American
International University – Bangladesh
Term Paper on Etihad
Airways
Presented To:
Professor Dr. M. Mahmodul Hasan
Faculty
of Business Administration
Department
of Management
MBA
Program
Submitted By:
Jeener
Badsha
Section: C
Date of Submission: 20th
July, 2014
Term Paper
On
Etihad Airways
LETTER OF TRANSMITTAL
20th
July, 2014
Professor
Dr. M. Mahmodul Hasan
Faculty of Business
Administration
American
International University of Bangladesh (AIUB)
Subject: Letter regarding submission of Term Paper
on Etihad Airways.
Dear Sir,
It's a great pleasure for
us to have the opportunity to submit a term paper on “Etihad Airways” which had been a great experience for us to work
with such a practical & real life issue. We tried utmost to make & let
it look like a professional one. Any shortcomings are expected to have a kind
view for us encouragement.
Thank you for
your sincere & honest try to let us make easy & get familiar with the
terms & facts of Strategic
Management and to help us
make the paper a successful one.
Our efforts
will be valued, if this paper can serve for what it’s been meant for & our
assistance will be there for any queries.
Sincerely,
We,
the group
members
|
Serial
|
Name
|
ID
|
Signature
|
|
1.
|
Ahmed Shehab
|
13-96814-2
|
|
|
2.
|
Ahmmad
Faysal
|
13-96759-2
|
|
|
3.
|
Shuva Sourav Sarker
|
13-96812-2
|
|
|
4.
|
Rob Mahfuj
|
13-96915-2
|
|
|
5.
|
Kabir Md.
Faisal
|
13-96920-2
|
|
Table of Contents
|
1. Definition of Strategy
|
1
|
|
2. Most Strategic Management Models
|
2
|
|
3.
Company Profile
|
4-5
|
|
3.1 Overview of the Company
3.2 Vision & Strategy
3.3 Etihad Organogram
|
4
|
|
4
|
|
|
5
|
|
|
4. PESTEL, SWOT and Porter’s
Five Forces Analysis
|
6-9
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4.1
PESTEL
4.2 SWOT
4.3 Porter’s Five Forces
|
6
|
|
8
|
|
|
9
|
|
|
5. SWAN Analysis & TWOS
Matrix
|
10-11
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5.1 SWAN Analysis
5.2
TWOS Matrix
|
10
|
|
11
|
|
|
6.0 Value Chain Analysis
|
12
|
|
7.0 ViSA Model & SMARTER
Model
|
15-16
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7.1 ViSA Model
7.2 SMARTER Model
|
15
|
|
15
|
|
|
8.0 The BCG chart
|
17
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|
9.0 PURE Objectives &
GREAT Model
|
18-20
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9.1 PURE Objectives
9.2 GREAT Model
|
18
|
|
19
|
|
|
10. Market Analysis including
Market Segmentation
|
21
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|
11. EFE Matrix
|
26
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|
12. CPM Matrix
|
27
|
|
13. QSPM Analysis
|
28
|
|
14 Financial Analysis
|
31
|
|
15. Competitors Analysis
|
33
|
|
16 Breakeven Analysis
|
34
|
|
17 KSF Analysis
|
35
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|
18 Strategy Evaluation and Contingency Plan
|
37
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19 Recommendations
|
39
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|
20 Conclusion
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40
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21 References
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41
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Acknowledgement
First of all
we would like to thanks Almighty Allah for helping us to complete this term
paper properly and on time.
We are also
especially grateful to our honorable course instructor Prof.
Dr. Md. Mahmodul Hasan, for his kind and sincere guidance throughout these
endeavors and to make our report better and much more knowledgeable.
We would like
to express our sincere gratitude and cordial thanks to our parents, friends and
other classmate for their crucial support and providing needed information
about our term paper despite of their enormous workload. It would have been
quite impossible to carry on the term paper and give it a final shape without
their help.
Although, we
had to face some difficulties due to the lack of time while preparing this term
paper, and at one moment of time, we thought we would not be able to complete
this, but thanks go to the Almighty once again for making us prepare this paper
and submit in time.
Finally we would like to say that this
report is a subject to error or mistakes that are inherent in human endeavor.
We therefore request every reader of this paper to forgive us for any kind of
mistake.
Executive Summary
Etihad
Airways, the national airline of the United Arab Emirates, was set up by Royal
(Amiri) Decree in July 2003. Etihad Airways commenced operations in November
2003, and in 10 years has become one of the fastest growing airlines in the
history of commercial aviation. Etihad is governed
by a board of directors chaired by HH
Sheikh Hamed bin Zayed Al Nahyan, HH Sheikh Khaled
bin Zayed Al Nahyan being the vice chairman and operates in terms of its
founding legislation and the Article of Association of the Company. The Board
consists of seven independent non-executive members and has two sub-committees,
being an Executive Committee and an Audit Committee, each with its own charter
and chairman. Other members of the
board include: Mohammed Mubarak Fadel Al Mazrouei, Ahmed Ali Al Sayegh, Mubarak
Hamad Al Muhairi, Hamad Abdullah Al Shamsi, Khalifa Sultan Al Suwaidi and
George Cheaib. The airline is led by James
Hogan (formerly CEO of Gulf Air) who was appointed as President and Chief
Executive Officer on 10 September 2006. The
airline has received a range of awards that
reflect its position as one of the world’s leading premium airline brands,
including ‘World’s Leading Airline’ at the World Travel Awards for five
consecutive years in2009, 2010, 2011, 2012 and 2013. Abu
Dhabi, the capital of the United Arab Emirates, is the airline’s hub. Etihad’s
fleet of 88 aircraft operates more than 1400 flights per week, serving an
international network of 84 passenger and cargo destinations in the Middle
East, Africa, Europe, Asia, Australia and North America. Etihad Airways also
owns nearly 30 percent of air Berlin,
Europe’s sixth largest carrier and 40 percent of Air
Seychelles. The airline seeks to reflect the best of Arabian hospitality
cultured, considerate, warm and generous as well as enhance the prestige of Abu
Dhabi as a centre of hospitality between East and West.
1. Definition of Strategic Management
There
are 2 types of strategic Management Theory. There are:
1.
Strategic Management
(Theory: 2000-2010)
2.
Strategic Management
(Theory: 2011-2015+-)
In our report is based on Etihad Airways. And that
reason we need to find that what type Strategic Management Theory follows by
Etihad Airways. Where Strategic Management (Theory: 2000-2010) can be defined
as, the art and science of formulating, implementing and evaluating
cross-functional decisions that enable and organization to achieve its
objectives. Which is not related the overall strategic management process by
Etihad Airways. They follow the Strategic Management (Theory: 2011-2015+-).
This strategy focuses on integrating management, marketing, finance/Accounting,
productive/operation, research and development (R&D) and computer
information system to achieve organizational success. And Etihad Airways
followed strategy development which is comprised of five stages:
1.
Discovery: This
stages Etihad’s all members of the team to individually gather information on
an agreed upon set of attributes affecting the organization.
2.
Strategic thinking: After
the discovery they can be defined as ‘the generation and application of
business insights on a continual basis to achieve competitive advantage’.
3.
Strategic planning: Strategic
planning stages Etihad assemble a mission statement, set goals and objectives,
audit the organization for internal strengths and weaknesses, assess the
external environment for opportunities and threats, evaluate strategic options,
and then select and operationalize an organizational strategy.
