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Case study Strategic Role

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Case Study of Air-Asia : Strategic Role of Information
System in Business
Air Asia is established on 12 December 2001 by Mr. Tony Fernandes, the CEO of Air Asia and
expanding rapidly since that. Air Asia is the leading low fare airline in Asia and Air Asia succeed
to become the award winning, ‘Asia Pacific Airlines of the year 2003’ by Centre for Air Pacific
Aviation (CAPA) in 2003. Air Asia has successfully positioned itself in customers’ mind by using
the “ Now Everyone Can Fly” slogan. Air Asia had flown over 55 million guests across the region
and continually create more extensive route network through its associate companies. Air Asia
flies over 61 domestics and international destinations with 108 routes and operates over 400
flights daily from hubs located in Malaysia, Indonesia, and Thailand with a fleet of 72 aircrafts. Air
Asia’s net profit for the second quarter ending 31 December 2004 was reported RM44.4 million,
a 323% increase over the previous quarter (Air Asia 2005). The vision of Air Asia is to serve the
3 billion people who are currently underserved with poor connectivity and high fare and to be the
largest low cost airlines in Asia. Their mission is to create a globally recognized ASEAN brand, to
attain the lowest cost so that everyone can fly with Air Asia, to be the best company to work for
as employees are treated as part of a big family, and to maintain the highest quality product,
embracing technology to reduce cost and enhance service levels.
Roles of information system in Airline Business
Air Asia’s business strategy is centered on cost leadership and targets specific markets which
are price sensitive customers (including 1
st
time fliers) who needing the short haul flights.
According to Porter’s generic strategies (1985), cost leadership is one of them. Air Asia has to

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offer the lowest possible fare amongst all airlines in LCC (Low Cost Carrier) industry whom
compete on costs in order to win the competition in current markets as well as new markets. The
central objective of Air Asia is to achieve bigger cost advantages than the rivals by continuously
searching areas for cost reduction along its value chain.
Support of Information System
The operational environment of airline industry is complex due to the continuous daily operation,
larger network in supply chain and some external uncontrollable variables such as government
regulations and weather condition. These issues are giving big impacts on airlines’ performance.
This show how important to implement advanced planning and scheduling as it will be able to
determine the success of airlines.
Air Asia has implemented APS (Advanced planning and scheduling) system which is triggered off
by Air Asia current market condition that saturated market with high degree of rivalry among the
existing competitors. APS system works as the brain supply chain activities (Ahmed, 2004) by
gearing activities in relation with customers and suppliers requirements. It helps Air Asia to
optimize its supply chain management as clusters and classifies customer orders, forecasts future
fulfillment requirements, set order priorities and checks resources availability. APS system
provides visibility across supply chain in term of cross functional scheduling and planning with
suppliers and customers. APS system will able to further improve Air Asia’s processes
performance and it also analysis the flying routes which optimal flying route is imperative in
deciding new destinations for Air Asia to serve in future.
Air Asia has implemented the Database Managing System in order to share the centralized data
amongst all functional areas to ensure daily operation is sufficient. Perriodot system had been
signed up to develop the travel itinerary gateway for Air Asia to process all confirmed bookings
with skylights Navitaire, where a final PDF processing will be handle through their XML driven
itinerary processing server. At the same time, Air Asia has signed up PEP (Process Flow
Enterprise Portal) system for their internal intranet operation whereby modules to be implemented
including news and announcement, leave management, claims processing lost luggage
management and staff scheduling.
In order to successfully maintain process integrity, reduce financial month-end closing processing
times, and speed up reporting and retrieval processes (Microsoft Malaysia), Air Asia had
implemented a full fledged ERP (Enterprise Resource Planning) system powered by Microsoft
Business Solutions (MBS) on Microsoft technology platform recently (May 2005) by Avanade
consultants. ERP is the system that integrated comprehensive software to make the IT system
works more effectively and efficiently. ERP system helps Air Asia to collect data from various key

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Case Study of Air-Asia : Strategic Role of Information System in Business Air Asia is established on 12 December 2001 by Mr. Tony Fernandes, the CEO of Air Asia and expanding rapidly since that. Air Asia is the leading low fare airline in Asia and Air Asia succeed to become the award winning, ‘Asia Pacific Airlines of the year 2003’ by Centre for Air Pacific Aviation (CAPA) in 2003. Air Asia has successfully positioned itself in customers’ mind by using the “ Now Everyone Can Fly” slogan. Air Asia had flown over 55 million guests across the region and continually create more extensive route network through its associate companies. Air Asia flies over 61 domestics and international destinations with 108 routes and operates over 400 flights daily from hubs located in Malaysia, Indonesia, and Thailand with a fleet of 72 aircrafts. Air Asia’s net profit for the second quarter ending 31 December 2004 was reported RM44.4 million, a 323% increase over the previous quarter (Air Asia 2005). The vision of Air Asia is to serve the 3 billion people who are currently underserved with poor connectivity and high fare and to be the largest low cost airlines in Asia. Their mission i ...
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