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Marketing Management Avid airways

1. Executive Summary

Aero Asia private airline which closed its operations in past due to unfavorable

environment is re-launching itself under the name Avid airways. The decision of re-

launching Aero Asia has been taken to obtain advantage of a specific gap in the short-

haul domestic travel market initially and latter internationally. The gap exists in low cost

service out of any town, Pakistan. The gap in the availability of low cost service in and

out of the any town hub coupled with the demand for passenger travel on selected

routes from any town indicates that any other airline except for the existing airline can

capture a significant portion of current air travel business at that hub.

The management of Avid airways is experienced in airline start-ups. Previously

management grew Private airline Aero Asia from a single BAC 1-11 aircraft to a fleet of

Boeing 707 series aircraft.

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Institute of Business Management


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1.1 Report Objective

The main reason of this report is to create an impact of a Pakistani airline all over theworld, which will fulfill the entire customer requirements. We have decided to re-launchAero Asia airline with new name, slogan & objectives.

New name:

AVID AIRWAYS

Logo:

AVID AIRWAYS

Slogan:

Things go better with Avidd airways

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1.2 Mission

Avid airways private airline has a mission to provide safe, efficient, nominal-cost

consumer air travel service. Our service will emphasize safety and quality service as its

highest priority. We will operate the newest and best routes and services available. We

will never skimp on maintenance in any fashion whatsoever. We will strive to operate

our flights on time. We will provide friendly and courteous "no frill" service.

1.3 Keys to Success

The keys to success are:

Obtaining the required governmental approvals.

Securing financing.

Experienced management. (Already in place).

Marketing; either dealing with channel problems and barriers to entry; or solving

problems with major advertising and promotion budgets. Targeted market share

must be achieved even amidst expected competition.

Product quality. Always with safety and services foremost.

Services delivered on time, costs controlled, marketing budgets managed. There

is a temptation to fix on growth at the expense of profits. Also, rapid growth will be

curtailed in order to keep maintenance standards both strict and measurable.

Cost will be controlled by employing the lower class people for making napkins,

glasses and other stuff required in plane; by doing so we believe we will help poor

class of our economy and will cut our cost by being innovative.

1.4 Vision & Strategy

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1.5 Introduction to Aero Asia Airlines

Aero Asia International was a privateairline based in Karachi, Pakistan. It operated

domestic and international services. Its main base is Jinnah International Airport,

Karachihttp://en.wikipedia.org/wiki/Aero_Asia_International - cite_note-FI-0. Since May

2007 the airline has suspended from flying due to issues related to the safety of

operations and passenger convenience. Since then the owners and executives have

been sourcing expertise, systems and aircraft to facilitate a lifting of the suspension in

early 2009 in accordance with the 2007 Draft National Avidation Policy issued by the

Pakistan Civil Avidation Authority.

Quick Facts

850 domestic and international per month

Aero Asia is Pakistan largest private airline

Serves 11 regional destinations

Aero Asia History

The airline was established in 1993 and started operations on 4 May 1993 The airline

made a promising start, employing senior ex-PIA management with a serious growth

plan. The airline contracted two Romanian Airlines aircraft for wet-lease & lease-

purchase of BAC 1-11 aircraft. Operations were started with wet-leased BAC 1-11

aircraft from the VIP fleet of Romania operated by Romania Airlines, a sister company

of the Romanian Air force. This fleet was primarily used by Romanian government

dignitaries during Ceausescus times. However, the post Ceausescu governments

decided to earn a little money by leasing this fleet to other commercial operators. Later,

Aero Asia obtained four BAC 1-11 aircraft on lease purchase option from Tarom, the

national airline of Romania. The airline, in its initial years, made serious commitments to

training its locally-hired staff, following the example of PIA and in line with requirements

of the local civil Avidation authority. A small training school was also founded, for

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training of cabin crew. Former Pakistan Air force pilots were recruited, who began flying

as co-pilots with the Romanian Pilots. In 1994 Aero Asia took the usual step for a

private airline in Pakistan by recruitment of batch of trainees for aircraft maintenance,

announcing that a fully-functional aircraft maintenance facility was planned. Senior

retired staffs from the PIA training center were employed and approval of the training

school from the local civil Avidation authority was sought. Aero Asia started its

international operation on a route to Bishkek, in Central Asia. For this purpose another

aircraft from the VIP fleet of Romania, a Boeing 707 aircraft was leased. The move to

shift international operations to central Asian ex-USSR states was supposed to help the

other businesses of Tabani Group in penetrating the countries. Later, Aero Asia started

flying to the Gulf Emirate of Sharjah, linking to Dubai via road network. It also

established a small maintenance facility in Sharjah Airport Free Zone by taking over a

small aircraft hangar and offering services to third parties. Aero Asia operated a fleet of

three to five Yakovlev Yak-42D on main trunk routes in Pakistan. These were mainly

Karachi, Islamabad and Lahore. However, as demand rose through the years, the

airline replaced its YAK-42Ds with Boeing 737-200Adv and Douglas DC-9s. The airline

also introduced a more modern livery instead of hAvidng the colors of a past operator of

the aircraft on its fuselage. A large "Aero Asia" was added to the front fuselage in bold

red color with the airline logo in between the words and on the tail

(A Boeing 737-200Adv operated by the airline. Here the aircraft is seen wearing a

Boeing/Aero Asia hybrid scheme)

At the start of2006, Aero Asia and Askari Bank MasterCard announced their strategic

alliance to offer their card members special discounts. On May 22, 2006 the Civil

Avidation Authority stopped all Aero Asia flights as it was owed millions ofRupees. The

management of the airline was pre-informed about the CAA decision and the ban would

remain imposed until further orders by the Avidation regulators.

