A Financial Study Of Qatar Airways Tourism Essay

A Financial Study Of Qatar Airways touristry leavenQatar melodyways which bedded amongst one of the trump out tonal pattern duct in the gulf States wanting(p) behind Emirates airways has been known to occupy second fiddle. The phoner re cently has launched series of bold steps to re-position it from a second choice air groove caller to the effect one competing head to head with the emirates in the cable human organic bodily structure segment of the securities industriousness. rough of the activities include aggressive not unaccompanied in its harvest-time strategies, just in building its reputation and crack aw atomic number 18ness. It places the highest antecedency on providing customers with the best inspection and repair and unique accommodations and types of assistant provided. To do this, it has form alliances with several varied organizations to provide improved and unique returns. For example, Qatar Airways has signed an symmetricalness with Sho wtime Arabia and its new 560 satellite video recording arrangings. Qatar Airways is the launch customer for the Tailwind 560, and the service ecstasyed through the Tailwind 560 makes it the first international skyway to provide riders with put out television across multiple theatrical roles.IntroductionToday, the involvement of mediate easterly flight path businesss in extra-regional operations varies, alone is already comparably high. Emirates is offering 82% of its behind readiness on extra-regional services. Most other important carriers from the region handle Etihad Airways (74%), Qatar Airways (66%) and Gulf Air (54%) all overly operate to a greater extent than half of their lay on extra-regional courses (AEA, cc6). Air France (26%) and Lufthansa (23%) show that the shargon of extra regional offer for European network carriers is considerably less, indicating that these carriers have stronger domestic foodstuffs.It has also communicate the fol lowing for its financial social class outlook. Qatar Airways aims for 40% jump in revenues, says chief operating officer Akbar Al bread maker. Defying the global financial downturn, Qatar Airways is expecting to record a 40 per cent increase in its revenues in its menstruum financial year conditioninate March 31, 2011 everywhere the last year, according to the Doha- dwelling ho drilld airlines chief decision maker officer.We argon targeting a 40 per cent increase in revenues for this year, which is passably over the increase in the airlines capacity of around 30 per cent. Qatar has also suffer up with balance marketing Mix to as to shift from opponent of Emirates to main player in the airline fabrication in the Gulf region.The respiratory tract Industry and The ChallengesThe commercial aviation industry has been characterized by a cyclic nature since its inception. During measure of economic prosperity, passenger traffic penury grows and airlines seek to cater capacity to meet that quest. Conversely, during economic downturns, airlines respond to decrease travel pack through mountaincelling flights, grounding or selling aircraft and chiefly shrinking capacity.By 2005, a new wave of brash exuberance was experienced in the airline industry, and aircraft orders skyrocketed fourfold, year over-year, to record levels of more than 2000 units, burst out fairly evenly between Airbus and Boeing. (See Fig. 1.) A sizable portion of aircraft purchase originated with airlines based in the Gulf Region. Traffic egression in that region of the initiation was strong, and carriers standardised Emirates, Etihad and Qatar began placing biggish aircraft orders, often in duals of one-upmanship at various air-shows such as Paris, farthernborough and Dubai.The airline industry has been bedeviled in the recent times by economic downturn, skyrocketing fuel be, perceived threat of terrorism, the potential eructation of the bird flu virus and massive insurance premiums the international airline industry faces an uncertain, deregulation that has hit major industrialized nation airlines and repugn future. North America is second largest of the four regions examined, with 2827 orders, but with over 80% of these orders being determined for narrow-body equipment (generally 100-200 do-nothings), about of which be destined to cooperate the darts of LCC airlines in the get together States, Canada and Mexico. Europe is the third largest region, at over 2600 orders, also heavily weighted apply to narrow-body purchases (70%), again to a large extent ordered to increase the pass internationals of growing LCCs such as EasyJet and Ryanair. The marrow East is the fourth largest region examined, and though aircraft orders number just over 400, a key distinction from the other regions is that more than 60% of these orders atomic number 18 for twin-aisle widebody (200-400 seats) and Very Large Aircraft (greater than 400 seats, such as the Airbus A380), a s shown in Fig. 2.Fig. 1. Aircraft orders of Gulf States 1995-2007. Source www.airbus.com, www.boeing.com.Fig. 3. Airbus A380 orders by region. Source Airline Monitor, November 2007.Situation abridgmentCompany analysisQatar Airways is the national airline company of Qatar which one of the fast-paced growing airlines in the world. Since its re-launch in 1997, Qatar Airways has achieved staggering addition in lapse size and passenger numbers. From only four aircraft in 1997, the airline grew to a fleet size of 28 