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Air Arabia Case Study

1824 words - 7 pages

About Air Arabia LLC.Air Arabia LLC was established as a fully fledged commercial airline of the United Arab Emirates on 3rd February 2003 by an Ameeri decree issued by His Highness Dr. Sheikh Sultan Bin Mohamed Al Qassimi, the Ruler of Sharjah and Member of the Supreme Council of the UAE. The Air Arabia fleet consists of two modern A320 aircraft, flying directly to the following destinations: Bahrain, Egypt, Iran, Kuwait, Lebanon, Oman, Qatar, Sri Lanka and Syria. This year Air Arabia plans to expand its fleet to four Airbus A320 aircraft, flying to more destinations.In this case study (report) I will go throw the external environment to assess the viability of this operation using the Porter's five-force analysis, as an advice manager for this company I have to use the forces influencing the decisions of the Air Arabia airline to enter the UAE Market with a unique strategy. Porter's framework, known as the Five-Forces model, focuses on five forces that shape competition within an industry:* The risk of entry by potential competitors.* The degree of rivalry among established companies within an industry.* The bargaining power of buyers.* The bargaining power of suppliers.* The threat of substitute products.1. The risk of entry by potential competitors.As we know that potential competitors are companies that are not in the market and may enter the UAE market which may have a big impact in the market. On the other hand, companies which are already operating in the market, which they will try not to loss their market share.As we know that the UAE has stable market, and that was proven after the September 11 attack. Even more UAE market has dramatically growing in the tourism specially due to the festivals held during the year, and constructional development. In addition the huge number of expatriate working in the country, they use airplanes as their transport from and to UAE.Some analysts expressed concerns about the UAE airline market being crowded with Emirates, Etihad, Air Arabia, Gulf, and others. Which defiantly will have a very high competitions between these airlines, but the Air Arabia situation is different because they are supported by the Ruler of Sharjah which is Member of the Supreme Council of the UAE.Air Arabia has innovated new idea of very low operating budget (compared to other airlines) and low ticket price, which created a big share for them in the market at the time they started.The Air Arabia company should maintain that using the same strategy (low price), but they have to finding ways to reduce the operating budget, more over the company have to introduce other and more services to the customer (coaches, snakes,...etc). In addition they have to continue to investing in advertisement in all kind of media domestic and worldwide.So, I think that there is a very low risk, even that the UAE government regulations is allowing any business to be opened. Thus, does not mean the company do not need to study and analyses the market...

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