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On June 12, 2006 a United Kingdom-based company acquired Aero Asia from its

original owners, Tabani Group. The Group belongs to people of Pakistani,Kashmiri

descent, with headquarters in Karachi and Yorkshire. The brand has a presence in

Pakistan, United States, and United Kingdom. The airline is currently in the process of

being rebranded and restructured.

In May 2007 the Civil Avidation Authority (CAA) of Pakistan suspended the operations

of Aero Asia due to issues related to the safety of operations and passenger

convenience. The problems had been highlighted to the management of Aero Asia time

and again but the situation, instead of improving, deteriorated. The airline announced

that it had decided to suspend operations temporarily with effect from 19 May 2007 until

further notice.

Fleet

The company returned the aircraft being operated on 19

May 2007 under wet lease arrangements to the lessors

and is now negotiating to acquire a fleet of five 737-300

aircraft under funding arrangements concordant with the

2007 Draft National Avidation Policy for Pakistan.

Former fleet

Over the years Aero Asia operated these aircraft;

Boeing 737-200

McDonnell Douglas DC-9

McDonnell Douglas MD-80

Rombac-111

Yak-42

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2. Industry Background

History of the Pakistan Airline Industry

The Pakistan Avidation industry was started up when Orient Airways merged with Pakistan

International Airlines Corporation (PIAC) to become the national flag carrier of Pakistan,

officially called Pakistan International Airlines.

PIA remained the only operator for many years after its creation, but soon private airlines

arrived at the scene to compete with the national flag carrier as conditions of the country

stabilized

In 1993 Civil Avidation Authority opened the Avidation sector for private investor in order to

boost the healthy competition for better traveling services at low price fares. As a result many

private companies make induction in to industry. Most of them have left the arena due to heavy

taxes of CAA, which would not sustain the cost structure of their companies.

Bhoja, Hajvery, Safe and Raji, wrapped up their operations years ago leAvidng the market

open to the remaining operators, the national flag carrier Pakistan International Airlines (PIA)

and private Shaheen Air International and Aero Asia.

It was not early nineties there was a major growth in the Pakistani Avidation market with four

new private airlines launching operations. The airline did very well to compete with the well

established flag carrier, PIA which was controlled by the government.

However, this was not to last as the UN placed economic sanctions on Pakistan and its

neighbor, India that caused the airline market to suffer. It caused two of the four airlines to file

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for bankruptcy and liquidate their assets. The airline industry remained quite stable with PIA

developing a strong hold on the international and domestic market for many years. It was not

until the early 21st century that the industry started to pick up again that allowed the entry of

new carriers in the market

As of August 2007, the Avidation market was developing and allowing more services and

facilities to be inaugurated as well as the development of a brand new airport to be built for the

capital at Fateh Jang.

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2.1 Market Analysis

Transportation sector is most important sector of any economy and Avidation industry is major

part of this sector. In Pakistan the transportation and communication sector holds more than

10% share in GDP (Gross Domestic Production). The Avidation industry can affect the other

sector of the economy, e.g. the International Trade, tourism and socio-economic condition of

the country.

Demand Analysis

Air traveling is still a luxury keeping in view the socio economic conditions of the people of

Pakistan. So prices of tickets do not matter for the upper class due to inelastic demand. In this

scenario quality services can play vital role in attracting the customer base.

Different loyalty programs offered by airlines are part of their strategy to retain its customers.

The up coming airlines like airblue have focused on passenger comfort. They have outsourced

catering to offer exquisite cuisine to its customers. The call centers have been established to

guide their customers 24 hours a day. In coming year the basis of competition would be how

airlines deliver services that offer value for money.

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2.2 Technological Developments

There have been various technological developments which have taken place in the airline

industry in Pakistan, which have tried to bring the service at par with international airlines;

Paperless Operation

Operation of airlines such as Air blue are paperless, any person who has access to Internet

can get reservation from the companys web-site with PNR numbers and get out the print,

which is acceptable even in the airport restricted area.

Innovative e-ticketing Technology

Various Pakistani airlines have introduced its latest and innovative web based e-technology to

members of the Travel Agents Association of Pakistan [TAAP] in Islamabad of late, e- ticketing

allows people to purchase tickets online in a convenient manner.

