AIRASIA X

INTRODUCTION

AirAsia X Berhad was previously known as FlyAsianXpress Sdn. Bhd. It was operated as

AirAsia X, a long-haul, budget airline based in Malaysia and a sister company of

AirAsia. It is the first airline in the region to implement fully ticketless air travel and

unassigned seats. It commenced operations on 2 November 2007 with its first service

flew from Kuala Lumpur International Airport to Gold Coast Airport. AirAsia X flies to

destinations within Asia and Australia. Nowadays, AirAsia X has flies to more than 165

routes including to Europe such as to Italy and Middle East countries, Dubai, Istanbul and

Jeddah. It has been known as the largest Asia’s largest low-cost carrier by keep costs

down by using a common ticketing system, aircraft livery, employee uniforms and

management style. AirAsia X have been known with their slogan of ‘Now Everyone Can

Fly’. AirAsia’s main hub is at Kuala Lumpur International Airport as well as the head

office of the company and its affiliated airlines, Thai AirAsia and Indonesia AirAsia,

have hubs in Suvarnabhumi Airport and Soekarno-Hatta International Airport. AirAsia

has also acquired and created mainly thanks to joint-ventures a lot of subsidiaries. Within

10 years of operations, the airline today is proud to be a truly Asean (Association of

Southeast Asian Nations) airline with established operations based in Malaysia, Indonesia

and Thailand, servicing a network stretching across all Asean countries, China, India,

Bangladesh, Sri Lanka and Australia. AirAsia was named the 2015 World’s Best Low

Cost Airline in the annual World Airline Survey by Skytrax for seven consecutive years.

TARGET CUSTOMER

AirAsia’s core product is obviously the flight service. Therefore, their target customers

are of course the travelers, businessmen , frequent flyers, tourists and many more. They

also make the students as their customers. For example, during the festive seasons, many

students will book their tickets in order to go back to their hometown. Therefore, they

targeting the students only for certain seasons. Besides that, Bangkok Bank and AirAsia

have launched a all-in-one credit card for shoppers and travelers that offering a wide

range of privileges. Target customers are the younger generation (aged 20-45) who love

traveling both domestically and internationally, including Bangkok residents who love to

travel to provinces or who travel back to their provincial hometowns for long holidays

such as Songkran, New Year and Visakha Bucha Day, or for special family occasions.

New customers from the bank’s branches and from AirAsia are also part of this target

market.

MARKET STRATEGY

To continue to be the lowest cost short-haul airline in every market AirAsia X serve,

delivering strong organic growth through offering the lowest airfares at a profit.

 

Leanest Cost Structure

• Efficient and simple point to point operations • Attracting and retaining hardworking and smart people • Passion for continuous cost reduction

 

Maximise Shareholders' Value

• Resilient profit growth through our lower cost base • Expansion of the AirAsia network in a prudent and disciplined manner

• Invest and enhance the AirAsia brand to increase investors' returns

  

Safety

• Comply with the highest International Aviation Safety Standards and practices• Keep operations simple and transparent • Ensure the security of our People and Guests

  

Passion for Guests' Satisfaction

• Maintain simplicity in every application • Practice the unique and friendly AirAsia experience at every opportunity • Recognise the linkage between guests' satisfaction and long-term success

  

Transparency

• Transparency in decision-making and information sharing • Optimum disclosure - higher than industry norms • Timeliness in disclosing information

  

Human Capital Development

• Invest in both hard and soft skills • Recognise all our people as contributors to our success • Reward excellence and individual contributions• Maintaining one brand across the Group

AirAsia’s core product is obviously the flight service. Their main business is the booking

of flights for the region of Asia at low fares. The facilitating products we could identify

for a low-cost carrier product such as AirAsia mainly concern the ways of booking.

AirAsia’s website is the main booking system offered by the airline. Really easy to use, it

permits to check flights schedules and to make bookings. It offers the possibility to

register in entering all your personal information, thus the system keep them on memory

and you are not obliged to enter them again for a further purchase. This website also

allows customers to manage their bookings and to have more information on the flights.

It is also possible to make online check-in to not lose time. The booking system is made

in order that the latest updates promotions are suggested. Moreover, AirAsia also offers

the possibility to book by SMS or by phone. A call centre has been launched in 2002 not

only for booking but also having help or information. The facilitating ways of booking

are also adapted for the payment. It is now possible to pay for their telephone bookings

by credit card or by cash at any Alliance Bank branches. AirAsia also permits to make an

easy and quick check-in at the airport thanks to computers. You just need the booking

name and the booking number. You don’t have to queue for check-in (if you only have

cabin luggage).