4.
Strategy roll-out: This
stage they follow into activities and offering and ensure that the strategy is
communicated well throughout the organization.
5.
Strategy tune-up/adjustment: And
this stages Etihad Airways phase is a meeting held several times per year to
keep track of the progress of the implemented strategy and adjust for changes
in the internal and external climate of the organization.
2. Most Strategic Management
models:
1.
PESTEL Analysis
2. STEER
Analysis
3. Five Forces
Model
4. Strategic
Group Map
5.
SWOT Analysis
6. Blue
Ocean Strategies
7.
Open innovation
1)
Strategic Group Map of Etihad Airways
1.
Extent of Product diversity: As far as the first class and business class is
concerned, Etihad Airways segregates its services as Etihad Diamond First Class
and Etihad Pearl Business Class.
2. Extent
of Geographic Coverage: Etihad Airways operates in Europe,
North America, Latin America, Australia, Asia Pacific and Middle East
(Malaysia, China, Indonesia and Qatar), and Canada
3. Number
of Market Segment Served: Etihad Airways segments the
market according to the geography and psychographic
to spread its overall business internationally.
4. Distribution
Channels Used: Etihad Airways are running their
business in codeshare agreements to major market hubs.
5. Extent
of Branding: Etihad Airways brands its
products through, print media, publicity and web based media predominantly etc.
6. Marketing
Effort: Environmental Laws and regulations while operating can
add to the cost and difficulty of marketing or transporting products across
state and international borders.
7. Product
Quality: High quality is maintained while they
provide service for the customer.
8. Pricing
Policy: Etihad Airways follows consistent price policy. Etihad Airways would not only avail booking facility
at its main offices but also increase sales in general throughout the Asian
region that it targets. Also, it can increase the volume of ticket distribution
at its corporate website.
2) Blue
Ocean Strategy of Etihad Airways
Etihad Airways is a pioneer in huge
investments in environmentally friendly technologies.
3) Open innovation of Etihad Airways
Etihad Airways prime focus is on providing
better service for the customer. And
also strive to make travel safe and environment-friendly by practicing the
highest global standards in both these areas.
4) Seven S- Model of Etihad Airways
1. Business
Environment/Strategy: Etihad Airways has higher
competition from national oil companies who are able to operate at lower
profitable level and an increasingly volatile market.
2. Shared
Value: The spirit values of Etihad Airways shared by everyone
in the organization.
3. Structure:
Etihad Airways employ over 10,000 staff representing more than 126
nationalities and 8,512 of whom are based at its headquarters in Abu Dhabi. They
have several departments those are Human Resource Department Marketing,
Software Engineering, Hardware Engineering, Project, Finance and Monitoring
department etc.
4. Staff: Etihad
Airways hire talent employee when they recruit they consider knowledge, skills
and experience, they consider their employee as an asset. Etihad Airways offer
attractive salary, pension plans, informs estimated retirement date provides
health care services.
5. System/
Infrastructure: State of the art technology and
exploration infrastructure.
6. Skills:
Recruitment is based on skills, technical knowhow, perseverance and diversity.
7. Style: Etihad
Airways always focus on quality service, innovation as well as teamwork for
better performance of the company.
3. Company Profile
Vision
As
the National Airline of the United Arab Emirates, they seek to reflect the best
of Arabian hospitality - cultured, considerate, warm and generous -
as well as enhance the prestige of Abu Dhabi as a centre of hospitality between
East and West. Their goal is to be a truly 21st century, global airline,
challenging and changing the established conventions of airline hospitality.
Etihad
Airways welcome everyone who flies with them as a distinguished Guest, as
reflected in the unique hospitality they offer in their Guest Travel Classes.
With fresh new approach to service in the air and on the ground, Etihad Airways
always seek to return a sense of freedom to flight as well as a relaxing
experience; and also strive to make travel safe and environment-friendly by
practicing the highest global standards in both these areas. And Etihad Airways
always in touch with Customers needs.
Mission
As
the national carrier of UAE Etihad mission is to make Arabian hospitality
closer and available to other part of the world by a creating sense of
cultured, considerate, warm and generous staff attitude and service. As now
remarked as innovative carrier Etihad wanted to maintain its name as most
innovative airlines in the world as compares.
Company Organogram
Etihad
is governed by a Board of Directors under the chairmanship of HH Sheikh Hamed
bin Zayed Al Nahyan and operates in terms of its founding legislation and
the Article of Association of the Company. The current Board consists of
seven independent non-executive members and has two sub-committees, being an
Executive Committee and an Audit Committee, each with its own charter and
Chairman.
4. PESTEL, SWOT, Porters Five Forces
4.1 PESTEL Analysis of Etihad Airways
There are
some factors in the macro environment that effect the decision making process
in an organization. To help analyze these factors marketers can categorize it
using PESTEL model. This distinguishes factors between political, economic,
social, technological, environmental and legal.
|
Political
|
 |
Economical
|
|
Ø Relatively Liberal Government as a flag carrier.
Ø Support of Sheikh to make this airline best in the world.
Ø Total Instability in Middle East makes difficulty to operate
business in this region.
Ø Role of Abu Dhabi as capital
|
|
|
|
Social/Socio–Cultural
|
Technological
|
|
|
Ø Cosmopolitan workforce and population so huge international
customers access.
Ø Plenty of wealth people
who can take this type of airlines service
Ø Still existing discrimination of women in the workplace.
|
Ø The existing order of aircraft is under proceed so the airline
quickly will increase number of flight.
Ø Development of devices online service department to give quick
and better service to passengers.
|
|
|
Ecological / Environmental
|
Legal
|
|
|
Ø Tough hot environment in region so it is very much challenging.
Ø Sound and others restriction in urban areas so it becomes so
challenging to operate flight noise free.
|
Ø Low tax regime as a flag carrier of United Arab Emirates
Ø High cost of VISA to UAE so limited labor force.
|
The
political situation in Emirates gives a competitive advantage to UAE companies
because of political stability in this region in comparison with other Arabic
countries. Etihad is based in Abu Dhabi which is a rapidly developing city.
Dubai has the advantage of starting its development earlier than other
locations, but on the other hand now the growth of Abu-Dhabi’s economy is
higher. It even more influences the Etihad’s role because its headquarters are
located in a capital of the country. There is a competitive advantage for
Emirates and Etihad airlines because they, as other companies in the country,
benefit from a low tax regime and lower costs in domestic airports. The
currency value of UAE is closely associated to the US Dollar, which resulted in
a lower exchange value base cost advantage over the EU rivals. The other
features of macro environment are shown at the PESTEL diagram.
4.2 SWOT Analysis of Etihad
Airways
|
Strengths
|
Weaknesses
|
|
1.
Etihad Airways is a
profitable airline. A full year EBIT of US$ 137 million was recorded on
revenues up 36% to US$ 4.1 billion.
2.
Safest airways
& Best in class airlines in between the competitor.
|
1.
Market share growth
is restricted due to intense competition level.
2. Flights having via destinations have their
interval time often increased more than that was committed.
|
|
Opportunities
|
Threats
|
|
1.
Five new routes were
launched in Etihad Airways. Now total 81 destinations in 51 countries.
2.
