Air Blue

SWOT ANALYSIS OF AIRBLUE

Submitted To: Submitted By:

Prof. Dr. M Zafarullah Farid Nawaz Khan MBA 1st Semester MB-06-13

Institute of Management Sciences

SWOT analysis of airblue

Introduction Airblue is a private Pakistani airline based at Jinnah International Airport Karachi. It started its operations on May 24, 2004. It was the first private carrier of Pakistan to operate the Airbus A320 when it initially started. Airblue has been expanding rapidly despite experiencing competition from the other three airline operators in Pakistan. The airline mainly flies on domestic routes plus internationally to Dubai International Airport and also has plans to fly to the Gulf, UK, and USA.

Mission Statement Airblue will be recognized as the most progressive enterprise in the transportation business. We will offer our customers cost effective transportation service within geographical areas and market segments that can benefit from our services and will insure a return on investment and growth rate consistent with current management guidelines.

Vision Statement Our vision is to make Airblue the most admired airline in the world. * Ensuring safety comes first * Providing Service Straight From the Heart * Encouraging product leadership * Delivering superior financial returns * Providing rewarding career opportunities

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SWOT analysis of airblue

The SWOT analysis is the process of analyzing organizations and their environments based on their strengths, weaknesses, opportunities and threats. This includes the environmental analysis, the process of scanning the business environment for threats and opportunities, which is considered as external factors, and the organizational analysis, the process of analyzing a firm’s strengths and weaknesses as internal factors. SWOT analysis was carried out for AirBlue and the results are summarized as follows:

Strengths 1. Second largest air-carrier of Pakistan, enjoying almost 30 percent market share on domestic routes. 2. Airblue is a Low-cost carrier (LCC). The reason behind air blue’s low fares is that it uses Dynamic Pricing Model. Airblue puts its entire ticket inventory on the Net and direct internet booking accounts for 15% of its sales. It begins selling tickets at a 40% discount to full service carriers (FSCs), but closer to the date of your travel, you may end up paying up to 30% premium over the price charged by FSCs. 3. 98% punctuality of on-time flight departures. 4. Innovative e-ticketing and wireless check-in technologies. 5. Operational efficiency. 6. Airblue is using latest technology for the airline's advantage and its valued customers. Many corporate entities tried to create a paperless work environment, in order to minimize its costs and maximize its efficiency, but only Airblue had been successful to the extent that its management does not need offices to function. 7. The airblue aircraft are the latest fly-by-wire technology Airbus A320's and A321's. This allows the airline more flexibility and scales of economy in crew planning and maintenance capability, adding directly to bottom-line profitability. 8. Lesser workforce because of extensive technology usage. 9. AirBlue is the first among public and private sector airlines in South-Asia and second after Emirates in the region to introduce latest s elf check-in system at Karachi airport. The self check-in system will facilitate the passengers carrying 3

SWOT analysis of airblue

baggage with them, to get boarding card through the new touch screen system without reporting at the counter. 10. Package for students and special children. 11. Good food, good entertainment, spacious seats, most exciting hospitality, elegant and charming hostesses. 12. Year 2006 witnessed exceptional performance in the short term financing which was reduced from Rs 206 million to Rs 48 million, showing a decrease of 330 percent. 13. Airblue showed a record operating profit of over Rs 150 million for year 2006 while providing a high quality product to the consumers. 14. Airblue outsources most of its secondary tasks to third parties. It helps airline to cut costs.

Weaknesses 1. Difficulty in developing brand-awareness as a startup company. 2. Engaged only in passenger service, whereas its competitor PIA is also providing cargo services (SPEEDEX). 3. Not having its own repair and maintenance facilities. 4. Doing less on the advertising and promotion of air line. 5. Not operating flights for Hajj Pilgrims, which could be a major source of income. 6. Small fleet of air crafts. 7. Two aircrafts are acquired on dry lease and one on wet lease. 8. It connects only seven cities in Pakistan. 9. Very tight schedule of flights, which puts extra burden on pilots, cabin crew and hostesses

Opportunities 1. Year 2007 is being celebrated as “Visit Pakistan Year”. So, the number of foreign visitors is likely to increase and complimentary tourism industry will increase demand for airline service. 2. Agreement with Airbus Industries for the purchase of eight airbus A320-200 and two airbus A330-200 aircrafts for an estimated cost of $ 790 million. New aircrafts will be used for additional frequencies and destinations on domestic and regional routes. 3. Low fares enable market share growth. 4. Introducing new domestic and international routes like Gulf, UK, Jordan, India etc. 4

SWOT analysis of airblue

5. Stable economy and growing GDP. 6. The air transport sector of Pakistan would also get a boost from newly developed Port of Gwadar in the Balochistan province. The development of the Gwadar Port, the third deep sea port of the country and the first of Balochistan, would serve as a link with the Central Asian States. The government is upgrading the Gwadar International Airport at a cost of 480 million rupees. Once upgraded, the airport will be able to handle wide-body aircraft such as Airbus and Boeing 747 aircraft. 7. Poor performance & red tapism in PIA. 8. Worldwide deregulation makes the skies more accessible, Open Skies. 9. Excellent credit rating allows Air Blue to purchase its expansion strategy.

Threats 1. Escalating jet fuel prices. 2. Low-cost Chinese airlines planning to enter into Pakistan’s domestic air market. 3. Cutthroat price war among airlines. 4. Buses business continuously improving speed in service in mid and long distant routes, attracting passengers away from air service. 5. PIA is also procuring 10 new Boeing planes. 6. Threat of terrorism. 7. No level-playing field for private airlines, as government always rescues PIA from risks. 8. Incapability of national airport runways to handle big crafts. 9. Competition is heating up as four new local airlines are going to start their operations very soon. 10. High insurance costs for aircrafts and passengers.

Comments AirBlue has performed very well so far. It has tried to build strategy on genuine understanding of the customers’ true needs. It identified key customer satisfaction drivers, and then turned into a foundation to shape company development strategies and innovations. The objective is to realize the quality-strategy integration. 1. AirBlue should adopt an aggressive marketing strategy to promote airblue as a customer-driven airline. 2. It should continue to be innovative in introducing latest technologies to reduce its costs and enhance customers’ ease, satisfaction and its profits as well. 5

SWOT analysis of airblue

3. Currently, it’s only the national flag carrier PIA which operates frequent flights during Hajj season. Airblue can make a huge dent on PIA’s profits if it’s able to capture some share of Hajj pilgrims. 4. AirBlue is doing well against PIA, but it should adopt proactive strategies to compete with Chinese airlines. 5. There is a huge potential in domestic market because it’s operating flights for only seven cities. So, airblue should expand its network.

References 1. www.airblue.com.pk 2. A.M Ahmed and M. Zairi, “SWOT analysis for Air China performance and its experience with quality”, (http://www.emeraldinsight.com/1463-5771.htm) 3. http://en.wikipedia.org/wiki/Airlines_of_Pakistan 4. www.piac.com.pk 5. “Aviation: Competition Heats Up” (Pakistan Economist – Cover Issue 12, 3/22/04)

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