EXECUTIVE DIPLOMA IN MANAGEMENT

(ADMINISTRATION AND OPERATIONS)

UFA1004 – QUALITY MANAGEMENT

ACADEMIC SESSION 2021

SEMESTER II, (PART II)

GROUP ASSIGNMENT TITLE:

COMPANY REVIEW ON QUALITY MANAGEMENT
(GROUP 1 – AIR ASIA COMPANY)

LECTURER:
MR. NUR ZAHDI BIN MOHD ALDIN

GROUP MEMBERS:
NO. NAME MATRIC NO.
1. MUHAMMAD KAMIL KHARAZZI BIN ROSLAM UFA200089
2. MUHAMMAD AZIZI AIMAN BIN ZAIMI UFA200104
3. HERNANEY BINTI ABDUL WAHAB UFA200100
4. SHARIFAH MUNIRAH BINTI WAN OTHMAN UFA200095
5. WONG LI MIN UFA200092

DATE SUBMISSION
WEEK 6
 ACKNOWLEDGEMENT

We would like to express my special thanks of gratitude to my lecturer Mr. Nur Zahdi Mohd Nor Aldin
who gave us the golden opportunity to do this wonderful assignment on the Quality Management
study, focused on AirAsia Company, which also helped us in doing a lot of research and we came to
know about so many new things.
Secondly, we would also like to thank our families and friends who helped us a lot in finalizing
this assignment within the limited time frame. We would like to thank our family who helped us a lot
in gathering different information, collecting data and guiding us from time to time in making this
assignment, despite of their busy schedules, they gave us different ideas in making this assignment
unique.

Thank you.
 TABLE OF CONTENTS
Pages
1.0 Introduction 1
2.0 Background of the Company 1-2
3.0 Quality Management System 2-3
3.1 Quality Control 3
i. Off-Line Quality Control 4
ii. Balance Scorecard 4-5
4.0 Controversies/Issues/Rumors on Quality 6
5.0 The Importance of the Quality Management System to Company 6
i. Increased Efficiency 6-7
ii. Better Employee Morale 7
iii. International Recognition 7
iv. Greater Customer Satisfaction 8
v. Keep Up with the Competition 8
6.0 Recommendations 9
i. Total Quality Management and Service Quality 9
ii. SERVQUAL 10
iii. Establish Clear KPI 10
iv. Service Quality Performance 10

7.0 Conclusion 11

References 12
 1
1.0 INTRODUCTION

Nowadays, firms are more realize to go depth on improving supply chains performance, and the most
important things need to structure systematically is quality management. The quality management
involves flows. There are a few flows process need to put attention on, such as information flows,
material flows, and flows of funds. This example needs to operate effectively, efficiently and with
outstanding quality.
Generally, the crucial structure in this study is to refers the definition of the quality to guide
our analysis in a way of quality management concept. According to Garvin (1984), he had divided
definition of quality into five categories: Transcendent; Product-Based; User-Based; Manufacturing-
Based; and Value-Based. In addition, he also developed a framework of eight quality dimension to
describe and define the quality more specifically: Performance; Features; Reliability; Conformance;
Durability; Serviceability; Aesthetics; Perceived. This study will examine the quality management from
AirAsia Company perspectives.

