This report mainly will talk about the analysis of Air Asia’s online business by focusing on the online business model, the features of the online shop and the effectiveness of micro-payment used and the recommendations to improve their online business. The main purpose is to develop the ability to analyze online business and to give recommendations based on the analysis to improve the business.

The first part of this report will give a brief introduction about Air Asia covering the overview of the business, nature of business products and current features of the online mode.

The second part will give an explanation of the company’s online business model including the illustration and explanation on the business processes with a diagram.

The third part will critically evaluate and explain the features of the exiting online shop relating to the customer experience.

The fourth part will give recommendations based on the analysis of existing micropayment mode relating to customer experience and satisfaction leading to customer retention. Finally, a summary of this report will be given.

2.0 Introduction

Electronic “commerce is very important for the businesses like Air Asia to operate in their competitive markets because it can increase sales and decrease costs. E-commerce contains digitally supported commercial dealings between the organizations and individuals. The categories of e-commerce include business-to-consumer (B2C), business-to-business (B2B), consumer-to-consumer (C2C), consumer-to-business (C2B) and mobile commerce (M-Commerce) (Bachok” & Seng, 2011, p. 18-22).

The “purpose of this assignment is to develop the ability to analyze online business in terms of the business model, online shop features and effectiveness of micro-payment to understand how the business will be affected and how a negative user experience will affect customer retention. This report will analyze Air Asia’s online business by focusing on the business model, the features of the online shop and the effectiveness of micro-payment used. Finally, the recommendations will be given based on the analysis in order to satisfy and” retain its customers.

2.1 Overview of Air Asia

Dato’ Sri Anthony “Francis Fernandes is the founder CEO of AirAsia. It was started with the dream of making flying possible for everyone. Today, it is one of the leading airlines in Asia. Since 2001, it has quickly broken travel norms around the globe and has risen to become the world’s best. They have a route networks in more than 20 countries. They are continuously working for low-cost flight by using their innovative solutions, well-organized processes and their excellent approach to the business.” AirAsia is also trying to have low-cost flying to all with it believe of “Now Everyone Can Fly” by integrating their associate companies including AirAsia X, Thai AirAsia and Indonesia AirAsia. Their major competitors are Air-India Express, Goair, IndiGo, Spicejet, Mihin Lanka and Tiger Airways (Nawi, Manan, & Aziz, 2010).

AirAsia’s main philosophy is “Now Everyone Can Fly” which is related to their vision. Their “mission is to be the best company by treating employees as a big family, to build a globally known ASEAN brand, to achieve the lowest cost, to retain the high quality, implementation of good technology to decrease cost and improve service” (Feng Chia University, 2009-2010).

2.2 Nature of business

AirAsia “Berhard is an airline company which provides air transportation service. AirAsia is of the top Malaysian B2C airline selling airlines tickets, car rentals, holiday packages and hotel room bookings. AirAsia maintains its presence in Facebook, Twitter, Flickr and YouTube channel” (Feng Chia University, 2009-2010).

2.3 Online features

There are six online features of AirAsia.com. They are navigation aspects (page load time, visitor’s location, refining options, search bar location, search effectiveness, Sorting Options, refining search results, remove narrowing options, pop-up windows and site map), website contents aspects (accurate headlines and relevant contents, all in one page, show the price, critical ‘Fit’ information, photos, product availability, alternative seller, ‘About Us’ page, ‘Contact Us’ page, ‘FAQs’ page and regular updates), user-generated contents aspects (forums and product reviews), security aspects (order confirmation page, order confirmation email, order and shipping details, ‘Disclosure Policy’ page, ‘Refunds Policy’ page and stresses the use of security), web design aspects (clean and simple, white space, consistency and font) and marketing aspects (Electronic newsletters, new product announcements, give users something to do and loyalty campaigns) (Li, 2012).

3.0 Explanation of online business model

Business-to-consumer (B2C) e-commerce comprises of the sale of product and services from a business to the general public or to the final consumer. Popular services offered by B2C businesses include online banking, stock trading, and airline reservations (Bachok & Seng, 2011, p. 18-22).

AirAsia is highly depending on Internet technology for its operations and strategic management. They are providing the online ticket booking services to travelers online. Currently, their home page is using as a key company channel for marketing and sales (Cary & Man, 2009).

To “book a flight with AirAsia, customers can choose different channels like Call center, Sales office and airport sales counter, Authorized travel agents, Mobile booking via mobile.airasia.com. Meantime, it can be done by visiting their home page and following the 5 different steps” (Cary & Man, 2009).

3.1 Illustration

The “following diagram shows the online electronic ticket ordering process in AirAsia B2C model” (Cary & Man, 2009).