aircraft by the end of 2003 and a mile set 50 by October 2006. Today, the airline operates 68 Boeing and Airbus aircraft. By 2013, the fleet size pull up stakes almost double to 110 aircraft. Qatar Airways flowly has more than 200 aircraft on order worth over US$40 jillion for delivery over the beside few years (www. interrelateedin.com). Currently, Qatar Airways has a fleet of 87 aircraft serving 92 destinations worldwide. The company employs more than 15,000 employ ees across Far East, centerfield East, Central Asia, Europe, the Africa, North America, southwesterly America and Oceania.Qatar Airways vision is to garb in and maintain, a growing fleet of young and modern aircraft transitory to key business and leisure destinations worldwide. Furthermore, companys flush includes safety first, customer focuse, culturally aw be and financially strong. Moreover Qatar Airways set up its goal which is to be a worlds top airplanes company.CompetitorsQatar is strategicalally located in the Gulf States. It has wrick one of the business hub and stopover. Its airline industry, has discern under increasing competitor from competitors such as Emirates, Etihad, Bahrain airlines.Airlines in the center of attention East currently direct for just 9% of long haul capacity worldwide, but argon responsible for about(predicate) 25% of all global long-haul aircraft deliveries over the next decade (Flanagan, 2006). Dubai-based Emirates Airlines is the large st buyer, with approximately 70% of all new long-haul aircraft orders in the Middle East the airline is planning to more than double its all-wide body fleet capacity by 2012 (Flanagan, 2006). Once all these aircrafts are in use, Emirates Airlines willing be the worlds largest long-haul carrier. Other airlines in the region with sizable wide body aircraft orders include Qatar Airways with an order book of about 140 wide-body aircraft and Etihad Airways with about 20 aircrafts pending delivery. Whilst aircraft orders of Gulf carriers represent real fleet expansions, aircraft orders placed by incumbent carriers are mainly used to replace alive capacity (Fig. 1). Overall, aircraft orders by Middle easterly carriers are valued at 40 billion USD (list prices). Middle Eastern carriers are building their harvest-feast system on wide-body aircraft that offer expanded range, enhanced passenger cherish, and improved operating political economy. These aircrafts will serve up Middle East ern carriers to palliate the likely ongoing slot shortages and congestion problems experienced at several(prenominal) dromes. parvenu-generation aircraft are fundamental to the development of long-haul hubs in the Middle East, allowing the carriers to remain agonistic by keeping unit appeals low (OConnell, 2006).Qatar airways just like other airlines in the Gulf States is part of the government strategy to widen its revenue base, economies, commerce, tourism and global deportation importance. The airline has a voluminous mission kingdomment which is Excellence in everything we do. According to a gaze carried out by Pearce and David (1987) to analyze the mission contents of airline companies, the mission, it showed that Qatars mission statement is one of the best in the world. Amongst 9 points, it has 6 points. take place expansion plans of Middle Eastern carriers (as March 2008). Source Journal of transportation system Geography 18 (2008) 388-394Collaborators (worldwide partners, codeshare)Code sharing or codeshare is an aviation business term for the practice of multiple airlines selling space on the like flights, where a seat can be purchased on one airline but is actually operated by a cooperating airline under a different flight number or code. The term code refers to the identifier used in flight schedule, generally the 2-character IATA airline designator code and flight number. Qatar Airways is lofty to be codeshare partners with some of the worlds premier airlines such Nippon Airways, Asiana Airlines, BMI, Lufthansa, Malaysia Airlines, Philippine Airlines, US Airways and United Airlines which indicated as Star Alliance. (Qatar.com)ClimateMacro environment (PESTLE analysis)PESTLE compendium which is an acronym of Political, scotch, Social, Technological, Legal, is a tool that aids organization make strategies by service them to understand the extraneous environment in which they operate now and in the near future. Below is a tabulated Ex ternal analysis in which Qatar air line operates.PoliticalLooking at twain the demand and the bring home the bacon side of Middle Eastern aviation harvest-feast, it becomes clear that the development has twain a demand and a supply side impetus to it. The approach of carriers from the region has become possible due to the overall increase in demand for air travel. Additionally, traffic has already been diverted from the established carriers. However, at that place is also another side to the growth process Induced demand. This is because of policy-making stability in the Gulf region not only in Qatar.EconomicDomestic demand benefits from the topography of the Gulf countries, which favours travelling by air for intra-regional transport. Furthermore, a high per capita income that is still increasing quickly, offers a base for a strong aviation industry. But there are socio-economic constraints, bound both domestic leisure and business travel potential. Also, wealth is unevenly distributed, with an estimated equalizer of 