Air Arabia, a low-cost airline established in 2003 in Sharjah, UAE, aims to provide affordable travel while maintaining quality service, operating flights to 118 destinations globally. The company focuses on maximizing market share and product-quality leadership through competitive pricing strategies and cost-cutting methods, such as fuel hedging and scheduling flights during low-cost hours. Challenges include rising competition, a reputation for being a 'cheap airline', and employee dissatisfaction due to low wages.

2. Company profile
• Low cost airline Headquartered in Sharjah,UAE.
• Established in 2003 by the emperor of Sharjah d
by Sultan bin Muhammad Al-Qasimi
• First low cost Airline in the Middle East
• Flies to 118 destination worldwide including New
Delhi,Mumbai,Dhaka,Peshawar,Asmara ...

3. Objectives
• Company moto- “PAY LESS FLY MORE….”
• With Great Flying Experience, Affordable Prices
and Good Customer Service..
Video

5. Setting the Right Price
1. Selecting the pricing objective
2. Determining Demand
3. Estimating Cost
4. Analysing Competitors costs, price and offers
5. Selecting a pricing method

6. Step 1:Selecting the pricing objective
Five major objectives of Price Selection
• Survival
• Maximum Current Profit
• Maximum Market Share
• Maximum Market Skimming
• Product-Quality Leadership
Air Arabia’s pricing objectives revolve around
Survival, Maximum Market Share and Product-Quality
Leadership

7. Step2 :Determining Demand
• Observed the demand for low cost air tickets
• Observed that a major chunk of the immigrant
population in the UAE came from destinations not
catered by national airlines
• Plans to target 85% of the potential customers who
cannot afford normal flying expenses

8. Step 3 Estimating Cost
• Cost of Fuel
• Airport Take off and landing
charges
• Cost of training the staff and
ground crew members
• The cost of the Aircraft
purchased
• The cost of frills and
refreshments
• Fixed
• Fixed
• Fixed
• Fixed
• Variable

9. Cutting costs &optimal pricing

10. Universal Aircraft Model

11. 1. Air Arabias fleet(55 in number) consists only of
A320-200a aircrafts
2. A320 uses Sharplet Technology ,helping on cutting
down on fuel cost by upto 4%
3. Since Air Arabia uses only one type of Aircraft the
order for new Aircraft can be placed in Bulk ,hence
drastically cuts down the fixed costs
4. The ground Staff need not be trained again and
again for different models of planes ,hence cutting
down costs.

12. Cutting take off and landing
costs

13. 1. Flights Scheduled at odd hours,when landing
and take off cost is low
2. The take off and landing costs at Sharjah are
way lower than those in Dubai,Rihyad or Abu
Dhabi.

14. Cutting Fuel Costs

15. 1. Analyzing Competitors costs,price and
offers

16. Fuel Hedging
Strategy
Ordering fuel in
bulk and years in
advance can help
the company to
save millions of
dollars. This is fuel
hedging

17. Step 4: Analysing Competitors
costs, price and offers
• Analysed the Competitors Price Mix like Fly Dubai
and Flynas
• Observed different business models of its
competitors
• Accordingly aimed to set its price 40% cheaper than
regular economy fares.

18. Step 5:Selecting a Pricing Method
• Different pricing methods are
1. Markup pricing
2. Target Return pricing
3. Perceived Value pricing
4. Value Pricing
5. Everyday Low Pricing
6. Going Rate Pricing
7. Auction Type Pricing
• Arabia opted for Value Pricing wherein it aimed to
win customer loyalty by charging a fairly low price
for a high quality offering

19. Challenges Air Arabia faces
• High Competition of low cost carrier emerging in
developing countries
• Perceived image as a cheap Airline even after
expansion
• Sharjah losing its magnet as a airline hub to Abu
Dhabi,RAK.
• Resentment in employees due to low payments
• Vulnerability to fluctuations in Fuel Prices.

20. DISCLAIMER
• Created By Hrishikesh V Wagle(S.P.C.E Mumbai) at a
Marketing Internship under Prof.Sameer Mathur,IIM
Lucknow.