Poland
Economic Factors
Competition
The international monetary fund recognizes Poland to have one of the leading economies in Europe. The polish air transport sector remains a global leader amidst strong competition from the key competitor North America.
With the realignment of economic powers to favor the East, there is a prediction that the polish aircraft maintenance services will have a larger market. However, this realignment might bring in new competitors to the polish aircraft maintenance industry from the Eastern countries which are growing such as Brazil and India.
Inflation
While many countries in Europe got affected by the economic crisis of 2009, Poland economy stood strong in the face of the inflation. Being at the center of the European continent, the country has been able to enjoy economic advantage over other western European countries.
At one hand, Poland hand aircraft maintenance industry gets the opportunity of having a market from the rest of the European countries due to the geographical location while, on the other hand, the industry is able to get skilled labor from these neighboring countries. This has led to the balance of supply and demand in the aircraft maintenance industry leading to the growth of the sector.
Social Factors
Infrastructure
In the midst of vast competition, the success of the transport sector in Poland has relied on the infrastructure system of the country. The country infrastructure system has been poor, but this is radically changing as the country prepares for the 2012 soccer Euro championship.
The country transport sector has received massive funding from the European Union in the effort to renovate the infrastructure. This will lead to the growth of the aircraft maintenance sector.
Cost of Living
The countries average income is much lower compared to other western European countries. This has directly led to lower cost of goods and services in Poland as compared to other European countries. Subsequently, many companies are outsourcing aircraft maintenance services from Poland because the prices are cheaper.
Political Factors
Politically, the country experiences a high level of stability. The republic of Poland has separate autonomy of power between the legislature, the executive and the judiciary. While the country has a presidential system of government, the legislative arm and the judiciary are independent.
In 1997, Poland adopted a new constitution that has guaranteed the freedom in economic transactions for outsourcing companies. The laws governing the aviation industry include the air law Act of 3rd May 2003 and the law by the infrastructure ministry of Poland of 6th may 2006.
Technological Factors
R$D activity is characteristic of the aviation industry in Poland demonstrating the role that human beings are playing in promoting innovations. Further, the country has many institutions of engineering that have been key in promoting technological advancement in the country.
Suitable outsourcing partner
AirTech Solution ltd became the ideal outsourcing partner for Ryan Air in Poland. The company has two certificates in Aircraft Maintenance that distinguish it from other air craft maintenance companies.
It possesses the certificate No PL 145056 of membership in the European Union Civil Aviation that approves its services in maintenance. Its second certificate No, PL05.ARD.2011 certifies its compliances to Poland civil aviation department through the strict compliance to the air law Act that came into force Poland in May and compliance to the laws that regulate the infrastructure industry in Poland as from May 2006.
The company offers five key services in aircraft maintenance namely; services in repairing aircraft defects, the supply of spare parts for the aircrafts, line maintenance in accordance to individual aircrafts, creation of line maintenance in all the European airports and solutions for logistics in the cases of AOG. These services target Aircrafts; ATR42-300, B737-300/400/500, B757-200/300, A318/319/320/321 and B737-600/700/800.
Venezuela
Venezuela faces many challenges that make it an ideal country for Ryan Air to outsource the Aircraft maintenance services.
Political Factors
The country political stability was unstable for a long time. In 1989, the country witnessed clashes that led to the death of over 200 people. Subsequently a few years later the country witnessed coup attempts to overthrow the government. The legal system of the country disfavors the freedom to conduct economic activity. Since 1998, the country has been on the track in nationalization of key sectors of the economy.
Companies dealing with steel and cement, oil and, tourism were nationalized. In the fear of subsequent nationalization of the air sector in the country, many investors have feared investing in the sector.
The local judicial system has barred economic activity in the country to the extent that countries, which have been, affected by nationalization have sought justice from the international systems of justice. The government has gone further to block international systems of justice in the commercial activities of the country by withdrawing its commitment to the international courts.
Economic Factors
The economy of Venezuela heavily relies on its oil sector. This has made it extremely vulnerable to international oil prices. In 200-10, the economy was affected by the decrease in the oil prices and subsequently the cost of living drastically went up. The prices of goods and services rose in response to the economy. However, in 2010, the government was able to reverse the economic meltdown through the increase in its expenditure.
