Project on AIRBLUE Pakistan

AIR BLUE PAKISTAN

Group Members

JAVERIA LIAQAT

SIDRA KOUSAR

ZUBAIR MUSHTAQ

WAJHEE UL HASSAN

ALI HUSNIAN

INTRODUCTION

Air blue is a private Pakistani airline based at Jinnah International Airport Karachi.

Air blue started its operations on May 24, 2004.

It was the first private carrier of Pakistan to operate the Airbus A320 when it initially started.

MISSION STATEMENT

We will offer our customers cost effective

transportation service within geographical areas

and market segments that can benefit from our

services and will insure a return on investment

and growth rate consistent with current

management guidelines.

VISION STATEMENT

Our vision is to make Air blue the most admired airline in the world.

Ensuring safety comes first. Providing Service Straight from the Heart. Encouraging product leadership.Delivering superior financial returns.

MARKETING MIX

4 P’s; Product Price Place Promotion

Product

Levels of productsCore Product

The actual level of product

Augmented Level of Product

Range of services

The range of service means the number of services provided.

Airblue provides the transport as well as cargo services

Cargo services Air blue offers more than 70,000 kgs cargo space on more

than 18 fleet everyday Faster More reliable

Pricing objectives of air blue: Profitability Customers ability Support positioning Cost determination

PRICING STRATEGIES OF AIRBLUE

There are four types of pricing strategies Premium pricing Penetration Skimming Economy

FACTORS FOR SETTING PRICES

Internal factors affecting pricing decisions:

Marketing Objectives Marketing Mix Strategy Cost Organizational consideration

External Factors affecting Pricing Decisions:

Nature of the Market and Demand Competition Promotional and special-event pricing

They place there product throw following channels:

Distribution channelsNumber of Channel Levels Direct Marketing Channels Indirect Marketing Channels

Intermediary selling Company Sales Force Manufacturers Agency Industrial Distributors

Number of intermediaries

Three strategies are available: Intensive Distribution Exclusive Distribution Selective Distribution

Air blue routesThe following are the different routes of air blue:Air blue Domestic Routes:Karachi – IslamabadKarachi – LahoreKarachi – PeshawarKarachi – DubaiLahore – Dubai Islamabad – DubaiPeshawar – Dubai Islamabad – Manchester

Airblue International Routes: Islamabad - Abu Dhabi Islamabad – Sharjah Lahore – Sharjah Lahore - Abu Dhabi

Promotion

The major methods of promotion are: Advertising Personal selling Sales promotion Publicity Public relations

Advertising

AirBlue promoted its airline by showing commercials on major television channels like GEO TV, ARY TV

extensive advertising in major newspapers like Dawn, The News, and Daily Jang.

Sales promotion

Cash Refund Offer (Rebates

Advertising specialties

Air Blue Positioning Strategy

“A cordial and reliable escort, Air Blue provides world class services through state-of-the-art technology at very low cost.”

SWOT ANALYSIS AIR BLUE

Strengths

Air blue is a Low-cost carrier (LCC)

98% punctuality of on-time flight departures.

Innovative e-ticketing and wireless check-in technologies.

Leading market position

Air Blue has high brand recall. It is recognized by travelers all over the country.

Air Blue has successfully incorporated latest technology in all its systems, giving it an edge over competitors.

Weaknesses

Engaged only in passenger service, whereas its competitor PIA is also providing cargo services (SPEEDEX).

The fares on which you make reservations are un-guaranteed

Not having its own repair and maintenance facilities.

High dependence on passenger revenues

AirBlue’s sustainability, growth and revenues directly depend on oil prices. A steep rise in oil prices can seriously damage the long term viability of any airline.

Opportunities

Low fares enable market share growth.

Introducing new domestic and international routes like Gulf, UK, Jordan, India etc.

New aircrafts will be used for additional frequencies and destinations on domestic and regional routes.

Expansion of freight business

AirBlue’s BlueMiles (frequent flyer program) was established to develop passenger loyalty by offering awards and services to frequent travelers.

Threats

High interest rates

Accidents

Strong competition

Threat of terrorism.

PEST ANALYSISAIRBLUE

Political Factors

Airline industry is significantly affected by political stability

If the management of Air Blue believes that the present government will perform well, then there will be more investment in terms of airplanes.

If the military takeover government, policies have become more liberal.

Pakistan’s Civil Aviation Authority had a Restriction that companies could not operate as airlines unless they own their aircrafts.

Economical Factors

An increase in interest rates has negatively impacted the airline industry.

Due to the devaluation of rupee, attractiveness of the Pakistani market has been reduced for foreign investors.

Social Factors

The social and cultural influences on business vary from country to country.

The trend is now changing as the general public is educated and is pursuing professional goals.

Air Blue has untapped market potential as consumers are unaware of its services because of ineffective marketing efforts.

Technological FactorsTechnology is vital for competitive advantage and is a

major driver of the airlines industry.

Major technological changes are taking place in the airlines industry with innovations

Internet plays a key role in e-ticketing as consumer can easily reserve tickets or check the status of the flight.