Non-Stop Flights

PIA and Air blue are now offering non-stop (without any stopover) flights to various

destinations in Europe, which were not available before.

Current Scenario

Recently many developments have been taken place, example India has opened the air

corridor for Pakistani airlines and the development of new ports like Gawadar & Sialkot the

rising cost of fuel and heavy taxes of CAA.

In all these threats and opportunities, the new and existing airlines are going to need tooperate and compete with each other not solely on price base but on the basis of services

standards.

For example, PIA has started operation to India and Far East, and the foreign carriers who

closed their Pakistan operations are back. A question arises that how these new airlines will be

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able to tap the market, especially since three existing airlines were sharing domestic market

among themselves.

PIA is dominating the market by about 75% and rest is majorly enjoyed by Air Blue and

Shaheen Airline, in prevailing conditions a new entrance would either gain the share from

currently operating airlines or create new customer base or combination of both. Lets see how

they survive in cut throat competition.

2.3 Legal Environment

Pakistan Civil Avidation Authority is a Public sector autonomous body working under the

Federal Government of Pakistan through the Ministry of Defense. It was established on 7th

December, 1982 as an autonomous body. Prior to its creation, a Civil Avidation Department in

the Ministry of Defense used to manage the civil Avidation related activities.

All kinds of Civil Avidation related activities are performed by CAA including the regulatory, air

traffic services, airport management, infrastructure and commercial development at the

airports, etc. Recently, Civil Avidation Authority underwent Restructuring and Change

Management process to meet the present and future challenges. This organizational

transformation process identified Structure, Culture, Skills, and Rewards as four tracks on

which simultaneous emphasis is being laid.

The restructuring process has helped Pakistan Civil Avidation Authority to fully focus on:-

Strengthening its safety and security oversight role as per International Civil

Avidation Organization requirements and standards.

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To facilitate growth of the infrastructure development (Airports and Airport Cities) on

a fast-track basis. Private sector participation in the process is also being

encouraged.

Enhanced Regulatory and air space management capabilities. Moreover, emphasis

is being laid on commercialization of its assets and land with improved customer /

passenger service standards, benchmarked with top performing international

airports

Development of a New Avidation Policy for the country in consultation with the

Ministry of Defense, Planning Commission, World Bank, Airlines, and Avidation

Experts (Expected to be considered by the Cabinet for approval shortly).

Investing in Human resource development through structured approach with

particular focus on quality of people and enhancing their professional capability.

Quality work on new initiatives is in progress such as introduction of Enterprise Resource

Planning (ERP), Health, Security, Safety, and Environment (HSSE), Corporate Social

Responsibility (CSR), Ethics Management Program, Customer feedback mechanism at the

airports, Employees Performance Management system, benchmarking, outsourcing of non-core and wasteful activities, etc.

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3. Competitor Analysis

3.1 International Competition:

Major competitors on different routes:

British Airways,

American Airlines

Continental Airlines

Delta Airlines

Emirates

United Airlines

South African Airlines

Cathay Pacific Airlines

Japan Airlines

3.2 Local Competitors:

There are currently only three operational airlines which are running their business in Pakistan.

Pakistan International Airlines

Introduction to PIA

Pakistan International Airlines Corporation, more

commonly known as PIA is the flag carrier airline of

Pakistan It is the 31st largest airline in Asia, operating

scheduled services to 23 domestic destinations and 36 international destinations in 25

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countries across Asia, Europe and North America, Its main bases are Karachi, Lahore and

Islamabad/Rawalpindi.

PIA passenger flights

The airline's secondary bases include Peshawar, Faisalabad, Quetta and Multan, from which it

connects the metropolitan cities with the main bases, the Middle East and the Far East. The

airline is owned by the Government of Pakistan (87%) and other shareholders (13%). It

employed 18,043 people as of May 2008.

When Pakistan was founded in 1947 it comprised two territories on either side of the expanse

of India. It was in this unusual circumstance that Pakistan International was formed. Despite

wars and economic trouble, the carrier survived to grow and prosper. Today it maintains asizeable international route network, in addition to its services closer to home, with a modern

and expanding fleet.

PIA Cargo

PIA also operates an extensive cargo delivery system within Pakistan. During the early 1970s,

PIA operated a service called "Air Express" that delivered documents and parcels from one

airport to another. Pakistan International Cargo was started in 1974.

The operations ended in the late 1990s when both aircraft were grounded. PIA Cargo

transports a range of goods across Pakistan as well as to international destinations. These

include meat and vegetables, textiles, paper products and laboratory equipment.

In 2003 PIA launched "'PIA Speedex'", a courier service in Karachi, Lahore, and

Rawalpindi/Islamabad; expanding within a year to 12 cities.

Today, the airline offers over 70 locations within Pakistan, with shipments collected and

delivered from customers' homes

Marketing and Sponsorships done by PIA

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Pakistan International Airlines (PIA) supports a first-class cricketteamthat plays in

the ABN AMROPatron's Trophy in Pakistan.