The augmented products are numerous with AirAsia as their slogan is to be a “no-frills”

airline. In fact, they buy a core product, a flight ticket, and you can choose to have added

value on the service. First, you have in-flight services. AirAsia offers “Snack Attack,” a

buy on board program offering food and drinks for purchase. Besides, the meals could be

booked at the same time of ticket by internet. Moreover, during an AirAsia flight, you

can buy different kind of stuff. There is a “shop on board”. Another service named

‘Xpress Boarding’ was launched, enabling passengers to get priority boarding for a fee.

In the same way, on Air Asia flights, passengers are given a choice of purchasing extra

baggage weight, comfort kit and seat selection all with nominal fees. Concerning the seat,

they also created the innovative Empty Seat Option. It means that customer’s onboard

Asia’s leading long-haul can purchase affordable options for the empty seats next to them

to spread out comfortably over a full row of 3 seats.

Think Big Digital Sdn. Bhd., is a joint venture between AirAsia and Tune Money and

operates the Air Asia BIG Loyalty Programme. Air Asia BIG is the global points

currency serving AirAsia and the Tune Group. Under the programme, members earn BIG

points from AirAsia, Tune Talk, Tune Hotels, and many other partners including Budget,

Avis, Starhub, DTAC, Petronas, and major banks such as DBS, Citibank, CIMB,

Standard Chartered Bank, Bank Mandiri, BRI, Siam Commercial Bank and Bangkok

Bank. In conjunction with Tune Money, Think Big Digital provides the loyalty program

for the BIG Visa Prepaid Card, co-branded and affinity payment products, giving

cardholders the opportunity to earn Points and redeem for AirAsia flights and many other

specialty merchandise and hotel rewards.

Bangkok Bank and AirAsia, AirAsia BIG and MasterCard have launched ‘Bangkok Bank

AirAsia Platinum MasterCard Credit Card’, providing convenient spending and traveling

options in one credit card, and offering a wide range of privileges to meet all lifestyle

needs of shoppers and travelers under the concept of ‘Shop and fly conveniently with one

card’. This includes collecting BIG Points for quicker AirAsia redemption, and an

installment plan with 0% interest rate for every flight and other privileges under the

concept of ‘Shop and fly conveniently with one card’. The cardholders will receive

superior privileges from AirAsia, AirAsia X and Bangkok Bank such as earning 1 BIG

Point for every Baht 20 spent to redeem for free domestic and international flights. They

can also earn triple BIG Points when making payments with the card at AirAsia website,

AirAsia sales counters or the AirAsia call center.

Cardholders can also make payments using the Be Smart installment plan with a 0%

interest rate for 3 months or with a special interest rate for up to 10 months in accordance

with the bank’s conditions. Cardholders each year will receive four complimentary

vouchers for free checked baggage and four complimentary vouchers for an upgrade to

premium seats. Other privileges include priority boarding, priority baggage and a

complimentary in-flight hot or cold drink. If cardholders don’t have enough BIG Points,

they can combine the points with their credit card payment to redeem for a flight to other

destinations. Cardholders can also redeem BIG Points for a flight from our airline

network including AirAsia or AirAsia X, as well as for a room from Tune Hotels via

www.airasiabig.com. Cardholders can also be assured that every payment is safe with

world-class payment service and innovation standards”. AirAsia also offers augmented

products which are not directly related to the flight. For example, it is possible to book a

hotel room, to rent a car, or to book a tour package with GO holiday (airline’s online

program where customers can book holiday packages online in real time).

PASSENGER RATING

The passenger overall rating for AirAsia X is seven over ten. It is based on the Skytrax

website which reviews all the satisfaction of customers for all airlines and airports in the

world. As for food and beverages, AirAsia X are rated three stars out of five stars.

Besides that, AirAsia X are rated four stars out of five stars for their seat comfort, staff

service and value for money. Last but not least, they only managed to be rated one star

out of five stars for inflight entertainment. One of the customer, G Mougin whom is a

French left a review at the website with rating AirAsia X for nine out of ten. He was a

business traveller fly from Kuala Lumpur to Taipei. He said “Kuala Lumpur to Taipei,

and AirAsia X in my opinion is more than a low cost company. This time I book the

business class as it is still cheap. I had great problems to get my ticket by mail. I got 2

chats with AirAsia : have to wait around 30 minutes each time. I was not able to get my

ticket. But at Kuala Lumpur airport they have printed it without any problem. We were

only 3 in the first class. The seat is really good : you can totally lie and have a good rest.

