Transcript of "Etihad Airway’s Product Offerings, Key Success Factors, Critical Issues, Mission and Strategy"
Etihad Airway’s ProductA research study on:Offerings, Key Success Factors, CriticalIssues, Mission and Strategy By Arshed Aydrose University of Wollongong
Etihad’s Product Offerings to the Far East nations.Etihad Airways has been the winner of Air Transport World’s Passenger ServiceAward for 2012 and it have been recognized the carrier’s excellent customer serviceproduct and offerings of a premium service across all cabins. Etihad Airways is alsonoted as it maintains a genuine service philosophy combining with best hospitalitywith comfort with the help of employees from more than 120 different nationalities. Itis also remarkable that Etihad not only maintained but also improved its service levelto customers notably to its Far East customers. One of the major first in industrymove by Etihad is that they have launched its first premium connect services for itscustomers from Bangkok and Hong Kong to provide bespoke and personalized traveloptions using the fleet of modern luxurious executive jets. The national carrier ofUAE have also upgraded it on-board product with new private suites in First Classand Business Class named next generation seating which is also made available to theselected Airbus A330_300 flights to Beijing and Bangkok is that Et. Economy classincluded the Panasonic eX2 IFE system which had new trim and finish and audiovisuals on demand which enabled in-seat capability for live news, USB file sharing,SMS, Email and access to Microsoft office. Another turn over in the industry EtihadAirways had started operating scheduled flights between its hub in Abu Dhabi andShanghai, China. It will operate non-stop commercial passenger flight between itshub in Abu Dhabi and Shanghai with its world leading first class suites with onboardchefs and E-Box onboard entertainment system. Etihad ensured that its travelers willhave unlimited access to the First and Business Class lounge in all of the airports inmajor cities of China, Thailand, Malaysia and Indonesia. As Bangkok was Etihad’sfirst ever long haul destinations in Far Eastern countries and the route’s seventh year
anniversary Etihad introduced regional Thai-language website which facilitate itsThai costumers for easy access to it products and services. Etihad believes significantgrowth in aviation industry in Far East countries mainly China, Thailand andSingapore and set their product line early to the customers in order to take an earlyadvantage in the market as well as the good will. By the end of 2010, the airline’sproduct and service team made a significant change and improvement in efficienciesin order to support their best in class customer service by reducing cost. For the pastcouple of years Etihad Airways have made inflight and aircraft developments in orderto penetrate the far eastern market and serve it customers better. Etihad’s premiuminflight service philosophy have expanded to all the Economy class on all flights androutes to many major far east destinations like Bangkok, Seoul, Beijing and otherAsian routes. On longer flights to these destinations included hot beverages, multiplecourse main meal with hot deserts. On March 2010, Etihad introduced a Japaneseinflight service method and which included Kaiseki menu a Japanese traditionaldining concept. A Kaiseki menu had bespoke utensils and beverages such as sake,Japanese tea and Asahi beer. Their new adaptive service like Express Dinner couldwhich supported many Etihad guest by choosing preflight dining and reduced take ofweight and thus less fuel burnt. Their new meal automated planning system andinflight duty free offerings resulted in gaining high material revenue.Etihad’s Key Success Factors.Identification of key success factors for strategic groups in the market is an importantoutput of market analysis. It in important to identify the key success factors and it isalso important to project them into the future and making uncertain key successfactors certain. Etihad airways have been successful in finding its key success factorin the market as compared to its competitors. Etihad’s Key Success Factors areclassified into many major sub units like People, Products and services, Route System,Partnership and Alliance and Revenue and Cost control.Its People: People and performance division should always support and be supportedby various business divisions in order to improve the productivity and process for asuccessful high performance organization. Etihad unique way of recruiting andtraining process led to provide a better inflight customer service and gained them the
