Srilankan Airline Industry - Analysing Challenges and Critical Success Factors

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  • 1. Analysing Challenges and Critical Success Factors
    The Srilankan Airline Industry
    Presented by
    Saatviga S.
  • 2. Road Map
    Vision & Mission
    Introduction
    Ten Year Review
    Key Performance Indicators
    The Business Turnaround Plan
    Challenges Faced
    World’s Successful Airlines and Strategies
    Factors Influencing Success
  • 3. Vision and Mission
    Vision
    “To be the most preferred airline in Asia ”
    Mission
    We are in the air transportation business. We provide our customers with a reliable and pleasant travel experience. We provide our business partners with a variety of innovative, professional and mutually profitable services. We meet Shareholder expectations of profitably marketing Sri Lanka and contributing towards the well-being of Society. We are a competent, proactive and diligent team. Our contribution is recognized and rewarded.
  • 4. Introduction
    Srilankan Airlines began operations in 1979 as the National Carrier of Sri Lanka
    Serves 45 destinations in 25 countries in Europe, the Middle East, South Asia, Southeast Asia, and the Far East.
    Codeshare partnerships with bmi (formerly British Midland), Etihad Airways and Malaysian Airlines
    Shareholders
    Government of Sri Lanka - 51.05%
    Emirates Airline - 43.63%
    Employees - 5.32%
  • 5. Introduction
    Subsidiary - SriLankan Catering (Pvt) Ltd. is a fully owned subsidiary of SriLankan Airlines.
    Workforce - More than 5000 employees in Sri Lanka and overseas
    In-flight comforts – Business and Economy Class Seats
    FlySmiles Flyer Program
    Srilankan Cargo
    Srilankan Engineering – Technical Arm
    Ground Services
  • 6. Ten Year Review (2000 – 2009)
  • 7. Year 2008-2009 Under Review
    Challenges faced
    Arising global fuel costs
    Struggle of the national tourism industry to survive in a wartime scenario
    High interest rates
    Major transition in management
    Increased competition from subsidised airlines
    Dropped prices fighting for market share
  • 8. Total Loss in the Year
    Huge Challenges Faced
  • 9. Key Performance Indicators
    Fuel Surcharges by Competitors
    Global Economy
    Passenger Revenues (decreased by 5%)
    Cargo Revenues (decreased by 8.5%)
    Overall Passenger Capacity (decreased from 12,599 million to 11,731 million)
    Unit Costs (increased from Rs. 46.48 - 50.71 per TonneKilometre)
    Average Staff Strength (significant decrease)
  • 10. The Business Turnaround Plan
    • Key Aspects of the Plan - “Earn more, spend less and waste not”.
    Restructuring of passenger and cargo revenue generation
    Restructuring of route network
    Savings through increased fuel efficiency
    Reducing company’s fixed costs
    Renegotiating of contracts with service providers
    Optimising of sales channels
    Reduced IT and Communication costs
    Increase Productivity by focusing on People, Process and Technology
  • 11. Challenges Faced
    Optimising Revenue
    Improving Service Delivery
    Enhancing Srilankan Engineering
    Increasing Fuel efficiency
    Increasing Productivity
    Technology Requirements
  • 12. Optimising Revenue
    New services to Rome utilizing the market opportunities in Italy
    Temporary Suspension of Loss-Making Sectors
    Hyderabad, Calicut, Cochin, Coimbatore and Goa
    Increasing operations to key destinations
    Increased frequencies to Middle East and South East Asian destinations
    Direct services to increase convenience of passengers and reduce flying time (Karachi)
    Expansion of route networks through increased Code share Partnerships
    Increasing bookings through its Internet Booking Engine
    Customer Loyalty Programme – FlySmiles
  • 13. Optimising Revenue
    “Srilankan Holidays” teamed up with Singapore , Thailand and Malaysia
    Business Class range and Platinum Range of holiday packages launched for the higher income market segment partnering with the top hotels
    Event-based packages
    Introduction of new products – eg. HOTSEATS
    To promote advance bookings on the Airline’s website
    SkyChain Cargo Handling System for customer convenience and operational efficiency
    Increasing Cargo revenues that contributes to the 13% of the Airline revenue
  • 14. Improving Service Delivery
    Emphasis on Inflight Service
    Training of cabin crew and increasing the no of instructors from 4 to 20
    Ensuring continuous on-site monitoring and evaluation of crew members
    Improvement in Meal Services
    Significant changes to inflight menus to suit a variety of customers
    Reducing wastage and overall meal costs
    Renegotiation of contracts with overseas caterers resulting in significant savings
    Enhancement to inflight entertainment
    Duty free sales on new range of 180 products including world’s leading brands and Srilankan items
    Heart-start machines for medical emergencies
  • 15. Improving Service Delivery
    Recruitment of new Chinese passenger assistants for Beijing service
    SMS alerts on flight service
    Uplifting the service standards of ground handling services for other airlines
    Training of new airport staff and sky marshals
    Innovation and cost control
    In-house production of specialised vehicles and equipment especially with regard to airport airside activities
    Modification to air-sickness bags to enable rapid identification of unused bags
    Closing of airport offices overseas
  • 16. Enhancing Srilankan Engineering
    Marketing programmes to increase awareness of SriLankan Engineering’s capabilities as an MRO, in order to attract new customers and enhance revenue
    Major Contract with Indian Carrier IndiGoue to carry out maintenance checks
    Training more aircraft engineers for Airblue, and to carry out maintenance checks for the Pakistani carrier
    Continued emphasis on key areas like fuel efficiency and punctuality
    Structural modifications to the fleet in-house resulting in cost-savings
  • 17. Increasing Fuel Efficiency
    Use of diesel-operated Ground Power Units to power internal systems and air-conditioning on aircraft parked at BIA, instead of using Auxiliary Power Units of the aircraft
    Reduce fuel burn while landing
    Flying shorter routes whenever possible.
