Japan Airlines – Impact of E-Ticketing Fino Indrasaputra Jimmy Budi Haryanto Noviana Soesanty Picasso Hutabarat Sutrisna Yussy Agastuty P MMUGM Group 4 – AP14A

Agenda Company Background Problem Identification E-Business Trend in Airline Industry Analytical Tools JAL Solution Strategy Implementation in Indonesia

Company Background Founded 1951 by Japan Air transport company 1953: granted special status as “flag carrier”, the only domestic airline allowed to operate international route, owned by government with public sharing ownership Nov 1987: fully privatized and public shared company The largest airline in Asia, JAL employs nearly 20,000 worldwide and operates in 109 airports in 30 countries. In 1999, JAL carried nearly 33 million passengers.

Problem Identification Since privatizing in 1987, JAL faced image problems and intense domestic and global competition JAL was not known for its customer orientation JAL image as bureaucratic and unfriendly relative to its domestic competitors During 1990s, JAL experienced a financial downturn due to high labor costs and over expansion of its fleet and facilities By 1994, customers pressured to cut prices

E-Business Trend in Airline 1990s – major structural changes in airline industry were instigated / imposed through e-commerce 1993 – Valujet pioneered a revolutionary innovation with low fares, no traditional paper tickets, and a proprietary reservation system 2000 – e-ticketing had become universal in North America and represented over 40% of total bookings for main carriers 2001 – sales were predicted to be at least US$ 8 billion and the market was expected to go up to US$ 20 billion in 2001 In Asia, only Singapore Airline had introduced e-ticketing to limited destinations, by 2000

JAL Towards E-business In July 1996, JAL had begun accepting reservation through Internet collaborating with Travelocity, a ticketing agent in North America JAL adopted a more traditional approach in their business re-engineering process rather than radically changing their business strategy

Analytical Tools Value Chain Analysis Five Forces

Value Chain Analysis Putting additional value added in all process within the organization both internally and externally The aim of the value chain framework is to maximize value creation while minimizing costs (

Value Chain Analysis

Inbound logistics Operations Outbound logisticslogistics Marketing and sales Service Primary Activities

Value Chain Analysis Pocurement Human Resource ManagementHuman Resource Management Technology Development Firm Infrastructure Support Activities

JAL Solution Strategy Building an e-business technology JAL should build a web-based services that would be widely adopted by its customer base. Results include an increase in both domestic and international revenues and substantially improved customer satisfaction Roadmap: Smart Card

JAL Solution Strategy E-business Benefits: Higher customer satisfaction Increased customer relation rates Increased travel volume Faster and more efficient communication with customer base

Information Technology for JAL IT service and planning executive, JAL: “IT system’s to the business side of the enterprise.” JAL took a leadership position pioneering aggressive efforts to improve the availability of its IT systems Japan Airlines implemented an enterprise wide IT

Implementation in Indonesia e-ticketing concept has been widely accepted by domestic and international airlines in Indonesia

Airline WebsiteTraffic Rank (Indonesia) Air Asia99Domestic + international Mandala279Domestic only Lion Air327Domestic only Garuda Indonesia389Serves e-ticketing for domestic only Implementation in Indonesia Traffic Rank source:

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