Improving Customer Service and People Skills in Air Asia

1. Improving customer service and people skills in Air Asia 1
IMPROVING CUSTOMER SERVICE
AND
PEOPLE SKILLS IN AIR ASIA
INDIRAN
MBS141104
SEM II 2015/2016 || UBSE 1123|| SESSION 01
INTERNATIONAL BUSINESS SCHOOL, UTM
LECTURER NAME: DR. HARCHARANJIT SINGH
SUBMISSION DATE: 15 OCTOBER 2015

2. Improving customer service and people skills in Air Asia 2
Contents
Part 1: Introduction ............................................................................................................. 4
Research Background ..................................................................................................... 4
Problem Statement:......................................................................................................... 5
Challenges....................................................................................................................... 5
Opportunities................................................................................................................... 5
Part 2: Industry Background ............................................................................................... 6
Description of the Industry ............................................................................................. 6
Part 3: Organization Background........................................................................................ 7
Historical Background .................................................................................................... 7
Branches & Location ...................................................................................................... 7
Products and Services ..................................................................................................... 8
Customer/ Clients description......................................................................................... 8
Employee ........................................................................................................................ 8
Management.................................................................................................................... 8
Part 4: Challenges and Opportunities faced by the organization...................................... 10
Main Challenges ........................................................................................................... 10
How it started................................................................................................................ 10
What Caused It.............................................................................................................. 11
How to overcome and respond to the Challenge .......................................................... 12
Conclusion ........................................................................................................................ 14
References......................................................................................................................... 15

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Abstract
Improving customer service and people skills in Air Asia
The 21st
century, after the recession that hit most Asian countries, emerges a revolution
by an underdog; Anthony Fernandez to innovate and further profiteer the organization into a
global brand. Bought after mortgaging all of his wealth, the reincarnation of Air Asia has soon
evolved into the talk of many locally and internationally. As a significant contributor to the
Malaysian Economy, Air Asia has uplifted its motto of “Everyone can fly” and proved it,
yielding an increase in tourism and also as an alternative medium of transportation for the thirty
million populations in the native country.
Service and quality has always been the fundamentals of sales profitability. Under the
wings of Tony, many new parameters were set in-line with his strategy, missions and values of
the Air Asia. Among are, to be the best company to work for whereby employees are treated as
part of a big family, and the caring values to ensure guests take pleasure as their home. Despite
being in the limelight of a growing-matured stage, the enterprise has received much critic on its
customer service and employee people skills since the medieval growth of Air Asia. This paper
further studies the two organizational behavior challenges effecting Air Asia which are
improving customer service and improving people skills.

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Part 1: Introduction
Research Background
Aviation in the industry level is commonly related to two operations which are Full Cost
Carriers (FCC) and Low Cost Carriers (LCC). The birth of aviation in Malaysia was in October
1937 by Malayan Airways Limited (MAL), now known as Malaysian Airlines Berhad (MAB,
2014). 11
In the LCC sector, the players are Maswings, Firefly, Air Asia, Air Asia X, Mahlindo,
Berjaya Air, and the upcoming FlyMojo. Air Asia is considered the market leader in the LCC
segment with the largest network and route up to 20 countries with the cheapest fare. Driving
behind the mission of “Now Everyone Can Fly”16
, Air Asia has emerged as the most ideal air
transportation brand.
The LCC slice started upon the realization of Aircraft Deregulation Act 1978 which
opens opportunities to many carriers such as Southwest Airlines as the pioneer of LCC. Where
else in Asia, the bilateral air transport agreement under the ASEAN summit in 2009 has
provoked the takeover or Air Asia by Tony Fernandez from DRB-Hicom. 16
Following the
terminology of LCC, Air Asia strengthens its role as a budget carrier, no-frills with
supplementary services such as food, drinks, luggage, seat allocation and flexi-boarding

