Contrasting Financial Performance Survival of Air Arabia and Jazeera Airlines

This report evaluates and contrasts the financial performance survival of Air Arabia and Jazeera Airlines during the current downturn in the aviation industry. It identifies the factors that most affected the development of airlines, evaluates and contrasts the two marketing strategies that focus on making them superior or lagging in the industry, and evaluates their financial performance between 2013-2016.

Contrast two airlines for
being influenced by the
current downturn in mainly
financial performance
survival

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Identifying the factors that most affected the development of airlines.....................................3
Evaluating and contrasting the two marketing strategies that focuses on making them superior
h or lagging in industry...............................................................................................................7
Evaluating financial performance between 2013- 2016............................................................11
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Aviation term drive the attention of individual person toward air travel experience that they
gain via airline services in appropriate and satisfactory manner. From luggage loading to check
in, airlines while running their ventures into aviation sector attempt to serve the best services,
which play significant role in success and growth of overall industry. There are different types of
airlines running their businesses in the corporate world in productive manner. The current
assignment will be based on two different airlines such as Air Arabia and Jazeera, which falls
under the category of low cost airlines in the United Arab Emirates. Both airline belong to same
business model, and take approaches to satisfy their passengers who travel the world and prefer
to retain with these two chosen firms. The study will explain factors within selected airlines
venture environment that most affected development of individual airline. Furthermore, it will
also define the marketing tactics of both players which made them contrary or superior lagging
in the sector. The report will justify how well airlines have performed financially between 2013 –
2016 years, by contrasting yield, passengers, revenues and cargo loads. Lastly, the study will
clarify which one of these airlines adopt the best venture model and successful long term tactic.
MAIN BODY
Identifying the factors that most affected the development of airlines.
There are many factors that affect the business environment internally or externally. Air Arabia
and Emirates are the two airlines selected for this analysis. It must analyse these factors because
these factors may have a positive and negative impact on the business and affects on the
profitability and survival of the organization. Firms should consider this as it may be necessary
for the long term growth of the company. Pestle analysis of Air Arabia includes study of external
factors and trends as this firm is trying to enter into Middle East countries, and what are the
growth opportunities as they impact the business. Pestle analysis of Jazeera includes study of
pestle factors like current market situations that are impacting the business so to make changes
accordingly and formulate different plans to improve its organization. These external factors are
Political, economical, social, technological and legal. These are explained as under-
Political factor :
It includes government interferences, tax rates any changes in these factors affect the
organization as a whole. These factors affecting positively on airline industry in UAE as tax

charged by the government is very less so it may have a direct impact on the profits. Company
may pay less taxes and authorities are not imposing heavy regulations on airlines' industry. These
airlines are freely operating and earning huge profits and on the other side not administration not
providing budget to airlines may have a negative impact on the industry. Another factor is
Political change airline industry is affected by any changes in political situation currently
prevailing in the country but the other countries allowed Air Arabia to operate and people
preferred this flight because they follow rules and regulations of the government. These flights
are opened to the world and the war situations and terrorism activities does not affect services of
this airline. Government focuses on the passenger safety it also increases sale of tickets. Jazeera
is operating internationally and has various flights in other countries. Rise of security increases
because of terror attack rises in the world and it is done by Europe countries. it has a negative
impact on the demand of air travel because people are more concern about their safety. (Hassan,
and et.al 2020). Administration may ban certain airlines and travel restrictions to the US so it
will decrease the sales. Uncertainty and the terrorism may have adverse impact on the industry.
Political factors may impact the industry but government may have to keep the experts who can
formulate different plans and strategies to overcome this challenges that are currently affecting
the airline industry for the smooth operations of a industry.
Economic factor :
It includes these factors they are interest rates, inflation, exchange rates any changes in
these factors has positive or negative impact on the organization. Economic factors may have a
good impact on airlines' industry in United Arab Emirates (Ignatiev, 2020.). Fuel prices in UAE
is continuously decreasing and it impacted the reduction in the operational costs of the airline
companies like Air Arabia and it results in increase of the profitability. Interest Rate when the
firms gets loans at lesser rate it helps in the growth and development of the industry. It helps Air
Arabia to operate in middle east so it has a great impact for expansion of firm at a large levels
and at last it may rise in the sales value. The other factor impacting the business is per capita
income of the consumers may increased, so they have more income, so they are easily booking
the flights and may increased the sales of the tickets results in business growth. Economic
Factors that affecting Jazeera is the demand factor air transport company may analysed that
passengers travel through aeroplane will rise in future so it may increase the demand for flight's.
It's an opportunity for Jazeera to increase its market in other countries like in America, Europe,

