A TIME SERIES STUDY ON THE TRAVEL DEMAND PATTERN OF
THE TOURIST COMING INTO MALAYSIA FROM TAIPEI.
A CASE STUDY FOR AIR ASIA SDN. BHD.
A GRADUATION EXECISE SUBMITTED AS A PARTIAL
FULFILMENT OF THE BACHELOR OF BUSINESS
ADMINISTRATION (TRANSPORT)
BY:
AZIM FAIDZ BIN AZIZ ZAMAN
93525211
BACHELOR OF BUSINESS ADMINISTRATION
(TRANSPORT)
SCHOOL OF BUSINESS AND MANAGEMENT
MARA INSTITUTE OF TECHNOLOGY
SHAH ALAM, SELANGOR DARUL EHSAN
APRIL 1997
CONFIDENTIALITY
This fffahation cicrcisc is strictyfor acakmic jiurposcs
only. Thy art of the thesis work shall not he (^otei or taken
ont mikontyrior consent from the author ani authorities
concerned.
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ACKNOWLEDGEMENT
First ani foremost i wouU like to eiyress my greatest gratitude to my parents,
that have suyyort me through out the years that I have stuiiei here in i.T.M.
To my father ani mother, may Allah hless loth of you for the krdness, yatient,
love, QUihnce ani suyfort that you have ^iven to me. I wouU also like to
eiyress my^ratitide to my hother and. sisters who have hely me in making my
life much more hayyier ani easier.
My gratitude's also goes to Encik MohL Yusoffsukiman as my advisor for his
knhess ani especially hisjatient ani suyjjortive towards me while assisting me
in finishing this thesis. My special thanks ani appreciation to Vum Norliia my
former course tutor who have help me in continuing my stuiy. for the staff of
I.T.M. especially the lecturers of Bachelor Business Administration {Transport)
who have teach me the way to live in this modem word today hy giving me all
the information needed for the growth ofmanhini.
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I wouU also like to ^ive my special tkanh to Mr. Sarjit Sin^li tkat liave keljj
me in^ivin^ tke information tkat i neeM ani teackin^ me tke way around, tke
Air Asia company. My special tkanks also ^oes to En. nak,Captain
KaiWn
and also all tke fli^kt Operation Department and tke customer Senice
Department staff in assisting me infiniskin^ tkis tkesis.
last hut not least, my keartfelt gratitude to all my friends in i.T.M. wko kave
always hen leside me no matter kow lad tke situation and lets tkis friendskip
lasted for life, and not forgetting E.Y. wko kave motivated me tkrougk out tke
years in i.T.M. Tkad YOU.
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ABSTRACT
Air Asia is a new airline for Malaysia, an airline inspired Ij our Frime
Minister Dato' Sri Dr. Mahatkir Mohammai. As a new airline in tkis
region, many jfrohlems will ke faced kj tkis comyanj. Tkis tkesis will look
upon tke yroklems tkat air Asia are facing especially in tke passenger loaL
Bj looking at ike forecasted Ma from tke analysis tkat kave keen kne, a
clearer picture of tke fiture expectation of tke travelling kmaid pattern of
ike passengers can h made.
Tke main objective of tkis study is to look at tke reason and tke ways tkat
can kelp Air Asia to overcome tkeproklem of passenger load. Tkis ikesis will
look upon ike information of ike Ma tkat kave keen gatkerei from TDC
and MAB . Tke Ma tkat kave hen collected will ke analyse and converted
intoffrapk to give a clearer picture of ike sitmtion.
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x k methi used, in tkis stidy are tke Time scries forecasting metkoL Tkis
metkoi will look ujnon tke ckan^es of tke mmhr of jiassen^ers tkrou^k out
tke year hffmin^ 1991 until 1995. After tkat, a forecasted 5 year wiU
he ievelojff'om tke kta. By looking at tkese information, an etyectation of
tke Market skare can h citracteL Witli tlii5, the future tAarket skare
can h forecast for Mr Asia.
