Organization’s current situation
Etihad Airways History
Etihad Airways Company is the UAE’s national airline. This company started its operations in the year 2003 and it was established by a “Royal decree”. The company’s hub is Abu Dhabi which is the capital city of UAE (“Etihad Airways Dubai”, Para 1).
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This Company is under the governance of a board of directors. It operates in regard to the legislation under which it was set up and in line with the company’s Article of Association. Currently, the board is formed of seven members who are non-executive and independent members.
The board has two sub-committees. One of the sub-committees is the “audit committee” and the other sub-committee is the “executive committee” and each of them has a chairman and a charter (Plunkett 95).
The company is among the airlines that are growing at a very high rate in the world. The company’s destinations are located in various regions in the world. The destinations are found in Africa, America (North America), Asia, Europe and Australasia.
The company serves a total of 61 destinations (“Etihad Airways”, Para 1). Launching of Etihad Airways Crystal Cargo by the company was done in the year 2004. The Etihad Airways Crystal Cargo is a division of the company and this division is expanding at a very high speed.
The company has a goal to turn out to be the preferred Cargo Carrier of each and every company dealing in logistics and forwarding through the provision of air transport solutions which are innovative.
This division serves 14 destinations in a total of forty countries located in Europe, “Africa, North America, Oceania, and Asia from the Abu Dhabi International Airport which is the company’s hub” (“Etihad Airways Dubai”, Para 5).
Etihad Crystal Cargo offers to the clients various Cargo services which are connected to the growing International Route Network.
More so, it carries out the operation of a committed freighter which “operates on the routes that are scheduled to Asia, Europe, as well as Africa” (“Etihad Airways Dubai”, Para 5). The representatives of Etihad are found all over the world and provide services to the customers day and night all through the week.
Beginning from the year 2004 the Etihad Airways Company has never posted a profit. In the year 2010, it was projected that the company would not even break even. This is for the reason that the yields of the company were hit by global economic crisis as well as the problem of the swine flu.
In the month of April 2010, the company made a loss of thirty million US dollars when there was a forced cancellation of the flight. This cancellation resulted from the “cloud of ash” coming up from the Eyjafjallajokull of Iceland.
In the cause of 2008 financial year, the company carried passengers totaling to six million and the cargo whose total weight was three hundred and thirty thousand tones.
The company was ranked among the top ten airline companies in the world in regard to growth and expansion basing on the statistics that were given out by the international Air Transport Association. This company obtained a top award at the World Travel Awards or WTA in the year 2009 (“Etihad Airways Dubai”, Para 8).
Organization’s Vision, Mission, and Objectives.
The vision of the Etihad Airlines Company is “to become the leading and most profitable Middle East airline offering consistently high standards of air cargo through customer service, connectivity, transparency, and technology” (“Etihad Crystal Cargo”, Para 1).
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To maximize cargo profitability for Etihad Airways by implementing effective business processes for optimum yield, maximum load-factors, minimum transit times, immediate and seamless information to the shipping community, customer service and reduced administration (“Etihad Crystal Cargo”, Para 2).
Organization’s Products and brands
The core business of the Etihad Airways Company is “international transportation of people” (Rodrigues 6). This company has three different kinds of products which include; “Diamond First Class, Pearl Business Class, and Coral economy Class” (Rodrigues 6).
In addition, the company carries out operations in the tourism sector and it does this through “Etihad Holidays and operates in cargo and logistic with Etihad Cargo and Etihad Express2D” (Rodrigues 6).
For the company’s “product portfolio” of a variety of businesses that it carries out its operations under in regard to product share, the international transportation takes up a larger percentage of 60 percent, followed by the Etihad Crystal cargo which takes up 30 percent and in third position we have the Etihad Holiday which takes up a share of 10 percent.
Basing on the company’s revenue as well as profits in the “International Transportation of Passengers”, the company receives 40 percent of its income from the “Etihad Pearl Business Class, 20 % from its Diamond First Class and 40% from its Coral Economy Class” (Rodrigues 6).
Basing on the market share, the part that has the largest market share is the “Etihad Coral Economy”. This is followed by the “Pearl Business Class” and the “Etihad Diamond First class” comes in the third position (Rodrigues 6).
Considering the company’s products on the basis of the BCG matrix, there can be consideration of the Etihad Coral Economy as being the company’s Cash Cow. This is for the reason that the Etihad Coral Economy has a market growth that is low but on the other hand, it has a market share that is high in relative terms.
The “Pearl Business Class” can be considered to be the “Star Product”. This is because this product’s market share is high in relative terms and it also has a market growth that is relatively high.
Rodrigues points out that the company is supposed “to prioritize what it needs to do with Etihad Express2D and Etihad Holidays as they are both Question Mark Products as they both have a relatively high market growth but low market share” (Page 6).
