Category: Etihad Airways

Introduction

Etihad Airways is the United Arab Emirates national airline. The airline was established in July 2003 through Royal Decree and it started operating in November 2003. Currently, it is one of the fastest growing airlines across the globe. Etihad Airways airline deals with passenger and cargo delivery to various destinations across the globe.

Currently, the airline serves 84 destinations and it expects to open more destinations in the near future. Besides the passenger and cargo delivery, the airline also operates a contact centre and Etihad Holidays (Etihad Airways 1-3).

The airlines ultimate goal is to be a real 21^st century world airline by enhancing the existing norms of airline hospitality, and to achieve this goal, the airline has established numerous strategies. This paper focuses on some of the current businesses, operations, strategic, and unit plans that are underway in the company as ways of helping it to achieve its goals.

Discussion

Organisational plans

The success of any business depends on its existing strategic, operations, unit, and business plans. Strategic plan plays a significant role in business development and marketing (Ticoll 18). Etihad Airways has come up with a strategic plan to help it in realising its goal. Currently, the company is seeking to increase its revenue base by opening new passenger and cargo destinations.

The company is exploring new markets and aims to launch numerous routes across the globe by the end of 2013. For instance, the company aims at opening new destinations in Ethiopia, India, the United States, and Brazil (Etihad Airways 9). Moreover, the company intends to increase the number of its aircrafts to meet the increasing number of passengers and demand for cargo delivery.

For an organisation to achieve its strategic plans, it has to come up with appropriate operational plans (Ticoll 19). Etihad Airways has come up with an operational plan that will help it to achieve its goal. Currently, the company is working with Universities in the United Arab Emirates to train its staff and equip them with the requisite skills.

Moreover, the company has stationed numerous staff in different destinations that are responsible for selling the companys products to potential customers (Etihad Airways 7). One of the ways of enhancing organisational operations is through improving on the quality of services offered.

The company is continuously upgrading its aircrafts to meet the needs of the different classes of passengers. The move aims at helping the company to attract more customers thus becoming the leading airline company in the world. Moreover, Etihad Airways is renovating its airport to facilitate in enhancing the quality of services it offers to its clients (Etihad Airways 3).

Besides the strategic and operations plan, Etihad Airways has come up with a business plan to help it to achieve its objectives. As away of enhancing its operations, the company has come up with a business plan that will help it to increase the number of aircrafts and buy the state-of-art airplanes to meet customer demands.

As the company aims at expanding the number of its destinations across the globe, it is gradually working on embracing diversity within its workforce, and thus the company employs people from different countries.

In addition, as a way of enhancing the quality of services it offers to local customers, the company has come up with an Emiratisation policy, which helps in hiring and developing the career of local employees (Etihad Airways 5-7). Currently, the company has split its operations into the cargo unit, passengers unit, and contact centre. Presently, the airline is working on increasing the number of its freighters by 2014.

Organisational structures

For any organisation to operate efficiently, it ought to have an efficient organisational structure. The order in which an organisation structures itself dictates the organisational values and beliefs held by that particular organisation. An organisation with few employees does not require formal organisational structure (Brews and Tucci 429-435).

There are four different organisational structures, viz. pre-bureaucratic, bureaucratic, post-bureaucratic, and functional structures. Presence of a single decision-maker characterises the pre-bureaucratic organisational structure. Bureaucratic structure exhibits a degree of standardisation, which comprises strict hierarchies through which the organisation makes its decisions.

The post-bureaucratic structure is almost similar to bureaucratic structure with respect to hierarchies. Nevertheless, this structure encourages modern ideas like culture management and total quality management (Brews and Tucci 437-442).

Etihad Airways is a large company; hence, the company requires a formal structure to enhance and monitor its operations. Etihad Airways uses a functional organisational structure. The company is structured in a way that it has varied segments based on the operations it undertakes.

Etihad Airways makes sure that it aligns its operations along geographical zones to facilitate their management. The company has established six geographical regions to facilitate in its sales objectives. Each region has a regional vice president who is responsible for managing sales operations with the help of general managers.

The company consists of three management levels. The highest level in the management structure comprises of the board of directors, which is responsible for making final decisions on matters affecting the company.

Right below the board of directors is the Executive Committee that is responsible for managing organisational operations and ensuring that the company is working towards the realisation of its goals (Etihad Airways 1-2). The Executive committee works closely with the Audit Committee, which is responsible for assisting the company to make better use of the available resources.

Human resource issues

Organisational strategic plans lead to the emergence of numerous human resource issues. As an organisation seeks to improve its operations through changing its existing strategic plans, it ends up affecting its employees in one way or another (Ticoll 20). The desire by Etihad Airways to become the leading airline company in the world has made it embark on various strategic plans. In return, it has spurred some human resource issues in the company.

Changes in technology and the desire to equip its staff with requisite skills have pushed the company to liaise with Universities to facilitate in training its staff (Etihad Airways 7). In addition, the company seeks to offer employment opportunities to the local people, and to achieve this objective, it has embarked on an Emiratisation policy, which gives the Emiratis an opportunity to train and work for the company.

Etihad Airline is opening new destinations across the globe. Hence, it requires staff with experience in diverse cultures. Today, its employees come from over 126 nations, thus embracing varied cultural practices (Etihad Airways 4).

The company has come up with a succession plan to help in identifying and nurturing talents that would help it to implement its strategic plans. Besides, the company intends to ensure that it helps in environmental conservation. Consequently, it seeks to work with like-minded staff and business partners.

Conclusion

Since its inception, Etihad Airways endeavours to be the leading airline company in the world. Hence, the company has initiated numerous strategic, operations, business, and unit plans to help in realising this goal. The company has not only increased the number of its destinations, but is also training its employees to equip them with requisite skills.

Works Cited

Brews, Peter, and Christopher Tucci. Exploring the Structural Effects of Internetworking. Strategic Management Journal 25.5 (2004): 429442. Print.

Etihad Airways. Our Story, 2012. Web.

Ticoll, David. Get Self-Organised. Harvard Business Review 82.9 (2004): 1820. Print.

Definition and History

The current definition of ISO 9001 states that the framework is a set of standards that are accepted internationally as the tools for managing the quality of a companys performance in the global market (Psomas & Antony 2015). First introduced in 1987, the ISO 9001 standards have been providing the foundation for consistent improvement of product and service quality (Psomas, Pantouvakis & Kafetzopoulos 2013) (see Fig. 1).

ISO 9001 has been used in the UAE for quite a while. Although generally being successful, the implementation process may be hampered in the UAE because of the lack of clarity in the definition of the constructs in ISO (Kumar & Balakrishnan 2011).

ISO 9001 Principles

There are several quality management principles that ISO 9001 incorporates. The quality management principles (QMPs) were designed to create the environment in which a company can experience consistent improvement in all domains of its existence, including production management, customer relationships, allocation of the corporate assets (including the human resources), etc. As Table 1 below shows, the identified principles imply that communication should be viewed as the key priority of any organization.

Table 1. 7 ISO Quality Management Principles.

Advantages

One must mention the fact that the framework allows for accomplishing three essential goals. ISO 9001 helps organize the workplace processes, enhance their efficiency, and introduce the idea of continuous improvement into the context of a company (Fonseca 2015).

Disadvantages

It should be noted, though, that ISO 9001 has certain problems. The system implementation is rather expensive deserves, and the framework requires that a lot of documentation must be handled.

Implementation Process

As Fig. 2 provided below shows, the current ISO 9001 standards are supposed to prompt a change in an organization by not simply introducing minor adjustments to separate areas of the companys operations but, instead, by upgrading the entire body of the organization for consistent quality improvement (Manders, Vries & Blind 2015). The process of engaging the target audience, particularly, employees and the representatives of a management team, by the company leaders, can be viewed as the most peculiar aspect of the framework that deserves closer attention.

As explained in the ISO 9001 manual, successful implementation of the employee engagement strategies is crucial since Competent, empowered and engaged people at all levels throughout the organization are essential to enhance its capability to create and deliver value (ISO 2015, p. 7). Therefore, to motivate the staff members to excel in their performance, one will have to shape the companys values and introduce the corporate philosophy that will promote the required organizational behaviors and place a powerful emphasis on the necessity to take the needs of the staff members into account.

Recommendations

It is strongly advised that the ISO 9001 standards should be followed closely and that the firms priorities should be shifted toward investing in the employees and viewing the human resources as the essential asset of a company. Consequently, the specified aspect of the ISO quality management principle implies that the environment which fosters the required qualities such as corporate social responsibility (CSR), global citizenship (GC), loyalty to the organization, etc., should be created.

Field Study

Introduction

Etihad Airways has been known in the airline industry for a while, making quite a name for itself in the target market and gaining a huge competitive advantage. The organization is currently defined as the flag carrier; in other words, it can enjoy certain privileges operating in the global market and carrying out international transactions. Etihad has recently reached a mark of US$ 9.02 billion and has been working on the introduction of sustainability into the realm of the airline industry (Net profit of US$ 103 million for 2015 2016).

ISO 9001: Implementation

Working on the consistent improvement of the quality of its services, Etihad has deployed a variety of tools that allowed meeting the existing standards and the target populations needs successfully. The adoption of the ISO 9001 standards was one of the steps that the organization leaders needed to take to introduce the principles of a consistent improvement to the companys design and, therefore, increase customer satisfaction levels, as well as passengers safety rates.

However, the adoption of the identified framework was also fraught with several difficulties. A detailed analysis thereof will help shed some light on the effects of ISO 9001 application (Mangula 2013). At present, the ISO 9001 standards define the work of organizations in 162 states (ISO: a global network of national standards bodies 2017).

Data Collection

In order to conduct the study, a semi-structured interview was used. The interview included questions about the levels of engagement, the motivation strategies used by the management team, the loyalty levels among the employees, etc. The personnel members, in turn, were asked about their experience of working at the organization, including the positive and negative aspects thereof.

The interview results showed that the managers were consciously adopting the approaches geared toward maintaining loyalty and engagement levels high among the employees. Particularly, a very strong emphasis was placed on providing the employees with the required safety and security during the flight. The interview results showed that 84% of the employees felt secure and satisfied at Etihad, 71% also mentioned that they felt encouraged to develop professionally. The management team results were, in turn, 93% and 78%. The lack of emphasis on diversity, however, was viewed as a source of concern for both staff members and managers.

Interpretation

A closer look at the way in which ISO 9001 has been implemented at Etihad will show that there has been a consistent focus on the strategy of managing the human resources, particularly, the design of the tools for empowering employees, and its change toward an improved model. To be more accurate, the organization has been exploring numerous ways of increasing employee satisfaction levels by offering the target population benefits and incentives (Kaya & Ergun 2014).

The recent incorporation of ambulant services into the list of the options that the companys staff can enjoy points to the fact that Etihads approach toward employee engagement is both innovative and efficient. The increase in the number of options for emergency situations, as well as the purchase of the medical equipment that will help the staff in case of an accident, is truly impressive: The ambulance is fitted with modern medical emergency equipment and supplies including heart defibrillators, oxygen cylinders, intravenous drips, spinal and traction splints, foldable stretchers and medicines (Etihad Airways launches new ambulance service for employees 2014).

Therefore, the quality of the medical services offered to the people employed at Etihad has increased rapidly over the past few years. The identified change created prerequisites for improving the relationships between the company and its staff members.

