Study On Etihad Airlines

Etihad Airways was recognized in 2003. It is the national or says the flag holding carrier passenger air service of Abu Dhabi, the capital of United Arab Emirates (UAE). The airline is headquartered in Abu Dhabi, the capital of UAE as mentioned earlier.

In 2007, it passed additional than 6 million clients, contrasted with approximately 340,000 in its very 1st full time process in the year of 2004. The company has more than 8000 employees working in numerous divisions like finance, marketing, flying, sales etc . Currently Etihad is operating its services in regions like Indian subcontinent, North America, Europe, Far East Middle East, Africa and Oceania. Its major base or platform is “Abu Dhabi International Airport”. (Delfmann, 2005)

Etihad Airways is the representative air carrier of Abu Dhabi, offers planned air transportation for cargo and customers. Company’s sole shareholder is the government itself of Emirate of Abu Dhabi, was been extracted from its combined venture in “Gulf Air in the year 2005” and preserved its spotlight on Etihad Airways.

INDUSTRY:

The airlines business of UAE is huge if we look at the quantity of service providers. The sector is filled from number of low cost airlines. State airlines of UAE other than Etihad include Gulf Air, Emirates and Air Arabia. Gulf air started operations in 1950. It provides a quantity of facilities to its clients. Initially it has provided many involved facilities to kids below the age of 10. It also provides spited dinning for its passengers. It is delectated as a standard nationalized flight for the majority of the purposes. Next, Emirates airlines were initiated after Gulf Air in the year 1985. (Vedder, 2008) It is also measured as a state flight. The airline has won numerous awards for its luxury services. This airline comprises of many aircraft both for private and public issues. Etihad airline is the most new one and was launched after Air Arabia in the very same year. It had also become fairly accepted but could not battle with Air Arabia on concern of low cost. Kam air fare is too considered as 1 of the stumpy cost airlines in United Arab Emirate. Among all the existing national air services till date, the “Air Arabia” is supposed to be the cheapest among all. It is not recognized to be an airline with the finest ability on board but of course it presents a cheap fare to its clients. The facilities offered by these public airlines to their clients vary drastically from each other. All the mentioned airlines have great contribution to the nationalized economy of the UAE. (Group, 2006)

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ETIHAD’S BUSINESS DESCRIPTION:

The Etihad airline was started in the year 2004 or say started operating in 2004, but was established earlier in august 2003. The airline carried over 4.5 million travelers, an boost of about 65.7% over the figure of year 2006; In addition with this, Etihad also gained 175,000 tons of cargo in year 2007, an augment of over 70% from that of year 2006 .

In 2008, the airline placed a requirement for over 190 planes, which would be of worth AED157.9 billion or approximately USD 40 billion. The order is composed of about 95 Boeing airplanes and 100+ from Airbus. Tentative schedule for release of order is between 2011 and 2020. (Vedder, 2008)

Etihad Airways possess complete stocks is its 2 subsidiaries, “Etihad Crystal Cargo”, which offers cargo handling facility and “Etihad Holidays”, a travel group and vehicle rental company. The Etihad Airline owned a group of 37 traveler and cargo airplanes, as depicted by the data of January 2008 and it plan is to increase its aircraft group to 300 by the year 2020.

The company is also planning to fly with over 25 million travelers per year by 2020 and to dual the number of destinations served from 48 to make it close to 100.

The principle business activity is to provide scheduled air transport services for customer and freight; travel agents etc.

VISION AND MISSION

• MISSION:

• The mission of the Etihad airline is to make the most of profitability by applying effectual business practices for best yield, maximum load factors, minimum transit times, seamless and instant information to the flying community, management and increase client’s service. (Delfmann, 2005)

• VISION:

• “As the public sector Airline of the United Arab Emirates, the company, Etihad seek to replicate the best of country’s hospitality – cultured, warm, considerate and generous – in totaling to get better the status of Abu Dhabi, the capital Emirate as a center of hospitality between West and East”. (Delfmann, 2005)

  STRATEGIES AND VALUES:

  Norms:

  There are few norms popular in Etihad One is the dress of employees in the company. It is expected in the company that people will wear traditional UAE cloths. In office, female employees are not allowed to wear short skirt or any other type of clothing considered un social in the UAE culture.

  Values:Few values prevailing in the company are:

  1. No one here complains for other employee in the team in the case he or she fail to timely accomplish the task assign to him or her. His is a very nice practice in terms of team culture as it stops any disunity in the team and promotes unity and working together.
  3. The second one is especially for foreign employees. The company use to pay the tri yearly labor license required by the government to work in the country.

