Analysis of Qatar Airways Company - Research Paper Example

Qatar Airways Introduction The Middle East Airlines industry have gone tremendous changes in the recent past in terms of fleet size, destinations covered, innovation and technology and many others. There are changes in the business environment such as economic, social, technological and overall regulatory environment for the airlines sector. Globalization, privatization and liberalization of airlines sector have changed the overall picture of the airlines business. Tremendous growth across various industries in last two decades including tourism has affected the traveling pattern of people across the Middle East and world. Along with that companies differentiated their services based on the consumer demographics and marketing mix. This also helped in changing the overall perspectives for the airlines industry in Qatar. Figure: IATA Airlines growth by regions Source: Center for Asia Pacific Aviation (2010) According to the IATA (2010) report, the growth of Middle East airlines industry was more than 10% by the end of June 2009 which was one of the fastest growth rates in the global airlines industry. Some of the reasons of the better performance of the Middle East airlines are their customer focused approach, competitive services that is helping them increasing the customer base. The reduction of prices of premium and luxury services has helped in increase demand of this segment. Some companies have established their names for the high standard services among their customers and competitors. Emirates and Qatar airlines are leading in this area to provide high benchmarking standards for the other competitors. Qatar Airways Company Background Qatar Airways was established in the year 1993 and started its operations in 1994. The first flight of this airline was 737-200. By the year 2003, the company had 35 aircraft that covered 52 destinations. In the year 2005 the number of aircrafts increased to 52 and by 2010 it is 71 aircrafts. The destinations covered increased to 60 in the year 2005 and 84 in the present scenario. The numbers of people using the Qatar Airways services are more than 120, 000, 000. The company has home offices across the 90 countries in the world including Al-Maha Tower in Qatar (See Appendix Route Map). The CEO of the company is Mr. Akbar Albaker and Executive Vice Presidents are MR. Bart Vos (Commercial), MR. Abdulla Ali Johar (Operations) and MR. Joshua Koshy (Finance and IT). The organisation has a strong team of 664 pilots. These include 67 Qataris pilots and 80 pilots under training. The current fleet size of 71 aircraft includes 8 B-777-300ERs, 2 B-777-200LRs and others such as A300, A320, A340, A321. Qatar Airways has ongoing orders for 200 more aircrafts and has expansion plan of 110 aircrafts by the year 2013. On Order Fleet are 5 A380, 26 B-777, 60 B-787 and 80 A-350. It is expected that five of the twin-deck Airbus A380 ‘super jumbos’ will be delivered by 2012. Services The services offered by the Qatar airways are range of travel services that includes quality lifestyle packages for their customers, special holiday packages, packages for entertainment and others. The services include the extended services that cover diversified cities and resort services for the passengers, clubbed services for the auspicious months like Ramadan and others. Passengers can check in online even before 36 hours to 90 minutes prior the flight departure time. There are range of special services provided by Qatar airways like medical services, special services for the passengers with infants and small children, unaccompanied minors and children, escort services and dedicated company for the child passengers between ages of 3 to 5 years in their journey. The services for dogs and other pets are provided under the Air Carrier Access Act. The baggage facility of the Qatar airways allows economy class passengers to check in with 20 kg of weight whereas business class and first class travellers can check in with 30 kg and 40 kg respectively. The corporate travel facility is provided for the frequent business flyers. The mobile services of Qatar airways include mobile check in facility, information regarding flight arrival and departure, Global contact information, special offers and others. This information has language compatibility to English and Arabic. The baggage tracer service allows locating of lost luggage. There have been various studies conducted in the past in order to understand the changing trends of airlines sector. It is evident from the increasing base of customers and growing coverage of global destinations by Qatar airways and increase of services and facilities for different groups of customers that the approach of Qatar Airways is customer centric. Ahuja and Khamba (2008) studied various aspects of the changes across different industries and argued that “management approaches, products and processes technologies, customer expectations, supplier attitudes and competitive behaviour” are the important aspects of changing trends across various industries. Tsang (2002) have focused on the level of quality of the service organisations and concluded that the companies are dealing with competition and meeting the long term objectives through the high quality services, understanding needs and demands of the customers, identifying the factors affecting competitive environment and providing best services to the customers in their domestic market. Companies want larger share of the market and business and sustain their growth in long term. This desire or ambition of the companies leads to intensifying the overall competitive environment (Mirghani, 1996). This is probably one of the reasons for the sustainable growth of Qatar Airways. There are various factors that help companies to stay competitive and sustain their growth such as innovation, continuous improvement and customer-focused approach (Mirghani, 1996). Qatar Airways is focusing on each of these factors. Operations and Maintenance Qatar Airways has code sharing partnership with All Nippon