DIPLOMA IN BUSINESS ADMINISTRATION CSC 2170 BUSINESS INFORMATION SYSTEMS GROUP ASSIGNMENT JANUARY 2013 NAMES: ABERAME DHURGA

D/O QUNAISEGERAN (I11009058) KAVITA D/O MARAIPAN (I11009277) KAYATTRI D/O MOGAN (I11008614) SECTION: 1S1 CLASS CODE: CSC 2170 LECTURER: MS.CHONG FONG KIM SUBMISSION DATE : 15 APRIL 2013 TOPIC: E-BUSINESS MODEL IN AIR ASIA AIRLINES

TABLES OF CONTENTS
TOPICS INTRODUCTION BACKGROUND OF COMPANY INTIAL IDEA OF THE TONY FERNANDEZ WHEN SETUP HE ONLINE BUSINESS E-BUSINESS MODEL IT IMPLEMENTATIONS AND STRATEGIC ALIGNMENT THE IMPORTANT FEATURES OR FUNCTIONS PROVIDED IN THE WEBSITE FOR THE CUSTOMER CRM FEATURES AND HOW IT HELPS

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3 4 5 5-7 7-9 10 11-12
13 14 15-16

IMPORTANCE INTERNET TECHNOLOGY TO AIR ASIA CHALLENGES THEY FACED IN IMPLEMENTHING THE BUSINESS ONLINE THE SECURITY OR PRIVANCY CONCERNS TAKEN FROM THE AIR ASIA RECOMMENDATION CONCLUSION APPENDIX
RESPONSIBILITY OF THE GROUP MEMBERS

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REFERENCES

INTRODUCTION Now days, the technology is very important to every business people because without the technology they cannot run up in good condition and cannot make the customer satisfied. However, when an organization use the technology can attract the customer and can make more profit. From this assignment we are going to explain about e-business model in Air Asia Airlines. Firstly we like to share what is defining of e-business model. The e-business model means model is an approach to conducting electronic business through which a company can sustain itself and generate profitable revenue growth. Actually, the business model spells out how a company plans to make money and how it is competitively positioned in an industry. Then, the information technology helps the strategic and operation management of airlines, and facilitates the successful airlines in the future. Future more, the AirAsia, is analyzes the current business environment, competitive advantages, current implementation of information technology, and the recommended future implementation of technology in customer relationship management (CRM) implementation to pursue competitive differentiation and profitability effectively in the future. So that, the clear explanation is following pages of the assignment and we feel happy for it been success.

To having a nice journey with Air Asia Airline

BACKGROUND OF COMPANY Air Asia The Air Asia Berhad is part of the Air Asia Group, a world-famous low cost airline that operates extensive networks both domestically and internationally. Air Asia found low cost airfares in Asia and is now currently the largest low fare, no-frills airline in Asia. It is also one of the largest airlines in all of Asia in terms of passengers carried. Air Asia has also been voted the Worlds Best Low Cost Airline in 2009 and 2010. Air Asia Berhad is currently based in the Low Cost Carrier Terminal (LCCT), Kuala Lumpur International Airport (KLIA), Sepang. Its associate airline is Air AsiaX, is also located at the LCCT and shares operational facilities with Air Asia Berhad. A Brief History of Air Asia The airline was established by a Malaysian corporation in 1993 and commences

operations in 1996. In December 2001, with the airline heavily in debt, Air Asia was purchased by Tony Fernandez of Tune Air Sdn. Bhd. for the price of RM1. As part of the purchase, Tony also took up the RM40million debt. Under the leadership of Tony

Fernandez, the airline was flying high in 2002 and launched its new route that year. In 2003, a second hub was opened in Senai International Airport, Johor Bahru, as well as the airlines maiden international flight to Bangkok. After that the only place Air Asia was heading for is up, as the Thai and Indonesian subsidiaries were set up as well as the commencement of flights to Indonesia, Macau, China, Philippines, Vietnam and Cambodia in 2005. Air Asia now flies to all ASEAN countries, a great portion of Asian countries that include India, Iran, Sri Lanka and Bangladesh; as well as to the United Kingdom, France, Japan, Korea and Australia via Air AsiaX.In 2011, we are setting up another Air Asia hub in the Philippines and are well on the way in setting up other similar operations elsewhere in the region soon after.

