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Air Asia Case Study

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Air Asia Case Study

  1. 1. Prepared by: GROUP 10: VARSHA BHARDWAJ VISHWAJEET KISHAN GAIKWAD W JASON SINGHA YATI K BANSAL RONIT DAS
  2. 2. As Asia’s leading airline was established with the dream of making flying possible for everyone. Since 2001, AirAsia has swiftly broken travel norms around the globe and has risen to become the world’s best. With a route network that spans through more than 20 countries, AirAsia continues to pave the way for low- cost aviation through their innovative solutions, efficient processes and a passionate approach to business. Together with their associate companies, AirAsia X, Thai AirAsia and Indonesia AirAsia, AirAsia is set to take low-cost flying to an all new high with their believe, ‘’Now Everyone Can Fly’’.
  3. 3. Dato' Sri Anthony Francis Fernandes – founder CEO of AirAsia
  4. 4. The largest LCC in Asia The fourth largest airline in Asia 265 aircrafts, in 8 airlines 100 million passengers flown annually >500 million total passengers flown 152 destinations across 22 Countries Over 388 routes, including 114 unique routes 24 hubs 6 airlines 2 airlines
  5. 5. Ancillary revenue growth from data & digital initiatives 2008 2018 9x RM2.06bn RM0.23bn 9% of revenue ✔ Baggage ✔ Inflight F&B 21% of revenue ✔ Baggage (dynamic pricing) ✔ Inflight F&B 1Q1 9 23% of revenue (up 29% YoY) ✔ Pick-a- seat ✔ Pick-a-seat (+ hot seats) ✔ Wifi ✔ Insurance ✔ Ourshop ✔ Fly-Thru ✔ Cargo 78 % Airline 22% Non- airline
  6. 6. Growing Market Share AirAsia’s Domestic Market Share & Rational Competition (1Q2019 vs 1Q2018)4ppts 61% 4 ppts 1 ppt flat FLA T 1 ppt 32% flat 2 ppts 1 ppt 2% 1ppt 1 8% FLAT 1 ppt 1ppt 6 % 3 ppts 6 ppts Source : PaxIS
  7. 7. We have a lot of Data to drive ecosystem expansion BIG Data and Real-time Insights Contact Details FOMA X Engine & Component Trans actionsOnline Activity Demographic Maintenance Feedback Loyalty Mobile Activity Aircraft Transactions Guests Social Data SpeedFeedback Lifestyle Data Cabin Baggage Weight Passeng ers Wei ght Queu e Time Passengers Movement Apron Temperatur eTerminal Location Available data source Potential new data source Coun ter Transactio ns Aerobrid ge Moveme nt
  8. 8. Data taking us to new heights Prioritie s to Focus On Verticals to Work On Fuel Cost Cost Reduction Oper ations Effic iency Ancilla ry Revenue Gain Pricing / Bundling Promo s / Reward s Goals to Achieve Increas e Fuel Cost Efficien cy Increase Cost Efficiency & Productivi ty Increa se Uptak e Drive Custome r Retentio n Drive More Traffic Skill Sets Requir ed Data Science
  9. 9. Staying true to being low-cost Our top priority, ALWAYS. Lowe r airpor t charg es Predictive maintenance to increase efficiency Adoption of ‘Agile’ organisati on Driving fuel usage reduction through data analytics Media cost on a downtrend with personalisation New A321neo aircraft that are fuel efficient & have lower cost per seat
  10. 10. AirAsia.com - All-in One Travel and Lifestyle Marketplace New enhanced homepage UX/UI on web & mobile
  11. 11. BigPay Overview Business Summary ● Launched in 2018, BigPay aim to democratize financial services in Asia by building a digital bank that offers consumers e-wallet service, remittance and lending ● Value proposition includes easy user experience, usability via Mastercard’s extensive network, issuance of Big Points upon top up or use, zero foreign exchange rate charged during international travels, and zero booking fees when booking on AirAsia.com Key Features ● Native iOS and Android build ● Latest tech stack & proprietary software ● Seamless, mobile-only user experience ● Bank grade and biometric security ● Peer-to-peer payments & split bills ● Fully automated spending analytics ● In-app card / account management ● Issue Mastercard / Visa card Proprietary Licences Make financial services better value, more transparent and fairer for everyone AirAsia Big Points earn with daily spend Save Money on AirAsia flights Best Exchange Rate when spending abroad Instant Money Transfer to your friends for free Christopher Davison (CEO) Former Director of Clearwater Partners Former Investment Manager at Talis Capital Limited Expense Analytics in real time e- Money Remittance Lending
