LOG 1033

MANAGEMENT OF BUSINESS LOGISTICS

SESSION 1/2021

MAJLIS AMANAH RAKYAT

BAHAGIAN PENDIDIKAN TINGGI
UNIT PEPERIKSAAN DAN PENSIJILAN

ONLINE ASSIGNMENT

KOLEJ PROFESIONAL MARA

SESSION 1/2021

COURSE : MANAGEMENT OF BUSINESS LOGISTICS

COURSE CODE : LOG 1033
ASSESSMENT TITLE : Challenges in Logistics Industry during COVID-19 Pandemic and Strategies
to Overcome
COURSE LEARNING : Evaluate the basic knowledge of business logistics organization
OUTCOME (CLO) and supply chain concepts towards competitive advantage in
logistics environment (C4, PLO6)
DATE OUT : 24 May 2021
DATE IN : 28 May 2021

TASK MARKS
Instructions:
• This question paper consists of ONE section.
• Answer ALL questions in Microsoft Word file.
• Rename your file as NAME_CLASS
• Email your answer to diyana.abdullah@bpenawar.kpm.edu.my

FULL
QUESTION NUMBER MARKS
MARKS
Task 1.0 20 M 20 %

Total Marks

STUDENT’S NAME : ATHIRAH HUSNA BINTI ABLLAH

ID NUMBER : PDL2007059
CLASS : DLM3C
 KOLEJ PROFESIONAL MARA BANDAR PENAWAR

DIPLOMA IN INTEGRATED LOGISTIC MANAGEMENT (LOG1033)

(FEB – JUNE 2021)

MANAGEMENT OF BUSINESS LOGISTIC

TITLE: ONLINE ASSIGNMENT INDIVIDUAL

LECTURE’S NAME: PN DIYANA BINTI ABDULLAH

CLASS: DLM 3C

DUE DATE: 28 APRIL 2021

SUBMISSION DATE: 28 APRIL 2021

INTRODUCTION

The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing

global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute
respiratory syndrome coronavirus 2 (SARS-CoV-2). According to Wikipedia (2021),
pandemic is an outbreak of an infectious illness that has spread across a wide area,
such as multiple continents or the whole world, and has affected a huge number of
people. The virus was firstly reported in Wuhan, China, in December of 2019. The
World Health Organization (WHO) declared a Public Health Emergency of
International Concern regarding COVID-19 on 30 January 2020, and later declared a
pandemic on 11 March 2020. COVID-19 has been linked to more than 167 million
confirmed cases as of 26 May 2021, with more than 3.48 million confirmed deaths,
making it one of the deadliest viruses ever.

The pandemic has caused widespread social and economic damage throughout the
world, including the biggest global recession. Widespread supply shortages have
resulted, which have been worsened by panic buying, agricultural disturbance, and
food shortages. However, there has been a reduction in pollution and greenhouse
gas emissions. Many educational institutions and public locations have been
shuttered in part or whole, and many activities have been cancelled or rescheduled.
Misinformation has spread over social media and the mainstream media. Too many
things happened due to this dangerous pandemic COVID-19. In Malaysia, it is very
worrying because too much fake news is spread which allows some people to be
deceived by the news. This matter needs to be curbed as soon as possible to
prevent it from getting worse.

During this pandemic COVID-19, government make decision to do Movement Control

Order (MCO) to prevent the epidemic spread widely. The order was commonly
referred to lockdown in international media. In education sector, The Prime Minister
had instructed the Ministry of Education to implement home-based learning
initiatives throughout the duration of MCO as schools nationwide were closed during
the period.
As several institutes were turned into temporary surveillance and quarantine centres,
assessments and examinations for several national higher education programmes
were cancelled, and students' performance evaluations were substituted by
continuous assessment scores. In addition, the SPM national test has been
postponed from November 2020 to January 2021. Even this method really makes
student stress with their study, but this opportunity can help government to curb the
spread of the virus.

