Aviation Strategy: Strengths, Weaknesses and Long-term Propositions

This article discusses the strengths, weaknesses and long-term propositions of aviation strategy in developed and developing countries, as well as the sustainable proposition. It covers topics such as nationalization and privatization of airlines, and key performance indicators.

Running head: AVIATION STRATEGY
AVIATION STRATEGY
Name of the Student
Name of the University
Author Note

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Part A:
Response to Question 1: Developed nation
a. Strengths- The main strength of the airline market in developed countries like USA,
Australia, UK and France is the increasing income level of the population as the
individual income level in developed countries are growing resulting in a higher level
in overall disposable income. The growth of tourism is another contributor in the
development of the airline market as it increased the number of international and
national passenger market with 50 percent growth in domestic flyers and 25 percent in
international flyers (Vatta 2017). The airline companies in USA are growing at a
faster rate for instance American Airlines which reflects the conduction of loyalty
program due to the growing business (Vatta 2017). The offer of the Flyer program
presents the benefit of mileage credits which can be redeemed for the purpose of
upgrading and/or free travel from the gathered points. The USA airline businesses like
American Airlines reflects strong alliances and tie-ups in regards with international
airlines (Vatta 2017). The developed countries have even formed an alliance named
Oneworld which comprises of the developed countries like Cathay Pacific Airways,
British Airways, American Airlines and Air Berlin (Vatta 2017). The coverage of
Oneworld alliance is very wide and serves around 1000 destinations across the world,
which in return increases the frequency of flight bookings in the member countries
(Vatta 2017). One of the airline businesses in USA, American Airline has one of the
largest network of operation in terms of (RPMs) Revenue Passenger Miles and ASMs
(Available seat miles). The reputation of the airline businesses in the developed
countries is invisible. Another strength can be the safety record of the businesses in
the airline market which includes both recognized and traditional brands. Skilled labor
in the airline industry. A major strength of the airline businesses/market in the
developed countries is the ability to segment the market in terms of service offerings

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and price. The airline industry of USA is known for delivering a strong growth in
regards with revenue in 2015.
Weaknesses- The main weaknesses of the airline market in developed countries is the
increasing number of Low Cost Carrier Competitor in the developed countries.
Another weakness of the airline business can be the increased demand for the updated
technological implementations, which marks the need for investment specifically
dedicated to the infrastructural development. The increasing competition and demand
for adaptability for technological adaptation reflects on the depleting customer
experience and corporate management strategies (Forsyth 2018). Another weakness
for the companies like American Airlines is the increasing rate of fuel prices as it is
being burdened with 25 million dollars debt and obligations of capital lease as well as
the pension fund of the company is underfunded by around 7.5 billion dollars (Vogel
2019). The concern marks the need for adopting energy efficient method for the
consumption of energy.
b. The long-term strategic proposition of the airline market in developed countries are as
follows:
i. Making culture as the competitive advantage in response to the increasing
competition of LCC (Low Cost Carrier) competitors. For instance, the
organizational culture at American Airlines should be constructed by
respecting the contribution of the ‘people’ element or service providers of the
business like improved pension plans/benefits and employee perks (Ivanova et
al. 2017).
ii. Development of a premium and value-based customer experience in airline
market will contribute towards the growth in the reputation and frequency of
airline companies.

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iii. Clarity in the strategy of target market can result in the formation of composed
groups, which will allow the airline companies to structure the benefits and
service offerings (Lawton 2017).
iv. The companies like American Airlines must plan the investment capacities in
regards with the increasing fuel costs. The trips can be planned based on the
on-route destinations which will form a sustainable choice for the company.
Directing the investments in the direction of core differentiating abilities for
growing in the market can act as a response for the financial constraints (Kim,
Park and Kim 2017).
Response to Question 2: Developing countries
a. Strengths- One of the major strengths of airline market in developing countries like
India, China, South Korea, Thailand and South Korea is the increasing rate of Low
Cost Carrier entries, which is pioneered by Air Deccan in India have helped in
reducing the cost of flying. The reduced cost in the flight fare rates acts as a response
for high concentration of middle level income group in the developing countries.
Another strength of the airline market of developing countries is the availability of
low cost labor, which allows the businesses to invest in other core competitive
advantages. The changing lifestyle of the population of developing countries and the
growing rate of disposable income contributes towards the rate of leisure travelers in
the past years as initially the rate of travelers was majorly concentrated on the
business travelers (Gill 2016). Middle East airline market invested in new
technological advancement for responding to the increasing demand and
environmental changes in the market. By the year 2015, the integration of Qatar
Airways and Doha International allowed reforming automated baggage transfer
system and the automated security access control technology design for the aim of
targeting around 50 million passengers.

