Air Asia's Readiness For The Covid-19 Endemic Phase

AHMAD SIDDIQ BIN JOHAN

A180834

Email: A180834@siswa.ukm.edu.my

ABSTRACT
The low-cost airline Air Asia Berhad is well-known, and its headquarters are in
Kuala Lumpur, Malaysia. In terms of fleet size and destinations, it is Malaysia's
biggest airline. For the last 11 years, Skytrax has awarded it the finest low-cost
airline in the world. In reality, a low-cost strategy aids the organization in making
a profit. However, because to the Covid-19 outbreak, Air Asia Berhad's income
has dropped dramatically in 2020. The Covid-19 epidemic started spreading in
Malaysia in the latter week of January 2020, and the pandemic is still affecting the
whole planet at this time. Coronavirus is also another name for the virus, which
may be communicated by the air through close contact. Due to the Covid-19
epidemic, the number of passengers transported has reduced by 74% from January
to December 2020 compared to January to December 2019, implying lower
revenue production. Furthermore, a large number of employees have been laid off.
The specific goal of this study is to establish Air Asia's preparedness during the
Covid-19 endemic period.

[Keywords: Air Asia; Tourism; ASEAN Countries ; Pandemic; Survival]

INTRODUCTION
AirAsia was founded in 1996 as a full-service regional airline with somewhat lower rates
than Malaysia Airlines, its major competitor. Air Asia was founded in Malaysia for one
ringgit, with the debt-ridden corporation being acquired by the government in order to turn it
into a commercial carrier to meet the growing need for tourist promotion. The airline
positioned itself successfully as a no-frills airline, with a marketing image of a low-cost.
AirAsia is a low-cost airline that began operations with the tagline "Now everyone can fly"
(Ming, 2018). As an independent organization in ASEAN nations, it extended out in the
neighborhood. Prior to 2001, AirAsia was unable to either excite the market or draw enough
passengers from Malaysia Airlines to create its own niche market. AirAsia's turnaround
occurred in 2001, when it was up for sale and purchased by Tony Fernandes. After that, Tony
Fernandes enlisted the help of certain low-cost airline professionals to revamp AirAsia's
business strategy. He invited Ryanair's former director of group operations, Connor
McCarthy, to join the executive team. AirAsia was re-launched as a low-fare, low-cost
domestic airline in Malaysia in late 2001 as a fashionable, no-frills business with three B737
aircraft (Habib 2010). Skytrax has named AirAsia the best low-cost airline in the world 11
times, the most recent honor being in 2019. (Chung, 2019).

MAIN ISSUE & CENTRAL IDEA STATEMENT

This study will look at Air Asia's survivability and readiness when COVID 19 enters its
endemic phase. The data will demonstrate how AirAsia dealt with obstacles during the
epidemic and how it overcame them. This study emphasized the difficulties that AirAsia
faces, such as flight cancellations, decreased demand, the loss of new consumers, and paying
large refunds. Controlling operating costs, finding new business, running promotions,
requesting for bank financing, and assessing ideas were all methods utilized by AirAsia. As a
consequence, AirAsia's financial troubles would be handled by lowering operating expenses
and raising earnings from other operations.

PROBLEM STATEMENT
Due to the Covid 19 epidemic, AirAsia has sustained significant losses, and its performance
has worsened significantly in recent months compared to the same time previous year. The
Covid 19 worldwide epidemic, which has crippled international airlines and travel
throughout the globe, has been identified as one of the most significant difficulties
confronting AirAsia at the present. Many airlines are declaring bankruptcy throughout the
globe. Strict travel controls, social distancing measures, and broad quarantines have all had a
detrimental impact on tourism, resulting in this airline firm experiencing significant losses.
Despite the relaxation of travel restrictions in certain nations, demand for air travel services
continues to decline. As a result, firms like AirAsia have had to adjust to the new
international travel standards. The airline industry's future is grim, and it is now critical for
AirAsia to do all possible to guarantee that it can continue to operate in such difficult
conditions. Due to the new criteria and restrictions put on the air travel sector, doing business
in such an environment is very difficult for AirAsia. A corporation like AirAsia's major
emphasis would be on determining the risk level of each passenger.

METHODOLOGY
The research approach employed in this study to tackle the issue linked to our research
subjects is explained in this part. I employed quantitative and qualitative methodologies to
easily achieve the goal and get the answer to our study topic of how AirAsia survived the
Covid-19 epidemic. There is a mix of primary and secondary data utilized. The study uses
both primary and secondary data to address the research questions. The main data was
collected via an online survey form that was delivered to the respondents. A set of
respondents with prior experience utilizing AirAsia airline services formed the sample
population. They were essentially from separate demographics services. We utilized a
Google form to conduct an online poll, which received 100 responses.