  12. 12. AirAsia.com Overview Business Summary ● Incorporated in 2019, AirAsia.com is a regional web and mobile app platform for travel and lifestyle bookings in Asia ● Offers consumers travel and lifestyle products that are available for purchase using various payment methods, including loyalty points ● Expanding beyond AirAsia’s airline network, AirAsia.com features global flights operated by other peer airlines and both proprietary and non-proprietary travel and lifestyle inventories for consumers to choose from ● Built travel and lifestyle ecosystem through strategic partnerships with local and regional partners working as earn and burn channels of loyalty points for consumers CONTENT Creative visuals & stories, sharing of experience COMMER CE Best deals for travel & lifesty le COMMUNITY Global community to drive engagement Spencer Lee (CEO) Former Head of Commercial at AirAsia Malaysia Products & Services Tr avel ● Flight ● Hotel / Vacation Rental ● Flight + Hotel ● Transport ● Tours + Activities ● Insurance ● Itinerary Builder Lifesty le ● Shop ● Duty Free ● F&B ● Health, Fitness ● Events ● Ticketing ● Services Conte nt ● Media ● Content (Print + Digital) ● Inflight Entertainm ent ● Infrastructure (Inflight WiFi) ● Podcast Beauty ● Content driven beauty marketplace ● Cosmetics ● Wellness ● Skincare ● Fragrance ● Haircare B2B ● Marketplace for comprehensive and proprietary content and inventory for other businesses to plug-in and use
  13. 13. 2Q19 Operating Statistics by AOCs Malaysia Indonesia Philippines Thailand India Japan Pax +11% +58% +22% +5% +25% +79% Capac ity +13 % +56 % +18 % +8 % +21 % +81 % We continue to grow across the board ASK +7% +58% +31% +12% +29% +103% Loa d fact or 84% (- 2ppt) 82% (+1ppt) 91% (+4ppt) 83% (-2ppt) 90% (+3ppt) 78% (-1ppt) Impressive performance by ID, PH & IN as we build momentum with our strong brand RP K +6 % +58 % +33 % +9 % +32 % +100 % All AOCs >82% load factor ex. Japan
  14. 14. 1Q19 Group Financial Performance HighlightsAirline Revenue +9% Group EBITDA +13% Adjusted PBT - 31% one-offs Gains on disposal of GTR RM350mil & Remeasurement gain RM535mil ● Airline revenue is higher 9% YoY due to 3% higher RASK despite adding 11% more ASK. Passenger seat sales increased 15% YoY ● PBT excluding one-offs is down 31% YoY mainly due to: ○ +64% higher maintenance & overhaul cost on the back of non-cash maintenance provisions of ~RM100m given higher number of leased aircraft post aircraft monetisation exercise in 2018; there is a differing accounting treatment for major overhaul cost for leased aircraft and owned aircraft (further details in Appendix); RMmillion
  15. 15. Building Teleport to enable direct businesses and consumers Opening our logistics infrastructure to social sellers Social Commerce (C2C) is growing faster than ride-hailing in Asean
  16. 16. Growth in 2019 and beyond: AirAsia 3.0 Logisti cs Digital Bank & Insuranc e Marketpl ace Lifestyle & Entertainm ent Travel and financial platform of Asean Data AirAsia BIG Loyalty points - BIGLIFE AirAsia ecosystem comprises the Group’s core airline network operations, travel and lifestyle commerce platform, financial and insurance services, logistics services, as well as lifestyle & entertainment affiliates
  17. 17. Teleport Overview Business Summary ● Today, a consolidator of belly capacity for the AirAsia group of airlines, enabling cargo carriage for businesses across 110+ cities ● Global network reach through partner airlines beyond Asia covering US, Europe, Middle East and Australia/New Zealand ● Our goal is to re-order the supply chain, with the airport as the distribution center of the future, and make same-day cross-border fulfillment a reality ● We intend to open our platform and infrastructure to empower consumers and small businesses across Southeast Asia Affordable Air Freight AirAsia Group Belly Space Consolidation/Partnerships Now: AirAsia Network Jan 2019 Aug 2018 Next: 8 Major Asean Cities Feb 2019 Apr 