Value chain analysis at air asia

Value chain analytic thinking at air asia billet Asia is the second Malaysian national air simple eye which provides a totally diffe blood types of dofulness called suffering constitute no frills. Their vision is to provide affordable price to all worldwide travellers with tokenish in- straightaway assistance.thier price is slightly lower than to any other full process air railroad lines. Before 2001 ship Asia fails to capture market or attract denounce- red-hot customer due to its poor operation against the full fledge returns given by Malaysian airlines which was supported by Malaysian government. twist point of channel Asia was in 2001 when this loss making company bought by Tony Fernandez. charge Asia re-launched in Malaysia in late tenor Asia re-launched in Malaysia in late 2001, with low follow domestic airlines.Value Chain depth psychologyPRIMARY ACTIVITIESThe primary activi yokes in Porters Value Chain ar as followsINBOUND LOGISTICSAs inbound logistics inv olves resistent categories in air line industry for example how to schedule flights, cargo decking an eye on their competitors that what strategy they ar adopting how to sustain in market, and how to cut off their price as they manage fuel efficiency by purchasing it advance when prices are low, and how to plan routes as they mostly plan short routes so that their be are low.OUTBOUND LOGISTICSAs air Asia mostly uses their operations with and through online as their ticketing process is totally online and customer set up besot their tickets bear online and they can alike(p)wise print their boarding card from their homes, Air Asia uses customary electric engine for their customer safety as customers are the main(prenominal) preference of the company.SALES MARKETINGAir Asia has a slopped brand name, at present days marketing guard a significant tinge on any organizations sales, so Air Asia do advertisement by sponsoring The amazing race, and famous Manchester untied (mu) football society, painting some(a) of its aircraft with club colours and sports star, and most importantly chief executive Fernandes himself wear Air Asia official red cap and T shirt in hearty-nigh e precise official function.SERVICESNow a days retaining a customer is a difficult task so to over practice this Air Asia provide different type of turn to its customer desire if flight is armed robberyed by much than(prenominal) thusly three hours then u$ 61 e-gift voucher is given, passenger can as well as pre-book their check into baggage for a lower rate, and customers can also online book hotels, hostels, rent a car and medical services.SUPPORT ACTIVITIESThe value chain epitome has some$ support activities as well. The support activities that Air Asia has to follow in order to keep their business clean and practicable are degraded INFRASTRUCTUREAir Asia has a strong firm infrastructure they boast evolved from a classic lcc into an integrated service provider, th ey are localizeing towards their goals, they are providing the cheapest fare, they are exploring new markets, and decision making process is simple.HUMAN imaging MANAGEMENTAir Asia hire capable workers ,and they assign multi dexterityed concourse so that they can over come their price in border of human resource and can notice their company mission of low price airline , and they also compensate their employees in terms of performance. applied science DEVELOPMENTAir Asia uses different type of technology to minimize its equal and to make their operation easy and efficient, they are using yield manner schema (YMS) which takes into account the operating cost and expected revenues, and they also use computer reservation system (CRS) as it is web-based reservation and inventory system as it is a direct sale engine which eliminates the middle man, and they also implemented enterprise resource planning system (ERP) which helps to save the duration at month end closing, and spe ed up reporting and entropy retrieval processes.Value Chain Analysis DiagramKEY ISSUES REGARDING trading operations OF AIR ASIAIT ProblemCustomer are facing problem regarding date tickets online, because their system are non up to date if the flight delay or cancelled they dont consecrate any system showing glimmer to the customers. Some clip cards are non accepted by the system for payment, this may create trouble for the passenger to purchase.Government intercessionWith growing motivations of low cost carrier, Air Asia get movinged penetrating much routes and tie up with more airports for Example In Singapore, Air Asia wanted to start the flights from the southern state of Johor, keeping in mind to attract the passengers by providing free bus service to the city state. Singapore government did non allow providing bus link to Air Asia by saying it was not her national interest. Government fears to lose the changi airport business, if Air Asia came with that service, t his suffer a capacious loss to Air Asia.Operating cost increased- be a low cost carrier, there is always a scourge either from other LCC or the full service airlines to make do for each one other, in order to beat the rivals, Air Asia came up with value added service to the customers like internet check in service, with this one can bang printing their consume boarding pass online, Air Asia not only when give low cost tickets exactly also provide other financial services like travel insurance, holiday packages, booking services for hotels, car rental, and Citibank -Air Asia credit card. To maintain this type of services required huge amount. This increased the operating cost by producing value added service high-pitched Labour cost-With increase in demand of low cost carrier, and expansion of air route, there is always need to recruit new member too give better service for smooth operation, it is now very difficult to hire people with low cost, payment should varies differ t o different industries. Being a low cost carrier, profit tolerance is only 30% of Air AsiaMaintenance HubAs Air Asia does not