We also use a BPM Tree to conduct this research. This metaphor conveys a nutritional
message that businesses should manage the fruit (performance) by using BPM with
exploration and exploitation impacts. The "tree" represents BPM ambidexterity, which must
be properly balanced in order to achieve corporate Air Asia's objectives and business models.
Exploitation entails gradually enhancing the "tree," while exploration entails a more
fundamental overhaul. Over time, gradual and drastic adjustments will usually balance each
other out. According to contingency theory (Niehaves et al., 2014; van Looy & van den
Bergh, 2018), the "roots" represent the business environment in which businesses function.
The "branches" represent the actions needed by the various CSF groupings. The "leaves"
represent the BPM-related CSFs' intermediate results. CSFs' "fruit" represents process
performance at the end. As a consequence, as predicted by RVB (Barney, 1991) and
knowledge-based theory (Cegarra-Sánchez et al., 2020; Trkman & Desouza, 2012), the
findings are "fruits" of the "tree."
FIGURE 1 The “Business Process Management Tree”: an ambidexterity metaphor

FINDINGS ANALYSIS & DISCUSSION

Table 1. Summary of How AirAsia Survive During the Pandemic (N=100)
Table 1 reveals that most respondents (80%) think AirAsia's low-cost approach is simpler
than other airlines. This not only saves money but also helps firms run more effectively. They
generate efficiency to save money and keep their fares cheap. This sets AirAsia apart from
other carriers. Customers like AirAsia because it is a low-cost carrier (Ong & Tan, 2010).
The airline has a strong leadership team and is well-known throughout Asia Pacific,
according to 70% of respondents (catatanraufmendunia, 2009). Employees must follow the
company's safety policies, which is one of their annual KPIs (Irdina et al., 2020). Therefore,
customers trust AirAsia to give a safe and technologically superior service before the
epidemic. Also, previous to the pandemic, more individuals inclined to go abroad for work or
vacation, according to 85% of respondents (Alrawi, 2020). Most customers prefer AirAsia
for its brand recognition and low-cost strategy. So, they are in high demand before the
pandemic. During the epidemic, most respondents (59%) felt AirAsia could provide a
reliable and technologically advanced service. This is likely owing to AirAsia's strict health
and hygiene policies, as well as all precautions taken to ensure every passenger's safety and
enjoyment. AirAsia also consults with authorities, local governments, and health groups, like
the WHO (WHO). Thus, travelers have more trust in the system (AirAsia.com, 2020). People
still want to fly, therefore AirAsia has domestic demand during the outbreak. Moreover, most
respondents agreed, citing the fact that some people still require aircraft for work or other
reasons. As a consequence, respondents expect that AirAsia will sustain domestic demand
even if the pandemic causes significant customer losses.

RECOMENDATION
Given the current state of uncertainty, AirAsia's future plan would be to diversify its
activities to a greater extent because AirAsia wanted to build 100 more Santan eateries
(Minter, 2020). According to statistics, AirAsia wants to lower its flying passenger rate from
80% to 40% by 2025. (Minter, 2020). In addition, AirAsia's in-flight meal brand is projected
to generate 10% to 15% of the company's income (Yusof, 2020). AirAsia's restaurant, which
serves in-flight meals, intends to expand its operations in Malaysia and throughout the globe
(Hosie, 2020). According to Datuk Alexander Nanta Linggi, Minister of Domestic Trade and
Consumer Affairs, demand for Santan has continued to rise. Moreover, according to
Catherine Goh, general manager of Santan Restaurant and T&CO Café, 65 new locations will
open by 2021 and over 100 by the first quarter (Q1) of 2022. Santan stores will also be
launched on worldwide platforms, such as in China, the United Kingdom, Australia, and the
Philippines, according to their plans (The Malaysian Reserve, 2020). The execution of these
extensions, however, would be contingent on the pandemic, and this is a strong suggestion
for AirAsia.

CONCLUSION
Due to Covid-19, AirAsia had to lay off nearly 10% of its 24000 staff. Furthermore, most
flights had to be rescheduled or canceled. Stewardesses and stewards, for example, were
unable to work from home. As a result, salary costs may be reduced. After the outbreak,
AirAsia guaranteed that the staff will be employed back. Profits are critical for overcoming
problems after lowering operating costs. AirAsia can only concentrate on other business
avenues to enhance profits, such as fast-food restaurants, ecommerce platforms, Big-Pay, and
cross-border package delivery.