A country’s foreign exchange policy affects the investment and outsourcing decision either positively or negatively. Countries with favorable foreign exchange policies attract outsourcing industries while unfavorable foreign exchange policies discourage the outsourcing companies. In Venezuela, the foreign exchange system is restrictive and discourages outsourcing companies.
The system is controlled by the National Exchange Control Administration which acts as the authorizing body in terms of foreign exchange. Further, the system gets restrained by the Central Bank which must approve any foreign exchange allowed by the Administration body. The government acts as the controlling body for all economic activity barring investment and business transactions.
Social Factors
The population of Venezuela is dominated by the poor and the very poor forming almost a quarter of the overall population. The population is rapidly growing with an annual growth rate of 1.6%. The transport sector is very poor and has discouraged the growth in the air sector. However, the growth in the tourism sector has been key to enhancing the transport sector in Venezuela.
With key tourist sites such as Angel Falls and Isla de Margarita, the air transport sector future is promising. With around 25, different ethnicity, decision making was slow and conflict was rampant with the most recent coup attempt being in 2002.
Despite the unfavorable conditions in Venezuela, the company recommended Areocentric de Servicios CA as a company of choice to outsource the aircraft maintenance services from Venezuela.
Turkey
Political factors
The country has been experiencing a period of political stability just as the rest of its European neighbors. This has favored growth and investment. The political system favors liberalization of market opening the ground to outsource services. The political environment favors the growth of the aviation industry.
Economic factors
Economically, the Turkish economy remains among the strongest in Europe, and the air travel sector has been essential in facilitating the growth Turkey’s economy. First among the advantages that turkey has in the air travel industry is the strategic positioning of the country in relation to geographic position of neighboring countries.
Just like its counterpart in Europe Poland, Turkey air industry enjoys a strategic, central position in Europe with the travelling time to 50 neighboring countries being at 3hrs.
Consequently, the country has been able to access a vast market not only from Western Europe but also from Eastern Europe, Germany Middle East and Asia. The major advantage of the vast market to the Turkish air travel sector is its ability to access different currencies that enable in balancing its economy to resist inflation.
Social factors
Though the country has a high population of over 75 Million, it enjoys a vast geography of around 780000 km. The large population has worked as an asset to the country’s air travel sector by providing a larger market for its services.
Unlike Poland whose, average income for its population is low Turkey population has been experiencing drastic increase in income that is encouraging the growth in air travel industry as people have more to spend.
Technological
Turkey technological growth has been on the rise in the recent past. The economic growth in the country has responded by improving the technology. There is a wide range of experts in civil aviation to fulfill the market demand in the air travel industry.
The air travel business is composed of a variety of competitors that have been forced to seek technological advancement and innovation in order to maintain a competitive edge over the rivals in the industry.
Suitable outsourcing partner
The Turkish Airline becomes the company of choice in terms of outsourcing from Turkey. It has been able to achieve a steady economic income in the midst of change and inflation. In the nine months ending September 2009, only one airline, Ryan air, remained ahead of Turkey airline with a 10% margin.
Nine months ending September 2009 performance comparison:
Source: Turkish Airlines
The company is the leading airline in Turkey, and has been able to enjoy a diversified income than most other airline shielding it from inflation.
Income versus Expenditure
Source: Turkish Airlines
Conclusions
A look at the three choices for Ryan Air outsourcing reveals that every country has its uniqueness to favor outsourcing. In the midst of economic uncertainty, Turkey advancement and strategic location make it more ideal as the country of choice. This is combined by the fact that Turkey Airline is the closest competitor of Ryan Air.
Working hard in hard in order to outsource the aircraft maintenance services from Turkey airline can enable the two companies to work in benefiting one another. The economy of Poland remains a leader in the European market Venezuela, acts as a tourist attraction site and this has enhanced growth in its air travel sector.
In making the final decision on which country to outsource from, the company must consider the country specific, the industrial specific and company specific factors discussed in the paper.