Category: Etihad Airways

Abstract

The increasingly competitive airline industry has in recent years experienced significant changes brought about by technology and innovations. Etihad has not been spared by the rush towards innovation to increase competitive advantage and gain market share. The company has adopted innovative strategies that have given it a competitive edge over the rivals. Innovation comes with costs with the airline industry planning to invest more than $11 billion in the next few years to ensure that the companies stay close to their customers (Hogan 2013). This study examines Etihad Airline innovations that have seen the company emerge among the fastest growing companies facilitated by innovation.

Introduction

Dubai is among the global locations that are on the forefront in the effort to offer the citizens a technological platform that enables the individuals to communicate and conduct businesses on the internet. The government has ensured that telecommunication infrastructure is available. The advancement of technology in Dubai has enable airline companies including Emirates and Etihad to offer its customers unmatched experiences. Etihad Airlines has been among the most successful airlines on the innovation front.

Main Body

The year 2013 saw Etihad make the most innovative moves in increasing its growth and global presence. The company avoids traditional airline model and heritage alliances adapted by many of its competitors. The president and chief executive of the company, James Hogan in an address in Sydney announced a novel business model for the company. He described the company as one that is inimitable. He revealed a unique strategy of developing scale via organic growth.

The innovation includes code-sharing collaborations with other airlines and increasing alternative equity investments in like-minded airlines. There exists evidence in the airline industry that the traditional airline model is no longer viable approach to doing business in the 21^st century. Hogan asserts that heritage airline coalitions in the industry environment require radical departure from traditional mode and drastic variation is compulsory for companies that wish to remain relevant. A viable future for the aviation industry depends on a gallant vision and concerted effort to break from tradition and prior practices (Travel & Tour, 2013).

For airlines to reach global markets, it is beyond any single company to effectively handle the challenge in isolation. Partnerships are hence inevitable. Among the innovative moves made by the CEO, Hogan announced that the company would have more than 40 code-partners and 6 equity partners. This offers the company an opportunity to be accessed by 95 million customers. Additionally, the move will enable the company to offer the customers access to 410 destinations globally. The partnerships with other airlines enable the customers the access to the services of more than five hundred contemporary aircrafts. The move ensures that the company can invest in other strategic innovations since it does not use substantial amount of financial resources to achieve its objectives.

One of the major innovations employed by the company is the ‘take-a-chance mentality’. The approach by the company illustrates the risk-take attitude as opposed to risk averse. It has significantly invested in technology. The company is on the forefront of developing communication infrastructures with its customers globally. In 2013, the company invested in technological online mapping tool. The company partnered with professional network LinkedIn. The gist of the innovation is the enabling environment that makes communication with customers easier. The company can communicate easily with its customers. The innovation made it easy for existing customers to message new contact, or even arrange for a meeting. The innovation makes the company customers productive individuals even when they are travelling to different global locations.

In a news release, the management of Etihad airways announced that the new tool offered professionals on the LinkedIn the capability to search for their networks using geographical location. Once the names of the contact are entered in the database, the tool gives a feedback displaying the contacts on a map making it easier for business customers to get in touch with global partners across technology networks of contacts as they traverse the world. According to press release by Etihad public relations’ officer, the company’s customers upon registration with the portal can enjoy a variety of services and offering.

The customer once registered only need to enter the search parameters founded on topographical location, the trades of interest and different degrees of connections. The feedback of the search activity is a personalized map of the contacts. The technology then sends a message to the searcher straight from the contact list. This way, the company’s global clientele are easily connected. The company portal on the LinkedIn website enables Etihad to connect points and individuals across the world.

The innovation taps into LinkedIn global clients of more than two hundred million. The tool supports Etihad’s core objective to increase its customer base and development as an extension of the vision. According to the company’s chief commercial officer, the LinkedIn tool is predominantly valuable for new customers traversing the international market for business purposes. Such clients often have issues they require to attend to despite being on travel. By utilizing the innovative tool, such customers immediately view new contacts in the area they are in as well as second-level contacts. The information can be obtained even before the actual travel.

This innovative tool supports more operational networking and increased prospect for the creation of acquaintances across regional, international and global boundaries. The innovativeness of the company is still being pursued by the research and development department of the company. The company is reviewing other ways that will enable the global clientele gain more from the travel experiences. For its travelling customers in different global locations, the globe is continuously becoming smaller.

For any successful business entity, maintaining a sound system of contacts is essential. The contacts offer the client a rich variety of individuals to contact in case of any business hiccup. This innovative initiative by Etihad through LinkedIn APIs facilitates the company customers to ably connect with other networks while on business trips. This enables the users of the innovation experience simplified technological experience that make it easier to have business done. Consequently, the users of this technology advancement remain productive despite being far away in foreign counties for business (Bennette 2014).

The development of LinkedIn innovation and its success has encouraged the committed research and development team develop further technology that will make the experience with the company give value for money. This is an innovative solution that allows company clients to transform their guest miles to cash. The technology referred to as PointsPay is the airline industry’s foremost loyalty program that has seen Etihad’s business leap in bounds in terms of profitability and popularity.

The innovative technology offers the customers loyalty e-commerce and e-payment solutions. The client gets an exclusive and real-time e-transaction. Developed by Loylgic, the technology enables the company’s guest members to change their miles into cash. The technology involves unlimited freedom for the customer to spend in-store or on the internet in more than 30 million outlets globally. This initiative was launched in 2012 following the need for the company to globalize to take advantage of the emerging business opportunities. The initiative did not disappoint the company. The initiative demonstrated to be an incredible accomplishment. There are more than twenty thousand registered end users. The customers redeem over a hundred million miles at over five thousand online and in-store around the globe.

The PointsPay initiative is an actual game-changer. It enables the company to reward amid offering of actual value to the loyal Etihad company clientele. It provides ultimate flexibility that enables the customers to convert the Etihad guest miles into money to spend in other missions anywhere in the world at any time. There has been immense feedback from existing and prospective Etihad customers from the time the tool was developed.

The application is comparatively easier to use. To convert the guest miles into cash, guest members merely use their smartphone. Alternatively, the client requires visiting the company’s website and organizing for the transfer of the cash converted from the guest mile points. The cash is then loaded straight to the PointsPay Visa card prior to utilizing the card in-store or online. If the client opts to shop online, he/she does not require a physical visa card. The PointsPay system generates a Virtual PointsPay card that is easy to utilize on the internet.

The innovative technology has a wide range of advantages for Etihad customers. The system application is utterly safe to use in-store or online. It incorporates huge security features such as programmed data encryption and authentication. The variety of personal identification number and statements are other features of PointsPay. Whenever the points are redeemed into cash, reports are sent to the holder of the account.

As mentioned earlier, Etihad Airline is an innovative organization that ensures that the industry is developed alongside emerging technologies and customer needs. In view of this, the company has developed yet another innovative package aimed at ensuring customer satisfaction. In addition to PointsPay application, the company has developed the Etihad Business Connect. This is a reward program designed for small and medium businesses. For any enterprise with two to fifty business travellers to any global location, the enterprise stands the chance to take advantage of an entire arena of advantages.

The initiative is designed to reward loyal customers irrespective of their position within the client organization. As the global leader in the airline industry, the company covers loyal customer innovations to the client company and its employees. They reward the employees and the company for their continued use of Etihad travel services. Fundamentally, Etihad keeps its business simple while ensuring increased convenience for its clients. The innovative tool, Business Connect, allows customers to enroll at their discretion. After enrolment, the customer has the prerogative to allocate an administrator at his own company or the travel agent.

The person assigned the administrator role manages the account on the internet. During flights, the administrator may access the account to maintain all the schedules in a single file. The innovation allows the user twenty-four hour access to manage the itineraries as may be appropriate or requested by the traveller. The application is easy to use with user-friendly attributes. The more the holder of the account uses Etihad travel services, the more miles are accumulated in the account. The miles earned on every flight have an Etihad prefix. The accounts operated by the company’s codeshare partners also benefit from the miles. Similar to PointsPay, the miles can be redeemed by the operator and converted to the reward of choice. This innovation has seen corporate executives enroll to reap the benefits of the initiative.

Besides working diligently to get the fundamentals of passenger experience right, such as timely departure schedules, friendly crew and comfortable seats, Etihad strives to surpass the parameters traditionally set in the airline industry. Majority of the main themes in the industry today have a digital and technological component. Etihad is on the forefront in responding to the increasing volume of passengers using smartphones and tablets. The company has been fixing the seats in all its passenger planes with power ports and integrating inflight Wi-Fi portals. Instead of the traditional seatback IFE systems, Etihad is striving to ensure that tech-savvy customers can use their gadgets inflight. The company encourages the innovative BYOD (Bring your own device) trend. The strategy involves the provision of digital content for the passengers including newspapers and magazines inflight.

Etihad is among the first airlines in the Gulf region to fix wireless entertainment applications inflight. In the determination to present the passengers an increased array of updates and entertainment, the company has departed from providing the traditional cluster of newsprint and publications. Passengers can now surf the content of their choice on the internet through the Wi-Fi fixed in passenger planes. The innovation has saved the company distribution costs. The crew does not need to physically distribute hardcopy newspaper and magazines to every traveller. The innovation ensures that the company contributes to environmental conservation by adopting green technology. The ability of travellers to get the newspaper of choice from the internet particularly newspapers available in the customers destination is a great invention by the company. Inherently, the travellers can adequately prepare after reading through the events taking place in their destination (Kollau, 2013).

In recent years, Etihad has been pilot-testing an initiative aimed at improving customer experience before, during and after flights. The company is gradually moving beyond digital publications. It is offering its customers with the choice of downloading television series and movies pre-flight on some routes. Customers travelling from Abu Dhabi stand the opportunity to download games, movies and television series and other digital content to their gadgets via the Wi-Fi fixed at the budget terminal. The company plans to avail the same digital services to customers in all the routes it operates. Such a move will further see the company developing a huge customer base and an augmented market share.

Conclusion

Etihad Airways avoids traditional airline model and heritage alliances adapted by many of its competitors. Instead, it develops unique innovative technologies that often disrupt the airline industry. The innovations have seen the company provide diverse services to its customers. The evident success of the company is attributed to its ability to stay ahead of competition through innovative unique technologies.

References

Bennette, C. (2014). Tihad airways launches linkedin mapping tool. Web.

Hogan, J. (2013). Airlines adapt to mobile world. Asian Aviation, 1(1), 36-37. Web.

Kollau, R. (2013). Best airline product and service innovations of 2013. Web.

Travel & Tour. (2013). Innovation was the key to success for Etihad Airways. Web.

Abstract

The current literature review dwells on the success of Etihad Airways and assesses the current situation. The author provides evidence concerning the critical acclaim of the company. This literature review focuses on the factors that majorly contributed to the accomplishments of Etihad Airways. The paper emphasizes the importance of the marketing strategy chosen by the company and its tactical approach to providing excellent customer experience and high-class services.

This literature review discusses the reasons that are implicitly related to Etihad Airways’ accomplishments and provides relevant examples from different areas of practice to support the hypotheses. The author pays close attention to the important peculiarities of the aviation business and compares the business models of other companies to the business model of Etihad Airways. The main objective of the current literature review is to analyze the background of the carrier business, logically associate Etihad Airways with its competitors, and realize the limitations of the current strategy of the company that might be revised in order to extend the company’s customer base and income level.

Introduction

The economic background of the United Arab Emirates is characterized by constant growth and improvement. Throughout several decades, the country was able to get to the top positions of various lists. The UAE became one of the most popular tourist destinations. This allowed the country to develop its financial state, and its major success is mainly caused by the correctness and adequacy of the chosen strategy.

As a tourist destination, the United Arab Emirates had to take into account the presence of airlines that would provide users with quality service. The current literature review concentrates on Etihad Airways, its economic and marketing strategy, customers’ response to their approach, and overall success of the company. It also comprehensively answers the question of whether the company is economically stable and complies with the customers’ wishes and needs. The main objective of this literature review is to assess the current condition of Etihad Airways and discover the downsides and limitations of the company’s marketing and customer experience strategies.

Literature review

Middle Eastern air companies are changing the undercurrents of intercontinental air travel as Etihad Airways, Qatar Airways, and Emirates are rapidly developing as the new worldwide contenders (O’Connell, 2011). The UAE’s airports are similarly experiencing a rapid renovation to keep consistent with the exponential traffic flow progress that is projected. The persistent evolution of the Emirates has to be thoroughly reviewed.

O’Connell inspected the numerous approaches that supported the essential competencies, which were in charge of its two decades of successive productivity (O’Connell, 2011). The author stated that the fundamental formula for the UAE’s efficiency should be mainly attributed to its actions, competitive cost organization, and the robust influence of its brand (O’Connell, 2011).

The next study examined the financial and environmental effectiveness of 27 international carriers in 2010 (Chang, Park, Jeong, & Lee, 2014). An all-embracing environmental measure statistics envelopment investigation model with the feeble dispersibility hypothesis was elaborated to evaluate the efficacy of the air companies. Etihad Airways proved to be generally more well-organized, trailed by European and American carriers.

