Information Technology (IT) is one of the major enablers of AirAsia’s successful low cost business model. AirAsia had demonstrated the strategic value of information and communications technology (ICT) in improving competitiveness with a very high majority of its passengers making their bookings online. AirAsia was also the world’s first airline to allow SMS (short messaging service) booking and payment of airline tickets. In 2003, AirAsia proud to be the first airline in the world to offer flight booking and payment via Short Messaging Service (SMS) and make their guests flight booking anytime and from anywhere 24 hours and 7 days a week. Apart from making a Flight Booking, AirAsia guests can also make enquiry on lowest fare, departure or arrival information and city codes. All this is available at a normal cost of RM0.15 cents per SMS and without any additional charges. AirAsia guests can also register to be the first to know of new promotional fares as soon as they are made available. AirAsia was also the world’s first airline to allow SMS (short messaging service) booking and payment of airline tickets.
AirAsia move from the traditional business into modern business by implementing E-commerce and maximize the information technology (IT) in their business. 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. 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, the technology introduce to eliminate long check-in queues in counter and minimize the manpower.
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).
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 ticket-less travel. 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.
The operational environment of an airline industry is complex. Large network in the supply chain, continuous daily operation, and several external uncontrollable variables such as weather condition and government regulations become factors affecting airlines’ performance. Given these complexities, operational planning and scheduling across the supply chain are important factors determining the success of any airline. Therefore , AirAsia apply APS system to optimizes its supply chain management. It works as the brain of supply chain activities by gearing activities in relation with customers and suppliers requirements. APS system clusters and classifies customer orders, forecasts future fulfillment requirements, checks resources availability and sets order priorities. Moreover, APS system helps AirAsia in gaining competitive advantage as it provides visibility across supply chain. APS system also improve AirAsia’s strategic and operational performances particularly in the inbound and operational activities
AirAsia have better connectivity across the supply chain in terms of cross-functional scheduling and planning with suppliers and customers. APS system ensure each party works together in integration. Relationships among processes and their activities become visible. Furthermore, this shorten scheduling cycle, lead time, and maintenance cycle leading to improved efficiency. Beside that, APS system enables AirAsia to have better understanding and control of the interrelationship between different variables constituting total performance. Complexity in measuring interrelationships can be manipulated by deploying an APS in a proper way. A good example could be the effect of a delay due to airport facilities or other variables such as bad weather condition. APS can help plan in advance for such situations so that proper actions can be planned to contain such situations. Other than that, The APS system will analyse the flying routes offering optimal profits for AirAsia given constraints such as geographical, short haul flights commitment i.e. AirAsia committed to serve flights no longer than four hours thus it only buys or leases small aircraft e.g. Boeing 737 and AirBus 320. Optimal flying route is imperative in deciding new destinations for AirAsia to serve. Aircraft maintenance quality is critical in airline industry. In AirAsia case, it is even more critical since AirAsia utilizes its aircraft fleet more than standard airlines. The visibility across the value chain given by APS will provide better collaboration between AirAsia and aircraft manufacturers and other suppliers. It will shorten over-haul time thus it will enable AirAsia to improve its fleets utilisation. Using APS system, AirAsia can save large proportion of its maintenance cost. Maintenance cost contributes approximately 9% to the overall cost of an airline.
The excellent utilization of IT have directly contributed to their promotional activities such as email alerts and desktop widget which was jointly developed with Microsoft for new promotions, brand building exercise with over 3 million hits per month and on the most widely surfed booking engines in the world as well keep the cost low by enabling direct purchase of tickets by consumer thus saving on airline agent fees.
AirAsia investment in technology to grow the business across all fronts is bearing fruit. 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 our guests, who use their 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 and over 80 percent of AirAsia’s flight bookings are done via the internet.
Other than that, AirAsia also utilize mobile technology to disseminate information to their guests via handheld devices. Guests could look forward to further convenience through the services of their self check-in kiosks and web check-in facility and Air Asia also successfully created an environment that accelerates the all-pervasive use of ICT across all segments of the community. AirAsia has almost literally overnight in corporate terms, 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.
Beside that, AirAsia online reservation system resides on a secure server that encrypts customer purchase information using Secure Socket Layers. They use all reasonable endeavors to protect personal information from loss, misuse and alteration. Only authorized employees, who are under appropriate confidentiality obligations will have access to their customer personal information. However, customer will be responsible for any user ID or password that is used on web site.