In order to increase the revenue, they are providing one stop solution of booking packages, hotels, taxies, food on board, check-in luggage, online check-in through their website portal “www. AirAsia.com” (Cary & Man, 2009). The below picture is taken from Air Asia’s website which shows more details of online booking.

(Air Asia, 2013).

3.2 IT applications

They “have gone through five different IT applications levels in their business. In level one, customers’ contacts such as telephone contacts, mailings and faxes were handled by their travel agencies. In level two, they became the first airline to go ticketless in Asia. In level three, Systems like Electronic Data Interchange (EDI) information were developed to increase the efficiency and which was developed to support B2C activities. In level four, they introduced online booking through its website at ww.airasia.com on 10th May 2002. In level five, they were the first airline in the world to practice booking air tickets through short messaging” service (SMS) (Nawi, Manan, & Aziz, 2010).

4.0 Evaluation of online features

AirAsia.com is an E-tailing website where visitors can purchase flight tickets, make reservations for affiliated hotel deals and purchase tour packages from the website. Customer that wishes to book hotel and car rental service will be directed to another website with different website address which is named as www.airasiago.com. They also have a separate online shopping website which is at www.airasiamegastore.com. These websites are accessible from AirAsis.com through the respective links (Li, 2012). The below picture is taken from Air Asia’s website which shows the following aspects.

(Air Asia, 2013).

4.1 Navigation Aspects

The website has page load timer function and it takes an average speed of 2.79 seconds to load the homepage of their website. They do not have breadcrumb trail method which might make the visitors to know the hierarchy of the pages in this website. Meantime, there is always a headline at the top of each page. Sometimes new browser window is opened when a different category of services or the latest promotion is clicked by the customer (Li, 2012).

The website has drop down menu to refine the destination that visitors would want to see. The website has various links to bring the customer to various types of services provided and to provide different categories of information in this website. The search bar is available on the top left corner of the page which helps for easy retrieval. It seems that the search effectiveness of this website is fair but the sorting search results options are not available yet. The website does not have the options to filter the search results. The website does not have pop-up advertisements yet but the site maps are available in this website (Li, 2012).

4.2 Website Contents Aspects

It is found that the contents of each page reflect accurately the headline of that specific page. The prices of flight tickets are always shown when the customers select their preferred flight information. The website shows related photos of destinations to show the beauty of the destinations that the customers fly to. However, the critical relevant information about the product is not present. Meantime, the website is selling mainly their flight services rather than products which may not be so applicable. The aspect to show all services of the sub-categories also may not be so applicable to this website (Li, 2012).

The availability of flight seats is always shown when the customers choose their desired flight information. It seems that the alternative seller information might not be appropriate to this website. There is ‘About Us’ page in this website which provides detailed information about the founder and other background information about AirAsia. The “Contact Us” page and FAQ page are available in this website. It also has AirAsia’s updates regularly with new offers, new flight route announcements and new promotions (Li, 2012).

4.3 User-generated Contents Aspects

In this website there are no forums for the visitors. Meantime, no product reviews are available in this website. However, comments can be made through different social media linked to the web site (Li, 2012).

4.4 Security Aspects

The website provides the Order Confirmation page after the purchase of flight tickets. From The website also sends emails to the customers after purchasing the flight tickets. The shipping details information is not appropriate to flight ticket purchase in this website. The website has Privacy policy page that shows the concerns and customers’ rights to privacy. It has found that there is no specific page for refunds policy but there is a page for FAQ questions and answers with looks to cancellation and refund of money. The website has security services like “Verified by Visa” and “MasterCard Secure Code” in order to provide protection and to secure the customers that makes purchases using credit cards (Li, 2012).

4.5 Web Design Aspects

It seems that the AirAsia.com website is little congested but the used red and white colors at the top and bottom of the pages indicates a clean design. The white colour background of the website is also makes the design clean. The white spaces that are used in the website are limited. The contents are too near to each other and which makes the website a little congested. However, the design of the website is consistent all through the pages in the website and the fonts used in the website are easy to read (Li, 2012).

4.6 Marketing Aspects

They also offer options for the customers to register their members and provide the electronic newsletters. They use the same member subscriptions to provide new service, new promotion and new information to the customers that register as the AirAsia.com member. They have contests for customers to join in. Moreover these contests, customers who want photography can also upload their photos in their travel3sixty’s photo blog. They have periodic promotion and attractive offer. They also have loyalty programs that offer many benefits to the members (Li, 2012).

