Project on marketing Plan of Pakistan international Airline

EXECUTIVE SUMMARY

In 1955 Pakistan international Air line formed. It is 16th largest airline in Asia, operating scheduled services to 62 destinations through out Asia, the Middle East, Europe and north America, as well as extensive domestic network linking 24 destination.

PIA is a three star international airline. In our report we did SWOT analysis &PEST analysis on PIA. We find as leading marketing position brand recognition, superior operating structure, network presence, hub airport at Karachi & effective use of technology. We identify major strength & weakness of PIA. Formulating on govt. rules, high depends on passenger’s revenues, high debt & reliance on oil; prices are major weakness opportunities are like having max. Routes and fleet, growth demand for low cost airline, customer loyalty, shifting customer need & industry recovery & major threats are high interest rate, accidents , strong competition by air blue, interest & foreign currency exchange rate & decline in industry. In pest analysis we find major govt. active role in increasing competition in airline industry, inflation rate, turning of social environment of Pakistan. Innovation in technology & its impact on distribution & cost from industry consolidation.

We make segmentation on the basis of Geographic basis, demographic basis, behavioral basis & physiographic basis than we do the product evaluation. In it we tell core, actual & augmented products of PIA. We do positioning of branding image of brand than tell about the product life cycle. We select the target market on the basis of geographic,behavioral,demographic and psychographic. We do the competitors analysis and study the strength and weakness of competitor, advantages of competitor than select marketing objectives & select the marketing strategy & than give our recommendation.

B.Z.U Sub Campus D.G Khan Page 1

HISTORY OF PIA

After a short period of independence, Pakistan decided in 1951 that it needed a national flag carrier airline; the government of the country accordingly established Pakistan International Airlines (PIA) in this role, and on 25 May ordered three examples of the Lockheed L-1049C Super Constellation four-engined airliner as the new operator's initial equipment. PIA flew its first service with the Super Constellation on 07 June 1954 on the route linking Karachi and Dacca(now Dhaka), which were the main cities of the country's western and eastern halves, of which the later is now Bangladesh. On 1 February 1955 the airline flew its first international service, between Karachi and London via Cairo On 11 March 1955 PIA formally took over the assets and routes of another Pakistani operator, Orient Airways, which had in effect been part of PIA since October 1953. The consolidation of the two airlines meant that PIA could enlarge its domestic network with 11 Douglas DC-3 and two Convair CV-240 aircraft, which left the Super Constellation machines wholly free for international services. Modernization of the fleet used for domestic and regional operations was now a matter of high priority, and in May 1956 the airline placed an order for three examples of the Vickers Viscount 815 four-turboprop airliner, the first of which was accepted in the UK on 2 January 1959 for a debut in revenue earning service on the service linking Karachi and Delhi on 31 January 1959. Further enhancement came in 1961 with debut of the Fokker F-27 Friendship twin-turboprop type, of which the first was received on 3 January 1961. The availability of the F-27 for operationon the routes linking the major Pakistani cities freed the DC-3 fleet for use on new services to the remoter parts of East Pakistan. PIA was the first Asian airline with pure-jet aircraft, in the form of a Boeing 707-321 machineleased from Pan American World Airways for use from 7 March 1960 on the London service that was extended to New York on 5 May 1961. On 21 December 1961 PIA began to receive its own jet aircraft when it took delivery of the first of three Boeing 720-040B aircraft, whose availability


permitted the operator to enlarge its international route network. In 1963 PIA called off its New York service, but on 29 April 1964 became the first non-communistairline to operate a service to the Chinese city of Shanghai. A notable feature of PIA's domestic routes in East Pakistan for some time was the helicopter services operated with Sikorsky S-61N's. PIA ordered four examples of the Hawker Siddeley HS.121 Trident 1E to replace Vickers Viscount 815s. First of these four Trident aircraft was accepted on 1 March 1966. The Tridentaircraft were later sold to the Civil Aviation Administration of China in 1970. In 1971 East Pakistan secured its independence as Bangladesh, and PIA ceased operations to that country. The airline's fleet and network were both reduced, but the service to New York was resumed in 1972.

The first wide-body airliner used by PIA was the McDonnell Douglas DC-10-30 three-turbofan type, which the airline first received on 1 March 1974. A pair of Boeing 747-282B four-turbofan aircraft (initially leased from TAP Air Portugal) followed in April 1976, and on 3 March 1980 the airline accepted its first Airbus A300B4-203 two-turbofan type. In 1985 PIA became the first Asian operator of Boeing 737-300 aircraft, a total of six Boeing 737-300s were ordered to replace ageing Boeing 720B aircraft. PIA received first of its six Airbus A310-308 aircraft on 25 June 1991 from Airbus Industrial.