PIA is also sponsoring the Pakistani team for the A1 Grand Prix.

PIA also promotes the Shandur Polo Gala that takes place every year in the Chitral

and Gilgit regions of northern Pakistan during the summer period.

PIA is one of the official sponsors of the "Destination Pakistan 2007" festivals.

PIA also has its own Boy Scouts Association (PIA-BSA) working in partnership with

Pakistan Boy Scouts Association. After the earthquake, PIA-BSA was working in

partnership with other charity organizations to provide relief help.

PIA Planetariums located in Karachi and Lahore are owned by PIA, which enable

the public to see static aircraft as well as astronomy shows.

PIA Horticulture, set up in 1996, provides flowers for display in PIA's offices and for a

range of events, winning several awards and accolades at flower exhibitions across

the country.

PIA also supports non-profit organizations within Pakistan such as; Al-Shifa Trust,

Zindagi Trust, The Citizens Foundation and Sindh Institute of Urology and

Transplantation (SIUT).

PIA teamed up with the fast-food franchise, McDonalds, to offer passengersdiscounts on meals and upgrades.

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Air blue

Introduction to Air blue

Airblue is a private airline based in Karachi, Pakistan. It is Pakistan's second largest airline

with over 30% share of the domestic market. Airblue operates scheduled flights operating 30

daily services linking seven domestic destinations and international services to Dubai, Abu

Dhabi, Sharjah, Muscat and Manchester.

It carried 1.4 million passengers on domestic flights in the 2006-07 fiscal year. Its main base is

Jinnah International Airport, Karachi. Airblue makes a fuel stop at Trabzon in Turkey when

flying to and from Manchester.

Services Offered

Airblue was the first airline in Pakistan to introduce e-ticketing, wireless check-in and self

check-in kiosk facilities. The airline also became a member of Sabre system that is used byover a hundred airlines to help it with ticket automation service

Cargo Service

Airblue have launched e-Cargo service to cater to air freight markets ofPakistan,UAE and UK.

According to a press release, e-Cargo will broaden the base of cargo and permit certified

agents to book freight directly online opening the inventory through the web.

Firsts for Air blue

First airline in Pakistan and only the third carrier in the region behind Emirates and

Royal Jordanian to introduce the state-of-the-art self-service check-in facilities at Jinnah

International Airport, Karachi.

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First private airline in Pakistan to initiate long-haul services on (Islamabad-Manchester)

sector.

First private airline within Pakistan to place an order for new aircraft.

First airline in Pakistan to start e-ticketing.

First airline in Pakistan to start self check in kiosks (Karachi)

Shaheen Airways

Introduction to Shaheen

Shaheen Air International is a Pakistaniprivateairlinebased in Karachi. It operates scheduled

services in the main cities of Pakistan and to the Persian Gulf countries. Its main base is

Jinnah International Airport (KHI), Karachi, with a hub at Benazir Bhutto International Airport

(ISB), Islamabad.

Shaheen Air was founded in December 1993 and in just 10 months on account of its

professional service, exceptional performance, customer support and expertise in Avidation,

on October 25, 1994; it was accorded the status of Second National Carrier of Pakistan. Since

then Shaheen Air has been in a perpetual pursuit of excellence in operations and services.

Since June 2004, under the new management of TAWA International Inc. of Canada, utmost

priority was accorded to achieve the sole objective of making it a leading customer focused

regional and international airline.

Services offered

Shaheen Air has re-emerged with a new vision and its visibility is increasing in domestic and

international skies. After the re-launch, Shaheen Air has acquired four modern Boeing 737s

aircraft. To facilitate the air travel at a reasonable price, Shaheen Air is increasing its domestic

17

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and international flight frequencies. Plans are afoot to introduce, very soon, more domestic

flights linking smaller cities with major cities across Pakistan.

Destinations flown

Shaheen Air International operates the following services (at June 2009):

Kuwait

Kuwait International Airport

Oman

Muscat - Muscat International Airport

Pakistan

Islamabad - Benazir Bhutto International AirportKarachi - Jinnah International Airport Hub