It is remarkable that Etihad meets the ISO 9001 standards by introducing new values and improving corporate ethics. For instance, the shift toward stressing the significance of the personnels well-being shows that the company is ready to build an emotional bond with its personnel. The identified connection is bound to create premises for consistent growth in loyalty levels among the employees (Talay & Akdeniz 2014).

As a result, Etihad will invest in its staff members so that they could grow and develop new qualities, acquire new skills, excel in their performance, etc. Therefore, it can be assumed that the approach toward managing employee engagement, if not being flawless, is at the very least steered in the right direction. By keeping the focus on investing in the staff members, promoting their professional growth, and allowing them to feel secure in the environment of the organization, Etihad makes a perfect case of a company with strong values and impressive potential. That being said, the diversity issue needs to be addressed (Wood & Wilberger 2015).

Conclusion

By incorporating the principles of ISO 9001 into its quality management framework, Etihad managed to cement its position in the global market as a responsible organization that seeks to provide its customers, staff members, and other stakeholders with the required safety.

Furthermore, the incorporation of the identified standards into the companys design made it possible for Etihad to reconsider its current approach toward managing its human resources efficiently; consequently, the prerequisites for investing in the staff members and building a team of loyal employees were created successfully. The implementation of the ISO 9001 standards may have required a significant amount of effort from Etihad, yet the effects thereof prove that the process of quality improvement should become one of the primary goals of any company operating in the global market environment.

Reference List

Etihad Airways launches new ambulance service for employees 2014. Web.

Fonseca, LM 2015, From quality gurus and TQM to ISO 9001:2015: a review of several quality paths, International Journal for Quality Research, vol. 9, no. 1, 167180. Web.

ISO 2015, Quality management principles. Web.

ISO: a global network of national standards bodies 2017. Web.

Kaya, N & Ergun, E 2014, The effects of human resource management practices and organizational culture types on organizational cynicism: an empirical study in Turkey, British Journal of Arts and Social Science, vol. 17, no. 1, pp. 43-61. Web.

Kumar, DA & Balakrishnan, V 2011, A study on ISO 9001 quality management system certifications: reasons behind the failure of ISO certified organizations, Global Journal of Management and Business Research, vol. 11, no. 9, pp. 43-50. Web.

Manders, R, Vries, HJ & Blind, K 2015, ISO 9001 and product innovation: a literature review and research framework, Technovation, vol. 1, no. 1, pp. 1-15. Web.

Mangula, MS 2013, Effect of quality management systems (ISO 9001) certification on organizational performance in Tanzania: a case of manufacturing industries in Morogoro, International Journal of Technology Enhancements and Emerging Engineering Research, vol. 1, no. 1, pp. 14-19. Web.

Net profit of US$ 103 million for 2015. 2016. Web.

Precision plus completes recertification of ISO 9001. 2016. Web.

Psomas, E & Antony, J 2015, The effectiveness of the ISO 9001 quality management system and its influential critical factors in Greek manufacturing companies, International Journal of Production Research, vol. 53, no. 7, pp. 2089-2099. Web.

Psomas, E, Pantouvakis, A, & Kafetzopoulos, DP 2013, The impact of ISO 9001 effectiveness on the performance of service companies, Managing Service Quality: An International Journal, vol. 23, no. 2, pp. 149-164. Web.

Quality Systems Toolbox 2016, Using process maps. Web.

Talay, B & Akdeniz, MB 2014, In time we trust? The effects of duration on the dynamics of trust-building processes in inter-organizational relationships, Strategic Management Review, vol. 8, no. 1, pp. 77-90. Web.

Wood, VR & Wilberger, JS 2015, Globalization, cultural diversity and organizational commitment: theoretical underpinnings, World Journal of Management, vol. 6, no. 2, pp. 154-171. Web.

Mobile technology refers to tools that support cellular communication in the form of a multiple access platform through codes. Examples of mobile technology include instant messaging, mobile phones, web browser, and GPS navigation. On the other hand, wireless technology refers to a platform of communication that utilizes electromagnetic waves to transmit the signal in a trajectory path. The wireless technology is void of wire as the main medium for transmitting the information. Examples of wireless technology are Wi-Fi, cordless peripherals for computers, two-way radios, and satellite television among others.

Utilizing the Wireless and Mobile Technology to Improve Efficiency

Companies across the globe use mobile and wireless technology to improve efficiency by saving on time since these platforms are easier to use and access by customers. Secondly, mobile and wireless technology is used by companies to attract and retain more customers since these platforms offer a series of benefits to clients such as free Wi-Fi, recharging, and messages. Lastly, companies use mobile and wireless technology to streamline the cost and personnel involved in serving customers (Turban, Liang, & Wu, 2011). Through such technology, a company can directly engage customers without having to pass through a third party. The reduced logistics channel translates into improved efficiency.

Wireless and Mobile Technology Implemented by Delta

The mobile and wireless technologies that have been implemented by Delta are free in-flight Wi-Fi, Delta mobile app, standardized recharging station, and the social media. The airline’s vice president noted that the company provides “customers with technology tools to keep them connected during their travel experience on the ground and in the air” (News Hub, 2012, par. 7). Besides, the standardized recharging stations in all waiting bays of the airline has enabled the company to support waiting for customers to continue working or using their computer without worrying about power.

The Delta mobile app provides customers with services such as “eBoarding, ability to track and pay for bags, alerts for updated travel information, airport and aircraft details, and a parking reminder” (News Hub, 2012, par. 6). These mobile and wireless technologies have placed the airline as a regional and global leader in technology application in sustaining customer-business interaction.

Level of Efficiency of the Mobile and Wireless Technologies at Delta

The Delta mobile app enables customers to order tickets directly from the company without having to pass through agencies. Besides, the customer is also able to pay for the ticket through the same mobile phone and only show up during the departure with the ticket code. Unlike the traditional ticketing platforms, which required customers to call agencies or visit their offices, the airline’s mobile app has empowered customers to take charge of their traveling schedule and save in the process.

The reduced time in ordering tickets and making the payment has improved the company’s efficiency as a result reduced complainants, fraud, and ticketing lines (Checkland, 2007). This means that Delta can concentrate the resources that were employed in ticketing to other aspects of the business without affecting the service charter for its customers.

The latest technology products such as free Wi-Fi, recharging portals, and the mobile app have improved on the actual and perceived customer satisfaction with the Delta products and services. For instance, in the 2011 financial year, the company recorded repeat customer growth by 14% while referrals in the corporate customer segment also grew by more than 10%. Customers are attracted to Delta because of the technology-based service charter that promises to entertain, offer comfort, and maintain constant contact with the company. For instance, a frequent business traveler would prefer using Delta because he can charge his laptop, use the internet onboard, and track his luggage. The increased customer retention and referrals have resulted in more efficiency as the company can meet its targets through improved revenues (Jiawei, 2011).

Since the mobile and wireless technology in use by Delta engages customers directly, the airline has been able to streamline the cost of operation by reducing the number of employees. Unlike before when the company had to employ many workers to sell tickets, the mobile app for ordering tickets means that the customer interacts directly with the company without the involvement of any third party. The streamlined logistical and personnel as a result of the above technology has resulted in reduced cost, thus improved efficiency (Reynolds, 2009).

Selected Company’s Strategy for Implementing Systems and Technology

Etihad Airways is based in the United Arab Emirates and has been in operation for more than a decade. At present, the company is considered one of the most technologically advanced airlines with the Gulf region. Among the notable technology that is applied by the airline company to reach its customers are wireless and mobile technology applied by Etihad are SMS system, free fast Wi-Fi onboard, product app for checking in and tracking luggage, free recharging portals, and the company’s crystal report system (Turban, Volonino, & Wood, 2012). These systems and technologies are used to sustain customer relationship management, efficiency in service delivery, and gaining a competitive advantage in the market.

Level of Efficiency at Etihad as Influenced by Technological Implementation

The Wi-Fi and service app is mobile technologies that are used by the company to keep in touch and improve the comfort of customers on board. In all Etihad planes, there is free and very fast Wi-Fi internet connection, which enables customers on board to select their entertainment channels and work while traveling. The service app can be downloaded and installed on the customer’s mobile phone for use in any location or at any time.

This means that customers who have installed the Etihad app are in a position to buy air tickets just by pressing a button on their mobile phones. Besides, the app empowers customers to track their ticket orders, luggage and traveling schedule in real-time (Turban, Volonino, & Wood, 2012). In case of any communication from the airline, a customer with the app is in a position to get the message in the shortest time possible. The app also comes with a toll-free customer care chart button. This means that customers can follow up on inquiries through live charts with the support representatives. Upon login into the app, a customer only needs to include his app identity number after which an automated chart can activate.

The other mobile technology applied by Etihad Airways is the SMS and toll-free calls. Customers of the airline can subscribe for free to messaging services to ensure that they get updates about products, schedules, ticketing, prices, and current offers. The offline messaging service offered by Etihad empowers customers through the provision of updated information about the company’s products and different services. Prompt communication via SMS service has been instrumental in improving the airline’s customer relationship management strategy through increased customer-company contact relationship (Turban, Volonino, & Wood, 2012).

Comparative Analysis: Delta and Etihad

In my opinion, Delta has been more strategic in using mobile and wireless technology to attract and retain customers. Unlike Etihad, which is still implementing most mobile and wireless technologies, Delta has created a stable technological application that has global coverage. Besides, Delta’s mobile can be customized and comes in more than ten languages and designs unlike Etihad’s app, which has not been rolled out beyond the Gulf region.

Operational and Enterprise Systems Supporting Technology at Etihad and Delta

In the case of the Etihad Airways, knowledge management decision support systems (KMDSS) and data warehousing are merged and the focused on incorporating the mobile and wireless technology to interact with available information, wherever and whenever it is available (Turban, Volonino, & Wood, 2012). Etihad Airways focuses on text mining for mobile messaging to facilitate remote interactions between the airline and customers in real-time. The emergence of text mining has improved business intelligence in the organization, which means that text mining has become an indispensable aspect of technological support at Etihad Airways.

In the case of Delta Airline, the company has integrated mobile and wireless technology to focus on customer satisfaction. The company uses data warehousing with the support of the Kalido Information Engine, which enables the company to not only deploy the technologies, but also maintain the functionality in an efficient manner (Turban, Volonino, & Wood, 2012). As a result of the automation with the support of the Kalido engine, the company has been in a position to implement automation, speed, and agility as part and parcel of the technological application strategy.

References

Checkland, P. (2007). Systems thinking, systems practice. New York: John Wiley & Sons. Web.

Jiawei, H. (2011). Data mining: Concepts and techniques. United States: Morgan Kaufmann Publishers. Web.

News Hub. (2012). Delta named top tech-friendly U.S. airline. Web.

Reynolds, G. (2009). Information technology for managers. New York: Cengage Learning. Web.

Turban, E., Liang, T., & Wu, S. (2011). A framework for adopting collaboration 2.0 tools for virtual group decision making. Group Decision & Negotiation, 20(2), 137-145. Web.

Turban, E., Volonino, L., & Wood, G. (2012). Information technology for management: Advancing sustainable, profitable business growth (9th Ed.). New York: Wiley Global Education. Web.