2.0 BACKGROUND OF THE COMPANY

AirAsia was established in 1993. Before 2001, AirAsia fail to sufficiently stimulate the market and
attract enough passengers from Malaysia Airlines to ascertain its own niche market. On 2 December
2001, due to the failure of multinational, the airline was up to sale and purchased by Tony Fernandes’s
company Tune Air Sdn Bhd. Tony Fernandes then enrolled several the lending low-cost airline experts
to restructure AirAsia’s business model. He invited some experts to hitch the chief team. In late 2001,
AirAsia was re-launched in Malaysia as a stylish, no-frills operation with three B737 aircraft as a low-
fare, low-cost domestic airline.
In 2003, AirAsia has already become more attractive in its market demand, subsequently
opened a second hub at Senai International Airport in Johor Bahru and launched its first flight to
Bangkok. After that, AirAsia started a Thai subsidiary, added Singapore itself to the destination list,
and commenced flights to Indonesia. AirAsia start to commence airline service in many other countries
within the subsequent years. In the year 2006, Low-Cost Carrier Terminal (LCCT) was established in
Kuala Lumpur International Airport which cost the establishment fee of RM108 million which may
handle 10 million passengers a year. After that, AirAsia has hedged 100% of its fuel requirements for
the following three years, achieves an aircraft work time of 25 minutes, and contains a crew
productivity level that is triple over Malaysia Airlines. It achieves a median aircraft utilization rate of
13 hours per day.
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AirAsia is currently the biggest single customer of the Airbus A320. the corporate has placed
an order of 175 units of the identical plane to service its routes and a minimum of 50 of those A320
are operational by 2013. On 27 December 2006, Air Asia’s CEO Tony Fernandes unveiled a five-year
conceive to further enhance its presence in Asia. within the plan, AirAsia will strengthen and enhance
its route network by connecting all the present cities within the region and expanding further into
Indonesia, Southern China, and India. Hence, with increased frequency and addition of latest routes,
AirAsia expects passenger volume to hit 18 million by the top of 2007. On 27 September 2008, AirAsia
has on its list 106 new routes to be added to its current list of 60 over the following few years. the
number of old routes discontinued has not been publicly disclosed. On 12 November 2008, AirAsia
abolished fuel surcharges. In doing so, it claimed to be the ‘first airline within the world to abolish fuel
surcharges. By May 2008, the airline had flown 55 million cumulative passengers. In 2010, it is the
world’s lowest costs for an airline, at the speed of below 2 cents per seat per kilometer.

3.0 THE QUALITY MANAGEMENT SYSTEM

Quality Management System (QMS) is defined as a formalized system that documents processes,
procedures, and responsibilities for achieving quality policies and objectives. QMS also helps to
coordinate and direct an organization’s activities to meet customer and regulatory requirements and
improve its effectiveness and efficiency on a continuous basis (American Society for Quality, 2021). In
the meanwhile, when the organization implementing QMS, it affects every aspect of an organization
performance. For example: (a) Meeting the customer’s requirements, which helps to instill confidence
in the organization, in turn leading to more customers, more sales, and more repeat business; (b)
Meeting the organization's requirements, which ensures compliance with regulations and provision
of products and services in the most cost- and resource-efficient manner, creating room for expansion,
growth, and profit. In addition, the quality system uses as concept or model to focus on the customer
and includes the dynamics of continual improvement, change, planning, and renewal. Continual
improvement is necessary for a company to learn to grow.
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Figure 3.1: The Quality System Model

Adapted from Managing quality integrating the supply chain (p.), by Foster, T. S, 2017, Pearson Education.

However, the most important aspect need to attention from the system is the people. It is
because people are the engine of creativity and innovation. Therefore, how the organization manage
people may be the important key in this system to unlock an organization’s potential.

3.1 QUALITY CONTROL

Quality Control (QC) can be defined as a system that maintains a desired level of quality and it go
through by looking on feedback of the product or service characteristics and also the implementation
of the remedial actions, in case of deviation of such characteristics from a specified standard. This
concept may be divided into three main components (a) Off-Line Quality Control; (b) Statistical
Process Control; (c) Acceptance Sampling Plans (but in this study, only component (a) Off-Line Control
will be discus):
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i. Off-Line Quality Control

Off-line quality control procedures deal with measures to select and choose controllable
product and process parameters in such a way that the deviation between the product or
process output and the standard will be minimized. Much of this task is accomplished
through product and process design. The goal is to come up with a design within the
constraints of resources and environmental parameters such that when production takes
place, the output meets the standard. Thus, to the extent possible, the product and process
parameters are set before production begins.

ii. Balanced Scorecards

One of the very important tools for measuring performance is a balanced scorecard.
Balanced scorecards are usually spreadsheets that are communicated to management on
regular basis. For example, weekly, monthly, quarterly and annually. The usefulness of the
balanced scorecard comes from integrating financial measures of business success, such as
key metrics, along with nonfinancial, operational information about the business, such as
customer satisfaction and process performance measures. Elements of sustainability have
always been part of AirAsia DNA. In 2015, the United Nations (UN) outlined 17 SDGs as a
setting of an agenda for countries across the world to work together to create a sustainable
future for all by 2030. The SDGs are comprehensive, covering all areas of social inequality -
including gender discrimination, health and education - and calls for action to spur economic
growth as well as protect the environment through climate change mitigation and the
preservation of our forests and oceans. For the comprehensive understanding, in the table
below, shows that the six SDGs and also describe of initiatives undertaken by AirAsia to
contribute towards achieving the goals within the context.
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Figure 3.2: The SDGs by AirAsia Perspective

Adapted from AirAsia Annual Report 2020: Rebuild and recover (p.94), AirAsia Group Berhad, 2020, Kuala
Lumpur, Malaysia. Adapted with permission.