11
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TABLE OF CONTENTS
CONFIDENTIALITY
ACKNOWLEDLEMENT
ABSTRACT
i
TABLE OF CONTENTS
Hi
LIST OF TABLES
VI
LIST OF FIGURES
vil
LIST OF APPENDIXES
viU
ABBREVIATIONS
iX
CHAPTER ONE
1.0 BACKGROUND OF STUDY
1
1.1 INTRODUCTION
2
1.2 PROBLEM STATEMENTS
3
1.3 OVERVIEW OF AIR ASIA SDN. BHD.
5
1.3.1 COMPANY OBJECTIVES
6
1.3.2 ROUTES COVERAGE
7
1.3.3 ORGANISATION STRUCTURE
9
1.4 RESEARCH OBJECTIVES
10
1.5 LITERATURE REVIEW
11
1.6 SCOPE AND LIMITATIONS
12
1.7 METHODOLOGY
13
1.7.1 PRIMARY DATA
14
a) FORMAL AND INFORMAL INTERVIEWS
14
h) OBSERVATIONS
15
1.7.2 SECONDARY DATA
15
111
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CHAPTER TWO
2.0 BACKGROUND OF COMPANY
16
2.1 AIR ASIA BOARD OF DIRECTORS AND
MANAGEMENT TEAM
17
CHAPTER THREE
3.0 FINDINGS
21
3.1 AIR ASIA SERVICE SECTORS
21
3.2 AIR ASIA SERVICE CHARACTERISTIC
22
3.2.1 SAFETY
22
3.2.2 PUNCTUALITY
23
3.2.3 RELIABILITY
23
3.2.4 FREQUANCY
24
3.2.5 COMFORT
24
3.1 PASSENGER GROWTH
25
3.2 PASSENGER LOAD
28
33 THE PROBLEMS FACED BY AIR ASIA
30
3 A THE PROBLEMS FACED BY PASSENGERS
32
3.5 THE PASSENGERS CURRENT TRAVEL
DEMAND PATTERN
34
CHAPTER FOUR
4.0 MARKET PROSPECT FOR AIR ASIA SDN. BHD.
37
4.1 FORECAST OF THE TRAVELLING DEMAND
PATTERN OF THE PASSENGERS FROM TAIPEI 38
4.2 IDENTIFYING ALTERNATIVE SECTORS THAT
AIR ASIA CAN PROVIDE.
4.2.1
45
PERCENTAGE OF TOURIST COMING
INTO MALAYSIA FOR 1994 TO 1995.
IV
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47
4.3 MARKET PROSPECT FORECAST OF THE
EXISTING SECTORS
51
4.4 AIR ASIA MARKET SHARE FOR THE
YEAR 2000
54
CHAPTER FIVE
5.0 CONCLUSION
58
CHAPTER SIX
6.0 RECOMMENDATIONS
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61
LIST OF TABLES:
TABLE 3.1: AIR ASIA PASSENGER GROWTH
TABLE 3.2: PASSENGERS DISEMBARKING FROM
MALAYSIA TO TAIPEI
TABLE 3.3: PASSENGERS EMBARKING AT MALAYSIA
FROM TAIPEI
TABLE 4.1: CALCULATION FOR A SIMPLE LINEAR
REGRESSION LINE (for the passengers disembarking
from Malaysia to Taipei)
TABLE 4.2: CALCULATION FOR A SIMPLE LINEAR
REGRESSION LINE (for passengers embarking at
Malaysia from Taipei)
TABLE 4.3: TOP TEN TOURIST FROM 1994 TO 1995
TABLE 4.4: PERCENTAGE OF TOURIST COMING INTO
MALAYSIA FOR 1994
TABLE 4.5: PERCENTAGE OF TOURIST COMING INTO
MALAYSIA FOR 1995
TABLE 4.6: MAJOR AIRLINE SERVING TAIPEI SECTOR
VI
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LIST OF FIGURES
FIGURE 1.1:
AIRASIA MANAGEMENT TEAM
FIGURE 2.1:
AIRASIA FLIGHT OPERATION
ORGANISATION CHART
FIGURE 3.1:
THE GROWTH OF PASSENGERS (monthly
basis)
FIGURE 3.2:
THE GROWTH OF PASSENGERS
(yearly basis)
FIGURE 3.3:
AIRASIA PASSENGER GROWTH
FIGURE 3.4:
NO. OF PASSENGERS COMING AND OUT
OF MALAYSIA FROM TAIPEI FOR 1991 TO
1995
FIGURE 4.1:
FORECASTED GRAPH OF DISEMBRKING
PASSENGERS TO TAIPEI
FIGURE 4.2:
FORECASTED GRAPH OF EMBARKING
PASSENGERS FROM TAIPEI
FIGURE 4.3:
PERCENTAGE OF TOURIST COMING INTO
MALAYSIA
FIGURE 4.4:
1994
PERCENTAGE OF TOURIST COMING INTO
MALAYSIA 1995
FIGURE 4.5:
MARKET SHARE PERCENTAGE
Vll
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LIST OF APPENDIXES:
1. AIRASIA FLIGHT SCHDULE FORM
2. CABIN CREW VOYAGE REPORT FORM
3. FLIGHT OPERATION DEPARTMENT CHANGE OF
DUTY FORM
4. CABIN CREW WORK POSITION FORM
5. AIRASIA GENERAL DECLARATION FORM
6. AIRASIA WEATHER REQUEST FORM
7. AIRASIA TECHNICAL COMPLIANCE SHEET
8. AIRASIA FLIGHT PLAN FORM
9. CAPTAIN VOYAGE REPORT FORM
10. AIR ASIA FLIGHT SCHEDULE
I L AIR ASIA SEATS ARRANGEMENT
Vlll
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ABBREVIATIONS
1. MAS:
MALAYSIA AIRLINE SYSTEM
2. TDC:
TOURIST DEVELOPEMENT CO-OPERATION
3. MAB:
MALAYSIA AIRPORT BERHAD
4. KLAS:
KUALA LUMPUR AIRPORT SERVICES
IX
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CHAPTER ONE
BACKGROUND OF
STUDY
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Background of study
Chapter one
1.0 BACK GROUND OF THE STUDY
In the world we live today, transportation has become the most
important and vital to the economy as well as to the social life of the
people. The expansion of technology has made transportation faster,
more efficient, efficient, safer and more reliable .
In this study, we will look at the travelling demand pattern for
tourism by looking at one sector that Air Asia are provides
.The sector
will be the Kuala Lumpur to Taipei via Kota Kinabalu sector . I have
chosen Air Asia as the subject.
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Background of study
Chapter one
1.1 INTRODUCTION
Airline industry has been developing fast over the past
few years. Many new airhnes have emerged in these few years for
example the Asia Pacific Airline , Berjaya Air and Transmile Air .
This is just some of the new players in the airline industry.
Because of the great expectation in airline industry ,
Hicom DRB and Mofaz Air have set-up their own airline named
Air Asia. On the 18* of November 1996 Air Asia have launch it
first flight to Pattaya and now Air Asia is nearly 3 months old fi-om
it first flight.
Air Asia is a very new player in the Airhne Industry,
so many information is needed to be the second airline in Malaysia
after Malaysia Airline (MAS).
For the past 3 months, many problems have been faced
by Air Asia Airline , for example the lack of personnel, lack of
knowledge of the workers and lack of information for the fiiture
travel demand of the passengers. For the past 3 month, getting a
fiiU load for the aircraft seems to be very hard especially for the
Kota Kinabalu sector , Pattaya sector and the Taipei sector. From
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Background of study
Chapter one
my point of view, there are lack of research done in learning the
travelling demand pattem for these sector and also for other
sectors. This is because not enough of man power to do the
research for the company.
This thesis will some how help in understanding the
future expectation of the travel demand.
1.2 PROBLEM STATEMENT
In the world of aviation, every decision is crucial to
determine the growth of any airlines. The choice of the route or
destination will determine whether the airline can make profit of
otherwise.
Like Air Asia Sdn.Bhd. as a new airline company,
profit making is only expected after 2fiiUyears of operation . After
these 2 years of struggle, Air Asia must make some profit in order
to compete with the other airliners that have already existed and
stable.
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Background of study
Chapter one
On the 18* November 1996, Air
Asia Sdn.Bhd.
launched its first flight from Kuala Lumpur to Pattaya. It has been
almost 4 months since they started operation. Air Asia has secured
several routes now. They have scheduled and chartered flights.
The schedule flights are to Kota Kinabalu and Taipei and the
chartered flights will be going to Pattaya.
The problem
Air Asia is facing now
getting full
passenger capacity load for its flights.. The load that they are
getting now cannot even reach the break even level for every single
flight or service that they are giving. The break even for the aircraft
is about 60% of the seats capacity'. Although they are expecting to
make a profit after 2 years, but with this kind of situation it will be
even harder for them to reach their target in two years.