There are many international airports in the U.A.E. The Etihad Airways serves customers who are in Al Ain and Abu Dhabi. Therefore, the company’s target clients are those people who travel to the Abu Dhabi international Airport and from the same airport.
The Airline tagline which is “From Abu Dhabi to the World” in the present puts its focus on “outbound holidays and travel from Abu Dhabi” (Rodrigues 10). Therefore, it can be clearly seen that the present target segment are businessmen and women as well as the tourists who come form Abu Dhabi.
In addition, basing on the company’s pricing strategy; the focus of this company is basically on the higher class as well as the middle class people. The target customers are those individuals who have an intention of travelling with high hospitality standards and also with luxury.
The Etihad airways company, at the present, has placed its customers in to segments in line with the customers’ purposes of traveling. The passengers are placed in the segments basing on such purposes as; business, tourism, personal reasons, and religious reasons.
Abu Dhabi is a city that is undergoing quick development in line with tourism as well as the business activities. There is anticipation by the “Abu Dhabi Tourism Authority” of the expansion in tourism sector in which the tourists come to the hotels in Abu Dhabi.
There is a projected growth in the tourist arrivals of up to 3 million by the year 2015 (Rodrigues 10). This follows that the Etihad Airways company’s future is supposed not just to target the “outbound passengers” that come from Abu Dhabi but should also target the “inbound passengers” who are the business class passengers as well as the tourists who go to Abu Dhabi.
The company’ main competitors include such airline companies as Air Arabia, Emirates and Fly Dubai. These companies are those found in the United Arab Emirates and are the direct competitors of the Etihad Airways. However, considering the Middle East region, there are other competitors of this company.
These include companies like Oman Air, Qatar Airways, and Gulf Air. Other competitors include Singapore Airline among other international airways. The major competitor of the company is Emirates Airline.
The indirect competitors of the Etihad Airways Company include “the telecom and the Holiday Cruise Industry” (Rodrigues 8). A threat to the company is brought by the Telecom industry because of the “enhancement technology” such as video conferencing.
This causes people to consider it as needless to move from one place to the other to conduct business. Another indirect competitor such as “Holiday cruise line” bring in competition because, on top of people transportation, they as well have “hotel setting” among other activities on board. This allows the people to spend a vacation on board as they move from one port to the other.
The advantages that can be derived from the clients at the time they travel with the Emirates, Etihad’s competitor, are similar ones to those obtained when travelling with the Etihad Airways.
But, when there is consideration in regard to the image, Emirates gives more value to the clients and this is because the company has been in operation for the last 26 years. Basing on the monetary price, Air Arabia stays ahead of the competition because this company charges lower prices as compared to the Etihad Airways.
Current Position in the market
The Etihad Airways Company is a company that can regard itself as the “national carrier of the United Arab Emirates” (Rodrigues 6). The company is located strategically in Abu Dhabi and this is one of the company’s competencies.
It attracts people who are linked for west to east and vice versa by Abu Dhabi. The company is wholly government-owned and is governed by a board of directors whose chairman is HH Sheikh Hamed bin Zayed Al Nahyan (“Etihad Airways”, 1).
According to Saleem, the company plans to “invest in the re-designing of 10 Airbus 320, which will hold 162 seats all belonging to the Etihad Coral Economy Class for short haul flights” (Para, 1). In August last year (2010), the “Etihad Crystal Cargo” got the A330-200 and this was its first “wide body carrier” (“Etihad Airways”, 1).
It can be seen clearly that this company do possess competencies in regard to funding for the organization to realize growth and engage in investing in fresh strategies.
However, this company is experiencing some vulnerability for the reason that it is young on the market and has only operated for a short period of time but it benchmarks itself with major airlines like the Emirates for it to turn out to be the same as the world’s leading airline companies.
The company had made a move to carry out heavy investments in its operations without even,”breaking even”. At this rate, the company may find itself making losses.
Even if the Etihad Airways company is young, it is realizing rapid growth towards becoming successful and it has “57 wide and medium-bodied air buses in its fleet that were only six in 2003, the point where they started” (AbuShahout, Punnose and Khalifa 5). The company charges lower fare to its customers in comparison to what the competitors in the region charge.
More so, another strength that this company has is that it is under the leadership of a Chief Executive Officer, James Hogans, who is a person that is creative and works with a management team that has high qualifications. In addition, the company has a sponsorship program in which it sponsors activities in sports club and also in sports events.
The company also received the “global award” as being one of the airlines in the world that is leading. The company has also “the great entertainment system on board with USB plug and play feature to connect personal devices to the system” (AbuShahout, Punnose and Khalifa 5).
Etihad Airways has cabin designs that are of their own kind which include “Diamond for first class, pearl zone for business class, and coral zone for economy class” (AbuShahout, Punnose and Khalifa 6). More so, the company offers services that are of high quality and following this, the company has obtained over thirty awards.