The initial idea of the Tony Fernandez when setup the online business to promote the Air Asia Airline to the customers. The information is following below: High tech world

In this globalization era everything has been changed to high tech. the word high tech describe how high the imagination of human turns to reality. In this era everyone was busy for 24/7 in their life. Time taken to have meals also become less, so imagine how people are going to outlets to booked the airlines ticket. The technology plays its role here. When there is an online business people in this global era will easily booked their air ticket rather go to the outlets to booked air ticket. There is no time limit for online business because it is 24/7. Every moment is available and everyone can make the online booking without any wastage of money, energy and time. Business hour 24/7/365

There is no time limit for online business because it is 24/7. Every moment is available and everyone can make the online booking without any wastage of money, energy and time. So the founder Air Asia plans carefully here. When there is no time limit why not he starts the online business which is bringing all the benefits to the organization. Global reach

Online business is only route to reach all over the world. Everyone will get know about our business in online. Customer from all over the world will get know about the business and will purchase our services. When there is online reservation system customer from all over the world can reserve the ticket without any wastage of energy. E-BUSINESS MODEL Basically e business model is known as a company that has an online presence. An ebusiness model is an approach to conducting electronic business through which a company can sustain itself and generate profitable revenue growth. E-businesses are that have ability to sell, trade, barter and transact over the web. The use of internet technologies to internetwork and empower business processes, electronic commerce, and enterprise communication and

collaboration within a company and within its customer, suppliers and other business stakeholders. This information took from the (software.ucv.ro. n.d) However, the Air Asia Airlines is using the E-business Model to increase their profit and make more customers to travel at there. So they decide to the low cost carrier (LCC) of the business Model. The low cost airlines like Air Asia have changed the definition of airlines that air travel is a luxury and it is only for the higher segment of the population. The key objective of low cost carriers is to increase their reach and provide the services to a large segment. However, the low cost carriers are now facing some challenges in the market. The information above and following below is taking from the (Wong Pui Man, Cary, March 2009, skcs.hk/AirAs.ia.pdf) The Low-Cost-Carrier (LCC) of E- Business Model

Air Asia has been classified into the Enterprise level E-business model http://booking.airasia.com/ is the website of e-business model used by air Asia for their online booking or online ticket reservation. This website allowed and make easy for customer for booked their airlines tickets online. checkin.airasia.com/ is the website of e-business model for customer for self-check-in without wasting on long queue to check in before fly. Social networking: Facebook is the social web page where customer can get information about the packages and promotions of Air Asia. Attributes : online reservation systems Revenue stream sources transaction fee model: all BSP payment transactions for Air Asia bookings will be charged a fixed BSP transaction fee. BSP is billing settlement plan standardized system for airlines and agents, providing them with a simplified approach to the selling, reporting and administration of passenger air transportation. It is established under the general jurisdiction of the Passenger Agency Conference (PAConf), delegated to the BSP Committee (BSPC) and co-ordinated by the Agency Administrator/Plan Management.

The Low-Cost-Carrier (LCC) of E- Business Model

Air Asia follows the Low-Cost-Carrier (LCC) business model in the airline industry, which can be characterized as below:

Simple Product

A typical low cost airline product is extremely basic. It focuses on getting passengers from A to B, cutting out all the extras. This means there are no meals, drinks or snacks served free on board. In certain airlines, these may be purchase on request. The aircraft have Narrow seating to permit greater capacity. Low cost airlines offer all- economy flights, with no additional space requirements for wider business class seating. Its means more passengers can accommodated on each sector. There are no facilities for seat allocations as free-seating makes passengers Board the flights early to get them a decent seat. The pricing structures of low cost airlines allow for no additional schemes or sales promotion activities, including frequent-flyer programmers.

