Sri Lank an Airline Industry
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Transcript of Sri Lank an Airline Industry
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Analysing Challenges and Critical Success Factors
Presented bySaatviga S.
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Vision & Mission
Introduction
Ten Year Review
Key Performance Indicators
The Business Turnaround Plan
Challenges Faced
Worlds Successful Airlines and Strategies
Factors Influencing Success
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Vision
To be the most preferred airline in Asia
Mission We 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 meetShareholder 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.
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Srilankan Airlines began operations in 1979 as the National Carrier
of Sri Lanka
Serves 45 destinations in 25 countries in Europe, the MiddleEast, South Asia, Southeast Asia, and the Far East.
Codeshare partnerships with bmi (formerly British Midland), Etihad
Airways and Malaysian Airlines
Shareholders
Government of Sri Lanka - 51.05%
Emirates Airline - 43.63%
Employees - 5.32%
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Subsidiary - SriLankan Catering (Pvt) Ltd. is a fully owned
subsidiary of SriLankan Airlines.
Workforce - More than 5000 employees in Sri Lanka and overseas In-flight comforts Business and Economy Class Seats
FlySmiles Flyer Program
Srilankan Cargo
Srilankan Engineering Technical Arm
Ground Services
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0
10,00020,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Operating Expenditure Net Profit/Loss Revenue
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Challenges faced
Arising global fuel costs
Struggle of the national tourism industry to survive in a
wartime scenario
High interest rates
Major transition in management
Increased competition from subsidised airlines
Dropped prices fighting for market share
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0
1000
2000
3000
4000
5000
6000
7000
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Estimated Loss ss in Milli ns
Business
Turnaround Plan
& Restructuring
Global
Economic
Crisis
Huge
Challenges
Faced
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Fuel Surcharges by Competitors
Global Economy
Passenger 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 Tonne
Kilometre)
Average Staff Strength (significant decrease)
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Key Aspects of the Plan - Earn more, spend less and waste not.
Restructuring of passenger and cargo revenue generation
Restructuring of route network
Savings through increased fuel efficiency
Reducing companys fixed costs
Renegotiating of contracts with service providers
Optimising of sales channels
Reduced IT and Communication costs
Increase Productivity by focusing on People, Process and
Technology
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Optimising Revenue
Improving Service Delivery
Enhancing Srilankan Engineering
Increasing Fuel efficiency
Increasing Productivity
Technology Requirements
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New services to Rome utilizing the market opportunities in Italy
Temporary Suspension of Loss-Making Sectors
Hyderabad, Calicut, Cochin, Coimbatore andGoa
Increasing operations to key destinations
Increased frequencies to iddle East and South East Asian destinations
Direct services to increase convenience of passengers and reduce flying time
(Karachi)
Expansion of route networks through increased Code share Partnerships
Increasing bookings through its Internet Booking Engine
Customer Loyalty Programme FlySmiles
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Srilankan Holidays teamed up with Singapore , Thailand and Malaysia
Business Class range and Platinum Range of holiday packages launched for the
higher income market segment partnering with the top hotels
Event-based packages
Introduction of new products eg. HOTSEATS
To promote advance bookings on the Airlines website
SkyChain Cargo Handling System for customer convenience andoperational efficiency
Increasing Cargo revenues that contributes to the 13% of the Airline revenue
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Emphasis on Inflight Service
Training of cabin crew and increasing the no of instructors from 4 to 20
Ensuring continuous on-site monitoring and evaluation of crew members
Improvement in Meal Services
Significant changes to inflight menus to suit a variety of customers
Reducing wastage and overall meal costs
Renegotiation of contracts with overseas caterers resulting in significant savings
Enhancement to inflight entertainment
Duty free sales on new range of 180 products including worlds
leading brands and Srilankan items
Heart-start machines for medical emergencies
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Recruitment of new Chinese passenger assistants for Beijing service
SMS alerts on flight service
Uplifting the service standards of ground handling services for other
airlines
Training of new airport staff and sky marshals
Innovation and cost control
In-house production of specialised vehicles and equipment especially with regard toairport airside activities
odification to air-sickness bags to enable rapid identification of unused bags
Closing of airport offices overseas
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Marketing programmes to increase awareness of SriLankan
Engineerings capabilities as an MRO, in order to attract new
customers and enhance revenue
Major Contract with Indian Carrier IndiGoue to carry out maintenance
checks
Training more aircraft engineers for Airblue, and to carry out
maintenance checks for the Pakistani carrier
Continued emphasis on key areas like fuel efficiency and punctuality
Structural modifications to the fleet in-house resulting in cost-savings
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Use 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 aircraft
Reduce fuel burn while landing
Flying shorter routes whenever possible.