The company has also attained success in forming partnerships in order to bring in, new destinations like the one that was formed with the Virgin Blue Australia. Each year, the company has also been increasing the seating capacity.
Another strength that the company has had is being able to wisely diversify its operations through “air transportation” and holiday as well as cargo services. This move enabled the company to raise $2.3 billion in revenue (AbuShahout, Punnose and Khalifa 5).
Another important Etihad’s strength lies in its creativity and innovations. This has been portrayed through ground and onboard services. The company was also able to attain positive EBITDAR with projections to be in a position to break even in this year (2011).
The company has its own weaknesses which have served to obstruct its operations. One of the weaknesses is that the company has a smaller number of destinations in comparison with its main competitors like Qatar Airlines and the Emirates Airlines.
Another weakness is that the company has “customer service centers” that offer weak support leading to customers presenting complaints that they do not receive the assistance that they may need. More so, there are always delays in the compensation processing. In some cases, customers also raise complaints in regard to having to wait for a longer time in “connection flights” (AbuShahout, Punnose and Khalifa 5).
Since the company is realizing an increase in popularity, this enables the company to gain entry in to fresh markets via “strategic alliances”.
More so, the company is strategically located and this offers promise of being able to attract customers on an increasing basis. The company is also in a better position to become attractive to those clients that love technology and this is because of the innovations the company has carried out in cabins (AbuShahout, Punnose and Khalifa 6).
One of the threats faced by the Etihad Airline Company is the possibility of new entry by companies in such a rich region. More so, the unpredictable fuel prices that can increase any time is also a big threat.
The natural environmental conditions is also another threat and these always have a negative impact on the aviation sector in general like the one that occurred in the year 2010 in Europe (ash cloud) which brought great losses for the airline companies (AbuShahout, Punnose and Khalifa 6).
Marketing Objectives & Marketing Strategies
Marketing goals and Objectives
The company has put in place both short-term and long-term goals and objectives. The short term goals and objectives were set to be realized by the middle of this year (2011). The long term objectives are set to be achieved in the coming three or four years.
The primary short term objective of this company is to “break even” by the middle of the year 2011. The company intends to achieve this through cost reduction and at the same time increasing the yield. The secondary short-term objective is to hold customer value at the same level while reducing cost. The tertiary objective under this category is to ensure the status quo of the company is maintained as being a company of a luxurious brand while at the same time reducing the cost.
On the other hand considering the long term objectives, the primary objective of the company is to ensure that the airline does not just remain profitable every year but there should be increase in the profits made by between five and ten percent.
The secondary one is to bring up the level of customer value and customer satisfaction by between eight and ten percent by the year 2015. The tertiary objective is to have a fifteen percent increase in “Emirate staff” by the year 2013. The company also intends to create “inbound holidays” to Abu Dhabi by the year 2030 (Rodrigues 11).
The company’s main product component is the “Air Transportation” on passengers as well as goods. “The Airline Actual Product Component comprises of Etihad brand Product Portfolio which has, Etihad Diamond First Class, Etihad Pearl Business Class, Etihad Coral Economy Class, Etihad Holidays and Etihad Express2D” (Rodrigues 11).
It also consists of Etihad Crew and staff. Competitive advantage of the company is mostly offered by the company’s “Augmented Product Components”.
This has competitive advantages in regard to the product strategy where the airlines is the carrier of the Abu Dhabi region on top of being the national carrier of the U.A.E. Abu Dhabi is rapidly undergoing development and heading towards the direction of becoming the hub in the middle of tourism and business.
This implies that, with Abu Dhabi as a hub, this offers the company a competitive advantage. The company also has another competitive advantage by virtue of it having its own private terminal that is found at the Abu Dhabi International Airport and this makes it to be in a better position as compared to its competitors that operate to and from Abu Dhabi.
Just as it is not the case with some of the airlines, the Etihad Airways Company makes it possible for its passengers to check in 24 hours before the time of departure and this enables the passengers to be able to save time because they are just supposed to come to the airport one hour before the time of departure unlike the normal three hours before departure.
More so, the “Etihad Crystal Cargo” with the Express2D service to such regions as North America as well as Europe is “a service from shipments airport to the customer door” (Rodrigues 11) and this is also a competitive advantage the company has.
At the present, the company does have a “market penetration” pricing strategy which is intended to enable the company to have a market share in the U.A.E.
In addition, by engaging in the delivery of almost similar service as those delivered by the Emirates Airways and British Airways, the company may be seeking to ensure having more passengers and therefore generating more revenue in order to break even because the company targets to break even this year (2011).
Looking at promotion, this is a means through which any business organization can encourage the capability and desire of buying in to a potential client. The Etihad Airways has put in place several promotional strategies that help it in attracting customers.