Introduction to the Study

The company was established in the middle of 2003. It finally started to operate in November of the same year. The most interesting fact about Etihad Airways is that this company managed to showcase one of the fastest evolutions in the history of airlines. Weekly, the company, manages to send out more than 1000 flights (O’Connell & Bueno, 2016). The company’s destination array includes more than 100 locations, and their fleet contains more than 100 airplanes. Their destinations include all continents, so it allows Etihad Airways to carry 15 million passengers annually. Moreover, the number of passengers also increases yearly and so do the company’s revenues (approximately $10 billion in addition to $100 million net incomes) (O’Connell & Bueno, 2016). Originally, Etihad Airways is located at Abu Dhabi International Airport. The company’s attitudes towards their services and clients reflect the best qualities inherent in Arabian residents – warmth, education, generosity, and friendliness. Another objective of the airlines is to represent Abu Dhabi as an international center of hospitality that connects different parts of the world. The company strives to the greatness by challenging themselves and trying to innovate constantly. It is no surprise that Etihad Airways receive numerous awards and prove that they are a worldwide-caliber commercial aircraft company (O’Connell & Bueno, 2016). Five years in a row, these airlines received the award for being the leaders of aircraft business. Their premium services are highly anticipated and praised by the customers. Currently, the company is still doing its best to improve their services and internal processes. Their key advantage is thoroughly described and supported by factual data in the next chapter of the paper.

Strategy of the Company

The mission of the company is to provide high-quality services that are essentially based on Arabian values. Etihad Airways is committed to embracing the strategy that is based on collaborative growth (Hazarika & Boukareva, 2016). This is done in order to preserve the company’s competitive position in the market and adjust the business in line with the advancements of the global airline business. Moreover, Etihad Airways make the best use of their partnership strategy by means of collaborating with smaller airlines and investing in the airlines that offer captivating destinations and prices (that are not originally available to Etihad) (Hazarika & Boukareva, 2016). By doing this, the company unlocks access to more than a hundred of destinations worldwide. Etihad Airways do not waste their time and improve their business strategy annually. They invest in franchising, connecting with new partners, and building alliances with other enterprises that are interested in the company’s services. Ultimately, Etihad Airways were able to gain shares in numerous companies (Virgin Australia, Jet Airways, Airberlin, and many others) (Hazarika & Boukareva, 2016). Overall, it is safe to say that the company employed a flexible differentiation strategy. On a bigger scale, the company does not measure its productivity, but there are two important indicators that can be used to define the company’s relative success. These two indicators are novel acquisitions and an increasing number of employees. There is a direct dependency between the income levels and the number of workers that were employed by Etihad. In the aircraft industry, productivity is not hard to measure due to the transparency of annual reports and a rather visible impact of the core variables on the success of the company.

Forecasting

There are two conventional methods of forecasting – qualitative and quantitative. The former is usually used when there is not enough information. This method is commonly applied to forecast the success of new products or technologies. Overall, it is based on the experience of those who apply this method and their intuition. Quantitative method is based on historical data and is applied when the market situation is stable. It is aimed at the existing products and technologies and involves a lot of mathematical calculations and approximations. The three categories of forecasting include time series, regression-based, and machine-learning-based forecasting. The first category is used to analyze the data concerning consistent market sales patterns. The second category is mostly useful when it comes to the process of modeling the outcomes of the company’s decisions. By applying this forecasting category, the company will be able to model the influence of their marketing campaigns, assess the decisions regarding the price changes, and plan the promotion of alternative services. The third category is the best when the company has to model the impact of other companies on the market. It is widely used to monitor the competition and forecast the majority of key market moves and their outcomes. If one has to provide examples of time horizons, it is reasonable to mention that medium-term future and long-term future objectives are the focus of Etihad Airways. The company is interested in gaining a loyal customer base and selling as many tickets as possible (Dresner, Eroglu, Hofer, Mendez, & Tan, 2015). Therefore, the booking process is one of the examples of time horizons. Etihad uses specific tools to forecast their financial capabilities that can be perceived as adaptive insights.

Capacity Planning

Etihad manages their capacity in a rather efficient manner. Nonetheless, there are several aspects that may impose critical limitations on the company over time. The supply of Etihad Airways is commonly affected by both operational and contractual limitations of the airline industry (Chang, Park, Jeong, & Lee, 2014). Therefore, the company focuses on its tactical scheduling and decision-making processes. Efficient management of capacity at Etihad is represented by adjustments that are made in terms of flight departures (for instance, setting the flights on the dates when demand is low). In other words, the company manages the capacity by means of yield management so as to reduce the impact of limitations inherent in supply management. Despite all the improvements and an increased capacity (80%), Etihad Airways still lose a crucial number of passengers (Chang et al., 2014). There is no excess capacity available and the company has to adjust their sophisticated yield management system to the available solutions. The latter are designed to fix the long-term supply of Etihad Airways even when there is no enough data regarding the demand. If the company needs more capacity, it will explore the existing supply management strategies so as to find flexibilities that may be helpful in eliminating the interruptions in the workflow. It should be noticed that these flexibilities may be utilized to revise the organizational tactic and improve the flight schedule on the basis of the demand. Nonetheless, the company still has to review its strategies constantly. Capacity planning is a relatively novel concept that has a rather inconsequential number of contacts with the commercial airlines market. Etihad has sufficient staff and aircrafts to increase their capacity so the only thing that they have to worry about is optimal flight scheduling.

Process Selection

The system of ticket ordering can be found on Figure 1. The core characteristics of ticket ordering at Etihad are cost-effectiveness and uniqueness of the suggestions. The key contributor to this process is the horizontal development of the company’s strategy. Regardless, the process is aimed to provide advantages that will help the customers get the service that they want. Ticket booking process at Etihad is also revolving around advantageous prices and getaway from the undefined market areas (Al-Ali & Ahmad, 2014). The ability of the worldwide-renowned company to showcase its offers in an efficient manner allowed Etihad to make the most out of its ticket ordering process. Nonetheless, the process of booking may seem too complex for some users due to its horizontal directionality. To put it other way, the company’s booking process is aimed at cultivating loyal customers instead of a one-time compliance with the customer’s wishes. It is evident that this process perfectly reflects Etihad’s strategy of collaborative growth as the company wants to build a long-time connection with its customers (Achinto, 2012). The advantage of this process consists in the fact that the majority of Etihad’s competitors exploit vertical development and impose generic offerings on their customers. In perspective, the existing booking process will probably help Etihad to win over the market and monopolize their practice. The company accurately draws attention to user-friendliness of the booking process so it is safe to say that it became of the key contributors to Etihad’s major success. Even though the existing system is not perfect, the company does everything to develop horizontally and improve the overall performance. Gradually, customer satisfaction will increase and Etihad will be able to revise their capacity planning strategy as well.

References

Achinto, R. (2012). Relationship of osmosis: Rise of Emirates, the airline and Dubai, the city. Academy of Taiwan Business Management Review, 8(3), 1-5.

Al-Ali, H. A., & Ahmad, S. (2014). Etihad Airlines: Growth through successful strategic partnerships. Emerald Emerging Markets Case Studies, 4(5), 1-17. doi:10.1108/eemcs-09-2013-0184.

Chang, Y., Park, H., Jeong, J., & Lee, J. (2014). Evaluating economic and environmental efficiency of global airlines: A SBM-DEA approach. Transportation Research and Environment, 27(5), 46-50. doi:10.1016/j.trd.2013.12.013.

Dresner, M., Eroglu, C., Hofer, C., Mendez, F., & Tan, K. (2015). The impact of Gulf carrier competition on U.S. airlines. Transportation Research, 79(2), 31-41. doi:10.1016/j.tra.2015.03.022.

Hazarika, I., & Boukareva, B. (2016). Performance analysis of major airline companies in UAE with reference to profitability, liquidity, efficiency, employee strength and productivity. Eurasian Journal of Business and Management, 4(4), 71-80. doi:10.15604/ejbm.2016.04.04.007.

O’Connell, J. F., & Bueno, O. (2016). A study into the hub performance Emirates, Etihad Airways and Qatar Airways and their competitive position against the major European hubbing airlines. Journal of Air Transport Management, 5(2), 4-12. doi:10.1016/j.jairtraman.2016.11.006.

Introduction

Etihad Airways is a transportation company and the second-largest airline in the UAE. This organization was established in 2003 in Abu Dhabi. The airline utilizes various types of aircraft and consists of four different entities, including Etihad Airways, Etihad Airways Engineering, Etihad Flight Academy, and Etihad Airport Services Group. The company prides itself on the quality of the provided services and hospitality.

Moreover, one of the core values of the company is its determination to create a sustainable system that will minimize the impact of the company’s operations on the environment. Therefore, environmental management has a significant role in the company as it regulates such issues as fossil fuel dependence, the use of alternative energy sources, the sustainability of resources, and waste management. The position of the environmental analyst in this situation is of particular importance as this professional takes on the responsibility for determining the best ways to conserve the environment and creating a plan for the airline to follow.

Brief Description of the Position

The role of the environmental analyst in training is to learn about different approaches to environmental sustainability and understand the ways of resolving various environmental issues. The specifications of analysis and data assessment in this field should also be studied. Environmental analysts investigate the connections between human health, the company’s environmental impact, and the effects of climate change.

The environmental manager is concerned with various problems that may arise in the business. For example, fuel dependency on aircraft and the impact of high fuel consumption on the soil and water resources of the planet. Research of alternative biofuel production and utilization and its consequences for the environment is another area of importance that exists in environmental management. Other issues may include resource consumption rates, non-recyclable materials essential to the industry, and possible ways of reducing pollution.

Environmental Issue

The environmental issue investigated in this paper is the problem of waste management in Etihad Airways. The annual reports of this organization show that the airline’s management is concerned with the preservation of the environment. The presented issue is one of the main problems that occur at every stage of the company’s operations. Thus, the assessment of waste products can help the organization to create new solutions for responsible waste management. According to Achillas et al. (2013), efficient waste management requires companies to consider many criteria that can affect their waste production. Moreover, approaches to waste disposal should be brought to one’s attention as well.

Issue Analysis

The company presents the issue of waste management as one of the central concerns on its path to environmental sustainability. According to Laurent et al. (2014), waste production, influenced by the consumer habits of people, grows every year. Therefore, efficient waste management becomes necessary, as well. Etihad Airways produce various types of waste that fall under both recyclable and unrecyclable categories. The company’s efforts to reduce waste production are accompanied by different programs of upcycling and recycling.

First of all, one of the first initiatives that were implemented by the organization is recycling. According to the report by Etihad Airways (2016), their recycling program accounts for various products that are used during the flights by both the crew and clients. The report outlines that crew members collect “more than 120,000 plastic bottles, 12,000 aluminum cans, and 20,000 tonnes of glass every month for recycling” (Etihad Airways 2016, p. 23). Other products also include different paper items, namely newspapers, magazines, and pamphlets. The part of the company that provides catering services is one of the main producers of waste.

Items that cannot enter the recycling process undergo different procedures. The next initiative, created by environmental management, is upcycling. According to the report, the upcycling program was initiated in 2014 (Etihad Airways 2016). The resources that would go to waste before the implementation of this program were repurposed. For example, the tires from the organization’s aircraft are now being used in the company’s sustainable gardens as a part of the “rammed earth wall” (Etihad Airways 2016, p. 25).

However, in this report, the company does not go into detail about the materials that can be used in upcycling. Thus, it is possible to assume that company’s managers are still in the process of devising new ways of upcycling some types of products. While environmental management has many approaches to reducing organizations’ waste, some materials are not yet studied in full. Thus, it is possible that the company should consider looking for alternative resources that can be recycled or repurposed.

The upcycling and recycling programs were brought to a new level after the airline decided to change its uniforms. The amount of waste produced by old clothes could substantially damage the environment. Thus, the organization decided to recycle the uniforms and created an initiative called “Carpets from uniforms” (Etihad Airways 2016, p. 23). Etihad Airways collaborated with a recycling firm in order to reweave the old uniforms into carpets.

