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AIR ARABIA'S STRATEGY

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on 1 May 2016

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Transcript of AIR ARABIA'S STRATEGY

AIR ARABIA'S STRATEGY
GROWTH STRATEGY AND STRATEGIC DIRECTION
Currently serving over 85 destinations, Air Arabia’s network has grown significantly since it launched in 2003.

59% of the aircraft are owned by the company.

Air Arabia prides itself to claim one of the industry’s highest seat load factor (82%) in 2012.

First Mover advantage:
First Arab-listed airline
“first and largest low-cost carrier in the Middle East and North Africa”.

Future’s only Pan Arab airline?

MAIN STRATEGY

Expand no. of products offered or markets served
Increase in the number of employees, revenue or market share

TYPES
Concentration strategy – Focus on the primary business
Market penetration – Increasing number of flights
Market development – New destinations
Diversification - Combining into different and related or unrelated industries
Provision of ancillary services such as travel agency, travel insurance, advance check-in etc.
Launch of a hotel at Sharjah International Airport and investment at Radisson Blu

Done By:
Fatima Hasan 4239702
Anam Fatima 4350224
Sara Sopariwala 4361192
Alia Qureshi 4619237

Opportunities
To expand in the indian sub continent, South and central Asia, europe & Africa.
To create more hubs to link arab world to africa and europe

Threats
Intense competition
SWOT ANALYSIS
STRATEGIC DIRECTION
First and largest low cost carrier
low cost
many destinations (65)
value for money
Offers long term jobs with career opportunities
Air arabia's vision is being one of the world's largesrt budget airline
PERFORMANCE COMPARISON TO 2012
Profitability Ratios:
Gross profit margin:
2012: 13.1%
2013: 14.8%
Net profit margin
2012: 9%
2013: 8%
Cash flow position
2012: AED 183,846
2013: AED 101,936
First half of 2013 faced a 16% increase in passenger number.
1.4 million passengers in Q1’ 2013:
The greatest number recorded yet (in a quarterly)
17.5% growth

RECENT ACHIEVEMENTS
July 2013
Completed one million flight hours
“2013’s “Best Low-Cost Airline, Middle East”.
Top 10 airlines in the Middle East
Also in 2013:
5 new routes and increasing frequencies
Total route network= 86 destinations
Total operational flight increased:
New Airbus received; 4 more are expected

“Air Arabia is pleased to announce strong and solid financial performance despite on-going political turmoil in parts of the region, which continues to impact the transport sector and the regional economic growth,” said Sheikh Abdullah Bin Mohammed Al Thani, Chairman of Air Arabia (4 August, 2013).

CONCLUSION
Reputed as the MENA region’s top LCC
Has had to face challenges:
Rising fuel costs
Competition
Should focus on higher revenues:
By integrating with the different hubs
Take advantage of its central location

Strengths
LCC
Value for money

Weakness
Fuel costs

MODERN FACTORS THAT INFLUENCE A COMPANY'S PERFORMANCE

Organizational Culture
One of the elements of organizational culture: employee attitude

CSR
Charity Cloud Program

Innovation
First mover

Communicating effectively with customers
New IPhone Application
Digital communication channels have always been the core of Air Arabia’s business model.

Competitive advantage
An organization’s distinctive edge
Doing something others can’t do or doing it better than competitors


Corresponding advantages for Air Arabia

Convenience, quality and value for money
Low operational costs and high operational efficiency
One of the leading LCC’s
Frequent flights to many destinations
Use of secondary airports and a single Airbus aircraft

