Executive Summary
Topic
The presented report will be focused on the ways Etihad can increase its capabilities and achieve set goals through the 2016-2026 destination statements. Furthermore, there is a developed strategic linkage map that covers the main activities the company implements in order to achieve desired outcomes, also illustrated in the map.
Content Summary
The paper contains Etihad Airways destination statements that span across four perspectives of the business: financial, customer, process, and growth with two statements related to each of the perspectives. In the financial sphere, Etihad Airways contributes up to five billion dollars to the UAE economy annually and increases the partnership revenue up to three times by 2026. In the customer sphere, Etihad maximizes the effectiveness of on-ground specialty commodities for customer’s comfort and safety and extends the range of available in the air facilities and commodities to cater to the needs and requirements of various groups of customers.
In the process perspective, Etihad provides up to 150 destinations for the customers without cooperation with other airlines, with cooperation – up to 400 destinations globally and extends the capabilities of the cargo transportation department to fly cargo. Lastly, in the learning and growth perspective, the company provides new jobs and creates training and support for already existing employees and is a member of a global alliance.
Remarks
The report will be beneficial for future research on the topic of how a global corporation can increase its revenue and build a strategy targeted at achieving this goal.
Introduction
The report is targeted at the management of the Etihad Airways that is interested in maximizing the company’s presence on a global scale, providing immaculate services for its customers, and the increase is revenue both through cooperation with other global carriers and as a separate company. The primary aim of the report is to outline possible outcomes for the company, along with proposals of activities that are targeted at their achievement.
The report consists of four interconnected parts. Part I consists of the Company’s background on the global market of airline services in which it operates, Part 2 presents the Etihad Airways destination statements for the future ten years. These statements cover the sphere of finance, expectation of customers, capabilities, and processes within the company, and the learning and growth perspective. Part 3 of the report illustrates a strategic linkage map that shows the desired outcomes of the companies and the activities that go towards achieving these outcomes. Part 4 analyzed the three outcomes exhibited in the previous parts as well as the outputs that result from the company’s activities.
Company’s Background
Etihad Airways is one of the leading air transportation providers in the world, with the main office situated in Abu Dhabi. Launched in 2003 by the Royal Decree, the company has set a number of ambitious goals for developing a brand that will be valued and recognized globally. Due to the tight competition with airline companies that have decades and generations of experience, Etihad Airways had to come up with a strategic plan to overcome the competitiveness. The new business model Etihad Introduced to the airline industry was the collaborative growth model that consisted of a three-tier approach toward the business – investments into other airlines, organic expansion of new territories where the company would provide flights to, and the codeshare partnership (Etihad Airways, 2013, p. 6).
The collaborative growth model has proven to be successful as it enabled Etihad Airways to deliver high-quality services on a global level and achieve significant growth in revenue that could not be achieved if the company decided to act without any collaboration. By the end of 2014, Etihad Airways was able to offer its customers more than a hundred destinations worldwide on their own, at the same time providing up to four hundred destinations through the partnership with other airlines.
When assessing the collaborative growth model critically, it is important to note that it has decreased the ability of the company to compete with other airlines since tight cooperation has been introduced. In order to expand the possibilities of Etihad Airways on a global scale, the company has to consider branching out into new territories by themselves to capture an appropriate spot on the market.
Etihad Airways 2016-2026 Destination Statements
Financial Aspect
- Etihad Airways contributes up to five billion dollars to the UAE economy annually.
- Etihad Airways is a contributor to the economy of Abu Dhabi. Supporting more than 180,000 jobs or twelve percent of non-oil jobs, the company can become a significant player in the process of diversifying the economy that is strictly focused on the oil industry. Furthermore, Etihad Airways has encouraged foreign airline transportation companies to invest in the UAE (Fast Facts and Figures, 2015, p. 6).
- The activities involved in this step of financial expansion are cost structure improvements, customer value increase, and asset utilization increase.
- Thus, by means of a partnership with other companies (discussed below), Etihad Airways is to increase the income of the UAE economy in a sphere that is not related to the oil industry.
- Partnership revenue has risen up to three times by 2026.
- Partnership revenue had increased by 30% in 2013 compared with 2012. With the stable increase of partnerships and participation in global alliances, Etihad Airways will be able to triple its initial partnership revenue by the year 2026.
- The activities involved in this step of revenue increase include revenue opportunities expansion and cost structure improvement.
- The outcome is in the increase of overall revenue for the company that will be able to satisfy new and existing customers and expand its coverage globally.
Customer/Public Expectations
C1: The effectiveness of on-ground specialty commodities for customer’s comfort and safety is maximized.
When it comes to immaculate customer experience, on-ground services that occur before departure are crucial.
- Etihad Airways provides its premium-class customers with transportation services to the airport in twenty-eight destinations worldwide and premium lounges in only five destinations.
- The activities involved in the maximization of safety and services in the on-ground facilities include service and price improvements and partnerships with other service providers.
- The range of the facilities should be extended in both territorial and class-specific ways. The company should look into providing on-ground service for non-premium customers, for example, quick check-in without any airport lines, transportation services, as well as waiting areas.
C2: The range of available in the air facilities and commodities is extended to cater to the needs and requirements of various groups of customers.
On-flight commodities are also included in the destination statement for the future ten years of Etihad Airways’ development. The company offers an extensive range of classes that include the Diamond First Class, Pearl Business Class, and Coral Economy Class. To satisfy its customers, the company can offer upgrades for economy class customers if vacant places in the upper-grade classes are available.
Process and Capabilities
- Up to 150 destinations for the customers without cooperation with other airlines is provided, with cooperation – up to 400 destinations globally.