Next, COVID-19 also has had a significant impact on the world economic and
financial markets, in addition to becoming a worldwide pandemic and public health
disaster. This pandemic Covid-19 have resulted in significant earnings reductions, an
increase in unemployment, and disruptions in the transportation, service, and
industrial industries. Most governments throughout the world appear to have
underestimated the implications of COVID-19's quick spread and have reacted
mostly in a reflexive manner. Because disease outbreaks are unlikely to go away
anytime soon, proactive international action is necessary to preserve lives while
simultaneously protecting economic growth. COVID-19 could be a "wake-up" call for
world leaders to step up collaboration on pandemic preparedness and give the
funding needed for global collective action.

In Malaysia, a variety of key sectors are now in distress due to COVID-19.

Malaysia's manufacturing sector, for example, has been hit by the global crude oil
crisis, which has caused oil prices to plummet this year, in addition to material
disruptions caused by the Movement Control Order (MCO). Tourism sector also
affected during this pandemic. Travelers will be required to postpone their travels
and cancel hotel and flight reservations, which will be a significant loss for Malaysia,
which was declared the third most popular Asian vacation destination in 2018. All in
all, COVID-19 has had a terrible effect on Malaysia's economy, causing an
unbelievable amount of damage to the country and the entire world.
COMPANY’S BACKGROUND

As this assignment requires to choose one of the company logistic that affected by
COVID-19, therefore, I have chosen, AirAsia which a private Malaysian low-cost
carrier company, in order to finish this assignment successfully. AirAsia was
established in 1993 and began operations on 18 November 1996. AirAsia is a
Malaysian lowest cost airline. It was established initially by DRB-Hicom, a
government owned- conglomerate. In December 2001, Tony Fernandes, a former
Time Warner executive, bought the heavily indebted airline. Tony was inspired by
Southwest Airlines' Low-Cost Carrier business model and proposed to start his own,
but the government refused due to issue a new licence and instead advised Tony to
purchase an existing airline. As a result, Tony and his investors formed Tune Air,
which purchased Air Asia for RM1 million. Before the year of 2001, AirAsia was
unable to attract enough passengers away from Malaysia Airlines in order to
establish its own market position. Following Tony Fernandes' purchase of AirAsia in
2001, the airline reached a turning point. Tony Fernandes hired a team of low-cost
airline experts to restructure AirAsia's business model. Connor McCarthy, the former
director of Ryanair's group operation, was invited to join his executive team. AirAsia
was re-launched in Malaysia in late 2001 as a modern, no-frills business with three
B737 aircraft as a low-cost domestic airline. Customers have backed AirAsia's simple
slogan "Now Everyone Can Fly." AirAsia 's profit for the second quarter, was RM 44.4
million, up 323 per cent from the previous quarter.

AirAsia Berhad headquartered near Kuala Lumpur, Malaysia. It is the largest airline
in Malaysia by fleet size and destinations. The AirAsia Group offers scheduled
domestic and international flights to over 165 locations in 25 countries. In
international travel and airline awards, AirAsia has been named the world's best low-
cost carrier for 11 years in a row by Skytrax, including the most recent award for
2019. During the COVID pandemic, AirAsia refused to refund passengers for flights
that were cancelled at the last minute while other airlines were still flying. (Belum
quillbot) Certain particular
criteria must be met in management in order to attain the company's long-term
objectives. When it comes to system management, one of the most crucial needs is
quality. Through the following vision and mission, AirAsia provides value. The goal of
AirAsia is to become Asia's leading low-cost airline, servicing the 3 billion people who
are now underserved due to inadequate connectivity and expensive rates. Next,
AirAsia's objective is to be the best place to work, with workers regarded as
members of a large family, to build a globally known ASEAN brand, and to achieve
the lowest possible prices so that anybody can travel with AirAsia. AirAsia also
maintains a high- quality product while utilising technology to cut costs and improve
service levels.

