AirAsia Company’s Business Excellence

The rationale for selecting AirAsia

The basis for picking AirAsia as the low-cost company for the study is due to the competitive nature of the South Asian market (Heracleous, Wirtz, & Pangarkar, 2005) The new entrants into the market like Malindo Air who seem to duplicate the company’s strategies have posed a threat to the low budget airline. Therefore, the strategic approaches employed by AirAsia necessitate inquiry to learn about its survivability and sustainability.

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Additionally, AirAsia has emerged as one of the reliable players in the industry that avails its affordable services to all as depicted by the lowest unit cost of $0.023 per available seat kilometers (ASK) in the world (Barbot, Costa, & Sochirca, 2008).

Besides, the company has won several awards owing to its business excellence strategies and activities (AirAsia, 2015b). The business excellence elements of the affordable carriers emerge due to the rising need for quality services to customers.

The entry of the relatively new player has resulted in heightened competitiveness as companies seek substantial market share especially in the developing economies (Francis, Humphreys, Ison, & Aicken, 2006). In essence, as one of the low-cost actors in the competitive aviation industry, AirAsia is an exemplary company that could facilitate an analysis of its business excellence elements of its operations.

A brief description of AirAsia

Headquartered at the Kuala Lumpur International Airport, Malaysia, AirAsia was formed in 2001 as Tune Air. Since its incorporation, AirAsia has emerged as one of the preferred low-cost carriers in the South Asian region and its environs. The slogan, “Now Everyone Can Fly” communicates the company’s intention of offering low-cost services to its customers through its domestic and international network. With its operations in over 20 countries and 100 destinations, AirAsia has intensified its partnerships with various aviation companies to widen its scope of operations.

The company’s association with AirAsia X, Indonesia AirAsia, Thai AirAsia, AirAsia Japan, and the Philippines’ AirAsia Inc. ensures that its affordable air travel costs are available to the customers in the South Asian region and around the world (AirAsia, 2015a).

Besides facilitating low-cost traveling and affordable cargo services, AirAsia provides a broad range of complementary services like customized travel, island and city transfer, travel insurance, tune talk sim cards, and car rental services. In the low-cost category, AirAsia faces competition from Malindo Air, Malaysia Airlines, and Tiger Air. Additionally, key players in the industry like Emirates Airlines, Etihad Airways, Air Arabia, Virgin Australia, British Airways, Thai Airways, Singapore Airways, and Qatar Airways give stiff competition to the company (Eriksson & Steenhuis, 2015).

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Excellent achievements of AirAsia

Business Excellence

Since 2001, AirAsia has embarked on a business excellence journey that seeks to improve the management of the company towards the provision of quality services at a low cost. In this case, the company has received numerous certifications and awards that acknowledge their performance in the aviation industry that could help in distinguishing excellent achievements (AirAsia, 2015b).

In 2003, AirAsia’s Tony Fernandes bagged the CEO of the Year award that was granted by the Business Times and American Express. The award depicted the business excellence aspect of the newly established company by then. In the same year, the company’s service excellence journey was acknowledged after it was among the CIO’s top 100 honourees for strategic IT deployment excellence (AirAsia, 2015b).

The year 2005 witnessed substantial business excellence performance by AirAsia as Tony Fernandes was awarded the CAPA Aviation Executive of the Year. The Air Transport World (ATW) reputed the company with the Airline Market Leadership Award in 2006, which showed the strength of the business management team (AirAsia, 2015b).

Operational Excellence

The 2006 period depicted various business, operations, and service excellence accolades to AirAsia. Notably, The Low-Cost Airline of the Year awarded by Malaysia Airports Holdings Berhad and Malaysia’s Ernst & Young Entrepreneur of the Year crowned to Tony Fernandes portray the efficient operations and management of the company (AirAsia, 2015b).

Since 2010 up to date, the business excellence journey for AirAsia has taken the right course as seen by the six consecutive World’s Best Low-Cost Airline awards by Skytrax. The operations and customer aspects of excellence have also shown growth since ATW awarded AirAsia the Value Airline of the Year in 2012 (AirAsia, 2015b).

AirAsia rating

AirAsia’s performance over time could be assessed to evaluate the journey towards the attainment of business excellence. In this case, rating the company’s excellence features by assuming the role of the SPRING Singapore Business Excellence assessor would validate the performance of AirAsia.