Despite the fact that AirAsia ran many discounts and packages before to the epidemic, such
as flight redemption, go vacation packages, free seats, and unlimited pass sales, these
promotions and packages were ineffective during the pandemic. To catch customers'
attention, AirAsia launched new specials and packages such as a 50% discount for returning
tickets, discounts for early reservations, lowered pricing for flights to foreign countries, and
zero-fare seats for domestic flights. Focusing on loss minimization rather than profit
maximization may aid airlines in combating the present predicament (Agrawal, 2020). As a
result, consumers who desire to fly will more than likely select AirAsia as their first option.
These initiatives may assist AirAsia in increasing brand recognition and value among
consumers who do not fly.

In addition, AirAsia intends to (Loh, 2021). It's an excellent method for dealing with Covid-
19's affects. People increasingly choose to utilize e-hailing since it is conveniently accessible
through mobile apps and provides them with a variety of possibilities. As a result, if these
tactics are adopted effectively in the future, they may be advantageous in a variety of ways.
Finally, it can be concluded that AirAsia is innovative and inventive when it comes to
overcoming obstacles and addressing issues.

REFERENCES
Organisations and Management (2010), compiled by Mohshin Habib, Swinburne
University of Technology. Pearson Australia Custom Publication Peng Mike W, 2006,
Global Strategy, Thompson, United States

Mohd Satar, N. S., Morshidi, A. H., & Dastane, O. (2020). Success Factors for
eLearning Satisfaction during COVID-19 Pandemic Lockdown. International Journal of
Advanced Trends in Computer Science and Engineering, ISSN, 2278- 3091.

Mohammed, B. H., Safie, N., Sallehuddin, H., & Hussain, A. H. B. (2020). Building
Information Modelling (BIM) and the Internet-of-Things (IoT): A Systematic Mapping Study.
IEEE Access, 8, 155171-155183.

Anaam, E. A., Abu Bakar, K. A., Mohd Satar, N. S., & Ma’arif, M. Y. (2020).
Investigating the Electronic Customer Relationship Management Success Key Factors in the
Telecommunication Companies: A Pilot Study. Journal of Computational and Theoretical
Nanoscience, 17(2-3), 1460-1463.

Mohd Satar, N. S., Dastane, O., & Ma’arif, M. Y. (2019). Customer value proposition
for E-Commerce: A case study approach. International Journal of Advanced Computer
Science and Applications, 10(2).

Kayali, M. H., Safie, N., & Mukhtar, M. (2016). Adoption of cloud based Elearning: a
systematic literature review of adoption factors and theories. J. Eng. Appl. Sci, 11(8), 1839-
1845.
 Sallehudin, H., Satar, N. S. M., Bakar, N. A. A., Baker, R., Yahya, F., & Fadzil, A. F.
M. Modelling the Enterprise Architecture Implementation in the Public Sector using HOT-Fit
Framework

Ma’arif, M. Y., & Satar, N. S. M. (2018). ERP training mechanism for upskilling
users and optimization of ERP system. Advanced Science Letters, 24(4), 2908- 2912.

Satar, S., & Morshidi, A. (2007). An Evaluation of Cultural Roles and Usability
Attributes in Learning Management System. Faculty of Information Technology and
Multimedia Communication, Open University Malaysia.

Motahar, S. M., Mukhtar, M., Mohd Satar, N. S., Ma’arif, M. Y., & Mostafavi, S.
(2018). Towards a product independent ERP training model: An Insight from a literature
review. Available at SSRN 3786560.

Ma’arif, D., Yusnorizam, M., Mohd Satar, N. S., Singh, D. S. V., & Motahar, S. M.
(2019). A mediating effect on ERP KM model for the performance of oil and gas sector in
Klang Valley: a preliminary study. International Journal of Advanced Trends in Computer
Science and Engineering, 8(1.4).

Shahar, S. M., Satar, N. S. M., & Bakar, K. A. A. (2019). Exploring Service Quality
Dimensions of IT Shared Services in Malaysian Public Sector. International Journal of
Advanced Trends in Computer Science and Engineering (IJATCSE), 8(1.4), 97-104.