- The second half of 2015 was marked with Etihad Airways, adding three destinations to their map that included Tbilisi, Baku, and Dar es Salaam. These flights have facilitated the development of the tourism business in these cities. With these three destinations, the total amount of destinations offered by Etihad Airways will equal one hundred and ten (El Gazzar, 2014, para. 4).
- The step towards underserved markets will facilitate the expansion of new territories and enable the airline company to increase the number of new destinations. On the other hand, cooperation with global partners will extend the possibilities of Etihad Airways to increase its global presence by means of offering additional destinations available from its partnering airways.
- The capabilities of the cargo transportation department to fly cargo are extended.
- Etihad Airways also operates the Etihad Cargo division established in 2014. Etihad Cargo carries a wide range of cargo to the destinations in Africa, Asia, Europe, and the Middle East. However, the number of cargo flights compared to passenger flights is relatively low.
- Since the company offers transportation of live animals, dangerous goods, vehicles, and other types of cargo, the destination range should be extended further to cater to the needs of clients worldwide (Etihad Cargo, 2015, p. 14). The outcome of cargo and passenger destinations is closely linked to the company’s aim of increasing revenue and cater to the needs of customers worldwide.
Learning and Growth
LG 1: New jobs are provided, and training and support for already existing employees is created.
In total, Etihad Airways has provided more than 180,000 jobs by the year 2016. In itself, the company employs 9,000 workers.
- Due to the extension of process and capabilities of the company outlined in the destination statements above, the increase in professional and trained personnel will become a benefit in the company’s growth. The frequency of hiring new employees is directly proportionate to the appearance of new destinations.
- On the other hand, it is crucial to provide additional training for the already existing personnel. With the development of new technologies, employees should be aware of possible methods of serving customers and provide better value both in-flight and on-ground.
LG 2: Etihad Airways has become a member of a global alliance.
- Now Etihad Airways does not participate in a global alliance although it has a reliable portfolio of relationships with global airline carriers. For now, there are two types of relationships that exist between Etihad Airways and other global airlines these are Special Prorate Agreements and codeshare arrangements. Special Prorate Agreements are one of the most effective sources of gaining value for an airline company.
- By means of setting up agreements with other companies, an airline is able to develop a network with new routes, extend the traffic capabilities with the help of discounted prices, and provide an appropriate level and quality of services for customers (Peluso, 2014, para. 4). Codeshare arrangement, on the other hand, is an agreement that exists between airline carriers allowing them to sell tickets for the same flight as if the flight is conducted by the same carrier, an approach widely used by Etihad.
The global alliance will allow Etihad Airways to establish its global presence in the industry of aviation. SkyTeam, Star Alliance, and Oneworld are the most prominent global alliances that offer its participants codesharing agreements, reduction of costs connected with maintenance, operation, purchases, as well as investments into other spheres of business. The outcome is predominantly linked to customer satisfaction; they will be able to enjoy lower ticket costs, an increased variety of departure and landing times, extended the range of new destinations, as well as the reduction of in-flight time.
Strategic Linkage Map
The primary outcomes for Etihad Airways are the increase in revenue, the satisfaction of the customers, as well as expansion of new destinations on the global scale.
Outcomes
Despite the fact that Etihad Airways claims an increase in the total revenue of up to thirty percent annually (Etihad Airways, 2015, para. 1), further increase as the primary outcome of the suggested activities will offer the company extensive possibilities. By satisfying the customers that will want to fly with Etihad again, the company will be able to expand its territorial presence thus gain more revenue for providing an extensive range of flights across the globe.
The financial, customer, and growth clusters of activity comprise a range of activities that should subsequently be measured with separate key performance indicators. If successful in their implementation, the clusters of activity will result in subsequent outcomes of revenue increase, customer satisfaction, and expansion of the company on the global scale.
Revenue increase is one of the most important outcomes since it allows Etihad to act upon satisfying its customers by offering top-quality services as well as expand their global presence by means of adding new destinations to its map. Customer satisfaction is an outcome that directly affects revenue increase since if customers are not satisfied with the services the company offers they will not add to the company’s revenue. Lastly, the outcome of expansion to new destinations is linked to the outcome of revenue increase since more destinations means more flights.
Reflection
The information learned in the class offered insights into how a business can broaden its capabilities and extend the range of the services or products it offers to customers. In terms creating a business model or a system of destination statement, the course has been beneficial for outlining main areas in which the analysis is the most effective.
Before conducting the research for the Etihad Airways destination statement, there was little known about the business. However, through the analysis of the company and through the design of the destination statement, it was learned that the primary objectives of an airline company are linked to satisfying the needs of customers, increasing revenue, and expanding the company’s coverage on the global scale.
Furthermore, from designing a system for the company, it was learned that all aspects of the business should be included in the system so that a company has a clear and a unified strategy. In addition, it was learned that the analysis of previous actions the company implemented is useful for finding out in which aspects the company was successful and what still needs improving. Designing an action system for an organization provides a skill of research and analytical thinking on the basis of such research.
The sources used in the research include the Etihad Airways Annual Reports, the Statement of the Facts and Figures of the company for the last decade as well as other articles and websites that provide extensive information on the current state of the company on the global market.
The designed system is different from the one the company previously implemented in a way that is more ambitious. Etihad Airways is used to setting smaller goals and develop their business gradually so that every detail is accounted for while the designed system is far more general and requires additional developments in terms of a detailed approach.
References
El Gazzar, S. (2014). Etihad Airways to Add New Routes by Mid-2015. Web.
Etihad Airways. (2013). Annual Report. Web.
Etihad Airways. (2015). Fourth Consecutive Year of Net Profit. Web.
Etihad Cargo. (2015). Corporate Profile. Web.
Fast Facts and Figures. (2015). Web.
Peluso, J. (2014). Special Prorate Agreements. Web.