The researchers found that mediocre fuel consumption is the key source of ineffective airlines both in financial and ecological aspects (Chang et al., 2014). This study dwelled on the rivalry between Etihad and numerous European and American airlines.

The topic of rivalry is also thoroughly discussed in the study conducted by Vespermann, Wald, and Gleich. They believe that by reason of deterring their economies away from deteriorating oil assets, some Middle Eastern republics follow the path of considerable investments into their airways. The majority of these funds focusses on the UAE and Qatar and includes fleet extensions strengthened by immense airport extensions and expansion plans (Vespermann et al., 2008).

Subsequent to an evaluation of the present growth tendencies in the Middle East, the authors of the study examined the effects of this progress on aircraft patterns along with the impact on the incumbent carriers and airport workers. Moreover, the grounds for the potentially premeditated response were presented. The results of the study were consistent with Chang et al.’s (2014) and showed that Middle Eastern air companies would soon become strong international opponents to the well-known carriers (Vespermann et al., 2008).

While there was no appropriate local demand, these air companies’ intention was to redirect the intercontinental traffic from the Old World and the Americas to the Middle East. Consequently, the key companies chiefly in Europe and the Middle East would be impacted directly. Nevertheless, the outcomes of the study also specified that (for some markets) Middle Eastern airlines were disapprovingly located concerning limitations like trip time and required transfer flights (Vespermann et al., 2008).

The issue of inadequate flight times and numerous transfers are also reviewed in Reynolds-Feighan’s (2012) study. He inspected the major Asian, Middle Eastern, North American, and European air cargo systems. In his assessment, he used the combination of the data concerning the relations between customers, cargo, and all-freight air companies. The author used the data set that comprised the statistics for the last 15 years (Reynolds-Feighan, 2012).

He also managed to examine some of the significant tendencies that have formed and categorized air cargo markets throughout the last two decades. The effect of air transportation market liberalization is acknowledged as the main factor of varying carrier behavior, mostly regarding the system structure organization (Reynolds-Feighan, 2012). The second major target was to scrutinize the sources of evidence accessible to tracing the tendencies in the air cargo sector.

The altering nature of the business organization was debated, and the key companies in each area were distinguished (Reynolds-Feighan, 2012). The monetary assets of the main air cargo centers were examined over an identical time period. This study is consistent with the vital driving aspects in indicating the future path of Etihad Airways in the next ten years. Merging in the commercial airline business and the importance of the united carriers are still to be considered (Reynolds-Feighan, 2012). This study is consistent with O’Connell’s (2011) research due to the absence of all-inclusive datasets specifying the actions of the integrated air companies.

A particular event that majorly impacted the development of Etihad Airways was the Eyjafjallajökull Volcano eruption. In 2010, it caused an overall loss of nearly two billion dollars for the air travel business (Balakrishnan, 2011). The research dwelled on the effective leadership practices that helped the company survive through the slight recession and get back on the track. Moreover, this study reflected the way Etihad, one of the top airline companies worldwide, coped with the crisis and continued to gain knowledge concerning the methodology of dealing with the crises in the future (Balakrishnan, 2011).

The airline companies are ubiquitously relying on the market needs and customer experience. Laming and Mason investigated the utilization of the perception of customer experience to the commercial airline industry and the degree to which air companies were providing decent customer service. The study exposed that the idea of customer experience was not well recognized and had had no clear and reliable explanation (Laming & Mason, 2014).

The determination of customer experience is acknowledged as to bring gratification through the customer experience that, in sequence, generates the allegiance and trust in the customers. In order to measure the performance of the customer experience concept, research was conducted exploiting the comprehensive data gathered over a one-year period from nearly 19,000 travelers on fifteen chief full-package commercial airlines in the Middle East, Europe, and Asia (including Etihad Airways) (Laming & Mason, 2014).

The essentials of the carrier passenger trip most sturdily associated with overall fulfillment, trustworthiness, and support were, for the majority of air companies, cabin assets surveyed by the team (for fulfillment) and onboard food and beverages (for loyalty and advocacy). The examination did not recognize any robust effects from the influence of carrier location, specific air company, and flight class (Laming & Mason, 2014). The main finding in relation to the Etihad Airways was that the connections between the travelers’ fulfillment ratings for definite elements of the trip and the general fulfillment, trustworthiness, and advocacy were not impacted by flight class.

Etihad is known as a quickly developing player in the flight business and has converted into one of the leading intercontinental players in the business in a comparatively short period. Etihad’s fleet now holds more than 70 airplanes, with over 1,500 flights weekly to miscellaneous locations all over the world (Al-Ali & Ahmad, 2014). The corporation defines its business approach as maintainable development. It is stated that premeditated companionships have been the most important actions by means of which Etihad had conveyed its strategy. The research conducted by Al-Ali and Ahmad particularized its key partnerships and the vital welfares of those.

Along with the partnerships, Etihad Airways is a pioneering company that is not afraid of innovation. Etihad developed lounges for children as a kind of marketing strategy which subsidized its attractiveness and demand. This innovation is a part of the development of the youth department agendas which contribute to its attractiveness (Cole, 2011). The physical indication market policy exploited by this company has formed customers’ responsiveness to this carrier and their facilities. This includes the onboard entertainment systems, diverse menu for its clients, and a large aerodrome layout. Numerous advertising strategies implemented by this company have allowed it to infiltrate into the worldwide market and conquer the trust and loyalty of its customers (Cole, 2011).

The commercial trials that air companies and airports encounter in the period of international financial variability are intricate and rather diverse. This has given Etihad Airways and the emirate’s administration the chance to reassess their core methods and strategies (Al Katheeri & Ocler, 2013). These units are now required to obey the novel premeditated paths with the aim of conquering the newly competitive market. Etihad Airways is concentrating on gaining growing devotion to the brand and is utilizing a strategy of collaboration, which the carrier wants to produce in order to decrease hesitation, division risks, and overall costs (Al Katheeri & Ocler, 2013).

Currently, it is obvious that any air company business has to reply to the current business situation, while exposed to the upsetting fails, devastated customer confidence, and collapsing profits (Nataraja & Al‐Aali, 2011). However, Etihad Airways testified remarkable growth and surprising revenues while their competitors faced unbearable losses. Nataraja and Al-Aali’s (2011) research investigated and scrutinized the competitive benefits of Etihad Airways. The key discovery was that the design and application of proper policies had led to the brilliant performance, productivity, and success of Etihad Airways (Nataraja & Al‐Aali, 2011).

The competitive tactics – such as functioning strategies, common strategies, and modification strategies – can be of profit for any company that wants to surpass its opponents. Similarly, the ability to control, revolutionize, and develop new concepts, along with a visionary administration crew, are indispensable for the excellent performance of an Etihad Airways (Nataraja & Al‐Aali, 2011).

Conclusion

Etihad Airways is one of the most successful air companies worldwide. This literature review found extensive evidence to that fact and comprehensively described the current market situation and Etihad Airways’ role. Owing to numerous factors, such as customer satisfaction, pioneering approaches, and quality service, the company is on top of the charts and is determined to keep pushing forward. The current literature review extensively describes the present state of affairs in Etihad Airways and concepts that relate to the profitability of the business. According to the statistical evidence, customer experience should be considered the main driving factor of the success of Etihad Airways. There is still room for improvement, but a thorough reassessment of the current values and strategies is required.

References

Al Katheeri, M., & Ocler, R. (2013). The relationship between strategic planning and suitable growth: A case study in luxury airline industry. International Journal of Sustainable Human Development, 1(2), 65-70.

Al-Ali, H. A., & Ahmad, S. Z. (2014). Etihad Airlines: Growth through successful strategic partnerships. Emerald Emerging Markets Case Studies, 4(5), 1-17. Web.

Balakrishnan, M. (2011). Etihad Airways: Reputation management – an example of the Eyjafjallajökull Iceland Volcano. Emerald Emerging Markets Case Studies, 1(4), 1-17. Web.

Chang, Y., Park, H., Jeong, J., & Lee, J. (2014). Evaluating economic and environmental efficiency of global airlines: A SBM-DEA approach. Transportation Research Part D: Transport and Environment, 27(11), 46-50. Web.

Cole, A. (2011). Analysis of the Etihad Airways. Business Economics and Marketing Research, 3(1), 1-17.

Laming, C., & Mason, K. (2014). Customer experience — an analysis of the concept and its performance in airline brands. Research in Transportation Business & Management, 10, 15-25. Web.

Nataraja, S., & Al‐Aali, A. (2011). The exceptional performance strategies of Emirate Airlines. Competitiveness Review, 21(5), 471-486. Web.

O’Connell, J. F. (2011). The rise of the Arabian Gulf carriers: An insight into the business model of Emirates Airline. Journal of Air Transport Management, 17(6), 339-346. Web.

Reynolds-Feighan, A. (2012). Comparative analysis of air freight networks in regional markets around the globe. Global Logistics: International Series in Operations Research & Management Science, 2(1), 325-366. Web.

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, 16(6), 388-394. Web.

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 company’s 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 company’s 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 company’s 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 firm’s 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 population’s 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 company’s 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 company’s staff can enjoy points to the fact that Etihad’s 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 personnel’s 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 company’s 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, 167–180. Web.

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

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

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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.

Introduction

Within recent decades, large companies have been paying more attention to the need to train their existing and potential workforce extensively, as it is recognized today that proper training is an integral part of successful human resources management. Etihad Airways is one of the prominent companies in the United Arab Emirates in this regard, as in its initiatives to train its personnel and future employees of the company went as far as to establish their own academy (“Train with us,” n.d.), a form of a corporate university, i.e. educational institution and training facility managed by a corporation. Training programs for three particular groups were identified—pilots, cabin crew members, and engineers—and analyzed for their design, evaluation, and possible recommendations.

Training Programs for Pilots

First of all, Etihad commits to training high-quality pilots. In 2013, the company established the Etihad Flight College, the purpose of which, according to the company’s CEO, is to “produce the best pilots to support our rapidly expanding fleet [and] underpin the growth and development of the aviation sector in Abu Dhabi” (“Etihad Airways to establish,” 2014, para. 5). The company extensively employs the most advanced training devices, such as full flight certified simulators for various types of aircraft (“Train with us,” n.d.).

An innovative competency-based training program was developed and introduced by Etihad; known as the Multi-Crew Pilot License (MPL), the program was adopted by major international aviation agencies (“Etihad Airways to establish,” 2014). The evaluation process in this program heavily relies on simulations, i.e. testing the competencies of a pilot under conditions imitating real ones with maximal accuracy and completeness. This is important because, unlike the work of cabin crew members, the work of a pilot to a larger extent consists in a number of strictly technical skills and abilities, which is why it is insufficient to evaluate the learning outcomes in this training program through tests or classroom sessions; instead, it is recognized that high-quality simulations are necessary.

In terms of recommendations, it can be suggested to Etihad Airways to develop further initiatives instead of collaborating with other organizations for Etihad Airways’ pilot training needs. Hudson (2016) stresses that Etihad Airways’ collaboration with Abu Dhabi University is rather costly, and the company can make training significantly less expensive by promoting professional learning as part of corporate education the company itself provides. This solution requires large investments, but it is assessed that the return will be remarkable, and Etihad Airways will ultimately benefit from training more pilots on the basis of its own facilities.

Training Programs for Cabin Crew Members

It can be argued that the work of cabin crew members is less technical than the work of pilots; however, it should be admitted that aircraft feature specific and elaborate patterns of organization of space, which is why successful operation on a plane requires technical competencies from crew members, too. This is why, apart from simulators for pilots, Etihad Airways training programs also offer simulators for cabin crew members (“Train with us,” n.d.). In these simulators, trainees can learn how to operate doors of various aircraft, how to carry out evacuations, how to behave in emergency situations, how to fight fire in an aircraft, and how to organize space in crew rest compartments.

Therefore, evaluation in these training programs is supported by the trainees’ ability to demonstrate their mastery of particular practical skills. Also, apart from technical skills, a lot of attention in cabin crew training programs is dedicated to customer services. A large portion of crew members’ work is dedicated to communicating with passengers, and it is crucial for a flight attendant to know how to effectively address the needs of passengers. Besides, it should not be neglected that the passengers’ impressions from a flight are largely based on the experiences of dealing with crew members; the latter is the face of an air company, and that is why training programs for them are designed with scrutiny by Etihad Airways.

A possible recommendation for Etihad Airways is to make its cabin crew training programs more available to learners from many countries. Al-Ali and Ahmad (2014) argue that the main purpose of establishing an academy was that Etihad Airways wanted to cut down the cost of educating its employees, but it should be recognized that the potential of the academy is larger than merely providing the company with a new, well-trained workforce. There is potential to train many professionals who will build careers in different companies, thus improving the standards of the entire industry and promoting healthy competition.