Online Payment
& security system is better than other competitors.
|
1.
Airways Services
becoming more competitive.
2.
Fuel price increasing in recent years which
is range $100 to $600
|
4.3 Porters Five Forces
Market risks are occurred in a specific
market and associated with the market’s characters. Market share would determine the
position that Etihad Airways would have in front of its competitors in the
Asian Market. The company’s competitors can be best seen in their degree of
challenge that they pose to Etihad Airlines by virtue of a thorough
competitors’ analysis using Michael Porter’s five force analysis. This can be
done as follows:
1.
Threat of Substitute Products: The competitors in
this category have been identified as Jet Airways and Oman Air. As per the
recent global recession, it has become a mind-set for all the companies to opt
for flying at low costs. In fact there are passengers who are ready to go for
flights that offer no fringe benefits either.
2.
Threat of Rivalry: The competitors in this category are
Emirates Airlines, Saudi Arabia Airlines and Qatar Airlines in terms of market share
which is the biggest threat to the company in terms of its market penetration
strategy. As these airline companies are increasing their number of fleets each
day, competition is getting even tenser.
3.
The Threat of New Entrants: With UAE and its
Asian counterparts advancing at a growth rate better than elsewhere, there is a
huge likeliness that new commercial airline companies would open in sometime.
So, this would increase the various reasons for which the customers would
prefer switching.
4.
The Bargaining Power of Suppliers: With Boeing and Airbus being the only two suppliers in the
category, there is a large degree of dominance from these suppliers. This can
only be reduces of the company succeeds in its marketing penetration spree and
buys more fleets as necessary.
5.
The Bargaining Power of Customers: This is comparatively low in the aviation industry. The
customers generally have to pay the price that is asked. Here, price reduction
can be a good way for better market penetration. (Etihad Trumps its Competitors,
2010).
5. SWAN Analysis, TOWS Matrix
5.1
Swan Analysis
Strength:
·
Etihad Airways is a
profitable airline
·
Safest airways &
Best in class airlines
Weakness:
·
Market share growth is restricted due to intense
competition level
·
Flights having via destinations have their
interval time often increased more than that was committed
Achievement:
·
Etihad Airways has been voted the World’s
Leading Airline, for the fifth consecutive year, at the World Travel Awards
2013, held in Doha on November 30th.
·
Etihad Airways won the award for World’s Leading
Cabin Crew and the prestigious World’s Leading Airline First Class award for
our Diamond First Class cabin.
·
Airline of the Year 2013 by Global Traveler
magazine in the US.
·
“The Oscars of the Travel Industry”, the World
Travel Awards are acknowledged across the globe as the ultimate travel
accolade, with winners setting the benchmark to which all others aspire.
Next
Step:
·
Etihad Airways has announce new routes will join
a daily service to Los Angeles and three flights per week to Dallas (United
States), plus daily services to Zurich (Switzerland), Perth (Australia) and
Medina (Saudi Arabia), all of which are scheduled to commence in 2014.
·
In 2015 the eight new routes will increase
Etihad Airways’ worldwide network to 102 destinations.
·
Etihad airways future deliveries will allow us
to progressively replace existing, less-efficient aircraft, add capacity in
existing markets, and launch flights to more destinations, with over 30 new
international routes planned by 2020.”
5.2 TWOS MATRIX
|
Internal
Environment
|
Scores
|
|
|
Strength
1.
Etihad Airways is a
profitable airline. A full year EBIT of US$ 137 million was recorded on
revenues up 36% to US$ 4.1 billion.
2. Safest airways & Best in class airlines in
between the competitor.
|
Weakness
1.
Market share growth
is restricted due to intense competition level.
2. Flights having via destinations have their
interval time often increased more than that was committed.
|
CPM
Scores 2.85
|
|
External Environment
|
|
|
|
Opportunities
1.
Global Destination, now total 81 destinations in 51 countries.
2.
Online Payment and security service is better than other competitor.
|
Threats
1.
Airways industry becoming more competitive.
2.
Fuel price increasing in recent years which
is range $100 to $600.
|
EFE
Scores 2.55
|
6.0
Value Chain Analysis of Etihad Airways
|
Firm
Infrastructure
|
Accounting
|
Legal
|
Finance
|
planning
|
 Quality Assurance & Govt. Relation |
|||
|
Human
Resource Management
|
Flight analyst Traning
Yield analyst traning
|
Pilot traning
Safety traning
|
Baggage handling traning
|
Product development
Market research
|
In-flight traning
|
|||
|
Technology
Development
|
CRS, FSS
|
In-flight system
|
Baggage
System
|
DBM, IS, CC
|
Baggage
tracking system
|
|||
|
Procurement
|
Technolgy
   Acqusitions |
|||||||
|
|
Flight & Crew Scheduling
Flight reservation
Route select
Pricing
Fuel
Aircraft
Acquisitions
Catering
|
Courier operation
Gate operation
Aircraft operation
Baggage handling
On-board services
|
Ground
Shuttle
Service
Baggage
Claiming
|
Promotion
Advertising
Direct sales
Selected travels agents
|
Lost & found services
Follow-up on
Customer’s Feedback
|
|||
|
|
Inbound
Logistics
|
Operations
|
Outbound
logistics
|
Marketing
& Sales
|
Services
|
|||
Human Resource Management
Human resources or human capital is the
intangible resources of abilities, effort, and time that workers bring to invest
in their work. The people at Etihad Airways are the major contributors of
strategic capability to the company. Service has a big impact on the customers’
perceptions about the company’s product. Because of the importance of its
people, Etihad Airways formulated an employee development strategy through
proper and effective training. This strategy is expected to strengthen Etihad
Airway’s position in the marketplace. Employee development can be an
essential ingredient of an organization’s competitive advantage. Employee
development includes all of the education and training that organizations might
invest in their employees such as training employees to perform effectively in
their current jobs, orienting employees to the workplace, developing them for advanced
positions or programs, and building organizational capability for future
success. Etihad Airways promotes a working environment wherein the employees
are free to act in both the company’s and passengers’ best interests.
Technology Development
Etihad Airways become Asia’s leading
e-business airline by implementing ambiguous strategy and fully harnessing
state-of-the-art technology. The company is determined to provide their
customers and business partners with greater ease and convenience, as well as
to create new business opportunities for business growth and to enhance
efficiency and economic benefits. The company has unveiled a series of
e-business initiatives in the areas of passengers, cargo, procurement and
internal procedures. Among the technologies that Etihad Airways introduced in
order to enhance passenger experience are:
1. Online Check-in
2. Airport Lounges
3. In-flight E-mail System
Service
More and more corporations throughout
the world are adding value to their core corporate offerings through services.
Modern corporations are increasingly offering fuller market packages of
consumer focused combinations of goods, services, support, self-service, and
knowledge. Etihad Airway’s goal is to deliver superior service and
value to its customers and to become the world’s most admired airline. The
organization recognizes that the quality of service sets it apart from its
competitors. The organization is committed to meeting on-time performance
goals, maintaining and growing international route network, and increasing
flight frequencies to meet market demand. Etihad Airways strives to deliver
Service Straight from the Heart and takes pride in making its customers feel
safe, welcome, comfortable and above all, reassured.
7. VISA Model, SMARTER Model
7.1 VISA
Model
Vision:
To
deliver an effective transport system that contributes to the economic growth,
quality of life and environmental sustainability of the Emirate of Abu Dhabi.
