AYESHA JAMIL AFRIDI DANISH

MEHMOOD NOOR FESHA NIMRA KHURSHID RABBIA SHOAIB

Airline industry is a service providing industry that provides air transport services for travelers and freight can classified as domestic, international, intracontinental or intercontinental. Pakistan International Airlines (PIA) was established as a first Pakistani airline in 1955 Airblue( our project)

 Problems
Accidents Future

growth n prospects analysis

 rapid

increase in the fuel prices, Labor cost, navigation and airport charges Taxation effect of politics international airlines operating in pakistan Poor management Low or poor maintenance Over staffing

Crashes and emergency landings due to : landing gear crumbling Fuel leakage Incapable pilots or junior staff Physical Defects No incorporation of new technology

 Internationally

air travel is flushing very well there has been a vast increase in air travel there has been a 6% annual growth in the air transport business Pakistan recently allowed 5 international airlines to begin direct passenger and cargo flights from Sialkot International Airport

 Pakistan

airline industry has a lot of opportunities for growth regardless of the challenges it faces. The private airlines operating in Pakistan are in comparison treated unfairly they are charged with heavy taxes and fuel sold to them is also on higher prices. They have to face tougher regulations and rules than pia as well.

 the

conditions there inability to introduce improvements in the existing structure and reluctance in building new airports is another reason why our local airlines are facing scrutiny. However, amidst all those challenges new private airlines are springing up they promise a brighter future of the airline industry of Pakistan. .

PIA AIR INDUS SHAHEEN BHOJA AIR AERO ASIA

EMIRATES THAI AIRWAYS QATAR AIRWAYS

 It

consists of macro-environmental factors that may have a positive or negative impact on the company and gives a chance to address problems at the right time.

It includes following factors Political Economic Social Technological Environmental and Legal

In 1993, the airline industry was deregulated by the GOP which allowed private airlines to operate ,so it lead to greater competition Political instability in Pakistan affects airline industry as much as it affects any other business. When government organizations has to choose an airline for staff travel, they usually give preference to PIA as it is owned by government.

Due to the influence of democratic government in Pakistan, private businesses are flourishing and as a result it has positive impact on growth and success of Airblue.
Government still owns a major stake in PIA and gives it frequent subsidies in the form of financial credit and oil

In the past years, Pakistan civil aviation authority (CAA) discouraged the investors to invest in the airline industry by imposing strict rules and regulations regarding taxes and aircraft ownership requirements .

Increasing interest rates influencing investment decisions Rupee depreciating against dollars (exchange rate changes) GDP increase and increase in spending power of people has positively influenced the airline industry of Pakistan. Tickets prices are reduced.

 Awareness

among customers has increased through multiple information channels such as television, internet, newspapers etc.
Customers are now well aware of the price differences between different companies in the same industry as well as differences in the services provided by each company.

Due to privacy issues customers are reluctant in providing their credit card information for E-ticketing.
Needs, demands and spending patterns of customers are changing

 Airblue

is the first Pakistani airline which introduced technological advancements and so they have first mover advantage
technological changes are taking place in airline industry; in-flight entertainment facilities and automated check-in counters are examples of technological advancement. Air blue has to constantly make efforts to maintain these services.

Major

 Airblue

was the first airline to install SABRE system. PIA imitated air blue and introduced this technology later on.
service provided by different airlines and also airblue is one of the technological advancements

SMS

 Environmental

rules and regulations must be followed by every organization.

changes and natural disasters affect flight schedules in air traffic control system affect smooth flow of air traffic

Weather

Disruptions

Rules laid down by Civil Aviation Authority have to be followed by every organization in the airline industry and so Airblue also has to follow every rule and has good relations with CAA.
the 2010 plane crash Airblues costs have increased to ensure safety and security of its passengers due to strict legal obligations imposed by the Civil Aviation authority.

After

 Second

largest private airline of Pakistan enjoying almost 30% market share on domestic routes Offers low fares as compared to PIA, Shaheen and Air Indus by using cost leadership strategy Airblue has eliminated all the paper work by deploying EDNET intranet software There is a special package for special childrens and students

 Airblue

has an excellent refund policy. In September 2012, the company invested in A-340 long range commercial passenger jet to cover longer routes for international flights. Airblue had the first movers advantage by starting eticketing in Pakistan for the first time.