Airways (Japan), Asiana Airlines, BMI (UK), Lufthansa German Airlines, Malaysia Airlines, MEA, Phillippine Airlines, SNCF (French National Railways), United Airlines and US Airways. Code sharing with these airlines allowed sharing the multiple airlines selling space in the flights. According to Wu, Liu, Ding and Liu (2004) there are two types of maintenance activities in any airlines corrective maintenance and preventive maintenance. Corrective maintenance allows maintenance when failure takes place whereas the maintenance activities are preventive activities which are done in advance through ““fault verification, fault isolation, disassembly, replacement, reassembly, alignment/ adjustment, and test.” This includes all the actions that take place periodically in order to maintain the serviceable condition of the parts or aircraft. This includes all the prescribed points of the aircraft and its equipments life. This is done in specific period and is classified as A checks, B checks and C or D checks as per their duration and tie interval. A-checks are performed before and after every flight. This is a routine check that confirms that flights are in a safe condition for operation at the same time C or D checks or heavy maintenance activities are performed in longer duration like within one to five years of the operations depending upon the flying hours of the aircraft. It is an overall overhauling of the aircraft that brings it back to the zero flying hour state. There are various factors involved in the aircraft maintenance. Qatar Airways have maintenance team that works on the A and B level checks in the airport itself. Heavy maintenance is the most expensive operations as the aircraft may take three months to six months for this. This has direct cost implications in terms of labour, material and replacement of parts as well as indirect cost implications as the aircraft is out of commercial activity of flying for long duration (Wu, Liu, Ding and Liu, 2004). According to Wu, Liu, Ding and Liu (2004) “Commercial aircraft maintenance activities form an essential part of airworthiness. Aircraft maintenance is actions that can restore an item to a serviceable condition, and consist of servicing, repair, modification, overhaul, inspection and determination of condition.” Qatar Airways was utilising the services from different maintenance service providers. There are many airlines companies which has heavy maintenance base where outsourcing of heavy maintenance services are possible. Qatar utilises service from Lufthansa Airlines maintenance services for A330/A340 airlines. Qatar Airways would utilise a world class facility for aircraft heavy maintenance facilities of maintenance operations, repairing, docking and overhauling centre with Ghafari. Competition and Sustainable Growth According to Ahuja and Khamba (2008) the popularity of the term ‘Global Market Place’ is due to the reason the competition have increased and customer reach and exposure to various kinds of services have increased their expectations and demands for the quality of services they are receiving. One more phenomenon that contributed to the growth of airlines companies is increase of number of people travelling from one destination to other. It is evident from the previous sections that the number of people using airlines services for Middle East destinations has increased. This has increased the opportunities of growth for all the airlines companies operating in this region. Qatar airways, though one of the youngest airways of the Middle East region has gained the reputation of quality service provider. Sustainable growth in the airlines industry can not be guaranteed by the pricing strategies alone in the present competitive environment (Gerardi & Shapiro, 2007). This is the reason Qatar Airways is focusing on other factors of the service experience rather than just using pricing as a tool for competition. The highly competitive business environment have forced companies to provide best quality within a given price range. Customers are getting benefited with the competitive environment as they are receiving better services. This is also changing consumer behaviour as the level of consumer expectations and demands have raised and increasing continuously. Qatar airways is not only focusing more on competitors’ strategies for marketing, service mix and changing preferences of their prospective and regular clients but also is aiming at establishing itself as an innovative global airlines company by involving in research and development activities for the use of alternate and eco-friendly fuels as jet fuel in commercial aircrafts. This is clear that airlines companies can sustain in the global business environment are through customer focused and innovative approach (Gerardi & Shapiro 2007). These are the best tool to deal with immensely high competition of the Middle East region. Innovation Skinnner (1991) suggested two decades back that innovation would be the most significant aspect for airline industry and this innovation is not restricted to the technology or state of art but also in the marketing mix, consumer behaviour and operations. Airlines operations are costly affairs. Yilmaz (2008) have explained various factors that makes airlines operations complex such as their financial obligations in terms of consistent financial returns, sustainability of growth for business and profits, open communication with the stakeholders, transparency in accounting system, handing human resource and dealing with continuously changing technical environment. According to Yilmaz (2008), “Fuel price risk, interest rate increase risk, capital structure risk, exchange rate fluctuations and cash flow risks” are the major risk factors affecting the overall revenues of the airlines companies. The Qatar Airways has also planned for the alternative fuel options. It is leading innovators which conducted study for the potential commercial use of the jet fuel that is derived from the natural gas. This is expected to reduce the impact of aviation on local and global pollution. There