Lahore - Allama Iqbal International Airport

Peshawar- Peshawar International Airport

Sialkot - Sialkot International Airport

Qatar

Doha - Doha International Airport

United Arab Emirates

Abu Dhabi - Abu Dhabi International Airport

Al Ain - Al Ain International Airport

Dubai - Dubai International Airport

Sharjah - Sharjah International Airport

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http://en.wikipedia.org/wiki/Kuwaithttp://en.wikipedia.org/wiki/Kuwait_International_Airporthttp://en.wikipedia.org/wiki/Omanhttp://en.wikipedia.org/wiki/Muscat,_Omanhttp://en.wikipedia.org/wiki/Muscat_International_Airporthttp://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/wiki/Islamabadhttp://en.wikipedia.org/wiki/Benazir_Bhutto_International_Airporthttp://en.wikipedia.org/wiki/Karachihttp://en.wikipedia.org/wiki/Jinnah_International_Airporthttp://en.wikipedia.org/wiki/Lahorehttp://en.wikipedia.org/wiki/Allama_Iqbal_International_Airporthttp://en.wikipedia.org/wiki/Peshawarhttp://en.wikipedia.org/wiki/Peshawar_International_Airporthttp://en.wikipedia.org/wiki/Sialkothttp://en.wikipedia.org/wiki/Sialkot_International_Airporthttp://en.wikipedia.org/wiki/Qatarhttp://en.wikipedia.org/wiki/Dohahttp://en.wikipedia.org/wiki/Doha_International_Airporthttp://en.wikipedia.org/wiki/United_Arab_Emirateshttp://en.wikipedia.org/wiki/Abu_Dhabihttp://en.wikipedia.org/wiki/Abu_Dhabi_International_Airporthttp://en.wikipedia.org/wiki/Al_Ainhttp://en.wikipedia.org/wiki/Al_Ain_International_Airporthttp://en.wikipedia.org/wiki/Dubaihttp://en.wikipedia.org/wiki/Dubai_International_Airporthttp://en.wikipedia.org/wiki/Sharjah_(city)http://en.wikipedia.org/wiki/Sharjah_International_Airporthttp://en.wikipedia.org/wiki/Kuwaithttp://en.wikipedia.org/wiki/Kuwait_International_Airporthttp://en.wikipedia.org/wiki/Omanhttp://en.wikipedia.org/wiki/Muscat,_Omanhttp://en.wikipedia.org/wiki/Muscat_International_Airporthttp://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/wiki/Islamabadhttp://en.wikipedia.org/wiki/Benazir_Bhutto_International_Airporthttp://en.wikipedia.org/wiki/Karachihttp://en.wikipedia.org/wiki/Jinnah_International_Airporthttp://en.wikipedia.org/wiki/Lahorehttp://en.wikipedia.org/wiki/Allama_Iqbal_International_Airporthttp://en.wikipedia.org/wiki/Peshawarhttp://en.wikipedia.org/wiki/Peshawar_International_Airporthttp://en.wikipedia.org/wiki/Sialkothttp://en.wikipedia.org/wiki/Sialkot_International_Airporthttp://en.wikipedia.org/wiki/Qatarhttp://en.wikipedia.org/wiki/Dohahttp://en.wikipedia.org/wiki/Doha_International_Airporthttp://en.wikipedia.org/wiki/United_Arab_Emirateshttp://en.wikipedia.org/wiki/Abu_Dhabihttp://en.wikipedia.org/wiki/Abu_Dhabi_International_Airporthttp://en.wikipedia.org/wiki/Al_Ainhttp://en.wikipedia.org/wiki/Al_Ain_International_Airporthttp://en.wikipedia.org/wiki/Dubaihttp://en.wikipedia.org/wiki/Dubai_International_Airporthttp://en.wikipedia.org/wiki/Sharjah_(city)http://en.wikipedia.org/wiki/Sharjah_International_Airport


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4. Market Analysis Summary

In Pakistan local routes are served by PIA, Air blue and Shaheen. PIA is considered as

an airline for upper middle class with comparatively higher rates then Air blue and

Shaheen whose main focus is on lower rates. Re-launching Aero Asia under this market

situation will be beneficial as our main focus would be on safety and quality serves. Our

survey has shown that currently people are not satisfied with the food and staff of the

airlines. With the recent plane crash people are worried about their security as well; at

this time customers are looking forward for an airline, whose rates are reasonable, is

safe to travel with and offers quality service especially to business people and students.

With the increasing trend of students moving from different cities or going abroad for

studies targeting student segment will be beneficial for this airline as this segment is

underserved.

4.1 Market Segmentation

The airline industry is dominated by the major carriers. It is an industry characterized by

private and public airlines. Like so many other industries it has quickly evolved into an

industry that has room only for major players and smaller "specialty" or "niche"

participants. There are two specialty segments that have characteristically been

exploited by the existing airlines. One is the "price" niche and the other is the "route"

niche. One focuses on charging less, the other on providing either the only service

between two given points or else superior or more convenient or less costly service

between two heAvidly traveled destinations.

In today's marketplace the "price" positioning, in and of it, is no longer a sufficient

concept on which to build an airline. Since de-regulation the flying public has been

inundated with low fares. Low fares have become an expectation, not a promise. Thus,

the true market segment opportunities today have become a COMBINATION of service

mix, price, and route selection. The more critical decision has become one of deciding

on service mix and price in conjunction with LENGTH of route. Avid airways have

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decided that to be different from other airlines it will focus more on services and safety;

our segmentation will be;

Segment Segment Analysis

Geographic: All Major Countries & Cities Of Pakistan

Demographic: All age group & for both gender, focusing

mainly on business people and students

Social Class: All Classes

Psychographic: Availability of Flights

More Attractive routes & services. Save & secure flights in less prices.

4.2 Target MarketOur primary target market will be students. With the increasing trend of studying abroad

and different cities Avid airways will primarily cater this market with low fares by giving

student discounts and will support the young generation of this nation through different

activities; which will be covered latter in the report. Beside that we will also target

business men and other sectors as other airlines do.