Strategy:
Etihad’s strategy is to be best airline in the world, to become
profitable and to contribute at its best to Abu Dhabi 2030 Plan.
Action Plan:
Wherever
possible, investigation reports should also make recommendations to management
on corrective action to be taken in order to reduce the likelihood that the
particular incident will reoccurs.
7.2
SMARTER Model
Specific:
Ø Philippine
Airlines (PAL) and Etihad Airways today announced a strategic partnership
agreement that marks a new era of cooperation between the flag carriers.
Measurable:
Ø Etihad
Cargo, the freight division of the UAE flag carrier Etihad Airways, has been
awarded the Air Cargo Industry Customer Care Award at the 2014 Air Cargo Week
(ACW) World Air Cargo Awards.
Achievable:
Ø They will continue to expand reporting assurance to cover a
broader scope of sustainable development metrics. They will develop company
guidance for implementing stakeholder engagement principles
Realistic:
Ø
Etihad Airways stake in Air Seychelles gives 'realistic way forward' to
the island carrier's future.
Ø
Airway’s 40% stake in Air Seychelles gives a
much-needed second lease of life to Air Seychelles, who says the stake offers a
"realistic way forward" for growth, critical as the carrier has
scaled back almost its entire network.
Time:
Ø National
airline of the United Arab Emirates will start a direct daily flight from
Edinburgh to its home base of Abu Dhabi. This service will launch in June,
using an Airbus A330-200 aircraft.
Encompassing:
Ø Giving
Together encompasses Etihad Airways’ support for nominated charities and
humanitarian programs across the network.
Ø Working
Together encompasses investment in the training, development and wellbeing of a
multicultural workforce, with the core airline employing stay from more than
140 nationalities during 2013.
Reviewed:
Ø Etihad
Airways has good reputation. Their flight timing is good. It is an excellent
airline with wonderful, professional service and excellent prices. They are
very flexible people, good hospitality and care a few times.
8. BCG Matrix of Etihad
Airways|
|
Relative Market Share
|
||
|
HIGH
|
LOW
|
||
|
Market Growth Rate
|
HIGH
|
 |
 |
LOW
|
 |
 |
|
Analysis:
Etihad Airways is
the fourth largest airline in the Middle East and it is the second largest
airline in the United Arab Emirates, after the Dubai-based airline Emirates. Etihad Airways has
growing market but low market share because buyers have yet to discover them.
According to World Airline Awards (WAA) Etihad Airways is one of the fastest
growing airline companies in the world. Etihad Airways needs to increase market
share rapidly otherwise it becomes dogs. Singapore Airlines, Emirates airlines,
Qatar Airlines are in the stars because they have high growth rate and high
market share.
9. PURE Objective & GREAT Model
9.1
PURE Objectives
Positive:
Ø Most of
the Customer preferred Etihad airline. Because this airline’s service is
excellent, its feel as if you are travelling business class, nothing is too
much trouble for the staff. Entertainment is the best with excellent earphones.
That’s why is airlines are awarded by fifth consecutive years.
Understood:
Ø Because
of good understanding with customer Etihad Airways stake in Virgin Australia
rises to 21.24 per cent. Loyalty programs give companies the ability to
understand who their consumers are and allow them to acquire new consumers.
Companies use the power of loyalty programs to get consumers to spend away from
the competition.
Recorded:
Ø Etihad
Airways has recorded first-half revenues of $3.2 billion, up 28% compared to
the year-ago.
Ø Passenger
revenue growth was even stronger, up 13% year-on-year to USD1.8 billion.
Ethical:
Ø Etihad
Airways expects all suppliers to comply with its supplier ethics and code of
conduct, regardless of local business practices and social customs.
Ø Ensuring
that all their employees who interact with Etihad Airways understand and adhere
to the Etihad Airways Supplier Ethics and code of conduct for doing business
with business with Etihad Airways.
9.2 GREAT Model
Goals:
Ø Etihad
airlines are to provide airline carrier services to its esteemed customers
globally with the dedication of meeting their clients' expectations.
Ø The
airline company wanted to provide the most modern flights to its customers
hence, creating a competitive air transport market for its competitors.
Roles:
Ø Provide a high- quality service of existing customers, promising high
quality service for the new customer and investment in numerous existing
businesses and also combined with employees who make a difference, ensures an
opportunity- rich future for Etihad.
Expectations:
Etihad Airways are
expected to increase more growth rate than previous year. They expect
Customer’s journey is more enjoyable than other time. Their profit will also
increase this year. This are the divided
by three important criteria. They are:
Ø Returns: Tickets
of this type are only available for certain airlines. The outward and the return flight will be paid at the time of
ticket purchase, with the guarantee that the traveler is conveyed to the terms
agreed with the purchase of tickets from his travel destination back to his
homeland. The date of the return flight must
match the issuer of tickets (usually travel agent, tour operator or by agreeing
with the airlines). An open return ticket is basically valid for 12 months.
In the specific case of the airline Etihad
Airways tickets can be issued even for a maximum of 18
months.
Ø Growth: Etihad Airways net profit jumped 48 per
cent to $62 million (Dh227.54 million) while revenues rose 27 per cent to $6.1
billion (Dh22.38 billion). Company’s earnings before interest and tax (EBIT) up
22 per cent to $208 million and earnings before interest, tax, depreciation,
amortization and rentals (EBITDAR) up 30 per cent to $979 million, a margin of
16 per cent of total revenues.
Ø Distributions: Saber implements technology for the
airline across operations including reservations, inventory, marketing,
planning, ecommerce and distribution. The contract also
includes a multi-year, full-content distribution agreement enabling
Saber-connected agents to access the airline’s inventory while Etihad will use
Saber to market and sells its services.
Accountable and Transparent:
Ø Franek
Services has received the “Partnership in Excellence” award from Etihad Airways
in recognition of its exceptional service performance supporting the airline’s
operations. Procurement
and supply management, Etihad, gave an overview of the airline’s procurement
policy and practices and their reliance on transparency, integrity,
accountability and strong governance.
Timing:
Ø Etihad Airways timing is perfect. These airs Company always
maintain their time schedule. That’s why passengers are going to enjoy these
airways and save time.
10. Market Analysis including Market Segmentation
Market Analysis
The marketing process starts by segmenting the market, selecting or targeting the most profitable
segments, and then positioning the service
or product on the minds of consumers within the selected
segment. Then providing and communicating the service or product. In order to
succeed in today’s competitive markets, a strong marketing strategy should be
put in place using the right principles, and this is just what Etihad did.
CCO Peter Baumgartner described the marketing strategy at Etihad, after
receiving the 2008 marketing award i.e. the “Airline Strategy Award”, that
their marketing strategy is driven by four principles. First, “undifferentiated
superiority” second, “to be inspirational to the individual” (they aim to act
like a small airline, through personalized service in
all classes, even the economy class), third to “behave like a luxury
brand but don’t lose sight of the entire spectrum”. Baumgartner says: “We
are a luxury brand and position ourselves as a luxury brand, but everybody has
aright to fly Etihad and experience a touch of Etihad luxury”, fourth is about
promoting Abu Dhabi and lining up Abu Dhabi’s new image with Etihad’s, through
the new slogan “From Abu Dhabi to the world” (Airline Strategy Awards 2008).