Similar repurposing of unrecyclable objects included making bags from old marketing banners. These bags were then sold to staff members. These programs show how the issue of unrecyclable waste can be solved through environmental management. However, not every material was repurposed by the company. Therefore, more efforts should be implemented to lessen the amount of waste further.

Excessive landscaping waste is another problem encountered by Etihad Airways. Degradable organic and vegetative materials compose one of the biggest portions of produced waste in such areas of service as catering and cargo handling. Although these materials can break down on their own, the amount of waste greatly affects the time it takes to decompose.

Thus, it is important to create an efficient system of biowaste treatment. For this purpose, in 2014, environmental managers of Etihad Airways decided to set up a composting facility that would utilize biowaste products by the company. According to the report, the bins for compost were created from “damaged wooden pallets from the airline’s cargo facility,” and various types of produced landscape waste, including “coffee granules from the canteens and coffee shop,” became the basis of the composting process (Etihad Airways 2016, p. 23).

Therefore, the management handled the issue of biowaste and incorporated items from catering services and cargo facilities as well. Some of the materials were also used in the sustainable garden that is mentioned above.

All in all, Etihad Airlines already has a vast range of solutions that were implemented in order to reduce pollution and manage waste. Such efforts as recycling, upcycling, and composting came from a professional team of environmental analysts. These people accounted for soil and air pollution and create initiatives that not only reduce waste but also help the company to reach its goal of sustainable development. However, some additional advice can be given in order to maximize the company’s efficiency and help it further reduce its environmental impact.

Possible Solutions

The problem of waste management should be looked at from multiple positions. First of all, the organization should consider lowering the production of waste. The generation of waste can significantly damage the environment and human health (Laurent et al. 2014).

Although companies can propose many solutions in order to recycle or reuse some materials, they should also think about choosing alternative solutions that do not involve the usage of excessive materials that will eventually go to waste. For example, the catering services of airlines produce large amounts of waste by using disposable tableware and cutlery. While the materials of this tableware are recyclable, the decision to use these materials should be reconsidered. Some of the cutlery can be made to be used multiple times. Alternatively, the organization can search for other materials for its disposable tableware. For instance, biodegradable plastic may become a part of the solution to this issue.

The company’s efforts in recycling involve many products that are used by the organization’s facilities. Etihad Airways should maintain these programs and implement them in every part of their system. For example, other Etihad Airways departments can follow the same rules of collecting recyclable materials, including glass, plastic, and paper. Furthermore, upcycling procedures should also be spread to other facilities.

Currently, Etihad Airways repurposes staff uniforms and advertisement banners as a part of this effort. To further advance this program, the airline can consider using other parts of their equipment for this initiative. The use of biodegradable waste as compost is another viable program that should be expanded.

The garden that Etihad Airways created as a part of its sustainability commitment showcases their use of a range of products that are hard to recycle in other ways. However, the utilization of such materials in this garden is an excellent solution for reducing waste. The airline should consider the possibility of creating more sustainable gardens throughout the facilities and implementing their compost programs and recycling programs to supply and furnish other gardens.

Other solutions may include working with the public and informing consumers about the importance of waste management. The airports and aircraft of Etihad Airways encounter many clients on a daily basis. These customers can participate in the company’s efforts to reduce their environmental impact. The organization can create various campaigns that will encourage people to bring products for recycling or choose materials that are easy to repurpose. Furthermore, products made from different materials such as advertisement banners and uniforms can be sold to clients and other individuals in order to utilize more old items and increase waste reusability. Moreover, these products from recycled items can help the company to raise awareness of this issue and promote waste management.

Conclusion

While the issue of waste generation remains one of the central problems in many industries, Etihad Airways seems to have a multidimensional system of programs that assess the company’s waste levels and propose many solutions to reduce the company’s environmental impact. The organization has multiple recycling and upcycling initiatives that allow it to move towards environmental sustainability. All in all, all programs of the company should be maintained and expanded to other parts of the Etihad Airways system. Furthermore, the company should consider engaging the public in their efforts in order to raise awareness and reach out to more people. It is safe to assume that environmental analysts of Etihad Airways do everything to move towards the goal of sustainability.

Reference List

Achilles, C, Moussiopoulos, N, Karagiannidis, A, Banias, G & Perkoulidis, G 2013, ‘The use of multi-criteria decision analysis to tackle waste management problems: a literature review,’ Waste Management & Research, vol. 31, no. 2, pp. 115-129.

Etihad Airways 2016, CSR progress report. Web.

Laurent, A, Clavreul, J, Bernstad, A, Bakas, I, Niro, M, Gentil, E, Christensen, TH & Hauschild, MZ 2014, ‘Review of LCA studies of solid waste management systems – part II: methodological guidance for better practice,’ Waste Management, vol. 34, no. 3, pp. 589-606.

Introduction

Quality management is one of the modern tools business organizations in the United Arab Emirates employ in confronting business challenges that come with modern approaches to doing business such as changing customer expectations and dynamic customer behavior.

That is the case with air traffic control and controllers at Etihad airways. Quality is an important aspect in air cargo operations, technical operations, the monitoring of weather conditions and other aspects for efficient running of the airport operations and service improvements.

For efficient operations at the airport, the principles of quality management, benchmarking employee responsibilities and tasks and the aspect of quality spanning the total organization, tools for quality management embedded in the six sigma steps for quality are key roles in driving the airway’s business organizations to better performance levels.

Recommendations call upon the management to factor issues such as effective and open communication channels, quality improvement plans that target both the customer and the employee, and customer focus at all levels of service provision to improve the quality of services to higher levels, among other recommendations.

Definition of Quality Management

Quality management is defined as the coordination of organizational tasks consistently focused at organizational policies implemented through clearly defined objectives using specific tools such as quality assurance, planning, control, and quality improvements throughout an organization’s hierarchy.

Therefore quality management principally focuses on customers, focused leadership, people improvement strategies, quality process techniques, quality management through a quality system approach, impeccable decisions and decision making processes, and organizational and stakeholder benefits. That is the case with Etihad airways.

Quality Management Contribution to Organizational Success

Successful business organizations factor the whole concept of quality management in tailoring themselves to success. Success, in terms of Etihad airways comes in terms of value gained by the customer, among other benefits, translating to higher organizational profits and customer satisfaction and quality service provisions.

However, organizations that do not factor the principles of quality management face severe penalties associated with organizational failures to comprehend and incorporate quality management policies. Such organizations largely lose their customer base and profits leading to failure in all aspects of the organization.

At Etihad, success has largely been the result of integral focus on quality management principles and approaches discussed below.

Quality planning

Etihad’s management keenly understands quality management planning strategies as a core driving element to business success. Quality planning incorporates identifying standards that define the rules to achieve customer satisfaction in its core international air carrying business to different global destinations with its current fleet of 54 aircrafts.

The management conducts a cost benefit analysis of the air carrier’s activities and benchmarks these activities against organizational goals and objectives. The time value for money, organizational efficiency against established benchmarks, business risks, and regulatory measures of different target business destinations underline the overall business objectives of the organization. In addition to that, business operations at the company are benchmarked against business best practices in the industry.

The benchmarking process incorporates aspects of identifying organizational performance in service provisions in the transport industry spanning the management hierarchy through every department of the organization. Quality planning within the business organization incorporates the creation a quality management plan strategically tailored towards organizational efficiency and productivity in quality service provisions.

The quality plan incorporates a quality baseline defined on quality metrics targeting customer satisfaction. The organization’s level of quality is benchmarked and evaluated against established metrics to ensure customer satisfaction. Satisfied customers not only come back and reuse the system, but bring other customers who need similar services.

The business organization’s quality plan outlines policies integral to the pursuit of quality standards and objectives to be achieved through the quality plan. Different departments contribute differently to the running of the business organization. Each individual in each department is assigned specific responsibilities and is obliged to fulfill them with an overall synergy towards quality implementations and achievements.

Each time, Etihad airway’s management conduct semiannual evaluations of their achievements by reflecting on the performance of the airline against long term and short term strategic objectives. That involves an evaluation of organization’s quality plan and its impact on the performance of the airline and employee productivity. In addition to that, similar airlines serve as points of comparison against which the airline evaluates itself.

Quality Assurance

Activities at Etihad airways are organized to systematically target organizational efficiency in the provision of air transport services. Quality assurance is a tool integrated in quality management within the organization to ensure each activity in each department meets established quality standards. Quality assurance provides the satisfaction that quality is being achieved at every department and that it is incorporated as an effective tool for achieving higher quality standards.

To ensure services adhere to established quality standards, the organization conducts regular quality audits to establish compliance to organizational quality policies. In addition to that, quality assurance audits are a measure put in place to ensure all processes and procedures meet the quality requirements defined in the organization’s policies.

Quality assurance audits are the responsibility of each department at Etihad airways overseen by the organization’s management at the top most hierarchy of management. Each department continuously devices ways of achieving higher quality standards while ensuring that departmental activities remain consistent with organizational policies and best practices.

Each department conducts an internal quality audit on a regular basis. These audits span employee productivity, attitude towards work, employee response to customer queries and concerns, and approaches to handling customers and their complaints. In addition to that, quality assurance is conducted at predefined intervals within the organization (Feigenbaum, 1991).

Quality Control

Quality control on the other is carried out continuously against organizational performance and employee productivity. Organizational performance spans a critical evaluation on returns on investment, profits generated from the air carrier’s transportation services, employee and customer satisfaction, and speed of service delivery.

In addition to that, customer complaints provide a clear indication of employee productivity and the levels of service quality. To ensure satisfactory quality provision is incorporated in the organizational pursuits, each element that contributes to waste and dissatisfaction is identified and eliminated in the process, to enable the organizational efficiency in serve provision (Etihad Airways Facts and figures, 2009).

Sound quality management and quality control principles ensure measures are continuously put in place to ensure errors are prevented from occurring in the whole process of handling customers within the airline. Errors can arise by booking a customer to the wrong destination, indicating wrong time about an aircraft’s departure, entering wrong figures on transportation charges, giving customers wrong information on flight schedules and a host of others.

Such errors should always be avoided to ensure quality services through a quality control mechanism. In addition to that, the airline always ensures that a mechanism is incorporated to ensure errors in the systems are kept free from customer hands. The airline takes responsibility for any errors as much as possible to ensure customers are well protected leading to customer satisfaction (Feigenbaum, 1991).

Quality control cannot be complete without a mechanism to ensure that results from quality audits are fully or tolerably accepted across responsible parties. When results are tolerably accepted, acceptable decision can be made that define the quality of the services provided at the airline, actions can be taken to correct anomalies within the system, and failures that may occur from the weakness of the system ca ne corrected. That is the case with Etihad Airways (Franceschini, Galetto. & Maisano, 2007).

As mentioned above, Etihad is a business organization run by experienced and clever executives. These executives have realized that a business organization cannot be driven to higher performance levels without incorporating aspects of business best practices. Quality metrics and quality polices are documented and open to every employee and any interested third party to access and read.

The organization has incorporated a mechanism for soliciting feedback from employees and customers on all quality issues and the quality of services offered at the airline. The management keeps track of the quality process by continually reviewing quality metrics and service provision practices to ensure quality is maintained at all levels of the organization. Quality management is a philosophy that is achieved by the use of different tools in its dimension as discussed below.