Upper Class

o Business travelers 35-45

o Earning > Rs.75, 000 / Month

Economy Plus

o Business travelers from cost-conscious companies

o Some leisure travelers

Economy

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o Primarily Leisure Travelers and students

Evenly spread among socioeconomic groups

4.3 Distributing a Service

Sales of airline tickets have historically been either direct from the airline itself or

through various travel agents. Modern computer technology and communications

capability are changing the mix dramatically. Travel agents once accounted for 80% of

ticket sales. This channel of distribution has been one of very high cost to the airlines.

Travel agent commissions at one time became the highest individual cost item to an

airline. Perks and incentives amounted to coercion and bribery. The airlines found

themselves held hostage.

Available technology has now afforded the opportunity both to sell one's own tickets and

to eliminate the physical ticket altogether. The critical element for both strategies to be

successful for an airline is simply to create the demand for travel on one's airline. If the

airline makes it desirable for the consumer to want to fly it then it is just as easy to order

tickets directly from the airline as it is from any other source. Avid airways will have its

own reservations agents available via a number (the service will be 24 hours from an

available pool of 20 agents in total) as we can afford more. In addition, we will have an

Internet site where schedules are available and customers can book their own

reservations and buy tickets via credit card.

Avid airways will encourage E-reservation rather then going to travel agents, picking up

tickets and giving commissions. We will focus more on E-ticketing as it convenient for

both the airline as well as the customers.

5. SWOT ANALYSIS

Strengths

Our major strength would be our target market i.e. students which are under

served.

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Quality services

Low cost

On time flights

Weakness

The most critical factor with Avid airlines is to overcome with the brand equity

and recognition; as its a re-launch by Aero Asia group we have to build our trust

on the people that we will not quite this time but we are here with a revolution

and better services.

Opportunity

With the increase of awareness among the passengers, it is very important that

'quality airlines' must come up. Pakistani passengers have seen many

inexpensive airlines with their cheap service where they save some money, but

lose a lot on every flight. Cheap food, dirty noisy eastern aircraft, overbooking,

late departures and humiliating behAvidor by the airlines staff are the hallmark of

these airlines. Some airlines did not have any real assets and were nicknamed

as 'Brief Case Airlines'. Avid airways will definitely try to capture this market and

give them the best service possible.

There is currently no such airline who focuses on students as their major target

market; tapping in this market will help us in increasing our sales.

Pakistan Avidation has tremendous potential for cargo business.

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Threats

Pakistan is a growing economy but the only problem is you never know what will

happen in this country tomorrow. The political situation is very unstable andinvestors dont want to take risks in such situations. Government change results

in difficulties as new governments also change policies and make new laws and

regulations.

Avid airways will have to face a tough competition with the local airlines: Pakistan

International Airlines, Airblue and Shaheen Air International as they have

established themselves over the years.

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6. Marketing Mix

6.1 Product

Core Product air travel

Augmented Product

ECONOMY

Individual seatback TV

o Latest movies

o Sports

o Drama, and

o Kids shows

o Own video games console (Up to 35 games)

Free amenity kit.

o Postcards

o Eyeshades

o Comedy

o Earplugs

o Socks, and

o Avid Airways lip balm

PREMIUM ECONOMY

Separate priority checking line.

Early boarding, prior to the main coach class passengers, allowed.

Priority luggage handling

Massive sized video screens

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Library of movies

Umpteen video and audio channels

In-seat power supply for laptop computers.

Members of Avid airways 'Flying Club' frequent flier program get 150% of flown

miles when flying Premium Economy

Seats are bigger and wider

Recline further back

Leg room is of a generous 38

Extra storage area

THE UPPER CLASS

Drive-Thru Check In

The Avid airways lounge

Printed menu with a range of hot and cold foods available - with table service,

fine china, and distinctive personalized cutlery

The Freedom menu

Beauty therapists on board

Entertainment on board

Service Offerings

Economy

In-flight Entertainment

Mileage Benefits

Economy plus

Check-in

Cabin

In-flight Entertainment

Mileage Benefits

Upper Class

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To/From Airport

Check In

Airport Lounges

On-board experience

Mileage Benefits

6.2 Place

Distribution and Sales Centers

An Avid airway has many conveniently placed service centers throughout the country.

6.3 Price

Pricing Strategy

Avid airways will follow middle range of price as compared to other airlines.

Our prices will be not too high neither too low.

Markup strategy will be followed which is cost + additional %

Pricing is one of the key aspects of marketing strategy; Pricing can build or break the

brand. Avid airways game plan is simple enough, offer customers good service to

places they want (or need) to go to, and at a fair and predictable price. Competition on

the basis of price alone has spelled disaster for more than one carrier and once down

that slippery slope it is hard to turn back. And while price is clearly an important factor

driving the marketplace, it is by no means the only one. It will not be our aim to be the

lowest-priced competitor in the market (though we may be on occasion). Nor will we

seek to be the highest priced, either. Fairness, clarity, and a rational fare basis,

combined with better service and greater convenience than offered elsewhere will beour guiding principles.