Table 3.3: AirAsia Balanced Scorecard

Strategic Objectives Measurement Target Initiative
Theme
SDG 9 – Develop quality, reliable, Sustainability To ensure AirAsia super app
Industry, sustainable & resilient measures and sustainability provides a simple
Innovation infrastructure to support monitored by the strategies and and seamless user
and economic development and Sustainability performance, experience across
Infrastructure human well-being, with a Working Group and validates all more than 15 travel,
focus on affordable & Committee (SWGC); sustainability e-commerce and
equitable access for all AirAsia have also related decisions. fintech products and
Group Operational services
Quality Assurance, BigPay is a financial
Communications services platform
and AirAsia that democratises
Foundation (AAF) fee-free access to
into the SWGC, products and
while Group Safety services - from
and Group payments to loans
Engineering have Paperless aviation
been combined and Partnerships with
are now under Google, GE and
Group Operations. Oracle

Adapted from AirAsia Annual Report 2020: Rebuild and recover (p.93-95), AirAsia Group Berhad, 2020, Kuala
Lumpur, Malaysia. Adapted with permission.
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4.0 CONTROVERSIES/ISSUES/RUMORS ON QUALITY

Low-cost carrier had been set long-time ago in Asia, with unsuccessful path to carry their position high
within the market during the past, until AirAsia get to overcome Malaysia budget airlines market
within the South East of the region being the previous Low-cost carrier and known worldwide. In fact,
polemics are trending on the corporate quality services they supply which activate through the media
and own experience that clients proscribed Air Asia.
It is noticeable that Air Asia is upgrading its working standard to occupy the top further the
advertise operates with by utilizing marketing tools like advertising, promotion campaigns, lowering
the value of fare also as free booking tickets to their clients. Hence, the controversy comes within the
point of shoppers aren't only specialize in having low fare price or free tickets when it involves ensure
they repeat back purchase. The factors contributing to satisfy customers are various and a number of
other as they're significant in creating customer loyalty.

5.0 THE IMPORTANCE OF THE QUALITY MANAGEMENT SYSTEM TO COMPANY

Quality management plays a crucial role in company's growth and performance. It is also a key
resource in the competition for customer relationships, striving to deliver a superior experience. For
business to succeed, quality should be maintained at every level. Companies can implement a set of
procedures to ensure their products meet the highest quality standards and perform optimally. The
end goal is to enhance customer satisfaction and drive business growth. In Air Asia, the organization
has created a department which is called Corporate Quality. The Corporate Quality department view
themselves as the extra wings that support the other departments’ soar to excellence. They assist
others in their daily operational issues and help to ensure that their procedures are in place and to
monitor operational performances and service deliveries by reviewing the processes and conducting
analysis to identify the roots of their problems.

i. Increased Efficiency

Quality management value lies in its ability to help companies improve their products'
reliability, durability, and performance. These factors help differentiate a business from its
competitors. Better products equal happier customers and higher revenue. Besides product
quality, quality management systems, such as ISO 9001, ensure clear communication
structures, responsibilities, and tasks across all departments. This results in higher employee
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morale, improved performance, and increased efficiency. Members of staff need to be
motivated and satisfied to perform well. Businesses who go through the ISO 9001 QMS
certification process have the aim to maximise the efficiency and quality of their processes.
As part of the process, guidelines will be put in place for all employees to follow. This means
that when dealing with trouble-shooting issues, transactions or training it will be a much
smoother process and less draining in terms of time or financial outlay.

ii. Better Employee Morale

Quality management practices can reduce human error and improve a company's validation
activities. The employees will have a set of guidelines to follow during their day-to-day
operations, which helps eliminate guesswork and ensures compliance. Clear, defined roles,
accountability of management, established training systems as well as a clear understanding
of how their roles affect the quality and the success of the business are all part of fostering
an effective employer/staff relationship. It makes good business sense to retain good staff
rather than go through the process of re-hiring and re-training and it boils down to the fact
that great employees are not replaceable. Each organization would success since their
employees have skills and expertise. In service process, frontline employees should have an
expertise, trained and skilled. It is important for service production and delivery, as well as
for creating new service offerings. It is proven that frontline employees’ attitudes and
behaviours are significantly influencing customer’ perceptions of the service as well as
innovation performance to satisfy customer needs and wants.