    Re-evaluation of the choice of alternate airports
    Stopping of over-fuelling of aircraft, to reduce weight
    Focusing on having ‘clean’ aircraft to reduce drag while in flight
    Tankering more fuel than required from cheaper points
  • 18. Increasing Productivity
    Continuing to review company structure for greater effectiveness and productivity
    Customising development intervention programmes to the requirements of user departments and business demands
    No-Pay Schemes, to reduce staff costs
    Continuous improvement of welfare facilities
    Engaging employee unions in the decision-making process
    Enhancement of recruitment processes for the future
  • 19. Technology Requirements
    Consolidation of Data centers in Colombo and Katunayake
    Maximizing the utilisation of existing systems to user departments
    Creating a common customer database to integrate different sub business units which interacts with customer profiles
    Revamping the Corporate website
    Increase penetration levels for internet bookings
    Rich features for customers and content management tools for internal users
    Introduction of a CRM system
    In-house developments of new systems for cost saving
    Minimise IT risks through IT security audits
  • 20. Some World’s Successful Airlines
    Singapore Airlines
    Cathay-Pacific Airways
    Qatar Airways
    Thai Airways
    Asiana Airlines
    Malaysian Airlines
    Emirates Airways
    Etihad Airways
  • 21. Singapore Airlines- Strategies Used
    Fully branded product/service differentiation strategy
    First to introduce hot meals, free alcoholic and non-alcoholic beverages, personal entertainment systems, and video-on-demand in all cabins.
    Maintains the youngest fleet of aircraft among all major air carriers
    Low maintenance or replacement costs
    New aircrafts are sub-branded further to distinguish from others
    Invests heavily in R&D, innovation and technology as an integrated part of the business strategy
  • 22. Singapore Airlines- Strategies Used
    • The famous Singapore Girl
    Rigorous training programs for the cabin
    and flight crew
    Strong Financial and cash position to
    internally fund purchases and limit interest costs
    Continuous price-premium strategy and satisfactory passenger load factors
    SIA carefully hedge up to 50 % of its fuel contracts 2 years in advance to avoid cyclical and often large volatility in fuel prices
  • 23. Emirates Airlines – Strategies Used
    Operates wide-body aircraft and flies mostly long haul
    lowers its per-seat-mile costs so it can be competitive on pricing
    Newer fleets resulting in low maintenance and replacement costs
    Attracts higher paying customers
    latest in-flight amenities and entertainment systems
    Distinctively uses Asian elements to create a premium product that appeals not only in its home markets but also to a Western audience.
    High-level services provided especially for 1st class section
    Latest technologies used to enable faster and more efficient handling of functions such as ticketing, baggage and cargo handling
  • 24. Emirates Airlines – Strategies Used
    Sporting event sponsorships for promoting brand awareness
    major events in football, horse racing, yacht racing, rugby, golf, cricket and tennis.
    Recruitment from over 100 countries around the world and provide training to them to the highest standards
    Invest millions of dollars to provide advanced engineering support
    Huge investments on promotion campaigns
  • 25. Thai Airways – Strategies Used
    User-friendly website to book and confirm flight reservations
    Development of catering service
    In the process of implementing e-ticketing to save time and reduces the need for check-in personnel
    Established a Tourism Alliance to promote Thailand tourism and travel industry
    Increased cooperation at the domestic and
    regional levels as well as with other global alliances
    to strengthen the airline’s competitive edge and
    expand market share
  • 26. Thai Airways - Strategies Used
    Implementation of the Customer Relationship Management system
    Automated Self Service System for domestic travel only to facilitate passengers’ demand in areas of reservations and check-in
    Frequent Flyer Programs
    • Promotions through media, co-marketing efforts with hotel chains and credit card companies and travel agents
    Maintaining high safety standards - Compliance with ISO 9000
  • 27. Factors Influencing Success
    People
    Service Product/Promotions
    Route System
    Fleet Management
    Revenue/Cost Control
    Financial Management
  • 28. References
    Srilankan Airlines Annual Report 2008/2009
    http://www.srilankan.aero/aboutus/SriLankan_Airlines_Annual_Report_2008_2009.pdf
    http://www.brandchannel.com/features_profile.asp?pr_id=209
    http://goliath.ecnext.com/coms2/gi_0199-6720187/CASE-STUDY-EMIRATES-Long-haul.html
    http://www.hicbusiness.org/biz2003proceedings/Niti%20Dubey-Villinger.pdf
    file:///C:/Users/Sudhahar/Desktop/Airlanka/facts_5242839_airline-industry-key-success-factors.html
    http://gbr.pepperdine.edu/064/airlines.html
    http://www.ehow.com/facts_5242839_airline-industry-key-success-factors.html
  • 29. Thank You