Analysing Challenges and Critical Success FactorsThe Srilankan Airline IndustryPresented bySaatviga S.

Road MapVision & MissionIntroductionTen Year ReviewKey Performance IndicatorsThe Business Turnaround PlanChallenges FacedWorld’s Successful Airlines and StrategiesFactors Influencing Success

Vision and MissionVision“To be the most preferred airline in Asia ”MissionWe 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.

IntroductionSrilankan Airlines began operations in 1979 as the National Carrier of Sri LankaServes 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 AirlinesShareholders Government of Sri Lanka - 51.05% Emirates Airline - 43.63% Employees - 5.32%

IntroductionSubsidiary - SriLankan Catering (Pvt) Ltd. is a fully owned subsidiary of SriLankan Airlines.Workforce - More than 5000 employees in Sri Lanka and overseasIn-flight comforts – Business and Economy Class Seats FlySmiles Flyer ProgramSrilankan CargoSrilankan Engineering – Technical ArmGround Services

Ten Year Review (2000 – 2009)

Year 2008-2009 Under ReviewChallenges facedArising global fuel costsStruggle of the national tourism industry to survive in a wartime scenarioHigh interest ratesMajor transition in managementIncreased competition from subsidised airlinesDropped prices fighting for market share

Total Loss in the YearHuge Challenges Faced

Key Performance IndicatorsFuel Surcharges by CompetitorsGlobal EconomyPassenger 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)

The Business Turnaround PlanKey Aspects of the Plan - “Earn more, spend less and waste not”. Restructuring of passenger and cargo revenue generationRestructuring of route networkSavings through increased fuel efficiencyReducing company’s fixed costsRenegotiating of contracts with service providersOptimising of sales channelsReduced IT and Communication costsIncrease Productivity by focusing on People, Process and Technology

Key Aspects of the Plan - “Earn more, spend less and waste not”.

Challenges FacedOptimising RevenueImproving Service DeliveryEnhancing Srilankan EngineeringIncreasing Fuel efficiencyIncreasing ProductivityTechnology Requirements

Optimising RevenueNew services to Rome utilizing the market opportunities in ItalyTemporary Suspension of Loss-Making SectorsHyderabad, Calicut, Cochin, Coimbatore and GoaIncreasing operations to key destinationsIncreased frequencies to Middle East and South East Asian destinationsDirect services to increase convenience of passengers and reduce flying time (Karachi)Expansion of route networks through increased Code share PartnershipsIncreasing bookings through its Internet Booking Engine Customer Loyalty Programme – FlySmiles

Optimising Revenue“Srilankan Holidays” teamed up with Singapore , Thailand and MalaysiaBusiness Class range and Platinum Range of holiday packages launched for the higher income market segment partnering with the top hotelsEvent-based packagesIntroduction of new products – eg. HOTSEATSTo promote advance bookings on the Airline’s websiteSkyChain Cargo Handling System for customer convenience and operational efficiencyIncreasing Cargo revenues that contributes to the 13% of the Airline revenue

Improving Service DeliveryEmphasis on Inflight ServiceTraining of cabin crew and increasing the no of instructors from 4 to 20Ensuring continuous on-site monitoring and evaluation of crew membersImprovement in Meal Services Significant changes to inflight menus to suit a variety of customersReducing wastage and overall meal costsRenegotiation of contracts with overseas caterers resulting in significant savingsEnhancement to inflight entertainmentDuty free sales on new range of 180 products including world’s leading brands and Srilankan itemsHeart-start machines for medical emergencies

Improving Service DeliveryRecruitment of new Chinese passenger assistants for Beijing serviceSMS alerts on flight serviceUplifting the service standards of ground handling services for other airlinesTraining of new airport staff and sky marshals Innovation and cost controlIn-house production of specialised vehicles and equipment especially with regard to airport airside activitiesModification to air-sickness bags to enable rapid identification of unused bagsClosing of airport offices overseas

Enhancing Srilankan EngineeringMarketing programmes to increase awareness of SriLankan Engineering’s capabilities as an MRO, in order to attract new customers and enhance revenueMajor Contract with Indian Carrier IndiGoue to carry out maintenance checksTraining more aircraft engineers for Airblue, and to carry out maintenance checks for the Pakistani carrierContinued emphasis on key areas like fuel efficiency and punctualityStructural modifications to the fleet in-house resulting in cost-savings