The integrated marketing mix for services
can be summarized using the 7 P’s model, which consists of Product, Price, Place,
Promotion, People, Process, and Physical Evidence, below is how Etihad
considered each part, with regard to the Segmentation, Targeting, Positioning (STP) process.
Product Strategy
As far as the first class
and business class is concerned, Etihad Airways segregates its services as
Etihad Diamond First Class and Etihad Pearl Business Class. This is integrated
with actual staff provision and the multi-cuisine availability on board. The company’s
augmented products give it maximum competitive advantage. This has been
diagrammatically represented in the subsequent diagram. Abu Dhabi being the
centre of tourism for many, gives the company a location advantage. The company
has chauffeur service for its customers not only at Abu Dhabi airport but other
airports as well where the company’s airline operates. This is especially for
the 1st class and business class passengers.
Also, the company provides 24 hrs departure facilities and only an hour early
arrival as against the normal 3 hour early arrival in other company’s flights.
The potential product of Etihad Airways does not include lounge which can be
developed over time so as to draw more customers in the targeted segment. The
company also does not have the baggage at the door pick up facility. Once this
is provided, it would be more convenient for the passengers to avail the
facility. Also, hot-towel can be provided to passengers at departure to suit
the likings of 1st class and business class passengers.
Price Strategy
The company has a market
penetration pricing strategy so as to increase the market share in United Arab
Emirates. If the company can deliver the same services at the same price as
compared to Emirates Airlines and British Airways, it has chances of achieving
its break-even as it targets. Once, this has been done, the company can raise
prices by about 5% and fall in the same category of customer perception as
Emirates Airlines. This way the customers would also not consider the company
as a low cost carrier which could damage the image of being a first class or
business class carrier.
Place Strategy
Etihad Airways would not
only avail booking facility at its main offices but also increase sales in
general throughout the Asian region that it targets. Also, it can increase the
volume of ticket distribution at its corporate website. This would enable the
busy passengers of 1st class and business class to customize their air travel.
The drawback in this regard is that the company does not have many sales
agents. The company should look forward to appoint more sales agents and
eventually increase its sales.
Promotion Strategy:
The customers’ perceptions
with respect to the promotional strategies of the company are as follows:
Ø Sales Promotion: The Company’s customers prefer the option and bundled
pricing efforts and the consistent updated facilities with respect to offers in
this respect. This would help a long way in increasing market penetration.
Ø Direct Marketing: By taking part in a number of travel and tourism
events, the company’s staff spread direct word-to-mouth marketing which has
been a matter of great appreciation.
Ø Sponsorship: The Company has been amongst the pioneers in
sponsorship by sponsoring Manchester City F.C, Melbourne City Football Club,
England Cricket Team, and Mumbai Indians Cricket Team. The Company has also
sponsorships by sponsoring in huge amounts at events like Abu Dhabi Grand Prix
and also the Ferrari F1 team. The motorsports fans of the company were highly
delighted at this step. Also the company’s involvements at events like Abu
Dhabi Golf Championship, Gaelic Athletic Association (GAA) have been
appreciated largely by 1st class and business class customers. And the
company’s involvement at Al Ain Football Clubs (UAE) Airline partner, Etihad
Stadium- Melbourne Australia, Sydney Opera House, Australia.
Ø Advertising: Etihad Airways advertises on all media channels form
radio to television to newspaper to magazines and travel magazines. Presently Etihad Airways does 20% print ads,
out of which 10% are in leading newspaper as Gulf News and Khaleej Times and
10% are in travel magazines.
People Strategy
The company’s staffs have
been highly acknowledged throughout its flight services. The only problem has
been in a certain case when a passenger was treated inferior to a staff when he
required a better seat to facilitate his long-broken leg. Such issues need to
be worked upon otherwise with the type of education and courtesy; the company
has high prospects especially in the 1st class and business class sectors. The
company has scored 91.5% in a survey conducted Ethos Consultancy on customer
service benchmarking. If the company wishes to make the most out of the survey,
it should further provide better training and development to its staff. Also,
it must be kept in mind that no matter how many flights the company increases,
a customer would always go for better hospitality which becomes all the more
important in the 1st class and business class services. The employees can work
as catalysts to word-to-mouth marketing.
Physical Evidence:
In
air transportation physical evidence is everything that’s
visible to customers, it starts from the logo, uniforms, and facilities to make
bookings, and lounges, to the seats, services, and space at the aircraft.
Etihad provided well designed offices, superior cabin design in all
classes, used a well known fashion designer to design the staff uniforms. All
these activities helped in improving the customers’ perception of the services
provided.
Process:
This
refers to the systems used to deliver the process. It can be described as the
whole process that starts with customers making the booking, until they depart
or arrive. Etihad built strong systems that can provide the customers with the
required services they are paying for, these systems include on-stage
systems such as the online information system through the website, and offices,
back-stage systems such as the booking and scheduling systems, and all the
support systems that helps Etihad to perform in the required way, such as
internal IT systems across all the departments, and ‘Amadeus’ Availability
Management, which gives Etihad ways to choose what inventory
to release to which sales outlet, to make sure all seats are
sold at the right time at the right price, through the most productive
channels, agents, and markets (Amadeus website 2007)
Market Segmentation
Within markets, not all
customers are the same - they have different tastes and want different things.
As a result, particular markets can usually be further divided into discrete
segments. Each group consists of people with similar needs and requirements.
The organization then develops strategies that are closely aimed at satisfying
each customer group. This process is known as market segmentation. Through
segmentation, Etihad Airways can identify market opportunities and meet its
marketing objectives. Segmentation gives an airline a better understanding of
its customers, the services they require, where and when they want those
services and how they would prefer to pay for them.
Etihad Airways has
used traditional approach adopted by legacy carriers for segmentation. Etihad
Airways focuses on business travelers and the price sensitive leisure
travelers. The business paradigm of Etihad Airways has clearly differentiated
these two segments by catering to their heterogonous need. In order to
penetrate their existing market and expand their revenue base they are also
focusing on additional segment based on consumer loyalty. Etihad Airways uses a
form of psychographic segmentation
to divide up the market for its services. This involves identifying the social
class, lifestyles, opinions, interests, behavior and attitudes of customers. Etihad Airways segments its market so that it can:
Ø Identify consumer needs and the proportion of
customers who have those needs.
Ø Develop products and prices to meet these needs.
Ø Target communications at customers within each segment.
Ø Allocate funds to support and develop each market
opportunity.
Detailed analysis of segmentation strategy used by Etihad
Airways is given as below:
Ø Preferences: The two major groups of business and leisure
travelers differ in their preferences. It’s believed that on an average in
aviation industry elite travelers contribute up to 50% of revenue though they
add up to less than 20% in passenger number (Brancatelli, 2010). Hence the
preference of this particular segment (Business travelers) is given additional
importance. They are given exclusive in-flight service with respect to variety
of cuisines being served, exotic drinks and special seating comfort (Wirtz and
Johnston, 2009). At the same time since the other segment i.e. the leisure
travelers form the major chunk of passengers their preferences also cannot be
ignored. They too are given in-flight services which can be termed best as per
industry practices.