Tools and dimensions of Quality Management

QM is a philosophy that is implemented at Etihad through a variety of tools. These tolls enhance service delivery, quality, employee performance, and effective organizational management approaches in meeting customer needs and staying competitive in the market. In addition to that, they help in analyzing service quality and in identifying ways of improving services and products in line with organizational objectives (Juran, 1988).

A flow chart provides a pictorial representation of processes in service provision within Etihad airways. Flow charts improve employee and management evaluation of the processes involved and helps them identify areas demanding continuous improvement within the organization (Etisalat, 2010).

The flow chart clearly illustrates the process of a customer launching a complaint at Etihad’s customer relations department. Once the complaint has been launched, it is attended to and if the customer is satisfied based on the on the concept of QM, the customer may re-launch the complaint (Kossoff, 1993).

On the other hand, a histogram brings to light the productivity of employees at various points and the waiting time a customer needs to wait before an issue is solved. At Etihad, employee productivity and customer waiting time are integrated to ensure employee productivity is improved, wastes are reduced and employee efficiency is attained (Etihad Airways Facts and figures, 2009).

Another tool is the scatter diagram illustrated below.

The diagram has points plotted on a two dimensional graphical axes that indicates the relationship between the number of employees that have undertaken QM training within Etihad. In addition to that, it illustrates the number of complaints received from customers against training programs. The number of customer complaints and the number of training programs illustrate to what extent the TQM program has had an impact on customer satisfaction and employee productivity.

Sigma Steps at Etihad Airways

At Etihad airways, QM is a concept that embraces six steps in its integration process to the airline. These sigma steps include, defining a process, evaluating the existing system, analyzing the system against a benchmark, improving the process, and effectively controlling the new process.

Each process is defined against defined quality standards and the strategic vision of Etihad, the current Etihad system continually evaluated and training needs identified, each process is improved against set benchmarks, and effective controls are affected to ensure quality management benchmarks are adhered to (Easton, 1993). The company could move from one level of productivity to another and enjoy a strong customer base and higher profits.

Failures

However, it has been noted with time that services sometimes do not fulfill customer needs and expectations. This is significantly due to the quality gaps existing within a service. Among the quality gaps that exist in a service is the failure of the marketer to understand the communication about the quality of a service Etihad. Customers may communicate differently and the marketing department at Etihad may understand them differently.

The conflict in understanding between the customer and the service provider influences or creates a gap between customer perceived value and marketer perceived value of a service. The gap created with the two perceptions leads to reduced service ratings. In addition to that, the management hierarchical organization, lack of employee autonomy in decision making affect performance levels at Etihad airways.

Recommendations

From the above discussion; it is evident that the Etihad is on the right track in quality management despite a number of pitfalls that need acute attention from the findings on the organization’s approach to quality management. The management has failed to address internal quality management issues that span employee satisfaction that translates to organizational efficiency and performance.

Therefore, a quality plan encompassing organizational employees across each department and each hierarchy of management is the way to go. It is further recommended that quality audits be more frequent and measures for quality control be universally applied across each department. Quality control should be an organizational tool factored into organizational culture of the air line carrier.

Glaring disparities seem evident with the airline, though. Customer focus is one of the areas that the company should focus more, among the principles of good customer relationships. Satisfied customers always come back and spend more. The exponential demand for air transport services within and outside of United Arab Emirates has compelled air travel customers to impulsively use Etihad without regard for the quality of services offered at the company.

The management of the company should not bank upon profits generated by the company and volume of customers as a tool to conclude positively about services quality. In addition to that, the management should incorporate other principles such as real time processing of customer complaints, employee satisfaction, and excellent communication channels within the organizational employee workforce.

Communication feedback is an essential tool to effect quality management at different departmental and organizational levels. Therefore, communication channels should be made open to cultivate understanding between communicating parties within and outside of the organization.

In addition to that, organizational employees need some degree of autonomy in decision making, reducing the time lag between contacting higher organizational managers. In addition to that, the organization should embrace a strategy that allows employees to keenly listen to and understand customer needs and expectations. Then services may be tailored to meet customer needs and expectations besides increasing their flow and use of the airline.

Etihad Airways Profile

From: Etihad Airways

References

Easton, G. (1993).The 1993 state of US total quality management: a Baldrige examiner’s Perspective. California Management Review, 35(3), 32-54.

Etihad Airways Facts and figures (2009). Vol.7. Web.

Etisalat, (2010). About us. Web.

Feigenbaum A.V.(1991). Total Quality Control: Engineering and Management.

Franceschini, F., Galetto. M., & Maisano, D. (2007). Management by Measurement: Designing Key Indicators and Performance Measurement Systems. Springer-Verlag Berlin Heidelberg.

Juran, J. M. (1988). Juran on planning for quality. Cambridge MA: Productivity Press. A Life Cycle Approach, (5th ed) Homewood, IL, Irwin.

Juran, J. M. (1988). Quality Control Handbook. 4th ed. New York: McGraw-Hill.

Kossoff, L. (1993). Total quality or total chaos? HR Magazine, 38(4), 131-4.

Tyco Electronics. (2003). Total Quality management. Quality manual, 102(1). Web.

Introduction

Etihad Airways is the United Arab Emirates’ national airline. The airline was established in July 2003 through Royal Decree and it started operating in November 2003. Currently, it is one of the fastest growing airlines across the globe. Etihad Airways airline deals with passenger and cargo delivery to various destinations across the globe.

Currently, the airline serves 84 destinations and it expects to open more destinations in the near future. Besides the passenger and cargo delivery, the airline also operates a contact centre and Etihad Holidays (Etihad Airways 1-3).

The airline’s ultimate goal is to be a real 21^st century world airline by enhancing the existing norms of airline hospitality, and to achieve this goal, the airline has established numerous strategies. This paper focuses on some of the current businesses, operations, strategic, and unit plans that are underway in the company as ways of helping it to achieve its goals.

Discussion

Organisational plans

The success of any business depends on its existing strategic, operations, unit, and business plans. Strategic plan plays a significant role in business development and marketing (Ticoll 18). Etihad Airways has come up with a strategic plan to help it in realising its goal. Currently, the company is seeking to increase its revenue base by opening new passenger and cargo destinations.

The company is exploring new markets and aims to launch numerous routes across the globe by the end of 2013. For instance, the company aims at opening new destinations in Ethiopia, India, the United States, and Brazil (Etihad Airways 9). Moreover, the company intends to increase the number of its aircrafts to meet the increasing number of passengers and demand for cargo delivery.

For an organisation to achieve its strategic plans, it has to come up with appropriate operational plans (Ticoll 19). Etihad Airways has come up with an operational plan that will help it to achieve its goal. Currently, the company is working with Universities in the United Arab Emirates to train its staff and equip them with the requisite skills.

Moreover, the company has stationed numerous staff in different destinations that are responsible for selling the company’s products to potential customers (Etihad Airways 7). One of the ways of enhancing organisational operations is through improving on the quality of services offered.

The company is continuously upgrading its aircrafts to meet the needs of the different classes of passengers. The move aims at helping the company to attract more customers thus becoming the leading airline company in the world. Moreover, Etihad Airways is renovating its airport to facilitate in enhancing the quality of services it offers to its clients (Etihad Airways 3).

Besides the strategic and operations plan, Etihad Airways has come up with a business plan to help it to achieve its objectives. As away of enhancing its operations, the company has come up with a business plan that will help it to increase the number of aircrafts and buy the state-of-art airplanes to meet customer demands.

As the company aims at expanding the number of its destinations across the globe, it is gradually working on embracing diversity within its workforce, and thus the company employs people from different countries.

In addition, as a way of enhancing the quality of services it offers to local customers, the company has come up with an Emiratisation policy, which helps in hiring and developing the career of local employees (Etihad Airways 5-7). Currently, the company has split its operations into the cargo unit, passengers unit, and contact centre. Presently, the airline is working on increasing the number of its freighters by 2014.

Organisational structures

For any organisation to operate efficiently, it ought to have an efficient organisational structure. The order in which an organisation structures itself dictates the organisational values and beliefs held by that particular organisation. An organisation with few employees does not require formal organisational structure (Brews and Tucci 429-435).

There are four different organisational structures, viz. pre-bureaucratic, bureaucratic, post-bureaucratic, and functional structures. Presence of a single decision-maker characterises the pre-bureaucratic organisational structure. Bureaucratic structure exhibits a degree of standardisation, which comprises strict hierarchies through which the organisation makes its decisions.

The post-bureaucratic structure is almost similar to bureaucratic structure with respect to hierarchies. Nevertheless, this structure encourages modern ideas like culture management and total quality management (Brews and Tucci 437-442).

Etihad Airways is a large company; hence, the company requires a formal structure to enhance and monitor its operations. Etihad Airways uses a functional organisational structure. The company is structured in a way that it has varied segments based on the operations it undertakes.

Etihad Airways makes sure that it aligns its operations along geographical zones to facilitate their management. The company has established six geographical regions to facilitate in its sales objectives. Each region has a regional vice president who is responsible for managing sales operations with the help of general managers.

The company consists of three management levels. The highest level in the management structure comprises of the board of directors, which is responsible for making final decisions on matters affecting the company.

Right below the board of directors is the Executive Committee that is responsible for managing organisational operations and ensuring that the company is working towards the realisation of its goals (Etihad Airways 1-2). The Executive committee works closely with the Audit Committee, which is responsible for assisting the company to make better use of the available resources.

Human resource issues

Organisational strategic plans lead to the emergence of numerous human resource issues. As an organisation seeks to improve its operations through changing its existing strategic plans, it ends up affecting its employees in one way or another (Ticoll 20). The desire by Etihad Airways to become the leading airline company in the world has made it embark on various strategic plans. In return, it has spurred some human resource issues in the company.

Changes in technology and the desire to equip its staff with requisite skills have pushed the company to liaise with Universities to facilitate in training its staff (Etihad Airways 7). In addition, the company seeks to offer employment opportunities to the local people, and to achieve this objective, it has embarked on an Emiratisation policy, which gives the Emiratis an opportunity to train and work for the company.

Etihad Airline is opening new destinations across the globe. Hence, it requires staff with experience in diverse cultures. Today, its employees come from over 126 nations, thus embracing varied cultural practices (Etihad Airways 4).

The company has come up with a succession plan to help in identifying and nurturing talents that would help it to implement its strategic plans. Besides, the company intends to ensure that it helps in environmental conservation. Consequently, it seeks to work with like-minded staff and business partners.

Conclusion

Since its inception, Etihad Airways endeavours to be the leading airline company in the world. Hence, the company has initiated numerous strategic, operations, business, and unit plans to help in realising this goal. The company has not only increased the number of its destinations, but is also training its employees to equip them with requisite skills.

Works Cited

Brews, Peter, and Christopher Tucci. “Exploring the Structural Effects of Internetworking.” Strategic Management Journal 25.5 (2004): 429–442. Print.

Etihad Airways. Our Story, 2012. Web.

Ticoll, David. “Get Self-Organised.” Harvard Business Review 82.9 (2004): 18–20. Print.

Abstract

The purpose

This paper examines the benefits that the domestic and international airlines draw from the formation of strategic alliances with other international carriers. Therefore, the purpose of the paper is to explore the significance of code sharing arrangements that most carriers have with other international carriers. However, the paper will narrow its focus on the strategic alliance between Etihad and Virgin Blue of Australia.

Methodology

Much of the data are obtained from the secondary sources mostly from the individual airline business reports as well as other important sources of literature. Some of the data are also obtained from the international aviation organizations such as the Australia Competition and Consumer Commission (ACCC).

