares on main

routes to compete with low cost airlines. AirAsia needs to work closely with

Microsoft to develop a comprehensive, yet simple distribution system that capable of

handing the most technologically savvy customer to the most technologically

deprived.

Microsoft introduce new version of Microsoft Vista - Windows Mobile on 16

February 2009, which is more finger friendly and more accessible to the information

required through mobile devices. The idea of Microsoft Vista is that you can look at

your mobile device to see where you are supposed to be or you are meeting with next

by viewing the screen; the screen is presented with icon of voicemails, emails, text

messages and date and time of your next appointment (Figure 4). This will allow

AirAisa customers to can access live travel information, such as destination,

itineraries, pricing and even online booking directly from the Window Vista at

anywhere and anytime. Microsoft Vista also enables customer keep updated with

latest news and travel promotions. Ultimately with information gather, Customer can

plan and organize their trip by using the phone’s internet features.


Page 18 of 25 05Sep2009

6.1 Benefit of Microsoft Vista and m-Commerce to AirAsia

“We believe in leveraging on leading edge technology, such as Windows Vista, to

enhance the customer experience with our brand. The collaboration allows us to

expand our marketing channels by providing instant information on AirAsia’s

promotions and updates to the region” said Kathleen Tan, AirAsia Executive Vice

President during launching of AirAsia Vista Gadget (Press Release, 31January 2007).

Since promoting Microsoft Vista in e-Commerce will help to expand their market

channel; ultimately the application of Microsoft Vista into m-Commerce will enhance

the effect of expanding into wider market.

AirAsia able to promote their brand and raise awareness as said by Microsoft

Malaysia Managing Director Yasmin Mahmood (2007) “Organization are recognizing

the branding and commercial value of such innovations as the sidebar gadgets on

Windows Vista”.

By taking advantage of Vista technology, AirAsia able to strengthen its competitive

advantage and reinforce its commitment to customer service excellence.

6.2 Benefit of Microsoft Vista and m-Commerce to Customers

Customers can access to AirAsia website checking on travel information, such as

destination, itineraries, pricing and thus online booking directly from the Window

Vista at anywhere and anytime


Page 19 of 25 05Sep2009

Window Mobile enable AirAsia’s customer for planning, organizing and entertaining.

By using the phone’s internet feature, customer can visit AirAsia website to see if the

flight is on time, or checking state transportation sites for traffic conditions.

Customer even can check in boarding pass up to 24 hours before flight by using web

check in facility.


Page 20 of 25 05Sep2009

7.0 Conclusions

Low cost carriers have reshape the traditional airline business model and have

significantly change the competitive dynamics of the industry. The successful model

strictly adheres to the containment of operating cost.

The successful of AirAsia in ASEAN significantly show the importance of e-

Commerce & m-Commerce assisting AirAsia to simplify their operation, efficiency,

productivity and high utilization of assets to offer low fares.

Overall, AirAsia seems to value added in operation and optimum the strength of their

organization in order to gain competitive advantages. Value is not determined by the

firm but by buyers in the amounts they are willing to pay for the product or services

(Rayport et. Al, 2003). But the report has revealed that customers are willing to accept

their cost leader strategy which is no frills, hassle-free in exchange for low fares.

Sustainable competitive advantage is a journey not a destination – it is like tomorrow

which is inescapable but never arrives (Chaharbaghi and Lynch, 1999). AirAsia

should thus poised to challenge their competitor by implementing technologies to

enable it to position themselves as a forerunner in technology, industry leading

punctuality, the 5-Star quality in airline industry.


Page 21 of 25 05Sep2009

APPENDIX

Porter’s (1985) Value Chain & SWOT analysis

Primary &

Support

Activities

Strength & Weakness

Inbound

Logistic

Replacement new Airbus A320 to reduce fuel consumption & overcome the

increase of oil price

Reduce stock of part maintenance, less training and servicing cost

Operation Partners with GE Aviation to ensure the fleet is always work in proper

condition and safety first.

High frequency flight and reduce turnaround for 25 minutes, to maximize aircraft utilization by 12 hours per day with load factor ± 80%

Do not establish own maintained, repair and overhaul (MRO) facility. Risk

to maintain quality, threats to company security and confidential issue.

Poor on time delivery performance caused huge lose on cost of delay

Outbound

Logistic

Adopt simple point to point network - time saving on transit

Landing at Low Cost Terminal, no airport lounges, provide E-ticket rather

than printed ticket to cut cost.

