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Developing a Survival Strategy By: Eng. Mohammed Salem Awad Senior Consultant Felix Airways in Competitive Environment

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<ul><li>Introduction </li></ul><ul><li>Major Trends . </li></ul><ul><li>Rask Vs Cask Analysis. </li></ul><ul><li>SWOT analysis </li></ul><ul><li>Benchmark analysis </li></ul><ul><li>Strategies </li></ul><ul><li>Improve Revenue </li></ul><ul><li>Cost Reduction ( Optimization ) </li></ul><ul><li>Summary </li></ul>Outline

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Introduction What !!! Makes airlines gain profits while the others fall in losses !!! How LCC create profits in a recession time …. Is Airline Industry a profitable Industry !!! What are various strategies in such cases… And how to survive in this miss !!!!!!!

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Trends <ul><li>IATA Passenger / Freight load factors </li></ul>

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Trends <ul><li>Airline Industry. </li></ul><ul><li>Analysis of RASM and CASM (World Wide - USA) </li></ul>

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CASK <ul><li>CASK (AEA related to worldwide Value ) </li></ul>

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Aircraft CASK Analysis

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Airline Industry Situation <ul><li>Competitive Environment </li></ul>Low Yield High Cost

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Problem <ul><li>The Problem : </li></ul><ul><li>- Low Market Yield </li></ul><ul><li>- High Operational Cost </li></ul><ul><li>In a competitive operating environments </li></ul><ul><li>This can be define by : </li></ul><ul><ul><li>SWOT analysis </li></ul></ul><ul><ul><li>Benchmarking </li></ul></ul>

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SWOT Analysis

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Bench Marking Adjusting Cost IY vs ET Bench Marking Study

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Airline Business Model <ul><li>Full service (point to point) </li></ul><ul><li>Full service (hub) </li></ul><ul><li>Low costs carriers (LCC) </li></ul><ul><li>Regional airlines </li></ul><ul><li>Charter </li></ul>

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Strategies <ul><li>FFA - Strategy </li></ul><ul><ul><li>This address the price i.e how to derive a max benefits from different levels of prices, this may express by RBD. </li></ul></ul><ul><li>LCC – Strategy </li></ul><ul><ul><li>lower fare is derive function to create Market Potential, consequently LCC shows a rapid growth. </li></ul></ul>

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Strategies Concept of Multi Scales Decision Matrix <ul><li>The general concept of the decision Matrix is based on two main critical factors that create a major effect on airline performance. </li></ul><ul><li>Based on the situation, airline will develop the right decision matrix . </li></ul>

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Strategies Concept of Multi Scales Decision Fleet Strategy Market Strategy

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Strategies Concept of Multi Scales Decision Network Strategy Competitive Strategy BCG Matrix Expand Opportunistic Maintain Yield

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Strategies Concept of Multi Scales Decision Competitive Strategy BCG Matrix

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Airline Strategy <ul><li>The Strategy of an airline will address two main factors </li></ul>By Cost Reduction Improving Revenue RASK CASK Increasing Decreasing

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Airline Strategy <ul><li>The Strategy in more details will be </li></ul>Cost Reduction Improving Revenue Hub Strategy Expand Regionally Ancillary Revenue Bench Marking Optimization Economy of Scale

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Improving Revenue Improving Revenue by: 1- Expand Regionally, and addressing the high yield destinations. 2- Developing More Hubs, and use the concept of connectivity 3- Generate Ancillary Revenue, when ever it is possible. Improving Revenue Hub Strategy Expand Regionally Ancillary Revenue

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Cost Reduction Cost Reduction by: 1- Economy of Scale: Based on a large scale of the company, the ratio of fixed cost to variable cost will be small. 2- Bench Marking: Tool to define the problems and weakness especially in the cost structure. 3- Optimization: Perfect utilization of company resources either maximize the profit or minimise the cost. Cost Reduction Bench Marking Optimization Economy of Scale

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Improving Revenue 1- Multi Stops Operating Model Concept of Connectivity: Selecting the Right Aircraft

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Improving Revenue Multi Stops Operating Model Concept of Connectivity: Selecting the Right Routes

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Cost Reduction Point To Point Operating Model Optimizations – Minimizing Cost Concept of U Curve – get the Right Aircraft Capacity

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Cost Reduction Point To Point Operating Model Optimizations – Minimizing Cost Airline Operating Curve

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Summary Summary: The main issue is how to Improve Revenue i.e to increase RASK, In the other direction, how to minimize the cost, i.e to decrease CASK, and that can be define by a Bench Mark study (Cost Factors ) with a similar airlines in the region. A SWOT analysis is an important to define the strength and weakness of the company, the term connectivity for multi stops operating model is the key factor that utilise and maximise the profit. While Optimization techniques as U curve approach is the main issue to minimise cost. By doing this airlines can gain a competitive edge in aviation environment.

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Contact Further Information: Mohammed Salem Awad : Tel: 00967 734777518 Email: smartdecision2002@yahoo.com www.freewebs.com/wingsofwisdom/ www.freewebs.com/art-of-knowledge/ www.standout-from-the-crowds.webs.com