Introduction
On third February 2003, Sharjah’s ruler, Sultan bin Muhammad issued a decree that created Air Arabia in United Arab Emirates. It current flies over 51 destinations spanning across five continents: the destinations are grouped as Europe, central Asia, NorthAfrica, as well as Middle East. Its vision is to become the leading low cost airline in the world that embraces innovation, reputation, as well as operational excellence (Ba-Fail, Abed, & Jasimuddin, 2000, p.55). The airline is headquartered in Sharjah at Sharjah Airport Freight Centre, which is approximately 15 kilometers away from Dubai city. The airline has remained profitable since its first year of operation in 2003, and later in 2007, Air Arabia launched its first initial public offering, which gave away 55% of its stock. By ditching expensive overheads such as free drinks and foods, Air Arabia has successfully revolutionized the airline industry and created a different working environment that has helped it minimize costs. It sells tickets electronically via internet and over the telephone thereby ditching the traditional paperwork.
Factors and Analysis of Air Arabia
1 Environment Analysis
- PESTLE Analysis
Political factors
- The government does not directly support the airline’s business activities by allocating some budget to it
- The government of United Arab Emirates neither strongly regulate the aviation industry nor impose hefty taxes which has enabled the airline to conduct its business freely in the market and remained highly profitable
- United Arab Emirates continues to enjoy periods of political stability and good governance thereby boosting the airline’s business activities
Economic factors
- The recent inflation of fuel prices has significantly reduced the airline’s operational costs thereby increasing its profitability level; fuel prices is anticipated to continue falling in UAE and other countries
- The purchasing power of its customers have improved over the past due to increased income per capita thereby making it easy for them to book flights frequently thereby boosting the airline’s business activities
- The long-term global future prospect of the aviation industry is looking good because of the booming tourism and globalization which makes more people to travel outside their locality
Sociocultural factors
- Tight work schedules is a major concern because people are not getting enough leave time and travel to other countries; this might reduce the number of flights offered by Air Arabia
- However, most expatriates need to travel often because they have families in other countries thus an increase in the demand of frequent flights
- Many people are interested in travelling and seeing the world
Technological factors
- New computer and internet technologies have improved the airline’s business by enhancing booking system. The airline is open to the use of new technologies in enhancing its business activities
- The airline uses technology to save cost on human labour, which has resulted in improved profitability; technology is also improving its operations (Katsioloudes & Hadjidakis, 2007, p.68)
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