Essentially, we will work from only two sets of fares (existing for market segmentation

purposes) for our service:

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Weekday fares, in both Value and Premium (aimed primarily at business

travelers who are willing to pay a higher price to be able to go and come back

during the week).

Stay-over weekend fares, in both Value and Premium (aimed more at the

personal or leisure traveler for whom price is more important than traveling mid-

week).

Students who visit their homes after every 3-4 months will get a frequent traveler

card and will be charged low fares.

The only variations on those fares (not new fare bases) will be these:

Set, publicized discounts for early reservations and purchasing tickets in

advance.

Set, publicized discounts for reserving and ticketing online, electronically.

Seasonal and certain peak-period adjustments to the basic fares or adjustments

due to spikes in fuel prices and the like.

Infant and child discounts based on the original fare (up to free in the case of

infants).

And possibly a stand-by fare (call it the "Gambler Fare") for people who are

willing to take what's available at the last minute (helps us fill seats, helps them get

on a nearly full flight, and it does not have to be radically discounted from the

normal fare - probably no more than 5 percent discount - since the normal fare will

be just that, a normal fare, and not some outrageously priced gouger).

Given our stress on electronic reservations and ticketing, most tickets will be paid

for in advance of the departure date, which means that Avid airways - again, as part

of its marketing strategy and offering a higher level of concern for the traveler -

should avoid the common and much detested practice of overbooking. This also is

where stand-bys can help fill any voids that may occur.

In addition, fares for the most part should be based on some rational system that is

calculated on distance and actual costs, and not simply what the market will bear.

One must wonder how much legitimate business is lost to the industry simply

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because many passengers cannot and will not pay the near-equivalent of a round-

the-world fare only to go between two cities or neighboring countries.

6.4 Packages:

Economy Packages

Premium Packages

Business Packages

Vacation Packages

Student packages

6.5 Promotion

Positioning Strategy

Avid airways is positioned, and widely perceived, as offering safety and high

service quality at a competitive price

Positioning is aggressive high service quality, safety, competitive prices

We have delivered this value through an integrated combination of factors:

load factors + high fixed costs >>increase trial rate, maintain profitability

low cost structure

innovation

employee culture

service recovery

effective PR

alliancesOther factors of our positioning include:

Lifestyle brand able to deliver value and quality with flair, innovation.

Provide highest quality innovative service at excellent value for money for all

classes of air travelers.

Maintain focus on meeting unmet needs of customers.

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Turn flying into a unique experience.

7. Promotional Mix

7.1 Broad Objective:

Create awareness about the airline

Encourage people to try the airline

Raise awareness of new product developments and Raise awareness of new

routes.

7.2 Advertising

Advertising Media Strategy

Television:

Advertising would not be placed on the television extensively due excessive clutter

present on that media and high cost inefficiencies. Only business channels such as

CNBC, Geo and Dawn News would be covered which goes with the image of the brand.

Radio:

Alternatively, radio is a much cheaper ad more effective media. An extensive radio

campaign will be undertaken for the initial months on channels like FM89, FM100,

FM107 and FM91.

Outdoors:

A strategic site will be obtained for outdoors in main metro cities K/L/I near their major

distribution office. Every months travel destination will be placed on this site. Such a

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strategy would increase the recognition factor through continuously rotating the

advertising on a symbolic location.

Advertising at airports will be done.

Newspapers:

An extensive blitz marketing campaign would be undertaken at the time of the launch.

After that, every months travel destination ad would be placed in major newspaper like

Dawn and Jang. Furthermore, Avid airways website would be promoted through print

advertising. Further promotional messages pertaining to the campaign would be present

on the website.

Magazine/Trade Publications:

Since they are the primary distribution source for airline seats, Advertising in trade

publications would be of crucial importance

7.3 Direct Marketing

DM media strategy

Direct mail will also be used to encourage trial and to support above the line product or

route messages. Our agents will personally visit the companies in which there is a lot of

traveling and will demonstrate our services to capture the segment of business travelers.

7.4 Sales/Trade Promotions

Objectives

In the initial stage, a lot of sales and trade promotions activities would be required to pushsales.

7.5 Interactive / Internet Marketing

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Interactive / Internet Marketing Objectives

As this medium is increasing gaining popularity, this would be increasingly utilized.

Moreover, the target market is easier to filer and access through this medium. The

objective for this media usage would be to create Top of Mind recall of Avid airways in the

minds of our target audience and also to increase consumption of the service.

Interactive / Internet Media Strategies and Messages

Every month will be associated with a travel destination with specific events or festivals

happening at that place in that particular month. The associated promotional elements will

include online ads appearing on sites such as www.about.com, www.facebook.com,

www.linkedin.com..

7.6 PR/Publicity

Publicity Objectives

CSR steps to improve the acceptability of the airline amongst the locals as a company who is

undertaking societal marketing initiative for improvements.