name of award winning cabin crew title. It also provide its cabin crewmembers andpilots a chance to see the world by visiting their destinations and therefor a betterworking satisfaction. Etihad provided its guest a 1st in industry inflight chef for the 1stclass and business travelers and enabled its economy class travels a chance toconsume the inflight chef service with a low charges. Etihad also opened its aviationacademy in Abu Dhabi for developing the skills of is staffs and a special training forthe communicative skills and crisis management. For a better serving its customersthe management introduced ‘iachieve’ model paying its staffs on performance base.The introduction of ‘iachieve’ method of paying it enhanced the performance of itsworking members by serving guest better and receiving appreciation accordingly.Product and services: As Etihad dealing in a service industry identifying its keysuccess factors in the field of product and services are very important for attaining abetter competitive advantage. Etihad’s KSF in product and service have beenidentified as inflight developments, aircraft developments and ground productofferings. For the past couple of years Etihad Airways have made inflight and aircraftdevelopments in order to penetrate the far eastern market and serve it customers better.Etihad’s premium inflight service philosophy have expanded to all the Economy classon all flights and routes to many major far east destinations like Bangkok, Seoul,Beijing and other Asian routes. On longer flights to these destinations included hotbeverages, multiple course main meal with hot deserts. On March 2010, Etihadintroduced a Japanese inflight service method and which included Kaiseki menu aJapanese traditional dining concept. A Kaiseki menu had bespoke utensils andbeverages such as sake, Japanese tea and Asahi beer. Economy class included thePanasonic eX2 IFE system made new trim and finish and audio visuals on demandwhich enabled in-seat capability for live news, USB file sharing, SMS, Email andaccess to Microsoft office. As ground product offerings Economy class passengershave the access to free Wi-Fi at home airport, printing facility, luggage storagefunction, family lounges and prayer rooms at Etihad’s home based terminal in AbuDhabi.Route Systems: Etihad’s new and increased frequencies in the route flight schedulesystem made them to achieve a better advantage in the competitive markets of FarEast region. Etihad’s daily flights to the several destinations like Beijing, Seoul andBangkok made their route systems unique and famous in Far East markets. By the end
of 2010 Etihad had five per week to daily flights from Abu Dhabi to Beijing China,six per week to daily flights from Abu Dhabi to Seoul South Korea and ten flights perweek to double daily from Abu Dhabi to Bangkok Thailand.Partnership and Alliances: At 31st December 2010, Etihad had almost most of thecodeshare agreements with many international carriers which also served Far Eastregion. It had a total of 28 codeshare agreements in place with leading airlines andgave them a advantage in serving several international destinations. By Etihad’sremarkable alliance with Australia’s Virgin Blue Group of Airlines in September2010, made its Far East customers having easy travel to Australia with no stopover. By receiving the approval from Australia’s competition regulator madeboth of the airliners easy to cooperate on scheduling, pricing and other variousco-operations. By developing a strategic alliance with virgin airlines alone madeEtihad to create 1million USD daily as revenue and 1 billion USD in othercodeshare and alliances with other major airlines all over the world.Etihad’s Revenue and Cost Control:Etihad made a significant improvement inRevenue and Cost Control with a robust support from finance division byproviding support to the business with financial, risk management, financing andother services. Another unique key success in the field of cost control was thatEtihad’s Express Dinning Service for long over night flight passengers could havetheir meal at the airport lounge before the departure so it can reduce the amountof meal carried in the aircraft and thus reduces weight and made less fuel burned.On April 2010, by the introduction of New Meal Planning System Etihad couldreduce the cost of excess order of meals and could eliminate the chaos due toshortage of meals delivers to its passengers onboard. At the time of high fuelexpense and in order to take the advantage over the competitors by reducingfuel cost Etihad asked their pilots to adapt a high altitude flying strategy forreducing the atmospheric pressure and therefor less fuel burnt during the flight.Critical Issues faced by Etihad AirwaysEtihad is always flying high with its plans to double its destinations around theglobe and serve 25million passengers by 2020. Like every international carrier
Etihad faces many issues and challenges now and ahead. One of the main issuesfacing by Etihad like many other independent carriers is that the increase in fuelexpense. With the leadership of CEO James Hogan, Etihad have successfullyhedged aggressively and are keeping a strong focus on reducing its cost andbringing it under control without compromising its products offered tocustomers or customer service. Even though Etihad is a product of a oil richcountry United Arab Emirates, Etihad’s competitors are running for the costcontrol and reduce its fuel expenses with the means of many advanced strategiesaround the world. So it is important for Etihad to follow the same rule of costcontrol in order to avoid gaining a advantage by its competitors.The next important issue faced by Etihad is that gaining the operational rightsand issue of receiving slots from the foreign countries in order to operate in theregion. After the down turn of the global economy most of the foreigngovernments bring many regulations for the foreign airliners for the purpose ofprotecting their home carriers. For example, in the last year Australia andGermany reportedly blocking more flights from Emirates and