Question a: What are the problems that you can find from the case study?

From the case, the problem that arises is the under utilization of the belly space of the aircraft
where Airasia only utilized 15% and sold only 7.5% of it. In other words, they have enough
capacity but lack of demand. Therefore, each of the flights could be a loss as AirAsia still has
over 40% of space to sell.

Besides, the extra costs are for transferring the cargo to the planes, fuel and warehouse. During
the cargo shipments, there might be more cost to handle the cargo. The extra cost increase, the
profit margin might be low.

Moreover, in AirAsia’s database of 100 million flyers and 25 million loyalty users, there is an
overlap in people who buy tickets or goods online and people who require logistics services.
The data might not be accurate due to overlap in customer behaviour.

Other than that, to start-up a parcel delivery fleet would incur a lot of capital cost.

Lastly, to acquire the EasyParcel also requires capital and might be risky.

Question b: What were the solutions provided (if any)?

The solution from the case is AirAsia Group Bhd and venture capital firm Gobi Partners are
jointly investing US$10.6 million (RM44 million) in e-commerce and parcel delivery player
EasyParcel, in order to solve the problem of underutilized aircraft belly space. Meaning that,
they are going to make logistics part of their business as big as passengers as they think that
logistics is a potential business.

-To acquire a 3PL that is specialised in parcel delivery in the form of EasyParcel. This will
provide them with parcels to deliver.

-Instead of set up a new subsidiary, AirAsia chose to acquire an existing 3PL

-Risk sharing by partnering with Gbi venture capital to purchase EasyParcel.

Question c: What are your recommendations?

The recommendation is that Airasia can provide more benefits for the customers from easy
parcels in order to maximize the space of the aircraft . For example, reduce the price and fast
delivery for customers. Besides, Airasia can do advertising to explode and get new customers.
- Rent/lease out the extra capacity to 3PL firms

Another recommendation is to reduce costs such as moving cargo,fuel and so on. Airasia can
combine all the cargo once the quantity of cargo is enough to fit in the space. Besides, reduce the
times of moving goods to the aircraft. Moreover, Airasia can also transfer the cargo to the
passenger aircraft in order to fulfill the customer expectation such as lead time.

- Collaboration to do profit-sharing
- Review the historical performance of Easy Parcel