Airasia Case Study

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Aircraft utilization is another broad element here. At a point, the X’s aircrafts were in the air for 16 hours every day vs. the industry average of 11 hours per day. The airline saw the opportunity to be in the air as much as possible to spread the debt over more flights and reduce the fixed operating costs. AirAsia X deviated from the fixed departure and arrival times, something that was absolutely novelty in the industry. The airline figured out if the price was low enough, both the early morning and the late night departures would be popular.

Industry and environment

Today Air Asia X’s strategy for long haul flights is seen as an innovation to the market. The airline challenged the market orthodoxies and changed the environment during its expansion. It opened a door, an opportunity, for a segment that earlier didn’t have the money to travel long haul. Although the airline was going against all the norms in the market, X both survived and expanded during the financial crises in 2008, while other regional competitors ceased operations. AirAsia X showed that a low cost model could go long haul.

3. What specific product and service offerings had to be adjusted or newly provided when AirAsia X introduced long haul service? What was the general customer response? Did this differ between markets?

Product and service offerings

When flying long haul instead of short haul, there is different expectation of the comfort level. To fulfill these expectations AirAsia X made new seats where they reduced the width of the seats to provide more legroom, as well as they designed a new headrest better fitted for sleeping. These product improvements took place because of an internal company survey about the long haul travelers preferred needs.

To improve the comfort level further, X was the first budget line to introduced a limited number of flat bed seats in a small section of the airplane. Traditionally you find the exact same seats in business class, but then to a higher price with premium frills included. These seats are known for opportunity to lie down and sleep in a more comfortable way. X introduced these seats because they saw what the long haul travelers really wanted. The response from the customers was positive, almost every seat was sold on every flight.

Additionally, if the passengers would like food or beverages they had to order this separately from the ticket. There was an option to pre-order before the flight to achieve a reduced price. This also gave the passengers the opportunity to eat when and as often they wanted. X also introduced an inflight entertainment screen so the passengers could use for a fee, this was unusual from other budget lines. The both offerings got a positive response from customers.

Other product and service offerings they adjusted/provided was to order a flight booking just four hours prior to departure, one-way point-to-point-fare and their flyer program “BIG”.

4. Use the techniques to innovate for AirAsia X. Come out with three realistic or viable innovations and describe the adjustment, if any, to be made to its business model.

AirAsia credit card

The first technique I will be using is the one to understand unarticulated needs in the market. By looking for analogies in the industry AirAsia can learn from other airlines. I believe there is an opportunity for them is to introduce an AirAsia credit card, where the customers earn flight points when using it. The flight points could be used to order new flights.

Change-fee on already ordered tickets

Another opportunity for the airline is to introduce e a fee it the customers want to change their tickets. Then there is a change-fee as well as the customer have to pay the price difference between the new and the old ticket if there should be any. Here I used the same innovation technique as above, looking for analogies in the industry.

Armrest Division

The last innovation technique I will be using is direct observation to understand unarticulated needs. When flying there is often a problem with the distribution of the armrest between the passengers, this is something I have observed by myself. AirAsia could introduce a device to share the armrest in a fair way, and at the same time also make it bigger (appendices, 4.0).

APPENDICES

1.0 Increase Shareholder value

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Source: Class-notes.

1.1 Value-Based Strategies to increase Shareholder Value

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Source: Class-notes.

4.0 Armrest division

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Idea from: https://www.outsideonline.com/1929946/7-airline-innovations-will-change-way-we-fly