4.7 Other Aspects

The prices of AirAsia’s flight services are one of the main reasons that contribute to the success of AirAsia.com. Since they are a low cost carrier airline, the price of AirAsia’s flight ticket is comparatively lower compared to the other main Malaysian airline companies in Malaysia. As a result of this the customer who has less financial budget prefers AirAsia over other Airlines in Malaysia. Another reason for their success is that they target a large customer market. They target to the customers who are at young age and to those who like travelling without spending much on flight tickets. They also cater to the lower income customer by providing low and less expensive flight ticket (Li, 2012).

4.8 Existing Online Payment Methods

AirAsia “accepts three different online payment methods which are credit card, direct debit and E-Gift Voucher. Credit card includes Visa, MasterCard, Amex and JCB. Direct Debit payment can be made via various banks like Maybank2u.com, CIMB Clicks, PBeBank.com, RHB Bank, AmBank Online, Bank Rakyat and Hong Leong Online. E-Gift Voucher is a credit based voucher for user to use towards paying for their tickets when making a booking at airasia.com. Currently, E-Gift Voucher is only available for corporate purchase. Other than online payment methods, the payment can be made at Sales office, Airport sales counter, Call center and Kiosk” (AirAsia, 2013).

5.0 Recommendations

Currently AirAsia has three different online payment methods. Meantime, its competitors have various online payment methods. Therefore it is recommended to introduce the following payment methods in order to retain its customers.

5.1 Pay Pal

PayPal “uses encryption software to allow customers to make financial transfers between computers. PayPal helps the customers in different ways to make the online payment transactions. It is faster in speed whenever customers shop online. The payment can be made with credit card, debit card, and bank account.” It is not required to retype the customers’ financial information (Schnidar, 2010, p. 494-510).

It is “one of the safest methods in the world. It protects against any unauthorized payments sent from other accounts. The purchase confirmation can be made with an email receipt. When a customer selects PayPal as a payment method, customer will be temporarily redirected to PayPal's Web site to securely log in and confirm the payment. If the PayPal payment is failed for any reason, customer reservation can be cancelled” instantly (Schnidar, 2010, p. 494-510).

5.2 Debit card

Debit “cards work differently although it looks like a credit card. The debit cards remove the amounts of the sales from the cardholder’s bank account which will be transferred to the seller’s bank account. Debit cards are issued by the cardholder’s bank and usually carry the name of a major credit card issuer like Visa and MasterCard by having an agreement between the issuing banks and the credit card issuers. By branding their debit cards with the Visa or MasterCard name, banks will ensure that the debit cards will be accepted by traders who recognize the credit card brand names” (Schnidar, 2010, p. 494-510).

Debit card ensures immediate transfer of funds in the dealer’s bank account. It is very convenient substitute to checks when shopping online. It allows customers to stay within their budget since customers can only spend what is in their accounts (Schnidar, 2010, p. 494-510).

5.3 Pay Later

Pay “Later option can help customers to book flights online conveniently and to pay for their tickets at AirAsia’s outlets or by contacting their call centers. This will help the customers for flexible payments by cash, credit card and other payment options accepted by their ticketing offices and call centers” (Schnidar, 2010, p. 494-510).

The “transactions can be done in Malaysian Ringgit or in other currencies. They can ask the customer to make payments within 24 hours of booking. Therefore, the booking is invalid until the payment is made and an e-ticket can be issued to the customers. If payment is not received within 24 hours, they can have an automatic cancellation of bookings” (Schnidar, 2010, p. 494-510).

They “can allow the customers to make payments at all their ticket offices in Malaysia or in other countries. The customers can make payment by credit card via their 24-hour call center and a service fee can be charged for domestic flights and international flights. They can ask the customers to be register in their Internet booking service” (Schnidar, 2010, p. 494-510).

5.4 Charge card

A “charge card is offered by companies like American Express. It has no spending limit and the total amount charged to the card is payable at the end of the billing period. It does not have lines of credit and it does not accumulate interest charges. Many retailers in United States such as department stores are using charge cards” (Schnidar, 2010, p. 494-510).

The “charge cards often do not have spending limit which makes customers very convenient if they are a high spender or when they have to make expensive purchases. It provides fraud protection and it is accepted worldwide. Charge cards also provide reward schemes and other bonuses, like concierge services, travel insurance, breakdown cover or even access to exclusive airport lounges. Depending on how much the customers use the charge card and the kind of rewards and extras included. It also helps to organize receipts for levy applications” (Schnidar, 2010, p. 494-510).

5.5 Electronic cash

Electronic “cash is a general term that describes any value storage and exchange system created by a private individual that does not use cash or coins and that can serve as a substitute for government-issued physical currency. Many stores that accept credit cards require a minimum purchase amount of $10 to $15. The same is thing is applied for Internet purchase. Small purchases are not profitable for traders that accept only credit cards. There is a market for small purchases on the Internet. This is one potentially significant market for e-cash. E-cash has very low fixed costs and allows users to spend” (Schnidar, 2010, p. 494-510).