Air Asia is a low-cost airline that offers the world's lowest prices per kilometre.
According to a five-forces study, the airline business is extremely competitive, with
new entrants and replacements in the domestic travel market posing a significant
threat. Air Asia is positioned at the low-cost end of the range of international airline
carriers. Air Asia has strengths in management, operational efficiency, and
marketing, according to a SWOT analysis. Air Asia has a solid management team,
with operations supervised by an ex-Ryanair executive with significant expertise
managing low-cost airline expenditures. The most likely explanation for Air Asia's
success has been its willingness to take chances with creative cost-cutting measures
while benefiting society. The company was a market leader in the usage of internet
reservations and paperless tickets, with its marketing efforts overcoming any
passenger concerns about using the digital tools. In the low-cost area of the market,
it has also used an innovative approach of establishing joint ventures with
competitors to penetrate new markets and save operational costs.
CHALLENGES DURING COVID-19 PANDEMIC

For several months, commercial air travel was halted because of the COVID-19
epidemic. Same goes to Airasia airlines. According to Geoff Murray and Tom
Stalnaker (2013), About 20 airlines have shut down operations or declared bankrupt.
Hundreds of thousands of airline employees have either lost their jobs or are on the
risk of losing their employment when government bailouts expire or prove
insufficient. Thousands of planes have also been sent to storage or retired before
they were required. In 2020, revenue management will confront several problems,
and several airlines will adjust their development goals.

The covid-19 pandemic has inevitably led airlines to lose many passengers since the
government restricted movement for every people. They are not only not allowed to
move abroad, but also not allowed within the country due to limited movement
control. This is to prevent the spread of the epidemic and cause the probability of
death to increase in our country, Malaysia. So, the government is taking steps to
curb the spread of this epidemic. And that is why most airlines lose a lot of their
passengers. AirAsia airlines are also no exception to be equally involved in this
problem.

First and foremost, based on the Malaysian Aviation Commission (MAVCOM), they
expect the number of passenger airline seats to decrease between -72.8 to -75.6 per
cent or 26.6 million to 29.7 million this year, compared to 109.2 million last year
because of the COVID -19 pandemic. That is mean the aviation sector faced a
financial crisis during this COVID-19 pandemic. According to Deputy Transport
Minister Hasbi Habibollah said the outbreak of COVID-19 not only affected the
country's aviation industry for the full-service airline sector but also low-cost service
airlines such AirAsia. He also said statistics showed a downward trend in domestic
and international passenger demand from March 1 and the total passenger demand
decreased from 280,321 a day in January to 59,378 a day in September. The airline
sector is expected to need a period of three years to fully recover from the
impact of the COVID19
outbreak. Therefore, we can see that this covid-19 pandemic has a very bad effect
on many economies in Malaysia which leading to huge losses.

Next, the COVID-19 pandemic has affected the financial performance of AirAsia
Group Bhd, causing the airline group to record a net loss of RM803.85 million in the
first quarter ended March 31, 2020, compared to a net profit of RM96.09 million in
the same quarter last year. Revenue decrease to RM2.31 billion from RM2.73 billion
previously. Concerns about the spread of the virus, as well as travel restrictions and
border controls announced by governments of various countries caused demand for
air travel to decrease in February and March 2020. For the airline business, the
group's total revenue in the first quarter of 2020 declined 18 per cent to RM2.16
billion year- on-year with increased and unprecedented travel restrictions following
COVID-19.

Lastly, low-cost carrier AirAsia Berhad decided to cut its workforce following the
effects of the COVID-19 pandemic. It was a very difficult decision for AirAsia to make
after several months of difficult periods. However, AirAsia will continue to provide
basic assistance such as healthcare benefits and flight coupons until December 2020
to the affected employees. According to AirAsia Berhad Chief Executive Officer, Riad
Asmat he says from a business perspective, they have been trying their best over
the past few months to manage the company which affected by COVID-19 crisis.
COVID-19 has had a huge impact on AirAsia airlines which we can see they had to
lay off their employees to curb the problems they face. Thus, we can witness the
importance of effective strategies to fight with this crisis.
STRATEGIES TO SUSTAIN IN THE MARKET PLACE

Airlines and the larger aviation and tourism industry are no strangers to overcoming
crises. Just as the industry has survived previous health epidemics, economic
recessions, terrible safety disasters, and other painful circumstances, it too will
overcome the COVID-19 challenge. The actions taken by the government, industry
leaders, and individual airlines during this time will have an impact on how deep the
crisis goes, how long it lasts, how fast the sector recovers, how much it is
transformed, and which businesses emerge comparatively stronger than their peers.
It is responsibility on today's generation of leaders to take bold and crucial action in
response to the COVID-19 crisis. Every problem, have their own ways to overcome
whether it is effective or not.