and in Asian countries where companies are growing at a faster rate so it may increase the sales
of tickets and thus results in profitability of the business. (Kharbach, 2020). Price factor may
have influence on the organization as the prices of oil is volatile in the market. If the price
increases it may difficult for the company to recover the costs incurred and it is negatively
impacting the firm. In the other scenario if the oil price decreases that may have good impact on
the growth and profits of the organization.
Social factor-
Along with above, there are more external factors accessible in the aviation industry that
may put direct impact on success, current practices and growth of aviation sector as well as
airlines that are running within it. In case of Air Arabia and Jazeera, social factors such as
customers need, current market trend, education level, buying behaviour, etc. may put negative
impact. The main reason behind this situation is pandemic, because it affects the way individual
person may take decision and act to buy anything (What is PESTLE Analysis? Everything you
need to know about it, 2022). It can be said that COVID- 19 affected overall industry in term of
decreasing sales as individual passenger may do not prefer to visit anywhere during pandemic
situation. They prefer to travel via own vehicle which is comfy and safe according to them. In
the recent time, aviation sector may saw a sudden decrease in its ticket sales, especially from
developed nations such as UAE. The impact of social factor and change related to this term may
influence airlines business operations. It may drive their attention toward considering the needs
and expectations of each passenger, which is also important for Air Arabia and Jazeera as low
cost airlines. Both airlines are accountable to take strategic action in the context of impact that
social factor put on their businesses. It may lead to decrease their financial performance, and also
bring challenges that create more issues for management to manage operational and functional
activities of airlines. Change related to social factors, whether it is buying behaviour of
consumers or trends that they prefer to follow, may put direct impact on existing activities of
companies that are operating under aviation sector.

Technical factor-
Technology advancement may put positive impact on Air Arabia and Jazeera as low cost
airlines in the UAE, in term of managing consumers queries, increasing their satisfaction level
and also maximizing operational effectiveness or efficiency. It can be said that technology
advancement play significant role in regard to venture growth because it may enable marketer to
create the best marketing plan through which they may generate excellent brand awareness in the
world, and also aid to gain the attention of more potential passengers. It is fact that with
advanced technologies such as social media, YouTube, etc. airlines may grow rapidly and in
competitive manner. As it may give marketer power to promote safe and satisfactory services of
Air Arabia and Jazeers worldwide, which is important for them to do that in systematic manner.
It may affect positively on both airlines because advanced technologies' utilization in the
workplace may increase productivity and service standard of companies. It may influence the
way marketer take decision and also the manner in which they act. Along with above benefits,
with excellent technologies they may grow both firm in appropriate manner. For example, they
may take reviews and comments from passengers about services, which give management
authority to make possible and necessary changes. Along with Instagram, Facebook and other
social media channels, airlines may promote policies and practices that they tend to conduct and
consider after pandemic. Organizations may take pleasure of this factor in term of enhancing
satisfactory level of each passenger that is essential as well along with consideration of other
Illustration 1: PESTLE Analysis
(Source: PESTLE Analysis, 2022)

things. They may capture the environmental situation and collect data about that before take off
and landing duration.
Environmental factor-
Like above, this factor may also put similar impact on airlines development and their
business productivity as well as sustainability within industry. For example, in the recent time
passengers and governmental bodies take concern regarding environmental sustainability and
because of this reason each and every firm in the business world, feel pressure to fulfil this need.
In case of Jazeera and Air Arabia, environmental factor put positive impact as both airlines may
follow CSR concept and conduct their activities accordingly. They may take care of
environmental issues and make decisions to reduce their carbon footprint that is essential. In can
be said that increasing demand of public to deal climate change may also affect airlines
positively, as they may also make change in current tactics that help to sustain for longer in the
market. It may drive the attention of organizations toward conducting more sustainable activities
that aid to gain competitive benefits and build strong relation with passengers who trust on
airlines and prefer to stay with these. Along with benefits, environmental factor may create
challenges of ventures as well, in term of creating difficulties to fly in the air, when sudden
modification may consider. Environment changes may put negative impact on airline as
management may take too much stress to manage flying and landing operations.
It may lead to decrease organizational productivity and profitability as well as
performance level, that is the biggest matter of concern. In order to deal with each challenge
strategic action and decision may require for which both airlines' management is responsible and
require to consider overall situation that is essential as other things.
Evaluating and contrasting the two marketing strategies that focuses on making them superior or
lagging in industry
In the current era, competition in the airline sector has inclined which require firm to pay
attention on developing such effective strategy in turn benefits can be derived. There are number
of players in the airline sector so focusing on deriving the competitive edge to have higher
profitability & sustainability becomes essential. Air Arabia and Jazeera are two largest
companies that focuses on gaining the effective approach that can help in increasing productivity
& performance in sector ( Hanson and Kalyanam, 2020). In order to become successful in the
prevailing circumstances where requirement of clients keeps on changing for which they

