Situational Analysis for New Zealand International Airlines (NZIA)

This report provides a detailed situational analysis of New Zealand International Airlines (NZIA), a low-cost carrier operating in the highly competitive aviation industry. The analysis examines NZIA's strategic objectives, which involve transitioning into a full-service network carrier to maximize profits and expand its routes. It explores the airline's current fleet of leased Airbus A330-200 aircraft and its network coverage, highlighting the limited scope of its operations as scheduled passenger services. The report delves into the competitive landscape, emphasizing the need for NZIA to adopt product differentiation and service quality strategies to address competition on existing routes. Furthermore, it identifies future route opportunities, such as Auckland-Hong Kong and Auckland-Singapore, which could facilitate growth. The analysis also considers market trends, including the rise of technology and the importance of customer satisfaction, and discusses how NZIA can improve its product offerings and adapt to industry changes. The report concludes by presenting financial data illustrating the growth of the aviation industry in Australia, highlighting the potential for NZIA to expand and capitalize on market opportunities.

Situational Analysis for New Zealand International Airlines (NZIA) 1
SITUATIONAL ANALYSIS FOR NEW ZEALAND INTERNATIONAL AIRLINES (NZIA)
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Situational Analysis for New Zealand International Airlines (NZIA) 2
Situational Analysis for New Zealand International Airlines (NZIA)
Description
The aviation industry is highly competitive and creates the need for industry players to
adopt effective strategies to remain competitive and achieve the desired objectives. With the rise
in the number of airlines, competition continues to grow to create the need for airlines to
establish strategic positions to achieve their overall objectives (Abeyratne, 2014). Focusing on
customer service quality is one of the key aspects of the aviation industry that significantly helps
retain and attract new customers as well as effectively addressing competition problems (Tsiakis,
2015). NZIA is also a low-cost carrier based in Auckland and operates scheduled passenger
services using 10 leased Airbus A330-200 aircraft which has an all-economy cabin
configuration. The case demonstrates that the airline is not a full-service network carrier
increasing the possibility of experiencing competition in the market; hence the need to create a
new strategic focus and strategic positioning to expand the current routes and product offering to
achieve profits and market optimization (Bruce, 2011). The situational analysis of NZIA presents
understanding on the strategic objective of the airline, the fleet, and network coverage to enhance
understanding of the competitive position and the given routes. Besides, the situational analysis
will focus on the future route opportunities for the airline which can help in the long-term
performance or success of the organization as well as the market trends and products.
NZIA Strategic Objective
According to the case, NZIA is not a full-service network carrier which is one of the key
aspect limiting its ability to maximize profits or success in the industry. As such, the strategic
objective of the airline involves becoming a full-service network carrier which involves focusing
on increased passenger flights rather than the scheduled only. The strategic objective is also
based on expanding the existing routes in order to position the airline in the competitive industry.

Situational Analysis for New Zealand International Airlines (NZIA) 3
The strategic objective is based on enhancing the ability of the airline to optimize new market
opportunities as well as increasing the company's profitability. Additionally, the strategic
objective will see the company expand its routes and product offering in order to increase the
overall number of passengers and gain a competitive position in the market (Mahadevan, 2009).
Fleet & Network
According to the case scenario, NZIA is a low-cost carrier and has been previously based
on operating scheduled passenger services which limited their fleet number and network.
Currently, NZIA provides its passenger services using 10 leased Airbus A330-200 aircraft which
has an all-economy cabin configuration and a capacity of 260 seats. The airline's network in both
domestic and international routes involves Auckland-Sydney, Christchurch-Sydney, Auckland-
Cook Islands, Auckland-Nadi, Auckland-Noumea, Wellington-Sydney, and Auckland-
Wellington-Christchurch. The fleet and network for the airline are limited based on the idea that
the company only operated as scheduled passenger services. However, in the achievement of the
new strategic objective, the airline is bound to increase the fleet number in order to meet the
growing demand and competition in the market as well as achieve the desired profits. The airline
must also expand the network cover to enhance the chances of serving passengers from different
areas as well as maximizing the profits.
Competition on Given Routes
As earlier identified, the aviation industry is one of the most competitive which creates
the need for airlines to have unique services of product offerings to meet the competing
demands. Competition is a key challenge that will be experienced by NZIA in given routes
owing to the existence of other key players in the industry (Ireland, Hoskisson & Hitt, 2012). In
this regard, NZIA should adopt product differentiation strategy and service quality in order to
address the competing demands as well as achieve the desired objectives (Odoni, 2015). For