S/n Requirements 5 4 3 2 1 Comments/
Reasons for Rating
1 The company’s management team employs different tactics to ensure sustainability and growth in the firm. The various awards to the CEO, Tony Fernandes, depict the strength of the management team.
2 Senior leaders develop the organization’s values that focus on customers. The leadership team values are affordable and quality services to the customers.
3 The organization demonstrates and reinforces commitment to customers. Maintains benchmarking processes that gauge the customers’ experiences
4 The organization adopts customer-focused policies and practices that support values. Reinforcement of the privacy policy and maintaining quality relations with customers
5 The organization has strategies that focus on customers. Widens the scope of operations to fulfill the needs of its customers globally Additionally, the car rental and hotel services show to focus on fulfilling the diverse needs of the customers.
6 The organization develops criteria for selecting comparative and benchmarking information to improve customer experience. Customers’ ratings and aviation industry comparisons have been considered essential for fostering efficiency.
7 Organisation uses the available comparative information to improve customer experience. Capitalizes on the weaknesses of other competitors in the industry
8 The organization has initiatives and plans in place to improve the quality and efficiency of its processes, products, and services. Besides online booking, online shopping, and banking services like the alliance with Public Bank.
9 The organization monitors its day-to-day activities and performance via different tools. Conducts regular assessment of its organizational processes
10 The organization has proactive initiatives and plans in place to deal with strengths, weaknesses, and competition. Maximizes its strengths and opportunities by addressing the weaknesses and threats
Rating Total 45 The 90% rating depicts AirAsia’s continued efforts towards becoming the leading airline company even after dominating the low-cost airline category.
Percentage Total (Ratings Total x 2) __90___%
Ratings:5 – Excellent 4 – Very Likely 3 – Likely 2 – Sometimes 1 – Unlikely

(Indicate EACH STATEMENT with a rating of 5-to-1 using * or ✓)
(Add all ratings from the 10 statements to get Rating Total, out of 50 points)

Table 1: AirAsia’s rating.

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The PDCA cycle

Continuous improvement of the various operational processes at AirAsia is vital for the attainment of exemplary business excellence. The Deming’s Cycle represented by the Plan-Do-Check-Act (PDCA) is a critical tool that facilitates organisational improved operational performance as one of the three elements of performance excellence (Gupta, 2006). Thus, the CEO’s request for the description and the creation of a PDCA factsheet would be strategic for attaining greater business excellence at AirAsia.

Description of the PDCA cycle

The PDCA cycle acts as a model that incorporates four steps necessary for the attainment of desirable change that enhances the performance or excellence of an organization (Barbot et al., 2008). The model’s four-step cycle involves the plan, do, check, and act repetitive procedures that the management incorporates in the organization’s operations. The model likens the PDCA to a circle that does not have an end and thus it requires constant repetition to achieve continuous improvement. Further, the PDCA model can be applied in various organizational settings globally (Gupta, 2006).

The PDCA factsheet

The PDCA factsheet provides valuable information regarding the operational excellence aspects of integrating the initiative at AirAsia. The PDCA process should be adopted when an organization purposes to make changes or solve a particular problem.

Walter Shewart was the original creator of the PDCA cycle in the 1930s. Later, in the 1950s, W. Edwards Deming adopted and developed the model before promoting its implementation for the realization of continued change towards improved performance (Gupta, 2006). The applicability of the PDCA cycle depicts its essence in various business processes that include process improvements, project control, quality management, performance management, and organizational competitiveness (Evans, 2013). In this essence, the model could be applied in the processes at AirAsia since it would add value to its business excellence journey.

The PDCA could be used in different situations that include the following. The PDCA could be implemented when continuous improvement is necessary. The usefulness of the PDCA applied during the initiation of a new improvement project. Additionally, it could be used when there is a need to define a repetitive operational process. Further, when planning data collection and analysis for problem prioritization and verification, the PDCA model could be applied (Tapping, Posegay, & Williams, 2008).

Phases of the PDCA cycle

Plan

The plan is formulated by envisioning what needs to be achieved, the timeframe, and the resources required to accomplish the goal. The planning element of the PDCA cycle requires the identification, analysis, and definition of the improvement or problem. The success of the plan is highly influenced by the incorporation of the Cause & Effect, 7 QC Tools, and 5 Why models. The essentials of the planning aspect require the setting of measurable goals and the development of solutions and actions (Gupta, 2006).

Do

This phase of the PDCA cycle involves the implementation of the plan developed in the previous step of the performance improvement process (Tapping et al., 2008). The success of the implementation depends on the efficient embedment of the solutions or performance improvement strategies at AirAsia.

Check

The check phase of Deming’s cycle evaluates the results of the implementation process. Data collection and analysis fosters the checking process whereby, the evaluation of the implemented activities validates the organization’s strategies (Gupta, 2006).

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Act

This phase entails acting on the results that record the organization’s improved operational performance. Planning the action for goal achievement is requisite at this stage to provide the operations’ improvement aspect with a sense of direction. The action requires the standardization of the solutions to achieve maximum results. Achieving the continuity of the cycle necessitates planning for further improvement of the operational processes (Tapping et al., 2008).