largely pay attention on developing effective approach in turn gaining significant outcome can
become possible. There are different kinds of marketing strategies which are applied by
businesses for attracting higher number of customers in turn accomplishing organizational
objectives like higher profitability, greater market share, compliance with government
requirements, etc.
Jazeera is one of the successful organization that pay attention on developing effective
approach to deal with prevailing circumstances of airline industry. For meeting the ability to
overcome the challenge and higher capability to meet the gaols of business in terms of
operational, financial and effectiveness. For this purpose, firm attention on having marketing
strategy for segmenting, targeting and positioning & having marketing mix that is permitting to
enhance its ability to overcome the competition (Mothersbaugh and et.al., 2020). On the other
side, Air Arabia is as well low cost possessing as competitive edge that focuses on concentration
strategy in turn having appropriate position can become possible. The detailed comparison can
be seen below to have proper level of information in respect to assess that these strategies are
helping in accomplishing the objective of boosting performance or not.
STP is major technique of marketing that permits business to have understanding about
crucial components in turn gaining accurate approach to develop attractiveness among
passengers can become possible. This strategy is adopted by both low cost leading organization
in turn higher sustainability can be achieved.
 Segmentation is exerted on the four basis that involves geographic, demographic,
behavioural and psychological factors. Air Arabia pay attention on all the four basis so
that all the geographical areas, demographical factors such as affordability, potential &
market, behavioural aspects such as loyalty status, psychographic components like
attitude, leadership, etc (Jacobson, Gruzd and Hernández-García, 2020). On the other
side, Jazeera as being one of the competitive player in market focuses on having
geographic & psychographics segmentation strategy.
 Targeting approach that is taken into process by Air Arabia (AA) is to attract middle
class people who are seeking to pay less for the travelling practices. It focuses on tapping
into the market for the bargain hunting flyers in turn greater amount of profitability can
be derived. In against to this, Jazeera has emphasized on target audience with integrated

marketing communication approach for maximizing brand service & exposure rate so
that price sensitive& business travellers can be attracted.
 Positioning practice in the airline sector is exerted with competitive edge of low cost &
more destination in turn having mass strategy that is helpful in gearing economies of
scale. In against to this, Jazeera airline as being participator of low cost service
providing sector highlights the benefits of having higher quality with less expenditure.
Marketing mix is one of the approach which is largely taken into practice by businesses for
focusing on the crucial elements like product, price, place & promotion. Both the companies
give emphasis on adopting the cost leadership strategy in turn reducing the expenses in all of its
components so that higher productiveness can be derived. These are the practice that are
implemented by firms in its marketing strategy in turn accomplishing goals in prevailing
competitive circumstances can be achieved.
Product- here are different types of services which are offered by the businesses with
maintaining number of features such as luggage handling, online booking portal reduced
legroom’s, meal, etc. by Air Arabia. In contrast to this, the other organization give focus on
offering products with maintaining design, technology, quality branding for the economy class
people. On the basis of this, it can be interpreted that organizations are adopting different
practices in order to f gain profitability and sustainability.
Price- it is one of the major factor that is needed to pay attention on developing the
significant pricing approach to attain the attention of buyers. For this purpose, Air Arabia focuses
on having effective prices by reducing the cost & managing the expenses related to fuel, etc. It
has adopted the flexible pricing strategy in turn achieving the higher level of profitability with
maintaining leadership in cost is exerted. Jazeera airline has focus on gaining the
competitiveness by managing the accurate actions to reduce the irrelevant expenses in turn
higher level of profitability to stabilize business can become possible.
Place- there are different designations where it provides the services in turn accomplishing
the objective of having higher ability to cover greater market share can become possible. There
are number places which are covered by Air Arabia & Jazeera in respect to get the position to
have higher productiveness by boosting financial position in sector. The both organization
provides the feasibility to the customers to book, cancel, etc. activities easily which helps in
gaining appropriate knowledge to have better performance.

