Strategies & Implementation
Operations Strategy in an airline is essentially about how the organization seeks to survive and prosper within its environment over the long-term. The decisions and actions taken within its operations have a direct impact on the basis on which an airline is able to do this. The way in which an airline secures, deploys and utilizes its resources will determine the extent to which it can successfully pursue specific performance objectives.
Saif Air ‘s primary objective is to establish itself as a niche player in the UK – South Asian market by providing a high level of service and comfort at an attractive price to our business and economy class passengers alike. The use of a simplified lean organizational structure, a common aircraft type, and a policy of system wide commonality will significantly reduce operating costs over the more traditional airlines. This, coupled with our focus on premium class passengers, will enable us to achieve much higher margins than our competitors.
Focus on a single type of aircraft and a single class of travel
Saif Air has opted for two Airbus A330 - 300 based upon its capacity, range, operating costs, reliability, and availability. By operating this aircraft on our flights, Saif Air is able to reduce significantly the operating costs. The operating cost for this aircraft will be approximately £94,547 one way. This demonstrates the lower risk associated with this operation. By operating a single aircraft type, Saif Air will minimize costs associated with training and maintenance programs. Pilot commonality, aircraft interchangeability, technician interchangeability, great economies of scale in spares holdings are some of the benefits associated with single aircraft type operation.
Ensure service-oriented personnel through productivity and profit-based incentives
Saif Air wishes to maintain labour cost flexibility by providing a portion of total compensation in the form of profit sharing. Maintaining high productivity of the work force is also an important aspect that management will focus on. Saif Air believes that employee’s ownership in the airline is fundamental to its success and will provide schemes to promote this.
Focus on long-haul, point-to-point, nonstop services
Saif Air will initially focus on the London/Manchester – Islamabad/Lahore route where it can operate profitably with a small share of the market. Saif Air will maintain this focus in the future by choosing routes where a large market already exists. Following Islamabad/Lahore Saif Air will start services to Karachi, Sri Lanka, Bangladesh, Amritsar, New York, Chicago and Toronto.
Outsource non-passenger related activities
Saif Air will outsource all customer related services to quality companies in areas where there is no direct contact with the passengers. Saif Air aims to offer a quality service to its passengers and will therefore ensure that only its staff interact directly with the customers.
Air Operator's Certificate and Operating License
In order to conduct commercial flights, Saif Air will need an Air Operator's Certificate (AOC) and
an Operating Licence which are granted by the U.K. Civil Aviation Authority. In order to get an
AOC and an Operating Licence, the company has to comply with safety, financial, and other
requirements laid down by the CAA. The application process can take about 12/24 months
to complete. In order to avoid relying on this lengthy process to start operations, Saif Air will use
the AOC and operating license of an established Portuguese Airline in the first year of operations.
By using an existing airline, Saif Air will significantly reduce the risk of delays in the start-up phase.
Saif Air will in effect outsource the operations to this airline for the first 12 months which will enable
Saif Air to focus on the commercial aspects of the business. From the passenger's perspective,
Portuguese Airline will be invisible. The crew will have Saif Air’s uniforms and the aircraft will have
Saif Air livery. This Portuguese Airline has tremendous experience with Boeing and Airbus ETOPS (Extended Twin Operations) operations and is viewed by many as the best quality airline in the U.K.
Through Portuguese Airline, Saif Air will obtain landing and take-off slots at both London Stansted, Manchester and ISB/LHE airports for the following times:
London Stansted/Manchester 20:00
Islamabad / Lahore 08:30
Islamabad – Lahore 10.30
London Stansted/Manchester 14.00
On the termination of the contract after one year, Portuguese Airline will transfer its route licence and all the slots to Saif Air once it obtains its own AOC.
In order to maintain a high level of customer service, Saif Air will either employ its own staff or ensure the ground handling agent has dedicated staff for all aspects of airport handling involving contact with customers. Saif Air will initially outsource its needs until critical mass has been established. Saif Air will also lease space in each airport for lounges and offices.
Maintenance and Training
Heavy maintenance and training will be outsourced, initially to Portuguese Airline in the UK and Pakistan.
£1,250 Business Premium class return,
£550 Economy Premium class return and
£325 Economy class return.
Saif Air will not need sophisticated yield management systems to determine the price of each ticket. However, Saif Air will hire an experienced yield analyst in order to maximize revenues. Saif Air will offer a simple fare structure which will be comprised of a maximum of four different fare types.
This pricing structure will be very attractive for the small and medium enterprises (SME) who do not have access to large volume corporate discounts with the major carriers.
Simple and Transparent Fare Structure
Saif Air will use a simple yield management system to determine the best price for each single seat in the aircraft. Saif Air will have a simple fare structure with three/four different fares. Saif Air will monitor the purchasing patterns and will be able to restrict the amount of discounted fares on certain flights.
Flexible (Full Fare) This fare will be designed for those travellers who make travel plans at the last minute and who often have to change their travelling plans. It will be fully changeable and refundable without any fees or restrictions. This fare will be 50 percent cheaper than current published business premium class fares and 25 percent cheaper our economy class fare.
Flexible (Discounted) This fare will be designed for those travellers who have fixed engagements and are price conscious. This fare will be used to stimulate leisure travellers to travel on Weekends or to book 4/6 weeks in advance. It will be very difficult for business travellers to get access to these fares because of their booking and flying patterns. These fares will be changeable and refundable without fee.