Point to point networks also apply to luggage, it cannot automatically

transferred from one flight to another. Inconvenience to customer, influence

purchase decision.

Marketing &

Sales

Partner with Citibank

Brand building exercise as Sport Sponsor for Manchester United and AT&T

Williams Formula One team

Services Provide after sales services by linking with other service provides like hotel in their route.

Insufficient care for Special Service passenger compared to full service

carriers

Procurement Bought fuel hedges to protect company losses on oil price increase.

Technology

Development

Launch AirAsia Vista Gadget with Microsoft to update customer latest

information.

Launch self check-in machine to eliminate long queues & minimize

manpower

Human

Resources

management

Provide in-house Flight Attendance training to ensure the employee’s is

competency.

AirAsia Academy to provide necessary training to all level of employees

Firm

Infrastructure

Operates over 500 domestic and international destinations from 6 hubs.

Consistently adding new routes included that never existed before.

Opportunities Increasing oil price and due to the slow down economy, many firm are

change to use budget airline instead of business class

The ASEAN Open Skies allow unlimited flights among ASEAN's regional air carriers beginning December 2008.

Threats Airport charges are beyond of AirAsia. Airport departure, security charges

and landing charges

Establish of new competitor - Full service airline have create low cost

subsidiary to compete with AirAsia. MAS has created Firefly

The tightly regulated international intra-Asian market is a major obstacle to

the full-scale development of low cost carriers in the region.


Page 22 of 25 05Sep2009

Porter’s Generic Strategic Model

COMPETITIVE ADVANTAGE

LOW COST DIFFERENTIATION

CO

MP

ET

ITIV

E S

CO

PE

BOARD Characteristics:-

1) Low Cost

2) No frills

3) Simple operation

Example: AirAsia, FireFly

Characteristics:-

1) High quality & high price

2) Brand building

3) Unique

Example: Singapore Airline

NARROW

/ FOCUS

Example: Asia X

Example: Eva Air

Table 1

Table 2


Page 23 of 25 05Sep2009

Table 3

Figure 4


Page 24 of 25 05Sep2009

REFERENCES

AirAsia Berhad, 2007. Annual Report.

AirAsia Berhad, 2008. Annual Report.

Bartram, S. & Gibson B. (2000) The Training Needs Analysis Toolkit, 2nd

ed.

Amherst, MA: HRD Press, Inc

Business The Ultimate Resources, 2nd

Edition. A & C Black Publishers Ltd 2006.

p104

Chaffey, D. (2004) E-business and E-commerce Managament. 2nd

ed., Harlow, UK.

FT Prentice Hall.

Chaharbaghi, K. & Lynch, R (1999). Sustainable competitive advantage: towards a

dynamic resource-based strategy.

Durlacher (1999), Mobile Commerce Report, Durlacher Research Ltd.

Gillan, D. & Lall, A., 2002. The economics of the Internet, the new economy and

opportunities for airports, Journal of Air Transport Management 8, 49-62.

http://www.airasia.com/creditcard/my/contest/citibank_promo_fares.htm, AirAsia,

2009

http://www.airasia.com/site/my/en/pressRelease.jsp?id=4322bb92-ac1e00ae-

1ad0d890-a7d011e3, AirAsia, 2007

http://www.airlines.org/economics/cost+of+delays/, Air Transport Association, 2008

http://www.microsoft.com/malaysia/pree/linkpage4327.mspx, Microsoft, 2007

Kotler., P. (2003). Marketing Management. 11th Ed. Upper Saddle River, NJ: Prentice

Hall

Phillips, L., D. Chang, and R. Buzzell (1983) "Product Quality, Cost Position and

Business Performance: A Test of Some Key Hypotheses," Journal of Marketing, 47,

Spring, pp. 26-43.

Purcell, F., and Toland, J. (2004). Electronic commerce for the south pacific: a review

of e-readiness. Electronic Commerce Research 4, pp. 241–262.

Rayport & Jaworski (2003). “Introduction to E-Commerce”, 2nd

ed., Int’l ed.,

McGraw Hill, New York.

Tony Fernanders (2005), Press Release http://www.airasia.com/site/MY/en/

http://www.airasia.com/creditcard/my/contest/citibank_promo_fares.htm



http://www.airlines.org/economics/cost+of+delays/

http://www.microsoft.com/malaysia/pree/linkpage4327.mspx

http://www.airasia.com/site/MY/en/


Page 25 of 25 05Sep2009

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Walker, J.W. (1992). Human resource strategy. New York: McGraw-Hill.

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