In the first half of the year 1999, PIA acquired five Boeing 747-367 aircraft (initially leased from Cathay Pacific) for its European and North American destinations. In 2002 PIA signed an agreement with Boeing Company for the biggest aircraft deal in the history of PIA. After a dry spell of 10 years, PIA ordered new aircraft - 8 wide-body aircraft from the Boeing 777 family for its long-haul flights. The airline accepted delivery of its first Boeing 777-240ER aircraft at Boeing Field in Seattle, USA, on 29 January, 2004. On 2 November, 2005, PIA signed an agreement with Avions de Transport Regional (ATR) of France to purchase seven brand new ATR 42-500 turbo prop aircraft. These new 48-seater ATRs will replace PIA's ageing fleet of Fokker F-27s on airline's domestic and regional route network. On May 31, 2006, PIA received its first ATR 42-500 in Toulouse, France. The remaining six ATR 42-500s were delivered to the airline between 2006 and 2007.

currently the mainstays of PIA's medium- and long-haul operations, with feeder, local and regional services provided by the Boeing 737-300 and ATR 42-500.


Vision

PIA vision is to be a world class air line meeting customer expectation through excellent services on time performance, innovative products and absolute safety

Mission

Employee team will contribute towards making PIA a global air line of choice through Offering quality customer service & innovative product

Using state of - the - Art technologies

Ensuring cost effective measures in procurement and operations


Developing safety culture

Goals & Objective

According to PIAC Act 1956 following are the main objectives of PIA Corporation

To provide further develop safe efficient adequate economical and properly coordinate domestic as well as international air transport system .

To operate any air transport service or any flight by air craft for a commercial or other purpose and to carry all forms of aerial work.

To acquire, own, run or participate in the running management of any hotel or business connected therewith.

To provide for the instruction and training in matters connected with aircraft or flight by aircraft of persons employed or desirous if being employed either by the corporation or by other person.

To promote any organization outside Pakistan for the purpose of engaging in any activity of a kind which the corporation has power to carry out

To acquire hold or dispose of any property whether moveable or immovable, or any transport undertaking.

To repair overhaul reconstruct assemble or recondition aircraft, vehicle or other machine parts, accessories owned by the corporation or by any person


VALUESCustomer Expectations

PIA is the most trusted name in the industry. The reason of its goodwill is according the expectation of their customers that PIA has fulfilled always. By providing competitive tariff, extensive care, convenience to their valued and potential customers.

Service

PIA aims at providing valuable and unique services to its customers. They are more personalized and courteous to their customers. The services are valuable and rare; this is the reason why customers trust PIA.

Innovation

PIA currently has a number of 43 fleets and aims at increasing this numbers to 53 by the next few years. PIA is adoptive to changes and believe in innovation that’s create new ideas and translating these ideas into action.

Reliability

PIA is the most experience airline with its service with more than 53 years. This has built in PIA has become the most reliable airline. PIA is known for its loyalty and consistency.

Safety

The most challenging responsibility of any organization is to provide complete satisfaction to its employees and customers together. This satisfaction rewards favorable and easy working conditions. The in-flight services are customers friendly and the organizational the organizational environment is also employees oriented.

Cohesiveness PIA has 12 departments working in their own direction and also provides a number of services including speedex courier service, catering etc. The most


impressive part is these all department and services are integrated in a cohesive way.

SWOT ANALYSIS

A.STRENGTHS

LEADING MARKET POSITION

PIA is one of Pakistan’s leading air carriers, with more than 800 daily flights. Around 150,000 passengers a month fly on PIA, making it one of the major operators in the domestic market in terms of passenger kilometers. PIA international market share was 48.4%, In the Domestic market, its market share was 65%. On a system-wide basis, PIA market share was 48% at the end of year 2009. Its strong market position is driven by consistently low fares as well as reliable service, frequent and convenient flights, use of new technologies like e-ticketing and self check-in terminals, comfortable cabins and superior customer service.

BRAND RECOGNITION

PIA has high brand recall. It is recognized by travelers all over the country. PIA is a national airline, operating passenger and cargo services covering eighty-two domestic and foreign. PIA has earned the number one ranking in customer satisfaction. This strong market position gives the company a scale advantage and helps it strengthen its brand image.

SUPERIOR OPERATING STRUCTURE

PIA has maintained its position as the low cost carrier. It has been first class Pakistani airline to use the latest technology. Factors’ contributing consists of different series of Boeing and Airbus and an efficient, high-utilization and point- to-point route structure. Flying one type of aircraft significantly simplifies scheduling, maintenance, flight operations, and training activities. PIA has continually achieved high asset utilization and employee efficiency. Superior operating structure serves as the primary competitive advantage of PIA.

NETWORK PRESENCE

PIA enjoys a strong network in key domestic and international destinations. The company’s network includes three the major airports in Pakistan, as well


as major international airport such as Dubai International Airport. Having a strong network means that PIA can generate traffic feed for both its domestic and international Flights.PIA network is spread in 24 destinations on domestic bases and 38 destination on international basis.

HUB AIRPORT AT KARACHI

PIA operates from its hub in Jinnah International Airport, Karachi. Jinnah International is one of the world’s busiest airports in terms of number of passengers carried. It is also one of the largest international gateways to Asia. It is also the leading international air passenger (and cargoitive ) gateway to Pakistan. The company’s strong presences in airports with heaviest traffic levels in Pakistan give it a compet advantage.

