AIr Asia using IT

Topics: Airline, Low-cost carrier, Customer relationship management Pages: 10 (3192 words) Published: May 10, 2014



Executive Summary
The use of Information technology is important to build the strategic and operation management of airlines, and help to build the future airlines successfully. The emergence of the Internet in the mid1990s as well as the development of Intranets and Extranets forced airlines to refocus their strategy on technological innovations in order to enhance their competitiveness. (Buhalis 2004). AirAsia believes in the low fare business concept and feels that keeping cost low requires high efficiency. The major threat and challenges which AirAsia is facing right now are competitive environment due to industry rivalry and the need to create differentiation to gain competitive advantage among other low cost carriers. Based on SWOT analysis, we can see that the company has been using an extensive of IT systems in their value chains. It has gain strengths in operations by implementing YMS, CRS and ERP systems. Analysing with Porter 5 Force on external environment, we could see that the major threats are increasing competition from other airlines and increase in operation cost. AirAsia needs to maintain its competitive advantage by maintaining low operation cost but also provides sufficient customer service in order to gain differentiation in the industry. Few solutions are proposed to address the threats and challenges. The solutions are to implement mobile applications and the ‘Roving Agent’ system. Customer Relationship Management (CRM) is highly recommended as one of the strategic IT implementation. The recommendation for AirAsia is to apply CRM strategy to develop new ways to manage both customer relationships and suppliers or partners to optimize customer loyalty, supplier relationship and revenue.

Statement of Problem
This study is conducted with the objective to identify the challenges faced by AirAsia in aviation industry using SWOT analysis and Portal 5 forces. It will look into how to use ICT to propose the solutions. Opportunities and threats were also being explored in this study and recommendations to counter them using ICT are pointed out. Analysis

First, Value Chain analysis is used to analysis how AirAsia utilise ICT in business. Refer to Appendix 1. For Inbound Logistics, IT evolution has enable it to utilize information systems in a significant way. The company has been carrying out Yield Management System ( YMS), customer reservation system ( CRS ) and enterprise resource planning ( ERP system). Yield Management System ( YMS ) is a revenue management system which reacts to the behaviour of customer to maximize revenues. AirAsia use it to take into account the operating cost and to optimize price through allocation capacity to maximize expected revenues. There are 2 levels of optimizations, Seat and Route. Computer Reservation System ( CRS ) is an integrated web-enabled reservation and inventory system powered by Navitaire Open Skies technology that includes Internet, call centres and airport departure control functionality. It is a direct sales engine that effectively eliminated the middleman ( travel agents) and the sales commissions that need to be paid to them. Centralized customer data helps AirAsia to track booking and schedule flight activities with real-time, on-demand reporting feature. This feature will help to bring more customers to use the website in order to reduce the cost for customer support.

Inbound logistics also utilize one type of aircraft ( Airbus A320 will replace the Boeing 737). This will reduce the maintenance cost, administrative cost and part inventory. The ‘In-flight system’ is acquired for operations activities, such as to perform courier operation, gate operation, aircraft operation, baggage handling and on-board services. For Outbound logistics, it relies heavily on IT on baggage system which includes ground shuttle service and baggage claiming service. AirAsia use Database Marketing, Internet...

References: Buhalis, Dimitrious. 2004. eAirlines:Strategic and Tactical use of ICTs in the Airlines Industry. University of Surry .
M.Burn, Janice. n.d. "Intro to MIS and Global Concept of Electronics Business." In Managing Information System, Unit 1 page 32. Wawasan Open University.
M.Burn, Janice. 2002. "Unit 2 - E-business and Market Competitions ." In Managing Information System, 7. Wawasan Open University.
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