EA392SE: Aviation Strategy and Planning- Course Work Assignment
The COVID-19 crisis came as a blow to businesses that were either forces to pause halt their operations. [A1] The worst affected were operators in the airline sector. Many airlines were grounded in a bid to cut the spread of the coronavirus that many reviewers term as the worst health crisis in history (Slotnick). Whereas some airlines were able to pick up following the easing of restricting barring intercontinental flights, others became bankrupt or quit their operations altogether. One of the airline firms that was equally affected by the health crisis is Air Arabia, a UAE carrier that operates at the Sharjah International Airport as it major hub, but also operates using other hubs such as Ras Al Khaimah International Airport, Abu Dhabi International Airport, Borg El Arab Airport, and Mohamed V International Airport (Air Arabia). [A2] The study examines the operations on Air Arabia pre-COVID 19, as well as gives hint on how the health pandemic impacted on the carrier. The analysis reveals that the effects of COVID-19 on Air Arabia were immense, an indication that the company must embrace practices that would boost its strategy going forward. The study offers recommendations that would enable Air Arabia carry on with its operations at time when the effects of the health crisis are still evident. The team should expect to encounter some constraints in its attempt to adopt new approaches but these should not hold it back in its quest to solidify its operations. [A3] Adhering to an effective recovery plan would allow Air Arabia to restore its operations and possibly become better. [A4]
Section 1: Pre-COVID Scenario
The Airline’s Strategic Positioning
Air Arabia’s strategic positioning prior to the health crisis was low-cost strategy. [A5] The approach according to Islami, Mustafa and Latkovijk stresses on generating standardized services and products at considerably low per-unit cost for buyers who are sensitive about the price. According to Islami, Mustafa and Latkovijk, low-cost approach is a plan in which a firm tries to achieve competitive advantage by minimizing its costs compared to that of competing corporations. Nonetheless, it is imperative to acknowledge that whereas the strategic objective of Air Arabia to serve as a low-cost operator entails providing relatively lower costs than competing firms, it does not imply that it offers the lowest cost of all firms operating in the sector. The company focused on the low-cost strategy because it emphasizes in an increase in organizational practices and performance (Air Arabia[A6] ). [A7] The company also does not have to worry about high cost of production and distribution of its services as it may happen with other carriers that other generic strategies formulated by Porter.
Network Organization and Major Traffic Flows
Prior to the health pandemic, a Board of Directors was responsible for the management of Air Arabia. The Board that has served since 2014 comprises of seven and is responsible for making chief decisions at the company. The firm closely examines its board and forbids all forms of trade of share within members of the Board. The group has formed joint ventures at various international bases with the objective of expanding its brand and making it familiar among buyers. The group has since 2010 operated the Air Arabia Egypt, which is a joint venture between Air Arabia and the Travco Group located in Alexandria, Egypt (Air Arabia a 10). The group also operated the Air Arabia Jordan, a joint venture between Air Arabia and Petra Airlines in Jordan. However, Air Arabia Jordan came to a halt following logistic challenges. Air Arabia Maroc is also part of the joint ventures Air Arabia has with other firms in an attempt to broaden its operations[A8] . Concerning the firm’s major traffic flows, the airline flies to various international destinations including Kabul, Yerevan, Vienna, and Baku in Afghanistan, Armenia, Austria, and Azerbaijan, respectively. However, the airline flew to many other destinations before the health crisis. It flew to Doha, New Delhi, Dammam, Copenhagen, Frankfurt, Fez, Goa, Gizan, Geneva, Hail, Islamabad, Istanbul, Hurghada, Jeddah, and Nairobi among many other cities across the globe (Air Arabia). [A9] [A10] The airline operated in all these routes as frequently as possible, which indicated significant traffic flow.