2019 May 2018 Jul 2018 1Q 2020 1Q 2020 Aim: 4 Capital Cities Apr 2019 7-8 Airlines in pipelin e Offering Door-to-Door Cross Border Logistics Services Pete Chareonwongsak (CEO) Former COO at AirAsia Philippines Former Group Head of Business Development First Mile Collection Parcel collection in origin country (warehouse / pick up / drop off points) Partner Warehouse Consolidation and sorting by consignee for final delivery at destination country Customs Clearance Outbound and inbound custom clearance in origin and destination countries Transportatio n Cargo terminal and warehouse as well as cross docking for final delivery leg Last Mile Delivery Identify various last mile partners based on items
  18. 18. BigLife Overview Business Summary ● Formally known as Big Loyalty and rebranded in 2019, BigLife is AirAsia’s frequent flyer program aiming to power AirAsia’s greater ecosystem with its loyalty points as a high utility digital currency ● Offers consumers earning opportunities when transacting with an ecosystem partner and also offers consumers the option to purchase travel and lifestyle products using the user’s point balance ● Provides additional benefits for its members such as exclusive discounts and priority access to sale inventories ● Tied to AirAsia’s single sign on to maximize value for users and create a wholistic profile of users’ behavioral patterns Major Customer Value Propositions Products & Services Points Earn & Burn ● Earn and use points at travel and lifestyle partner channels Co-Branded Cards ● Earn extra Big Points when spending on the co-branded credit cards Points Exchange ● Convert your other (Citi, CIMB, Maybank) points to Big Points on Big Exchange points marketplace TBD (CEO) Exclusive BIG Member discounts at up to 90% Pay with BIG Points and save more on flight bookings 24-hour priority access to AirAsia sales Full flight redemption for free flights Redeem short haul flights from as low as 500 BIG Points Shop online and earn BIG Points for every cash spent Earn and save BIG with Fave deals Rewards differentiated by membership statuses
  19. 19. Airlines Industry – Low cost carrier (LCC)
  20. 20. SIMPLE PRODUCT (No Frills) LOW OPERATING COSTS POSITIONING Low Cost Carriers (LCC) Low Cost Carrier Business Model
  21. 21. Positioning Low-cost short haul, no frills Aircraft Airbus A320 with 180 seats Seat Type Single Seat ( Economy class only) Seat Option Free seating with Xpress boarding option In-Flight Services Wide range of light meals and snacks available for purchase on board MARKETING STRATEGY
  22. 22. LEVEL TWO : At this level, Air Asia became Asia’s first airline to go ticketless. LEVEL ONE : Customer contact such as telephone contact, mailing and fax was handled by travel agencies LEVEL THREE : Systems such as Electronic Data Interchange (EDI) information were developed to increase the efficiency. EDI was developed to support B2C activities.
  23. 23. LEVEL FOUR : Air Asia introduced online booking through its website at ww.airasia.com on 10th May 2002 LEVEL FIVE : Air Asia was the first airline in the world to practice booking air tickets through short messaging service (SMS).
  24. 24. Yield Management System (YMS) Computer Reservation System (CRS) Enterprise Resource Planning System (ERP) CURRENT STRATEGIC IT IMPLEMENTATION
  25. 25. Awards and Recognition Masterclass Global CEO of the Year awarded to YBhg. Dato' Tony Fernandes World's Best Low Cost Airline by Skytrax AirAsia voted the Air Cargo Industry Newcomer Award at the ACW World Air Cargo Awards 2010 by Air Cargo Week
  26. 26. AirAsia wins 11th consecutive World’s Best Low-Cost Airline award at Skytrax
  27. 27. Airline Of The Year By Centre for Asia Pacific Aviation (CAPA) Tony received the 2009 Frost & Sullivan Excellence in Leadership Award by Frost & Sullivan Best Asian Low-Cost Carrier By TTG Travel Awards 2009 World's Best Low Cost Airline by Skytrax
  28. 28. Analyze Process and Infrastructure Evaluate People & Partners Assess Organization and Culture Evaluate Leadership and Governance
  29. 29. THANK YOU Have a Pleasant Flight with

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