Airline SectorE-Business and Applications

Section “A”Presented to Sir Manoj Kumar

Presented By:M.Shaharyar Saeed

Introduction• Pakistan International Airline: The national flag carrier and a

state-owned enterprise of Government of Pakistan. Once regarded as Asia's best airline, it is headquartered at Jinnah International Airport in Karachi and operates scheduled services to 24 domestic destinations and 38 international destinations in 27 countries across Asia, Europe and North America. Its main bases are at Karachi, Lahore and Islamabad/Rawalpindi.

Introduction• British Airways (BA) is the flag carrier airline of the United

Kingdom, based in Waterside, near its main hub at London Heathrow Airport. It is the largest airline in the UK based on fleet size, international flights and international destinations and second largest measured by passengers carried, behind easy Jet.

Benefits of Information Systems to These Airlines• Convenience to Customers

Reservation System, Request hotels, car.

• Knowledge of CustomersFrequent-Flyer Program: A Advantage.

• Providing a Foundation for Other SystemsYield-Management System.

• Building a Base for Other BusinessesDesigned systems for others.

Market Segmentation

• Demographic Segmentation:These airlines is targeting the income and occupation oriented

people. The classification of both categories is as follow;• Income Segmentation From income segmentation, those who falls under the category

of upper class and upper middle class.• Occupation Segmentation From occupation Segmentation that Airlines is taking in to

account, there are two main subheads of working class and business class. The working class includes all those who are working as an employee inside and outside the country. In business class all those people are included who are having business.

Continue…

• Tourists • Religious Travel• Social class• Loyalty Status• Geographic Segmentation:All the audience from the domestic and international regions

are included. In domestic people within the country are included and people residing outside.

• Behavioral Segmentation:In behavioral segmentation both airlines are working well and

their according to different religion or occasion like EID, Christmas, Diwali, Easter and etc…

Porter Competitive Model

Intra-Industry RivalrySBU: PIA and BritishRivals: Air Blue, Virgin and alldomestic

BargainingPower of Buyers

Bargaining Power

of Suppliers

Substitute Products

and Services

PotentialNew Entrants

Airline Industry Analysis - North American Market

•Travel Agents •Business Travelers•Federal Government•Pleasure Travelers•Charter Service•Military•Cargo and Mail

•Alternate Travel Services•Fast Trains•Boats

•Private Transportation•Videoconferencing•Groupware

•Aircraft Manufacturers•Aircraft Leasing Companies•Labor Unions•Food Service Companies•Fuel Companies•Airports•Local Transportation Service •FAA•Hotels

•Foreign Carriers•Regional Carrier Start ups•Cargo Carrier Business Strategy Change

Figure 4-2

Europe Middle East Pacific Rim

MARKETS

Short Haul Long Haul

ROUTES AND ROUTE STRUCTURE

Hub and Spoke Point to Point

FARE STRATEGY

Low Fare Premium Fare

Independent Alliances

COMPANY STRUCTURE

INFORMATION SYSTEMS FOCUS

Figure 4-1

Latin American

Business Strategy Model - Airline Industry

Passengers Operations Logistics Business

PRODUCT/SERVICESScheduled Passengers

Charter Services Cargo

Mail Air Express

Modified compared to the example in the textbook.

Benefits of Information Systems to American Airlines• Convenience to Customers

• Reservation System, Request hotels, car.• Knowledge of Customers

• Frequent-Flyer Program: AAdvantage.• Providing a Foundation for Other Systems

• Yield-Management System.• Building a Base for Other Businesses

• American designed systems for others.

Airline Industry Value Chain

INBOUNDLOGISTICS

OPERATIONS OUTBOUNDLOGISTICS

MARKETING AND SALES

SERVICE

PROCUREMENT

TECHNOLOGY DEVELOPMENT

HUMAN RESOURCE

MANAGEMENT

FIRM INFRASTRUCTURE

Adapted with the permission of Michael E. Porter from Competitive Advantage: Creating and Sustaining Superior Performance, copyright 1985 by Michael E. Porter.

-Financial Policy - Accounting -Regulatory Compliance - Legal - Community Affairs

Pilot TrainingSafety Training

Agent Training

In-flight Training

Baggage Tracking System

•Promotion•Advertising•Advantage Program•Travel Agent Programs•Group Sales

•Ticket Counter Operations•Gate Operations•Aircraft Operations•On-board Service•Baggage Handling•Ticket Offices

•Route Selection•Passenger Service System•Yield Management System (Pricing)•Fuel •Flight Scheduling•Crew Scheduling•Facilities Planning•Aircraft Acquisition

Information TechnologyCommunications

Product DevelopmentMarket Research

•Lost Baggage Service•Complaint Follow-up

•Baggage System•Flight Connections•Rental Car and Hotel Reservation System

Computer Reservation System, In-flight SystemFlight Scheduling System, Yield Management System

Baggage HandlingTraining

Flight, route andyield analysttraining

Figure 4-3

Value Chain in Airline Sector

• Primary activitiesActivities which are directly involved in delivering service of Airlines

areas follows

• LogisticsAirline has a huge system of cargo system which delivers luggage to

different destinations.

• OperationsOperations can be one of the important parts of value chain where the

smooth running of the business is very important. Starting from the men on the runway to the people In control room, everything has to be properly controlled and organized. Head of operations plays very important role in this part of value chain.

Continue…• Customer ServiceThis is the most important part in the whole value chain.

Customer service is the only factors which matters in service industry. The better the customer service, more will be the passenger flying . it also boosts up the motivation among employees.

• Secondary ActivitiesThe activity that even though are not involved directly in the

operations, could increase the effectiveness or the efficiency of service delivered are as follows

• Human Resource ManagementHuman resource management is where all employees data are

kept. The hiring and firing , employee motivation, performance appraisals and other related issues are dealt .

Continue…

• Marketing and salesSales and marketing is a key factor in brining the success of

Airlines.

• TechnologyAs preceding discussed is one of these Pakistani businesses that

do not execute strict and converged R&D departments therefore technology is less than the worries for these Airlines.

The 7C’s Framework

Context

Content

Community

Customization

Communication

Connection

Commerce

0% 20% 40% 60%

Source: PhoCusWright, Inc., Sherman, CT USA, 2001

Price

Reliability

Service

Ease of Use

Which is the Most Important?

The Online Traveler

Source: PhoCusWright, Inc., Sherman, CT USA, 2001

Who has the Best Price?

0%

10%

20%

30%

40%

50%

60%

Trad. Agencies OnlineAgencies

TravelSuppliers

Buyers

Non-buyers

The Online Traveler

Best Airlines for Business Travelers

1. Etihad Airways2. Swiss Air3. Cathay Pacific4. Midwest Express **5. Singapore Airlines6. Quantas7. Virgin Atlantic8. Lufthansa9. Emirates Airlines10. Japan Airlines

11. Finnair 12. British Airways 13. Alaska 14. Air France 15. Varig 16. Aer Lingus 17. Kiwi 18. Air Canada 19. American ** 20. Delta**

Airline Industry Conclusions • It is a vivid example of the dynamics of the

markets that it serves.• Establishing strategies dictated by the market is

critical.• Once the right strategies have been identified,

information systems can play an important supporting role.

Thank You!