Training Programs for Engineers

Etihad Airways is not only part of the passenger air transportation industry; in addition, the company is engaged in professional services by providing aircraft maintenance and engineering solutions to many other companies of the world (“Etihad Airways engineering,” 2016). To perform successfully in the area, the company hires engineers, and within recent years, has also been dedicating particular attention to training engineers. A company manages a technical training facility in Abu Dhabi and provides programs for various types of aircraft. The facility combines different approaches to teaching, including classroom sessions and practical lessons, and adopts innovative learning experience techniques. The practices associated with designing educational courses and evaluation tools in the technical training facility are widely acknowledged; Etihad Airways even provides consulting services to other corporations on how to establish successful training programs.

In terms of assessment and evaluation, they can be challenging when educators adopt innovative learning techniques. In traditional learning patterns, knowledge can be more conveniently assessed, as the necessary tools for this, e.g. tests, already exist. In progressive education, the subject of successful evaluation remains debatable. That is why it is recommended to Etihad Airways to invest in education research as an area that can potentially supply the company with new solutions that will help educate engineers (as well as pilots, cabin crew members, and other employees) more effectively, i.e. more learning outcomes will be achieved, and more efficiently, i.e. more learning outcomes will be achieved with the same input of resources.

Conclusion

In order to improve the effectiveness of their employee training efforts, some companies establish large educational and training facilities. This way, they reduce the costs of educating their existing and prospective employees and ensure that what is learned by such employees is specific to the work they will be required to do. Etihad Airways established several such training programs; particularly, curricula for pilots, cabin crew members, and engineers were developed.

Pilots and cabin crew members are trained with the application of advanced simulators in which their practical skills and technical knowledge can be evaluated. Engineers are trained with a combination of traditional and progressive approaches to learning and educating. Major recommendations for Etihad Airways include further developing their own programs (instead of collaborating with external education institutions), providing its programs to wider groups of students, and investing in education research.

References

Al-Ali, H. A., & Ahmad, S. Z. (2014). Etihad Airlines: Growth through successful strategic partnerships. Emerald Emerging Markets Case Studies, 4(5), 1-17.

Etihad Airways engineering. (2016).

Etihad Airways to establish world class flight training college. (2014)

Hudson, M. (2016). Increasing corporate university training options within aerospace. In Conference proceedings: The future of education (pp. 405-410). Limena, Italy: Webster.

Train with us: Etihad Airways training academy. (n.d.)

Nowadays, the rapid advancement of humanity requires businesses to look for appropriate ways to renovate their processes, products and services to stay competitive. The Japanese philosophy of continuous improvement, called “kaizen,” presents one of the ways to enhance efficiency and experience fewer costs. Practical experience shows that this approach revolutionises different industries, from automotive production to healthcare. As such, the application of the mentioned philosophy seems to be a viable idea when it comes to other industries as well. This paper aims to highlight the key concepts related to kaizen and other Japanese instruments, introducing them into the context of Etihad Airways to discuss the ways the company can use to improve continuously.

Organisation Identification

Etihad Airways is the national airline of the United Arab Emirates (UAE) that provides transportation for passengers and cargo around the world. The principal goal of this company is to create a 21st-century global airline with a new view of the concept of hospitality in the field of air transportation (“Building the future,” 2015). Etihad Airways provides its services to passengers from all over the world, operating flights in 61 destinations. The Crystal Cargo department of the company is responsible for cargo transportation flights to 42 countries in Africa, Asia, Europe, North America and Oceania.

The services on board the aircraft include those service on board the aircraft, entertainment and medical assistance. The onboard services of Etihad Airways consist of two parts: flight conditions (for example, the convenience of seats) and the level of service for cabin crew. The services are offered for airline passengers while they wait for a flight at the airport, after the end of the flight and when they are considering the purchase of a ticket. The airline also takes care of passengers who are currently in flight. At many airports in Europe, Etihad Airways has opened exclusive bars with comfortable seats for passengers awaiting their flight. The bars open three hours before boarding, allowing airline customers to wait in comfort for their flight.

Despite its variety of routes and millions of passengers, Etihad faces difficulties, and its revenues decline steadily. Dudley (2019) reports that the idea of buying troubled airlines and returning them to the market proved to be calamitous, negatively affecting passenger and cargo volumes. In comparison to 18.6 million passengers in 2017, the company carried 17.8 million passengers in 2018, and the numbers are likely to decrease further. In addition, the seat load also declined, and the total revenue fell by 2.3%, comprising $5.86 billion per year (Dudley, 2019). In this connection, it becomes evident that the company needs innovative management decisions to enhance its core operating performance. Among other approaches, the Japanese improvement methods suggest gradual change, a focus on quality, communication, employee motivation, and willingness to transform.

Implementing Japanese Concepts into Etihad Airways

Kaizen

Kaizen is a comprehensive concept that encompasses theory, philosophy and management instruments, enabling the achievement of competitive advantages in a given period. Masaaki Imai set forth the ideas of the kaizen system, distinguishing between radical change (innovation) and continuous improvement (Rüttimann & Stöckli, 2016). The latter is a framework that contains five main components: personal discipline, teamwork, quality circles, improved morale and considerations for enhancement. According to kaizen, all enterprise has problems but can resolve them by developing a specific culture. In it, the company tries to guarantee that no problems happen rather than punish employees for creating them. This strategy arises from the recognition that management, whose goal is to make a profit, should set the goal of client satisfaction as its central requirement, acting as a customer-oriented improvement system.

With regards to Etihad Airways, kaizen also follows the fact that all the services of the company should ultimately lead to increased customer satisfaction. The philosophies of serving internal and external clients are different. The kaizen system operates through the creation and constant work of so-called kaizen teams (Rüttimann & Stöckli, 2016). Five main types of teams emerge based on the tasks they perform. The composition of permanent teams that operate every day can include specialists who work on the ground. In turn, problem-solving teams search for answers to a specific issue, and the professions of their members can be diverse. The team consists of participants from several permanent groups. The number of participants in such a team is usually six to eight people, and after making a decision, the team disbands.

These decision-making teams should change depending on the situation. For example, the airline serves its customers free of charge when the flight delays for an extended period. An example of such a service is the situation in which airlines could not operate during a volcanic eruption in Iceland. In this case, team-based decision-making is a suitable method to discuss the critical situation occurred and choose the coping strategies that would best meet the needs of passengers. Cross-functional teams, another type of kaizen team, gather to assess the current processes of the organisation and search for opportunities to improve them (Bouchereau, 2016). The composition of the team can involve ordinary specialists and managers from various departments.

Solution implementation teams can be useful for Etihad to introduce developed process improvements. These teams consist of participants of other groups, a trait that simplifies the application of specialised or innovative processes. The composition of the team includes grassroots specialists (workers, performers) and heads of units from permanent and problem-solving teams. The teams work in kaizen sessions, which usually last for 2-5 days (Bouchereau, 2016). Each session aims to solve a specific business problem, and the organisation of work within the framework of the kaizen session uses the principle of the plan-do-check-act (PDCA) cycle. In the case of a disaster such as that above, the described system of response can promptly address the consequences and maintain high service quality.

Visual Management

The internal arrangement of the aircraft is another area that may benefit from kaizen. For the convenience of customers, Etihad’s aircraft feature the latest technology, yet there is a significant disparity in quality. The airline offers passengers three classes of service: first class (Diamond First Class), business class (Pearl Business Class) and economy class (Coral Economy Class). The implementation of visual management can be an appropriate strategy that can noticeably improve service quality and promote cost-effectiveness. Visual management is a clear statement of all the standards, goals and working conditions in the field (Eaidgah, Maki, Kurczewski, & Abdekhodaee, 2016). It is an opportunity to compare the actual situation with the requirements for production efficiency provided to each of the employees so that any participant in the process can evaluate the state of the system. Visual management can improve through the use of Kanban, 5S, 5M, problem analysis visualisation (Pareto diagram, fishbone structure, et cetera), key performance indicators and other standards.

The passengers flying with Etihad Airways can order services via the Internet when buying a ticket for first or business class. They can request transportation to the airport of departure and from the airport of arrival in a limousine. After fulfilling his or her direct duties, the driver will show the client to the registration desk and departure hall while answering any questions. Also, many airports where Etihad operates have select areas where one can play with children or leave them with workers who have the necessary competencies in dealing with children. Visual management may help notify customers of the mentioned services. For example, brief videos of services available, staff training certificates and company-specific indicators can improve customer satisfaction.

There are many different examples of how visual management can be used to improve service quality, brand recognition, and customer satisfaction in airports and planes. Airport monitors are a well-known method of conveying large amounts of critical information in a compact and easily understandable format. Signs positioned where people can see them easily, even in a crowd, are essential for navigation through large airport buildings. “Japan Airlines” (2019) remarks on the Japanese company’s careful usage of colours, logo placement, and other characteristics such as grain, stitching, and leather wrapping in its first-class cabin interiors. Visual management can express itself in both highly visible signs and subtle indications, all of which contribute to the improvement of the customer’s experience.

The literature suggests a set of stages that implement visual management tools in practice. The first step consists of work organisation, preferably with the use of the 5S system, which will be discussed later in this paper. In the second stage, information collection focuses directly on the workplace, comprising quality, equipment usage, equipment safety rules compliance and others (Bititci, Cocca, & Ates, 2016). Etihad should collect data about the customers that would benefit from the services described above and assess their needs. At the third stage, the results and performance indicators of the process undergo an evaluation. The preliminary customer satisfaction outcomes produced by visual management should go to Etihad management for analysis. The fourth stage is the implementation of necessary measures based on the collected information.

With regards to the forms of visual management that Etihad Airways can use, the creation and implementation of methods, quality, maintenance and service quantity standards is essential. Also, the identification of employee goals (workplaces, quality, productivity, costs and delivery times) is critical, as they inform a large portion of overall customer satisfaction (Eaidgah et al., 2016). By monitoring and posting the achieved results, the company can approach its planned performance. In the case of problems and accidents, a visual and acoustic warning should occur, and, most importantly, the information posted should relate directly to specific jobs/processes (Bititci et al., 2016). The posting of unstructured information is inadequate because employees must then analyse it and find their portion, creating inefficiency.

There is considerable room for improvement in many aspects of Etihad Airways’ visual design. As can be seen in Figure 4, the company’s first-class seat cabin appears to be much less spacious and premium than that of Japan Airlines seen in Figure 1, though this is not necessarily the case. There are large amounts of plastic that constrain the walkways and make them seem narrow, creating an overall appearance of wasted space. The passengers have better isolation from outside onlookers, but they also cannot see beyond their space, which can give it a constraining feeling. A change in seat design may reduce the cramped aesthetic and make the area appear, and possibly be, more comfortable than it is now.

5M and 5S Techniques

According to the 5M framework, the causes of problems arise from one of five elements: manpower, machines, materials, methods and management. Materials include internal components as well as services of external organisations that are used by the central company (Mansor, Ismail, Hamran, & Sarifudin, 2018). In the case of Etihad, the external materials are fuel supplies, catering and cleaning services, and others. Machines, or machinery, are equipment, tools and units that see usage across the processes and procedures carried out by Etihad. The technologies and approaches to the organisation of production compose the methods element, and measurement refers to the evaluation of characteristics relevant to consumers for shaping product quality. Lastly, the manpower aspect includes all people who, in one way or another, participate in the service provision processes.

For instance, Etihad has the opportunity to decrease its costs by increasing the time of landing to use less fuel, a practice introduced by several US-based companies. A few minutes longer flight is regarded as the strategy that can save millions in a year by slowing down the landing procedure. This solution is attractive because it does not create any inconveniences for customers. Another recommendation is to change the catering inventory, namely, the soft drinks that the company offers on board. Overall, Etihad Airways can improve the quality of its services both in the airport and on board its aeroplanes by identifying and resolving issues through the use of 5M. The author of this work does not have access to sufficient information to highlight specific issues, but the framework can always help a company improve with proper application.

The steps in the 5S methodology include a set of interconnected components. When following seiri (sort), managers need to single out items and processes that do not contribute enough (Dandawate, Raut, & Talamale, 2015). The component of seiton (set in order) states that one needs to arrange everything necessary for work productively. Next, to fulfil seiso (shine), the workplace and all equipment must be clean. Etihad needs to follow this requirement with particular care since airlines are an area that benefits significantly from waste reduction and resource conservation (Jaca, Viles, Paipa-Galeano, Santos, & Mateo, 2014). Seiketsu (standardise) explains the importance of the standardisation of the first three steps, which is expected to turn them into everyday practice. Lastly, shitsuke (sustain) refers to the continued maintenance of established workplace management practices. A well-structured system is essential to monitor the performance of organised and standardised jobs.

Etihad Airways planes may sometimes rely on an aesthetic that emphasises the UAE’s beauty and wealth too much. Schlappig (2014) describes the company’s approach to design as “style over substance” and complains about unnecessary additions such as a minibar with room temperature water. Seiri requires that the design does not feature such nonessential items, freeing space for better allocation of the critical aspects as per seiton. More straightforward and spacious layouts would also make cleaning easier, leading to better results when observing seiso. The idea of seiketsu mandates that the company develops the best approach as a global standard and applies it across all of its planes. Lastly, shitsuke means that the company has to review its visual design continuously and repeatedly, trying to isolate critical improvement ideas and implement them. Through determined attempts to enhance its services, Etihad Airways will stay relevant worldwide and potentially become an industry leader.