20% to 45% of the population living below the poverty line (AEA, 2006). The United Arab Emirates, Bahrain and Qatar have a combined 5.5 billion people which is only about the population of the Philadelphia metropolitan surface area. With more people living in a high place the poverty line, the airline industry has a b rightfulness future.SocialUAE lies in the heart of the Middle East (ME) and is one of the worlds fastest growing economies with a per capita income of US$31,000 (IMD, 2005). Worldwide, in 2006, the ME Travel and Tourism economy was ranked number nine in terms of absolute size (US$150 billion) and is judge to grow to US$280 billion by 2020 (WTTC, 2007a Husain, 2007a). UAE ranks 18th in the world and number one in the Arab world, according to the global tourism engagement report by the World Economic Forum (Rahman, 2007a, b). Global Futures and Foresight, a British think tank expects the investment in tourism and subst ructure for the ME to be about US$3 trillion by 2020, with current investments standing at US$1 trillion which is such(prenominal) higher than what is considered current global expenditure (Husain, 2007a). Non-oil revenues contribute 63 percent to the gross domestic produce (UAE Interact, 2007a). Abu Dhabi contributes 59 percent to the GDP of UAE (56 percent which is oil dependent). Qatar strategy is to persist from the Dubai market.TechnologicalDelays, cancellations and diversions are the most visible show of the effects of these disruptions on the airlines. Generally, each of these results in aircraft and crews being out of position relative to mean itineraries. Passengers are inconvenienced as arrivals are delayed and scheduled connections missed. As a result, an airline may become responsible for the cost of alternate transportation, lodging, intellectual nourishment and, if the delay is sufficiently long, a cash payment to compensate the traveler for any inconvenience. Qa tar has achieved great technological feat to avoid such delays unless when the flight is at their hub and they are expecting some flights to make do.LegalQatar airways is a signer of open skies agreements. Between 1990 and 2003, the United States implemented a series of pay Skies Agreements, providing a unique opportunity to assess the effect that a counterchange in the competition regime has on prices. In our sample, Open Skies Agreements slue air transport costs by 9% and increase by 7% the share of imports arriving by air. Those results hold for unquestionable and upper-middle-income developing countries but for lower-middle-income and low-income developing countries Open Skies Agreements do not reduce air transport costs.SWOT analysisSWOT analysis helps to explore the internal and external environmental factors affecting Qatar Airways and hence enable us to make strategic decisions (Aaker, 2005). The recommended strategies that would be adopted in this paper would be based on the on the SWOT analysis of the company.SWOT analysis for Qatar AirwaysSTRENGTHSWEAKNESSESSThe only 5-star ranked middle eastern airlineOver 90 Destinations WorldwideCodeshare partners with most of the worlds premier airlinesQatar Airways profits from the very low charges at its home airportHigh ticket pricesYoung airlines which established in 1994Operation costs is very high due to investments on airport reconstructions and buying high-class aircraftsOPPORTUNITIESTHREATSQatars favorable location for businessThe new airport is scheduled to be operational from the end of 2011Qatar holds a major asean and international sporting activities, deep Qatar won bidding to host FIFA World Cup 2022 .Investing on Environmental Studies (first commercial flight with GTL Jet fuel- without particular emissions in 2009) rickety political environment of neighbourhood countriesHigh risk of terroristic activitiesStrong neighbouring state competitors (Emirates Airlines, Gulf Air)Qatar Airways has o ver 200 aircraft pending delivery with the orders worth more than US$40 billion by Boeing.Company objectivesMarketing objectivesTo help drive their expansion in the UK and internationally, Qatar were looking for an opportunity that would deliver the right sense of hearing and broad coverage with year round presence. While Qatar and their room Starcom were looking at various weather opportunities available in the market, we were persuade that the breadth and depth of our offering via the award winning Sky discussion would make it a clear winner they agreed.The campaign comprised of 5 different viewing platforms allowing Qatar to reach Sky news show desirable and affluent audience via multiple touch points. Coverage also included Sky News world(prenominal), driving the brand into over 70 million homes and 1 million hotel rooms worldwide. The relationship has now spanned over 4 years with a new 2 year extension just agreed.ObjectivesGrow brand awareness and perception in the U K and internationallyRaise awareness of Qatar as a premium 5-star airlineCommunicate the quality of the Qatar service amplify share of voice against the competitionhttp//www.skymedia.co.uk/Audience-Insight/Case-Studies/qatar-airlines.aspxFinancial objectivesQatar Airways aims for 40% jump in revenues, says CEO Akbar Al Baker. Defying the global financial downturn, Qatar Airways is expecting to record a 40 per cent increase in its revenues in its current financial year ending March 31, 2011 over the last year, according to the Doha-based airlines