 Airblue

was the first airline in Pakistan to introduce wireless check-in and self check-in kiosk facilities. Customized SAP ways software implementation has facilitated business process integration as well as coordination . Airblue had an agreement with ONAIR to launch mobile onair voice and data services on up to 12 of its airbus A320 aircraft beginning in 2009.

 Doesnt

have business class they have economy class for all customers. People who want to travel in business class dont travel in Airblue and they prefer other airlines. Lack of marketing efforts and brand image promotion. Company officials still travel in PIA as they have contracts with PIA and PIA offers discount. Airblue doesnt provide such facilities. Airblues 2010 plane crash affected brand image adversely.

 Airblue

has small fleet of aircrafts ,due to this they have to do refueling of aircrafts during flights to foreign countries from international suppliers Airblue doesnt have its own repair and maintenance facilities.

 Untapped

domestic and international markets can be tapped through market development. Route expansions to Europe and North America. There is an increasing demand for freight. Taking advantage of this opportunity, Airblue should expand its cargo operations to destinations other than UAE and UK.

 Can

generate high revenue by providing high quality services to less-price sensitive customers.
expand its services by having a section for business class travelers.

Can

 Airblue

is the market leader in private Airlines and because of its current position in the market it can easily form alliances with other airlines to enhance its market reach. There is a growing trend of internet usage in Pakistan. Airblue can use it as an opportunity for advertising and online services promotion.

 PIAs

possible privatization. Shaheen Air International and Air Indus are progressing. International airlines such as Emirates and Qatar Airways are internationally renowned airlines and have international standards. If they reduce their fares, Airblues customers may switch to them because of the good quality services provided by them. Airfares are dependent on oil prices which are increasing day by day. Increase in taxes by civil aviation authority is also a threat for the company.

SO Strategies

WO Strategies

1. More bookings through internet by 1. Start providing services for business class using e-ticketing (S6, O7) (W1, O4) 2. Add new destinations and increase 2. Market through online advertisements market share by offering low fares (W2, O7) (S1, O1/O2) 3. Sign contracts with companies by giving 3. Increased use of online services due excellent offers for Staff travel. (W3/O6) to excellent refund policy (S3,O7) 4. Invest in more A-340 Jets to cover international destinations (S4,O1)

ST Strategies

WT Strategies

1. Provide low fares with good quality 1. Offer high quality services for business to beat competitors (S1, T2/T3) travellers to be in a better position to 2. Purchase more A-340 Jets to reduce compete with PIA (W1, T1) threat of competitors and gain 2. Improved marketing and brand promotion competitive advantage (S4, T1/T2/T3) efforts to reduce threat of competitors. (W2, T2)

high initial investment is the main barrier to entry in the airline industry. Sometimes banks provide credit for capital investment and new entrants can come in the market with few leased aircrafts.

 In

1993 the civil aviation industry deregulated and they opened the airline industry for private sectors to invest here. They wanted competition in airline industry so better services can be provided to customers at low fares. As a result so many private companies entered into the industry but many left too soon due to heavy taxes levied by CAA.

 Bhoja,

Hajvery, and Raji closed their operations years ago Other private airline safe airways incorporated in Pakistan in 1999 but it had to close its operations in Pakistan due to heavy taxes levied by CAA and it couldnt pay some of those taxes.

 The

barriers to entry are significantly high, consequently decreasing the threat of new entrants. plane and flying experience. When any new firm wants to become a part of airline industry they have to get licensed which can take about a year. So the threat of new entrants is low due to the time and expenditure required to even enter in airline industry.

 Substitutes

such as buses, cars, trains, ships are all a threat for the airline industry as they are substitute means of transportation. Airblue offers low fares to its customers. Low fare offering enhances the chances of preferring air travel over other substitutes. Other means of transportation are still preferable and cheaper for price sensitive customers especially when it comes to travelling short distance.