Ø Nature of demand: Since the nature of demand varies with respect
to business and leisure travelers it is used as a parameter for discriminator
analysis. Business travelers demand more working space, internet and telephone
connections whereas leisure travelers demand more in-flight entertainment
features.
Market segmentation
therefore enables Etihad Airways to maximize the efficiency of its marketing
efforts by moving the company to use a different strategy for each market
segment.
11. EFE Matrix of Etihad Airways
|
Key External Factors
|
Weight
|
Rating
|
Weighted Score
|
|
Opportunities
|
|||
|
3. Global
Destination, now total 81 destinations in 51 countries.
|
0.10
|
1
|
0.10
|
|
4.
Online Payment and security service is better
than other competitor.
|
0.20
|
3
|
0.60
|
|
5.
Five new routes were
launched
|
0.15
|
2
|
0.30
|
|
6.
Increasing popularity of
Etihad
|
0.05
|
4
|
0.20
|
|
Threats
|
|||
|
3. Airways industry becoming more competitive.
|
0.20
|
3
|
0.60
|
|
4. Fuel price increasing in recent years which is range $100 to $600.
|
0.15
|
2
|
0.30
|
|
5. Natural
environment condition could also be a threat to any airline
|
0.10
|
4
|
0.40
|
|
6. Entry of new rivals in such a
wealthy part of the world is relatively easy.
|
0.05
|
1
|
0.05
|
|
|
|||
|
4= the response is superior
3= the response is above average
2= the response is average
1= the response is poor
|
Rating
|
||
|
Total
|
1.00
|
2.55
|
|
12. CPM Analysis of
Global Airlines Services
|
|
Emirates Airlines
|
Singapore Airlines
|
Etihad Airways
|
||||
|
Critical Success Factors
|
Weight
|
Rating
|
Score
|
Rating
|
Score
|
Rating
|
Score
|
|
Advertising
|
0.20
|
3
|
0.60
|
4
|
0.80
|
4
|
0.80
|
|
Quality of Service
|
0.10
|
3
|
0.30
|
3
|
0.30
|
3
|
0.30
|
|
Price
Competitiveness
|
0.10
|
4
|
0.40
|
3
|
0.30
|
2
|
0.20
|
|
Management
|
0.10
|
3
|
0.30
|
3
|
0.30
|
2
|
0.20
|
|
Financial Position
|
0.15
|
3
|
0.45
|
4
|
0.60
|
3
|
0.45
|
|
Global Expansion
|
0.20
|
4
|
0.80
|
2
|
0.40
|
3
|
0.60
|
|
Customer Loyalty
|
0.10
|
3
|
0.30
|
3
|
0.30
|
2
|
0.20
|
|
Market Share
|
0.05
|
3
|
0.15
|
2
|
0.10
|
2
|
0.10
|
|
Total
|
1.00
|
3.30
|
3.10
|
2.85
|
|||
|
4= Major Strength, 3= Minor Strength, 2= Minor
Weakness, 1= Major weakness
|
|||||||
13. QSPM (Quantitative
Strategic Planning Matrix) for
Etihad Airways:
The QSPM is a Strategic decision - making tool that allows
strategies to evaluate alternative strategies objectively, based on previously
identified external and internal critical success factors. Like other strategy
formulation analytical tools, the QSPM requires good intuitive judgment.
|
|
Alternative
-1
Increase flights to
high-traffic – volume countries
|
Alternative
– 2
New market share
|
||||
|
Key Factors
|
Weight
|
AS
|
TAS
|
Weight
|
AS
|
TAS
|
|
Strengths
|
|
|
|
|
|
|
|
Etihad Airways is fastest growing
airline in Middle east
|
0.09
|
3
|
0.27
|
0.06
|
2
|
0.12
|
|
Etihad Airways is one of the most
profitable airlines in the world.
|
0.10
|
2
|
0.20
|
0.12
|
3
|
0.36
|
|
The company has a strong, stable
and nontraditional leadership team ambitious yes calculated decision making
and ground breaking ideas.
|
0.11
|
3
|
0.33
|
0.10
|
2
|
0.20
|
|
Etihad Airways is renowned for
pioneering new ideas and leading markets trends often in contrast to the
conventional industry view.
|
0.12
|
1
|
0.12
|
0.13
|
2
|
0.26
|
|
Etihad Airways has strong existing
distribution channel and networks
|
0.15
|
4
|
0.60
|
0.17
|
3
|
0.51
|
|
|
|
|
|
|
|
|
|
Weaknesses
|
|
|
|
|
|
|
|
In this competitive market future
competition analysis is very difficult
to find out
|
0.10
|
3
|
0.30
|
0.12
|
2
|
0.24
|
|
There are inconsistencies service
quality in some Etihad Airways flight segment
|
0.15
|
4
|
0.60
|
0.12
|
3
|
0.36
|
|
Most employees are form nearby
low-wage nations and there may be demand for high wages in the near future.
|
0.08
|
3
|
0.24
|
0.06
|
2
|
0.12
|
|
Though wholly owned by the
government of Dubai , Etihad Airways receives no financial support from
the government
|
0.10
|
2
|
0.20
|
0.12
|
3
|
0.36
|
|
Sum Weights
|
100%
|
|
|
100%
|
|
|
|
Opportunities
|
|
|
|
|
|
|
|
The heavily populated China and
India are at closer reach for Etihad
Airway’s scope of operations to these high –traffic- volume countries
|
0.08
|
4
|
0.32
|
0.06
|
3
|
0.18
|
|
In general Asian continent is
witnessing an economic boom and the airline has really benefited from this
opportunity
|
0.10
|
4
|
0.40
|
0.08
|
3
|
0.24
|
|
The rulers of Dubai seek to
transform Dubai into a regional hub of trade and tourism in the Arab world
which could fuel the growth of Etihad Airline.
|
0.18
|
3
|
0.54
|
0.20
|
2
|
0.40
|
|
The prosperity of Dubai has
provided the opportunity for Etihad Airways to grow as the flag carrier of
the Etihad with overwhelming market demand.