PR/Publicity Media Strategies and Messages

Charity

Avid airways onboard charity, Change for Children, national fund raising day will be

celebrated. A similar kind of function would be undertaken through its office in Pakistan.

Student social service program will be run in which different type of social services will take

place such as teaching poor chidren etc. Moreover, Upper Class amenity kits are to be

collected and unused items are to be given to charity.

Sponsorship

Pakistani students and youth is very talented but the sad back is theres no one to support

them so Avid airways will do different activities to push this talent forward. Activities such as

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Voice of Pakistan

Best writers of Pakistan

Student designers of Pakistan etc

Event

Social events for travel agents exhibitions, road shows and press launches.

The Press Office

This would serve as another promotional facilitation and support tool. All PR activities can be

initiated here and this will serve as the launch-pad for all Publicity campaigns;

It will draft and distribute press releases providing journalists with information about

Avid airways

It will organize press briefings, run press conferences, accompany the press on new

route launches and set up photo opportunities for Pakistan.

It will works with broadcasters and filmmakers to secure product placement for Avid

airways.

7.7 Budgeting

Avid Airways

Media Budget

Medium Spend (in PKR)

Television 5,000,000

Radio 150,000

Print 150,000

Digital 3,000,000

Total 8,300,000

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This will be our over all budget for advertising and promoting Avid airways.

8. Management Summary

The management of Avid airways will be highly experienced. There will be no one in the

management team who has not already performed his or her function for another airline.

We are not in the business of training key people. We intend to hit the ground running

with a highly qualified and experienced management team. Some of the individuals

The bios of the management team are as follow.

Organizational Structure

The company will be organized into five major operational areas:

1. Flight Operations.

2. Maintenance.

3. Financial

4. Marketing.

5. Customer Service.

8.1 Management TeamA complete management team, covering the elements of administration, Avidation, and

finance, is being assembled. This team brings together a wide range of skills and

backgrounds covering the key areas needed to form, launch, and operate the airline,

and from a range of national origins.

8.2 Management Team Gaps

Previously we have seen that Aero Asia closed its operations due to safety issues so

the team hired should possess the widest possible range of the requisite skills. The

current project team believes investors in the airline will want to play a key role in

helping formulate core management. Once re-launching requirements are made step

can be undertaken to finalize the core team quickly.

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This airline will need people with skill, experience, energy, and vision to head up and

serve in such areas as information management, flight safety, Avidation operations,

Avidation maintenance, ground operations, sales and marketing, communications, and

human resources management. Also good pilots, co-pilots, cabin crew members, and

ground staff, and administrative staff.

Avid airways believes in putting together the best possible airline management team in

the business, one that also shares the common vision of what this new airline truly can

be and what it can become.

8.3 Routes:

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Financials:

The financials of Avid Airways was sub divided into following parts

A. Sales EstimationB. Cost EstimationC. Breakeven AnalysisD. Risk AnalysisE. Contingency PlanF. Monitoring/Control

However the over all financial perspective is mentioned below

Sales Estimation

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0000000

0000

000

t tr 2nd tr 3rd tr

Economy

Economy Plu

Upper Cla


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Cost Estimation

Cost Item Share of Expenses

Q1 (%)

Share of Expenses

Q2 (%)

Share of Expenses

Q3 (%)

Share of Expens

Q4 (%)

Labour 31.5 38.4 35.5 37.4

Fuel 17.3 11.6 13.4 12.6

Aircraft Fleet 7.9 10.2 8.8 10.5

Interest 2.6 3.0 2.9 2.7

Insurance 0.3 1.5 2.0 1.5

Maint. Material 3.4 2.5 3.1 2.5

Landing Fees 1.8 2.1 2.0 2.1Traffic Commissions 9.4 2.2 3.6 2.2

Communication 1.4 1.5 1.5 1.5

Advertising & promotion 2.0 1.0 1.0 1.0

Passenger Food 3.5 2.3 2.5 2.5

Others 19.1 23.7 23.7 23.5

Total 100 100 100 100

As per our calculation & estimation the initial cost will be Rs. 100 million for this

project

Breakeven Analysis:

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Expected Sales Rs 10,000

Fixed Cost Rs 100,000,000

Variable cost Rs 8,000

Breakeven (Qty) Fixed Cost/(Expected sales Variable cost)

= 50,000 tickets per month

Risk Analysis:

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Contingency Plan:

If we find low cost is becoming a threat, in 90 days Avid Airways can launch a competitive

product. We are completely prepared; we already have a test plane that is flying about under the

guise of a full service aircraft. Our fleet would grow to over 50 planes by 2013, from around 15now, and would increase its routes to 100 in five years from 68 now

Whatever is happening around the world will not affect our growth plans. We are committed andremain committed to growth and all our expansion is pressing ahead on schedule

Monitoring/Control:

We have created a separate department to monitor the same & also weekly meeting has been

planned with upper management to discuss & control the same.

avi airways 1

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