Most “of the people do not have credit cards due to minimum income requirements. People live in most the countries other than developed countries have less credit cards because they make purchases in cash. For these reasons, e-cash provides the solution to pay for online purchase. Electronic cash transactions are more efficient and less expensive than other payment methods. The efficiency of the company can be increased which eventually leads to lower prices for consumers. The transferring cost of e-cash on the Internet is less than the credit card transactions. The existing infrastructure and computer systems can be used for e-cash transactions hence no distribution methods are required” (Schnidar, 2010, p. 494-510).

Some other competitors of AirAsia are currently using the PayPal, Debit Card and Pay Later online payment methods. Therefore, it is highly recommended for them to use introduce these methods in order to compete its competitors and to satisfy its customers in future.

6.0 Summary

In conclusion, Ecommerce is growing very fast because it has brought many benefits to the business like AirAsia. Although there are different types of ecommerce, AirAsia is following B2C model. AirAsia is a successful low cost airline company in Asia. There are six main online features of AirAsia.com.

AirAsia provides different channels for ticket booking. The online electronic ticket ordering process (B2C model) in AirAsia has five steps. They are choosing the trip type, selecting the departing flight, login with the member account, making the payment, flight itinerary will be sent to the customer’s email. They have gone through five different levels of IT applications in which the last two levels have supported their B2C model.

The analysis of AirAsia’s website shows that AirAsia.com is an E-tailing website which helps customers to purchase flight tickets and make reservations. Their website has six main features. The website enables fast navigation and has a site map but cannot filter the search results. The website shows provides required information and photos but information about some products are not shown. The product reviews and forums are not shown in the website. The website has high security features but it does not have a page for refund policy. The webpage is clean and the fonts are easy to read. It has good marketing aspects like providing e-newsletters and loyalty programs. The other reason for the success of their website is their low cost strategy. AirAsia has credit card, direct debit and E-Gift Voucher online payment methods. However, their competitors are using other good payment methods which they do not have.

Based on the analysis of AirAsia’s website and existing online payment methods, it is highly recommended to introduce various online payment methods like PayPal, Debit Card, Pay Later, Charge Card and Electronic Cash to AirAsia Company. There are several reasons and advantages for introducing these methods to AirAsia. Some of its competitors are also accepting these methods. Currently, AirAsia accepts very few online payment methods.

In my opinion, AirAsia needs to introduce the above recommended methods as soon as possible in order to retain its customers in future.

7.0 Reference

AirAsia. (2013). Payment FAQ. Retrieved May 30, 2013, from http://www.airasia.com/my/en/book-with-us/payment-faq.page

Bachok, S., H., & Seng, Y., C. (2011). E-Commerce. Malaysia: Meteor Doc. Sdn. Bhd.

Cary & Man, W., P. (2009). Professional Diploma Program in Logistics and Supply Chain Management: AirAsia.com. Retrieved May 25, 2013, from http://www.brandattachment.com/images/W%202_AirAsia,%20SWOT,%20Business%20Modal_Operational%20Business%20Modal.pdf

Feng Chia University. (2009-2010). Analyzing Air Asia in Business Competition Era (Academic Paper). Retrieved May 25, 2013, from http://wenku.baidu.com/view/a39628f4f61fb7360b4c6557.html

Li, G., C. (2012). Analysis of key success factors for e-tailing websites in Malaysia: Literature review versus airasia.com (Master's thesis, WASEDA University, Japan). Retrieved May 25, 2013, from https://dspace.wul.waseda.ac.jp/dspace/bitstream/2065/38120/1/ShokenShuron_2012_9_Li.pdf

Nawi, N., S., M., Manan, N., R., A. & Aziz, N., A., A. (2010). MIS 750 (Management Information Systems) [PowerPoint slides]. Retrieved May 26, 2013, from http://www.google.mv/url?sa=t&rct=j&q=airasiaint-casestudy+ppt&source=web&cd=1&cad=rja&ved=0CCsQFjAA&url=http%3A%2F%2Femeyes.files.wordpress.com%2F2010%2F10%2Fairasiaint-casestudy.ppt&ei=6DymUfbuA8nwrQeStoHwDg&usg=AFQjCNH6lCQN30oW4YrVIjNCpoaQHyLmJw&bvm=bv.47008514,d.bmk

Schnidar, G., P. (2010). Electronic Commerce: Chapter11Payment Systems for Electronic Commerce (9th Edition). USA: Joe Sabatino.

Adam Khaleel

Wednesday, December 23, 2015

Module Name: E-Commerce

1.0 Executive Summary