The benefits of adopting the PDCA cycle

The model of operations excellence is easy to use due to its simplicity implying that its adoption into the operations systems is highly compatible with most organizational structures. The PDCA cycle is useful since its “thinking perspective” provides a new approach for continuous improvement (Evans, 2013). The comprehensiveness of the improvement strategy is facilitated by the model’s ability to link all the relevant stages together in a simplified process.

The flexibility aspect of Deming’s cycle facilitates easy adaptation to various circumstances that require performance excellence. Engagement at the organizational setting improves since the continuous nature of the cycle fosters teamwork, thus resulting in meaningful and productive interactions. The inexpensive attribute of the tool enhances cost-efficiency since it is a team-focused exercise (Tapping et al., 2008).

Ensuring a functional PDCA system

An active PDCA system should always embrace a cross-functional team that creates synergy in the repetitive steps. A simple process needs development for smooth implementation, and the organization should stick to it to attain substantial results. Assumptions should be avoided since the robustness of the PDCA is subject to the information collected, thus implying that every aspect requires attention. The visualization of the data and information used is vital for goal-oriented actions. Since the action phase is the most problematic, either following up on the results by taking necessary actions or cascading the solutions across the organization is essential.

Application of the PDCA cycle at AirAsia

Based on the self-assessment results, Deming’s model of improving operational excellence could be applied to achieve better performance in the competitive air travel industry. In any case, even though AirAsia streamlined authoritative capacities permitted administrators to perform different roles inside of a straightforward and level hierarchical structure, it may trade off AirAsia’s profitability later on as the company expands.

For instance, with a specific end goal to upkeep that seeks the consistent execution of Internet bookings and wholesalers, AirAsia would require a considerable number of specialized experts. Performing numerous parts may bring down the proficiency and viability of such workers that are excessively theoretical in occupational scope and not sufficiently concentrated. Likewise, as AirAsia grows, its basic and level hierarchical structure could result in shallow choice-making; negatively influencing the carrier’s profitability.

In this regard, the organizational structure requires the deployment of the PDCA model is the customer-focused policy formulation and implementation. Therefore, AirAsia could adopt the PDCA model in reinforcing the development of customer-focused policies and exercises that uphold the company’s values.

The second business excellence aspect that could employ the PDCA cycle is the daily operations and monitoring processes at AirAsia. Furthermore, the essence of the model could be put into practicability at AirAsia to boost daily monitoring of the operations and general organizational performance.

The reason for selecting the two areas for the deployment of the system in the operations of the processes is due to the vast benefits that would guide the business excellence journey of the reputable low-cost airline company (Lawton & Solomko, 2005). Adopting a system that allows continued development of customer-oriented policies and practices would be essential since the operations of the aviation industry player will always focus on formulating policies that fulfill the ever-increasing needs of the customers in over 100 global destinations.

The integration of the PDCA cycle would ensure that the leadership team would always engage in activities that seek the formulation of policies that seek to improve both the operational and business excellence of the company. Thus, constant decision-making processes would ensure that the leadership team engages the workforce in developing policies that provide solutions to the problems faced by the player.

Further, the PDCA cycle would foster the creation of a culture that upholds certain values and practices that are essential for reinforcing the organizational culture. Nonetheless, the reason for incorporating Deming’s cycle at Air Asia is that the core competencies of the company would experience improvement continuously resulting in greater excellence of the company’s operations management. Moreover, the continuity of the PDCA cycle would facilitate the realization of a management system that regularly plans, implements, evaluates, and acts on the results of the evaluation to fortify the performance of the organization.

The alignment of the PDCA model in tracking the daily activities and overall performance of the processes would ensure that the loopholes or gaps in the operations processes are filled promptly. In this case, the interdependent processes in the financial, supply chain, customer relations, employee motivation, and other relevant processes would experience streamlined operations that guide the organization towards elevated performance in the business excellence journey at AirAsia. Therefore, continued monitoring of the various processes at AirAsia would result in greater efficiency of its operations since the solutions to emerging challenges would be implemented promptly to allow room for streamlined and efficient operations.

Barriers to AirAsia’s business excellence journey

Embarking on the business excellence journey should be approached with the knowledge that certain hurdles could undermine a steady course towards the envisioned destination (Evans, 2013). In this case, several barriers would lead to the failure of the mechanisms formulated to improve the performance of the operational, business, and customer processes at AirAsia.