 The

suppliers in airline industry are aircraft manufacturers and fuel supplier. The airfares are very much dependent on oil prices. Airbus, Aircraft Parts Suppliers and Reservation System Providers dominate the supply chain of airblue.

 Airbus

A319, Airbus A320, Airbus A340 were all taken on lease from airbus (leading aircraft manufacturer) except one airbus A340 which airblue owns. As there are few aircraft manufacturers main are Airbus, Boeing and ATR so bargaining power of suppliers is very high. Airblue has small aircrafts thats why they have to purchase fuel from foreign countries which increases bargaining power of foreign fuel suppliers.

 Buyers

have a high bargaining power since they have a lot of options to choose from according to their price demands. Advanced technologies have now enabled the customers to conveniently check and compare prices online. Customers are well aware of the differences between prices charged and services provided by different national and international airlines.

 PIA,

Air Indus, and Shaheen are the various competitors of Airblue. PIA is Airblues biggest competitor which is supported by government and makes it difficult for Airblue to attract and retain customers.

 There

are high exit barriers in airline industry. As the fixed cost is very high in airline industry and it is hard to leave the airline industry because the aircrafts are on lease like in case of airblue so there are long term loan agreements to stay in business. There is comparatively low product differentiation in this service but we can differentiate the services when it comes to international airlines operating in Pakistan like Qatar airways and emirates.

Cross-functional analysis is integration of information from all levels of management. At times unstructured strategic decisions are also made by cross functional teams such as what markets to compete in, what new production technologies to invest in, and what return on investment to require In our cross functional analysis we will see how the major different departments within the organization work together in cooperation with each other to provide smooth working of the organization

There are certain departments in which do not have directors instead they have senior managers. Airblue has an open organizational culture and centralized organizational structure. The flow of information and communication of long-term and short-term goals and objectives within the organization is from top to bottom. The annual or short term goals which are directed towards department are communicated to the departments in the monthly meeting.

CEO COO
MD
SDO
Directors of all Departments The Leaders hip Team

HR Flight Opera tions Contr ol

Airport Opera tions

Flight Servic es

Enginee ring

Opera tions

Commerc ial Marketing

Corpo rate Safety

Traini ng

Qualit y Assur ance

Finance/ MIS/ Procure ment

 Marketing:

The marketing department of air blue is not as distinct as the other departments mainly because of the fact that promotion through advertising within airline industry is different as compared to promotion for other products or services the department consists of only 2 employees the airline industry markets its itself at airports, ticket counters, travel agents and travel and in-flight magazines and by sponsoring an event this way of promoting and advertising for an airline has been proven successful

The marketing department further consists of the commercial department which includes sales and call center. These both sub departments are focused mainly on assisting with online and call reservations of customers and also manual counter ticketing.

marketing

commercial

sales

call center

operations

scheduling

fleet management

flight operations

The IT department is there to manage and update the companys website and provide smooth functioning of its e-ticketing service and assist in online and call reservations

The engineering department consists of all the engineers technicians and plane maintenance support crew that work hard to make air blue planes and flights safe.

finance and accounts

accounts
logistics

The finance department is further subdivided into 2 departments : Accounts Procurements Air blue incurred more variable costs than fixed cost. The cost structure of an average air blue flight depends on the route it takes Air blue is required to pay off monthly leases with the amount of lease payment varying with the plane size

IAS 17 Leases it gives the rules for the accounting policies and disclosures applicable to leases, for lessees as well as lessors. Leases are of two types finance lease and operating leases and a lease has to be classified under these two heads IAS 17 was reissued in December 2003 and applies to annual periods beginning on or after 1 January 2005 Air lines use this standard for leases because most of them lease air crafts so they have to do the accounting treatment for leases in accordance with the international accounting standard 17

 Rights

and equitable treatment of shareholders Interests of other stakeholders Role and responsibilities of the board Integrity and ethical behavior Disclosure and transparency

private limited company Dont issue shares 7 days term agreement with suppliers corporate social responsibility

Plant A Tree programmer in march 2008 relief campaign in May 2009