The service is simple but enough (no wine). It was a good flight, and I recommend this

experience.”

MARKET SEGMENTATION

1) Geographic characteristics

The geographic characteristics of the target market of AirAsia are obviously Asian

people. The name of the company, AirAsia, and its development in all the different

countries of Asia is the proof that they target people from all Asia. They try to respond to

a domestic demand. Concerning their subsidiary AirAsia X, the target market is not the

same as they try to attract people from Australia, Europe and Middle-East who want to

visit the Asian region.

2) Demographic characteristics

Concerning demographic characteristics, AirAsia is not targeting a specific demographic

group. It is mostly based on the social status or the average budget of the customers.

AirAsia mainly target workers or low pay salaries earners. It could also be categories like

students who have not a lot of money.

3) Psychographic and behaviour characteristics

AirAsia targets people who want to travel in Asia for leisure or business purposes. Their

main purchasing motivations are the price and the simplicity for buying and check-in.

Moreover, as the Chief Executive Officer of AirAsia explained, they target people who

would like to travel often to meet their families especially during special occasions but

due to how expensive it was that time, their desire are not fulfilled. By introducing a low

fare will give all those people opportunity to travel if not more than once in a year. They

mostly create a specific target market.

KOREAN AIR

INTRODUCTION

Korean Air Lines Co., Ltd., operating as Korean Air (Daehan Hanggong) is the largest

airline in South Korea and Asia based on fleet size, international destinations and

international flights. One of the main services that Korean Air provides are transportation

of passengers, cargo, maintenance, and training service, which is the 96% of its revenue

(90,548 hundred million won) and the remaining percentages are Limousine, Hotel, in-

flight service, among others having as a total revenue of 93,937 hundred millions (2009).

The airline's global headquarters are located in Seoul, South Korea. Korean Air's

international passenger division and related subsidiary cargo division together serve 127

cities in 44 countries, while its domestic division serves 12 destinations. It is among the

top 20 airlines in the world in terms of passengers carried and is also the top-ranked

international cargo airline. Incheon International Airport serves as Korean Air's

international hub. Korean Air also maintains a satellite headquarters campus at Incheon.

Korean Air was originally founded as the Korean National Airlines in 1946. After several

years of service and expansion, the airline was fully privatized in 1969 and commenced

operations on the 1st of March 1969. The airline celebrated its 45th anniversary in 2014.

The majority of Korean Air's pilots, ground staff, and flight attendants are based in Seoul.

Korean Air is the parent company of Jin Air and is a founding member of SkyTeam. The

alliance has since become the second largest alliance in the world, behind Star Alliance.

It was voted Asia's best airline by Business Traveler readers in 2012. Korean Air is

currently an official sponsor of the 2018 Winter Olympics. The main slogan and mission

statement of Korean Air is "Excellence in Flight".

MARKET STRATEGY

Korean Air has been achieving its mission statement by giving a good service being one

of them having SKYPASS. Skypass is the frequent flyer program which they give to the

passengers multiple benefits like free tickets, hotel discounts, among others, if the

passenger flies a certain amount of miles per year. Korean Air also gives 4 types of first

classes which Kosmo Suite and Prestige Sleeper class can stretch the seat into 180

degrees, making it more private and also delivering specials food. To be excellence in

flight and being a top ranked airline they have to fulfill with operational excellence,

service excellence, and innovative excellence. In North America, Korea airline is the

largest airline to Asia and their main rival is Asiana airline which is another Korean

company. In order to have a better operational and service excellence, Korean Air

belongs to the Skyteam which is the world second largest airline alliance. By making

some special alliance in certain routes, passengers can earn miles even though if they are

not flying Korean Air.

The SKYPASS program benefits members by giving them the opportunity to earn

SKYPASS Miles and acquire bonus awards from many airline and hotel partnerships.

SKYPASS members enjoy specially discounted rates from companies such as American

Express, Hyatt Hotels & Resorts, Hertz rental cars and more. As you accumulate Miles,

you’ll enjoy even more advantages from programs, which include Morning Calm,

Morning Calm Premium and Million Miler.