Re-evaluation of the choice of alternate airports
Stopping of over-fuelling of aircraft, to reduce weight
Focusing on having clean aircraft to reduce drag while in flight
Tankering more fuel than required from cheaper points
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Continuing to review company structure for greater effectiveness and
productivity
Customising development intervention programmes to the
requirements of user departments and business demands
No-Pay Schemes, to reduce staff costs
Continuous improvement of welfare facilities
Engaging employee unions in the decision-making process
Enhancement of recruitment processes for the future
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Consolidation of Data centers in Colombo and Katunayake
Maximizing the utilisation of existing systems to user
departments
Creating a common customer database to integrate different sub
business units which interacts with customer profiles
Revamping the Corporate website
Increase penetration levels for internet bookings
Rich features for customers and content management tools for internal users
Introduction of a CRM system
In-house developments of new systems for cost saving
Minimise IT risks through IT security audits
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Singapore Airlines
Cathay-Pacific Airways
Qatar Airways
Thai Airways
Asiana Airlines
Malaysian Airlines
Emirates Airways
Etihad Airways
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Fully branded product/service differentiation strategy
First 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 carriers
Low maintenance or replacement costs
New aircrafts are sub-branded further to distinguish from others
Invests heavily in R&D, innovation and technology as an integrated
part of the business strategy
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The famous Singapore Girl
Rigorous training programs for the cabin
and flight crew
Strong Financial and cash position to
internally fund purchases and limit interest costs
Continuous price-premium strategy and satisfactory passenger load factors
SIA carefully hedge up to 50 % of its fuel contracts 2 years in
advance to avoid cyclical and often large volatility in fuel prices
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Operates wide-body aircraft and flies mostly long haul
lowers its per-seat-mile costs so it can be competitive on pricing
Newer fleets resulting in low maintenance and replacement costs
Attracts higher paying customers
latest in-flight amenities and entertainment systems
Distinctively 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 section
Latest technologies used to enable faster and more efficient handling
of functions such as ticketing, baggage and cargo handling
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Sporting event sponsorships for promoting brand awareness
major 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 support
Huge investments on promotion campaigns
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User-friendly website to book and confirm flight reservations
Development of catering service
In 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 industry
Increased cooperation at the domestic andregional levels as well as with other global alliances
to strengthen the airlines competitive edge and
expand market share
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Implementation of the Customer Relationship Management
system
Automated Self Service System for domestic travel only to
facilitate passengers demand in areas of reservations and check-in
Frequent Flyer Programs
Promotions through media, co-marketing efforts with hotel chains
and credit card companies and travel agents
Maintaining high safety standards - Compliance with ISO 9000
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People
Service Product/Promotions
Route System
Fleet Management
Revenue/Cost Control
Financial Management
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Srilankan Airlines Annual Report 2008/2009
http://www.srilankan.aero/aboutus/SriLankan_Airlines_Annual_Report_2008_20
09.pdf
http://www.brandchannel.com/features_profile.asp?pr_id=209
http://goliath.ecnext.com/coms2/gi_0199-6720187/CASE-STUDY-E IRATES-
Long-haul.html
http://www.hicbusiness.org/biz2003proceedings/Niti%20Dubey-Villinger.pdf
file:///C:/Users/Sudhahar/Desktop/Airlanka/facts_5242839_airline-industry-key-
success-factors.html
http://gbr.pepperdine.edu/064/airlines.html
http://www.ehow.com/facts_5242839_airline-industry-key-success-factors.html
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