  Assumptions: There are few assumptions also considered in the company. For example, the people here consider that the task is assigned only by the senior and they are required to work only after the assignment of the work providing a very mechanistic framework of work in the company.

  BUSINESS STRATEGIES FOR ETIHAD:

  Some strategies of Etihad for future few years are as follows:

  • Expanding its aircraft range: One important constraint in company’s expansion plan is the limited number of cargo and passenger planes available to the company. The company will place periodic orders for new aircrafts to support its expansions plans.

  • To provide service on more number of routes: The company would like to serve in European countries and other untouched destinations in North and South America. The expansion will give a vast increment in company’s present market size.

  • To enhance efficiency of operations: As a long term strategy, the company would like to implement TQM strategies in its operations.

  • Increase its revenue maintaining high and quality structure of luxurious aircraft industry:

  • Another one is Emiritization and advancement of UAE people. The company has a number of plans in this direction with long term interest which are mentioned as follows:

  1. “UAE National Cadet Pilots Training or UNCPT ”
  2. The company invites aspirants who what to become a pilot with a statement like “We are giving wings to your dreams”. Its pilot training program is one of the finest in the nation.
  4. The company states that as the public Airline of the United Arab Emirate, it has a immense vision. To see further Emiratis taking their correct position as pilots in lone of the fastest mounting airlines on the planet. (Bilimoria, 2006)
  1. “UAE National Graduate Entry Management Programme”
  2. The public airline of the UAE, Etihad, is investing in its outlook and would consequently like to spend in people by giving them the chance to be 1 of the privileged students chosen to join its UNGEM program.
  4. It states that by this program, graduates will develop sturdy leadership abilities and form a collection of professionals who are organized to meet quickly expanding and developing leadership wants in various branches within the company. (Bilimoria, 2006)

  • Enhancing the cargo carrier’s flights: As shown from the contribution of profit from the cargo and customer units, the cargo unit contributes around 65% of the company’s turnover, which depict the clear dominance of cargo unit over the customer unit in terms of profit. The company would like to utilize this faith of people in Etihad’s cargo unit to gain additional market share. Thus as an expansion plan for cargo unit, the company is ordering more share of cargo planes as compared to that of passenger planes.

  BUSINESS SERVICES AND CUSTOMERS:

  The company mainly focuses on two streams of services: passenger service and fright carriers. Few highlights are:

  • International flight connecting Abu Dhabi to more than 45 international destinations in USA, Indian subcontinent etc. Etihad carried over 4.6 million passengers, an augment of approximately 65.8% over in 2006.
  • Along with this, it also griped 175,000 tons of freight in 2007, which is an increase of over 75% than the year 2006. (Group, 2006)
  • Etihad Airways owns complete share is its two subsidiaries, Etihad Holidays, a travel group and vehicle rental company and “Etihad Crystal Cargo”, which provides freight handling services.
  • Etihad had a 24 hour help line for its customers.
  • Etihad also provide hospitality services by providing temporary accommodation in hotels. (Group, 2006)
  • The Etihad Airline owned a group of 37 traveler and cargo airplanes, as depicted by the data of January 2008 and it plan is to increase its aircraft group to 300 by the year 2020.
  • Etihad is also planning to fly over 25 million customers per year by 2020 and to twofold the number of metropolitans served from 50 to make it near 100.

  MARKET SEGMENTS:

  The key market segments been served by the company is the corporate cargo and low and medium earning customers for passenger carriers.

  COMPETITIVE POSITION IN THE INDUSTRY:

  COMPETITOR’S ANALYSIS

  THE MICRO ENVIRONMENTAL ANALYSIS

  The micro environment analysis is a structure for outlining marketing strategies of a company and also conducting an industry review. It is governed by Porter’s five force analysis. They are as follows:

  • The threat of substitute products: In case of Etihad, the substitute product is actually similar services present in the gulf. For example there are number of companies providing similar aviation services like the company under consideration like Easy Jet, Air Arabia etc.
  • The threat of entry of new competitors: The aviation market in gulf is going through a boom. Many new investors including both domestic and foreign firms are seeking an opportunity to fly in this gloomy aviation market. (Delfmann, 2005)
  • The threat of competitive rivalry: Aviation is a field where competition doesn’t just come from price dimensions but also from innovation and advertisement. Etihad should realize the number of competitors it has and the diversities in which they exist.
  • The bargaining power of customers: Etihad like other airlines had a fixed cost service. The cost of any travel is predefined. However, due to costumer’s reaction toward any particular price frame, the company needs to bring variation in the cost of travelling.
  • The bargain power of suppliers: Etihad is an airline company, so it owes much of its pricing to its suppliers. The raw materials and small services that it uses, determine the costs of its service. So, it is highly beneficial to have suppliers who are good at bargaining to keep the cost of the service low. Major intake of aviation industry of Etihad includes high quality fuel, packers and movers, transportation and hospitality partners.
  • Competitors: There are number of other airline services which create market saturation for Etihad. Easy Jet is an example of such service which provides competition to Etihad. (Vedder, 2008)