Situational Analysis for New Zealand International Airlines (NZIA) 4
example, NZIA can provide pre-flight and in-flight services to enhance the passenger's
experience as well as satisfaction which can significantly help address the competing demands.
NZIA can also introduce in-flight entertainment, seat configuration and menu's which also play a
significant role in improving customer experience and retention with the company.
NZIA operates in routes with key competitors which creates the need to perform a market
survey prior to establishing new routes in order to enhance the returns on investments. The
company can also focus on less competitive markets or routes in order to enhance the chances of
achieving its objectives (Couto, Plansky & Caglar, 2017). One of the key parts of achieving the
strategic objective of the company involves the acquisition of a new fleet of 20 Boeing B787-8
or Boeing B787-9 which are critical and significantly used by competitors. Adding the fleet
enhances NZIA ability to carry a large number of passengers and load as well as expand its
network as well as enhancing the airline's product offering. NZIA improved fleet enhances the
ability to compete on any new routes in terms of load and destination as well as the frequency of
the travel in all the destinations. The intended additional aircraft empowers the airline to achieve
its strategic objective as well as manage competition from new and existing players.
Additionally, the idea that, the company is not relatively presenting the notion that its
experienced in the market and have improved abilities to achieve its objectives in the expanded
network and increase profitability (Papatheodorou, 2006).
Future Route Opportunities
NZIA has key growth opportunities primarily by expanding its routes which enhances
the chances of achieving its strategic objectives as well as managing competition. The increase in
the fleet number and expansion of the product offering by the company enhances the chances of
growth. Some of the future route opportunities that can help NZIA achieve its strategic
objectives include Auckland-Hong kong (9142.68 km), Auckland-Singapore (8420 km),

Situational Analysis for New Zealand International Airlines (NZIA) 5
Auckland- Los Angeles (10,477 km), Auckland-Kuala Lumpur which would be achieved by a
partnership with other regional airlines to help in achieving the objectives. Other key future route
opportunities for the company includes Auckland- Beijing (10,386 km), Auckland- Delhi
(12,843 km), Auckland – Tokyo, and Auckland-Seoul. Achieving success in the future route
opportunities is also dependent on a widespread partnership with airlines from different regions
to enhance the ability of NZIA effectively reaching its desired destinations. Additionally, the
airline is expected to change its transit airport which is based in Auckland in order to enhance its
capacity to serve passengers from different regions as well as reduce the operational costs while
enhancing the returns on investments.
Market Trends & Products
The current market trends and products demonstrate key aspects of differentiation while
the trends involve the rise of technology in the industry. NZIA is expected to adopt the new
trends in the industry in order to effectively meet passenger needs and satisfaction. One of the
key issues that are critical to the success of the airlines involves the ability to achieve customer
satisfaction which enhances the ability of the airlines to retain and attract more customers
(Pycraft, 2000). In order to remain relevant, NZIA is expected to be flexible to the market trends
such as the inclusion of online booking, demand in luxury services or provision of charter
services. In regards to product, NZIA can improve its product offerings to enhance the
passenger's experience and satisfaction in the airline. NZIA can focus on in-flight services for all
passengers irrespective of their class of travel, providing regular offers and reward programs.
The current market trend in the aviation industry involves outsourcing services which promote
the chances of airlines reducing their operational costs as well as enhancing their efficiency
(Young, 2009). For example, NZIA can outsource services such as maintenance or flight

Situational Analysis for New Zealand International Airlines (NZIA) 6
booking which enhances the chances of the airline focusing on service provision to customers
only thus improved chances of customer satisfaction.
The consideration of current market trends and products promotes the ability of the
airlines to achieve growth in existing and new markets due to the adoption of the market-focused
business model. The aviation industry in Australia is also estimated to have grown by a
significant percentage since 2005. The graph presents the growth in revenues demonstrating the
market trend and opportunities for NZIA. In 2009 the revenues were around $9.7 Bn where $5.9
billion were from domestic flights while $3.8 billion resulted from export activities. By 2016, the
industry trend demonstrated growth to $12Bn-$16 Bn. The graph demonstrates the demand and
total earning which has improved over the years creating the need for NZIA to engage in full
service carrier. The second figure demonstrates the growth in domestic travel which
demonstrates key opportunities for NZIA in the market.
Domestic and International Market revenue growth in Billions from 2009-2016

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