iii. International Recognition

ISO is a worldwide mark of quality management, making a business appear reliable and
trustworthy. It is the goal of many businesses to export internationally, and ISO accreditation
will go a long way to establishing credence in the international business arena. In Air Asia,
Quality Assurance and Control is heavily considered. Air Asia has achieved ISO 9000
standards in Quality Management. ISO is a recognition given by the International
Organization of Standardization. This proves how much importance Air Asia has given into
quality. Besides that, quality assurance is of real advantage in terms of identifying whether
the procedure that is used to produce the product or services are suitable for the right time
and as well as conditions.
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iv. Greater Customer Satisfaction

Quality management help to turn prospects into loyal customers. It does so by continuously
improving the company’s products, incorporating changes, and eliminating defects.
Furthermore, it provides companies with the information they need to develop goods and
services that customers want. In the long run, Quality Management system helps increase
the market share and gives the business a competitive edge. In today's competitive market,
consumers are more demanding than ever. Customer can choose from thousands of brands
and have access to millions of stores due to the advances in technology. It is critical to meet
or exceed customer expectations if the company want the business to stand out. The
company need to address customers' needs and comply with the highest quality standards.
Being a low-cost carrier with reduced ticket price, customers can always expect what they
pay for. Air Asia believe not only in enabling everyone to fly but also for the customers to
enjoy the experience. Therefore, Air Asia value their guests’ feedback and improve on
customer expectations by providing better services.

v. Keep Up with the Competition

Quality management systems provide the information and guidelines for doing things
correctly. Furthermore, they help your business achieve optimum cost efficiency and
utilization of available resources. By improving quality above competitors, it is foreseeable
that the company’s performance in the marketplace will improve as customers will choose
the company’ s products / services over other companies. The goal is to emphasize on the
overall satisfaction of the customers through the continuous improvement of products /
services. However, it is important to know what factors lead to customer satisfaction so that
companies can focus on improvement on areas that are valued by customers. In the long
run, these practices strengthen the company’s brand, raising to the level of the competitors.
Since it will improve the company products and business operations, it will also lead to a
stronger market position. Air Asia emphasizes quality in every other external aspect as well.
For example, from the food and beverages served until the quality of training that is given
to all the employees. This is also another major factor why Air Asia has beaten all their
competitors in their category with a big margin.
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6.0 Recommendations

Improvement of service quality is needed by organizations or companies to satisfy their customers

and at the same time to compete with business competitors. There is various perspective on how the
service provided should be defined argued by the researcher. For example, Parasuraman defined
service quality as the difference between customer’s expectations and actual services that they
received in this highly concentrated market, service quality for the airline industry is distinctive from
each other depends on the company’s policy and to evaluate and improve their performance, they
should use customer’s and employee satisfaction as the indicator. Airlines Services satisfaction will
drive customer to choose the best airline service provider and their view and perspective are
important to improve the quality of service. But in terms of operation management and quality
management, there are few guidelines’ strategies for improving the service quality.

i. Total Quality Management and Service Quality

Total quality management can be defined as an approach of management team to reach

long-term success through customer satisfaction. It involves all employees for continual
improvement by using all strategies and data to integrate the quality discipline based on the
quality management principles such as customer-focused, employee involvement,
integrated system.

a. Customer- focused means that, all quality improvement must focus on customer
orientation and customer’s needs first. Customer-focus is important in order to build
a strong relationship with the customer or consumer and company can get enough
data in order to improve their service’s quality based on customer, consumer needs.
b. Employee Involvement is a process of empowering all employees working together
toward goals. Management should provide a proper environment and effort to gain
total employee commitment. Total employee involvement can increase the working
performance and at the same time will lead to continuous quality improvement.
c. Integrated and Cross-Functional is the process of connecting all function expertise
and specialties such as marketing, operations, and human resources departments
together in order to improve productivity and at the same time will improve quality.
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ii. SERVQUAL