Muda, Mura and Muri

Muda, which means “loss” in Japanese, is any activity that takes resources but does not create value. According to Taiichi Ohno, the founder of the Toyota production system, there are seven types of losses: waiting, overproduction, inventory, transport, defects, over-processing and motion (Smith, 2014). In the case of Etihad, baggage handling and the associated waiting times may be considered muda. The solution is to apply the lean process of accelerating the baggage loading process. When the aircraft lands in the airport, the cargo doors should open, and the baggage should leave the aircraft before the passengers start getting up. Such an approach would reduce time wastage since the customers would be able to retrieve their baggage from the carousel as soon as possible.

In the case of Etihad Airways, the presence of muda expresses itself in a design aesthetic that emphasises luxury over efficient space usage. Klint (2018) highlights the presence of a large lounge in the first-class cabin of his flight while also expressing concern over the storage container’s inability to fit his bag, self-described as small. The design uses much space for accommodations that not all passengers will need while failing to provide a service that most of them find essential. Due to the small number of first-class compartments on board the aircraft, it should be simple to alter the design so that the lounge is slightly smaller and the individual cabins can store larger bags.

Mura is unevenness in the workload; it arises due to differences in scheduling, planning and speeds for various operations. Sunjka and Murphy (2014) state that mura can result in an untimely delivery of components, necessary data not being collected on time, an inability to provide the required number of workers or equipment, and other issues. The critical factors for the successful implementation of the principles of lean manufacturing and the elimination of mura are thoughtfulness, expediency and phasing. Etihad should develop an approach that would enable efficient work and minimise downtime. As a result of transparent and well-designed planning that takes all aspects of operations into account, mura should disappear naturally.

Etihad Airways is sometimes prone to planning and preparation issues. Klint (2018) praises the airline for its commitment to providing extensive menus and high-quality meals but also notes that it tends to run out of first-class food, recommending readers to order early to avoid being left hungry. Etihad can estimate the dietary requirements of an average passenger based on the length of the flight and prepare sufficient ingredients in advance. Wastage issues may arise if the plane stocks enough food to provide each passenger with every meal on the menu on demand. However, such problems can become less prominent through customer preference analysis or the usage of meals that share numerous ingredients.

Muri is overburdening of equipment or operators that appears due to inadequate resource allocation. If the management is unable to equalise the loads of personnel and production capacities, then workers will be either idle or overloaded with work at most times (Sunjka & Murphy, 2014). To avoid muri, one has to stabilise the processes in order to eliminate unevenness (mura), standardise the rules of work and eliminate the losses caused by the previous unevenness. For example, Etihad may reduce the costs of its flights by minimising the time its planes stay on the ground, reducing its costs and removing some of the burdens on airports.

Etihad Airlines is known for providing excellent food quality, particularly to its first-class passengers, with excellent chefs working on their planes. However, as Klint (2018) notes, the size of the menu, combined with the complexity and number of various items, creates a massive workload for cooks and flight attendants, especially on shorter flights. With that said, this issue can likely reach a partial or full resolution through the methods proposed above. Reduced and simplified menus would reduce the stress on staff by making it easier to prepare several meals at once. Moreover, the improvement would achieve this target without compromising food quality with subpar ingredients.

Kanban

This system uses the just-in-time system, which revolves around the timely delivery of the minimum necessary quantities of product where they are needed, as the basis. The essence of the kanban system is in the fact that all the production sites of the enterprise, including the final assembly lines, work on an exact schedule, using specific amounts of raw materials (Mansor et al., 2018). This precision is necessary for rhythmical production, where items move through production without stopping.

Instead of a large number of small tasks, Etihad should set up several large ones and divide them into steps. This change should reduce production time and eliminate overproduction, lowering catering and waiting delays. The task should gradually move between teams or individual members. For example, a manager proposes a flyer or visual management placement layout and passes the idea to a designer, who sends the samples for testing upon completion. At each stage, specialists solve one problem and move on after transferring it to the next team. The product’s assembly will resemble a conveyor in its structure as a result. However, the elements of this conveyor work when necessary, reducing unnecessary labour: the teams work on current tasks and not future ones.

Conclusion

Today, the service sector has become the most significant in the world economy. Etihad Airways services distinguish themselves through intangibility, non-standard approaches and instability in demand and supply, which create specific problems in management approaches. Service organisations feature large-scale usage of the human component, and Etihad Airways is no exception. Since personnel is a crucial asset of the airport, the application of internal Japanese improvement management, particularly for human resources, is a way to achieve better results. The central idea of ​​these approaches is that satisfied employees improve the experience of the company’s customers. After analysing the activities of Etihad Airways, the author concludes that the company occupies a leading position in the global aviation services market. Although it offers a wide range of services and has excellent potential for further development, its processes need to be enhanced. Continuous improvement based on kaizen, Kanban, 5M, 5S and visual management can lead to significant improvement in results.

References

Baby rooms[Image]. (2017). Web.

Bititci, U., Cocca, P., & Ates, A. (2016). Impact of visual performance management systems on the performance management practices of organisations. International Journal of Production Research, 54(6), 1571-1593.

Bouchereau, F. (2016). Kaizen kanban: A visual facilitation approach to create prioritized project pipelines. Milwaukee, WI: ASQ Quality Press.

Building the future. (2015). Web.

Dandawate, S., Raut, L. P., & Talamale, P. (2015). Implementing ‘5-S methodology’ as tool for improving efficiency & performance of delivery and production operations at Bajaj Steels Industries Ltd. International Journal for Scientific Research & Development, 3(3), 214-220.

Dudley, D. (2019). Etihad Airways claims progress with restructuring while reporting another huge loss.Forbes. Web.

Eaidgah, Y., Maki, A. A., Kurczewski, K., & Abdekhodaee, A. (2016). Visual management, performance management and continuous improvement: A lean manufacturing approach. International Journal of Lean Six Sigma, 7(2), 187-210.

Jaca, C., Viles, E., Paipa-Galeano, L., Santos, J., & Mateo, R. (2014). Learning 5S principles from Japanese best practitioners: Case studies of five manufacturing companies. International Journal of Production Research, 52(15), 4574-4586.

Japan Airlines unveils new cabin design. (2019). Trade Arabia. Web.

Kishi, D. (2019). Arrivals departure board in Narita Airport, Japan[Image]. Web.

Klint, M. (2018). Review: Etihad A380 First Class Apartment [Blog post]. Web.

Mansor, M. A., Ismail, A. R., Hamran, N. N. N., & Sarifudin, M. S. (2018). Knowledge management to boost productivity in manufacturing. Journal of Fundamental and Applied Sciences, 10(3), 19-31.

Rüttimann, B. G., & Stöckli, M. T. (2016). Going beyond triviality: The Toyota production system — Lean manufacturing beyond Muda and Kaizen. Journal of Service Science and Management, 9(02), 140-149.

Schlappig, B. (2014). Review: Etihad Airways first class A340-500 Abu Dhabi to Los Angeles [Blog post]. Web.

Smith, S. (2014). Muda, Muri and Mura. Lean & Six Sigma Review, 13(2), 36-37.

Sunjka, B. P., & Murphy, S. F. (2014). Lean implementation within South African aircraft maintenance organisations. International Journal of Lean Enterprise Research, 1(1), 59-80.

Etihad Airways is one of the big international companies ensuring the transportation of passengers to various destination points. It is a second flag carrier of the UAE, headquartered in Khalifa City, Abu Dhabi (“About Etihad Airways,” n.d.). Statistics show that the company has around 1,000 flights per week to more than 120 destinations on various continents (“Etihad Airways on path to recovery,” 2021). In such a way, Etihad is one of the significant companies working in the civil aviation sector and offering its services to numerous passengers.

External Environment Analysis

The external environment of Etihad can be analyzed by using the PESTEL tool.

• Political
  • The company is supported by the government of Abu Dhabi (“About the Etihad Aviation Group,” n.d.)
• Economical
  • The growing rivalry in the sphere
    • Improving the well-being of passengers
• Social
  • The company participates in the Emiratization program promoting social change (“Our commitment to Emiratisation,” n.d.)
• Technological
  • Etihad promotes the use of innovative technologies
• Legal
  • The company has to observe existing international regulations and laws
• Environmental
  • The environmentally friendly fleet is used.

In such a way, the analysis shows that the external environment is overall positive.

Internal Analysis

The company’s internal analysis can be performed using the VRIO tool, which stands for value, rarity, imitability, and organization.

• Value
  • Etihad’s central values are brand recognition and a large number of operations (“About the Etihad Aviation Group,” n.d.). They ensure the company remains attractive for clients globally and can provide various services to them.
• Rarity
  • Etihad enjoys multiple benefits from its geographical location as it helps to connect various continents and parts of the globe, which helps it to evolve (“Our latest facts and figures,” 2021).
• Imitability
  • However, the company has several rivals, such as Emirates, who focus on the same segment and might use the same solutions to work with the target audience.
• Organization
  • The company has a strong structure and organization, which leads to the establishment and support of links between departments and their improved cooperation (Etihad Airways reports strong start,” 2020).

VRIO analysis also shows that the brand has stable positions as there are numerous factors promoting its further evolution.

Business Strategy

Etihad has an effective business strategy creating the basis for its growth. Thus, the company focuses on providing high-class and safe transportation to people and efficient cargo delivery. Etihad guarantees secured and on time delivery and comfortable flights to all clients (“About Etihad Airways,” n.d). It results in the growing number of passengers and broadening of the loyal audience, as individuals are ready to use the company’s services again (Tore, 2021). The business strategy also focuses on supporting the positive image of the brand.

Corporate Strategy

Etihad emphasizes the importance of its corporate strategy and culture. The company states that it is committed to improving the well-being of people. It is achieved via increased attention to sustainability issues and empowerment through development (“About Etihad Airways,” n.d.). The corporation encourages its workers to engage in personal and professional development incentives to demonstrate better results (“About Etihad Airways,” n.d). The focus on the given strategy helps to create a positive climate within the company and motivates workers to demonstrate high commitment levels and do their best to achieve current goals.

Recommendations

The analysis shows that Etihad enjoys its current position and has numerous advantages that might help it to struggle against rivals. However, it is possible to offer specific recommendations related to the analysis. The high level of rivalry means the corporation needs a unique offering that cannot be imitated by its competitors. For this reason, it can be recommended to create a special program for most loyal and new clients providing them with unique bonuses and advantages.

References

About Etihad Airways. (n.d.). Etihad. Web.

About the Etihad Aviation Group. (n.d.). Etihad. Web.

Etihad Airways on path to recovery as operations grow. (2021). Etihad. Web.

Etihad Airways reports strong start to 2020 with second quarter heavily impacted by COVID-19. (2020). Etihad. Web.

Our commitment to Emiratisation. (n.d.). Etihad. Web.

Our latest facts and figures. (2021). Etihad. Web.

Tore, O. (2021). Etihad carried 1 million passengers in H1 2021.ftn News. Web.

Introduction

Business organizations use different strategies, models, and initiatives to meet the changing needs of their customers. Marketing is a critical function that makes it possible for a specific company to deliver high-quality products and services to the targeted clients. It is an effective practice since it dictates the profitability of a given organization. Modern technologies have catalyzed the development of marketing analytics tools to support the performance of different companies. This paper gives a detailed analysis of Etihad Airways’ business strategies and marketing actions.

Company Identification

Etihad Airways is currently one of the leading airline corporations in the United Arab Emirates (UAE). It has its head office in Khalifa City and competes directly with Emirates (Russell and Medvedev 37). This company has been in operation since the year 2003 and has a fleet of 117 aircraft (Russell and Medvedev 42). Some of its leading cargo and passenger destinations are located in Asia, Europe, the Americas, the Middle East, and Australia.

The organization’s chief executive officer (CEO) is called Tony Douglas. Mohamed Mubarak Al Mazrouei is the company’s chairman. Statistics released in 2017 revealed that Etihad Airways had a total of 24,500 employees (Russell and Medvedev 19). The company has a powerful organizational culture that continues to drive performance.

Business Strategies and Marketing Actions

The success of Etihad Airways is applicable to the nature of its business strategy. Two unique approaches make it possible for this organization to achieve its objectives. The first one is known as corporate strategy. This model focuses on the commitments and choices the organization makes to deliver high-quality services and experiences to the targeted passengers. The first aspect is to identify business operations and practices that can add value to different clients.

For example, Etihad Airways has partnered with other companies to attract more customers and operate in various regions across the globe. The second aspect is that of products and services. Etihad Airways purchases Airbus and Boeing aircraft to meet the diverse needs of all individuals (Russell and Medvedev 54). Proper processes have also been put in place to improve the quality of services to different workers.