According to the problem that AirAsia face, which is most airlines lose a lot of their
passengers. AirAsia can overcome this problem with one effective solution. As we
know, due this COVID-19 pandemic, AirAsia provide cargo services to cover their
losses. According to Malaysia Airport Holdings Berhad's General Manager of Aviation
Marketing and Development, Mohammed Sallauddin Mohamed Shah says that, they
are preparing for a turnaround phase with plans to increase cooperation with local
and foreign airlines to revive domestic and international air travel and work with
Federal and State tourism bodies. Before COVID-19 existed, cargo planes only had
around 50 flights a day, but now it reaches up to 70 flights a day. He also said that
although passenger planes were affected, there was wisdom behind it as air cargo
flights had benefited from the reduction in capacity which saw an increase in
revenue. Since there were no passengers, the cargo was carried in the aircraft and
placed on the passenger seat during this COVID-19. Industry experts conclude that
the Covid- 19 crisis offers an opportunity to drive change in the manufacturing
industry. The same criteria would not have been possible without them reviewing
their company from top to bottom, bottom to top and changing their operations and
procedures for the better. International regulators from various countries should
work together to
preserve this industry. Cooperation from all parties is very important for the recovery
process. Without proper and consistent preparation and programs for all countries, it
will be difficult to achieve the success. This approach should be done to avoid
bankrupt.

Next, the solution for the problem that I state before which is AirAsia’s financial was
decrease due to this COVID-19 pandemic. Tony Fernandes says that, he saw the
crisis towards AirAsia as a chance to refocus its company and began focusing on
ASEAN, working to understand its cost structure, and eliminating operations that did
not make sense. With digital platforms such as the super app, fintech and food
business going pretty well, we are now at the end of the tunnel and excited on the
diversified businesses that are coming in, he added. Regarding efforts in
diversification, he said the AirAsia also planned to launch an air taxi service in one-
and-a-half years' time, as well as an e-hailing service in April. The air taxi will feature
four seats and a pilot. At the moment, their team is working on AirAsia's next
service. AirAsia Digital also propose to collab or partnership with Malaysian Global
Innovation and Creativity Centre to launch the Urban Drone Delivery Sandbox. A six-
month staged drone trial project for the delivery of items from the group's e-
commerce platforms will be carried out in Cyberjaya. It would make products
movement throughout Malaysia and throughout the world faster, cheaper, and more
accessible.

Last but not least, just to let everyone know, AirAsia also offers door-to-door
logistics services anywhere in Southeast Asia. It’s call Teleport. Teleport is an AirAsia
Group logistics company that was previously known as RedCargo Logistics until
rebranding in 2019. Teleport's key business is using technology to simplify the end-
to-end logistics process, which is crucial for providing a consistent client experience.
Next, the teleport function is for picking up packages or goods to be sent through
the AirAsia Teleport expedition. Teleport also functions as a medium for the delivery
of packages and goods less than 24 hours with 4 choices of types of services
offered. Teleport also refer to an expedition provider who is able to send packages
to the entire network of
domestic and international destinations. It’s now provides two delivery options, a 60-
minute “Instant” service and a four-hour “Flash” service. Teleport began as a
Movement Control Order (MCO) project to assist local companies, but AirAsia
decided to contribute support on a more long-term basis by providing companies
with the lowest commission model in town. Currently, Teleport is operational in 77
cities across Malaysia, Singapore, Thailand, Indonesia, and the Philippines. In fact,
according to Centre for Aviation (CAPA), Teleport is now the second largest cargo
airline group in Southeast Asia after Singapore Airlines Cargo as of July 2019.
Teleport generated revenue of US$113.7 million in financial year 2019 and US$66
million in financial year 2020. Teleport will continue to enhance its logistics by
expanding its partnerships with airlines, while also seeking to convert select
passenger flights to cargo-only freighter airplanes.
CONCLUSION & RECOMMENDATION