EFFECTIVE USE OF TECHNOLOGY

PIA has successfully incorporated latest technology in all its systems, giving it an edge over competitors. PIA takes credit for introducing most new technologies to the Pakistani market. It was the second carrier in Pakistan to incorporate the c-ticketing system and the second in South Asia to introduce self check in systems at the Jinnah International Airport, Karachi.

B. WEAKNESSES

FORMULATION OF GOVT. RULES

The Basic flaw of this organization is its consolidation that is centralized system. The key policies, strategies and set of laws are designed by the upper management. The centralized system is one of the biggest obstacles of long term success of PIA. PIA centralizes structure lead to barrel between different level of management, decreased motivation, hard access to information.

HIGH DEPENDENCE ON PASSENGER REVENUES

Passenger revenues accounted for 89.35 percent of the PIA total revenue in 2009. Cargo services allow airlines to generate additional revenues from existing passenger flights. In addition, cargo revenues are usually counter cyclical to passenger revenues and have lower demand elasticity than passenger business, which allows airlines to pass on fuel price hikes to customers.

DEBT


PIA has a significant amount of 68817616 PKR debts in 2009 . Current and future debts could have important consequences for stakeholders of the company. For example, debt could impair PIA ability to make investments and obtain additional financing for working capital, capital expenditures, acquisitions or general corporate or other purposes. Debts could also put PIA at a competitive disadvantage to competitors that have lesser debt and could also increase the company’s vulnerability to interest rate increases.

RELIANCE ON OIL PRICES

PIA sustainability, growth and revenues directly depend on oil prices. A steep rise in oil prices can seriously damage the long term viability of any airline. Recently many airlines around the world went bankrupt due to rising oil prices. Airlines need to hedge against this risk by taking proper measures.

C. OPPORTUNITIES

HAVING THE MAXIMUM ROUTE AND FLEET

PIA is having the maximum route and fleet domestic and international destinations network in Pakistan as compared to its Competitors. Route and fleet expansion will positively impact the company’s operations by increasing revenues.

GROWING DEMAND FOR LOW COST AIRLINES

The growing demand for air travel is driven by lower fares and consumer confidence. A survey by International Aviation Authority showed that ticket price is the number one criterion for passengers when selecting a flight, well ahead of the availability of a non- stop service.

CUSTOMER LOYALTY

PIA frequent flyer and loyalty programs can help it retain customers. PIA award plus (frequent flyer program) was established to develop passenger loyalty by offering awards and services to frequent travelers. Such schemes encourage repeat travel on PIA, as passengers seek to accrue the benefits given to regular travelers. This enables the airline to retain customers and reduce costs, as it does not have to spend money targeting new customers to replace those lost to other airlines.

SHIFTING CUSTOMER NEEDS


The needs of air passengers are increasingly changing, as they are becoming more and more price sensitive. If PIA succeeds in making its prices more competitive, then the company will be able to gain significant market share.

INDUSTRY RECOVERY

Market analysts believe that the global airline industry will experience an upturn in fortunes over the next few years. This represents an opportunity for PIA, as it could generate increased revenues and command market share if it capitalizes on increases in demand.

D. THREATS

HIGH INTEREST RATES

The past few years have seen State Bank of Pakistan impose high as well as low interest rates to check inflation and the over heating of Pakistani economy. Inflation in Pakistan may see another raise in the short-term.

ACCIDENTS

There had been five accidents with PIA listed as below:

Pakistan International Airlines Flight PK 705 was a Boeing 720 – 040 B that crashed while descending to land on Runway 34 at Cairo International Airport on May 20, 1965 resulting in 119 fatalities.

Pakistan International Airlines Flight PK740 was a Boeing 707-340C

that crashed after takeoff from Jeddah International Airport on November 26, 1979. All 156 aboard were killed.

Pakistan International Airlines Flight 268 was an Airbus A300B4-203,

registration AP- BCP, which crashed on approach to Kathmandu's Tribhuvan International Airport on September 28,1992 All 167 on board were killed.

PIA Flight 554 is the flight number of a Pakistan International Airlines (PIA) Fokker F27 that was hijacked on May 25,1998. The flight started its journey at Gawadar in Baluchistan after originating in Turbat, and was flying to Pakistan's southern port city of Karachi. The aircraft was carrying 24 passengers and 5 crew members.


Pakistan International Airlines Flight 688 (PK688, PIA688) was scheduled to operate from Multan to Lahore and Islamabad at 12:05 pm on July 10, 2006. It crashed into a field after bursting into flames a few minutes after takeoff from Multan International Airport. All 41 passengers and four crewmembers on board were killed.

PIA has to continuously ensure almost safety and security of its passengers. Accidents can adversely affect customer confidence in PIA and result in declined revenues intensifying competition.