The next critical aspect that supports the effectiveness of this company is the implementation of powerful marketing actions. The organization has a department that focuses on some of the major issues that can result in increased profits. Marketing is a critical function that Etihad Airways pursues to support its entire business strategy. For instance, the relevant department engages in continuous research to identify emerging trends, changing customer demands, and the role of technology (Russell and Medvedev 72).

The findings obtained from such studies make it possible for the company to develop superior procedures for addressing passengers’ demands. New product development is taken seriously to identify better options for cargo transportation. The same idea is considered to improve passengers’ experiences.

Brand development is something that Etihad Airways takes seriously. The marketing department considers various attributes that can ensure that more people perceive the company’s brand positively. For example, involved professionals ensure that airplanes carry the organization’s name. The department also offers competitive prices, bonuses, reward schemes, and promotions. Such measures have resulted in a superior brand. In terms of promotion, Etihad uses different platforms to inform more people about its brand and encourage them to enjoy its superior services (Russell and Medvedev 44). The company’s website, social media platforms, and television channels support its promotion strategy.

Etihad Airways takes the issue of distribution seriously. The company has established strategic partnerships across the globe, thereby informing more people about the superiority of its brand. The ultimate objective behind the distribution model is to ensure that more people are informed about the airlifting, cargo, and passenger services offered by Etihad Airways (Russell and Medvedev 72). This organization’s pricing strategy is founded on the norm associated with the aviation industry.

Business Matrices

Successful companies use various tools to measure performance and apply the acquired information to make evidence-based decisions. The first business matrix is SWOT Analysis. This tool focuses on a company’s strengths, weaknesses, opportunities, and threats. These constitute both the external and internal aspects of an organization. Etihad measures the concept in order to understand its weaknesses and threats.

The existing strengths are then leveraged to address them and drive performance (Rackley 83). The metrics can be measured using assigned key indexes or percentage. A good example of calculation is the use of strengths or opportunities as a scientific construct. Etihad can monitor the intensity of a given opportunity or strength using key index of 1-5. These metrics can guide the company to make evidence-based decisions or strategies to drive performance.

Etihad has been using SWOT to improve its business model. This means that there is a relationship among the company’s use of different metrics. For instance, SWOT and PEST are related and monitor the company’s strengths and threats. The source of data for this metrics is the company’s internal and external business environments.

The second one is that of PEST Analysis. This model gauges the technological, social, political, and economic forces acting on a company’s environment. Such concepts are critical since they inform a company’s business strategy. Etihad measures these metrics to complete a detailed analysis of its business environment. A good example of calculation is the use of indexes (1-10) to understand whether a give force is an opportunity or a threat (Rackley 73).

These metrics can have positive implications on businesses since they can reshape their models. Etihad uses this tool to prepare for future performance. It is combined with SWOT to deliver positive results. The company uses its departments and units to get high-quality data.

Hofstede’s Cultural Dimensions is another tool that can make a difference for every company. This model focuses on the issues of culture in an organization. It is necessary to measure the concept to understand how to guide employees, and make decisions. The metrics can be calculated by analyzing a region’s culture. A good example is the use of high and low scores to gauge these issues: uncertainty avoidance, masculinity/femininity, and power distance (Cook and Billig 62).

The metrics can guides businesses to make appropriate decisions and implement evidence-based cultural practices. Etihad uses it to guide, empower, and improve its employees’ experiences. The company uses the model individually without linking it to other tools. Data is obtained from studies focusing on the cultural attributes of people from different regions.

Porter’s Diamond Modal is the fourth model and identifies the determinants of competitiveness. It compares and contrasts existing government policies and strategic actions. The concept is worth measuring since it dictates a firm’s key sources of competitive advantages. It is measured by examining a company’s strategy and the existing regulations. A good example of calculation of the metrics is the use of key indexes. For instance, competitive advantages can be ranged from 1-5.

In terms of implications, businesses using the metrics will make evidence-based decisions and create models that can deliver positive results. I have suggested this model since Etihad has not been considering its benefits (Cook and Billig 14). It relates to the PEST model since they both focus on the role of government-imposed policies on performance. Data can be obtained from the company’s departments, case studies, and government publications.

The first metrics is Risk Analysis. It guides managers to identify and address problems that might disorient performance. This is something worth measuring since it helps companies save money and avoid losses. Leaders measure it by examining the responsiveness of different projects or processes. Companies can use losses, profits, or costs to calculate potential risk. When conducted effectively, managers will know when to continue with various projects, action plans, and processes (Cook and Billig 18).

Etihad has been using the metrics to monitor the effectiveness of different undertakings and strategies. This tool relates to the SWOT analysis since they both focus on potential threats that might disorient business performance. Data is obtained from financial reports, project plans, and marketing forecasts.

The sixth metrics is called a Contingency Plan. This tool guides companies to prepare for unpredicted events. It is necessary since it ensures that firms transform their models to address such challenges. Percentages can be used to predict and measure potential sources of disruptions.

For example, data loss can have a smaller percentage of 10 while the loss of customers could be 85. This metrics is appropriate for businesses since it prepares them for issues that might have a negative impact on performance (Rackley 102). Etihad has been employing it to monitor potential challenges and disasters that can affect its marketing procedures. This metric is related to the portfolio of metric used by Etihad since it forecasts future business threats. Data is obtained from weather stations, newspapers, customers’ feedbacks, and market surveys.

The seventh tool is the Porters’ Five Forces. It focuses on these five key attributes that can dictate a future marketing strategy: rivalry, new entry, suppliers’ power, buyers’ power, and substitutes. Companies should measure the concept to develop a superior business model (Cook and Billig 25). These aspects are measured by analyzing their respective intensities. A good example is to calculate each of them using key indexes (minimum-average-maximum).

The adoption of the tool will guide leaders to formulate a superior strategy for achieving positive results. Etihad Airways has been using this tool to revolutionize operations and add value to its passengers. This tool is related to the ones described above since they can monitor threats, opportunities, and environment of the organization. The company obtains data for this metric from weekly magazines, customer feedbacks, supplier information, and case studies.

The eighth metrics is known as Scenario Planning. This is a powerful technique aimed at establishing views of a positive future for an organization. This concept is worth measuring since it provides a platform for better investment decisions. The model is not measureable since it focuses on future predictions. However, indexes can be used to gauge plausible views depending on their attractiveness. This tool has meaningful implications since it can dictate future performance (Cook and Billig 24).

The concept is recommendable to Etihad since the company has not been using it to improve its strategy. This tool is relatable to the ones currently applied at this organization since it focuses on possible opportunities and challenges that might disorient future profitability. Information or data can be gained from consumer reports and industry projection surveys.

The ninth tool is called the Critical Success Factor Analysis. The concept behind this tool is that it identifies areas that companies should succeed in an attempt to record positive results. It guides organizations to make meaningful decisions. Strategists can measure it by predicting the potential outcomes of different functions. It can be calculated through the use of indexes. It has a positive implication for companies since it ensures that efforts and resources are allocated to key areas. This company has not been using it. It can consider the model to record positive results (Rackley 91). This model has a relationship with the other metrics the company uses since it focuses on internal strengths and gaps that require improvement. Data is obtained from organizational performance reports.

The final tool is the PESTEL Analysis tool. This is an expansion of the PEST model since it introduces the elements of environment and law. Companies can measure the concept to make informed decisions and operate within the existing requirements. Companies can measure these concepts to develop superior strategies. Firms can measure these metrics by analyzing the nature of the legal and environmental policies in the sector. A good example of calculation is the use of indexes (1-10).

These aspects can have positive implications on companies since they can improve their models and make them more sustainable (Cook and Billig 29). Etihad uses this tool to prepare for its future business performance. The metric is combined with SWOT and PEST to deliver meaningful results. The company uses its departments and government publications to get high-quality data for this metrics.

Conclusion

The above discussion has revealed that Etihad Airways is major player in the UAE aviation industry. It uses a powerful business model to meet its passengers’ needs and remain competitive in the region. It embraces the power of a powerful strategy to market its services. The use of various marketing analytical metrics is something that continues to support its business performance. Such tools make it possible for Etihad’s leaders to identify potential gaps, threats, and opportunities for supporting future performance.

Works Cited

Cook, Gerald N., and Bruce Billig. Airline Operations and Management: A Management Textbook. Taylor & Francis, 2017.

Rackley, Jerry. Marketing Analytics Roadmap: Methods, Metrics, and Tools. Apress, 2015.

Russell, Ronald, and Alex Medvedev. Alan Waite, Manager Government, Etihad Airways, Australia. Blurb Incorporated, 2016.

Business Purpose

Supply Chain Management and Competitive Strategy

Brief Background of the Company

1. Etihad Airways is a state-owned carrier in the commercial aviation industry with a strong global presence. Etihad primarily competes in the commercial aviation industry that includes freight and passenger transport segments. Globally, the industry has more than 2000 players controlling over 22,000 commercial jets from various airports around the world (Etihad Airways, 2016). The UAE commercial airline industry has over four major players based in different regions, including Dubai (Emirates Airways) and Ras Al Khaimah (RAK Airways). Etihad competes through the provision of integrated freight services, passenger travel, import/export solutions, and on-board catering, among others.
2. Etihad faces competition from regional and international airlines. Emirates airline has a larger market share than Etihad in the Gulf region in terms of passenger numbers (39.4m vs. 10.3m). Therefore, Etihad is a challenger to the Emirates’ market dominance. Its revenue from cargo services and passenger segment grew by 17% between 2014 and 2015 (Etihad Airways, 2016). The airline is based in the Abu Dhabi International Airport. It serves over 130 destinations spread across 46 different nations, including India, Australia, China, the UK, and the US, among others (Etihad Airways, 2016).

The Environment, the Resources, the Objectives, and the Feedback Decisions

The external environment that Etihad operates in includes markets in the Middle East and Africa region. The company operates in 130 travel destinations spread in different countries. The external environment is characterized by high rivalry between players, low threat of new entrants, presence of substitutes, and high customer and supplier bargaining power. Etihad’s resources consist of tangible and intangible resources. The tangible resources include joint ventures with travel agencies, such as BCD travels, a large fleet size of 122 aircrafts, 130 destinations and centers, and technology resources. The intangible resources include skilled workforce (management), technology, business networks, functional expertise, quality customer service (lounges), and sponsorships (Pezelj, 2015). Its core objectives include

1. offer quality and competitive carrier services to clients worldwide,
2. elevate the image of the UAE,
3. unify the Eastern and Western nations by making Abu Dhabi a connection point.

Etihad, through its two loyalty programs called “Etihad Guest and Etihad BusinessConnect”, receives feedback to maintain customer value (Etihad Airways, 2016, para. 6).

Supply Chain for Etihad

The firm’s supply management unit performs the purchase of fuel, airport services, on-board services, accommodation, and equipment, among others (Etihad Airways, 2016). Its main product is passenger transportation. Other products include airport services, cargo transport, and holiday services. The Etihad’s supply chain management brings together its facilities, information, sourcing, merchandise, transportation, and pricing.

Flow of Goods and Services

Customer Fulfillment and Environmental Scanning

How the Company Creates Value

Etihad’s warehouses are located at the Abu Dhabi International Airport to facilitate the supply of cargo to customers. In addition, the firm has expanded its network through partnerships and alliances that enhance service accessibility and flexibility. It employs technology, such as the SAP implementation, in its operations (Etihad Airways, 2016). Etihad runs innovation centers such as the Etihad Training College that train its engineers and technology experts.

It offers luxurious customer lounges, customized in-flight iPads, and sophisticated chairs called ‘GoSleep’ at the airport. It has deployed technology to detect aircraft faults and increase operational efficiency and safety, leading to service quality. Its loyalty products differ in price range. They include the “Diamond first class, the Pearl business class, and the Coral economy class” (Etihad Airways, 2016).

How the Company Could Monitor Satisfaction

Etihad has a loyalty program called the Frequent Flyer Program. Customers give feedback and views about the quality of the services and frequent travelers receive instant rewards. The loyalty program has the Etihad Guest and the Etihad BusinessConnect (Etihad Airways, 2016). Etihad also relies on surveys done by research firms to monitor customer satisfaction. On the other hand, Etihad’s partners have an option to obtain early payments through its Supply Chain Finance (SCF). The SCF program provides finance to suppliers for receivables at a lower cost (Hogan, 2014). Thus, it deepens the relationship with the supplier.

Environmental Scanning

Environmental scanning helps define the strengths, weaknesses, opportunities, and threats in the market or industry. Etihad’s SWOT analysis is as shown below.

Forces of Change

The most important forces of change for Etihad include:

1. Global capacity – Etihad relies on the Etihad Training College to produce unique products and capabilities that could give it a competitive advantage in the market (Etihad Airways, 2016)
2. Technological innovation – Etihad utilizes technology to enhance safety, improve customer experience, and promote efficiency. Examples include the SAP implementation, the ‘GoSleep’ chair, and the customized on-board iPads. It also collaborates with Boeing in the BIOjet project to develop aircrafts that use bio-fuels.
3. Globalization – Etihad forms alliances with other airports to give premium services to its clients. It has formed partnerships with travel agencies in the 130 destinations it serves.