are various companies with which Qatar airways has partnered with the objective of finding clean alternative fuels such as Qatar Petroleum, hell, Airbus, Rolls Royce, Qatar Science & Technology Park and Woqod. Qatar Airways is also working for the use of Jet fuel containing Gas to liquid Kerosene. It has an aim of being first airlines across the globe to use this in commercial flights. However, researches are still going on in this area for its safe and practical use. Qatar Airlines almost all the aspects are equally important, however the human resource management is regarded as one of the most significant aspects of the airlines business (Yilmaz, 2008) regarded human resource management as significant to the corporate sustainability. For any airlines company recruitment and retaining of the skilled workforce is very important. Human resource management is highly significant aspect of corporate sustainability. This is the reason airlines companies provide various benefits and growth opportunities and ensure that they retain capable workforce and their employees are satisfied. All the leading airlines provide employees training and development opportunities. The positive work environment, fair pay and benefits, fair chances for the opportunities help organisation to retain their employees. Human Resource Management There are five significant aspects of human resource strategy of airlines companies such communication, teamwork and quality, empowerment, culture and customer centric approach. These aspects are interlinked with each other. Airlines with high performance have supportive top management and clarity of communication (Appelbaum and Fewster, 2004). Appelbaum and Fewster, (2004) state “leading airlines emphasise on two-way communications and employee input into operational matters” They further elaborate that the problem areas identified in any low performing airlines is with the “communication, information, training and development of employee input, responses in the organisation development section” (Appelbaum and Fewster, 2004). Qatar Airways provides equal opportunities for the prospective employees and employees for development and growth. Majority of the employees working in Qatar Airways are from different nationality and diversified social, cultural and geographical backgrounds. Therefore it is very challenging to have a consistency in work culture in such a diversified workforce. “Qatar Airways continues to grow at a rapid rate and is therefore looking for stars to join our world-class workforce of more than 15,000 employees with more than 100 different nationalities. Each of them strives to uphold our mission statement: “Excellence in everything we do.” (Qatar Airways) Yilmaz (2008) arguments support Appelbaum and Fewster as h suggested that competitive advantage can be achieved through the proper management of the skills and capabilities of the employees in the organisation, ensuring employee satisfaction and provide them proper culture, learning and growth opportunities (Yilmaz, 2008). Conclusion Qatar Airways have adopted innovative low-fare, provided consistent quality and developed the services according to the needs of consumers and special customer segments like children, disable, elderly people and others. Pricing has helped companies to gain more business volume whereas quality has helped in retaining the same volume. Pricing also have impacted the long term growth and sustainability of the airlines organisations. The global service providers are offering low cost services to their customers at the same time the cost of operations are increasing that is creating challenging situation in order to maintain their profit margins. Reference: Ahuja, I.P.S. and Khamba, J.S., “Total productive maintenance: literature review and directions”, International Journal of Quality & Reliability Management, Vol. 25 No. 7, 2008 pp. 709-756. Appelbaum, S H and Fewster B M (2004) Human Resource Management Strategy in the Global Airline Industr y, Business Brieding: Aviation Strategies: Challenges and Opportunities of Liberalisation available at http://www.touchbriefings.com/pdf/12/avia031_p_apple.pdf Celebrating 100 A330/A340 heavy maintenance checks available at http://www.ltp.com.ph/UserFiles/file/Technilink/TL_cust_4Q09%20(2).pdf Gerardi, K., & Shapiro, A. H. 2007. Does Competition Reduce Price Discrimination? New Evidence from the Airline Industry. Research Review, 8 (8): 8-11. Mirghani, M.A., “Aircraft maintenance budgetary and costing systems at the Saudi Arabian Airlines”, Journal of Quality in Maintenance Engineering, Vol. 2 No. 4, 1996,pp. 32-47. Mixed picture for traffic in Sep-2010: stronger air travel, weaker freight volumes, available at http://www.centreforaviation.com/news/2010/10/28/mixed-picture-for-traffic-in-sep-2010---stronger-air-travel-weaker-airfreight-volumes-iata/page1 accessed on 11 November 2010 Skinnner, S. K. 1991. Revolution in the Airline Industry. Vital Speeches of the Day, 57 (12): 363. Tsang, A.H.C, “Strategic dimensions of maintenance management”, Journal of Quality in Maintenance Engineering, Vol. 8 No. 1, 2002, pp. 7-39. Haiqiao Wu, Yi Liu, Yunliang Ding, Jia Liu, (2004) "Methods to reduce direct maintenance costs for commercial aircraft", Aircraft Engineering and Aerospace Technology, Vol. 76 Iss: 1, pp.15 - 18 Yilmaz, A K (2008) The Corporate Sustainability Model for Airline Business, European Journal of Scientific Research, ISSN 1450-216X Vol.22 No.3 (2008), pp.304-317 available at http://www.eurojournals.com/ejsr_22_3_01.pdf Qatar Airways available at http://www.smilinjack.com/airlines.html http://qatarairways.com/global/en/online-checkin.html http://qatarairways.com/global/en/special-services.html http://qatarairways.com/global/en/mobile-website.html http://qatarairways.com/global/en/our-fleet.html http://www.qatarairways.com/global/en/routemap.html Figure IATA Airlines growth by regions available at http://www.centreforaviation.com/news/2010/10/28/mixed-picture-for-traffic-in-sep-2010---stronger-air-travel-weaker-airfreight-volumes-iata/page1 Appendix Route Map Read More