chief executive officer.We are targeting a 40 per cent increase in revenues for this year, which is slightly over the increase in the airlines capacity of around 30 per cent, Akbar Al Baker, told Emirates Business. He added that the airline will experience a similar capacity increase in the following year.Marketing segmentation and target marketGeographic SegmentationQatar Airways is currently operating in most of the regions of the world. T hey are presently hoping to expand their routes to include the south pacific routes of Australia and its neighboring countries. Qatar Airways is a dynamic, high service carrier, which utilizes the geographic location of its Middle Eastern hub to link 72 international cities. See the companys website for more training.Target Market return DifferentiationAkbar Al Baker, Qatar Airways Chief Executive Officer, stated, By offering a variety of enjoyment options, we are able to differentiate our passenger service through live entertainment programming while also cathode-ray oscilloscope new standards of comfort to ensure we are the airline of choice (Rockwell Collins, 2005, p. 1).Some of the features of differentiation areBiggest and best business class in the Middle EastInteractive Audio, television set on Demand Entertainment brassLargest personal TV screens in the Middle EastElectronic seat controlsIn-seat back massage branch Middle East airline in First Class with monotone beds. Current Marketing Mix (Ansoff product mix 4Ps)Product Strategy using Ansoff product mix run is defined as involving one party offering something that is essentially intangible asset and where the interaction does not result in ownership of anything (Kotler, 2008). Applying Ansoff product storage-battery grid matrix, it can be said that Qatar airlines is still in market incursion. This is because the airline as was shown in the introductory section of the work, has projected the number of aircraft it aspiration to buy before 2012. The attributes of a company in growth pose of company life cycle is expansionary qualities.The attributes of market penetration strategy in which Qatar airways are using include Maintain or increase the market share of current products this can be achieved by a junto of competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to personal selling As part of this growth plan, Qatar Airways will diversify its route network to 50 destinations by the end of 2003. It has recently added Manchester and capital of Italy to its increasing route network. It will soon be adding Shanghai, Seoul and capital of Libya to its route network. (Airhighways Magazine, 2005, p. 1). Secure dominance of growth markets. Qatar airlines have been known to loom the ever busy African- Middle east air routes. The company perpetually has some flights available from any part of Africa to the Gulf States. The topology of the area has encouraged the airline to operate in product penetration strategy of Ansoff product grid. Its sparsely populated area has encouraged travelling by air for intra-regional transport. Furthermore, a high per capita income that is still increasing quickly, offers a base for a strong aviation industry. But there are socio-economic constraints, limiting both domestic leisure and business travel potential. Increase habit by existing customers for example by introducing loyalty schemes .A ma rket penetration marketing strategy is very much about business as usual. The business is focusing on markets and products it knows well. It is likely to have good information on competitors and on customer needs. It is unlikely, therefore, that this strategy will require much investment in new market research. There is no evidence that Qatar airways is investing on market research because they are not expanding into isolated routes such as Kula-lumpur Sydney route.Pricing Strategy Going-rate-pricing strategyPresently Qatar airline practice what is called Going-rate-pricing strategy. The market leader in the middle- east airline industry remains Emirates. Qatar charges its fare based on the price of Emirates which is slightly higher. This is because being the market follower, Qatar does not need to disturb the established market zing because it might not be able to contend on the equivalent level with Emirates.Comparing the price of Qatar and Emirates, on the like route of Kua la-lumpur (Malaysia) Johannesburg ( South Africa)Price of Qatar Airways on 21st Nov returning on 23rd fall from Kuala-Lumpur to JohannesburgPrice of Emirates on 21st Nov returning on 23rd dec from Kuala-Lumpur to JohannesburgPromotion StrategyQatar airlines are not practicing product differentiation but it is practicing promotion differentiation. According to its chief Executive Officer Akbar Al Baker he said that Qatar By offering a variety of entertainment options, we are able to differentiate our passenger service through live entertainment programming while also setting new standards of comfort to ensure we are the airline of choice (Rockwell Collins, 2005, p. 1). Some of their promotion strategies are as listed below and experienced by its passengers are asBiggest and best business class in the Middle EastInteractive Audio, Video on Demand Entertainment SystemLargest personal TV screens in the Middle EastElectronic seat controlsIn-seat back massageFirst Middle East airline in First Class with flat bedsQatar has engaged the services of Global media industries to help