REVENUE COMPOSITION:

According to the latest report of PIA:

87% of revenue generates from passengers,

8% of revenue generates from cargo and remaining

5% consists of others

FLEET:

Pakistan International Airlines fleet includes the following aircraft (as of May

2008)

Type Total Routes

Airbus A310-

300

12 long, medium and short haul (East / South / West Asia,

Europe, domestic)

ATR 42-500 7 short haul (West Asia, domestic)

Boeing 737-

300

7 short haul (South / West Asia, domestic)

Boeing 747-

200

2 short and medium haul (Saudi Arabia, domestic)

Boeing 747-

300

6 short and medium haul (Saudi Arabia, domestic)

Boeing 777-

200ER

4 long and medium haul (Europe, Saudi Arabia, domestic)


Boeing 777-

200LR

2 short and ultra-long haul (North America, Saudi Arabia,

UK, domestic)

Boeing 777-

300ER

3 long and medium haul (Saudi Arabia, UK, USA, domestic)

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STRONG COMPETITION BY AIRBLUE

PIA is now competing against carriers such as Air blue and Shaheen Airline. PIA remains Air blue’s strongest competitor because of the huge market it has gained over time, strong brand image and customer loyalty. PIA has started new low-fares subsidiary “PIA Express” to stop the Air blue market share growing to fast. Moreover, major legacy airlines have been focusing on restructuring costs, which has improved their competitiveness. With costs restructured, the legacy airlines are becoming more formidable competitors in terms of increasing capacity, matching prices and leveraging their frequent flier programs. Increasing competition could adversely affect the company’s margins.

INTEREST AND FOREIGN CURRENCY EXCHANGE RATES

Fluctuating foreign currency exchange rates can have a significant impact on PIA’s earnings. For example, as PIA is providing its services to the UK. Negative or positive effects arise from exchange rate movements as change in expenses. Strengthening of foreign currencies against the British Pound will positively impact PIA and vice versa.

DECLINE IN AIRLINE INDUSTRY

A number of factors have caused the current decline in the airline industry. For example, the threat of further terrorist attacks since September 11 and a fall in the number of business travelers have both caused passenger numbers to fall. These and other factors may continue to affect demand for air travel in the future, which will affect revenues of PIA. The threat of terrorism may discourage people from traveling by air and could especially reduce the number of passengers traveling on international flights.

PEST Analysis

POLITICAL FACTORS


Political factors always have a great influence on the way businesses operate in the airline industry and the spending power of customers. In recent years it has been observed that government played an active role in increasing competition in the airline industry. A number of new airlines such as Air Blue and JS Air have been awarded licenses to enter the domestic market. Pakistan has achieved some political stability in recent years. If the management of PIA believes that the present government will perform well (consistently), then there will be more investment in the form of purchase of new airplanes and latest technology. The over all industry will grow resulting in more luxurious and comfortable flights. With the military takeover government policies have become more liberal.

ECONOMIC FACTORS Currently, Airlines industry has three major players: Pakistan International Airlines, an Air blue, Aero Asia and Shaheen Airlines. Their target market includes domestic travelers as well as Pakistanis living abroad particularly in the UK and USA. These countries have strong economies coupled with high purchasing power. Customers’ purchase behavior depends very much on prices of the competing airlines as well as services offered. As inflation rate is unstable in Pakistan, spending power of consumers has effected in the long term. In fact growth in Pakistani economy has resulted in an increase in spending power and has a positive impact on a airline industry. Economically, the new millennium has been highly volatile; the September 11 attacks revolutionized the whole world. Consequently, there was a global depression in the North America, South America, Australia and Europe. However, in Asia especially Pakistan the effect in the short term was otherwise. The economy began to boom because of greater remittances from abroad and whole sum immigration by expatriates. As a result, demand for air travel in South Asia rose .Economic conditions of Pakistan are however improving. PIA has cost a advantage over its competitors because of its newly acquired, improved, long distance aircrafts from Boeing’ which give longer range and better fuel economy than any other jet currently produced. This cost advantage is a barrier to entry for new firms. However, this cost advantage will not be significant on domestic routes.

SOCIAL FACTORS The social arid cultural influences on business vary from country to country. The social structure of Pakistan is closely tied. The trend is now changing as the general public is educated and is pursuing professional goals. Customers are more aware of market conditions and available options and want to get best value for their money. They spend considerable time and money on entertainment hence increasing the need of in-flight entertainment systems. Also, word of mouth has a significant impact in the use of airline services. The social environment of Pakistan is turning liberal with the new regime. The initiative to automate check-in and ticket booking process might not be very popular with the general public (even educated population) is still


technology averse. E-ticketing might also face significant challenges as consumers are generally reluctant to provide their credit cards information over the phone and the internet. The consumers, however, have a warm reaction to the prospect of less costly but quality service flights.

TECHNOLOGICAL FACTORS Technology is vital for competitive advantage and is a major driver of the airlines industry. Major technological changes are taking place in the airlines industry with innovations in the reservations and booking systems. In-flight entertainment systems and auto check in counters are two examples of such innovations. Internet plays a key role in e-ticketing as consumer can easily reserve tickets or check the status of the flight. A key issue will be the extent, to which technological advancements (such as Internet) impact distribution and cost synergies from industry consolidation, can offset upward pressures on costs. PIA has always led the path of technological innovations by introducing new technologies ahead of its competitors such as its auto check-in counters which has helped it gain market share. It was the first airline in Pakistan to install Sabre system followed by the market leader.