Positioning

The low cost airlines the world over are known to target Non-business passengers, leisure traffic and the price-conscious business passenger segment. The low cost model works best on short-haul point-to-point traffic with high frequencies. These airlines have aggressive marketing strategies and compete with all transportation carriers, including the road and railway networks. Most Western low cost airlines fly to secondary airports which are cheaper to land into. However, this is not yet an option available in India.

Low Operating Costs

Low cost airlines have a very lean organization structure and operating costs are kept to the bare minimum with low wages such as a crew or staff requirement are low and generally fresher are preferred , low airport fees, low cost for maintenance and cockpit training like as these are typically outsourced. There are no requirements for standby crews due to homogenous aircraft fleet. The low cost carriers aim at achieving high resources productivity. Its generally achieved due to short ground waits like turnaround times are kept minimal due to simple boarding processes, no air freight, no hub services and short cleaning times. However, selling costs are

also minimized as high percentage of ticket sales is generated online, eliminating the margins that would otherwise need to be passed on as a commissions to travel agents.

The figure of Low Cost Carrier Business Model

IT IMPLEMENTATIONS AND STRATEGIC ALIGNMENT Now days the globalize economy, information technology has driven important changes in the nature and application of technology in business. The implementation of information technology in its value chain provides powerful strategic and tactical tools for AirAsia, which if properly applied and used, could bring great advantages in promoting and strengthening the competitive advantages.

CURRENT STRATEGIC IT IMPLMENTATION The AirAsia has currently adopted information technologies strategically to integrate the operations and coordinate all the business and management functions. The followings are few system implementations that AirAsia has done in its marketing and sales activities as well as operation activity in the value chain. This information above and following below took from the (www.skcs.hk/AirAsia.pdf, March 2009)

Yield Management System (YMS)

The Yield Management System (MYS) is known as the Revenue Management System, which can understand, anticipates and reacts to the behavior of customer to maximize revenue for the organization. This takes into account the operating costs and aids Air Asia to improve the prices and allocate capacity to maximize predictable revenues. The optimization is done on two levels in Air Asia; it is mention in following below: Seat Every Air Asia seats are considered as an opportunity to maximize revenue. The seats are available at various prices in different points of time. A reservation done at a later date will be charged more than the one done earlier and set up for the same seat. Route The Air Asia is adjusting the prices for routes or destinations that have a higher demand when compared to others. The effective method is to combine these two levels for all flights and routes, so that the both seat and the route is effectively priced for all the flights.

The Air Asia has realized to increase the revenue in (3-4%) for the same number of aircrafts by taking advantage of the forecast of the high or low demand patterns, effectively shifting the demand from low period to high period and charging a premium for late bookings. Over the past couple of years, Air Asia have actually lowered prices in essential for LCC as the YMS has been given to them for the window to increase their revenue by offering higher discounts, more frequently during off-peak times while raising prices only marginally for peak times. (Voneche, n.d) Computer Reservation System (CRS) The Air Asias CRS system is open Skies by Navitaire has been helped to grow at a dramatic pace in the past couple of years. "Navitaire's Open Skies technology has truly enabled Air Asias growth from 2 million passengers to 7.7 million passengers in less than two years. Open Skies scaled easily to accommodate our growth, which mention by Mr. Tony Fernandes. It is an integrated web-based reservation and inventory system. However, it is including with internet, call center, airport departure control and many more. It also a direct sales engine that effectively eliminates the middleman (travel agents) and the sales commissions that need to
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be paid. The centralized customer data is maintained by Open Skies and it is helps the Air Asia to track the booking and schedule flight activities with real-time, on-demand reporting feature. The huge booking information is provided online to the customers acts as a force that brings more customers to use the website thus reducing the customer support costs. Besides that, the important feature is that Open Skies effortlessly integrates with the implemented of 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. The CRS enabled in AirAsia because to introduce the first ticket less 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 in 1 hour early for securing a seat on the aircraft. The AirAsia have proposed to implement a Wireless Delivery System (WDS) to expand its reach via mobile phones. This system is potential customers to able for booking their tickets via by using the mobile phones. Actually, this strategic to move for growth as the Asia-Pacific region has a larger population of mobile phone users rather than internet users. Enterprise Resource Planning System (ERP) The AirAsia has recently chosen for a full-fledged ERP system implemented by Avanade consultants in May 2005. By implementing this package AirAsia is looking to successfully maintain process integrity, reduce financial month-end closing processing times, and speed up reporting and data retrieval processes for the Microsoft Malaysia.