Apart from that, A cookie is a piece of data stored on the user’s hard drive containing information about the user. Usage of a cookie is in no way linked to any personally identifiable information while on our site. This enables AirAsia system to recognize their customer browser and remember passenger names and billing information so that customer won’t have to retype it. The address and passenger information is saved to their customer hard drive by the AirAsia web server. This information can only be accessed by the AirAsia web server but Internet users and other companies cannot access this information. For security reasons, customer credit card number is not saved.so customer must type the credit card number each time they purchase travel using Ticket-less Booking Online. Beside, AirAsia also utilize cookies to track the effectiveness of online advertising. This information is treated confidentially and will not be shared with anyone outside of AirAsia Bhd. AirAsia will only use this information to make informed decisions with regard to the purchase of online advertising. This enables AirAsia to maintain low costs and low fares for their customers.
Integration of Information Technology in Core Business
From now a day, the Information technology is fully use by the social. AirAsia know that E-commerce is becoming a business tools. Airasia use this to sell their products(e-ticketing,hotel room and etc), advertise, bypass intermediaries and so on. AirAsia was implementing E-commerce and maximized their information technology usage to make the effectiveness and efficiency in their company and make possible low cost carrier in their business. AirAsia has implement current IT such as Yield Management System(YMS),Computer Reservation System(CRS), and enterprise resources planning(ERP) system.
Airasia has use the Yield management System as revenue management system it understand, anticipates and reacts to the behavior of the customer to maximize revenues for the organization. In this system, Airasia take into account the operating cost and aids AirAsia to optimizes price and allocate capacity to maximize expected revenue. Airasia use YMS to optimization the seats to maximum revenue. The price of the ticket can be based on the available of the seats at various time. A reservation done at a later date will be charged more than the one done earlier(for the same seats). This can make the plane when flight in once can be full seat, prevent any empty seats at the plane. Based on the economy theory, when the seats are the fixed cost, for minimize the fixed cost, most effective way is to maximize the seats, this can bring profit maximization. The second is the route, by adjusting prices for routes/destinations that have a higher demand when compared to others). The effective methods however is to combine the seats and routes for all flights, this can lead both of the seat and the route are effeectively priced for all the flight.By using this yield management system, AirAsia can understand the behavior of their customer and offering the effectiveness and effiency strategy and also can allocate capacity to maximize the expected revenue.
Airasia implemented Customer Reservation System(CRS), it 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 prevent the middleman(travel agent) and the sales commission that need to paid to them. By using this system, Airasia can cut their cost and eliminates the middleman(travel agent) and the sales commission to pay them. Other than that, this system are very customer friendly because the entire customer if want to buy or make a reservation, the customer are no need like the traditional way, call go to have reservation the seats or through the agency, the the airline company will deliver the ticket to your house. It can be all done by online, the customer just need to online to make reservation and payment, print out the ticket, when go to the terminal just need to show out the printing ticket to the counter and also your IC(identity card) or passport. This also because of why the flight ticket are cheapest than other airline company because the company have direct relationship with the customer without any intervention middleman. Airasia can save the cost and transfer the benefit to thier customer.
Airasia also implementation of enterprise resources system(ERP) to maximized IT to meet the lowest cost during their business activities. ERP is the system that integrate comprehensive software to make the IT system is more effectively and efficiency. From the managers view in a company, the emphasis is on the word planning; ERP represents a comprehensive software approach to support decisions concurrent with planning and controlling the business. Airasia is looking to successfully maintain process integrity, reduce financial month-end closing processing times, and speed up reporting and data retrieval processes. Then, this system focusing on capturing transaction in daily operation and helping AirAsia to save its operational cost as well as to increase the efficiency and integrity in its operation.
Airasia also implement Customer Relationship Management(CRM). AirAsia has partnered with travel and tourism solutions provider Amadeus. The partnership will enable more than 10,200 traven agencies using Amadeus Global Distribution System(GDS) to book flights for travelers on AirAsia and all its subsidiaries. AirAsia also provide accommodation, they provided the traveler convenience to book their hotel. Airasia also provided the travel package for the company who need their staff travel overseas, this also can save the cost of the company, and also can build the good relationships with the company. Other than that, Airasia also provide if the flight delay, AirAsia will send a SMS(short massage service) or email to their customer to inform them. AirAsia also using the SMS to advertise their promotion as well.
AirAsia also using the outsourcing to control their cost. By using outsourcing, AirAsia can be eliminated in more resource consumption. And than for the competency, AirAsia competency is not in IT, by implemented outsourcing IT field, AirAsia also can reduce cost in IT system activities which is can make possible more cost in their business. Airasia can easily to control all the system that is outsourced to other vendor or company, the control in this strategy also gives benefits because AirAsia function only to be controlled a system that is AirAsia used. Example like the AirAsia did computer reservation system(CRS) by Navitaire Open Skies Technology Company, and than implementing enterprise resource planning (ERP) by Microsoft Corporation, and also implementing AirAsia X. By implementing outsourcing more better than in house operation, because it can give more lowest cost, reduce risk,more effectively and efficiently, and also can easily control by AirAsia and than more fast in AirAsia company.