Ming, J. (2018). AirAsia- “Now everyone can fly”. Retrieved from:

https://modernbuyerbehaviour.wordpress.com/2018/03/02/airasia-noweveryone-can-fly/

Chung, C. (2019, June 19). AirAsia crowned world’s best again. Retrieved from
https://www.thestar.com.my/news/nation/2019/06/19/airasia-crowned-worlds-bestagain

Ong, W. L., & Tan, A. K. G. (2010). A note on the determinants of airline choice: The
case of AirAsia and Malaysia Airlines. Journal of Air Transport Management, 16(4), 209-212.

catatanraufmendunia. (2009, Aug 31). The AirAsia company strategic management:

How AirAsia can be a leader in the lowest cost carrier in the airplane industry [Web log post].
Retrieved from https://itsaboutmymot.wordpress.com/2009/08/31/theairasia-company-
strategic-management-%E2%80%9C-how-airasia-can-be-aleader-in-the-lowest-cost-carrier-
in-the-airplane-industry%E2%80%9D/

Irdina., Kee, D. M. H., Reddy, V., Izzati, Z., Sri, K., Perez, M. G., . . . Pandey, R.
(2020). AirAsia’s efforts in maintaining good workplace environment for its employees
during Covid-19. International Journal of Tourism and Hospitality in Asia Pasific, 3(3), 22-
32.

Alrawi, M. (2020, August 27). AirAsia’s Tony Fernandes: We will come out of
pandemic much stronger than before. Retrieved from
https://www.thenationalnews.com/business/aviation/airasia-s-tony-fernandes-wewill-come-
out-of-pandemic-much-stronger-than-before-1.1068855

Reddy, S., P V, R., Lim, Y., Mui Hung Kee, D., Ting Loo, W., Tyng Cheah, K. and
Yee Mak, S., 2021. The Survival of Airasia During the Covid-19 Pandemic. Minden: CMS
Business School, p.14.

WHO. 1991. Guidelines for the Assessment of Herbal Medicines. Geneva: World
Health Organization.

Agrawal, A. (2020). Sustainability of airlines in India with Covid-19: Challenges

ahead
and possible way-outs. Journal of Revenue and Pricing Management, 1-16.
doi:10.1057/s41272-020-00257-z

Loh. (2021, March 28). Tony Fernandes confirms airasia’s move into e-hailing
business.
Retrieved from https://www.lowyat.net/2021/235977/tony-fernandes-confirmsairasias-move-
into-e-hailing-business/

Nair, R., Ganatra, V., Kaur, K., Mui Hung Kee, D., Teng Khoo, W., Ying Khor, S.,
Rao, K. and Mahajan, J., 2021. Analysis of Strategies Implemented by AirAsia to Cater to the
Covid-19 Effects. Pulau Pinang: Universiti Sains Malaysia, p.18.

Minter, A. (2020). Comment: Will ‘Asean airplane food’ restaurants take off?
Retrieved
from https://www.thestar.com.my/news/focus/2020/01/05/comment-will-aseanairplane-food-
restaurants-take-off

Yusof, A. (2020, April 6). Khazanah committed to support Malaysia Airlines.

Retrieved
from https://www.nst.com.my/business/2020/04/581692/khazanahcommittedsupport-
malaysia-airlines

Hosie, R. (2020, October 5). AirAsia is rolling out restaurants serving its in-flight food
across the world. Retrieved from https://www.insider.com/airasia-announcesglobal-
expansion-of stores-serving-in-flight-food-2020-10

The Malaysian Reserve (2020) AirAsia’s Santan to open outlets in China, London.
Retrieved from https://themalaysianreserve.com/2020/12/07/airasias-santan-toopen-outlets-in-
china-london/
 We are travel REDy Mission Accomplished: AirAsia Philippines COVID-19
Vaccination Campaign — airasia newsroom. (2021, August 31). airasia newsroom. Retrieved
October 25, 2021, from airasia newsroom website:
https://newsroom.airasia.com/news/2021/8/31/we-are-travel-redy-mission-accomplished-
airasia-philippines-covid-19-vaccination-campaign

Niehaves, B., Poeppelbuss, J., Plattfaut, R., & Becker, J. (2014). BPM capability
development—A matter of contingencies. Business Process Management Journal, 20(1), 90–
106

van Looy, A., & van den Bergh, J. (2018). The effect of organization size and sector
on adopting business process management. Business & Information Systems Engineering,
60(6), 479–491.

Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of

Management, 17(1), 99–120

Cegarra-Sánchez, J., Cegarra-Navarro, J. G., Chinnaswamy, A., & Wensley, A.

(2020). Exploitation and exploration of knowledge: An ambidextrous context for the
successful adoption of telemedicine technologies. Technological Forecasting and Social
Change, 157, 120089. https://doi.org/10.1016/j.techfore.2020.120089

Trkman, P., & Desouza, K. C. (2012). Knowledge risks in organizational networks:

An explorative framework. Journal of Strategic Information Systems, 21, 1–17

APPENDIX

Figure 2: Air Asia’s value for valuing employees mental and physical health during the
pandemic