Value Chain Analysis And Operations Management Essay

October 10, 2017 Management

Air Asia is the 2nd Malayan national air hose which provides a wholly different types of service called low cost no frills. Their vision is to supply low-cost monetary value to all world-wide travelers with minimal in-flight service.thier monetary value is somewhat lower than to any other full service air hoses. Before 2001 Air Asia fails to capture market or pull new client due to its hapless operation against the full fledge service given by Malaysian air hoses which was supported by Malayan authorities. Turning point of Air Asia was in 2001 when this loss doing company bought by Tony Fernandez. Air Asia re-launched in Malaysia in late Air Asia re-launched in Malaysia in late 2001, with low cost domestic air hoses.

Value Chain Analysis:

Primary Activities:

The primary activities in Porter ‘s Value Chain are as follows


As inward logistics involves different classs in air line industry for illustration how to schedule flights, maintaining an oculus on their rivals that what scheme they are following how to prolong in market, and how to cut off their monetary value as they manage fuel efficiency by buying it progress when monetary values are low, and how to be after paths as they largely plan short paths so that their costs are low.

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As air Asia largely uses their operations through online as their ticketing procedure is wholly on-line and client can acquire their tickets book online and they can besides publish their get oning card from their places, Air Asia uses general electric engine for their client safety as clients are the chief penchant of the company.

SALES & A ; Selling:

Air Asia has a strong trade name name, now yearss marketing have a important impact on any organisations gross revenues, so Air Asia do advertizement by patronizing “ The astonishing race ” , and celebrated Manchester untied ( mu ) football nine, painting some of it ‘s aircraft with nine colorss and athleticss star, and most significantly main executive Fernandes himself wear Air Asia functionary ruddy cap and T shirt in about every official map.


Now a yearss retaining a client is a hard undertaking so to over come this Air Asia supply different type of services to it ‘s client like if flight is delayed by more so three hours so u $ 61 e-gift verifier is given, rider can besides pre-book their checkered luggage for a lower rate, and clients can besides online book hotels, inns, lease a auto and medical services.

Support Activities:

The value concatenation analysis has some $ support activities as good. The support activities that Air Asia has to follow in order to maintain their concern clean and operational are ;


Air Asia has a strong house substructure they have evolved from a authoritative lcc into an incorporate service supplier, they are concentrating towards their ends, they are supplying the cheapest menu, they are researching new markets, and determination devising procedure is simple.


Air Asia hire capable workers, and they assign multi skilled people so that they can over come their monetary value in term of human resource and can keep their company mission of low monetary value air hose, and they besides compensate their employees in footings of public presentation.

Technology Developments:

Air Asia uses different type of engineering to minimise its cost and to do their operation easy and efficient, they are utilizing output direction system ( YMS ) which takes into history the operating cost and expected grosss, and they besides use computing machine reserve system ( CRS ) as it is web-based reserve and stock list system as it is a direct sale engine which eliminates the in-between adult male, and they besides implemented enterprise resource planning system ( ERP ) which helps to salvage the clip at month terminal shutting, and speed up coverage and informations retrieval processes.

Value Chain Analysis Diagram:


IT Problem:

Customer are confronting job sing booking tickets online, because their system are non up to day of the month if the flight hold or cancelled they do n’t hold any system demoing hint to the clients. Some clip cards are non accepted by the system for payment, this may make problem for the rider to purchase.

Government intercession:

With turning demands of low cost bearer, Air Asia started perforating more paths and bind up with more airdromes for Example In Singapore, Air Asia wanted to get down the flights from the southern province of Johor, maintaining in head to pull the riders by supplying free coach service to the metropolis province. Singapore authorities did non let supplying bus nexus to Air Asia by stating it was non her national involvement. Government frights to lose the changi airdrome concern, if Air Asia came with that service, this suffer a immense loss to Air Asia.

Operating cost increased: –

Bing a low cost bearer, there is ever a menace either from other LCC or the full service air hoses to vie each other, in order to crush the challengers, Air Asia came up with value added service to the clients like cyberspace cheque in service, with this one can bask publishing their ain embarkation base on balls online, Air Asia non merely give low cost tickets but besides provide other fiscal services like travel insurance, vacation bundles, booking services for hotels, auto lease, and Citibank -Air Asia recognition card. To keep this type of services required immense sum. This increased the operating cost by bring forthing value added service

High Labour cost: –

With addition in demand of low cost bearer, and enlargement of air path, there is ever need to enroll new member excessively give better service for smooth operation, it is now really hard to engage people with low cost, payment should change differ to different industries. Bing a low cost bearer, net income border is merely 30 % of Air Asia

Care Hub:

As Air Asia does non hold its ain care and fix installation, as by transition of clip and increase in figure of planes from 3 to 100 planes presently and about more 100 planes to have following twelvemonth, so non holding their proper care hub it cost a batch to the company.