Hierarchy


Market Segmentation of PIA

Demographic Segmentation of PIA:

Income Segmentation

Occupation Segmentation

Geographic Segmentation

In this segmentation PIA focuses both on segments

Domestic

International

Behavioral Segmentation

Occasion segmentation

Hajj’s Occasion. Eid’s Occasion. New Years’ Occasion.

Loyalty Status

Psychographic Segmentation of PIA

Social Class Tourists Religious Travels Pakistani Expatriates

The existing market segmentation strategy of PIA is reasonable enough because it covers all necessary parameters that are to be focused in doing market segmentation for Airline Company.


Product life cycle


Product life cycle have five stages

Development

Introduction

Growth

Maturity

Decline

Our product lies in growth stage due to following reason

Increase in sale

New feature offering

Competitor’s entry

Increase in investment

Expense increase

Financial performance

The profitability of PIA is published in the 2009 annual report with figures in millions of Pakistani Rupees. The following table gives the key financial results for the end of year period of the financial year. PIA explains that the loss was caused by two factors: the weakening of the Pakistani rupee and the rise in crude oil prices during 2009.

Financial trends for the airline from 2004–2009.

Market share of PIA

Domestic 60 %

International 48.4 %

Unique feature offer by PIA


Reliability an d safety

Has best engineering facilities.

Has best trained pilot’s.

National flag carrier.

Pakistani expatriates when step in the PIA plane they get they homely feelings because of the national airline which plays a role of ambassador.

High linkage to the remote areas of Pakistan.

Using state of art technology.

Positioning of PIA

PIA’s existing Positioning Strategy

Currently PIA positions itself within the following positioning strategies and technologies and highly equipped engineering.

Positioning by attributes.

Positioning by price and quality.

Positioning by product user.

Positioning by Attributes

Positioning by attributes

In this strategy PIA positions itself in the mind of the consumers as the reliable air transport service provider because from all the airline companies of the world PIA has the least crash rate. By positioning there reliability attribute of the airline in the minds of the consumers, people prefer to travel from PIA. Because of the safety attached with the PIA. Attribute of safety is also associated with the airline as PIA has the following certifications

European Aviation Safety Agency (EASA)

IATA Operational Safety Audit (IOSA)


Civil Aviation Authority of Pakistan ( in accordance with the International Civil Aviation Organizations Standards)

Positioning by Price and Quality

In this positioning strategy, PIA paints the image of being the less price taker and providing high quality to the customers as compare to the competitors. Examples is given. Introduction of Additional Low Cost Flights PIA has introduced additional low cost flights. PIA express at 20% less fare.

PIA express This facility is available in Business Plus, Economy Plus & Economy

Class. No meals. Stand by fares applicable.

Positioning by Product User PIA positions itself as an ambassador of Pakistan in the world. Pakistani expatriates residing outside the country feels proud when they see an airline of their own home- country carrying the national flag. This arises the loyalty factor in the hearts of the expatriates and they prefer to travel by PIA.

Targeting Strategy of PIA

PIA’s Existing Target Audience

From the Demographic Segmentation, PIA is targeting the income and occupation oriented people. The classification of both categories is as follow.

Income Segmentation From income segmentation of PIA, those who falls under the category of upper class and upper middle class.

Occupation Segmentation

From occupation Segmentation that PIA is taking in to account, there are two main sub heads of working class and business class. The working class includes all those who are working as an employee inside and outside the country. In business class all those people are included who are having business.

Geographic Segmentation

of PIA. All the audience from the domestic and international regions are included. In domestic people within the country are included and people residing outside Pakistan. From the Behavioral Segmentation PIA‘s target


audience is categories as follow. In the occasion based market segmentation of PIA.

Behavior segmentation

Hajj’s Occasion. When Hajj operation in going all those people flying from different cities of Pakistan to Saudi Arabia for the performance of Hajj.

Eid’s Occasion. When Eid occasions are near people within the cities and outside the country move to their homes for having Eid Occasion together with family.

New years occasions

Now people prefer to have New Year with their family that’s why all those people coming back to Pakistan from different countries or moving outside Pakistan to different countries and also all those people moving within the country are targeted over here.

Loyalty Status PIA gives different benefits to the fliers. But all those who travel a lot get the benefit of frequent fliers which carries few discount rates on the tickets. To such audience PIA not only gives the discount facility but also the facility of pick and drop to them. From the Psychographic Segmentation of PIA, the target audience of PIA will be the following. Psychographic segmentation

Social Class In Social Class PIA targets the tourists, religious travelers and Pakistani Expatriates.

Tourists All the tourists from different regions of the country or from different countries come to Pakistan for tourism purpose or go outside the country. Because PIA is having highest rate of linking the remotes areas of Pakistan.

Religious Travels All the religious travelers for example people going for Hajj etc are targets over here.

Pakistani Expatriates


As PIA is a national flag carrier airline that’s why people residing outside the country feel a unique sort of feeling to get into the National Airline. PIA is not just and Airline but also acts as the ambassador of Pakistan in the whole world.