Competitive Advantages/Strategic Capabilities
Prior to the health crisis, Air Arabia’s primary competitive advantage over other operators is that it employed strategic use of social media to communicate with stakeholders and to market its operations. [A11] The firm while using the approach acknowledges that social media marketing is one of the most suitable tools utilized by various firms to reach target consumers (Air Arabia). [A12] The group while expanding its use of social media focused on creating its brand to the target buyers (market) and listening actively to their consumers online to broaden its consumer base. Overall, the social media approach of Air Arabia could be termed as being effective in realizing its aspiration. A critical scrutiny of the competitive advantage using the VRIO analysis provides more insight into the firm’s attempts to improve on its use of social media (Air Arabia). To begin with, competitive advantage added value to the firm because it became more efficient in the way it marketed its operations. However, the approach is not rare because various firms had already explored the approach before the crisis broke out. The approach is also imitable because other operators could easily install similar forms when they liaise with the experts. Finally concerning organization, the firm could be termed as being adequately prepared to use the approach judging from availability of IT experts and infrastructure such as computers and a reliable server to facilitate the use of social media. [A13]
Whether Previous Strategy was Successful and Sustainable
It is apparent based on the analysis of the previous strategy that it was successful and sustainable at the time. The organizational structure applied before COVID-19 did not generate much concern or constraints that warranted the company attention. Instead, everything happened smoothly with organizational leaders being in charge of key business practices. Leaders offered clear guidance in virtually all areas, which ensured the firm conducted all its activities appropriately. The same happened to the various joint ventures the group formed to broaden its operations. However, failed attempts such as Air Arabia Jordan that existed from 2015 and 2018 and Fyl Yeti (a joint force between Air Arabia and a Nepali carrier) that existed from 2007 to 2008 suggested that not everything went well as expected and that the group has had to deal with various strategic challenges (Air Arabia). Nonetheless, because the company did not witness any major constraint before the coronavirus disrupted airline operations, it could be argued that the previous strategy was successful and sustainable. [A14]
Section 2: Post – COVID Recovery Plans
Validating the Mission and Vision
The tribulations the company underwent during the COVID-19 period should not deter it from working towards achieving its vision and mission that have guided the firm since its inception on 3 February 2003. Going forward, the company should abide by its vision, which is to be one of the globe’s leading budget carriers [A15] (Air Arabia b 9). The group, in everything it does to recover from the effects of the health crisis should always remember that it should work towards being an impactful budget airline in terms of operational excellence, reputation, innovation, and profit margin (Air Arabia 9). Moreover, the company in whatever it does, must always remember its mission, which is to “To revolutionise air travel in the region through an innovative business approach offering superb value for money and a safe, reliable operation” (Air Arabia b 9)[A16] . To achieve this mission, the company should not deviate from its reputation of being a low cost carrier, and should always focus on its aspiration aimed at growing the business profitably. Moreover, the team in embracing a recovery plan should not distracted from its goal of building motivated multi-functional groups, should be ready to demonstrate the most advanced operational strategies and standards, and should manage its costs as effectively as possible (Air Arabia b 9). Being focused on all these aspects as stipulated in the company’s vision and mission would allow the airline to move forward steadily as it strives to get over the effects of COVID-19.
Reassessing the Internal and External Environment of the Airline
Examining the internal and external environment of Air Arabia in light of the health crisis and the transformations the airline sector gas undergone since March 2020 when the pandemic became a global concern provides valuable insight into the impact of COVID-19 on the UAE-based carrier. Assessing both the internal and external environments are important because once the management knows about the negative and positive effects within and outside the firm, it is possible to come up with effective strategies to deal with any unprecedented or predicted condition. Thus, assessing the internal and external environments is perceived the most essential role for an organisation before adopting any strategic plan, or a recovery plan as it is in this instance.
