CASE APPLICATION Air Arabia's Strategy Air Arabia names itself "Middle East and North Africa's leading low-cost carrier (LCC)." It prides itself on being a company that offers comfort, reliability, and value Airarabia.com for money. Its CEO, Adel Ali, was awarded world's best Low Cost Airline CEO 2008. The company started operations in 2003, and operates a total fleet of 23 new Airbus A320 aircraft, serving 65 routes from three hubs in UAE, Morocco, and Egypt. Since its inception, the company has been pursuing an aggressive low- cost strategy that aims at controlling costs, enhancing profitability, and improving quality and reliability of operations. The simple business scheme of the company is based on the following: . Single passenger class/single aircraft type to save on . Optional - paid for - in-flight food and beverage to training, maintenance, and multi-cabins costs save on catering costs . Fast turnaround times and high aircraft utilization to . Direct sales channels via internet to save on distribu- save on airport expenses tion costs . Flying to secondary, less congested airports to save on So the overall model is based on reducing costs in a major airport costs and rush hours smart way to offer better prices. . Simple fare scheme and simplified routes to save on The company is spreading its wings to cover many long haul cost involvement areas of the world including the Middle East, the Indian Scanner190 Part Two Planning subcontinent, South and Central Asia, Africa, and Europe. It wants to increase its fleet to over 50 by 2015 Discussion Questions: and establish more hubs to link the Arab world to Africa 1. What growth strategy does Air Arabia appear to be and Europe. using? What corresponding advantage do you think Is this strategy working? The past few years have Air Arabia has? seen positive results for the airline, although the indus 2. How might a SWOT analysis be useful to Air Arabia? try's troubled global performance has lately impacted 3. Visit the Air Arabia website. What information could the airline negatively, largely due to increased fuel costs you get about the airline's strategic direction? and continuous competitive pressures. Company offi- cials, however, have expressed their satisfaction with 4. Get the company's latest financial results from the "Air Arabia's solid performance despite overall challeng airline's website. How is the company performing? ing market conditions." To what factors could one attribute positive or nega- tive performance? Source: "Welcome to Air Arabia" presentation, Air Arabia www.airarabia.com, 2010