Data such as the approval of interlink of both airline customers in all the airline destinations are obtained from ACCC. The data such as the alliance patterns as well as the RPMs (revenue passenger miles) together with other load factors are obtained from both the airline business data bases.

Findings

The study indicates that the code sharing arrangements between the two airlines, Etihad and the Australian Virgin Blue, will result in increased revenue passenger miles (RPMs), the market share and the passenger load factor (PLF). However, in the long run these benefits will erode as more players in the industry enter into more alliances thereby increasing competition.

In fact, strategic alliance was formed as a competitive strategy for the two airlines. Therefore, the code sharing arrangements between the two airlines are done at the right time so as to benefit from the initial increased RPMs. The effect of the alliance on the market share will be consistent and explicit throughout the alliance period.

The study also indicate that the airline, Etihad, have an equity investments relationship with this international carrier. Though most of the literatures reviewed do not indicate any positive influence of this relationship on the RPMs, PLF and the market share, the analyzed data seems to support this hypothesis in this alliance.

Interestingly, the result indicate that the size of the alliance partners have a greater influence on the three most observed benefits, RPMs, PLF and the market share. The result also support the hypothesis that in situations where the alliance partners are not equal then the domestic airline may not be in a position to benefit from the alliance, for instance, increase its load factor, RPMs and the market share.

Therefore, it can be concluded that the airlines that form code sharing agreements must be large enough and almost equal in order to continuously benefit from the strategic alliances. That is to continuously increase benefits such as increased RPMs, PLF and the market share. This report reveals that carriers that enter into code sharing agreements early enough in the competition will always benefit. However, these benefits tend to reduce in the long run.

Introduction

The noticeable trends in most industries currently are the development and popularity of the alliances among the competing firms and even within the supply chain members. This trend has largely been attributed to the current world economic order, globalization and the liberalization of most of the industries, particularly, the aviation industry (Rajasekar & Fouts 2009, p.93).

Therefore, studies on what drive firms towards this cooperation have remained to be an interesting topic to most researchers. Several empirical studies have documented exceptional development and growth in popularity of inter-firm alliances or cooperation’s in various industries. Majority of companies are looking for alliances in various aspects of their operations (Rajasekar & Fouts 2009, p.95).

The aviation industry is not left behind in this new era of inter-firm cooperation. The aviation industry is vital in the development of the world economy, enhancing exchanges among the world countries as well as stimulating and facilitating the economic relations internationally. With the liberalization of the industry, the air transport has exposed itself to a new dimension of competition and the client orientations (Ladki & Misk 2009, p.73).

The result is that most of the airlines have revised their growth and competitive strategies that includes the cost cutting measures, better revenue management tools and most importantly strategic alliances. These competitive and growth strategies will not only ensure their survivability but also prosperity in terms of increased revenue and market share.

Strategic alliances are normally formed by most airlines in order to enter the constrained global networks and operate within the limits of the current air services bilateral agreement systems (Flores-Fillol & Moner-Colonques 2007, p.428). In most cases, major carriers enter into the bilateral code sharing agreements in order to increase their network coverage.

In addition, alliances are used by airlines to attain the global services networks, gain access as well as establishing their presence in new markets without having their aircrafts. Moreover, airlines use strategic alliances to provide services which would be costly and unprofitable if operated singly (Merkert & Morrell 2012, p.857).

Alternatively, consumers have indicated their preference for large airlines with increased service networks in order to minimize their travel costs, get better services and take advantage of the more attractive frequent flyer programs. Further, alliances increases access to the airports that are congested with landing restrictions and lacking slots for take-offs (Merkert & Morrell 2012, p.859).

Theoretically, alliances are believed to increase economies of scale leading to the reduced costs associated with marketing, operations, training and the ground maintenance. Moreover, alliances reduce the redundancies and duplications in the overall airline operations. Therefore, the aim of any alliance in the air transport industry is seen as enhancing each of the partner’s competitive advantage as well as attaining greater profitability (Rajasekar & Fouts 2009, p.95).

This study aims at establishing the benefits accrued or not accrued when two international airlines forms a code sharing agreements. In this case, the study will be focusing on the benefits that are accrued or not accrued in the alliance between Etihad and Virgin Blue of Australia. The term benefit is defined in this study as the increased RPMs, PLF and the market share. The reason is that these three variables are normally used to measure the productivity and the profitability of the airline.

The paper will first provide the background information of the two airline companies, aviation industry in UAE and the reasons for the formation of the strategic alliance. The paper will then provide broad literature review on the benefits of strategic alliances in the aviation industry followed by research methodology, research findings, and recommendations before making conclusions of the study.

Background information

Etihad airways

The airline is currently boasting of 81 destinations in almost 51 countries. The available seat kilometers on the airline network grew by 51% in the previous financial year while revenue passenger kilometers grew by 16%. The airline also increased its flights by 7% in the same year.

Generally the airline recorded growth in its entire operation segment. The airline growth projections indicate an overall 7% growth in the next two years. This growth trend has largely been attributed to its competitive and growth strategies that include the formation of alliances with other major international carriers.

The airline has pursued an effective strategy of forming strategic alliances with other international carriers to enhance its network and marketing strategies. The strategic alliance has enabled the airline to access most of the competitive market.

The code share deals the airline has with other major airlines have generated a wide-ranging effective network providing customers with easy access to destinations not directly served by the Etihad airways fleet. These code share agreements have also contributed to the considerable revenue growth of the airline.

Comprehensive code share agreements include the reciprocal frequent flyer programs, code share flights, access to lounges together with other customer services. All these depend on the type of the agreement partner.

The alliance with Virgin Blue of Australia means that the virgin Australia will be operating its own flights to Abu Dhabi and code share across each others networks. The benefits that the two airlines will get are reciprocal. The two companies are currently offering the most comprehensive rout networks both in and out of Australia.

In relation with the government, Abu Dhabi government believes that aviation industry is critical in its plan for the 2030. The reason behind this belief is that running a successful airline will form a solid foundation for free market commercial activities in large scale to strengthen diverse economy while at the same time attracting further investments.

Against these backdrops, Etihad is playing a crucial role in ensuring that these economic goals are achieved. In other words, Etihad is critical in driving and supporting economic growth in UAE.

The economic contribution of the airline has been categorized into four major groups including direct, indirect, induced and catalytic. The direct economic benefits are what the airline contributes directly to the economy of Abu Dhabi. In 2011financial year the airline contributed approximately $1.46 billion, 2.1% of non-oil contribution to the GDP and 0.8% of the total GDP.

In the same financial year the airline contributed $830 million indirect benefit to the Abu Dhabi GDP through the purchase of fuel, investments in marketing, ICT as well as maintenance and repair, airport landing and rental fees. Also included in the indirect economic contribution is the generation and supporting of 15,000 jobs.

Generally, the current airline projections indicate that the airline is likely to contribute over $10.7 billion to the Abu Dhabi economy with a growth arte of 7% in the next two years. This encompasses all the contributions even that of the tourism sector.

Virgin Blue of Australia

The company was incorporated into the Australian market in the 2000. The airline expanded rapidly during its first year of operations and by mid 2001 the airline has launched 14 routes within the national domestic network. The airline has continued to grow and expand in the subsequent years through the formation of strategic alliances with other airlines.

The airline expansion strategies have enabled it to become one of the top competitors in the Australian aviation industry. Its code sharing agreements with other airlines have enabled its accessibility to some of the Asia pacific markets as well as the increased revenue for growth. The airline has operated in the Australian market for only ten years but have experience a tremendous growth momentum.

The strategic alliance the airline entered with Etihad is expected to enable the airline gain access and increase its market share in Middle East. The agreement means that virgin blue will be operating its own flights to Abu Dhabi among other code sharing agreements benefits including providing customers with better services. This strategy has been seen as not only increases its competitive advantage but also essential for its growth and expansion globally.

Literature review

Reasons for the strategic alliance

The aviation industry has experienced a number of changes since its deregulations in the mid 80s particularly in the USA and Europe. According to Flores-Fillol & Moner-Colonques 2007, major airline carriers have seen a substantial decline, increased reorganization of routs leading to the major hubs as well as the spoke networks and more recently the formation of strategic alliances between the major international carriers.

In fact, the formation of strategic alliances symbolizes the modern and significant innovation in the aviation industry. Most major airlines today form strategic alliances for various reasons. However, these alliances are driven by the current world economic trends and fierce competition in the industry (Ladki & Misk, 2009). Currently, almost every major international airline belongs to one or two strategic alliance. Industry observers assert that with the increased number of the air travels, fierce competition is likely between these alliances.

There are several types of alliances that the industry players make. The most common is the complementary alliance. The complementary alliance is where two major international airlines link their existing networks and come up with a new networks that offers the interline services to their clients (Rajasekar & Fouts 2009, p.97).

Complementary alliance permits the competing carriers to have their networks extended since they rely on each other to serve those destinations in which they have no market. However, interline trips have numerous inconveniencies.

In order to reduce these inconveniencies, complementary alliances provide passengers with almost perfect services through the proper management of flight schedules, guaranteeing gate access and bringing together the recurrent flyer programs (Adler & Gellman 2012, p.25). On the other hand, the major competing airlines can form a parallel alliance where they collaborate on the major rout or destination.

Whether in complementary or parallel alliances, the major carriers in a strategic alliance are immune to antitrust that exists in the autonomous ventures, absorbs the negative externalities arising from double marginalization observable in independent pricing as well as set the airline fares. According to Adler & Gellman 2012, the resulting corporative interline fare should cost less than the non-corporative fare.

This assertion is also supported by a number of empirical evidences. This point supports the fact that complementary strategic alliance among the major carriers is beneficial to the passengers (Ladki & Misk, 2009). In situations where competition is limited or absent, the complementary strategic alliance also benefits the allied airlines. This is due to the elimination of the double marginalization that has been mentioned (Adler & Gellman, 2012).

Further, Brueckner (2001) in Flores-Fillol & Moner-Colonques, 2007 argues that formation of complementary alliances among the major aviation players enables reduction of interline fares while at the same time increasing the travel volumes. Moreover, the joint pricing within the interline trips do away with double marginalization while the existence of economies of scale results in increased profitability of the alliance parties (Ladki & Misk, 2009).

Brueckner (2001) in Flores-Fillol & Moner-Colonques 2007 further observes that even though these outcomes are expected of the alliance agreements, the result is not always the case. This is due to the increasing competitive environment which appears to hurt the rivals. To the competing rivals, the alliances reduces the interline fare and travel volumes.

The reduced interline fair among the allied partners put downward pressure on the rivals interline fare. In the presence of intense competition and less product differentiation, the result is the general reduced interline fare both for the alliances and the rivals. However, the allied parties will benefit due to the increased travel volumes (Adler & Gellman, 2012).

Essentially, in situation where there is intense competition and less product differentiation, the formation of alliances seems to be more beneficial that acting independently (Rajasekar & Fouts, 2009).

Industrial players argue that the circumstances currently being experienced in the aviation industry present a situation where the formations of alliances are the only way through which the major carriers can survive (Rajasekar & Fouts, 2009). The reason is that most of the airlines are now offering almost similar products, in fact, travelling to the same destination and squeezed market size resulting into intense competition for few customers.

If a domestic airline goes into a code sharing agreement with an international airline, the earlier reaps the benefits of increased Revenue Passenger Miles (RPMs), market share as well as Passenger Load Factor (PLF). These three factors are used to determine the profitability and productivity of a particular airline (Flores-Fillol & Moner-Colonques, 2007).