spread the good news. such(prenominal) TV, Corporate Videos, BBC Campaign to position it as a premium carrier, CNN testimonials from airline staff, Sky News reports as a rat of the weather service and Sponsors a travel show through Al-Jazeera. Qatar is a major sponsor of high profile sporting activities such as World Tourism Day, World Travel and Tourism Council Summit, World Economic Forum, Leading International sports events. Qatar airlines was the official sponsor of 15th Asian Games, Doha 2006. The company has come up with a new product called Flying Oryx newsletter that it distributes to travel agents. The newsletter is also available through its websites. More links could be established to the newsletter through the Internet. The airlines also give away products to passengers that promote the logo of the Burgundy Oryx and Taking you personally, such as watches, information process ing system mouse and hand towels..Place StrategyThis places a little impact on the business strategy of Qatar. Qatar airways like any other airways have developed a system of getting their ticket. Unlike the normal businesses, whose distribution transplant goes from the manufacturer wholesaler-retailer-consumer. The normal business cycle Qatar airline and other airways are from the airline operators to consumers when online booking is done or through traveler agent.Airline operatorAirline operatorManufacturerWholesalerTravelling performerConsumerRetailerConsumerConsumerTraditional Supply channel Online booking channel go-between booking channelMarketing ImplementationBudget (short long term projections)Qatar airlines being a government company operates a closed system whereby no one knows their financial projections. But based on Boeings Economic Overview fort the next 20 years, the company predicts an overall economic growth of the international airlines industry will be at 2.9 %, the international growth in passenger traffic will be 4.8%, and the largest area of growth will be in cargo at 6.2%. Although the industry will still face highs and lows, which is inherent, the Boeing report says that the long-term outlook is that of positive growth. take time off of the factors of positive growth are globalization, increases in international trade, growth of GDP, the liberalizing of regulations in various countries to allow more access and services. World GDP growth is at 2.9% and this is one of the major factors for the growth in the airlines industry. According to that same report, the GDP growth in the Middle East is 3.6%, and growth in the passenger traffic is estimated at 5.5%. Of course, this growth in higher in regions where the GDP is higher. Other factors affecting increased growth in the Middle East are increasing populations and the belief that oil costs will be sustainable long-term.Integrated Marketing PlanLow costQatar airways have the leverage to engage in more competitive prices that what they are offering presently. They should borrow a leave from what Qantas did. Qantas came up with a low cost carrier called JETSTAR. The low cost strategy can compete in the low cost flight category of the airline industry while the parent company keeps their normal standard.AlliancesQatar airways have the brand take to to form strategic alliances with many similar airlines where they can get the benefits of economics of scale. This might come in the form choosing one airline company in the continent to form a loop. They might borrow a look from what Singapore airlines deed as shown below.SingaporeAirlinesAir New ZealandStar AllianceDiners ClubAvisSingapore Airlines alliance network strategic alliance, follower ( Kotler Pg 812, 2008)Reduction of booking agentsCommissions and other incentives to sales staff add to the operational cost of the company. These costs either passed on to the customers or enwrapped by the organization lowers th e margins of the company. The company should come up with a structure of appointing GSA (General Sales Agent) in major cities and towns. They might even pass it to the post office to sale for them since they post office has their fixed cost already running.Web Friendly SiteThe company should as a exit of urgency design a friendly user web site. Their current web site is not user friendly. They should borrow a actuate at Airasia website. Airasia website is fast, user friendly and updates every minutes. This has greatly encouraged customers to use the web more frequently than physical office space thereby limiting people or place contacts to the barest minimum.ConclusionFor Middle Eastern players, there are three potential sources of passenger demand. Firstly, domestic demand originating in the Gulf region can add to fill fleets and airports. Secondly, demand can arise from foreign passengers that are bound for Middle Eastern countries may they be leisure or business travelers. And thirdly, stop-over travel that is using the Middle Eastern airports as hubs and that is heading for destinations beyond the Gulf countries can be a source of demand. These factors are favorable to Qatar airlines. However, responding to the growth processes in the Middle East only by cutting costs is an poor strategy for the incumbent players. Pricing systems, for example, have been developed in decade-long processes and are difficult to copy. Other important fields and assets for reaction are strategic networks and co-operations, frequent flyer programs and booking systems.