|
0.10
|
2
|
0.20
|
0.11
|
4
|
0.44
|
|
Etihad Airways is most important
customer of Boeing and airbus aircraft
makers
|
0.16
|
2
|
0.32
|
0.15
|
3
|
0.45
|
|
|
|
|
|
|
|
|
|
Threats
|
|
|
|
|
|
|
|
There is keen competition from
excellent airlines such as Emirates, Gulf Air, Cathay Pacific, Qatar Airways
and Singapore Airlines
|
0.09
|
3
|
0.27
|
0.08
|
2
|
0.24
|
|
The airlines industry pays high
salaries and pensions to pilots which is not sustainable for Etihad
Airlines
|
0.08
|
2
|
0.16
|
0.11
|
1
|
0.11
|
|
The growth strategies of regional
competitors such as Emirates and Qatar
Airways are challenging to Etihad Airways
|
0.10
|
4
|
0.40
|
0.06
|
3
|
0.18
|
|
Etihad may become a potential pawn
in Dubai’s scramble for financial stability
|
0.11
|
0
|
0.00
|
0.15
|
2
|
0.30
|
|
Sum Weights
|
100%
|
|
|
100%
|
|
|
|
Sum Total
Attractiveness Score
|
|
5.47
|
>
|
5.07
|
||
Note: AS= Attractiveness Score,
TAS= Total Attractiveness Score
Attractiveness Score:
·
1= Not acceptable
·
2= Possibly acceptable
·
3= Probably acceptable
·
4= Most acceptable
·
0= Not relevant
14. Financial Analysis
Etihad
Airways financial performance (Based on Last three years auditor’s report):
|
Year
|
|
Revenue
|
|
Net Profit
|
EBIT
|
EBITAIR
|
|
2013
|
|
6.1
Billion
(US $)
|
|
62
Million
(US $)
|
208
Million
(US $)
|
979
Million
(US $)
|
|
2012
|
|
4.8
Billion
(US $)
|
|
42
Million
(US $)
|
170
Million
(US $)
|
753
Million
(US $)
|
|
2011
|
|
4.1
Billion
(US $)
|
|
14
Million
(US $)
|
137
Million
(US $)
|
648
Million
(US $)
|
Increasing
the profitability year by year (Based on year 2011 profitability)
|
Year
|
Revenue
|
Net
Profit
|
EBIT
|
EBITAIR
|
|
2013
|
Increased
27 %
|
Increased 48%
|
Increased 22%
|
Increased 30%
|
|
2012
|
Increased 17 %
|
Increased 200%
|
Increased 24%
|
Increased 16%
|
In the
financial performance of Etihad Airways we see that, the record financial
result for 2013, with net profit up 48 percent to US $62 million on revenue up
27 percent to $6.1 billion. The record performance also saw earnings before
interest and tax (EBIT) up 22 per cent to US$208 million and earnings before
interest, tax, depreciation, amortization and rentals (EBITDAR) up 30 per cent
to US$979 million, a margin of 16 per cent of total revenues. This marked
the third successive year of net profitability, in the airline’s tenth year of
operation. This outcome is remarkable, given Etihad’s youth and ambitious
growth program, as well as its continued investment in product and service
innovation. These positive results reflect the focus on its business plan and
Board mandate, and the implementation of its strategy to expand through a
combination of organic growth, code shares and equity investments in key
markets. This growth strategy is underpinned by a rigorous cost control program
and strict financial discipline.
15. Competitors analysis
Although competing
with these established market leaders is going to be very difficult, Etihad
Airways should be confident to gain the market share and achieve good profit. Competitor
Analysis is an important part of the strategic setting up method.
This analysis
provides both an offensive and protective strategic framework to identify
opportunities and threats.
As we have seen in the
previous analysis, the direct competitors of Etihad Airways are Emirates
Airlines, Saudi Arabia Airlines, Thai Airways, Qatar airways, Malaysian
Airlines and Singapore Airlines in different regions. As far as its other Asian
competitors are concerned, Singapore Airlines also poses a big threat. The
biggest of all is Emirates Airlines. Also, the company has a number of indirect
competitors. They can be in Telecom Industry
and also Holiday Cruise Line Industry. Telecom industry has made communication
so easy that video calling is so easy and cheap that people would not need to
go to places for meetings. Some Holiday cruise Line industry players like
Carnival Cruise Liners and Star Cruises have taken up the job of not only
transportation but providing hotel facilities and other amusement facilities,
beyond Etihad Airlines’ reckoning. As far as direct competitors are concerned,
with Emirates, customers receive larger value for it being more than 25 years
old in the industry, for Saudi Arabia Airlines, this is because of its cost
leadership strategy while the other competitors offer same value as Etihad
Airways. This needs some change of strategy by the company.
16. Break even Analysis
The
break-even level or break-even point (BEP) represents the sales amount—in
either unit or revenue terms—that is required to cover total costs (both fixed
and variable). Profit at break-even is zero. Break-even is only possible if a
firm’s prices are higher than its variable costs per unit. If so, then each
unit of the product sold will generate some “contribution” toward covering
fixed costs. In economics
and business specifically cost
account, the break even point (BEP) is
the point at which cost or expenses and revenue are equal: there is no net loss
or gain, and one has "broken even." A profit or a loss has not been
made, although opportunity cost been
"paid," and capital has received the risk-adjusted, expected return.
In short, all costs that need to be paid are paid by the firm but the profit is
equal to zero. Etihad Airways looks certain to make 2013 a milestone year,
carrying the positive momentum of 2010 to 2012 into the New Year. The company
reported revenue over last year grew year-on-year and continued growth in 2013,
and in year 2010 it was expected to see it post a break-even result that year.
Profits are forecast for
2014, a goal Etihad Airways has had its eye on for some time. Cost figures were
not released by the airline, but Etihad stated that it has beaten its own cost
reduction targets for the year.
17. KSF Analysis
The airways business is an extremely competitive marketplace. And
every company has to some key success factors (KSF). Key Success Factors are those functions, activities or
business practices, defined by the market and as viewed by the customers that
are critical to the vendor/customer relationship. Key Success Factors are
defined by the market and by the customer, not by the company. They revolve
around skills, processes and systems.
And here we know about Etihad’s Key Success Factor. There are
relating on:
1.
People
2.
Products & Services
3.
Route System
4.
Partnership and Alliance
5.
Revenue and Cost control
1. People: People are the most important factors for Etihad Airways. People
and performance division always support and be supported by their various
business division. Etihad has unique way to recruiting and training process led
to provide in flight customer service. And this all is possible because they
have:
Ø Awarded Winning cabin crew.
Ø In flight Chef
Ø Training for communicative skills and crisis management
Ø Introduction of “iachieve” a performance based pay
2. Products & Services: this is another important key success factor for Etihad. And
Etihad dealing in a service industry identifying its key success factors in the
field of product and services are very important factor for attaining a better
competitive advantage. Etihad’s KSF in product service have been identified as:
Ø Inflight Developments
Ø Aircraft Developments
Ø Ground Product Offering
3. Route System: Etihad’s new and frequencies in the route flight schedule
system made them to achieve a better advantage in the competitive markets for
fast east region. Etihad’s daily flights to the several destinations like
Beijing, Seoul and Bangkok made their route system unique in Far East markets.
But now they have continued their flights in several destinations.
By the
end of September 2013, Etihad serves
96 passenger and cargo destinations across Africa, Europe, North America, South America, Asia and Australasia from its hub at Abu Dhabi
International Airport. Etihad Airways, along with Air France, British Airways, Delta Air Lines, Emirates, Korean Air, Qantas, Qatar Airways, Singapore Airlines, South African Airways and United
Airlines, is one of the few carriers to have services to all six inhabited
continents
4. Partnership and Alliance: At 1st
March 2014, Etihad had almost most of the codeshare agreements with many
international carriers. It had 43 codeshare agreements in place with leading
airlines and gave them advantage in serving several international destinations.
By Etihad’s remarkable alliance with Australia’s Virgin Blue Group of Airlines
in September 2010, made it Far East customers having easy travel to Australia
with no stop over.
5. Revenue and Cost control: Etihad made a significant improvement in revenue and cost control
with a robust support of Finance division by providing support to the business
with financial, risk management, financing and other services.