Though the increased RPMs may be eroded in the long run, it is advisable for a domestic airline to form a code sharing agreement with an international airline as early as possible. However, the market share advantage remains consistent throughout the agreement period..

During congestions at the airports, alliances overcome such hurdles as landing restrictions as well as inadequate landing and take-off slots. This is because the alliances are associated with wider clientele and sometimes monopoly. Membership to an alliance is considered a critical tool by airlines sales team as it is not only attractive to potential customers but easier to sell.

A great significance is recorded in the increase of Revenue Passenger Kilometres (RPKs). According to Rajasekar, as cited in Iatrou , 2005 alliances between airlines result in a 9.4 percent increase in RPK. There is also significant increase in market share as well as traffic volume for airlines that are in alliances

Alliances offer learning opportunities to member airlines thus enabling individual firms to access embedded knowledge of fellow partner. As a result, these firms acquire a potential to internalize capabilities and skills. This is known as grafting-a process where organizations increase their level of stored knowledge by internalizing knowledge that was previously unavailable to the organization (Rajasekar & Fouts, 2009). However, this may not happen to small firms when they strike partnership with bigger firms.

Alliances in airlines

Alliances refer to those networks that bear loose collections of firms with contrasting interests and abilities. When selecting an alliance partner it is advisable to do so with care, so that necessary skills are provided to the whole alliance (Flores-Fillol & Moner-Colonques, 2007).

This is because the coalition nature among members of an alliance drives the competitive nature of an alliance set-up. Other than reshaping rivalry, alliance networks assist in the creation of collective competition. This means airlines within alliances achieve a competitive advantage over individual airlines.

However, the dynamics and the new structure of competition depend on the joint performance of the linked firms. This means that the number of airlines in an alliance affects the performance as well as the competition advantage of the whole alliance as a single entity in the market. While a large alliance network may enable it to access an extensive range of capabilities, the same may hinder the alliance from uniting towards a common strategy (Adler & Gellman, 2012).

This is because decision making procedures may be lengthy leading to failures to come to an agreement. These alliances can only succeed if there is an advantage that results from the combination of capabilities of two or more airlines (Adler & Gellman, 2012).

Thus, each member airline must be incapable of developing internally unless it is within an alliance. The capability to develop must be offered by another airline within the alliance. In a nutshell, the total value generated by these capabilities must be exceeding the value of capabilities if used separately.

The size of alliance has a great effect on the benefits reaped by alliances. Broader alliances benefit the members with additional traffic as well as extra revenue. However, this happens at the expense of other airlines. These broad alliances permit member airlines to explore and reach wider destinations as well as benefit from hub-and-spoke efficiencies. Although each member airline remains independent in the partnership, the alliance is viewed as a single entity so as to attract more customers (Rajasekar & Fouts, 2009).

Formation of multiparty alliances has resulted in the utilization of new programs that help to rationalize fleets, plan flights, electronic ticketing, workforce utilization as well as optimal determination of route and fare structures. These alliances have helped individual airlines in the provision of profitable services on several routes which they are incapable of if left alone.

Nevertheless, this advantage can only be realized by ensuring there is a partner feeding traffic via a hub hence producing many advantages (Ladki & Misk, 2009). This includes a stimulation of traffic. Other than lowering the airline’s operating costs, this strategy also helps to reduce fares as well as increase the frequency of flights without having to invest in extra aircraft. In summary, multiple airlines result in increased RPMs as well as market share to the domestic airline as compared to airlines forming alliances with only one partner.

Equity orientation is associated with international alliances while domestic alliances adopt a contractual nature. This is because domestic alliances are created in a common environment hence equity control is of less significance in monitoring agreement (due to the short distance). International alliances on the other hand are less familiar with the behavior of member airlines and therefore must adopt a strategy of equity control. Moreover, it is easy to establish a contract in a familiar environment as compared to an unfamiliar one.

While complementary alliance involves two airlines linking their existing networks and building of a new system to provide interline services to their clientele, parallel alliances involve teaming up of two airlines which compete on one route.

Complementary alliances are wider and they usually allow airlines to extend their networks through partners that serve as destinations where these airlines lack route influence (Ladki & Misk, 2009). Complementary alliances are more effective as they reduce inconveniences caused by interline trips by synchronizing flight schedules, merging regular flyer programs as well as ensuring gate closeness.

Current airline industry status

Various changes have hit the air transport industry since the US deregulated its industry. This occurred around 1980s. The deregulation of the European industry that occurred in the 1990s also played a part in these changes. Consequently, the number of major carriages has declined sharply and the reorganization of itineraries into hub-and-spoke systems has intensified as well (O’Connell 2011, p.340).

More strategic alliances are being formed among international airlines in order to reap the benefits of economies of scales associated with these alliances such as reduced costs of operation as well as wider target clientele.

The first significant international alliance was formed in early 90s between KLM and Northwest. Since then, more alliances are mushrooming increasingly. Several alliances including Sky Team, Star Alliance and One world have been formed. Almost all airlines in the globe belong to either of this.

Due to increase in the number of alliances and expansion of international travel, a competitive battle has ensued among the airlines and is likely to continue and intensify in future (O’Connell 2011, p.340). Though the alliance revolution has been adopted by majority of the airlines, there are some carriers that are still reluctant to join alliances. These include; China Airlines, Air India, Japan Airlines, and SN Brussels.

Competition in the airline industry

Membership to an alliance by an airline offers it a competitive advantage over airlines that do not belong to any alliance. Through the shared code agreements airlines achieve global service networks, establish and access new markets without having to provide aircrafts as well as services that would result into unprofitability if they were operated alone (Gross & Luck, 2011).

These new markets help to fetch higher profits through increased passengers and reduction of costs. The reduced costs occur as a result of economies of scale linked to joint maintenance, training, ground facilities, computer reservation systems as well as marketing.

Another factor that has led to reduction of costs in these alliances is the removal of redundancy and duplication in operation (Cerimagic 2011). Moreover, the shared code agreements attract a wider clientele as most consumers prefer airlines with a wider service network to ones with a narrow service network because minimal costs, better services and attractive flyer programs are involved in the earlier. In a nutshell, alliances boost the competitive position of partner airlines as well as reap higher profits for each individual partner.

Australian and United Arab Emirates (UAE) airline industry

The Emirates Airline has recorded a significant growth rate recently. For example, in 2008, it ordered 58 of the 555-seater Airbus A380. This pioneered more orderings by other UAE airlines causing a challenge to carriers in other parts of the world. Increased passenger volumes have posed danger to the infrastructure of the industry leading to heavy investments in projects aimed at improving and maintaining this infrastructure (Vespermann et al. 2008).

The rise of air travel has also resulted in an increase in the number of carriers in UAE. UAE intends to develop into a global centre for trade and commerce and a portion of its master plan is the development of an aviation industry. To achieve this, it has began diversifying its economies and venturing into global tourism, commerce and tourism (Sundaram & Abdulrahman, 2011). Abu Dhabi and Dubai have been the central focus of the growth of aviation in the Gulf area.

UAE has concentrated in acquiring new generation aircrafts. This is of high importance as it helps in developing long-haul hubs in Middle East that will offer its airlines a competitive edge in the global market (Genral et al. 2011. These airlines have expanded their networks extensively so as to satisfy their customers fully. For example, Emirates Airlines is serving in more than 20 cities in Europe.

Research design/methodology

Sources of data

The study data are primarily from three sources. From the airline data bases while much of the data are obtained from the individual airline business reports as well as other important sources of literature. Some of the data are also obtained from the international aviation organizations such as the Australia Competition and Consumer Commission (ACCC).

Data such as the approval of interlink of both airline customers in all the airline destinations are obtained from ACCC. The data such as the alliance patterns as well as the RPMs (revenue passenger miles) together with other load factors are obtained from both the airline business data bases.

The airline data base contains all the statistics about the airlines in addition to all the airline alliance agreements in the industry, including the years in which these alliances were formed, names and the patterns of these alliances, the type of the alliance and whether the alliance were equity or non-equity. On the other hand, the individual airline data bases contains information on the individual airline flight schedules for all the destinations a round the world.

Findings and discussions

The primary research question is to establish the benefits of code sharing agreements between two airlines. The results indicate that code sharing agreements in the early stages of completion leads to increased RPMs, PLF and market share.

As can be observed from the both the virgin and Etihad data bases, the two airlines revenue have improved due to the increased market share, passenger load factors as well as the RPMs. Moreover, the mutual agreement between these two airlines have enabled them access markets in each others networks. In essence, this has led to the increased market share which in effect has led to the augmented revenue.

The literatures of the airline business strategies also indicated a focused increase in market share in their territories. Analyzed together with other data sources, the alliance between large partners will lead to increased profitability, access to the markets as well as increased customer services. In general, the alliances between large partners provide added competitive advantage with non allied competitors while at the same time reduces competition among the allied parties.

In as much as most of the findings support the benefits of code sharing agreements between the two airlines generally in form of increased RPMs, PLF and market share, the result also indicate the initial gains will erode over time. In other word, the alliance will benefit the parties more in the initial stages.

However, as more and more competing alliance continue to penetrate the market networks, and as the fare prices continue to decrease, the gains of the alliance eventually drops. Therefore, airlines must enter into alliances or code agreements at the earliest so as to benefit from the increased RPMs. Virgin and Etihad alliances are strategically formed to benefit from this increased RPMs.

In terms of load factors, the result indicates that airlines in code sharing agreements always increase their code passenger load factors. The load factors are essential to any airline since it is normally used to measure the airlines productivity. The higher the load factor the greater the profitability of the airline.

Given that the study suggested an increased load factors for airlines that form an alliance, the code sharing agreements must be used by the airlines as a strategic tool not only to increase the RPMs but also to enhance their load factors which will eventually lead to greater performance and productivity.

As discussed before, the code sharing agreements not only results in the increase of RPMs and PLFs but also the market share of the alliance airlines. This specific finding will be essential to many airlines to adopt the strategy when they want to venture into any particular market. The common thing about Virgin Blue and Etihad is that they focuses on capturing market share instead of the profitability of their products when launching into a new market.

These airline companies understand the fact that in the long run, they will entrench themselves strongly into the market and slowly turn their dominant position into profitability as their competitors are way behind in the share of the market. This strategy has proved to be effective in situations where the competition is high and where there are numerous barriers to entry into the market.

With this reasoning, many international carriers will end up having multiple code sharing agreements around the world as can be observed with Etihad in the recent past. In the last financial year Etihad enter into code agreement with air Berlin to gain access to the European and North American market.

Previous alliances with other international airlines have been aimed primarily to gain access to the believed congested markets. In essence, the airlines have multiple code agreements in order to increase its RPMS, PLF and the market share globally. Generally code sharing agreements benefits the alliance parties profoundly not only in the increased RPMs, PLF and market share but also other economic benefits.

However, consolidating the airline market gains attracts the regulatory actions. Similar to all other forms of mergers and acquisitions, alliances have the potential of being significantly anti-competitive.

The reason is that the consolidation of the market share taking place in the airline market will eventually limit the choice of the passengers in selecting their routs. Provided that the airlines generate new services, lower cost, improve on the existing services as well as increasing efficiency for the general clientele then the alliances will not attract the regulatory actions.

Recommendations

Like any other alliances, the Etihad and Virgin airlines must make long term view; match the firm’s cultures as well as managing styles when forming an alliance. The two companies must take cognizance of each of the firm’s values, operations as well as the environments in which they want to venture.

