Part 2: Case Study: Air Arabia Strategy Case Answer 1 question of your choice (In the real case, you will have 2 questions to answer; each will be worth 20 marks) 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 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 44 new Airbus A320 aircraft, serving more than 101 destinations 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 training, maintenance and multi-cabin costs Fast turnaround times and high aircraft utilization to save on airport expenses 45. Flying to secondary, less congested airports to save on major airport costs and rush hours Simple fare scheme and simplified routes to save on long haul cost involvement Optional - paid for - in-flight food and beverage to save on catering costs Direct sales channels via internet to save on distribution costs So the overall model is based on reducing costs in a smart way to offer better prices. The company is spreading its wings to cover many areas of the world including the Middle East, Indian subcontinent, South and Central Asia, Africa and Europe. It wants to increase its fleet to over 50 by 2015 and establish more hubs to link the Arab World to Africa and Europe. Is this strategy working? The past few years have seen positive results for the airline, although the industry's troubled global performance impacted the airline negatively, largely due to increased fuel costs and continuous competitive pressures. Company officials, however, have expressed their satisfaction with "Air Arabia's solid performance despite overall challenging market conditions". The company indicated that Air Arabia and its subsidiaries have continued to develop over the years and are following a path of profitability. Discussion Questions 1. What growth strategy does Air Arabia appear to be using? What corresponding advantage do you think Air Arabia has? 2. How might a SWOT analysis be useful to Air Arabia? 3. Visit the Air Arabia website. What information could you get about this company's strategic direction? 4. Get the company's latest financial results from the airline's website. How is the company performing? To what factors could one attribute positive or negative performance