Flower of service in airline industry – Case analysis of the low cost airline, Air Asia

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Table of contents

1. Background of Air Asia 2
2. Discussions 2
2.1 The flower of service model 2
2.2 Application of the flower of service model in Air Asia 3
2.2.1 Facilitating services 3
2.2.1.1 Information service 3
2.2.1.2 Order taking service 4
2.2.1.3 Billing service 5
2.2.1.4 Payment service 6
2.2.2 Enhancing services 7
2.2.2.1 Service of Consultation 7
2.2.2.2 Service of Hospitality 7
2.2.2.3 Service of Safekeeping 8
2.2.2.4 Service of Exceptions 8
3. Summary and identification of the challenges 9
3.1 Summary 9
3.2 Challenges 9
3.2.1 Inconvenience in issuing invoice 9
3.2.2 Instability in the online booking systems 10
4. Recommendations 10

Flower of service in airline industry
Case analysis of the low cost airline, Air Asia

1. Background of Air Asia

Air Asia is a famous low cost airline with special feature in its product service; it provides great benefits to many customers by making “everyone can fly”. This paper will focus on the quality of the service using the flower of service model.

2. Discussions

2.1 The flower of service model

Figure 1.0 The flower of service model
Source: Lovelock, C. and Wright, L. 2001. Principles of service marketing and management. second edn. Upper Saddle River, New Jersey: Prentice Hall, p 143.
The concept of the flower of service proposes a model in which the core product is surrounded by a cluster of supplementary services which are either facilitating services or enhancing services. The model of Flower of Service, according to Arthur A. Thompson, A. J. Strickland, Tracy Robertson Kramer (1997, p 208), offers both researchers and companies a method of apprehending and disaggregating the series of supplementary services that enhance and increase the perceived value of the core product.

2.2 Application of the flower of service model in Air Asia

2.2.1 Facilitating services

2.2.1.1 Information service

In the consumer decision making process, information finding and gathering is of great significance (Cant, Strydom & Jooste 2006, p 294). In Air Asia, the company use several ways to inform and educate the customers about the product services of the company. The first way is through the email system. Because Air Asia has a large number of customers and many of them are members of Air Asia, also many of the members are willing to tick the option to agree to receive the email notice from the company to inform them about the most updated promotion information that is coming. The second way is through the advertisements that the company provides by its own or source through other advertising companies. The company itself has three major ways of channel of making its own advertising services: in-flight advertisements such as video, magazine, painting inside and outside the aircraft’s, website and email. Through these ways, customers will obtain enough of information and news about the company and also the most recent promotion information in order to attract them to buy the tickets.

2.2.1.2 Order taking service

Order taking service refers to the process of reservation or purchasing behaviors which could involves a transfer of ownership (Peerenboom 1993). In the case of Air Asia, its customers would have four major channels to make their orders and pass to the system to process before they can receive the e-tickets from the system. The first channel is through online booking which is the recommended way by the company because it does not need employees to take orders which will increase the operating cost. The online booking could be done via personal computer or mobile phone which is very convenient to the customers. The second channel through which customers could easily book their tickets is through the dealers who would charge additional service fee by helping the customers to book tickets. But the use of this channel is limited by the company as we can see that there are very few official business partners to sell the Air Asia ticket because of the company’s wish to provide the customers with low fare and tries to remove the intermediate processes. The third channel is via counters which could be in the services counter (such as the one in KL central) and in the airports where the Air Asia flight route network covers. The fourth channel is via telephone which is operated by an outsourcing call center. Regarding the call center, the company provides two types of lines: normal hot line and premium hot line as we can see from the figure below. The differences between the premium hot line and the normal service line is that the customers’ call will be picked up by premium line agents without waiting too much time like the normal service lines. The telephone line order taking system again shows that the company has a positioning of low cost.

Figure 2.0 The premium customer service hot line offered in Malaysia
Source: airasia.com 2011

2.2.1.3 Billing service

To save up cost, Air Asia does not issue paper tickets to customers who book online or by mobile phone; hence most customers would need to print out the E-itinerary which would be sent to their email once the payment has been confirmed. What is more, invoice will only be stated in the last page of the itinerary without any chop. And even the customers may request for an official invoice with company’s stamp, the airline would not agree.

2.2.1.4 Payment service

The payment service is important to any residential aviation service providers due to the large number of online and offline transactions among which many are done within a short period of time, and in Air Asia, it provides several major payment methods and services. The first payment method which is the most frequently used and is also encouraged by the company to used by the customers is the direct debit. Due to the transaction fee charges, as a low cost airline, Air Asia strongly recommends its customers use the payment method of direct debit. For example, payment in Malaysia Ringgit (MYR) would be able to be made using many local banks such as RHB and Maybank. The second payment method is credit card which is also used widely because many currencies are still not supported by Air Asia and the local banks. The third payment method is by cash which is usually used by dealers and in the counter because card transactions take time to confirm. A fourth payment method is equal to a direct debit which is through cooperation with the third party payment service providers such as Alipay and Paypal (widely used among the Australia customers).