Limited Human Resource:

As to keep it low cost competitory advantage Air Asia goes with limited human resources so if some irregular state of affairs comes so it is hard to manage the state of affairs.

Flight Delay:

As when their flights are delayed so there is no proper channel to pass on to the client or client is non inform earlier

Fuel Monetary values:

Due to lifting in fuel monetary values, the air line industry effects a batch in that instance the operational activities of Air Asia besides adversely effected.


Air Asia is concentrating on low cost and no frills to be on right way with carry throughing the organisation ends. To vie with the market challenges and to confront them following are some of the recommendations to heighten the operational activities.

New IT System Implementation:

The company should implement IT system strongly because the concern of Air Asia is to a great extent depending on cyberspace, therefore they should use Advance Planning and Scheduling system ( APS ) . As APS system is capable in optimizing operational planning, scheduling supplier portal, stock list planning, and demand per costing, care direction and path profitableness which will assist them to vie in the low cost market.

Staff Training:

Air Asia is engaging multi skill people, In instance of hard state of affairs they should develop their staff, Human Resource Development should take necessary stairss by updating their employees through on occupation preparation as it will be effectual.

Joint venture with different low cost air hoses:

As air Asia is a low cost air line so to keep and to maintain their client stick with them they should travel for confederations with different air hoses so that they can acquire entree to different paths, and their cost should be low every bit good as there are different companies like virgin blue who want to widen service who want to widen service to south east Asia, hence air Asia can hold a joint venture with them.

Self Care:

As to keep the mission of the Air Asia as a low cost bearer and no frill, it is has to concentrate from different facets, care and overhauling of the aircraft is the major

Operating activity, for that Air Asia needs its ain hub and care staff instead trusting on outsourcing. Initially it is dearly-won but in the long tally this investing would be executable for the air hose.

Flight hold:

To fulfilling the client is the basic importance for the service industry, if the flight is cancel or delayed the direction should inform rider on clip or apologise by explicating the valid ground.

Frequent circular programme:

Loyalty programme should be present for the riders who often winging with Air Asia in order to retain them and air hose should affect the loyal client with the new approaching offers.

Extra Servicess:

Air Asia should present member sofa to handle their frequent riders and they should supply excess amusement through nominal charges to do better impact of air hose. Air Asia besides has to get down in flight amusement during short draw flights on client demand.


Strength: –

They have strong relationship with authorities and political leaders to run smooth map. They have good direction squad who work expeditiously with strong use of IT, so that each and every client can book tickets online by taking easy method. Air Asia penetrates more and more market because of their low cost outlook, this help them to go low cost leader in Asia Pacific part. With strong working relationship with authorities organic structures can assist them to work swimmingly in the state For illustration: working with Thai Prime Minister Mr.Thaksin Shinawatra who holds 50 % interest in the company aid Air Asia to capture good market in Thailand.

Failing: –

Air Asia do n’t hold their ain care hub, ab initio they started for few planes to keep. By the transition of clip, they have come up with 100 planes, but in future they are anticipating another 100 planes. So they will be confronting to keep all the planes at a clip. It is one of the large disadvantages non to hold their ain care hub. Second job with Air Asia is one can non alter their, if it is delayed or acquire refund for the same and besides bear downing more on luggage ‘s to cut the cost of fuel. Because of limited staff they can non manage the debatable state of affairs when arise. By supplying low cost they fail to supply basic service to the clients in order to keep the net income border.

Opportunities: –

Explore more on Asiatic markets ; there are Asiatic metropoliss with population of more than 1 million which are in-between category, so they are aiming more on in-between category people. Joint venture with virgin bluish group. This group want to widen their service to South East Asia, so Air Asia can hold joint venture with virgin bluish group to capture more markets with them. Increasing oil monetary value which can be menace to all air hose industry. But Air Asia does n’t hold their clients already basking low monetary value irrespective oil monetary value goes up or down. Due to increase in turning demand of Air Asia clients. Prospects generates for new paths for clients and more Numberss of airdrome trades.

Menaces: –

Some charges like Air going, set downing cost security charges are non in control of air hoses operators. This menace is for all air hoses but particularly to those air hoses who are maintaining their rates really low. Full service air hoses can come in any clip by cut downing their cost. Because net income border of Air Asia is 30 % which is really less as comparison to any other full service air hoses. Problem may happen due to to a great extent depend on-line gross revenues, like break or any other mistake can go on to system which may ensue straight on gross revenues. There will be deficiency of assurance among clients due to terrorist onslaught, accident, authorities policy etc.


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