Etihad andrevoking the permission to serve in their new airports like Germany’s inBrandenburg international airport. Etihad’s one of the major issue faced in theexpansion of Far East regions is that getting landing slots at the Singaporeairport. Even though Singapore is a key market for expansion the issue of gettingnew slots at the airport due to air traffic conditions create a greater threat andchallenge for Etihad. These challenges faced in Europe will effect Etihad’sambition to serve Europe to Far East market.The next threat is that is about how Asian and European rivals make use if thenew generation aircrafts and new technologies. As New generation aircrafts arecapable of flying up to 19hours and 17500 km and threat of loosing Etihad’s hubin Middle East for the passengers between Europe and Asia. Due to the muchmore sophisticated aircrafts advantage of Etihad’s stop over at Abu Dhabi mayloose later in the future by bypassing Middle East Hubs.In short the main regions that creates problems for Etihad are fuel expenses,home infrastructure, foreign regulatory policies and staff for the airline. If Etihad
wants to expand its presence in many other destinations in the world, a fineequipped home airport with latest facilities and with desired manpower areinevitable and important. The growing fuel prices globally are creating anegative after effects for the total aviation industry as well as Etihad Airways too.Even though Etihad is attracting many candidates to the pilot programs fromdifferent part of the world, the lifestyle and living in Gulf in a setback for thesuccess.Mission (Etihad Tomorrow)Social responsibility and sustainability are the core factor of Etihad’s businessprocess. Etihad airways are fully committed to work its business to make surefor a responsible management that had a positive impact on the environment.The adoption of the new environment policy and the partnership with theMasdar Future and focusing on its fuel-efficient flight Etihad is focused onfollowing the policy of reduce, reuse and recycle. A part from the environment,Etihad is trying to create a mission and objectives in the competitive globalmarket mainly Far-East regions. With the commitment of growing in the Far Eastregion Etihad is planning to open many other destinations in Japan, South Korea,China and Thailand. Etihad’s interest in this region have made to set a goal ofcreating 15 more destinations and setting two Etihad lounges in the region bythe end of 2019. Etihad believes that by creating many other codeshare andalliances with other airlines and by opening many other offices in this region willhelp serving their passengers directly and better. By the end of 2012, Etihad isplanning to operate nonstop economy flights from Abu Dhabi to Bangkok andAbu Dhabi to Shanghai daily. By 2030, Etihad mission is it expand its productofferings and enhance customer experience by replacing its entire inflightpremium class individual screens to 3D technology and all of its economic classindividual screens to high definition graphics. One of the missions of Etihad inthe field of its people is to create diversity among its staffs across the world byemploying staffs from different countries and of different sex. As the nationalcarrier of United Arab Emirates Etihad mission is to make Arabian hospitalitycloser and available to other part of the world by creating a sense of cultured,considerate, warm and generous staff attitude and services. As now remarked as
innovative carrier Etihad wanted to maintain its name as most innovativeairlines in the world as compared.StrategyEtihad’s cooperate strategy is to be the best airline in the world, to become profitableand to contribute at its best to Abu Dhabi 2030 plan. Most of Etihad’s cooperatestrategy is created and planned by the mandate from its shareholders. On the year of2010 Etihad’s top management team were focused on a strategy to grow and achieveits scale quickly and to develop sustainable business process and its systems and tolead from a start up position to maturity level. In order to measure and analyze theprogress and assess the strategic direction of the airline Etihad hired a leadingmanagement consulting firm called Booz and Company in 2010. The company foundthat Etihad have successfully and efficiently delivered its shareholders vision, butthere are several structural limitations, which complicated the airline’s ability to reachprofitability. To overcome the limitations Booz and Company suggested a betterbusiness model in order to diversify its current structure to engage in manypartnerships, distribution, hub operations and its air cargo. By approval of thisbusiness model by Etihad’s senior management and board on 2010, Etihad havedoubled its global activity and profit level as compared to its other competitors sincepast 2 years from now.REFFERNCES 1) The Times 2012, Etihad Airways wins award for ‘inspired service’ [online], Available from: http://www.timesofmalta.com/articles/view/20120119/business-news/Etihad- Airways wins-award-for-inspired-service-.402965 [Accessed: 29.3.2012]. 2) travelwerke 2011, ETIHAD AIRWAYS LAUNCHES PREMIUM CONNECT, PARTNERS ROYAL JET [online], Available from: http://travelwerke.wordpress.com/2011/05/06/etihad-airways-launches- premium-connect-partners-royal-jet/ [Accessed: 29.3.2012].
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