SERVQUAL is a multi-dimensional instrument that has been designed to identify and

evaluate the problems related to quality of services that can affect the quality of service. For
example, SERVQUAL model can identify whether value perceived by the customer or
consumer is lower than expected or not. There’s a few important SERVQUAL component
that can be used to improvise the service quality. Reliability, Assurance, Tangible, Empathy,
and Responsiveness can be used by AirAsia to measure their service quality. To ensure that
the quality of services provided by AirAsia meet the customer’s expectation, AirAsia should
be able to provide complete equipment and physical service facility. Besides, they also
should make sure that they can perform the promise service dependably and accurately to
gain trust from the customer or consumer. Their customer service team also must be able
to be more empathy and responsive towards all customer’s problems.

iii. Establish Clear KPI

Key performance indicator (KPI) is an indicator of progress of company. KPI is a measurable

value that can describe how effective a company in achieving their objectives. Company
often use KPI to evaluate their success reaching the target. In order to improve the service
quality, AirAsia should establish a clear Key Performance Indicator (KPI) on how they can
fulfill consumer’s satisfaction. For example, AirAsia can set a customer satisfaction score or
known as happy customer key performance indicator (KPI). It will help AirAsia to evaluate
their consumer’s service satisfaction and will help them gain insight on how and what their
consumer’s think about their services.

iv. Service Quality Performance

One of the most basic management roles is performance measurement. The strategic
management process includes evaluating performance, reviewing changes in the
surrounding environment, and making improvements (Chaneta, 2007). It will produce a set
of data to determine the efficiency and the effectiveness of the firm based on the
performance indicators that have been set and will detect the weakness of the program. By
monitoring service quality performance, AirAsia can measure their quality performance
whether the performance meet the consumer’s expectations or not.
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7.0 Conclusion

Quality management has the best system to help the company produce high-quality products or
services that meet customer requirements. It provides companies with a new way to improve
products and services. It also creates a better working environment for workers. Effective teamwork
improves the company's bottom line by paying more attention to customer needs. These factors help
differentiate the company from its competitors. Better products mean happier customers and higher
income. In addition to product quality, quality management systems such as ISO 9001 also provide a
clear structure for communication, responsibilities, and tasks for all departments. This will increase
the morale of employees. Improved performance and higher efficiency. As a globally recognized
ASEAN brand, the sky’s the limit for AirAsia. Over the years, the company has retained unwavering
focus on its vision to provide the lowest cost airfare and the highest possible quality of service for
every guest that boards its aircraft. Although the focus is on AirAsia’s incredible achievements, awards
and honors, it is undeniable that the true core of this incredible story lies in the people who make up
which are AirAsia’s employees and management to maintain the excellent quality. Since this is a low-
cost airline that offers discounted fares, customers can always be sure of what they are paying. AirAsia
is at a stage where it must lay a solid quality foundation for its growth in one place. AirAsia will have
more quality improvement programs involving cross-functional and multi-teams that need better
coordination. At the same time, customer experience is an important part of AirAsia future strategy,
provided by their own team and employees, so that AirAsia can better deal with quality and service
issues.
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References

American Psychological Association. (2020). Publication manual of the American Psychological (7th
ed.).

American Society for Quality. (2021). What is a quality management system (QMS)?. Retrieved from
https://asq.org/quality-resources/quality-management-system#Benefits

AirAsia. (2020). Annual report: Rebuild & recover. Retrieved from https://ir.airasia.com/ar.html

AirAsia. (2020). Annual report: Sustainability Statement. Retrieved from

https://ir.airasia.com/newsroom/AirAsia_Group_Berhad_AR2017_-_3.pdf

Foster, T., S. (2017). Managing quality integrating the supply chain (6th ed.). Pearson Education.

Jayaraman Munusamy, Shankar Chelliah & Sivamurugan Pandian. (2011). Customer satisfaction
delivery in airlines industry in Malaysia: A case of low cost carrier. Australian Journal of Basic
and Applied Sciences, 5(11): 718-723. Retrieved from
https://www.researchgate.net/publication/287434175_Customer_satisfaction_delivery_in_ai
rline_industry_in_Malaysia_A_case_of_Low_Cost_Carrier

Parasuraman, P. A., Zeithaml, A. V., & Berry, L. (1988). SERVQUAL: A multiple-item scale for measuring
consumer perceptions of service quality. Journal of Retailing, Vol. 64(1). Retrieved from
https://www.researchgate.net/publication/225083802_SERVQUAL_A_multiple-
Item_Scale_for_measuring_consumer_perceptions_of_service_quality.