Applying Porter’s five forces analysis presents a clearer overview of Air Arabia external environment. The firm operates in an environment where other operators are striving to secure a significant portion of the local and international markets. For example, the group operates in the same market as leading operators such as Emirates, Etihad Airways, Wizz Air Abu Dhabi, and Flydubai among others (Air Arabia). However, Air Arabia does not have to worry about the threat of new entrants considering the high cost associated with entering the sector. Moreover, the firm does not have to worry much about the substitute of its services because presently only airline services offer effective international travel services. Equally important are the consumer and supplier powers. The firm does not generate as much revenue as it would desire when the buyer and supplier powers are high.[A17]
Key Aviation Industry Trends
Airline operators have witnessed new trends since the health crisis began a global concern in March 2020. For example, Air Arabia, like many other operators in the sector, is embracing measures that would protect its staff and customers from contracting or spreading COVID-19. For example, the group encourages its members and customers to sanitise at different strategic points, and also encourages them to wear face masks in crowded places. The group has also established a COVID-19 travel information desk, and has launched a COVID-19 medical cover for all travelers. Besides, the group is increasingly embracing online-based transactions, which has become trendy since the virus struck in 2020 (Air Arabia a 4). Another trends that is fast picking among airline operators is the need to help vulnerable individuals and communities, especially those worst hit by the health crisis. Air Arabia has excelled in this area in the way it contributed to relocate people to their homes at the peak of the crisis, and offered relief support to affected individuals and households in worst affected places (Air Arabia a 8). The [A18] company has an added advantage in this area because it had already developed its use of social media to engage consumers and other stakeholders. The company must keep up with all these trends lest it fails to put up with what others do.
Strategic Opportunities for Aviation Business Development
Technological advancement that has been witnessed since the breakout of COVID-19 presents a suitable chance for airline operators to witness significant advancement in their operations[A19] . A SWOT analysis of the company reveals how it is likely to respond to the technological growth witnessed in the sector. A strength that would enable the firm to embrace the new technology such as improved online interaction is that it has a strong basis for this kind of operation. However, the weakness and threat that could bar it from expanding in this area is its slow growth and advancement in other firms, respectively. Nonetheless, increased knowledge on how such technologies work offers an opportunity to witness significant growth. [A20] Nonetheless, increased knowledge on how such technologies work offers an opportunity to witness significant growth. The following table provides a summary of the SWOT;
|Strengths Advanced insight into technology use||Weakness Slow pace of technological growth|
|Opportunity Increased knowledge on technology||Threat Technological advancement by competing firms|
It is encouraging that the company is committed to uphold its low-cost strategy even after undergoing the tough times introduced by the health crisis. [A21] While the preceding years continue to be difficult for the company and the airline sector at large, Air Saudi Arabia is committed to uphold its strategic position that has enabled it to create its market niche. The company’s management quick intervention to control overall cost and to improve cash position has gone a long way into ensuring business continuity (Air Arabia a 2). [A22] Therefore, Air Arabia is dedicated to conduct its operations while based on the low-cost strategy that has contributed towards gaining competitive advantage at the firm. [A23]
Challenges and Opportunities
Even though Air Arabia still faces challenges in its operations as it happens with other operators in the airline sector, it is has various opportunities that could help it to pick up and progress steadily. The COVID-19 crisis is still a major challenge affecting airline firms. The cost of dealing with the crisis is considerably high and companies that lack effective mechanisms can hardly cope with the increasing financial demands (Air Arabia a 2). However, the company can take advantage of the available opportunities, internally and externally. Internally, the group has added additional 14 routes since 2020, which offers an opportunity to generate more revenue (Air Arabia a 3). The group also acquired two new Airbus A321 in 2020, which expanded its fleet. Externally, the urge for cargo flights is increasing, which offers an opportunity for increased revenue generation. [A24]
Using the PESTEL analysis offers more information about the Air Arabia’s challenges and opportunities. Politically, the company must adhere to all enacted laws and regulations, some of which pose significant challenges. Economically, factors such as economic depression and inflation impact negative on the company’s operations. Consequently, the group tend to focus on markets that enjoy economic stability. Socially, what comes as an opportunity is that the group serves various communities that improves its engagement with different societies (Amazon). Technologically, the opportunity the company enjoys is that rapid innovation is happening with the airline services, which makes it possible to perform more features. Air Arabia also considers the environmental factors by ensuring that the company reduces its adverse effects on the environment. Finally, the company performs all its operations in accordance with existing laws, especially those that impact on airline services. The firm fully understands the possible ramifications of non-compliance, and that is why it is dedicated to abide by all existing legal provisions. [A25]
National / International Aviation Policy Updates
Both national and international policy updates impact significantly on the activities of Air Arabia, as it does with other airlines. [A26] The group must adhere to regulations set by aviation bodies such as ICAO and IATA. Besides, the group must adhere to policies created to combat COVID-19. In the UAE, the General Civil Aviation Authority that was formed in 1996 provides valuable guidelines that all operators in the airline sector must follow in accordance with suppressing the spread of the virus (GCAA). [A27] Air Arabia has an obligation to follow all regulations as stipulated by the agency to operate flawlessly in this post-COVID period. [A28]
Generating Short- and Medium-Term Objectives
Relying on short- and medium-term objectives provides a suitable chance to facilitate a swift recovery and survival. [A29] An effective approach would be to make the airplanes and station as safe as possible to eradicate any fears that customers could contract or spread COVID-19 by travelling with the airline. Sun et al. recommend the need to make in flight changes which entails creating more space and encouraging use of face masks until it is safe to relax these directives (6). In addition to working towards creating safety, the group would move forward steadily if it expands its telecommunication services that Sun et al. think is a major factor as airlines continue to get over the effects of COVID-19 (9)[A30] . Making improvement in this area would minimize paperwork and at the same time facilitate operations.
