ARIK AIR

Arik Air

Arik Air

Q1- Analyze the relevant issues when establishing an Airline (market accessibility) and competition economy bilaterals, political situation etc.

Ans. Refrence to Airline establishment studies Economic & structural changes have greater impact on the air line industries. For example, September 11th attack affected the whole economy & the airline industry as well. Demand for airline declined to a greater extent & cost of the industry reached a skyrocket due to an increase in security cost, fuel cost etc. This affected the supply of airline industry. The influence of the economic cycle on domestic traffic is apparent. The high-risk nature of the airline industry tends to discourage entry. Because airlines have high fixed costs relative to revenues, a small change in load factors or fare levels can have a large impact on profits. Regional airlines focus mostly on transporting major travelers between major cities and small communities near by. This class has been seen to have the fastest growing and most profitable segment of the airline industry. Lastly there are the cargo carriers. They are part of the industry that focuses on the passengers and their cargo.

Q2- Analyze the profile of the new entrant Arik air.

Ans. Several potential drivers are considered as an entrant's strategies, Being a new Airline Arik will have to consider firstly: To keep their costs below those of competitors', LCCs have to avoid costs that their competitors incur. Price discrimination: An incumbent that maintains or reduces fares erodes an entrant's chance of maintaining any skimming-effect of price discrimination. Moreover, it may erode the loyalty of passengers to the incumbent. Airline is a complex industry. It involves major capital requirements for aircraft, monitor by government regulations, restrictions and state policy, competitive reaction from other tourist transport and requiring high level of expertise to operate and manage. Airline facing increasing globalization, rising fuel prices, heavy repair & maintenance cost, raising labor costs, increasing competition and requirements for higher service levels and greater flexibility.

Hence, the entrant's cost position becomes less crucial for its profitability, and it can be posited that the more an airline engages in differentiation the more the effectiveness of strategic barriers in general and the effectiveness of high average costs compared to competitors' is lowered. Distribution channel: Travel agencies rely on flight information made available to them via computer reservation systems, as do airlines selling via travel agencies. First, airline management took evasive action and implemented an effective Service Recovery System to handle complaints and information needs of the passengers. “Service Recovery is a term that refers to the art of turning customer disappointment into a more positive experience. Research has shown that 82 percent of customers who have had bad experiences will return if the complaint is quickly recognized and resolved,

However, code-sharing crowds out competitors' flight from the booking screen so that they are less likely to be booked. Hence, we expect that the more an airline sells via travel agencies, the greater is the effectiveness of an incumbent's code-sharing as an entry ...