e)

Find out the important features/functions provided in the website for the customers

Air Asia is the first airline which introduced online booking system in Malaysia. Online booking system refers to making online, real time, internet bookings for such things as flight, hotel rooms or even theater ticket. The number passenger of Air Asia has increased from 200,000 to 350,000 after Air Asia was introduced the online booking system to their clients. Furthermore, Air Asia also became the second largest airline in Asia to go completely ticket less after Sky mark Airline in Japan. One of the advantages of buying airline tickets online is the convenience of doing it

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inside your house without having to drive all the way to a travel agency office in the city. Within a few clicks, you are already taking out your credit card and preparing to confirm your booking. After few minutes, the ticket confirmation is already arrived in your mailbox. In addition, the airline websites have the facility to compare airline ticket prices across many different days. You just simply specify your date and time of travel and the search engine will do the rest. This saves your time of having to visit each and every date in order to get a best deal of flight ticket Air Asia also provides web check-in service to their customer. Web check-in is refers to the service that used internet to check-in and print the boarding pass through the website or download it to the mobile. Use the web check-in and save the time you would spend in queues at the airport because web check-in allows you to check in between 23 hours and 1 hour prior your departure. There is another benefit of web check-in which you can drop off your baggage quickly at the separate counter. Hoot having to drive all the way to a travel agency office in the city. Within a few clicks, you are already taking out your credit card and preparing to confirm your booking. After few minutes, the ticket confirmation is already arrived in your mailbox. In addition, the airline websites have the facility to compare airline ticket prices across many different days. You just simply specify your date and time of travel and the search engine will do the rest. This saves your time of having to visit each and every date in order to get a best deal of flight ticket. Air Asia also provides web check-in service to their customer. Web check-in is refers to the service that used internet to check-in and print the boarding pass through the website or download it to the mobile. Use the web check-in and save the time you would spend in queues at the airport because web check-in allows you to check in between 23 hours and 1 hour prior your departure. There is another benefit of web check-in which you can drop off your baggage quickly at the separate counter.

THE CRM FEATURES AND HOW IT HELPS Electronic customer relationship management (e-CRM) involves the integration of Web channels into the overall enterprise CRM strategy with the goal of driving consistency within all channels relative to sales, customer service and support (CSS) and marketing initiatives. It can support a seamless customer experience and maximize customer satisfaction, customer loyalty and revenue. This statement takes for the (gartner. com, n.d)
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However, in the e-CRM have a lot of features are following below and the information took from (panomtech.com, n.d)

Entirely web-based. Through Panom tech ECRM application Contact with customer is made through the retail store, phone and fax. Besides, all the other traditional methods are used in addition to Internet, email, wireless and PDA technologies.

Geared more toward front end, which interacts with the back-end through use of ERP systems, data warehouses, and data marts.

Personalized individual views based on purchase history and preferences. Individual has ability to customize view.

System can be designed based on customer needs. Web application designed for enterprise-wide use.

Reduction in time and cost. Implementation and maintenance can take place at one location and on one server.

Based on, the Air Asia Airlines also using the Customer Relationship Management (CRM) in their industry .In long term, customer relationships should be advance for Air Asia to maintain competitive advantage and profitability. When planning and implementing CRM of application, while the management is recommended the following approaches. This statement took from the (Wong Pui Man, Cary, March 2009, skcs.hk /AirAsia.pdf) Customer segmentation mileage-based segmentation is inadequate, rather should focused on value-based and needs-based approaches can guide investment decisions and drive greater insight into the needs of high value customers. CRM initiative development to differentiate from other competitors, AirAsia should not adopt the fast follower approach to CRM initiative development, i.e. learning from other competitors approach such as installing kiosks for fast check-in and etc. Air Asia implement CRM program in favor of investing in initiatives with a high return, which respond to the needs and desires of their own customers.