AirAsia’s journey towards the attainment of greater operational excellence could be inhibited by the lack of maintenance, repair, and overhaul facility (MRO). In this respect, the operational costs could hike shortly due to its intentions of embarking on an expansion of its fleet. In this line of thought, AirAsia subjects itself to competitive disadvantage given that the fleet of over 100 planes that is growing needs regular maintenance to ensure the delivery of quality services that translate to business, operational, and service excellence (Evans, 2013).

Inadequate granular information would also pose threats to the success of a business excellence journey (Francis, Humphreys, & Fry, 2005). For instance, the financial systems at the low-cost carrier could only integrate revenues and costs into classifications that suit financial reporting, but not adequately granular for active operations management. Thus, lacking information about the unknown yet vital issues would undermine the business success journey.

Increased complaints from AirAsia’s customers regarding their services could also hinder the growth of the low-cost airline company. For example, continued customer dissatisfaction regarding the issue of delays has tarnished the image of the organization thereby, undermining its excellent performance. Additionally, the inefficient processes regarding changing of flights and refunds should be improved for better customer management and service (Saha & Theingi, 2009).

Recommendation of activities that enhances business excellence based on the Customer criterion

The delivery of standard services to the clientele aspect of business operations requires streamlined activities that uphold efficiency. In this case, AirAsia could consider several activities that would improve customer satisfaction concerning the customer criterion elements of the business excellence framework. The table below illustrates the recommendations applicable at AirAsia.

Item in
Customer
Criterion
Area to Address Critical Activity
Leadership The creation of organizational culture values amongst the workforce at AirAsia. AirAsia ought to implement quality management tools that ensure the satisfaction of all its customers regardless of their income levels. Further, a transformational leadership style that instills the values requisite for quality service delivery whereby, the identified customer needs are considered.
Information The benchmarking and comparative aspects of customer experiences and responses should be considered. Data collection and analysis should be intensified to lay a foundation for evaluating the implications of the airline’s practices towards fulfilling the needs of the customers.
Additionally, benchmarking processes should not inconvenience the customer experiences to acquire relevant information for products and services improvement. Online platforms could also be used for post-travel responses at the customers’ convenience.
Processes Check-in/bag drop, in-flight services, farewell, and baggage pick-up The reduction of time spent in check-in and processes is essential. In-flight services like entertainment and shopping should be convenient and standardized.

Table 2: Recommended critical activities.

Since the customers’ criterion highly regards the requirements, relationships, and satisfaction, the low-cost airline player should focus its business excellence journey on the key aspects. Therefore, the definition and segmentation of the crucial customer cohorts and markets are strategic in this case. For this reason, the leadership issue needs to facilitate the communication of messages that define the key competencies that the company needs to uphold for the delivery of quality services. Similarly, the information aspect should embrace the voice of the customer (VOC) to understand and respond to their needs.

Further, the operational processes at AirAsia should create connections amongst the VOC, production, and delivery of services to attain customer satisfaction. In summary, customer service should be the focus of any company and thus the company’s management team should focus on this aspect.

References

AirAsia: About Us. (2015a). Web.

AirAsia: Achievements. (2015b). Web.

Barbot, C., Costa, A., & Sochirca, E. (2008). Airlines performance in the new market context: A comparative productivity and efficiency analysis. Journal of Air Transport Management, 14(5), 270-274.

Eriksson, S., & Steenhuis, H. J. (2015). The Global Commercial Aviation Industry. New York, NY: Routledge.

Evans, J. R. (2013). Quality & Performance Excellence. Cincinnati, OH: South-Western College Pub.

Francis, G., Humphreys, I., & Fry, J. (2005). The nature and prevalence of the use of performance measurement techniques by airlines. Journal of Air Transport Management, 11(4), 207-217.

Francis, G., Humphreys, I., Ison, S., & Aicken, M. (2006). Where next for low cost airlines? A spatial and temporal comparative study. Journal of Transport Geography, 14(2), 83-94.

Gupta, P. (2006). Beyond PDCA-A new process management model. Quality progress, 39(7), 45.

Heracleous, L., Wirtz, J., & Pangarkar, N. (2005). Flying High in a Competitive Industry: Cost-Effective Service Excellence at Singapore Airlines. New York, NY: McGraw-Hill Education.

Lawton, T. C., & Solomko, S. (2005). When being the lowest cost is not enough: Building a successful low-fare airline business model in Asia. Journal of Air Transport Management, 11(6), 355-362.

Saha, G. C., & Theingi. (2009). Service quality, satisfaction, and behavioural intentions: A study of low-cost airline carriers in Thailand. Managing Service Quality: An International Journal, 19(3), 350-372.

Tapping, D., Posegay, B., & Williams, J. (2008). The Simply Lean Pocket Guide – Making Great Organisations Better Through PLAN-DO-CHECK-ACT (PDCA) Kaizen Activities. Chelsea, MI: MCS Media, Inc.

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