Air Blue has led the path of technological innovations by introducing new technologies such as its auto check-in counters, In-flight entertainment systems

PORTERS FIVE FORCES ANALYSIS

Threats of new Entrants

PIA enjoyed a complete monopoly in the domestic sector and preferential treatment in the overseas sector.

The initial investment required for starting an airline is quite large

Capital expenditure is very large and most new entrants come in the market with few leased air craft’s.

So threats of new entrants is low in airline industry.

Threat of Substitutes

Likely substitutes for air travel include other transportation modes such as trains, buses and cars.

Driving on shorter routes provides a cheaper substitute Buyers may use personal cars or buses for such trips.

Air travel can, save both time and money for longer routes

The threat of substitutes in the air travel industry will vary for each customer segment.

Bargaining Power of Supplier

The price of jet fuel is directly related to the cost of oil.

This price is determined by international markets and an individual company does not have the power to influence it.

There is cut throat competition among suppliers

The oil suppliers have high bargaining power.

Bargaining Power of Buyer

Buyers now have a number of options when choosing an airline

Pricing information is less fragmented and easier to compare

This industry has lower bargaining power.

Intensity of Rivalry

The Pakistani airline industry is fiercely competitive.

There are substantial exit barriers in the industry.

Due to high rivalry airlines generally earn low returns because competition drives down prices

COMPETITORS ANALYSIS

AirBlue Competitors

Pakistan International Airlines (PIA)

International Aero Asia

Shaheen Airways

It is the oldest airline in Pakistan and has the first mover’s advantage

it flies to 82 destinations.

It still claims percent market share and is the largest airline in the country by all standards

International Aero Asia

Aero Asia is a private Pakistani airline.

Aero Asia was previously owned and operated by the Tabani Group, which sold it to the UK based Regal Group

It has total of 11 destinations, 7 domestic and 4 international.

Within Pakistan it currently provides services at Karachi, Lahore, Islamabad, Peshawar, Multan, Faisalabad and Sukkur.

Shaheen Airways

Shaheen Airways is the second national airline after PIA.

It mainly covers Karachi, Lahore and Islamabad and the Gulf

It is mainly focusing on international customers.

It currently operates in Islamabad, Karachi, Lahore, Peshawar,, Abu Dhabi, UAE, Doha, UK, Kuwait and Oman.

ANSOFF MATRIX

There are four Possible product/market combinations:

1. Market penetration (existing markets, existing products)

2. Product development (existing markets, new products)

3. Market development (new markets, existing products)

4. Diversification (new markets, new products)

AirBlue’s Position

AirBlue is in the Market Penetration Matrix.

Market penetration strategy begins with existing customers of the organization

Market penetration occurs when a company adopts a low cost strategy to induce customers to try its product or service.

This strategy is used airlines to increase sales and market share without drifting from the original product/market strategy

AirBlue’s Position (cont.)

AirBlue penetrated the Pakistan market applying a three strategies

1. attracting competitors’ customers

2. providing superior services

3. targeting non-user segments

It has managed to successfully attract and retain customers by superior services at the same or lower fares.

PRODUCT LIFE CYCLE

Stages of Product Life Cycle

There are four stages of PLC

Introduction

Growth

Maturity

Decline

Introduction

Launch:Airblue was launched on 18th June ‘2004.

Airblue carried out a very soft launch strategy aiming at promoting the company mainly through word-of-mouth

Promotional Spending: Advertisement on television and FM 107 Travel agents & seminarsBillboards Word of mouth

Customers attractionThey are mainly targeting to capture the

customers of PIAShaheen air Aeroasia

Growth

In the growth period both sales and profits rise at a rapid rate

SalesIncrease in salesTotally e-based e-ticketing everything new

Growth(Cont.)

PricesAirblue offered their fares at 50%

discounts on the first 3 days of their launch. And now they are offering 25% and 15% discounts on the available seats.

Best services at low priceIn-flight entertainment

Distribution network:

Airblue launch itself in Sukkar, Faisalabad, Quetta, Gawadar,

Multan and Peshawar.

Its international expansion plans include flights to Jordan, the UK, the US, and Saudi Arabia

Competitors There is so much competition in domestic

market There are five careers alreadyRoyal AirlinesSafe AirPIA, Saheen airlineAero Asia

Maturity

A mature service is well established in the marketplace

Sales may still be increasing but at a much slower rate

Firms are trying to determine ways to hold on to their market share

Maturity Air Blue

SalesAs for the future, Airblue is expecting their

sales to be at the peak. ProfitsWith the increasing sales, the profits are

also expected to increase.

Prices:It also has plans to offer heavy discounts

for the senior citizens and students as well as operating night coach at discounted fares.

Competitors:Many competitorsNew entrants

Decline

Many services remain in the maturity and saturation stage for years

New products are introduced to replace old ones

demand drops, advertising expenditures are lower, and there are usually a smaller number of competitors

Decline Airblue

Airblue is on maturity level

Its improving service

So its not coming towards declining stage still

Porter’s Generic Strategies

Cost leadership

Differentiation

DIFFERENATION

AIRBLUE carved a special place in the consumers’ minds

Air Blue strategy is to promote tourism in Pakistan.

AirBlue’s focused is on good quality service.

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