Generating, Evaluating and Choosing Strategies and Action Plans
An effective way to achieve the recommended plan is to constitute a team that would work towards implementing changes. The benefit of creating a special team to handle the matter is that the group will commit its effort towards dealing with the matter, and will advocate for the allocation of necessary resources to achieve the desired changes. The selected team should be well-informed about their roles and should be able to deliver the targeted aspirations. However, the team changed with the task may not succeed if its lacks managerial support. [A31] Fortunately, the management of Air Arabia values team work and cooperation, and will definitely offer the needed support to attain the desired goals.
Creating an Implementation Plan
Adopting an effective implementation plan would determine how fast and effective the group overcomes the effects of COVID-19. [A32] A suitable approach in this case would be for the selected team to conduct individual assessment of each carrier to find out their safety in transporting passengers now that some people still fear being in crowded places. The team should then make recommendations based on its observations. Moreover, the team should examine the company’s current telecommunication strengths and weaknesses and identify areas that may require improvement. [A33] The move to improve the company’s telecommunication infrastructure is necessary because more operations are becoming technological-based as both operators and consumers seek to get away from traditional approaches to transacting.
Identifying Measures and Feedback Loops
Air Arabia should be able to determine whether the adopted frameworks give the targeted aspirations by relying on particular measures and feedback loops. [A34] One way to determine whether the group is providing safety for its customers is to examine the reviews on various platforms, including social media and the company’s website. Positive reviews would indicate that the firm is doing well in this area. Positive reviews would also signal the level of consumer satisfaction. Another indicator of impressive performance in the identified areas would be an increase in revenue generation. Increased revenue generation would suggest that the team obliged with the duty of implementing the change is on the right track, while decreased returns would imply that more need to happen to salvage the situation.[A35] However, failing to follow these indications could deny Air Arabia the opportunity to identify whether it is progressing or not. [A36]
Identifying and Assessing Risk Factors
The team should be watchful of the possible risks that could deter its ambitions to implement the strategies. [A37] An evident risk is that some members may not be ready to embrace change, which calls for the use of an effective change management model. An effective framework in this case is Kurt Lewin’s 3-stage model that requires implementers to consider three critical steps during implementation – unfreezing, change, and refreezing (Hussain et al. 124). The unfreezing stage offers an opportunity to understand why the change is needed, the change stage is where actual transformation takes place, and the refreezing phase ensures that the firm upholds the adopted change (Hussain et al. 125). However, being able to implement the change without any complications would facilitate the realization of the targeted goals. [A38] However, it is essential to pay considerable attention to other potential risks that could disrupt the process. [A39]
The research falls into two major sections. The first section examines the state of affairs at Air Arabia before COVID-19 broke out. It shows how the firm focused on advancing its low-cost strategy that allowed it to charge lower prices compared to rival operators. The Board of Directors was responsible for making decisions that guided all business activities. The firm operated across a wide region, which strengthened the impact of the carrier in the global arena. The firm has developed improved approaches to using social media in its operations. Its prowess in this area has earned it a competitive advantage over its rivals that also strive to secure a substantial portion of the market. A VRIO analysis of the competitive edge suggests that the approach adds value and the company was organized to implement the approach, but it is not rare and it is also imitable. Overall, the approaches adopted prior to the COVID-19 were successful and helped the firm to achieve sustainability. The second part centers on post-COVID recovery plans that would allow the group to maintain steady operations even after the health crisis threatened to destabilize air operations. The section emphasizes the need to follow short and medium-term objectives while creating effective structures to implement the adopted plans. [A40]
“Annual Report: 2020.” Air Arabia a, 2020, https://www.airarabia.com/sites/airarabia/files/gallery/AA_AnnualReport_2020_en.pdf. Accessed 2 Apr. 2022.