Korean Air offers regular flights to 104 cities in the world and tries to develop new

markets. In 2009, Korean Air launched new flights to some potential markets such as

Xi'an, Mudanjiang in China and Shizuoka in Japan and non regular flights to a third

country by expanding the fifth freedom rights of the airline in Japan. As next new growth

engines, the company decided to go into South America, the Middle East and Africa and

establish service and sales offices. Also, as aeronautical agreements are liberalized among

countries, the company is finding new flights actively than before. In the case of flights to

the Americas, Korean Air has the largest flights among Asian Airline companies and

secures model for long-distance flights after liberalization agreements among countries.

Moreover, by using 'Codeshare' with allied airlines, Korean Air strengthens global

network to create global demands. 'Codeshare' is an agreement where an airline buys

space on another airline and markets the extra space as its own. Korean Air belongs to

SKYteam, an alliance of global airlines. Korean Air and the airlines in SKYteam

cooperate with each other to increase route networks without spending extra cost of

running the whole service through 'Codeshare'.

An airline industry is very sensitive to global events and changes, so Korean Air controls

flight supply flexibly. The company can improve the profitability through some activities.

For example, in 2009, Korean Air reduced some flights to China and Oceania in which

demand for tour decreased and increased flights to the Americas, Japan and CIS which

demand increased because of visa waiver, a strong yen and interchange of economy.

Although there were the financial crisis and the flu, it overcame those obstacles well

enough.

Korean Air has two ways to sell the tickets, direct way and indirect way. The company

sells the tickets in international offices, airport offices and online directly. Especially,

through own online reservation system, TOPAS (Total Passenger Service System), it sells

tickets on 9 sites by regions. It can get synergy effect with other businesses that Korean

Air is providing, such as Hotel or Limousine business because people can also reserve

hotel and limousine at once.

Also, Korean Air uses indirect sales through travel agencies both at home and abroad.

The company contracts dealership with travel agencies and gives some rebates depending

on their sales. Travel agencies are connected to TOPAS and use it. Sometimes there is a

problem. Korean Air forces sales to small travel agencies and if an agency does not fulfill

that, it cannot get any incentive or commission. Especially, Korean agencies both in and

out of the country have some trouble like this.

Korean Air also provide the services such as below :

Airport Service: Passenger using Korean Air can use lounge service in various

international airports, because Korean Air shares over 400 lounges with allies of

SKYteam. Also, the company helps passengers' efficient transfer by check-in

service. A staff carries out allocating seat, issuing boarding pass and checking in

baggage to the final destination.

In-flight Service: Korean Air has following in-flight services to satisfy various

passengers with the finest and state of the art seats. First, it gives tailored

entertainment service for international people such as movies, music, magazines

and newspaper. Second, it provides tailored meal service. People can order

individual and special meals before 24 hours. Also, it provides fragmented meal

service. There are vegetarian, medical, religious meals and infant or baby meals.

Lastly, It has so unique service, 'Flying Art Embassador'. This is famous museum

guide service. The company hires culture or museum professionals as crews and

the crews give some information about museums in the destination. It is one way

to improve the company's premium image.

Korean Air uses membership system for customer loyalty, and contracts strategic

alliances with other business on and offline as one major marketing strategy. Also, for the

premium image and differentiation from competitors, it promotes and puts an

advertisement.

Skypass: Skypass is a membership system that Korean Air provides. The

company gives special treatment to frequently flyers in the world. In 2006, there

were 13,000 thousand members. Members can earn mileage when they travel and

buy bonus flight tickets with their mileage they have collected. Also, Korean Air

provides some service such check-in counter only for VIP and lounge, free-

baggage service for residual seats.

Partnership (Alliance): Korean Air has many partnerships with many firms.

First, Korean Air expands 'Codeshare' between Skyteam allies, and promotes own

brand to other nations. Second, passengers can use renter-car, hotel, theme-park,

hospital, restaurant and outlet with discounted prices, because of partnership.

Third, Korean Air and some partner operate online site together. These partners

are travelling sites and sometimes other airline companies. For example, Korean

Air will create online travel agency in collaboration with Asiana airline.

Culture Marketing: To be a premium airline, since 2007, it uses culture

marketing. 'Museum sponsorship' and 'Flying Art Embassador' are good examples.

Through sponsorship, it supports culture exchange between Korea and Europe and

Korean language service in museums such as Louvre and the professional crews

give information of the museums and the works to the passengers.

Ads and Promotion: In airline industry, majority of passengers are sensitive to

safety. Thus, Korean Air emphasizes safety by planning strategic ads. In the ads, a

huge airplane is in the center and the company uses a simple message to give an

image of calm and safety. Also, the model is an employee or an ordinary person

instead of star so consumers can feel more comfortable and as a result the

reliability of the company would increase. Moreover, Korean Air continues to

announce the awards, new seats, service and company's good news through mass

media such as magazines, TV and etc.