18. Strategy Evaluation and Contingency Plan
Strategy Evaluation:
Etihad’s
cooperate strategy is to be the best airlines in the world, to become
profitable and to contribute at its best to Abu Dhabi 2030 plan. Most of the
Etihad’s cooperate strategy is created and planned by the mandate from its
shareholders. On the year of 2010 Etihad’s top management were focused on a
strategy to grow and achieve its scale quickly and to develop sustainable
business process. The company found that Etihad have successfully and
efficiently delivered its shareholders vision, but there are several structural
limitations, which complicated the airlines ability to reach profitability. To
overcome the limitations company suggested a better business model in order to
diversify its current structure to engage in many partnerships, distribution,
hub operation and its air cargo. By approval of this business model by Etihad’s
senior management, Etihad have doubled its global activity and profit level as
compared to its other competitors.
Contingency Plan:
To ensure
minimal customer inconvenience during lengthy delays on the ground, Etihad
Airways’ plan for providing customer comfort during irregular operations is
outlined below. Lengthy tarmac delays can result from unusually severe weather
conditions, government-imposed operating restrictions, air traffic control
issues, or other issues associated with the airport facilities. Even though
these causes of lengthy tarmac delays are outside of Etihad Airways’ control,
they coordinate with all appropriate agencies to ensure that the following
policies will be implemented.
Ø Etihad
Airways will provide at least a snack and potable water, from the on-board
catering supplies, no later than two hours after the aircraft leaves the gate
(in the case of a departure) or touches down (in the case of an arrival) if the
aircraft remains on the tarmac. If the pilot-in-command determines that safety
or security considerations preclude this service, then this may not be
provided.
Ø Operable
lavatory facilities will be available while the aircraft remains on the tarmac.
Ø Adequate
medical attention, if needed, will be available while the aircraft remains on
the tarmac.
Ø The
flight crew will ensure that information on the status of the delay is
available to the passengers on the delayed flight at least every thirty minutes
while the aircraft is delayed, including the reasons for the tarmac delay, if
known.
Ø Etihad
Airways will notify the passengers on the delayed flight beginning 30 minutes
after scheduled departure time (including any revised departure time that
passengers were notified about before boarding) and every 30 minutes thereafter
that they have the opportunity to disembark from an aircraft that is at the
gate or another disembarkation area with the door open if the opportunity to
disembark actually exists.
Ø Etihad
Airways will make every effort to provide sufficient resources to deliver this
plan.
19. Recommendation
1. Etihad
needs to re-access its profitability in within particular geographic area. It
is necessary to go into code-share alliances in certain markets where there is
a decline in profitability. By going into strategic alliances, Etihad will cut
down significant cost and obviously still gain marketing benefits of large size
of network spread and reduce competition on duopolistic routes.
2. Market penetration is recommended
through cutting prices in existing markets. Etihad should redirect its strategy
to price competition to widen market coverage from lower cost market. This is
probable because customers are more prices sensitive and growth of budget
airlines is increasing.
3. Etihad
airways need more strategic plan for reducing their cost and expenses because
to survive in any financial crisis they need more retained earnings to protect
them.
4. They
should have more of the customer’s service and loyalty programs. The company
should provide discount to their corporate clients. The company should get in
touch with their clients when they have some promotional offers.
5. From
competitive advantages and economic of scale, Etihad can also strengthen or
expand the function of other special aircraft or specific cargo service to
existing markets to gain profitability.
6.
Improving on people process is highly recommended. Also technological strategy
is an important pursuit.
20. Conclusion
Etihad
has proved time and again that with it’s out of the box attitude, backed by
lavish Arabian hospitality it has earned a place for itself in the minds of customers.
Customers who have experienced this service would vouch for the standards set
by the airlines. The constant up gradation employed by Etihad in providing
service by acquiring new aircrafts, ensure that their planes will be in the air
for the majority of the time than on ground for maintenance. Etihad currently
employs the strategy of having fewer destinations than its competitors. This
has enabled the airline to provide better service for the ones that they have
than run off in search of newer destinations. This concept of quality over
quantity is of great concern in the airline industry, particularly if the
airline wants to be perceived as a luxury brand and not a cheap low cost, no
frills airline. Potential customers can be gained only if they could be
convinced that they are getting more bangs for their buck. The perception of
customers towards quality has drastically risen over the years and many
wouldn’t mind paying the extra money if they are convinced they are getting
what they paid for. Etihad knows this and strategically places their products
and services to attract these customers. They know that the airline industry is
a delicate one and word of mouth advertising is very crucial for
their survival. This is the reason they truly focus on their customers and
make sure that they feel satisfied and make it a point to come back after being
on one of their flights. As Abu-Dhabi is turning into an international tourist
destination and business centre for the Middle East, Etihad being operated from
here will be strategically positioned and they stand 15 to gain a potential
share of the action. Hence upholding the concept of ‘Abu Dhabi to the world’ is
very crucial for their marketing strategy. This plus point of Etihad to
convince their customers of their superior service is what drives them forward.
To conclude it can be safely said that if Etihad continues to provide this sort
of superior service and follows the low price penetration strategy it can
enter more markets and repeat its success. The airline has proved that it is
able to retain its customers and that their customers recommend the carrier to
others have worked in the advantage of Etihad. The carrier has
to build on this brand loyalty and continue to provide
better and newer services and gradually add more destinations and grow at
the steady pace. This will see the airline reaching a top position and
turning out to be one of the most preferred ones in the aviation industry.
21. References
1.
Christopher H., Lovelock., Jochen Wirtz.,(2007). Services Marketing, people,
technology, strategy. 6th
edition.
USA: Pearson Prentice.
2.
Annual Report Etihad Airways. ‘‘Etihad Airways Annual Report 2012”. Retrived
from the Wikipedia online website:
http://en.wikipedia.org/wiki/Etihad_Airways.
3. Annual
Report Etihad Airways. ‘‘Etihad Airways Annual Report 2011”. Retrived from the
Wikipedia online website:
http://en.wikipedia.org/wiki/Etihad_Airways.
4. Arab
News, 2014. Etihad Airways net profit rises 48%. The daily online newspaper
‘‘Arab News’’ Mar 03, 2014. Retrieved from the Arab News online.
website: http://www.arabnews.com/news/534286.
5. The
National Business, 2014. Etihad Airways land first profit. The daily online
newspaper ‘‘The National Business” Feb 10, 2012. Retrived from the The National
Business online newspaper.
website:http://www.thenational.ae/business/industry-insights/aviation/etihad-airways-lands-first-profit.
6. Dubai
Chronicle,2014. Etihad Airways again tops Skytrax First class awards. The daily
online newspaper ‘‘Dubai Chronicle” Jun 19, 2013. Retrived from the The Dubai
Chronicle online newspaper.
website:http://www.dubaichronicle.com/2013/06/19/ethiad-airways-again-tops-skytrax-first-class-awards/.
7.
Zeithaml, V.A. (1998). Customer a perception of price,quality,value: A means
end model and synthesis of evidence . Journal of Marketing, 52, 2-22.
8.
Rodrigues, J. G. (2010). Etihad Airways-Marketing plan. Unpublished project
report. Retrived from the scribd online website:
9.
Khalifa, K. (2011). Etihad Airways-Marketing strategy. Unpublished project
report. Retrived from the scribd online.
Abbreviations
BCG- Boston
Consultancy Group
CPM- Competitive Profile Matrix
EFE- External Factor Evaluation
KSF- Key Success Factors
QSPM- Quantitative Strategic
Planning Matrix
TWOS- Threat Weakness Opportunity
and Strength
GAA- Gaelic Athletic Association
BEP- Break
Even Point