Competitors Analysis

Competitor analysis in marketing and strategic management is an assessment of the strengths and weaknesses of current and potential competitors. Created by Michael Porter competitor analysis focuses on four key aspects: competitor's objectives, competitor's assumptions, competitor's strategy, and competitor's resources and capabilities.

Competitive Advantages of PIA

Reliability an d safety

Has best engineering facilities.

Has best trained pilots

National flag carrier.

Pakistani expatriates when step in the PIA plane they get they homely feelings, because of the national airline which plays a role of ambassador.

High linkage to the remote areas of Pakistan.

Using state of art technologies and highly equipped engineering. Competitive Position of PIA. The competitive position of PIA is Differentiation because PIA has created highly differentiation products e.g. for the economy class and for the business plus class. PIA has different and unique product characteristics and features which cater the needs of the respective customers.


Competitive Moves. PIA is having 48.4% market share internationally and 65% domestically, and PIA has the Market Leader Competitive Move in Pakistan.

Competitor Attack Strategy

The attack strategy of PIA against its competitor Air Blue is Flanking Attack Strategy. Air Blue has not that much access to the remote areas of Pakistan than PIA has. Due to this weak point of Air Blue, PIA is attaining the flanking attack strategy against the Air Blue.

Existing Competitors of PIA

PIA operates both domestically and internationally. So it has different competitors on both scales of operations.

Domestic Competitor

Within the country PIA has Air blue as a competitor. Air blue is a private airline based in Karachi, Pakistan. It is a scheduled domestic and international airline operating 30 daily services linking seven domestic destinations and international services to Dubai and Manchester. Its main base is Jinnah International Airport, Karachi. Air blue was the first airline in Pakistan to introduce e-ticketing, wireless check-in and self check-in kiosk facilities.

Achievements and Recognitions

Pakistan's fastest growing airline.

First airline in Pakistan and only the third carrier in the region behind Emirates Airline and Royal Jordanian to introduce the latest self service check-in facilities at Jinnah International Airport, Karachi

First private airline in Pakistan to fly long-haul international route (Islamabad-Manchester with a refueling stop at Ankara, this has since been moved to Trabzon)

International Competitors of PIA


PIA is having market share of 48.4% in the international market and having tough competition from its international competitors. Following international competitors of PIA.

Thai Airline

Etihad Airways

Qatar Airways

Singapore Airline

Marketing object

Satisfying the loyal customers

Bring back the customers which shifts toward the competitors

Increasing marketing share

Marketing mix

Marketing mix is the set of marketing tools that the firm uses to pursue to its marketing objectives in the target market. There are literally dozen of marketing mix tools. McCarthy classifies these tools into: product, price, place, promotion. Is called 4 p”s of marketing.

ProductThe product is any things which have both favorable &unfavorable that a person receives in exchange. Most products we think are physical but it also include services. PIAC is also providing services to the nation, which can be categorized as follow Seat services (for passengers) Space services (for cargo)

The characteristics of services by PIAC are in the following line

Intangibility Services provide by PIA are intangible. Unlike physical product, they can not seen, tested, heard or smelled before the purchase. To reduce the uncertainty, the buyers will look for signs and evidence of service quality. They will draw interface about the quality of service from place, people, equipment, communication material symbols and price that they will see. PIA task is to manage the evidence to tangibles the intangible.


InseparabilityServices are typically produces and consumed at the same time. If the service is rendered by a person, than the person is a part of service. Since the client is also present as the service is being produced.

Variability Services are highly variable, as they depend on who provide them, when and when and where they are provided. Services firm can take two steps towards quality control. The first step is investing in good personnel selection and training. PIA spends a large sum of money to train their employees in providing good service. Second step is monitoring customer satisfaction system and PIA doesn’t monitor customer satisfaction properly.

PerishabilityServices can’t store and they have no self life. When demand fluctuates, service fires have difficult problems, like PIA has to apply much more equipment because of peak period demand on a specific route than it would, if demand, was even throughout the year.

PIA uses following strategies for producing a better match between demand and supply.On the demand side Differential pricing to shift some demand from peak to off peak period. Non peak demand can be cultivated Reservation system is one way to manage the demand level, and PIA employee extensively On the supply side Peak time efficiency routines are introduced. Employees perform only essential tasks during peak periods. Shared services are developed by interline agreements. Price A profit organization faces the task of setting a price on their product and services. Price is the amount of money that customer willing to pay for the services. How are prices set? PIA set their prices on the basis of two type of situation.

Domestic routes

International routes

Domestic routes

Prices for domestic route are fix by the government of Pakistan for PIA. The cost plus method is used to set the price at domestic level. The PIA management estimates the price by using following 6 steps. Selecting the price objective Determining the demand Estimating costs Analyzing competitor price and offers. Selecting a price method. Select the final price.

International routes.


The price for international routes is set by international air travel association (IATA).the IATA doesn’t allow any discount on any international routes. Ticket show the full pries for the route while air lines charge discounted fare by cutting their share of profit. However, PIA establishes the pricing strategies on different international routes keeping in view the following points . Competitor price Cost of operation

Type of aircraft used

On the other hand PIA has three categories of their pricing as below, they also vary by season to season and at peak time

Higher prices

Shoulder prices

Low prices

PlaceMarketing channels can be viewed as sets of independent organization involved in the process of making a product or service available to use. A distribution system is a key resource. PIA has partially owned distribution system.