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Problem Statement:
Profit in business comes from repeat customers (W. Edwards Deming, 1950), is a
definitive apprehension for all airlines. This contributing factor has lead to many studies which
links customer service to tangible features of service quality such as schedule, on air service
provided by flight attendants, food services and pre-flight services provided by the ground staff,
online services and passenger satisfaction.7
Service Quality is undefined due to uncertain
variables which differ from individual to scenario. Thus, in this paper we will focus on two
organizational behaviors challenges faced by Air Asia which are improving customer service and
improving people skills.
Challenges
The major challenge in evaluating the customer service is to evaluate the dimension of
service quality as it varies from one person to another and from circumstances to circumstances.
Besides that, there are very few research done on customer service in the Asian aviation industry,
thus limiting the framework with very few resources.
Opportunities
This paper will benefit the Air Asia service industry in defining the contribution variable
in relation to the customer service which is related to the staff’s soft skills and being translated
into an improvement to ensure maximum customer satisfaction and growth for the organization.

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Part 2: Industry Background
Description of the Industry
Service is defined as the after sale support of a product. It is also a form of business
which is indirectly linked a product or brand. In aviation, service is the determinant of the growth
of the organization since it’s highly linked with customer perception as the repeat of sales is only
available upon a pleasurable memory of purchase. Service integration is the evaluation of every
component that contributes to the repeat of sales from the website to branches to the stores.
Many corporation, business, even public sector has learnt the importance of service industry and
have stepped up to improve the response based on consumer feedback. Satisfaction is a vital
component in the measurement of service quality and is influence by customer’s experience
towards a certain goods and service, since satisfied consumers highly repeat purchases. Service
to the airline consumers are often separated into two main component which is the core service
and support service which begins from the reservation of the ticket, ticket confirmation, checking
in with baggage, ground crew hospitality, welcoming by the cabin crew, 10,000 feet generosity,
in flight services, disembarking the flight, baggage collection till leaving the airport.4
Integrity of
these components influences customer perception and satisfaction due to the intangible
characteristics which is difficult to quantify in relation to cost.

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Part 3: Organization Background
Historical Background
Now Everyone Can Fly, a well heard slogan to everyone today. In 1994, under the
umbrella of government-owned corporation DRM-Hicom Air Asia was establish, due to poor
performance and a need of revitalization. In 2001, Mr. Anthony Fernandez (here on known as
Tony) took over Tune Air Sdn Bhd for the sum of RM1.With just 2 fleet and over MYR 40
million of debt, Tony launched a 5 year plan and expended routes domestically and further to all
ASEAN countries. Currently being based in Kuala Lumpur International Airport 2 (KLIA), Air
Asia has moved hubs from LCCT, to Senai and rumors has it soon to Langkawi.16
Branches & Location
Locating the headquarters in Sepang, Air Asia primary operating hub is the KLIA 2, and
has five different secondary hubs locally in Kota Kinabalu International Airport, Penang
International Airport, Kuching International Airport, Senai International Airport and Langkawi
International Airport.16
Air Asia has expanded from a single low cost carrier with 2 fleets to a franchise in the
Malaysian LCC industry. Among them are the birth of Air Asia X in 2007 which focuses on long
haul journey by joint venturing with Air Canada and Virgin Group in the regions of Australia,
Middle East and Japan. Air Asia India in 2012 with only 49% share and the remaining by Arun
Bhatia 21% and Tata Sons 30%, being covering the whole of India from Banglore to Chennai;
extended to Sri Lanka too16
. Air Asia Japan in 2011 based in Narita to cover the Narita, Osaka
Tokyo regions; unfortunately was closed in 2013 and will be open back upon restructuring in late
2015. Air Asia Zest in collaboration with Zest-O Corporation of Philippines and Air Asia
Philippines based in Manila. Indonesia Air Asia and Indonesia Air Asia X both operating at

