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Submitted By :
Ajroosh Abbas
Topic:
This case look at the role played by in sequence systems that helped Airblue to discriminate itself evidently from its participant and also at the various repercussion encounter by the airline. It also examine the near nothingness of whatever thing linked to Internet marketing done by the airline. The basic reason for this is that in Pakistan the industry world has not ongoing to comprehend the probable of Internet in terms of promotions and advertising, their main focus on the internet being information provision or at a later stage transaction of products/services through their website. Although we have established previously that websites are a medium of advertising yet they are not a direct intentional promotional tool used by most of the businesses in Pakistan.
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Airblues Inception
Early in 2003, Tariq Chaudry, a US based Pakistani software engineer and the exchairman of PIA, Shahid Khaqan Abbasi toyed with the idea of launching a private airline in Pakistan. Seeing the potential market, Airblue took off to the skies on 18th June, 20042. The launch created quite a stir in the Pakistani aviation industry. Airblue did not emerge as just another private carrier. It had an edge over the other carriers as it adopted a leading approach in deploying information technology in its everyday operations. For the first time in the history of Pakistan, Airblue introduced the concept of total e-ticketing and PDI check-ins. The management had no intentions of using their website or other means of promotion over the Internet. E-ticketing and PDI check-ins were their basic innovation over the Internet. This new concept was the brainchild of Mr. Chaudry, Airblues CEO. Having experienced the way the power of technology has been harnessed in the West in terms of e-ticketing, Mr. Cahudry that the Airblue team be the first-mover and take up this challenge.
Competitive Advantage
With e-ticketing and PDI check-ins Airblue not only provided convenience to passengers in terms of saving time but has also helped eradicate the back-dating system associated with manual ticketing that costs airlines, including its competitors, millions in losses every year. Airblue has integrated unique innovations to ensure security and affordability. Purchasing an Airblue ticket online is even easier and requires four simple steps3: 1.
2 3
Log on to www.airblue.com
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2. 3. 4. 5.
Search for available flights; Make a reservation by selecting the desired flight; Enter credit card information; Printing the e-ticket out-right at home.
The absence of manual ticketing and the introduction of computerized check-ins by hand-held computers helps Airblue offer quality-conscious travelers value for their money by offering quality product and consistent scheduling4.
4 5
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Payment Gateway
6 7
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The system uses the Citibank Payment Gateway, which enables the customers to purchase tickets online. This is a major enhancement because previously Airblues customers were forced to use the dollar based reservation system that caused problems and complaint due to the fluctuating dollar rate. Now Citibank's Payment Gateway enables organizations to use a Rupee-based Internet Merchant Service facility to accept Visa/MasterCard transactions online. This has increased customer satisfaction to a larger extent.
Paperless Environment Tensions of not receiving tickets in time and then making sure its not misplaced are the woes of the bygone days. There isnt any need to carry paper coupons, which means the tension of misplacing a ticket is gone. An Identity card/credit card/a passport is enough for identification. Checkin becomes fast (there are even self-service check-in options in the UK/US). Whats more important here is, since the travelers are given a reference number they need not worry about the loss of their tickets as it is stored electronically in the airlines system and there are no charges for a reprint of the ticket in case of loss, even if he/she loses the number or needs any alteration in the reservation it can be retrieved from the electronic Ajroosh Abbas
airline system by any travel counselor. This very easily diminishes the hassle of visiting the travel agent or the airline office as the UAN no. is easily accessible. Cost Saving E-ticketing creates a win-win situation for everybody. The airlines get their benefit in terms of saving time and cost in terms of managing manual tickets by using simple A-4 size sheets out of any printer. Travel agents too get their share of benefit as they save on their overhead cost and time in terms of delivering tickets. Investment in deploying eticketing is justified by the potential cost savings it can provide because of less administrative work and less documentation. Travel agents can now focus on their core competence, which is travel consultancy and research, rather than on ticket issuance and delivery. According to an estimate, Airblue with IT investments in excess of US $ 2 million, savings of 40% over standard paper based ticketing systems are being achieved, with a corresponding improvement in efficiency--8. Seamless Check in Process The check in process works on state of the art hand held computers that operate on wireless communication. This wireless technology provides convenience to the passenger, as customer service agent is able to serve the passenger without having him/her stand in the queue. The hand held computer has bar code reader that scans passenger's e-ticket and retrieves passenger details. After verification of passenger data, passenger is issued with a boarding pass and bag tags through small zebra printer that is directly attached to hand held devices. Advantage for Travel Agents E-ticketing has proved to be very beneficial for travel agents. Every agent has his own account and email. Each sale is recorded and the system also generates sales and payments reports. In this way the agents get their fair commission with no financial disputes. -Online Sales Statistics Initially, following its launch, Airblue expected to capture 5-10% of its sales through eticketing owing to the fact that its a new concept and people are still reluctant to use their credit cards on the internet especially on a Pakistani website12. However according to the company at present approximately 51% of their total sales are through the website. This shows the future potential that web advertising has in the country. People todays have slowly accepted Internet to be an important part of their lives and convenience. Thus Airblue although at the time only uses indirect promotion through its website there are a lot of opportunities for it to increase the scope of internet advertising in the future.
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This would be most profitable if a great percentage of its customers are frequent internet users like the business class etc.
Effect on Competitors
Modern approach used by Airblue created quite a stir in the domestic airline industry and a number of its competitors, including PIA and Aero Asia followed suite by overhauling their systems in terms of IT.