Promotion- it’s the one of the significant determinant of success that allows the business to
receive position to spread awareness about its services in turn higher performance effectiveness
can be achieved. Air Arabia advertise directly in the media like television magazines, internet by
showing the effectiveness of other services like taxi bookings, package offerings, etc (Air
Arabia’s Marketing Mix, 2021). Jazeera is the other course of action in turn better effectiveness
to make customers understand the understanding about the types of services along with features
by using methods like social media marketing, media, etc. to attract higher number of users to
gain greater amount of revenue.
Physical evidence – in this segment, the Air Arabia possess to offer high value customer
service so that greater flexible and smooth process can be derived by having excellent website,
etc. In addition to this, Jazeera has the physical evidence of giving good quality of service to
customers in turn accomplishing ability to give competitive benefit with lower cost is provided
by organization.
People- there are different kinds of operational practices of business which are attained
by firm through delegating right responsibilities to correct employees (Kotler and et.al., 2019) .
In the Air Arabia, there is presence of diverse, dynamic, qualified and well trained employees in
turn higher quality performance can be obtained. There are different objectives which are
attained by staff of frim that include diverse range of people possessing specialized knowledge.
Process- for making the organizational process smooth business is require to have higher
level of efficiency in it procedure by adopting different advanced technological components in
turn better performance can be derived. Jazeera as being international organization that give
focus on online booking & check in service to maintain privacy & security into overall
procedure.
On the basis of this it can be interpreted that there are certain differences in the overall
course of action applied for the business to gain competitiveness to boost performance which is
contributing in achieving success. It can be interpreted that business is having all offered service
successful in turn getting the accurate position to deal with loss occurring situation has become
possible. From the evaluation, it can be specified Jazeera Airways is performing effective as
compared to other player as it has given focus on gaining the diversification in turn achieving
higher brand image in industry.

Evaluating financial performance between 2013- 2016
There are several factors that are required to be taken into consideration by the
organizations in order to gain the profitability & sustainability in turn achieving higher
profitability and sustainable performance in sector can be derived. The both the mentioned
organizations performance can be evaluated by referring the below calculations:
Jazeera Airways:
Particulars Formula 2013 2014 2015 2016
Net profit 16,673,405 14,169,133 15,382,159 10,795,212
Revenue 65,558,805 58,601,910 58,601,910 52,754,535
Net profit
margin
Net
profit /
sales *
100 25.43% 24.18% 26.25% 20.46%
There is fluctuating trend in the performance of organization which is required to be
improved as going in declining trend.
Particulars Formula 2013 2014 2015 2016
Gross profit 24,580,935 17,460,082 17,045,061 12,468,090
Revenue 65,558,805 58,601,910 58,601,910 52,754,535
Gross profit
margin
Gross
profit/
sales *
100
37.49% 29.79% 29.09% 23.63%
On the basis of gross profit it can be mentioned that firm is having ineffective gross profit
as drastically falling.
Particulars Formula 2013 2014 2015 2016
Dividend per
share
15 15 25.519 15
market
value per
share
745 137 154 108

Dividend
yield ratio
Dividend
per share/
market
value per
share
0.020134 0.109489 0.165708 0.138889
The dividend yield ratio is in increasing trend which is reflecting positive trend i9hn
overall performance.
Air Arabia
Particulars Formula 2013 2014 2015 2016
Net profit 435,201 749088 530588 508,768
Revenue 3,183,823 3,867,584.00 3,825,859 3,778,008
Net profit margin Net
profit /
sales *
100
13.67% 19.37% 13.87% 13.47%
The profitability of firm in terms of net profit is lesser than other mention organization which is
increasing trend.
Particulars Formula 2013 2014 2015 2016
Gross profit 502,554 905806 801,916 630,706
Revenue 3,183,823 3,867,584.00 3,825,859 3,778,008
Net profit margin Net
profit /
sales *
100
15.78% 23.42% 20.96% 16.69%
There is fluctuating performance as but as compared to other firm it is performing
ineffective which require improvement action.
Particulars Formula 2013 2014 2015 2016
Dividend per share 7.25 7.25 9 9
market value per 570 243 93.96 116.06