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Organizational design and management Air Asia needs to train the employees, empowering them with a complete view of the customer and clearly articulating the employees role in the CRM strategy.

In order to gain market share and sustain its competitive advantaged to be the cost carrier in the high demanding environment, Air Asia must develop new ways and program to manage customer relationship loyalty, supplier relationship and revenue. Between the program customer relationship and information take from

(misairasia.blogspot.com, December 5, 2011)

Travelling Planning Its site personalization for on- line customer to create travel plan, bundled services information, flight notification system and gate information displays.

Frequently flyer program The membership based or point based rewarding scheme offering to the applicable customer.

Business Intelligence The Dynamic, updated, multi-dimensional report that help management to do analytics in various areas such as customer profiles.

Customer Care The web based on self -services, such as e-ticket booking and reservation, online baggage and air internet services.

Reservations and Ticketing The ITA search engines, roving agent check-in, kiosks, internet check-in and phone check in.

IMPORTANCE INTERNET TECHNOLOGY TO AIR ASIA The Air Asia has a lot of benefit using the internet technology in business. Actually, Air Asia make more effective and efficiency and possibly able to reduce the cost and removed inefficiency in their business. The Air Asia used it to takes into account the operating costs aids
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Air Asia to optimize price and allocate capacity to maximize expected revenues. The Air Asia can be more understand the behavior of customer and offering the effectives and efficiency strategy. It also can be allocate capacity to maximize the expected revenue. Air Asia can make efficiency to know their customer using IT technology with lowest cost by using this system. The also Open Skies seamlessly integrates with the implemented YMS so that the system can be used in unison for pricing and revenue maximization and driving down the cost of operation at the same time. With the strong ERP technology platform, Air Asia is able to successfully maintain process integrity, red financial month-end closing processing time, speeds up reporting and data retrieval process. From the information took from the (izam-informationsystem.blogspot.com, 2011 December 8).

h) What are the challenges they face in implementing the business online?
Does no meet every customers demand for convenience in terms e-ticketing (Not possessing any related card services for transaction, emergency booking (before 24 hours fight) Minimum air-fare rates

AirAsia faces challenges finding open takeoff and landing slots at opportune times, and Thailands regulation that sets minimum air-fare rates. Although Transport Minister Suriya Jungrungreangkit said the current minimum air-fare regulations will be scrapped to open up the market, he couldnt name a date when this will be done. This seems to be favoritism toward Thai Airways Internationals domestic operations, and affects Thai AirAsia to compete in the Thailand market.

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THE SECURITY OR PRIVANCY CONCERNS TAKEN FROM THE AIR ASIA The AirAsia is concerned about the customer right to privacy. Therefore, AirAsia recruits to be responsible when gathering their personal information and to protect your privacy in every possible way. Although, this Privacy Policy is not a contract and does not create any legal rights, however, it does serve as an expression of Air Asias commitment to protecting private personal information. The privacy notice aims is to answer the customer questions about the sources and kinds of information AirAsia collects, how it is used, when it may be shared with others, and how they safeguard its confidentiality and security. They also provide to customer ways to correct data and the option to limit they sharing of data with Air Asias authorized third parties. However, the following below the method of privacy policy using by the Air Asia Airlines and the information took at the ( airasia.com, n.d). Cookies A cookie is a piece of data stored on the user's hard drive containing information about the user. The usage of a cookie is in no way linked to any personally identifiable information while on our site. This enables to their system to recognize the customers browser and remember the passenger names and billing information so that they wont have to retype it. The address and passenger information will saved to their hard drive by the AirAsia web server. This information can only be accessed by the AirAsia web server; Internet users and other companies cannot access to the information. A session ID cookie expires when they close the customer browser. A determined cookie remains on the hard drive for an extended period of time. They can remove persistent cookies by following directions provided in the Internet browsers help file. Besides that, they also use the cookies to track the effectiveness of online advertising. Based
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on the information is treated confidentially and will not be shared with anyone outside of AirAsia. AirAsia will only use this information to make informed decisions with regard to the purchase of online advertising. It enables AirAsia to maintain low costs and low fares for the Customers.