Most significantly, the alliance must aim at improving the customer services in addition to the increased market share. Further, the alliance must define the success measures, practice and insist on the open communications. The companies must not only focus on single alliance but also pursue multiple alliances if at all they intend to succeed and sustain themselves in the current market place.

In fact, the benefits of the alliance must be distributed to all parties in a more balanced way to strengthen the alliance and built the culture of trust among the parties. All these will not only ensure successful alliance that is beneficial to all but also as a strategic tool to survive in the market place.

Conclusion

The current world economic order, globalization and the liberalization of most of the industries have led to the development and popularity of the alliances among the competing firms. This trend is more profound in the aviation industry where large carriers form an alliance with other international carriers as a competitive, growth and survivability strategies.

Airlines enter into Strategic alliances in order to penetrate the constrained global networks and operate within the limits of the current air services bilateral agreement systems. Major carriers enter into the bilateral code sharing agreements in order to increase their network coverage, attain the global services networks and gain access as well as establishing their presence in new markets. Moreover, airlines use strategic alliances to provide costly services which would be unprofitable if operated singly.

References

Adler, N & Gellman, A 2012, “Strategies for managing risk in a changing aviation environment”, Journal of Air Transport Management, vol. 21 no. 1, pp. 24-35.

Cerimagic, S 2011, “Cross-cultural adaptivity and expatriate performance in the United Arab Emirates”, Education, Business and Society: Contemporary Middle Eastern Issues, vol. 4 no. 4, pp. 303-312.

Flores-Fillol, R & Moner-Colonques, R 2007, “Strategic formation of airline alliances”, Journal of Transport Economics and Policy (JTEP), vol. 41 no. 3, pp. 427-427.

Genral, L Sergio, R & Mohammed, HS 2011, “Managing talent for competitive advantage: perspective from the Gulf Cooperation Council Nationals”, IAMURE: International Association of Multidisciplinary Research Journal, vol.11, pp.166-127.

Gross, S & Luck, M 2011. “Flying for a buck or two: low-cost carrier in Australia and New Zealand”, European Journal of Transport and Infrastructure Research, vol.11 iss. 3, pp. 297 – 319.

Ladki, SM & Misk, AP 2009, “Airlines competition in the gulf: a competitive advantage”, International Journal of Business Strategy, vol. 9 no. 1, pp. 73.

Merkert, R & Morrell, PS 2012, “Mergers and acquisitions in aviation – management and economic perspectives on the size of airlines”, Transportation Research Part E: Logistics and Transportation Review, vol. 48 no. 4, pp. 853-862.

O’Connell, JF 2011, “The rise of the Arabian Gulf Carriers: an insight into the business model of Emirates Airline”, Journal of Air Transport Management, vol. 17 no. 6, pp. 339-346.

Rajasekar, J & Fouts, P 2009, “Strategic alliances as a competitive strategy: how domestic airlines use alliances for improving performance”, International Journal of Commerce and Management, vol.19, no.2, pp.93-103.

Sundaram, N & Abdulrahman, A 2011, “The exceptional performance strategies of Emirate Airlines”, Competitiveness Review: An International Business Journal, vol. 21 no. 5, pp. 471-486.

Vespermann, J Wald, A & Gleich, R 2008, “Aviation growth in the middle east – impacts on incumbent players and potential strategic reactions’, Journal of Transport Geography, vol. 16 no. 6, pp. 388-394.

Introduction

In the corporate society, structural leaders usually seek to develop relationship between strategy, structure and environment in their organizations (Bolman and Deal, 2008). As a result, extensive preparation, strategic planning and effective change management becomes a priority for these leaders. Consequently, these leaders adopt structural framework as a panacea to effective management in their organizations.

The Structural Frame of Etihad Airways

A structural frame binds managers and leaders of Etihad Airways as an organization in a fundamental role to establish goals which lay good relationship between structures and the organization’s environment. Therefore, they have crafted some good array of roles and relationships that are appropriate to the core objectives and mission of the airline ().

Nonetheless, without appropriate structure in place, different stakeholders in the organization can be confused on what roles they should play in the attainment of the common goal. Consequently, in the event of poor or absence of structure in place, there is likely to be confusion, conflict and frustrations.

With regard to the mandate of Etihad Airways which outlines to be commercially viable through being profitable and operating business that is financially sustainable in order to support economic development and diversification in Abu Dhabi, it was imperative for the Airline to have a good structural frame to enable it achieve this mandate (Etihad Airways, 2010).

For the mandate of the airline to be achieved, the airline had to implement structural frame basing on several processes. These processes include strategic planning, decision making, reorganizing, evaluating, approaching conflict, goal setting, communication, meetings and motivations (Wheeler, 1994).

To begin with, strategic planning process exhibits itself as the basic process through which other processes are built on (Robbins, 2003). For instance, it is through this process that the Airline was able to set its objectives which in turn helped to coordinate its resources.

In addition under the strategic planning process, the Airline’s management was able to come up with a corporate strategy that was geared towards achieving 2030 plan of Abu Dhabi through being the best airline in the world (Etihad Airways, 2010).

Moreover, in respect to decision making process, an organization must ensure that there are proper and coherent sequence of coming up with the right decision (Robbins, 2003).

According to the interview contacted to an employee of the airline, it was established that decision making process within the organization follows a defined hierarchy in a centralized manner. However, there are some elements of decentralization but any decision made has to be authenticated by the central office.

Nonetheless, reorganizing process also exhibits itself as one of the elements of structural frame that are applied by Etihad Airways where realignment of roles and responsibilities to match tasks and environment take a center stage. For that reason, the Airline through its strategic review decided to take some reorganization measures in order to overcome structural limitations.

This was implemented through adoption of enriched business model by the company to enable it venture into new business opportunities such as airline partnerships, air cargo, hub operations and distributions (Etihad Airways, 2010).

Moreover, according to Mintzberg (2009), evaluating comes in as another process of implementing structural frame that the airline implemented in its management and leadership. This is accomplished through means of distributing rewards or penalties in order to enhance performance.

From the interview contacted, the employee affirms that the airline through their state managers usually assess employees in order to evaluate their performance and achievements (De Janasz, Dowd and Schneider, 2007). This is undertaken to ensure that common goal and mandate is achieved.

Nonetheless, for the organization to have a cordial working environment, it has an approach to conflict resolution process where it maintains its organizational goals by solving any conflict that may arise.

Moreover, goal setting process forms another element of structural frame of the company since it ensures that the airline is managed well. This is achieved through delegation of duties at departmental levels where each department is responsible for setting its own goals by having their own rules as long as they conform to the overall company goals.

References

Bolman, G. & Deal, T.E. (2008) Reframing Organisations: artistry, choice and leadership. SanFransico, Jossey-Bass.

De Janasz, S.E, Dowd, K.E. & Schneider, B.Z. (2007) Interpersonal skills in organizations. Boston, McGraw Hill.

Etihad Airways. (2010) Atihad Airways Business Review 2010. Web.

Interview. (2011) Atihad Airways Employee Interview.

Mintzberg, H. (2009) Managing. London, Prentice Hall.

Robbins, S.P. (2003) The Truth about Managing People. London, Prentice Hall.

Wheeler, M. (1994) Problem people at work and how to deal with them. London, Century Books.

Introduction

Innovations play an important role in the company success. They allow remaining the competitive edge in the market and maintaining profitability. The innovation process assumes several stages each of which is characterized by its peculiarities and specific features.

The aim of this essay is to map the innovation process at Etihad Airways which is the national air carrier of the United Arab Emirates.

The Innovation Process at Etihad Airways

Searching

Searching is the first stage in the innovation process. It assumes the search of relevant information about the competitive environment and the determination of the threats and opportunities. According to the WTM Euromonitor report, “global air online value sales are expected to reach US$382 billion by 2016, driven by Western Europe and North America” (“The WTM Euromonitor Report” p. 2).

The expected growth in the sector indicates to the importance of the online tickets sales by the airways. It is a signal of the growth opportunities in the industry.

However, the rapid expansion of the low-cost airlines can be viewed as the potential threat to the other companies in the industry. The results revealed in the WTM Euromonitor report show that the low-cost carriers are increasing their market shares (“The WTM Euromonitor Report” p. 2).

Selecting

Selecting is the second stage in the process. The information gathered at the previous stage is the basis for the determination of the most important areas for improvement. The decision should be based on the strategic goals of the company.

According to James Hogan, CEO of the company, the corporate strategy of Etihad Airways can be described by two important points: the vast differentiation with 138 nationalities working for the airline and 475 destinations the passengers are offered to fly to as well as the economy of scale (Schaal n.p.).

Both the differentiation and the scale are achieved due to the investments in four other airlines, namely Airberlin (29%), Air Seychelles (40%), Aer Lingus (appr. 3%), and Virgin Australia (10%) (Schaal n.p.). Taking into account the corporate strategy and the information gathered, it is reasonable for the company to develop its online tickets sales accelerating the speed of the customers servicing and reducing the cost of sales.

“Hogan noted that emerging technologies will be vital in attracting and retaining passengers, and he vowed that Etihad will have Wi-Fi connectivity throughout its fleet by August 2014” (Schaal n.p.). That is why the emphasis in the innovation process should be put on the Internet technologies.

Implementing

At the stage of implementation, the innovative features of the new service should be clearly identified. First of all, the knowledge based should be acquired by the company through strategic alliance or investment in the low-cost airline. The stake in the LLC will contribute to the reduction of the cost at the consolidated level and to the increase of a customer base.

The acquisition of the competitor is one of the ways of gaining the competitive advantages. Secondly, the margins of the project should be calculated under different scenarios providing the clear relation between the expected risk and reward. The diffusion of the innovation should be forecasted at this point.

Although it is hard to forecast it precisely, one of the suggested ways is to model the s-shaped trend by means of using the Bass model (Sönke p.14). A subjective judgment should be applied here anyway (Sönke p.14). Thirdly, a new service, for instance the new online service, should be managed carefully during the initial adoption.

This means the determination of its weaknesses which can be improved. Finally, the adoption needs to be analyzed and certain measures should be calculated to make it sustain in the market. The profound analysis of the stage of the innovation in its life cycle is crucial at this point. It allows determining the areas of improvement and possibility of reinnovation as well as the amounts of the necessary investments.

Learning

Learning is the final stage in the process. It is the stage when the results of the innovation implementation should be analyzed. The factual margins should be compared to the expected ones in order to calculate the overall efficiency of the project.

Having the results supported by the exact figures, the company can find out which knowledge or technologies it lacks. Besides, at this stage, new models for diffusion of innovations forecasting can be acquired. Finally, the company can reconsider its approach to the innovation process as a whole, if it finds it weak.

Conclusion

Mapping the innovation process requires the understanding of the industry peculiarities. Etihad Airways is the airline carrier which operates in the highly competitive environment. The threats and opportunities of the environment should be determined at the initial stage. The innovation process of the company should be accomplished in the frameworks of its corporate strategy.

The analysis of the competitive environment allowed selecting the areas of development in the company services. After that, the undertaken project can be implemented. Finally, the company should estimate the efficiency of the innovation and evaluate its strength and weaknesses.

Works Cited

Albers, Sönke n.d., Forecasting the Diffusion of an Innovation Prior to Launch. PDF file. Web.

Schaal, Denis. “Etihad CEO Believes There’s Lots of Equity in the Airline’s Strategy.” Skift 20 June 2013. Skift.com. Web.

The WTM Euromonitor Report. Global Airlines: Key Threats and Opportunities Facing Global Airlines. Web.