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Jakarta was established in 1999 and 2015 individually with share equity of 49% to Air Asia and
51% to Fersindo Nusaperkasa 16
Air Asia Thai in 2004 and Air Asia Thai X in 2014 which is
45% owned by Air Asia and 55% owned by Asia Aviation.
Products and Services
The Core business for Air Asia is to provide air transportation for its customers thus its
considered as a service provider rather than products. Air Asia provides domestic flight
networks.16
Customer/ Clients description
In line with Air Asia’s Vision, they have targeted to serve 3 billion people facing poor
connectivity and high fares. The organization grew from 2 fleet to almost 188 aircrafts to date
and have served almost 100 million guests with the core believes of “Now Everyone Can Fly”. 16
Employee
“Employees come number one, customers come number two. If you have a happy
workforce, they’ll look after your customers anyway – Tony Fernandez 2012”, to date Air Asia
has about 10000 employees today and is still growing due to its vast expansion. According to
Skytrax, Air Asia employees enjoy great benefit and many look for opportunity in the
organization. Air Asia provides its staff’s with loyalty service award, hospitalization and surgical
expenses, travel benefits like yearly free flight coupons, exam leave, career progression, food
and drink subsidies, performance bonus, paternity leave, compassionate leave, medical benefits
for dependents and 90% discount on concession travel. 13
Management
Air Asia in under the wings of Tan Sri Dr Anthony Fernandez, Datuk Kamarudin and
Aireen Omar, Benyamin Ismail has transformed the airline industry using with a bold and strong

9. Improving customer service and people skills in Air Asia 9
mission, vision and mission. The principle of Air Asia : at all times all crew and staff are
responsible of the people’s lives in hand and is obliged to safeguard the duty while maintaining
a quality operation. 13
With an Allstar value, Tony has emphasize 6 core values while being an
Air Asia staff which is safety conscious, caring, passionate, full of integrity, hardworking and
fun to embrace their mission of being the best company to work for as a global ASEAN brand
with low fare and high quality.
With strong moral values, ethics and corporate governance, Air Asia also has a very solid
information system infrastructure to aid their operation. Among them are the Yield Management
System (YMS), to manage the revenue by optimizing Seat and Route by adjusting the price and
maximizing the seat capacity to the expected revenue per route with optimized cost per available
seat kilometer (ASK). Computer Reservation System (CRS) which is equipped with Internet call
center and airport departure control functionality is use to track booking, schedule flight
activities in real-time to reduce operation cost and increase revenue. 14
Airline Reservation
System (ARS) is used for supply chain planning that sense information from Enterprise Resource
Planning (ERP) which is the total business solution for Air Asia. As per Air Asia’s vision to be
the largest low cost airline serving 3 billion people, Air Asia has taken initiatives to upgrade to
bigger management system known as the Amadeus which incorporates all the individual system
as one for flexibility and ease of maintenance. 14

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Part 4: Challenges and Opportunities faced by the organization
Organizational Behavior is the study of why does people behave in a certain way in an
organization. What factors what effect job performance, employee interaction, job commitment,
managerial styles, motivation, internally and externally. Thus in this paper will concentrate on an
external scale of how customer service and people skill or Air Asia ground and air crew is
interrelated and cohesively impact the organization and further suggest how to improve these
weakness.
Main Challenges
Fussy customer with ridiculous demands and unwillingness to pay are most of the time
leading to frustration to the staff regardless ground or 30,000 feet above the air. 2
Facing more
than a million type of attitude day in day out will relentlessly demotivate the staff to uphold their
people skills and courtesy. It will also lead to them to stereotype certain group of customers
without even starting any conversation.
Although with and AllStar values embedded by the leader of Air Asia that focus on
employee welfares, due to the cost cutting operation regime, Air Asia prefers to hire new birds as
a cheaper option.3
This is due to the hectic work lifestyle; most of the crew resigns due to
fatigue. With an exhausted mental, no anthropomorphic could handle situation out the norm.
How it started
There are three main factors that affect the service quality – customer service of Air Asia;
workload, working environment, and technology. 4
Air Asia has a high traffic operation which leads to high workload which in long term
affects the employee’s physical, mental health, performance and productivity including customer