“Annual Report: 2010.” Air Arabia b, 2010, https://www.airarabia.com/sites/airarabia/files/styles/square_thumbnail/public/styles/AirArabia_AnnualReport_2010_En.pdf. Accessed 2 Apr. 2022.
“Covid-19 Update (for Industry and Aviation Personnel).” GCAA, 2022, https://www.gcaa.gov.ae/en/ePublication/Pages/covid-19.aspx, Accessed 2 Apr. 2022.
Hussain, Syed, Shen Lei, Tayyaba Akram, Muhammad Haider, Syed Hussain, and Muhammad Ali. “Kurt Lewin’s Process Model for Organizational Change: The Role of Leadership and Employee Involvement: A Critical Review.” Journal of Innovation & Knowledge, vol. 3, 2018, 123-127. doi:10.1016/j.jik.2016.07.002[A42]
Islami, Xhavit, Naim Mustafa and Marija Latkovijk. “Linking Porter’s Generic Strategies to Firm Performance.” Future Business Journal, vol. 6, no. 3, 2020, https://fbj.springeropen.com/articles/10.1186/s43093-020-0009-1
Slotnick, David. “Many of the World’s Airlines could be Bankrupt by May Because of the COVID-19 Crisis, According to an Aviation Consultancy. These Airlines have Already Collapsed because of the Pandemic.” Business Insider Africa, March 29, 2020, https://africa.businessinsider.com/lifestyle/many-of-the-worlds-airlines-could-be-bankrupt-by-may-because-of-the-covid-19-crisis/bhrg663. Accessed 2 Apr. 2022.
Sun, Xiaoqian, Sebastian Wandelt, Chganghong Zheng, and Anming Zhang. “COVID-19 Pandemic and Air Transportation: Successfully Navigating the Paper Hurricane.” Journal of Air Transport Management, vol. 94, 2021, pp. 1-13. https://doi.org/10.1016/j.jairtraman.2021.102062
[A3]Overview of the study.
[A6]MLA citation requires the author’s name only for websites.
[A7]Describing Arabia’s strategic position.
[A9]Air Arabia’s destinations before the health crisis.
[A12]The chief competitive advantage.
[A13]VRIO analysis of the firm’s competitive advantage.
[A14]Showing how previous strategy succeeded.
[A15]Air Arabia’s vision.
[A16]The company’s mission.
[A17]Using Porter’s five forces to examine the company’s external environment.
[A18]Describing key trends in the aviation sector after COVID struck.
[A20]SWOT analysis of the firm’s ability to embrace modern technology.
[A22]Identified competitive advantage.
[A24]Description of the challenges and opportunities facing Air Arabia.
[A25]Using PESTEL analysis to understand the firm’s challenges and opportunities.
[A30]Possible short- and medium-term objectives.
[A31]Identifying an action plan.
[A32]Opening sentence shows the need for an implementation plan.
[A33]Potential implementation plans.
[A38]Explanation of the possible risk.
[A40]Review of the entire report.
[A41]For organizational websites, MLA referencing requires the title, website’s name, year of publication, website, and date of access.
[A42]For journal articles, MLA requires the author’s last name followed by the first name for the first name followed by the first and then the last name of subsequent authors, title, journal name, volume number, year, page numbers, and doi number.