Supply Chain Process Thinking and Order Fulfillment

Strategies Used by the Firm

Etihad uses partnerships as a strategy to reduce operational costs and increase its revenues. The strategy entails code-share partnerships with other airlines to provide Etihad with passengers. For example, its partnership with Berlin Airline increased traffic by 300,000 travelers (Etihad Airways, 2016). The firm also uses product differentiation to attract customers from different socioeconomic classes. It has the Diamond first, Pearl business, and Coral economy classes, which are relatively cheaper than the comparable competitor products. Another strategy used by Etihad is partnerships with travel and tour companies, such as the Dubai Marina, to offer tourists integrated ground services and customer lounges.

Order Fulfillment Process

The SCOR model consists of five elements, namely, plan, source, make, deliver, and return used to manage supply chain processes.

1. Plan – encompass processes that leverage on demand and supply to meet production, supply, and delivery needs. Etihad’s has a code-sharing and equity plan that helps it meet supply and demand needs of the market. The plan has seen the airline report up to 23% increase in passengers flying with Etihad (Etihad Airways, 2016). In addition, Etihad used the code-sharing plan to provide cargo services and reduce costs.
2. Source – includes the actual purchase processes that meet the demand. Airbus and Boeing supply Etihad the aircrafts that make up its fleet. The firm collaborates with the manufactures to produce customized in-flight amenities and ensure timely completion of projects through projects like the BIOject project in Abu Dhabi.
3. Make – entails processes that produce a finished product to meet demand. Etihad, through backward integration processes with providers to offer online check-in systems and in-flight entertainment (Panasonic eX2 system) (Hogan, 2014).
4. Deliver – covers processes that provide finished goods and services to customers. The online check-in system allows passengers to obtain advance services. Etihad Cargo runs warehouses based at the Abu Dhabi airport that handles inbound and outbound logistics (Hogan, 2014). Goods destined for Asia, Europe, and Australia pass through the airport to the depots in various destinations.
5. Return – covers processes that facilitate the return of damaged or misplaced products. Etihad Cargo provides post-delivery customer support through its offices located in the destinations it serves.

Sourcing Processes

1. Supplier selection – involves four stages, namely, identification, evaluation, approval, and monitoring. Buyers search for suppliers from databases before evaluating them based on price, quality, and expertise, among others (Harrison & Van Hoek, 2008). An eligible supplier is then approved. Monitoring is done to ensure high levels of performance during the contract. Etihad sources its maintenance spare parts from FAA approved suppliers, namely, Airbus and Boeing.
2. Transaction management – utilizes price and purchase orders to evaluate the sourcing group’s performance. The aim is to obtain the best price through competitive bidding or negotiation. Etihad collaborates with Citi group to identify suppliers from Asia, America, and Europe that would deliver the highest returns (Etihad Airways, 2016). Citi offers Etihad a solution called the supply chain finance (SCF) for the transaction (orders and payments) management.
3. Relationship management – entails the supplier and customer relationships. Etihad’s efficient invoice clearance procedures (SCF) strengthen supplier relationships. In addition, the loyalty program that rewards frequent travelers helps in customer relationship management (Hogan, 2014).
4. Communication management – entails internal and external communication channels. Etihad communicates with its customers directly through online check-in systems and travel agencies (Hogan, 2014).

As-Is Supply Chain

Strategic Supply Chain Costing and Performance Measurement

Strategic Cost Management Principles

The aim of strategic cost management is to reduce operational costs and increase revenue while creating customer value. The three principles of strategic cost management include, supply chain analysis, value proposition analysis, and cost driver analysis (Gattorna, 2006).

1. Supply chain analysis – involves the analysis of the flows of information, inventory, business processes, and finance throughout the supply chains, i.e., from the supplier to the consumer.
2. Value proposition analysis – reflects a company’s competitive strategy in the market. A value proposition can be the cost leadership or differentiation strategies of a firm. A firm may use more than one value proposition or change value propositions during the product life cycle (Harrison & Van Hoek, 2008).
3. Cost driver analysis – helps identify company processes, operations, and decisions that lead to costly supply chains. Cost drivers depend on the number of outsourced functions, the quality of the materials or parts used, and the scale of operations (Harrison & Van Hoek, 2008).

Tools Used to Support Strategic Cost Management

The tools that can be used to support strategic cost management include:

1. Cost analysis – entails zero-based pricing and a breakdown of the operational costs related to purchased solutions (Simchi-Levi, Kaminsky & Simchi-Levi, 2008).
2. Price analysis – helps compare prices offered competitors in the market.
3. Total cost of ownership – helps analyze the actual cost of purchasing, maintaining, or selling a product, service, or equipment.
4. Target costing – helps determine the production and marketing costs to estimate the profit margin.

The importance of a supplier to a firm is determined using a decision matrix that considers the nature of the purchase and the relationship sought. Using this matrix, suppliers can be classified into low impact, critical, strategic, and ‘leverage’ providers (Gattorna, 2006). In this regard, an appropriate supplier can be selected using the decision matrix.

How Etihad Could Measure its Sourcing, Operations and Logistics Processes, and Customer Satisfaction

Etihad could measure the efficiency of its sourcing using tools such as quantities of spare parts inventory levels, inventory obsolescence, inventory turns, return on assets (ROA), and economic value added (Gattorna, 2006). On the other hand, the measures of operations of Etihad may include work in progress inventory, inventory obsolescence, ROI, ROA, and economic value gained. The efficiency of Etihad’s logistics could be measured using indices such as inventory turns, inventory obsolescence, ROA, inventory days supply, and economic value gained.

Customer satisfaction is critical in the airline industry. Etihad can measure the satisfaction of its customers using time metrics and customer complaint monitoring (Gattorna, 2006). For firms using Etihad Cargo, on-time delivery, order to delivery cycle, shipments expedited, and complaint response time could indicate their satisfaction levels.

How Etihad Could Measure Its SCM Performance

1. Inventory days of supply – refers to the number of inventory days needed to sustain the supply. According to Simchi-Levi, Kaminsky, and Simchi-Levi (2008), raw materials and final products must be maintained at optimal levels. The calendar days when consumables used in Etihad’s in-flight catering could be divided by the daily cost of sales to obtain the inventory days of supply.
2. Response time – is the number of days it takes a firm to detect demand changes and increase its output by 20%. Etihad’ SCM performance could be the time it takes the firm to increase its fleet or flights per week by 20% in response to a demand rise in a particular destination (Etihad Airways, 2016).
3. Cash to cash cycle time – refers to the time needed to recoup a dollar spent to purchase supplies through the sale of the final product or service. Etihad could use this measure to determine the performance of its food supply chains. It is given by the total inventory days + day’s sales outstanding – day’s payables outstanding (Simchi-Levi, Kaminsky & Simchi-Levi, 2008).
4. Perfect order fulfillment – a perfect order is delivered on time, in a good condition, and with the correct enclosed documents. SCM performance can be determined based on the number of orders that arrive in a perfect condition (Simchi-Levi, Kaminsky & Simchi-Levi, 2008). In this regard, Etihad’s perfect order could be the proportion of freight or consignments that arrive in a perfect condition to the customer.
5. Customer inquiry response time – Etihad’s customer relationships depends on the quality of customer service. Its performance could be measured based on the customer inquiry response time, i.e., the duration it takes for a customer’s call to be directed to the individual who could handle the issue.
6. Source/make cycle time – Etihad could determine the efficiency of outbound logistics for its freight segment using the source/make cycle time. This measure estimates the duration it takes to package and ship a product or consignment.

Competencies and Outsourcing

Etihad’s Core Competencies

Core competencies are the rare capabilities, activities, or skills of a firm that give it a competitive advantage (Beamon, 2009). Etihad’s core competencies include:

1. Luxurious passenger lounges – Etihad recently launched a luxurious customer lounge in Frankfurt. The other lounges are within the UAE. The passenger lounges come with 5-star restaurants and a range of entertainment products. Therefore, the lounges constitute a core competency because it indicates Etihad’s commitment to offer superior products to its customers.
2. Child care services – Etihad’s premium passengers can receive nanny services at the lounges. The trained nannies provide care for children of travelling parents. This service is unique to Etihad and therefore, a core competency.
3. Online booking – passengers have the option of booking for their cabs before landing or checking in through Etihad’s website. This complementary service allows passengers to commute smoothly between the airport and their hotels. The integrated service is difficult to imitate, hence, a core competency.
4. Luxury air travel – Etihad’s $70 million first class suites is fitted with a 23’ screen and several entertainment options, on-board iPad, and beverages, among others. The luxurious amenities enable the airline to compete for high-end clients and corporate executives.
5. Sports sponsorships – Etihad is a leading sponsor of sports tournaments, such as football. The sponsorships improve its global profile and image.

Outsourcing

Outsourcing is defined as the process of contracting certain aspects of the production process or business functions to another company or supplier (Beamon, 2009). Privatization is a form of government outsourcing. Companies outsource functions for various reasons.

1. Conserve capital through cost savings.
2. Grow revenue – outsourcing to specialist firms can lead to improved performance and revenue.
3. Reduce operating costs – outsourcing to low-wage countries can lower a firm’s operating costs.
4. Focus on the core business – by outsourcing auxiliary services, a firm can concentrate on its key business function.

Examples of outsourced services include financial services, data entry, website maintenance, transcription, and secretarial services, among others (Gattorna, 2006). The three kinds of risks associated with outsourcing include:

1. Strategic risk – outsourcing may lead to a loss of core capabilities and knowledge in the long-term.
2. Tactical risk – outsourcing is associated with a short-term risk of capacity loss due to the reliance on suppliers.
3. Effect on buyer power – the reliance on third party providers increases supplier power.

Make-or-buy Analysis

Firms often face dilemmas when deciding between outsourcing and retaining the functions. Make-or-buy decisions involve four steps. First, a cross-functional team evaluates the need for outsourcing (Gattorna, 2006). Second, the functions to be outsourced and the expected outputs are identified. Third, the costs associated with the outsourced activity are determined. The costs may include materials, staffing, transportation, quality control, and capital, among others. The fourth stage is evaluation, which entails sensitivity analysis to compare outsourcing costs and benefits. A decision to outsource part of the functions is made when the provider shares the estimated costs with the firm.

Supply Chain Rationalization

Supply-base Optimization

Creating supply effective relationships with good suppliers can be challenging. Beamon, (2009) defines the supplier base optimization as an ongoing process of evaluating suppliers to maintain an effective supply base by identifying and removing inefficient and redundant ones. The aim is to develop an optimized supply base with a low risk and build effective supplier relationships. American manufacturers often obtain supplies from many suppliers globally. Through supply base optimization, they can remove redundant suppliers to maintain a simple and efficient supply chain. Optimization can be achieved through multiple source suppliers, supplier scorecards, plant visits, and high quality requirements.

Role Shifting

Role shifting calls for a reexamination of the capabilities needed in the supply chain. It requires cross-functional skills to develop successful supply chains. Modern firms need to develop management skills to complement their supply chain expertise. Role shifting creates competitive supply chains through collaboration, better management of complexity, use of technology, and increasing responsiveness to demand changes (Simchi-Levi, Kaminsky & Simchi-Levi, 2008). The manufacturing management brings together people from technically diverse fields that employ different approaches to optimize the supply chains. Role shifting considers different production methods and decisions that obtain innovative and efficient supply chains.

To-Be Supply Chain

Supply Chain Relationships

The Right Type of Relationships for Etihad

1. Arm’s-length Relationships – are appropriate for ‘routine’ purchases of products that involve no value addition by the supplier. Arm’s-length relationships are recommended for Etihad’s suppliers of hotel products for its in-flight catering (Pezelj, 2015). The supply market for hotel supplies is very competitive and non-differentiated. In addition, in arm’s-length relationships, no long-term commitment is required, and therefore, Etihad can change suppliers easily.
2. Niche relationships – are the relationships between the firm and providers that are specialized in a specific, limited product or service. Unlike arm’s-length relationships, niche relationships involve high switching costs. Niche is recommended for the relationships between Etihad and providers of airline solutions, such as passenger services and e-payment systems. An example of such providers is Sabre Airline Solutions that offers specialized products for departure control (Pezelj, 2015).
3. Hybrid relationships – involve providers of intermediate level services or products of moderate importance to the company. The products may involve turnkey solutions that are ready for use upon delivery. Etihad’s may have hybrid relationships with jet fuel suppliers and other airlines (code sharing relationships) (Pezelj, 2015). Hybrid relationships are characterized by higher switching costs and continuous collaboration.
4. Full service relationships – involve strategic products and services integrated into a company’s internal processes and custom solutions. The suppliers cooperate with the organization and have a high level of responsibility and accountability. Etihad could have full service relationships with aircraft manufacturers, i.e., Boeing and Airbus, which provide maintenance parts and safety features (Pezelj, 2015).