2.2.2 Enhancing services

2.2.2.1 Service of Consultation

Consultation service could be defined as “that the consultant works with the consultees as clients in problem identification, problem analysis, treatment design and implementation, and treatment evaluation (Weiner, Freedheim, Reynolds, Schinka, Miller & Velicer 2003, p 436). In Air Asia, there is little consultation service provided to the customers, and it seems that the company is more willing to engage in the automation of all the service to save costs.

2.2.2.2 Service of Hospitality

Hospitality could easily make customers feel that they are valued by the company. As a result, many service companies would require its employees in particular those who have face to face interaction with the customers to act more politely and more caring about the need of the customers. In Air Asia, hospitality is a must as we can see the smiles from the face of the stewardess. This also could be found in the corporate culture as the company encourage having fun while working among the employees because while staffs are having fund, they tend to be more polite than usual. And the key reason that the Air Asia would focus on the building of service hospitality is because smile does not cost a sen and a low cost air line would not let such service undeveloped.

2.2.2.3 Service of Safekeeping

The service of safekeeping involves the mission and work to be done to keep the customers rest assured and do not need to worry too much while enjoying product service. As a matter of fact, Air Asia by focusing too much on cost reduction has little flexibility to make the customers feeling safe. For example, if one may wants to change the flight within 48 hours before the departure time of the flight, his or her request for a flight change would be declined which is stated in the basic term and conditions. Also the term and conditions empower the company to change the flight any time without notifying the customers. Though the company usually will send out SMS and email, but many customers could have missed the information and hence in some cases customers would not feel safe at all by flying with Air Asia because uncertainties could happen and compensation will not be enough. In another aspect in which company has done a good job to make the customers feel safe and certainty is by keeping a very good flight time punctuality record of all its flights by efficient and effective operation management.

2.2.2.4 Service of Exceptions

Exceptions services are those services that are not usually offered to customers in normal cases. For Air Asia, exceptions are made rarely to avoid possible additional costs. Term and conditions seem to be the most powerful tool and reliance that the company uses to turn down the request for exceptions. But still there could be exceptional handling which could only be grated while higher management empowerment is obtained but such exceptional handlings are also rare.

3. Summary and identification of the challenges

3.1 Summary

There are two kinds of principles that the company adheres when providing such supplementary services to the customers together with the tickets. The first principle is low cost or cost control, this is closely linked with the company’s low cost positioning and it is understandable; the second principle is the maximization of process efficiency. Just like its planes, the company would focus on simplifying and enhance the efficiency of the operations and the relative processes to maximize the benefits and outputs.

3.2 Challenges

3.2.1 Inconvenience in issuing invoice

As mentioned above, even the customers may request for an official invoice with company’s stamp, the airline would not agree because of the strict policy to adhere to the cost saving principle. But this has increased the difficulties for some customers when they need such official invoice for a number of purposes such as claiming insurance or for reimbursement.

3.2.2 Instability in the online booking systems

Though the online booking system creates great convenience to both the company and the customers, it is reported that many wrong booked cases because of faulty of the booking system which happen frequently when there are promotion activities. Such instability in the online booking system will bring down the service quality perceived by the customers.

4. Recommendations

One solution to the inconvenience in issuing invoice is to provide an online application service for the customer to apply for the official invoice which could be a value added service, meaning to say that the customers would need to pay for paper based invoice with official chop on it. This has been in accordance with the company’s policy to stay low in operating expense and also will meet the need of the customers to obtain such documentations.
List of references

Airasia.com 2011. visited on 20 Nov 2011 Link: http://www.airasia.com/cn/en/contactus.html

Cant, M. C., Strydom, J. W. & Jooste, C. J. 2006, Marketing Management. 5th edition. Cape Town: Juta & Co. Ltd. p 294

Lovelock, C. and Wright, L. 2001. Principles of service marketing and management. second edn. Upper Saddle River, New Jersey: Prentice Hall, p 143

Peerenboom, R. P. 1993. Law and morality in ancient China: the silk manuscripts of Huang-Lao. New York: State University of New York Press.

Thompson, A. A., Strickland, A. J. & Kramer, T. R. 1997, Readings in strategic management. New York: McGraw-Hill Companies, Inc. p 208

Weiner, I. B., Freedheim, D. K., Reynolds, W. M., Schinka, J. A., Miller, G. E. & Velicer, W. F. 2003, Handbook of Psychology: Educational psychology. Hoboken, New Jersey: John Wiley & Sons. p 436