REFERENCES
Air Arabia Robbins, S, Coulter, M, Sidani, Y, & Jamali, D 2011, Management, Arab World Edition: Pearson Education inc, New Jersey.
World Economic Forum 2011, Global Entrepreneurship and the Successful Growth Strategies of Early-Stage Companies, accessed 09/11/2013, http://gvcepe.com/site/wp-content/uploads/2011/12/WEF-Global-Entrepreneurship-Case-Studies.pdf
Air Arabia 2013a, Annual Report 2012, accessed 10/11/2013, http://investor-relations.airarabia.com/sites/default/files/AA%20AnnualReport%202012%20En.pdf
‘Air Arabia introduces new travel insurance service’ 2008, Middle East Company News, accessed 14/11/2013, http://ezproxy.uow.edu.au/login?url=http://search.proquest.com.ezproxy.uow.edu.au/docview/232806375?accountid=15112
‘Air Arabia to build 300-room hotel at Sharjah Airport’ 2007, Middle East Company News, p. 1, accessed 14/11/2013, http://ezproxy.uow.edu.au/login?url=http://search.proquest.com.ezproxy.uow.edu.au/docview/232839201?accountid=15112
CAPA 2011, Air Arabia hampered by slow liberalisation, accessed 09/11/2013, http://centreforaviation.com/analysis/air-arabia-still-in-the-sweet-spot-but-growth-hampered-by-slow-pace-of-liberalisation-44624
Air Arabia 2013b, Investor Presentation, accessed 10/11/2013, http://investor-relations.airarabia.com/sites/default/files/investor/presentation/Air%20Arabia%20IR%20Presentation-Q1,%202013.pdf


STRENGTHS: Knowing strengths will help Air Arabia to focus on maintaining that standard.
WEAKNESSES: Knowing their weaknesses presents the opportunity to improve themselves.
OPPORTUNITIES: Having a clear view of their opportunities will help them create a plan to achieve it.
THREATS: By knowing their threats they will be able to overcome them.

OVERVIEW
Introduction
Case summary
SWOT analysis
Growth strategy
Strategic direction
Financial result and performance

INTRODUCTION
Founded in Feb 2003
Started operations in Oct 2003
First and largest LCC in North East and North Africa
86 destinations using 34 aircrafts
3 operational hubs

AIR ARABIA'S OVERALL PERFORMANCE
Air Arabia 2013, Air Arabia celebrates one million flight hours with CFM engines, Air Arabia, viewed 8 November 2013, <http://investor-relations.airarabia.com/news/air-arabia-celebrates-one-million-flight-hours-cfm-engines>.

Air Arabia 2013, Air Arabia first quarter 2013 net profit increases 20 per cent to AED 59 million, Air Arabia, viewed 8 November 2013, <http://investor-relations.airarabia.com/news/air-arabia-first-quarter-2013-net-profit-increases-20-cent-aed-59-million>.

Air Arabia 2013, Air Arabia increases booking options with new iphone application, Air Arabia, viewed 9 November 2013, <http://investor-relations.airarabia.com/news/air-arabia-increases-booking-options-new-iphone-application>.
Air Arabia 2013, Air Arabia IR Presentation Q2 2013, Airarabia.com, viewed 7 November 2013, <http://investor-relations.airarabia.com/sites/default/files/investor/presentation/Air%20Arabia%20IR%20Presentation%20Q2%202013.pdf>.

Air Arabia 2013, Air Arabia named best low-cost airline, middle east at skytrax world airline award, Air Arabia, viewed 8 November 2013, < http://investor-relations.airarabia.com/news/air-arabia-named-best-low-cost-airline-middle-east-skytrax-world-airline-awards>.

Air Arabia 2013, Air Arabia net profit soars AED 134 million in first half of 2013, up 13 per cent, Air Arabia, viewed 8 November 2013, <http://investor-relations.airarabia.com/news/air-arabia-net-profit-soars-aed-134-million-first-half-2013-17-cent>.
Air Arabia 2013, Air Arabia passenger records surge first quarter 2013 to 1.4 million, Air Arabia, viewed 8 November 2013, <http://investor-relations.airarabia.com/news/air-arabia-passenger-records-surge-first-quarter-2013-14-million>.
AirArabiaGroup, 2013, Create Tomorrow, online video, 18 February, Youtube, viewed 7 November 2013, <
Claudia-Marian, G 2011, ‘Modern Factors that enhance company’s financial performance’, Annals of the University of Oradea, Economic Science Series, vol. 20, no. 2, pp. 169-175
Air Arabia 2013, Air Arabia PJSC and its subsidiaries, Air Arabia, viewed 7 November 2013, <http://investor-relations.airarabia.com/sites/default/files/investor/financial/Air%20Arabia%20Q2%202013.pdf>.
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