With enough of research about the travel demand
pattern of the potential users, this problem will somehow help in
knowing the travel demand pattern of passengers in order to give
good service and also a profitable one.
' Interview with En. Sarjit Singh
(Senior Flight Operation Officer)
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Background of study
Chapter one
1.3 OVERVIEW OF AIRASIA SDN. BHD.
On the 20*
of December 1993, Air Asia was
incorporated to be a complementary regional airline service along
with the first national carrier of Malaysia, or formally known as
MAS. Air Asia will try to get as many passengers in using their
service by providing a chartered service and scheduled within the
routes that the National Carrier (MAS) has not served. With this
kind of strategy. Air Asia hopes that it strengthen the company's
revenue while positioning Air Asia as Malaysia second national
airline carrier.
The Air Asia's corporate vision is " to become an
international airline which is safe, reliable, efficient
and
profitable".
Air
Asia has two principal shareholders,. HICOM
holding Berhad and Mofaz, holding a share of 85% and 15%
respectively. With the backbone of a very stable company as
HICOM holding, Air Asia is expected to grow smoothly without
having any financial problems like the Asia Pacific Airline is
facing.
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Background of study
Chapter one
1.3.1 Company Objectives
As a new player in the Airline industry, Air
Asia also has some objectives for them to achieve within
the period of their operation especially in the first two
initial years. From the research that Air Asia have done in
the first few years when they set-up the company in 1993, a
few vital information has been identified. The range of
destinations and different places to fly have widened as the
market opened up and became more accessible to holiday
makers. This is what makes Air Asia strife to meet its
objectives.
The objectives are:
a) To provide a complementary regional airline service
alongside the first national ceirrier, Malaysia Airline,
(MAS)
b) To meet the increasing demand of travellers especially
for business and for leisure .
c) To open up new destinations for travellers to visit with
maximum speed and economy.
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Background of study
Chapter one
1.3.2 Route Coverage
Air Asia Sdn.Bhd. is now serving from Kuala Lumpur
as their home base and Kota Kinabalu as their regional
hub. Being the second national carrier , Air Asia has the
opportunity to operate in Schedule as well as chartered
flight. Below are the current and proposed flights and
destinations for Air Asia.
Current Destination (Schedule):
Kuala Lumpur - Taipei (via Kota Kinabalu)
Kuala Lumpur - Kota Kinabalu
Kuala Lumpur - langkawi
Current Destination (charter):
Kuala Lumpur - Pattaya
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Background of study
Chapter one
Proposed Destination:
Kuala Lumpur - Sukhotai
Kuala Lumpur - Phuket
Kuala Lumpur - Surabaya
Kuala Lumpur - Siem Reap
Kuala Lumpur - Sendai
Kuala Lumpur - Guilin
Kuala Lumpur - Xiamen
Kuala Lumpur - Kunming
Kuala Lumpur - Tianjin
Kuala Lumpur - Koh Samui
Kuala Lumpur - Taipei/Kaohsiung
Kota Kinabalu - Bangkok
Kuching - Phuket
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Background of study
1.2.3. Organisation Structure
FIGURE 1.1
AIR ASIA SDK BHD,
MANAGEMENT TEAM
DATO' TIK BIN MUSTAFFA
( DIRECTOR)
_r
CAPT JAMALUDDIN TAMBYCHIK
(HEAD MARKETING)
I
EN AZMINUDDIN MOHAMMAD
( HEAD HUMAN RESOURCES )
T
EN MAT JUSOH DAUD
{HEAD FINANCE )
1
EN HYDER SHA
MOHDSHUK
VIJAY KUM
( DEPUTY HEAD ENG
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Background of study
Chapter one
1.4 RESEARCH OBJECTIVES
There are a few research objectives in this study on knoM^ing
the travel demand pattem of the number of tourist coming into
Malaysia fi-om Taipei. These objectives have been obtained by
looking at the problems that Air Asia Sdn. Bhd. are facing. The
objectives are:
1.4.1
To identified the travel demand pattem of passengers from
Taipei(Taiwan)coming into Malaysia in order for the
company to plan for fixture services. This information can
be gathered by looking at the other airline passenger
statistics that serve similar route. The reason for taking data
from other airlines is because Air Asia is a very new
company, so data that can be collected from Air Asia are
very limited.
1.4.2
To identified the service characteristic on the flight that Air
Asia is serving.
10
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