Practices that Promote Successful Alliance Creation and Management

Successful alliances require proper process management and leadership commitment. Some of the best practices for successful alliances include:

1. Process management – it entails the management of the alliance as per the set objectives, regular performance evaluation, effective tackling of teething problems, and implementation of a risk mitigation strategy (Christopher & Towill, 2002). Furthermore, clear specifications of the process or products can help avoid ambiguity in production.
2. Open communication – building strong relationships requires effective communication and engagement on issues that require joint decisions (Christopher & Towill, 2002). In addition, open communication helps resolve any differences between the firms and fosters collaboration. Relationships can be strengthened by holding regular stakeholder meetings to seek feedback and address pertinent issues early to avoid conflicts.
3. Equitable investment – resource constraints account for most alliance failures. Building successful alliances requires dedicated resources and effective management of processes, human resource, and strategies (Christopher & Towill, 2002). The organizations should contribute resources equitably.
4. Timely payment – suppliers should be paid on time after delivering products or services.
5. Training – empowering customers and suppliers through training can strengthen strategic alliances.

Elements of an Effective Negotiation Strategy

Having a mutual win-win attitude can help Etihad and its partners to collaborate to raise their competitive position. In addition, planning for a successful outcome can motivate both parties to negotiate (Pezelj, 2015). Portraying the negotiation as being fair and accommodating can also increase the commitment of partners towards the process. Focusing on creating value for both parties through a mutual agreement can create trust and strengthen the SC relationships.

Etihad Airways can plan effective negotiations by formulating specific objectives of the process beforehand. Another strategy involves appointing an effective team to lead the negotiations. Effective planning also requires the collection and analysis of relevant data to identify the strengths and weaknesses of the other party. The analysis can also allow Etihad to identify the other party’s needs, identify the pertinent facts, take a stand on each issue beforehand, and formulate a negotiation strategy (Christopher & Towill, 2002). Proper planning also entails choosing the negotiation tactics.

One of the tactics suited for win-win negotiations include honesty and openness (Christopher & Towill, 2002). The process entails honesty and transparency in providing information to facilitate informed decision-making. Other tactics may include listening effectively, using positive statements, being considerate, and arguing based on facts.

Sharing Information across the Supply Chain

SC-related Information Technologies and Information Systems Used

A number of IT technologies have been applied to streamline supply chains. Examples include:

1. E-commerce – refers to a suite of tools that facilitate transactions without paperwork (Beamon, 2009). It includes “data interchange, database systems, and e-mails”, among others (Beamon, 2009, p. 278). Firms use automated e-commerce systems to exchange documentation between the firm and its suppliers and customers.
2. Another IT SC-related IT solution is electronic data interchange (EDI). EDI allows firms to exchange documents in an electronic format. Supply chain partners can use EDI to share documents quickly.
3. Bar coding – scanners are used to track goods in transit between the supplier and the customers.
4. Enterprise resource planning (ERP) system – firms use ERP tools to process transactions such as inventory control and client orders.

The Benefits of SC-related IT Systems

1. ERP systems can help streamline the supply chains by promoting communication between SC partners.
2. The systems can help firms know customer needs and create tailor-made products.
3. ERP systems can help firms synchronize the flow of products during production or transportation.
4. IT systems provide tools for billing and processing invoices at a lower cost, which increases productivity.
5. Optimization tools can help in fleet management to lower costs and reduce response time.

How Companies Use the Internet and E-commerce

1. Order processing and tracking – firms use the internet to monitor the flow of goods from the warehouse to customers (Simchi-Levi, Kaminsky & Simchi-Levi, 2008).
2. Inventory management – EDI information programs are used by buyers to communicate stock-outs to suppliers via the internet.
3. Transportation – Internet-based tracking systems facilitate order processing and payment.
4. Customer service – customer complaints can be addressed using internet-based systems.
5. Production scheduling – Firms use the Internet to schedule production processes and delivery between suppliers and customers.

The Supply Chain Road Map – Mapping the Supply Chain Design

Supply Chain Mapping

Conclusions and Recommendations

In light of the increasing competition in the global airline competition, rising fuel costs, and Abu Dhabi’s strategic location in the world map we recommend that:

• Fulfilling customers’ needs
  • Etihad enhances its punctuality and reliability in flight scheduling to reduce customer complaints and increase trust and satisfaction
  • The company expands its range of in-flight entertainment options and cultural sensitive hospitality products offered to the destinations it serves
  • Etihad avails information in local languages to travelers via online applications
• Supply chain processes
  • The airline forms SC relationships with more airports (supply network) to provide premium services to its customers in all its destinations
  • Etihad reduces operational costs by forming long-term relationships with fuel suppliers (backward integration with suppliers)
• Supply Chain Costing and Performance Measurement Practices
  • Etihad measures the efficiency of its sourcing using a combination of indices, such as inventory levels, and ROA.
  • The carrier measures its SC operations and logistics using work in progress inventory to capture product flows
  • The company uses time metrics to measure response time to increase customer satisfaction
  • Etihad employs a range of indices to measure and monitor its SCP performance, including response time, inventory days of supply, and cash-to-cash cycle time, among others (Hogan, 2014).
• Core Competencies and Outsourcing Practices
  • Etihad should invest in the training and development of local work force to run its operations within each of the 130 destinations as the travel attendants and pilots
  • The luxurious passenger lounges should be opened up in locations outside the UAE to give its clients premium services globally
  • The childcare service (trained nanny) should be replicated in the other destinations that Etihad serves besides Abu Dhabi international airport
  • The luxurious suites should give customers video conferencing solutions to allow executives to hold in-flight meetings or communicate with staff in different locations
  • Etihad outsource its supply chain finance function to a banking institution to facilitate transaction management and payments
• Supply Chain Relationship Management
  • Etihad should develop arm’s-length relationships with the providers of in-catering food supplies because they involve low switching costs
  • Etihad’s niche relationships should involve specialist firms such as providers of IT solutions
  • The airline should form hybrid relationships with fuel provider, e.g., ADNOC, to lower its operational costs in the long term
  • Etihad’s full service relationships with aircraft manufacturers, Boeing and Airbus, can enhance safety and reliability
• Sharing Information across the Supply Chain
  • Etihad should use e-commerce tools to share documents with its suppliers and facilitate online booking and payment by customers
  • The airline should use ERP systems to manage its inventory and streamline its cargo transportation segment
• Aligning All of the Above with its Supply Chain Strategy
  • Etihad’s strategy is to “expand globally by adding the largest possible number of destinations” (Etihad Airways, 2016, para. 3). Etihad should explore market opportunities in Asia and South America for its cargo and passenger travel segment. The company should use the SCM tools described to develop distinctive logistics services across its destinations.

References

Beamon, B. (2009). Measuring Supply Chain Performance. International Journal of Operations and Production Management 19(3), 275-292.

Christopher, M. & Towill, D.R. (2002). Developing Market Specific Supply Chainm Strategies. The International Journal of Logistics Management, 13(1), 32-39.

Etihad Airways. (2016). About Us. Web.

Gattorna, J. (2006). Living supply chains. How to Mobilize the Enterprise around Delivering what your Customer Want. New York, NY: Prentice Hall.

Harrison, A. & Van Hoek, R. (2008). Logistics Management and Strategy. Competing through the Supply Chain. New York, NY: Prentice Hall.

Hogan, J. (2014). New era for Etihad in 2014. Web.

Pezelj, I. (2015). Differentiation in Strategy Key to Etihad Airways’ Success. Web.

Simchi-Levi, D., Kaminsky, P. & Simchi-Levi, E. (2008). Designing and Managing the Supply Chain: Concepts, Strategies, and Case Studies. Boston, MA: McGraw-Hill/Irwin.

Market Segmentation

Partners Business Segmentation

This market includes small airline businesses across the regions of Abu Dhabi and beyond. The company has instituted partnership deals with the local airlines to improve its customer traffic and ease market penetration. The notable partners of Etihad are Jet Airways of India and Aer Lingus of Ireland, among others. Therefore, this segment is influenced by competitive pricing, quality, and safety for optimal benefits for Etihad Airline to survive the competition and ensure business sustainability.

Consumer Segment

This is the largest segment for Etihad Airways flight and cargo delivery products. This segment comprises passengers who travel with Etihad airlines. Since the flight and cargo products come in different packages, the segment is influenced by differential quantification, competitive pricing, and efficiency. As a part of its strategy, the company has internalized these aspects to position itself in this segment. Thus, Etihad was in number seven globally, among the 200 leading airline companies reviewed.

Target Audience

Etihad is a leading airline in the global flight arena, and it offers some of the safest and most affordable flights to its passengers. Every household within and beyond the Persian Gulf consists of potential customers of Etihad. With the need to be ahead of its competitors, Etihad adopted the strategy of maximum comfort in the first-class cabin, spacious airplanes, and a variety of meals served during its flights.

Positioning Strategies

Because of fierce competition in the global market for air travel, product position is directly linked to success in the short and long term, especially for Etihad products. In order to achieve the desired goals, Etihad has positioned itself to emphasize the difference between its products and those of its competitors. As a strategy for diversifying market operations, Etihad Company has created multiple brands through its numerous airline partners, such as the Jet Airways of India and Aer Lingus of Ireland. This has created an environment of competition and blocked other competitors from encroaching into the company’s local and global market. This strategy has been successful and has led to the company’s dominance over other local airlines.

The threat to new entrant

It is difficult for any aspiring airline company to enter into the airline industry in the Persian Gulf market and manage to break there easily. In the Persian Gulf, Etihad’s businesses magnitude together to that of its main competitors, such as the Emirates of Dubai and Qatar Airways, which are well established and would easily enjoy economies of scale to the disadvantage of a new entrant. Etihad Airways is well-positioned to survive in the competitive market through gaining from economies of scale, competitive price tags, and a strong customer base in the Persian Gulf region.

Threat of substitutes

Emirates and Qatar Airways pose the greatest threat to Etihad’s existence and business performance. These air carriers have been in the industry for a longer period and are more established than Etihad is. Besides, Emirates and Qatar Airways have the ability to offer an alternative perfect substitute to the customers who may be unsatisfied with the services offered by Etihad Airways. However, in order to remain relevant, Etihad has established a unique market for its clients through tailored optometry flight services.

Competitive rivalry

There are several air carriers operating in the same industry with virtually all of them dealing in a variety of flight products and services. For instance, the Emirates and Qatar Airways provide the biggest competition to Etihad due to their big market share and expanded networks. All the players in the industry are putting measures in place to ensure they attract more customers and, therefore, expand their market share. In line with this, Etihad Airways of Abu Dhabi has the highest passenger traffic.

Introduction

The demanding and fast-paced business environment of modern economies has created several shifts in business working paradigms. Corporate Social Responsibility (CSR) is one business paradigm that has emerged from these changes. As such, Sharma and Kiran (18) say CSR has become a growing area of interest for researchers, businesses, and practitioners (in terms of its theoretical and practical underpinnings).

Although few scholars agree on the proper definition of CSR, Sharma and Kiran (18) define it as “a concept whereby companies integrate social, environmental, and health concerns in their business strategy (policy) and operations, and in their interactions with stakeholders” (18). The above definition shows that the society often has legal, economic, and ethical expectations (from companies).

These expectations are more profound for multinational organisations because they have the greatest impact on the society. Consequently, people expect many multinational organisations to take part in CSR projects. For example, airline companies have increasingly come under sharp scrutiny because of their environmental impact and cross-border activities. However, such companies have responded by participating in many CSR responsibilities. Etihad Airways (6) is one such company.

Founded in 2003, by a Royal Decree, the airline has become among the fastest-growing airline companies in the world. Based on its stature as a premium airline brand, Etihad Airways (6) operates as the national flag carrier of the United Arab Emirates (UAE).

The airline mainly operates a fleet of more than 88 planes from Abu Dhabi (the capital of the UAE). From this place, the airline flies to more than 84 destinations around the world (spanning across the Middle East, Africa, North America, Asia, Europe, and Australia) (Etihad Airways 6).

Etihad’s vision is to give quality airline services by blending the best of Asian and Western hospitality. However, the airline’s sustainability vision is “To be recognised as a sustainable airline that operates to the highest standards of safety, with integrity and transparency” (Etihad Airways 8).

Etihad Airways (8) also strives to adopt new and unconventional hospitality practices. This goal is part of the airline’s commitment to introduce “freedom” to air travel by practicing the highest global standards in this respect. In line with its vision, the airline also strives to provide safe and environmentally friendly air travel to its customers, by being in-touch with customer needs.

This paper seeks to investigate and understand Etihad’s CSR practices. In doing so, this paper consults several models and theories, such as the pyramid of corporate social responsibility, intersecting circles CSR model, and the instrumental theories (shareholder maximization theory).

These theories categorise Etihad’s CSR initiatives into economic responsibilities, legal responsibilities, ethical responsibilities, and philanthropic responsibilities. Although they show that the airline’s CSR initiatives mainly focus on meeting ethical responsibilities, they also affirm the economic values of its CSR projects. The last section of this paper recommends key improvements to the company’s CSR practices.