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Weaknesses- One of the major weaknesses of airline market of developing countries
is the focus of airline operations, which is majorly concentrated on the specific
regions rather than on the whole country. For instance, the airline
companies/businesses in India are focused on specific regions like Air Deccan and Go
air concentrates more on western and southern regions of India. Another weakness
can be lack of planning in terms of infrastructural designs (Jain and Natarajan 2015).
Even though government of India facilitated the partnership with GMR, which is an
infrastructural firm for the development of facilities and structures around the country
but in spite of the development in Bangalore and Delhi, other areas needs to be
improved. Another major weakness can be the increasing rate of fuel prices, which
almost comprise 40 percent of the operating cost. The ATF (Aviation Turbine Fuel)
prices of India is approximately 37,800 INR per kilo liter, higher than the average cost
(Cheng, Dong and Li 2018). The parking and landing rates are 78 percent higher than
international average. One of the major challenges for the airline market can be
increasing demand of integrating value with timely delivery of services (Jain and
Natarajan 2015).
b. The long term growth of the strategic proposition are given below:
i. Smarter operational choices reflects the capability of responding to the
increasing demand of quality and timely delivery along with the reduction of
operational costs. One of the smarter choices can be the decision of using only
a single kind of aircraft, which enables the efficient management practices for
staff, pilots, cabin crew and maintenance staff as they will be specialized for
handling a specific type of aircraft (Jain and Natarajan 2015). The operational
activities by a single aircraft type facilitates the purpose of faster Maintenance,
Repair and Overhaul. Indigo Airlines adopted the smarter operational
decisions (Becken and Mackey 2017).

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ii. Another example of Indigo can depict the long term growth of the strategic
proposition of fulfilling the main aim of the company, ‘On time delivery’. The
aim is fulfilled by the strategies like encouraging customers to help the staff
members with cleaning their seating area (Jain and Natarajan 2015). Small
choices like offering packaged food/snack items as meals-for-sale for the
customers contribute towards the aim of delivering timely/efficient service.
Moreover the on-time take-off and landing is recorded in real time through the
Aircraft Communications Addressing and Reporting System (ACARS)
Response to Question 3: Sustainable proposition
The strategic proposition which can be considered as the most sustainable approach is
the efficient utilization of energy for airline operation. The energy efficiency can be
achieved by the implementation of improved technology for deploying the sustainable
low-carbon fuels. Infrastructural improvements in the airline business can directly
reflect improvements in the rising environmental concerns (Flouris and Oswald
2016). The merits of the proposition can be the reduction in operational cost by
addressing the issues regarding fuel cost (Yilmaz and Atmanli 2017). Efficient
utilization of energy can lead towards the efficiency of the operational process. For
instance, ANA Holdings Inc. is a Japanese airline which is known for its customer
care provisions, risk management and environmental safety (Itani, O’Connell and
Mason 2015).
Part B
Response to Question 1: Nationalization of airlines
a. Strengths-
 Nationalized airline businesses like Qantas Airlines of Australia portrayed the
consistent and steady growth in regards with revenue inflow.

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 Qantas Airlines is known for its superior service quality which is managed by the
government of Australia (Jain and Natarajan 2015).
 Government funds in nationalized airline businesses aims at improving the quality of
operational activities in the presence of limited financial resources (Phang 2016).
 In Qantas, the constraints in governmental funds resulted in the strategy of cost-
cutting initiatives without compromising on quality and performance.
 The strength of Nationalization in airline market is the support of the government in
regards with the management of risks (Jain and Natarajan 2015).
 Government guarantees the deposits and offers accessibility of loans with minimum
interest rates.
Weaknesses:
 The weakness of nationalization is the cost pressure on government which marks the
need for continuous improvement in operational processes.
 The nationalized airlines cannot have the provision of private investors.
 The nationalized airline market may experience the aspect of unionization
 The nationalized airlines like Qantas is facing issues in maintaining the profitability
and pricing structure with the increasing demand.
 The financial restrictions may affect the areas of innovation in airline market, for
instance in Emirates Airlines, which reflects lower level of investments in research
and development (Jain and Natarajan 2015).
b. Regularly monitoring the operational functions of the nationalized airline brands can
contribute towards the efficiency in regards with quality and resource management.
The strategy of monitoring will contribute towards the process of continual
improvement and will ensure minimization of environmental impacts. The
nationalized airline entities can design a framework, which enables the businesses to
operate under the governmental rules and policies (Jain and Natarajan 2015).

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c. Key performance indicators- The key performance indicators of nationalized airlines
can be the government financial support, provision of loans, tax exemption, financial
and operational resources backed from government.
Response to question 2: Privatization of airlines
a. Strengths-
 Privatization of airlines allows the businesses to incorporate flexible strategies
in regards with the pricing structures and value proposition.
 It allows to mold the customer experience according to the customized
segment demand.
 For instance, Royal Jet positioned itself as a luxury brand on the basis its
independent pricing decisions as well as the innovative implementations.
 The strategic position of privatization ensures the factor of greater efficiency
due to the limitation of governmental support and financial resources (Cruz
and Sarmento 2017).
 The increasing level of competition marks the need for continual improvement
in regards with restructuring the strategy of competitive advantage.
 The private investors facilitates the technological implementations as well as
the innovative strategies, which is not possible with the limited financial
resources of government.
Weaknesses-
 Privatization cannot include the provision of tax exemption.
 This strategic proposition cannot include the backup for legal hurdles
(Cruz and Sarmento 2017).

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b. Long term of privatized proposition can be ensured by networking for private
investors. The proposition demands the requirement of continual improvement
process for sustaining in the competitive market.
c. Key Performance Indicators- The KPI of privatized airlines can be the financial
resources from private investors, technological resource investments as well as the
competitive pricing structures.
Response to Question 3: Sustainable proposition
The proposition which can be considered sustainable is the privatization of airlines as it
enables the brands to implement innovative strategies as well as the continual improvement
process for the sustaining in the competitive environment. The benefits can be the provision
of private investors. The benefits of implementing technological advancements.

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