Level of channel According to our opinion, PIA uses two level of channel which are as follow”.

Zero level channels It is also called the direct marketing channel. Now the PIA sells the tickets to final users through its ticket counter. In Lahore, PIA has ticket and booking office to different place to sell the ticket to customer. These offices are computerized and directly linked with the head office at Karachi.

One level channel Here traveling agents and intermediaries are involved in selling the ticket to customers. Many travel agents are provided auto ticketing and reservation system. There are two types of agents which are defined as follow,

IATA agencies There are 30 IATA approved agencies which deal with PIA.These agencies can also be stocked and sell tickets of other airlines. Commission of these agents is as follow, International sector = 9% Domestic sector=5%


District sector agents. These are agents who exclusively deal with PIA ticket and cannot deal in other air lines normally these are located where PIA does not have sale point.

PromotionPIA is not invested much in this area. They just use brochures, news paper & some T.V commercial when peak season is not there. Agents play an important role in promotion as they convince traveler to travel through PIA. Some brochures, are listed below

Umrah made easier. PIA offers more flights to Jeddah in may, June and July for umrah. These additional flights will not only provide more travel option to

umrah pilgrims but also enable more people to perform the holy ritual Pilgrims can enjoy comfortable & luxurious journey in Boeing_777s PIA “budget flight – enjoy up to 39% discount on regular fares. PIA introduced Budget Flight between Karachi, Lahore & Islamabad. Fly PIA:s new ATR Up to 10kg hand baggage allowed No checked in baggage Condition apply PIA flexible fare_ plan ahead & pay less Book international or domestic flights as early as possible because the

earlier you buy, the cheaper you fly. A variety of discount in Business, Economy Plus & Economy Classes. The benefit of even lower fares in the lean travel period. Flexible fares are applicable on sectors where revenue management is

implemented. Condition applies. Fly business class with a free ticket. Buy three tickets and get one free Buy one ticket and pay only 50% for your companion The offer is available on international routes only This offer is not available on UK, USA& Canada sectors Discount to student on international and domestic sector 25% discount offered to students on domestic routes 10% discount on international routes offer can be availed exclusively from PIA Booking offices. The offer is available only for Economy Class passengers.

Free pick and drop service PIA offers the free pick and drop service from your door to airport. This offer will be offer only for Business class


MAIN ASPECTS OF THE BCG GROWTH-SHARE MATRIX

The BCG Growth-Share Matrix is based on two dimensional variables: relative market share and market growth. They often are pointers to healthiness of a business . In other words, products with greater market share or within a fast growing market are expected to wield relatively greater profit margins. The reverse is also true. Let’s look at the following components of the model:Figure 1

Relative Market Share

According to the proponents of the BCG (Herndemson 1972), It


captures the relative market share of a business unit or product. But that is not all! It allows the analyzed business unit be pitted against its competitors. As earlier emphasized above, this is due to the sometime correlation between relative market share and the product’s cash generation. This phenomenon is often likened to the experience curve paradigm that when an organization enjoys lower costs, improved efficiency from conducting business operations overtime. The basic tenet of this postulation is that the more an organization performs a task often; it tends to develop new ways in performing those tasks better which results in lower operating cost (Cipher 2006). What that suggests is that the experience curve effect requires that market share is increased to be able to drive down costs in the long run and at the same time a company with a dominant market share will inevitably have a cost advantage over competitor companies because they have the greater share of the market. Hence, market share is correlated with experience

Market growth

Market growth axis, correlates with the product life cycle paradigm, and predicates the cash requirement a product needs relative to the growth of that market. A fast growing market is generally considered attractive, and pulls a lot of organization’s resources in an effort to increase gains. A case in point is the technological market widely consider by experts as a fast growing market, and tends to attract a lot of competition. Therefore, a product life cycle and its associated market play a key role in decision-making.

cash cow

These products are said to have high profitability, and require low investment for the fact that they are market leaders in a low-growth market. This viewpoint is captured by the founders themselves thus:The cash cows fund their own growth. They pay the corporate dividend. They pay the corporate overhead. They pay the corporate interest charges. They supply the funds for R&D. They supply the investment resource for other products. They justify the debt capacity for the whole company. Protect them (Henderson 1976).

StarsStars are leaders in high growth markets. They tend to/should generate large amounts of cash but also use a lot of cash because of growth market conditions Based on these assumptions Pakistan international airline classified as a cash cow because it does have a high market share which is 67% in domestic air line and 30% internationally and low business growth opportunity.


RECOMMENDATIONS FOR PAKISTAN INTERNATIONAL AIRLINES

Decentralization

PIA should decentralize its structure that would lead to the easy management, increased motivation, easy access to information and resolution of the conflicts (as they would be resolved by the immediate manger time span would then reduced). Since employees issues regarding their behavior would lessen, so it would ultimately lead to more satisfied employees that would result in enhanced productivity of the organization.