11. Improving customer service and people skills in Air Asia 11
service. The stress; strains the employee into illness leading to lack of motivation and
productivity that eventually injures the customer service image of Air Asia.
Lack of communication between management and employee is also highly related to
have an impact on customer service perceived by the customers. This is largely due to conflict of
interest and conflict of instruction received and perceived by the staff that leads to a situation out
of the standard, which ruins the reputation of the organization due to poor customer service.5
Based on Minztberg Managerial Roles Managers should display these three roles as an effective
manager; interpersonal, informational and decisional. Top-down communication is the key to be
an effective manager, communication within managers and employees will lead to an increase
job performance and job satisfaction on an employee which in return results into an improve in
customer service and service quality.
The main reason company capitalizes on man, machine and equipment is to improve
productivity.7
Technology expends at an exponential rate and workers take time to learn and use
technology which is a contributor to decline of service quality. For example, with the 25 minute
turnaround implemented, the pilot, cabin crews, ground operation staff and the crew have to
familiarize the whole new process due to advancement of technology and the process of learning
on job, so instead of full-filling customer needs they tend to concentrate on their main focus
which is the key to organization wheel, letting the service quality drop.5
What Caused It
Research has found language proficiency and competency as a contributing factor to
decline in customer service. Non English speaking staff’s find it challenging to communicate as
it is not their mother tongue.6
Non-native English speaking employee stretch more time to

12. Improving customer service and people skills in Air Asia 12
complete a task. Due to this difficulty of conversing, they tend not to approach customers or
avoid customers which lead to the poor performance of customer service in the airline industry.
Attitude and personality also plays a vital role in improving customer service in the
service industry. Air Asia employees assess the organization as a low cost carrier and have the
perception that they are not obliged to provided and excellent service. Many of them thinks in
such a manner due to low wages and cheap ticket fare, customers have to accept the fact that the
service received is how much they paid for. Nevertheless, managers should plant the seed into
their employee’s mindset that the key to customer pleasure turn loyalty lies behind a well
behaved behavior and service perceived.3
Wages and employee benefits encourage the employees to promote better customer
service. This factor motivates the staff to put and extra effort to execute their duties.
How to overcome and respond to the Challenge
Human Resource should create a healthy environment to reduce the high turnover due to
unhealthy work-life balance. Organization should create a wholesome working environment for
employees in order to facilitate an effective customer relationship.7
The HR team should conduct
aptitude, attitude and personality test from time-to-time on all staff not only limited to the Pilots
and Air Crew in order to monitor their behavior and perception towards the organization at all
time in order to retain a quality service outcome on the brand.
Training is another manner to acquire or refresh the untapped talents, skills and attitudes
which results in improved performance and productivity of the job. Studies have shown
organization that provides more training than other establishment tends to have higher
productivity employee.9
Team buildings and team lunches is a form of motivation for the staff as

13. Improving customer service and people skills in Air Asia 13
it boost up their chi towards the job and thus improves the service quality in terms of customer
satisfaction.
Proper company policy could lead to improve of customer service.8
Due to the nature of
Air Asia as a low cost carrier, there are many limitation to the service offered such as extra cost
for food/snacks, baggage fee and fee for flight change and many others, not many passenger are
educated on these fundamentals of a low cost carrier and expects more as in a full cost carrier
which lead to the responsibility of the staff to explain and educate the passenger; this done in
repetition can lead to a change in attitude to the staff as the frustration builds. Thus, organization
has to clearly state its policy and concept to customers in a large visible scale in terms of
banners, posters or reminder instruction prior to booking flight tickets.
Quality control is another manner organization can improve their process and which will
lead to an improvement in customer service and people skill.2
The reason auditors audit the job is
to ensure that most of the tasks carried out are in accordance to the policy for instance ISO9001-
2008. Although most employees dislike “audit” sessions since the auditors are always finding
flaws, the fact is the auditors are actually finding weakness to be improved which results to an
improvement in customer service.

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Conclusion
As a conclusion, customer service plays a vital role in advocating a brand image and is a
key component to measure the service quality. It can be enhanced by placing several key actions
such as proper training in terms of soft skills, educating the employee on their weakness,
upholding their motivation via team events and retaining skilled employees with better career
development, rewards and recognition. These measures will lead to a improve customer skills
and lower turnover rate; leading to an improvement in service quality in the aviation service
industry.
Air Asia as the market leader in low cost carrier need to enhance their customer
service and staff’s people skills from down-to-top; operations till management in order to have
repeat in sales and further develop a brand loyalty towards it. In line with the company policies,
mission and values the company has to evaluate and monitor the customer satisfaction index
more frequently in order to be competitive to new entries and market followers.

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References
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20-of-revenue-to-improve-service-operations/?style=biz

16. Improving customer service and people skills in Air Asia 16
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