Analysis

CSR Pyramid

Among the most known scholars in CSR studies is Archie Carroll. He introduced a systematic model for analysing CSR practices by formulating a pyramid that defines key organisational responsibilities in CSR practice. The diagram below shows his layers of CSR responsibilities that include economic responsibility, legal responsibility, ethical responsibility, and philanthropic responsibilities, in that order.

Figure One: The Pyramid of Corporate Social responsibility (Source: Sharma and Kiran 19)

As shown above, the economic responsibility outlines an organisation’s need to make profits. This is the foundation for all other levels of corporate social responsibilities. The legal responsibility outlines an organisation’s need to obey all laws – playing by the rules. This requirement provides the foundation for ethical practices – obligation to do what is right (Sharma and Kiran 19). Organisations that meet this need (could) also meet their philanthropic responsibilities of being a good corporate citizen and improving the life quality of their stakeholders.

Many organisations that engage in CSR responsibilities have met the above CSR responsibilities. However, the focus on the ethical and philanthropic responsibilities is a recent development. Therefore, in the past, many organisations focused on meeting their economic and legal responsibilities only.

Relation of Carroll’s Model to Etihad’s CSR Strategy

Environmental Responsibility

Etihad’s CSR strategy shows that it meets Carroll’s ethical responsibility level. Particularly, its focus on environmental sustainability shows its compliance with its ethical obligations because it outlines the organisation’s quest to do what is right (being ethical). This compliance level comes in the wake of the environmental concerns about carbon emissions from the aviation industry.

Etihad has responded by developing an environmental policy, developed through a collaborative effort among its stakeholders – partners, suppliers, and customers (Etihad Airways 22). Although this CSR strategy mainly aims to adopt environmentally friendly practices, it broadly fits within a wider “sustainability” model that strives to embrace new technologies in propelling the organisation’s activities. For example, the company strives to use cleaner fuels, such as biofuels, to power its aircrafts.

Similarly, the company aims to start a comprehensive waste management program to inform its customers about the advantages of disposing waste in an environmentally sustainable way (Etihad Airways 22). Comprehensively, Etihad’s environmental sustainability strategy covers three important areas – carbon management and measuring emissions and materiality.

For example, despite the significant progress made by commercial airlines in adopting environmentally friendly practices, the airline industry has continued to receive immense pressures to cut its carbon footprint.

Etihad Airways has been a leader in this regard by reducing its carbon footprint (in its airline operations, and administrative activities). The company does so by measuring its carbon footprint through the greenhouse gas protocol (Etihad Airways 22).

These activities outline parts of the company’s environmental policy that strive to abide by all environmental legislations, install measurement systems to track and change the organisation’s environmental performance, reduce the dependency on traditional fuels, train employees to embrace environmental sustainability, and communicate the organisation’s performance (about environmental sustainability) to all stakeholders. These initiatives outline the company’s ethical responsibilities.

Legal Responsibility

Complying with existing environmental laws highlights Etihad’s legal responsibility in Carroll’s CSR model. Indeed the company’s 2011 CSR report affirms its commitment to work with industry bodies such as “The Civil Aviation Organization (ICAO), the International Air Transport Association (IATA), the Arab Air Carriers Organisation (AACO) and with local government and non-governmental partners” (Etihad Airways 14).

Etihad’s legal responsibility also stretches to its health and safety standards. For example, the company’s safety and quality department complies with all existing standards regarding the health and safety of its employees and customers (Etihad Airways 14). This commitment has reaffirmed the airline’s presence in the corporate aviation map.

For example, the company’s sustainability report affirms the organisation’s presence in several global bodies, including the “Environmental Committee of lATA and the Environmental Policy Group of the Arab Air Carriers Organisation (AACO)” (Etihad Airways 20). Besides complying with existing legislation regarding environmental sustainability, Etihad also plays a proactive role in influencing existing legislations by collaborating with other airlines in developing new legislative frameworks.

Economic Responsibility

Etihad plays a crucial role in improving Abu Dhabi’s economy. For example, the company complements the Emirate’s trade and tourism sectors by acting as a global ambassador for Abu Dhabi. This contribution complements Abu Dhabi’s vision 2030 plan, which strives to diversify the Emirate’s economy by expanding non-oil economic sectors (Etihad Airways 22).

A study by UK’s think tank, Oxford Economics, shows that Etihad’s contribution to Abu Dhabi’s economy covers diverse sectors including “Trade, tourism, location investment, labour supply and productivity” (Etihad Airways 22). The same study revealed that the airline contributed about $6.1 billion to the Abu Dhabi economy (Etihad Airways 14). This amount accounted for about 9.1% of the country’s non-oil GDP.

Progressively, the company’s contribution to the Abu Dhabi economy has increased (over the years) because in 2010, Etihad contributed about 3.7% of the Emirate’s GDP. Besides this contribution, it has also created more jobs than other national companies have done. For example, Oxford Economics shows that the company created about 97,472 jobs in the non-oil sector (Etihad Airways 22). About 6,631 of these jobs directly support the organisation’s activities.

The same UK firm shows that in 2010, Etihad created about 14, 236 jobs from its direct and indirect business interactions with independent Abu Dhabi businesses (Etihad Airways 22).

Roughly, through these business interactions, the company makes an indirect contribution of about $763 million to the Abu Dhabi economy. Indirectly, the company’s contribution to the economy contributes a further $661 million to Abu Dhabi’s economy (based on the expenditures made by the company’s employees and suppliers) (Etihad Airways 22).

Philanthropic Responsibilities

Etihad’s contribution to Abu Dhabi also includes non-monetary contributions. For example, the company markets the Emirate as a top tourist destination, globally. In 2011, the company launched the “Essential Abu Dhabi” marketing campaign to promote Abu Dhabi as a favourite tourist destination. The campaign involved painting aircrafts with a “Visit Abu Dhabi” logo. Several new aircraft had the logos.

The campaign brought together several tourist stakeholders in Abu Dhabi and created a joint marketing effort (Etihad Airways 22). For example, the Abu Dhabi Tourism Authority participated in the campaign. Part of the marketing campaign included a spirited effort to promote Abu Dhabi’s cultural heritage.

For example, the airline gives opportunities to women from marginalised communities to sell traditional crafts in the duty-free on-board flights (Etihad Airways 22). This way, the airline creates employment for marginalised communities. Overall, the following diagram sums Etihad’s contribution to Abu Dhabi.

Figure Two: The Impact of Etihad’s Economic Contribution in Abu Dhabi (Source: Etihad Airways 22)

Instrumental Theories

Instrumental theories suggest that most organisations only take part in CSR activities for economic gain. This view emerges in Friedman’s conception of CSR activities when he says ‘‘the only one responsibility of business towards society is the maximization of profits to the shareholders, within the legal framework and the ethical custom of the country’’ (Garriga and Mele 53).

This view also suggests that the motive for wealth creation would overshadow the gains from managerial responsibility. Some researchers have argued that this principle promotes the concept of stakeholder value maximization (Garriga and Mele 53). However, it does not presuppose excluding other stakeholders’ interests from the analysis.

Garriga and Mele (53) say that profit maximization outlines one group of instrumental theories, which supports incremental share prices as an “ultimate” CSR goal. Coincidentally, this group of theories outlines the main motive of Etihad’s CSR initiatives. For example, the company’s CSR initiatives aim to promote Abu Dhabi’s “beauty” to the rest of the world.

However, they underlie significant economic gains for the airline and the Abu Dhabi Emirate. For example, the marketing campaign aims to attract more visitors to Abu Dhabi. This translates to more tourist numbers and a resultant growth in the tourism industry (by extension, the growth of the non-oil sector).

Such developments portend several economic gains for Abu Dhabi. Furthermore, considering a Royal Decree established Etihad Airways, correctly, the airline shares a close relationship with the government. Therefore, marketing Abu Dhabi to the rest of the world is a profitable venture for the government, which is Etihad’s main shareholder. This analysis shows how the instrumental theories apply to the airline’s CSR practices because its CSR activities aim to maximise shareholder value (the Abu Dhabi government is the key shareholder).

Etihad Airways (22) would also gain from similar marketing initiatives because its marketing campaign translates to more customers (more tourist numbers) because the airline is a significant player in Abu Dhabi’s aviation industry. This assessment shows that Etihad Airways (22) and the Abu Dhabi government benefit economically from the airline’s CSR activities.

Intersecting Circles CSR Model

The intersecting circles CSR model shares a close relationship with Carroll’s CSR model because both frameworks explain CSR practices, based on their philanthropic, ethical, economic, and legal attributes.

However, unlike the pyramid model, the intersecting circles CSR model shows interrelationships among CSR domains (Geva 15). Similarly, the intersecting circles CSR model does not follow a hierarchical model of CSR importance, as outlined by the pyramid model. The diagram below shows the intersecting relationships among different CSR responsibilities.

Figure Three: Intersecting Circles CSR Model (Source: Geva 5)

Although the pyramid model described shows the nature of Etihad’s CSR responsibilities, the intersecting CSR model provides a better conception of these responsibilities. Particularly, this model shows how the airline’s CSR responsibilities overlap each spectrum of CSR analysis.

For example, the pyramid model describes the airline’s environmental sustainability practices, as part of the company’s ethical responsibilities. However, the intersecting model shows the possibility of this CSR practice overlapping on another CSR responsibility. For example, the company’s adoption of environmentally sustainable CSR practices overlaps the ethical and economic CSR spectrums.

Indeed, Etihad Airways (14) has collaborated with several institutions of higher learning, in Abu Dhabi, to explore the use of “green” energy. As explained in this paper, the airline aims to reduce its reliance on traditional fuels to reduce its carbon emissions. However, this strategy is not purely ethical (the company could benefit from it economically). For example, the use of biofuels would (possibly) provide a cheaper and alternative fuel for the airline.

This would result in significant cost reductions for the company, especially considering the aviation sector suffers from increased costs of operations, partly contributed by increased fuel costs. Therefore, as the airline cuts its carbon footprint by adopting greener energy, it could cut its operational costs. Overall, this analysis shows overlapping CSR spectrums, as outlined by the intersecting model.

Conclusion and Recommendations

Conclusion

This paper sought to evaluate the CSR practices of Etihad Airways (6) by comparing and contrasting them to CSR models and theories. Carroll’s CSR pyramid explained the airline’s CSR practices by categorising them into four distinctive CSR groups (economic responsibility, legal responsibility, ethical responsibility, and philanthropic responsibility). Etihad’s CSR responsibilities mainly lie in the ethical and legal categories.

A deeper review of the company’s main CSR initiatives shows a strong focus on environmental sustainability as the main CSR focus. Therefore, its environmental responsibilities overshadow its philanthropic and economic responsibilities. In fact, the company’s CSR report shows minimal and scanty philanthropic initiatives.

The intersecting circles CSR model shows how the airline’s sustainable practices cut across ethical and economic spectrums. The pyramid model was unable to show this relationship because it does not recognise overlapping CSR spectrums. Instead, it broadly categorised the CSR initiatives into the four categories described above. Instrumental theories show that the company’s main CSR practices have an underlying economic gain for the shareholders.

The business also benefits in this regard. The airline’s political connections outline the greatest evidence supporting this fact because ties to the UAE government creates an opportunity for Abu Dhabi and the airline to benefit from joint marketing activities (managed by the airline and government bodies, like the Abu Dhabi Chamber of Commerce).

Based on the economic benefits emerging from this analysis, and the findings of the intersecting circles CSR model, it is pertinent to state that Etihad stands to benefit economically from most of its CSR initiatives. This finding further strengthens the findings of the instrumental theories, which suggest that the motive to create wealth often overrides social or non-profitable interests.

Recommendations

Already, this paper shows that Etihad’s CSR initiatives mainly focus on promoting the adoption of environmentally sustainable activities. Marketing initiatives outline other CSR projects that aim to create awareness about the “beauty” of Abu Dhabi. These analyses show that the airline has a narrow CSR focus.

Therefore, it needs to expand its CSR scope to include more initiatives. For example, besides focusing on environmental issues only, the company could introduce other aspects of CSR practice, like introducing ethical labour practices or engaging in more practices that are philanthropic.

Particularly, the company should focus more on venturing into CSR initiatives that strive to improve employee well-being and engagement. Similarly, the airline could expand its CSR scope and include diversity and social equity programs. Overall, these initiatives should aim to improve the community’s well-being and economic prosperity.

Works Cited

Etihad Airways 2011, CSR Report 2010. Web.

Garriga, Elisabet & Mele Domenec. “Corporate Social Responsibility Theories: Mapping the Territory.” Journal of Business Ethics 53.1 (2004): 51–71. Print.

Geva, Aviva. “Three Models of Corporate Social Responsibility: Interrelationships between Theory, Research, and Practice.” Business and Society Review 113.1 (2008): 1–41. Print.

Sharma, Anupam & Kiran Ravi. “Corporate Social Responsibility: Driving Forces and Challenges.” International Journal of Business Research and Development 2.1 (2013): 18‐27. Print.