Conclusion
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Marketing over the Internet in Pakistan initially might have some impedance considering the above discussion, but the pros evidently overshadow the cons in case of favorable conditions. In spite of deviating from the conventional system, Airblue has made its place among the best carriers in Pakistan in just two years because of the convenience it provides through the use of its website. The combined implementation of technologies will define a new era for the travel experience. Airblue is well on its way achieving greater efficiency, security and convenience throughout a passenger's journey. The airline industry has decided on a direction and will make this change happen in the most successful way. Internet Marketing has quite a lot of potential for the airline industry as there are few service providers and the market share for each is huge. Thus investing over the Internet is well worth every penny spent.
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Exhibit 1
Airblue is a private limited company and started with three new-generation aircraft Airbus A320, each of which has 20 Business Class seats and 126 Financial system class seats, offers travel services to the following cities within Pakistan:
Dubai
Airblues offices are located in the above mentioned cities with the operations head quarter based at Karachi and the Customer Support head office in Islamabad. The airline strives to provide customer comfort and has trained its employees through foreign experts. Moreover the airline is the first one to provide in-flight entertainment facilities like movies, games etc.
Exhibit 2
About Sabre Airline Solutions Sabre Airline Solutions, a Sabre Holdings company, is the world's largest provider of software products, reservations and departure control systems and other passenger management systems, and consulting services that help airlines simplify operations and lower costs. Sabre Airline Solutions' proven leadership is demonstrated by the growing number of airlines that leverage the technology and services: More than 200 airlines worldwide use Sabre Airline Solutions' broad portfolio of smart solutions for decisionsupport tools to increase revenues and improve operations. More than 100 airlines worldwide rely on Sabre Airline Solutions for passenger management solutions, with 15 new carriers added and nine carrier renewals for SabreSonic Res advanced reservations in 2003. In addition, more than 100 clients worldwide have turned to Sabre Airline Solutions consulting group for strategic, commercial and operational consulting. More than 500 contracts worldwide were signed in 2003 within Sabre Airline Solutions.
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Sabre Holdings Corporation (NYSE:TSG) is a world leader in travel commerce, retailing travel products and providing distribution and technology solutions for the travel industry. More information about Sabre Holdings is available at http://www.Sabreholdings.com. Sabre Airline Solutions, the Sabre Airline Solutions logo and SabreSonic, and AirOps are trademarks and/or service marks of an affiliate of Sabre Holdings Corporation. All other trademarks, service marks, and trade names are the property of their respective owners.
http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=TSG&script=410&layout=-6&item_id=579618
4 Star Airlines
A seal of Approval, awarded to airlines supplying a good Quality performance across the range of Product and Service delivery rating areas. A 4 Star ranking signifies airlines providing a good standard of Product across all travel categories - and a good standard of Staff Service delivery in Onboard and Airport environment.
3 Star Airlines
The 3 Star ranking signifies a "satisfactory" standard of core Product across most travel categories - but reflects poor or less consistent standards of Staff Service / Product quality in selected Onboard or Airport features for the airline listed. Pakistan International Airlines (3 star)
2 Star Airlines
Star rating for a poor Quality performance - falling below the industry average in the different competitive rankings of Product and Service standards.
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The 2 Star ranking represents a poor standard of Product and / or poor and inconsistent standards of Staff Service delivery in Onboard or Airport environments.
PIA
SWOT Analysis of Pakistan International Airlines:
Strengths:
o Domestic and International Reputation o Direct flights from small cities to foreign destinations o Organized distribution channels
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Weaknesses:
o Centralized decision making o Aging Fleet o Ground services (lack of staff, improper management) o Less technologically advanced as compared to foreign airlines o High charges as compared to other airlines Weak financial
position.
Opportunities:
o New product innovations o Improving quality by new techniques and resources o 2007-2011 great increase in world air transportation
Threats:
o Unstable Government policies o Inflation o Increasing competition o Increasing fuel prices.
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Benefits
By purchasing new fleets the repairing cost decreases and attracts thecustomers that cause to decrease the cost and increase the revenue of PIA.Fleet modernization will bring more security, safety, less maintenanceexpenses and will project a brighter image of the airline. By applying the modern techniques of management, management will focuson its objectives and goal in an efficient and productive manner which willreduce the expenses and focus on the achieving the profit By properly marketing itself PIA will present a better image to the world. Byclearly describing facilities and projecting its image it will help in growingmarket share Training and development of employees will prepare the employees for current tasks and for future challenges. By removal of old employees it creates an opportunity for fresh energeticcandidates to show their performance. It also causes to reduce the cost becausetheir salaries have been increases very high. By the publication of magazine the awareness of the people about PIAincreases. It increases the number of passenger that increases the revenue. Timely decisions are possible by decentralizing the decision making power. Strict control on inventory stock will reduced the cost. By appointing employees on permanent basis the sense of ownership willincreases. When employees secure about future they can focus on their work more efficiently. By giving the importance to the suggestion of lower level management andtheir participation in decision making, they wok with responsibility and triedtheir best for the organization. Reducing the HR budget by clearly defining the job and designing the jobs.So right number of people and required number of people will work. A proper performance and reward system will induce employees to work effectively,efficiently and remain loyal to the organization
Financial performance
During the first quarter of 2007, the airline achieved a 5% growth in overall revenuemainly supported by 7.6% increase in passenger revenue which was partially lowered by a 10% reduction in cargo revenue. The revenue growth was reduced due to the EU ban from early March which meant only the Boeing 777 were able to operate intoEurope. This caused many of the European services to be put on hold until the aircraftthat were considered to be inefficient to be brought up to EU standards so they cancontinue flying. Even with the fuel cost remaining at the 2006 level due to stable oil prices in the first quarter 2007, the operating and financing cost increased in proportion. The impact of 2006 salary hike, increased cost of leased aircraft andhigher maintenance cost of PIA fleet increased the overall operating expenses by19%. Consequently, the airline suffered an operating loss of Rs 2.5 billion in the firstquarter
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