One of this is sales promotion. This company has coupon and bundle offers that they issue to the clients. In addition, the company’s webpage provides the lowest prices in comparison to the sales agents. This implies that the company boosts direct promotion to airline instead of the “general sales agents” (Rodrigues 13). More so, the company engages in promoting itself through taking part in a number of sweepstakes.
Another promotional strategy that is used is direct marketing. The company’s employees and staff are used to market the company’s products and services in a direct manner through oral communication. The company also participates in a number of tourism and travel activities as well as exhibitions. The company also uses sponsorship as a promotional tool.
The company takes part in sponsoring sporting activities. Some of the programs put in place include “Ferrari F1 team” and “Abu Dhabi Grand Prix” aimed at promoting sports festivals (“Etihad Airways” 1). The company is also a sponsor for the “U.K Premiership rugby team known as harlequins RFC and Manchester City FC” (“Etihad Airways” 1).
The company also engages in advertising as a way of promoting its products and services. It advertises its products through all forms of media including radio, TV, newspapers and magazines.
Currently, 20 percent of the company’s advertisement is done on TV, print advertisements is also 20 percent and the leading newspapers in the region take up ten percent and also the travel magazine forms 10 percent of the advertising.
Prints promotions are another strategy that is used by the company. The company makes many posters and also brochures that are issued out to the clients either directly or indirectly via the “general sales agents”. Another form of promotional strategy is giving out gifts to the customers and especially those customers who are loyal. The gifts that are given have the brand name of the company.
At the present, the company engages in the distribution of the tickets in the company’s main office as well as its branches. On top of this, it also distributes the tickets through the general sales agents in various parts of the world.
The distribution of the tickets is also carried out by the company online through its company website. A person can be able to book and make a choice of fares on the company website basing on the budget the person has. In addition, the company has “Customer call centers” where a person can book for a specific flight and also seat whenever it is available.
Recommendations for Change
The company should seek to improve its operations in order to break even and even start making a profit. The company is supposed to make necessary changes in order to operate on the same level as other major airline companies that have been in operation for a long time such as the Emirates Airlines and British Airways among others. It should seek to move from a position it can be perceived as a low value brand company by he customers.
The Etihad Airways Company is targeting to break even by mid this year (2011). The moment the company has broken even, it can be recommended that it brings up the level of its prices by ten percent. In this manner, the company would be able to come to the same class of the major competitor, Emirates Airlines, basing on the price factor as well.
Following this, the customers will no longer look at the company as it being a low value brand in comparison to the big companies such as the British Airways and the Emirates Airlines. There will be a rise to a higher degree of the “luxury high quality image” of this company.
It can also be recommended that the company maintains its present distribution strategy but ensure addition of several branches as well as the general agents to the list of the company. In addition, it can be recommended that the company could set up stalls that are not big at the “leading mall” where the customers could as well go to book their flights.
The company has people who have a good education working in it. However, the company should take an initiative to engage in investing more in offering training to its staff to ensure they have appropriate skills to carry out their duties more effectively and efficiently.
An airline company may take several initiatives such as reducing the price, increasing the fleets, and bringing in new products to the market as a way of seeking to improve its performance. However, this can turn out not to serve the intended purpose in the case where there is no supportive and well-mannered staff. Therefore, it is important to offer adequate training to the company’s employees.
Budget and Implementations
The Etihad Airlines should capitalize on its strengths and the available opportunities in order for it to realize growth. For instance, the company should seek to invest money in training programs.
The budget for staff training should be increased by 20 percent and this program should be projected to go on for the next one year. Implementing such a program will serve to increase the employee competence and this will help the company to meet the customer needs in a better way to have less or no customer complaints that makes them to prefer travelling with other airlines.
The company should seek to increase the number of branches as well as the general agents through which there will be more distribution of the company’s tickets. This will require an additional budget. The company needs to increase the distribution budget by 10 percent and this will serve to increase the number of customers. This can also be implemented within a period of one year.
Monitoring & Control
In order to implement the plan for the improvement in the company’s performance, there is need to carry out monitoring and controlling with an objective of ensuring that everything goes as planned.
The management of the Etihad Airways Company should take up necessary steps in order to come up with a plan to ensure effective implementation of the planned activities aimed at bringing the company to a whole new level.
People should be assigned tasks that they have to carry out according to plan and to be completed within time. Targets need to be set that need to be met within specified time periods and there is need for performance measurement in order to determine whether or not the actual results have been achieved.
If there are any deviations appropriate actions need to be taken in order to ensure things run smoothly.
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“Etihad Airways.” Hoovers., 2010. Web.
Plunkett Jack, Plunkett’s biotech & genetics industry almanac. New York: Plunkett Research, Ltd., 2005.
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Saleem, Nadia. Gulf news – Etihad to reconfigure up to 10 A320s in to economy jets 2010. Web.