In my point of view, COVID-19 pandemic really makes world change. Not only the
aviation sector suffered losses, but other economic sectors in Malaysia were also
affected and suffered relatively severe losses. Due to our limited movement, it has
affected the decrease in profits in this economic sector, especially for the tourism
sector. when the tourism sector does not make a profit, thus causing losses to the
aviation sector because it cannot bring passengers to tourist destinations such as
abroad. We as Malaysians hope that the financial markets will continue to change
and recover as this virus will continue to disrupt economic activities and adversely
affect our industry. There are still doubts for every of us and government whether
this growing crisis will have a permanent structural impact on the world economy or
only a short-term financial economic impact. Infectious viruses such as COVID-19
have the potential to have significant economic and financial consequences on
regional and global economies.

In other aspect, because of strong transportation connections, globalisation, and

financial integration, managing the virus and controlling the danger of importation
has been extraordinarily difficult and costly once the disease spread to several
locations. This requires international cooperation and worldwide investment in
vaccine research and distribution, as well as preventative measures like as national
and international capacity building in real-time observation and the development of
contact tracing capabilities. Because this pandemic is unlikely to go away very soon,
strong worldwide action is essential not just to save lives but also to secure
economic growth. In aviation sector, every airlines company in the industry is
attempting to implement certain techniques in order to compete with a rival in their
business. A corporation must have a strategy in order to attain its long-term goals
and be successful in their operations. Strategic management is important for a
number of reasons, including the need to survive in a global world, and the fact that
e-commerce has become a crucial component of a company's success in recent
years.
All in all, based on all the information in this assignment, we can add our knowledge
on how AirAsia overcome their problem when the pandemic come. We can see that
all their strategies and struggles are invaluable in overcoming this COVID-19
pandemic crisis and in upholding or re-raising their profit levels caused by their
previous economic recession.
REFERENCES

C. (2009, September 18). the AirAsia Company strategic management: “ How AirAsia
can be a leader in the lowest cost carrier in the airplane industry.”
Management Of Technology.
https://itsaboutmymot.wordpress.com/2009/08/31/the-airasia-company-
strategic-management-%E2%80%9C-how-airasia-can-be-a-leader-in-the-
lowest-cost-carrier-in-the-airplane-industry%E2%80%9D/

C. (2021a, March 6). AirAsia used COVID-19 pandemic to relook businesses:

Fernandes. CNA. https://www.channelnewsasia.com/news/business/airasia-
covid-19-pandemic-relook-businesses-fernandes-14348644

Pak, A. (2020). Economic Consequences of the COVID-19 Outbreak: the Need for
Epidemic Preparedness. Frontiers.
https://www.frontiersin.org/articles/10.3389/fpubh.2020.00241/full

Salim, Z. (2021, April 23). How He Built AirAsia’s Logistics Arm Teleport From
Scratch In Singapore. Vulcan Post.
https://vulcanpost.com/740857/teleport- airasia-logistics-arm-singapore/

Wikipedia contributors. (2021c, May 26). COVID-19 pandemic.

Wikipedia. https://en.wikipedia.org/wiki/COVID-19_pandemic

Wikipedia contributors. (2021d, May 26). Malaysian movement control order.

Wikipedia. https://en.wikipedia.org/wiki/Malaysian_movement_control_order
Zainuddin, M. Z. (2020, April 13). COVID-19: AirAsia hilang pendapatan, 96 peratus
pesawat tidak beroperasi. Berita Harian.
https://www.bharian.com.my/bisnes/korporat/2020/04/676549/covid-19-
airasia-hilang-pendapatan-96-peratus-pesawat-tidak