“NEW DIGITAL ECONOMY OF AIRASIA”
AirAsia Berhad (MYX: 5099) is a Malaysian low-cost airline headquartered near Kuala Lumpur, Malaysia. It is the largest airline in Malaysia by fleet size and destinations, and Asia’s largest low-cost airline by passengers carried and jet fleet. AirAsia Group operates scheduled domestic and international flights to 120 destinations spanning 24 countries. Its affiliate airlines Thai AirAsia, Indonesia AirAsia, Philippines AirAsia, AirAsia India, and AirAsia X. AirAsia operates with the world’s lowest unit cost of US$0.023 per available seat kilometre (ASK) and a passenger breakeven load factor of 52%. It has hedged 100% of its fuel requirements for the next three years, achieves an aircraft turnaround time of 25 minutes, has a crew productivity level that is triple that of Malaysia Airlines, and achieves an average aircraft utilisation rate of 13 hours a day. AirAsia has consistently been named as the world’s best low cost carrier for 8 years in a row in international travel and airline awards, including the latest award for 2016.
How do they optimize their operations?
Optimally use “digital-technology” on their operations.
The transition from conventional working patterns become digital, according to AirAsia Indonesia, also had a large impact. Purchase tickets from manual, converted to online. Cheapness internet access make AirAsia more efficient. In the end, the Internet used as a ‘weapon’ for ticket distribution channel. It’s been two years we switched to online-based transactions. This method adds to the advantage of ticket distribution costs can be reduced. Although initially received resistance from customers who are not familiar with online purchasing patterns, AirAsia still go on with the digital style. Familiarized with online climate that has been widely applied in the European hemisphere.
It results in AirAsia could reduce the inefficiency. According to data in the Global Distribution System (GDS), 80% of ticket purchase and check-in AirAsia is already using his official website.
Another advantage? Digital also can be used as a weapon to market their products.
From Facebook, Instagram and others, the airline winning Best World’s Best Low Cost Airline by Skytrax for 6 years in a row it can detect the most searched every person of any hemisphere. Ranging anywhere from young children Singapore streets? What favored the Chinese people? Where the citizens of Japan and India spend holidays? Until the overall budget? All can be detected easily.
The result? Marketing strategy can be easily designed. Various interesting promo can be easily created, could easily be offered to everybody. With the effort that is not too big, not too many human resources, AirAsia could so easily encompass many customers everywhere.
From family travelers, young children, a solo traveler, halal tourism, marine tourism, nature, man made, all netted. All can be served. With this digital pattern, AirAsia dare to set a target to fly six million tourists to Indonesia. The numbers are quite high. The number has a third of the target achievement tourists visiting Indonesia.
From Passenger Bookings to Enhanced Customer Experience
Low Cost Carriers (LCCs) are a big success story in e-commerce in Southeast Asia. Travel generated US$22 billion in e-commerce revenues in 2015 and airlines accounted for the majority of that revenue (around US$12 billion or 55%). Strong growth is expected ~ experts estimate airline revenues from e-commerce will more than triple to US$40 billion by 2025.
A Success Story to Date
AirAsia is a stand-out in e-commerce in Asia. Digital affects many of the most important functions of the airline, but the primary focus is and will be on the customer experience.
To date, the airline has been successful in attracting customers and making the basic sale. In Malaysia, AirAsia’s customers deal direct. Online bookings make up 90% of total sales. Success to date makes sense ~ after all, three of four big things identi ed to grow e-commerce have been done well. AirAsia has built trust with its passengers, employs a robust payments systems and has invested in Internet infrastructure. The net result is that the customer experience is easier, faster and less costly than ever before.
Transforming the Customer Experience
But AirAsia isn’t for standing still in digital. It knows that only a fraction of the potential of digital has been tapped to date. In the next three years, AirAsia aims to completely transform the customer experience. That transformation starts by learning more about customers’ preferences and using that insight to engage before, during and after each flight with targeted offers tailored to customers’ preferences and to their circumstances. For passengers, that means a better experience and more value from the airline. For AirAsia, it means greater and pro table ancillary revenues ~ by some estimates, an average of twice as much for each customer.
Cloud Computing is a Must
For AirAsia to achieve this transformation, it needs cloud computing. Only by using the cloud, AirAsia can gather data across its network and analyse it in ways that are useful for customer engagement at an effective cost. More than that, low cost is at the heart of the AirAsia business model. Cloud computing ts with the model as it aligns technology costs closely to usage and avoids big ticket, long-dated, in exible contracts and capital expenditure decisions.
Data Must Flow Freely
Success in transforming the customer experience and the requirement to implement cloud computing means that data must be free to flow across the AirAsia network. Some complexity has been introduced into the business by the lack of standardization of information for consumer protection and immigration authorities across Southeast Asia, but to date it is manageable.
Cyber Security & Privacy Underpins E-Commerce Succes
AirAsia recognises that global best practice for data privacy and cybersecurity is an important component to build customer trust (and that of other stakeholders). At a time where there is heightened concerns about cyber security attacks and privacy breaches, the lack of such trust limits the scale to which AirAsia can expand its business opportunities.
Success To Date & More to Come
AirAsia is undoubtedly a success story both for regional integration and for the digital economy. It is striking though that only a small part of the potential from both has been tapped to date. Data (and specifically its ability to flow freely across the AirAsia network in the region) will be an essential ingredient for further success in the future.
They almost digitized everything of their processes, from online booking, online manage booking, many types of online payment, they even have Virtual CS (Customer can contact through live chat) or social medias. Boarding passes are also online, select foods and seats, etc. They optimalize the usage of Mobile App, customer can checkin, look for tickets and schedule through their fingertips. They also have Loyality Card for the customer, can be exchanged with tickets in their website. Everything is integrated and combined as an efficient system. Big Data are analysed properly to capture the markets. Even AirAsia offer package (Hotels + Flights).
IT may have turned global aviation on its head and disrupted the entire airline industry with its low-cost carrier business, but AirAsia Group is essentially an Internet company.
CEO’s of AirAsia stated that AirAsia is constantly looking at ways to improve customers’ experience by leveraging on technology. “We are trying very hard to push technology at AirAsia. We are trying very hard to be at the forefront of technology.”
“In a few weeks, you would be able to check in using a mobile app. You can [already] print your boarding pass at home … physical check-ins are already a thing of the past,” he said.
Even in the future, CEO’s of AA said that they are also working with a startup which specialises in facial recognition technology, so that soon, you would be able to go straight to the plane.
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