Strategic Business Unit

PIA should make its different departments into Strategic Business Unit. Every SBU should have a defined business strategy and a manager with sales and profit responsibility. As PIA is a large organization, so it must be convert into SBUs. Different factors should be determined for the success of SBUs which as follows:

The degree of autonomy given to each SBU manager

The degree to which an SBU shares functional programs and facilities with other SBU's The manner in which the corporation evaluates and rewards the performance of its SBU managers.

Employee Empowerment

PIA should make efforts towards empowering the employees that is going to lead to more employee participation in the decision making process and also result in more employee satisfaction and enhanced motivation. Apart from this, employees would feel more independent to discuss the issues explicitly without hesitation. This would also enhance team work process at PIA as quality team and cross-functional teams. The employees will work with more


commitment and dedication and every employee would work to his/her fullest due to increased motivation. However, with empowerment comes accountability, so it is suggested that while they empower their employees, there should also be a “controlled check’’ on them to ensue the correct usage of power delegated to every employees within their circumscribed limits.

Overhead Costs

PIA should also reduce its overhead costs that are it should mange its resources: labor more effectively, so that with less input, more out put can be achieved and the saved resources can be utilized in other areas such as introducing more training courses for the employees so that the quality of the workforce could be increased. Hiring the services of expertise can improve the efficiency of their services, so by saving the overhead costs, they can utilize that money for the expertise services. So by analyzing the various segments of the organization and making the right corrections, it can substantially improve the standards of Organizational behavior.

Two-Way Communication

The suggestions of the employees can prove to be very effective in improving the operations as they are the ones who manage them. Therefore, a top-down approach should be replaced with two-way communications. In this way, the employees would feel motivated and valued as they would be included in decision-making.

Following data is collected by Pakistan international Airline

Findings OF Research

After conducting research, the following results have found which follows as bellow:

Selection of AirlineAccording to research in , 60% people utilize the services of PIA, 30% people utilize the services of air blue and only 10% people utilize the services of shaheen International Airline.


Reason for Selection of AirlineAccording to research in, 50% people selected the service of airline taking into consideration the price, 30% people selected the service of airline taking into consideration the service, and 10% people selected the service of airline taking into consideration on many grounds which are related to their desired destination.

Comparison of PIA with Different Airlines

After conducting the research we have rated the different airlines in the following manner.


Attributes PIA Air Blue Shaheen Air

Destinations 6 5 4

Punctuality 5 6 4

Quality of Food 5 6 5

Hospitality/Customer Service

6 5 5

Economical 5 5 5

Technological Advancements

5 5 5

Services 5 5 4

Corporate Image 6 3 4

Total Points 43 40 36

BIBLIOGRAPHY

www.google.com www.piac.com.pk www.wikipedia.org


http://www.wikipedia.org/

http://www.piac.com.pk/

http://www.google.com/

http://www.piac.com.pk/ http://en.wikipedia.org/wiki/Pakistan_International_Airlines http://www.answers.com/topic/pakistan-international-airlines?cat=biz-fin http://news.bbc.co.uk/1/hi/business/1561315.stm PIA ANNUAL REPORTS(2007,2008,2009,and 2010) Philip Kotler and Kevin Keller,”Marketing Management”12th edition Mr. Ashraf(air traffic controller) 0344-7868287 Mr. M. Nasir(salary Maintainer) 0333-2386892 http://www.piac.com.pk/pia_about/pia-about_career.asp http://www.piac.com.pk/pia_about/pia-about_corpreport.asp http://www.piac.com.pk/pia_about/pia-about_Management.asp http://www.piac.com.pk/PIA_Business/pia-Business_Procurement.asp http://www.historyofpia.com/people25.htm http://www.historyofpia.com/uniform3.htm http://www.historyofpia.com/greatshots152.htm ^ PIA moves towards Global Alliances Pakistan International Airlines Press Release, assessed 03-04-2007 ^ PIA Annual Report 2006-2007 ^ About PIA - Flight Kitchens


http://www.piac.com.pk/PIA_About/pia-about_FlightKitchen.asp

http://en.wikipedia.org/wiki/Pakistan_International_Airlines#cite_ref-18%23cite_ref-18

http://www.piac.com.pk/PIA_About/profiles/2007/annualreportfull_05052008.pdf


http://www.piac.com.pk/pia_about/pr_03Aprl07.asp


http://www.historyofpia.com/greatshots152.htm

http://www.historyofpia.com/uniform3.htm

http://www.historyofpia.com/people25.htm

http://www.piac.com.pk/PIA_Business/pia-Business_Procurement.asp

http://www.piac.com.pk/pia_about/pia-about_Management.asp

http://www.piac.com.pk/pia_about/pia-about_corpreport.asp

http://www.piac.com.pk/pia_about/pia-about_career.asp

http://news.bbc.co.uk/1/hi/business/1561315.stm

http://www.answers.com/topic/pakistan-international-airlines?cat=biz-fin

http://en.wikipedia.org/wiki/Pakistan_International_Airlines

http://www.piac.com.pk/

Project on marketing Plan of Pakistan international Airline

Documents

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major strength weakness

star international airline

asian airline

largest airline

noncommunist airline

new york service

international services