Korean Air operates various marketing strategies, but there is a limit because Korean

travelers occupy the highest portion of whole passengers of Korean Air, the company's

marketing has mainly focused on Korean. Recently, in Korea, the firm started YOUTH

marketing for 20s after visa waiver program between Korea and USA was signed. On the

other hand, in international market, it has performed more single marketing to improve

brand awareness and image. However marketing strategies by region are not successful

enough yet.

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1) Increasing transit passengers

As the result of the increase of transit passengers who use Incheon International Airport and Korean Air, the boarding rate has been increased. Transit passengers who use Korean Air have been increased for years, but since 2008 the amount increases faster than ever. While passengers who departure from Korea decreased in 2008-2009(due to some economic recession and increased exchange rate), transit passengers were responsible for the loss and from this year, the transit passengers will play an important role to increase profit margins. Usually March, April and November are low seasons for airline business, but this year the situation is different. Korean Air is expecting the boarding rate to reach 77% even in March. This expectation is impossible without transit passengers. The number of transit passengers tended to increase for a long time. In 2005-2007, there were Economic boom and decreased won / dollar exchange rate and due to those factors passengers who departure from Korea increased. So at that time Korean Air didn't really need to attract transit passengers. However the trend of the rapid decrease number of passengers who is leaving Korea since 2008, the airline starts transfer marketing with Incheon International Airport.

Thanks to Incheon airport, 30% of the international passenger demand consists of transit passengers in 2009. One of the main reason investors do not like Korean Air in past was that the revenue structure is depend entirely on the macro variables such as exchange rates and oil prices, so the company can't control anything. But now Korean Air can do something. They can control the demand mix. Starting this year, if passengers who departure increase and there are no enough seats, they can simply sell less ticket to transit passengers and in the low seasons they can increase the seats for transit passengers. The revenue structure will be stable so exchange rates and oil prices would less affect the profit than they did in the past.

2) Incheon Airport's important rule

Every people who experience Incheon international Airport argue without hesitation that Incheon international airport is the best airport in the world. Even though it is a public company, Incheon international airport always actively listens to the needs of customers to improve efficiency. Therefore it always looks like brand new airports for 9 years and become one of the most competitive airports in the world. This is because of the geographic advantage, superior service and the operating ability of Incheon international airport corporation is performing.

One of the advantages Incheon international airport is the convenience of the transfer. For example, if someone has to take a flight from United States, stop at Shanghai to transfer, and arrive at Qingdao, he should transfer from international flight to domestic flight. In this situation he will feel inconvenience to find his baggage from international flight and send it to domestic flight. But if you fly into Incheon international airport to transfer to go to the Qingdao, the International flight will be flown twice and he does not have to find or send at the airport which is not his destination. Incheon International Airport, calls the system 'Through-check system'. People do not need to find their luggage or go through such complicated procedures such as boarding pass.

Also Incheon airport possess many routes to go to many cities. Compared to Japan's Narita Airport and Pudong Airport in China, which are available for 35 and 31 line each in the Asian International airline, Incheon international airport has more lines which can go to 86 cities. Already, Incheon airport is the hub air port in northeast Asia.

3) Government encourage the tourism industry

November 2009, the government announced ' advanced strategies for tourism industry ' and will improve the visa system to attract more Chinese tourists. Thanks to SHANGHAI EXPO which is held in May 2010, the government is preparing the system to enter each country with no visa. Also the government is planning to issue the travel visa for the individual visitor in Korea. Jeju Island has already allowed Chinese visitors with no visa and the Chinese tourists annually by 2008, increased 82 percent (22,913 people in 2008). Even though the profit from China area out of the whole passenger revenue isn't very large but the high growth potential shows the positive aspect. In the 'Advanced strategies for tourism industry', government also announced it will promote and improve the system related with vacation and holidays. To ensure the legal holiday and to make sure people enjoy their vacations enough. These kinds of government actions will definitely help the airline business, and of course it will help Korean Air to make more profit.

4) Eco-friendly Company

Actually Korean Air has been exercising a green management during the past 10 years. As we know global warming is affecting the entire world and has cause a cultural shock to almost the entire population making big companies create Eco friendly campaigns in order to satisfy the consumers at flying Korean Air that they are not polluting the environment. They are actually reducing greenhouse gases, reducing fuel consumption, using energy efficiently, and even preparing the noise reduction.