Fully Discounted This fare will be used to stimulate leisure travellers to book 4/6 weeks in advance. These fares will be non
– changeable/non – refundable and will carry fee
Business Premium Economy Premium Economy
Flexible Full fare £1,850 £900 £600
Flexible Discounted £1,500 £700 £475
Fully Discounted £1,250 £550 £325
Saif Air will use special promotions in the first months of operations in order to attract as many customers as possible and get them to experience our premium service. The initial objective is to focus on load factors rather than yields in order to penetrate the market and stimulate product trial.
Sales, Marketing, and Distribution Strategy
Saif Air intends to cut out new territory as it goes about marketing itself. While it will clearly serve the target markets of U.K - Pakistan, it will just as clearly be a different kind of player on the field, and will seek to be known not only as a British airline, but at the cutting edge of the aviation business in this region.
Saif Air’s emphasis is on the latest information and electronic technology, and its stress on comfort, convenience, safety and customer service, will be cornerstones on which the marketing strategy will be built.
Saif Air will utilize a combination of methods to achieve the recognition that it both desires and needs. Saif Air has a very limited market, hence does not requires large advertising budget or exposure. Saif Air will instead use local media, Asian TV Channels, Radio, newspapers and local bill boards in the Pakistani populated cities which are most cost effective.
Corporates: To get corporate customers for our Business Premium and Economy Premium class. Saif Air will focus its efforts on targeting corporate travel managers directly through a strong sales force, partnerships with credit card companies, and other entities that have access to corporate clients. Saif Air will offer flexible pricing to suit companies' travel requirements.
End-users: In order to attract the traveller directly, Saif Air' marketing strategy will focus on the lifestyle and convenience rather than price because in many cases price is not the primary issue for the business traveller. Saif Air will only use electronic tickets which will be distributed through the Internet, and our call centre. Saif Air will also distribute through travel agents as they still have a significant position in the corporate market.
Saif Air will hire a strong sales team that will target companies directly. Saif Air will also team up with a major credit card company and large business travel agencies that will give Saif Air access to a large number of SMEs. Saif Air believes that getting companies enrolled will be a critical success factor and will ensure that its value proposition is well communicated to the businesses likely to use the service.
Saif Air will offer customers quicker, easier, more convenient ways to arrange travel
through the use of e-ticketing or "ticketless travel." An e-ticket will entitle passengers to
the same conditions of a conventional paper ticket, however instead of being
printed, the e-ticket will be stored in the Saif Air e-ticket database. The customer will
simply receive a paper itinerary/receipt for Customs and Immigration
Distribution and Revenue Management
Saif Air will use an integrated ticket-less software (Open Skies by HP) which offers an online booking engine as an alternative to traditional airline distribution through Computer Reservation System (CRS). Open Skies also offers streamlined revenue accounting, airport functionality, and a customer database function. The Open Skies system is currently used by Go, Easyjet, JetBlue, Buzz, CityBird, and many others.
Saif Air will form relationships with the key travel agents giving them an opportunity to
increase their commission by taking some of the risk. Travel agents will be able to buy
in bulk in advance and get higher commissions than if they simply book tickets on an
ad - hoc basis.
Travel agents' commissions in the U.K. have declined from 9 percent to 7 percent in
recent years and are set to reduce further. Saif Air will offer attractive returns for agency
partners—well above U.K. industry standards.
Saif Air will operate an efficient, customer-oriented call center, open 24 hours a day in order to serve
individuals, corporate clients, or travel agents. Fully trained staff will also be able to handle website
Direct Sales through the Internet
Harnessing the power of the Internet will be key to the success of Saif Air. It is the most
cost-effective distribution method and Saif Air will heavily promote its website to attract direct
passengers. A user - friendly website will be set up to sell tickets, select seats, choose meals,
check punctuality, hotel/rental car bookings etc. In addition, the website will enable passengers
to choose connecting flights with European/American and Canadian airlines and also airlines
in Pakistan. This will enable Saif Air to expand its target market by capturing connecting
passengers as well as point - to - point passengers. An extranet corporate booking tool will be
developed for use by corporate clients.
Saif Air will form strategic partnerships with leading travel, luxury goods, and financial
websites targeting similar audiences with hyperlinks between websites.
Saif Air will initially target the high-volume routes of UK - Pakistan in which it will only be a small
player and not be perceived a real threat to the larger airlines. During the first three to five years,
the following cities are obvious targets: Islamabad, Lahore & Karachi in Pakistan, Amritsar in India,
Sylhet in Bangladesh, Colombo in Sri Lanka, Newark & Chicago in USA and Toronto in Canada,
Bangkok, Sydney and Melbourne in Australia where most of the immigrants from these South Asian
Year 1: Market Penetration in high density routes
Saif Air believes in slow and steady growth policy. During its first-year operation Saif Air will target the densest UK - Pakistan market starting with Islamabad and Lahore. Because there are no European airlines, operating to Pakistan from the UK, Saif Air can capture a good portion of market share by operating non-stop direct flights. By targeting this dense market, Saif Air will only need a small portion of the overall market in order to be profitable.
Year 2: Extend service to other south Asian countries
During its second-year operation Saif Air will expand to Karachi, Amritsar (India) and Sylhet (Bangladesh).
Year 3: Extend service to Middle East
Year three includes flights to Hajj & Umrah (Saudi Arabia) and Colombo (Sri Lanka). While scheduled flights will clearly be our focus, Saif Air will take advantage of opportunities in the high-end segment of the Hajj/Umrah market where we are seeing strong growth. Such opportunities could fit in nicely with the current travel market. Saif Air will also consider ad hoc charters and corporate charters on a case by case basis.
Year 4: Extend service to USA, Canada, Thailand and Australia