share
Dividend yield
ratio
Dividend per
share/ market
value per share
0.012719 0.029835391 0.095785 0.077546
From the assessment of the above information it can be mentioned that business in
current year is having higher dividend yield as compared to Jazeera Airways.
`The passenger load of Jazeera Airways is 64.3% which is lesser than the Air Arabia firm as
has capacity of 174 clients. On the basis of this, it can be interpreted that Jazeera Airways is
performing better than Air Arabia in terms of revenue and dividend yield which is helping to
have good financial health.
There are certain lacking areas which are needed to be improved by Air Arabia the in respect
to have the ability to enhance its growth & development in turn meeting the objective can
become possible (Edeling, Srinivasa and Hanssens, 2021). For overcoming this complications
business is requiring to pay attention on developing the effective understanding of implementing
improvement actions in turn higher profitability & sustainability in sector can be applied. The
actions which can be applied to improve performance area s follows:
 This is suggested to the company to give emphasis on conducting the market analysis in
turn having information about the current trends can become possible. There are number
of changes that occur in market with time so that having relevant information to offer
those qualities in service can permit to achieve good market position.
 It is advised Air Arabia to develop effective research &development strategy in business
in turn offering innovative practices to have higher ability to coordinate with changing
circumstances can be exerted. It can allow to get ability to adopt technological advanced
resources in organization in turn higher position to meet with market forces can be
derived
 There is recommendation to give emphasis on improving the lacking areas by executing
the feedback mechanism. It can boost the relationship with customers in turn loyal,
committed and positive review offering type of clients can be achieved for having better
performance as compared to other players in market.

 To improve the financial performance having effective marketing strategy can help the
Air Arabia to gain other competitive advantage than economies of scale by attracting
higher clients. It will help in having higher revenue and ability to satisfy stakeholders.
CONCLUSION
On the basis of above discussion, it has been concluded that airlines has developed their
ventures and grown in appropriate manner within aviation industry. They had gained
competitive advantages in term of determining factors and taking strategic actions according to
the extent to which a factor impact on their businesses growth. They also survive during current
global crisis such as pandemic in appropriate way. It has been determined that both airlines and
their management has taken strategic decisions that played vital role in their progress, which
was unpredictable. They has taken important actions after pandemic situations and always taken
care of customers satisfactory as well as services level, which is important for them to consider.
By summing up above discussion, it has been summarized that airlines has gained the attention
of international passengers and gained their trust, by conducting the best marketing activities.
They have developed one of those tactics that contributed to reached desire outcomes and
provide appropriate satisfaction to all the stakeholders. The efforts and initiatives of both
airlines has enabled them to generate unpredictable revenue and provided change to increase
more profitability than last few years or months, and also better than rivals that are also running
their ventures in the same sector.

REFERENCES
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Hanson, W.A. and Kalyanam, K., 2020. Internet marketing and e-commerce.(Student ed.).
Thomson/South-Western.
Hassan, S.W.U., and et.al 2020. Impact of Service Quality on Customer’s Satisfaction in the
Airline Industry (A case study of PIA, Oman Airline and Air-Arabia). Elementary
Education Online. 19(3). pp.3562-3573.
Ignatiev, P., 2020. THE UNITED ARAB EMIRATES: WHAT IS BEHIND ECONOMIC
MIRACLE?. Аctual Problems of International Relations.1(145). pp.4-16.
Jacobson, J., Gruzd, A. and Hernández-García, Á., 2020. Social media marketing: Who is
watching the watchers?. Journal of Retailing and Consumer Services. 53. p.101774.
Kharbach, M., 2020. Understanding the ideological construction of the Gulf crisis in Arab media
discourse: A critical discourse analytic study of the headlines of Al Arabiya English and
Al Jazeera English. Discourse & Communication. 14(5). pp.447-465.
Kotler, P and et.al., 2019. Marketing Management: 4th European Edition. Pearson UK.
Mothersbaugh, D. L and et.al., 2020. Consumer behavior: Building marketing strategy. New
York, NY, USA: McGraw-Hill Education.
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