Increasing Fuel EfficiencyUse 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 aircraftReduce fuel burn while landingFlying shorter routes whenever possible.Re-evaluation of the choice of alternate airportsStopping of over-fuelling of aircraft, to reduce weightFocusing on having ‘clean’ aircraft to reduce drag while in flightTankering more fuel than required from cheaper points

Increasing ProductivityContinuing to review company structure for greater effectiveness and productivityCustomising development intervention programmes to the requirements of user departments and business demandsNo-Pay Schemes, to reduce staff costsContinuous improvement of welfare facilitiesEngaging employee unions in the decision-making processEnhancement of recruitment processes for the future

Technology RequirementsConsolidation of Data centers in Colombo and KatunayakeMaximizing the utilisation of existing systems to user departmentsCreating a common customer database to integrate different sub business units which interacts with customer profilesRevamping the Corporate websiteIncrease penetration levels for internet bookingsRich features for customers and content management tools for internal usersIntroduction of a CRM systemIn-house developments of new systems for cost savingMinimise IT risks through IT security audits

Some World’s Successful AirlinesSingapore AirlinesCathay-Pacific AirwaysQatar AirwaysThai AirwaysAsiana AirlinesMalaysian AirlinesEmirates AirwaysEtihad Airways

Singapore Airlines- Strategies UsedFully branded product/service differentiation strategyFirst 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 carriersLow maintenance or replacement costsNew aircrafts are sub-branded further to distinguish from othersInvests heavily in R&D, innovation and technology as an integrated part of the business strategy

Singapore Airlines- Strategies UsedThe famous Singapore GirlRigorous training programs for the cabin and flight crewStrong Financial and cash position to internally fund purchases and limit interest costsContinuous price-premium strategy and satisfactory passenger load factorsSIA carefully hedge up to 50 % of its fuel contracts 2 years in advance to avoid cyclical and often large volatility in fuel prices

The famous Singapore Girl

Emirates Airlines – Strategies UsedOperates wide-body aircraft and flies mostly long haullowers its per-seat-mile costs so it can be competitive on pricingNewer fleets resulting in low maintenance and replacement costsAttracts higher paying customerslatest in-flight amenities and entertainment systemsDistinctively 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 sectionLatest technologies used to enable faster and more efficient handling of functions such as ticketing, baggage and cargo handling

Emirates Airlines – Strategies UsedSporting event sponsorships for promoting brand awarenessmajor 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 supportHuge investments on promotion campaigns

Thai Airways – Strategies UsedUser-friendly website to book and confirm flight reservationsDevelopment of catering serviceIn 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 industryIncreased 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

Thai Airways - Strategies UsedImplementation of the Customer Relationship Management systemAutomated Self Service System for domestic travel only to facilitate passengers’ demand in areas of reservations and check-inFrequent Flyer ProgramsPromotions through media, co-marketing efforts with hotel chains and credit card companies and travel agentsMaintaining high safety standards - Compliance with ISO 9000

Promotions through media, co-marketing efforts with hotel chains and credit card companies and travel agents

Factors Influencing SuccessPeopleService Product/PromotionsRoute SystemFleet ManagementRevenue/Cost ControlFinancial Management

ReferencesSrilankan Airlines Annual Report 2008/2009 http://www.srilankan.aero/aboutus/SriLankan_Airlines_Annual_Report_2008_2009.pdfhttp://www.brandchannel.com/features_profile.asp?pr_id=209http://goliath.ecnext.com/coms2/gi_0199-6720187/CASE-STUDY-EMIRATES-Long-haul.htmlhttp://www.hicbusiness.org/biz2003proceedings/Niti%20Dubey-Villinger.pdffile:///C:/Users/Sudhahar/Desktop/Airlanka/facts_5242839_airline-industry-key-success-factors.htmlhttp://gbr.pepperdine.edu/064/airlines.htmlhttp://www.ehow.com/facts_5242839_airline-industry-key-success-factors.html

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