His major aims were to increase the profitability and the yield by 2010. In order to satisfy this condition, James came up with a second bag charge to be imposed on the customers. The case also gives out certain aspects of the future plan of the airline. The airline has placed an order for 205 aircrafts for $43 billion. This will increase the fleet size to 100 in 5 years. This move will generate more revenue as the capacity of the airline will increase. The case says that Etihad Airlines gives much importance to customer value. They have a loyalty program for their customers which is called Etihad Guest. It includes features like, immediate rewards, no black-out periods, anytime availability, widest choice, miles plus cash, miles that are worth more and family membership. They had high end redemption awards. The case further says that the Indian market shows much stronger signs of improvement. Given, the current scenario, a passenger seat load factor of 76-77 percent is being expected.
The Etihad Airlines is under a major issue of profitability and yield. James was hired to take the airline to profits by the year 2010. However, the chances seem to be slim. The International Air Transport Association has showed concern and has estimated that the global aviation industry will show a global net loss of $5.6 billion in the year 2010.
To face the problem, James has ann...
However, the chances seem to be slim. The International Air Transport Association has showed concern and has estimated that the global aviation industry will show a global net loss of $5.6 billion in the year 2010.
To face the problem, James has announced the charging of second baggage to customers to increase revenue. However, the major question which it posses it is, whether such a move is profitable I the short run as well as the long run. And also what are the other options to achieve the target as well while maintaining the customer value or adding it.
Profitability is the term used to describe the ability of a company to earn profit (profitability definition).
Passenger seat load factor is the measure of the airlines passenger carrying capacity being used.
Second Baggage is the fees charged by an airline for carrying excessive baggage.
Value proposition states that the functional and emotional benefits attached with a product or service is communicated in such a way that it appears higher than the cost of the product or service to the customer (Philip Kotler, 2009). A tool to identify ways to create more customer value is the value chain (Philip Kotler, 2009). The value chain shows the primary activities and the supporting activities of the business which together create value for the customer.
Source: (Philip Kotler, 2009)
Etihad Airways Strategy (Hogan, 2008)
Etihad Airways does a lot of innovation to keep up the standards realistic to the market place. It has a clear policy of providing the customer with the best that there is. They have been using the below mentioned techniques:
To reduce the costs they have been reducing space within the aircraft by maximizing the number of seats to the extent possible.
They have been trying