arouse its own maintenance and repair facility, as by transportation of time and increase in number of planes from 3 to 100 planes soon and about more 100 planes to received next year, so not having their proper maintenance hub it cost a lot to the company . hold in Human preferenceAs to maintain it low cost competitive advantage Air Asia goes with limited human resources so if some unorthodox situation comes then it is difficult to handle the situation. public life DelayAs when their flights are delayed then there is no proper seam to communicate to the customer or customer is not inform previousFuel PricesDue to rising in fuel prices, the air line industry effects a lot in that case the operational activities of Air Asia also adversely effected.RECOMMENDATIONAir Asia is focusing on low cost and no frills to be on right direction with fulfilling the organization goals. To compete with the market challenges and to face them following are some of the recommendations to enhance the operational activities.New IT System ImplementationThe company should implement IT system strongly because the business of Air Asia is heavily depending on internet, thereof they should apply Advance Planning and Scheduling system (APS). As APS system is capable in optimising operational planning, scheduling supplier portal, inventory planning, and demand per costing, maintenance management and route profitability which bequeath help them to compete in the low cost market.Staff TrainingAir Asia is hiring multi skill people, In case of difficult situation they should train their staff, Human Resource Development should take necessary steps by updating their employees through on job training as it will cost effective. mutual venture with different low cost airlinesAs air Asia is a low cost air line so to maintain and to keep their customer stick with t hem they should go for alliances with different airlines so that they can get access to different routes, and their cost should be low as well as there are different companies like virgin down(p) who want to extend service who want to extend service to south east Asia, therefore air Asia can sport a union venture with them.Self Maintenance As to maintain the mission of the Air Asia as a low cost carrier and no frill, it is has to focus from different aspects, maintenance and overhauling of the aircraft is the majorOperating activity, for that Air Asia needs its own hub and maintenance staff rather relying on outsourcing. Initially it is costly but in the long run this investment would be feasible for the airline.Flight delayTo satisfying the customer is the raw material importance for the service industry, if the flight is cancel or delayed the management should inform passenger on time or apologize by explaining the valid reason.Frequent circular programmeLoyalty programme sho uld be produce for the passengers who frequently flying with Air Asia in order to retain them and airline should involve the devoted customer with the new upcoming offers.Additional ServicesAir Asia should introduce member lounge to treat their frequent passengers and they should provide extra delight through nominal charges to make better impact of airline. Air Asia also has to start in flight entertainment during short haul flights on customer demand.SWOT ANALYSIS OF AIR ASIA Strength They collapse strong relationship with government and political leaders to operate smooth function. They have good management team who work efficiently with strong recitation of IT, so that each and every customer can book tickets online by choosing easy method. Air Asia penet place more and more market because of their low cost mentality, this help them to become low cost leader in Asia peaceful region. With strong working relationship with government bodies can help them to work smoothly in t he country For example working with Thai pristine Minister Mr.Thaksin Shinawatra who holds 50% stake in the company help Air Asia to capture good market in Thailand.Weakness Air Asia dont have their own maintenance hub, initially they started for few planes to maintain. By the passage of time, they have come up with 100 planes, but in future they are expecting another 100 planes. So they will be facing to maintain all the planes at a time. It is one of the big disadvantages not to have their own maintenance hub. Second problem with Air Asia is one cannot transfer their, if it is delayed or get refund for the same and also charging more on baggages to cut the cost of fuel. Because of limited staff they cannot handle the ruffianly situation when arise. By providing low cost they fail to provide basic service to the customers in order to maintain the profit margin.Opportunities-Explore more on Asian markets there are Asian cities with population of more than 1 million which are midd le class, so they are targeting more on middle class people. Joint venture with virgin toothsome group. This group want to extend their service to South East Asia, so Air Asia can have joint venture with virgin profane group to capture more markets with them. Increasing oil price which can be threat to all airline industry. But Air Asia doesnt have their customers already enjoying low price irrespective oil price goes up or down. Due to increase in growing demand of Air Asia customers. Prospects generates for new routes for customers and more numbers of airport deals.Threats Some charges like Air departure, landing cost security charges are not in obtain of airlines operators. This threat is for all airlines but especially to those airlines who are keeping their rates very low. Full service airlines can enter any time by reducing their cost. Because profit margin of Air Asia is 30% which is very less as compare to any other full service airlines. Problem may occur due to heavily depend online sales, like disruption or any other fault can reach to system which may result directly on sales. There will be lack of confidence among customers due to terrorist attack, accident, government policy and so forth