Site tracking

The Air Asia Airline also using the tracking software to monitor customer traffic patterns and site usage to help for develop the design and layout of the site to better meet the needs of visitors to AirAsia.com. This kind of software does not enable to them for capture any personally identifying information. Security

The Air Asia online reservation system resides on a secure server that encrypts the customer purchase information by using the Secure Socket Layers. They also use all reasonable endeavours to protect the personal information from loss, misuse and alteration. Only the official of the employees and agents, who are under appropriate confidentiality obligations, will have access to the personal information. However, the customer will be responsible for any user ID or password that is used on web site.

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RECOMMENDATION As we know, is the No.1 biggest Air Asia in the world because of they use a lot of technology to develop their organization. Actually, they choose this kind of information system for their customer equipment. Therefore, the benefit and features of the system will enable a good service of the Air Asia to meet and satisfy the need of the customers. But the Air Asia still has to increase their technology system for inflammation their sales and profit. However the Air Asia must increase to train their employees and empowered them by giving them guidelines on how to provide good quality of services to customers. However, employees should be trained to be familiar about the whole operations of Air Asia to increase effectiveness and efficiency of customer services, thus build up relationship with customers. Besides, traveler needs minimum 45 minutes to reach to the terminals which are very time-consuming and inconvenient. Therefore, Air Asia should consider locating their airport near cities. CONCLUSION When we start doing this assignment we feel exciting because to learn about the ebusiness model in Air Asia Airlines industry. We learn a lot of information about the e-business model such as, how it help for Air Asia and how solved the problems and many more. Other than that, they also mention what is internet technology use by the Air Asia to increase the customer .from the internet technology the customer will get the good website of the Air Asia about the information and the advertisement of the travel offer in holiday times. However, they also using the CRM method to support a seamless customer experience and maximize customer satisfaction, customer loyalty and revenue. Then they also have the security or privacy of the

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company to protect the company information and the customer personal details. They also benefit of using the internet technology in business because make more effective and efficiency and possibly able to reduce the cost and removed inefficiency. Finally, the challenges faced by the Air Asia, they through a lot of problem and achieve their goals based on the vision and mission. Our opinion all the company must use this e-business model to reach their target.

APPENDIX

AIR ASIA SEATS LAUNCHING THAT EVERYONE CAN FLY

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AIR ASIA FOOD REVIEWS

LOW COST TRAVEL

RESPONSIBILITY OF THE GROUP MEMBERS As the group leader my group member did a good job. Actually, we didnt separate the work because we always do the assignment together. When we start doing this assignment, we feel happy because to learn about the new things. Then, we share the ideas and combined the things together to each part. My group members always understanding my situation because the last Friday I have quiz test so, still they still carry on doing the assignment without me .its show that, they responsibility of the assignment and follow my orders. However, they also corporate with me in any time to do the assignment even through it middle of the night. In my team, Kavita is the idea promoter because she always gets the information as fast as possible and good in editing the assignment. Then Kayattri is good in searching about the information based on the company and her also help to rearrange the sentences in correct. In my opinion, they are good group members for me to finish the assignment in the time and I feel happy to get them.

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REFERENCES

Izam,

December

2011,

Information

system,

http://izam-

informationsystem.blogspot.com/ N.d, Business environment and strategies of Air Asia Airlines,

http://www.ukessays.com/essays/marketing/business-environment-and-strategies-of-airasia-airlines-marketing-essay.php Wong Pui Man, Cary , March 2009, AirAsia, http://www.skcs.hk/AirAsia.pdf DECEMBER 5, 2011, AIR ASIA, http://misairasia.blogspot.com/ N.d, The Low Cost Airline: AirAsia

elc.polyu.edu.hk/subjects/ELC2202/Air_Asia_Report.doc N.d, Air Asia Success factors, http://www.ukessays.com/essays/marketing/businessenvironment-and-strategies-of-air-asia-airlines-marketing-essay.php#ixzz2Q2ZsLhlV N.d, Air Asia Strategic IT Initiative, sandygarink.tripod.com/papers/AA_SITA.pdf

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