  MAIN COMPETITORS OF THE ORGANIZATION:

  Air Arabia, Aerovista Airlines, Abu Dhabi Aviation, Air Cess, Kang Pacific Airlines, Falcon Aviation Services, RAK Airway, Flydubai, Dolphin Air, Palm Aviation, Emirates, Airlink, Dubai Air Wing and Eastern SkyJets etc.

  MARKETING ACTIVITIES OF COMPETITORS:

  Talking about Airlink, which is a major competitor of Etihad, the number of jets possessed by the company is much higher than Etihad. Airlink and similar airways like Air Arabia believes in cheep service providing and better market capturing. Etihad on the other hand believes in capturing luxury market sharing. Air Arabia has 5 times aircrafts than Etihad. It has more capacity aircrafts too.

  Palm aviation is much concerned towards long distance comfortable tour packages. For promotional activities, bigger firms like Air Arabia, Aerovista use television ads while smaller firms uses print media for promoting their services. Institutional marketing and collaboration with other firms is also employed as a marketing tactic. (Vedder, 2008)

  PESTLE ANALYSIS:

  Political:

  • Etihad, like other aviation firms, has to follow strict government regulations. Any small incident can result in heavy burdens in terms of rules and possessing aircrafts.

  Economical:

  • Economical problems are an obvious outside factors for Etihads. As the company is trying to increase its span, namely in Russia, it needs more Aircraft and investment.

  Social:

  • The Company also has some social responsibilities to follow. The company has to take serious steps in order to meet the social responsibility towards its people and towards the nation’s culture. The reason is as Aviation co exists with country’s hospitality industry, it has to make sure that hospitality industry does not get suffered. (Delfmann, 2005)

  Technological:

  • As the technology changes, the employees who can deal with new technology are needed in every aspects of work. Also there arises a need that the existing employees must also be re engineered so that they can cop up with new style of work.

  Legal:

  • Aviation laws, labor laws, governments rules form the legal periphery for Etihads.

  SWOT ANALYSIS:

  SWOT is an acronym of Strengths, Weaknesses, Opportunities and Threats. This is a marketing analysis that helps a company understand its competitors. A brief discussion of SWOT analysis of Etihad is as follows:

  Strength: The Company has strong brand image Cargo units. The company already has 12 jets including 5 Boeings other world class luxury aircrafts like Learjet 35, Learjet 55, Avro RJ70 and Avro RJ80 etc to support its luxury market. The company’s hold on this segment is increasingly growing too. (Delfmann, 2005)

  Weakness: Because of work in luxury segments and passenger unit is down, the company’s market scope is limited, any new competitor and launch of new luxury aircraft can force the company to drastically change is market statistics. Also the desired costumer volume is also limited.

  Opportunities: Recently the company is exploring opportunities to invest in Eastern Europe including Russia. The company is looking constantly for new markets apart from Gulf region.

  Threats: the main threats to the company are form increasing number of aviation services in luxury class. Another threat is from economic crises that is indirectly affecting the end customers of Etihad.

  FUTURE GROWTH PERSPECTIVE:

  The company has immense growth opportunity in both its passenger and cargo units. Few of these are mentioned as follows:

  • New business opportunities in Russian and European market.
  • Acquisition of new and small business possible in many areas including international markets.
  • Buying of new aircrafts will facilitate the growth and increased number of routes as planned by the company.

  REFERENCES:

  1. Oxford Business Group (2006), “Emerging Abu Dhabi”, Published by Oxford Business Group, ISBN: 1902339428, 9781902339429

  2. Delfmann, Werner (2005), “Strategic management in the aviation industry”, Published by Ashgate Publishing, ISBN: 0754645673, 9780754645672

  3. Vedder ,Hendrik (2008), “Strategic Alliances in the Aviation Industry: An Analysis of Past and Current Developments”, Published by GRIN Verlag, ISBN: 364023037X, 9783640230372

  4. Bilimori; Sandy Kristin, Piderit (2006). “Handbook on women in business and management”. Published by Edward Elgar Publishing. ISBN: 1845424328, 9781845424329