Analysing Challenges and Critical Success Factors
The Srilankan Airline Industry
Presented by
Saatviga S.
Road Map
Vision & Mission
Introduction
Ten Year Review
Key Performance Indicators
The Business Turnaround Plan
Challenges Faced
World’s Successful Airlines and Strategies
Factors Influencing Success
Vision and Mission
Vision
“To be the most preferred airline in Asia ”
Mission
We are in the air transportation business. We provide our customers
with a reliable and pleasant travel experience. We provide our business
partners with a variety of innovative, professional and mutually
profitable services. We meet Shareholder expectations of profitably
marketing Sri Lanka and contributing towards the well-being of
Society. We are a competent, proactive and diligent team. Our
contribution is recognized and rewarded.
Introduction
Srilankan Airlines began operations in 1979 as the National Carrier
of Sri Lanka
Serves 45 destinations in 25 countries in Europe, the Middle East,
South Asia, Southeast Asia, and the Far East.
Codeshare partnerships with bmi (formerly British Midland), Etihad
Airways and Malaysian Airlines
Shareholders
Government of Sri Lanka - 51.05%
Emirates Airline - 43.63%
Employees - 5.32%
Introduction
Subsidiary - SriLankan Catering (Pvt) Ltd. is a fully owned
subsidiary of SriLankan Airlines.
Workforce - More than 5000 employees in Sri Lanka and overseas
In-flight comforts – Business and Economy Class Seats
FlySmiles Flyer Program
Srilankan Cargo
Srilankan Engineering – Technical Arm
Ground Services
Ten Year Review (2000 – 2009)
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Operating Expenditure Net Profit/Loss Revenue
Year 2008-2009 Under Review
Challenges faced
Arising global fuel costs
Struggle of the national tourism industry to survive in a
wartime scenario
High interest rates
Major transition in management
Increased competition from subsidised airlines
▪ Dropped prices fighting for market share
Total Loss in the Year
Estimated Loss
7000
6000
Huge
5000 Business
Challenges
Faced Turnaround Plan
4000 & Restructuring
3000
2000 Global
Economic
1000 Crisis
0
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Key Performance Indicators
Fuel Surcharges by Competitors
Global Economy
Passenger Revenues (decreased by 5%)
Cargo Revenues (decreased by 8.5%)
Overall Passenger Capacity (decreased from 12,599 million to
11,731 million)
Unit Costs (increased from Rs. 46.48 - 50.71 per Tonne
Kilometre)
Average Staff Strength (significant decrease)
The Business Turnaround Plan
Key Aspects of the Plan - “Earn more, spend less and waste not”.
Restructuring of passenger and cargo revenue generation
Restructuring of route network
Savings through increased fuel efficiency
Reducing company’s fixed costs
Renegotiating of contracts with service providers
Optimising of sales channels
Reduced IT and Communication costs
Increase Productivity by focusing on People, Process and Technology
Challenges Faced
Optimising Revenue
Improving Service Delivery
Enhancing Srilankan Engineering
Increasing Fuel efficiency
Increasing Productivity
Technology Requirements
Optimising Revenue
New services to Rome utilizing the market opportunities in Italy
Temporary Suspension of Loss-Making Sectors
Hyderabad, Calicut, Cochin, Coimbatore and Goa
Increasing operations to key destinations
Increased frequencies to Middle East and South East Asian destinations
Direct services to increase convenience of passengers and reduce flying time
(Karachi)
Expansion of route networks through increased Code share Partnerships
Increasing bookings through its Internet Booking Engine
Customer Loyalty Programme – FlySmiles
Optimising Revenue
“Srilankan Holidays” teamed up with Singapore , Thailand and Malaysia
Business Class range and Platinum Range of holiday packages launched for the
higher income market segment partnering with the top hotels
Event-based packages
Introduction of new products – eg. HOTSEATS
To promote advance bookings on the Airline’s website
SkyChain Cargo Handling System for customer convenience and
operational efficiency
Increasing Cargo revenues that contributes to the 13% of the Airline revenue
Improving Service Delivery
Emphasis on Inflight Service
Training of cabin crew and increasing the no of instructors from 4 to 20
Ensuring continuous on-site monitoring and evaluation of crew members
Improvement in Meal Services
Significant changes to inflight menus to suit a variety of customers
Reducing wastage and overall meal costs
▪ Renegotiation of contracts with overseas caterers resulting in significant savings
Enhancement to inflight entertainment
Duty free sales on new range of 180 products including world’s
leading brands and Srilankan items
Heart-start machines for medical emergencies
Improving Service Delivery
Recruitment of new Chinese passenger assistants for Beijing service
SMS alerts on flight service
Uplifting the service standards of ground handling services for other
airlines
Training of new airport staff and sky marshals
Innovation and cost control
In-house production of specialised vehicles and equipment especially with regard to
airport airside activities
Modification to air-sickness bags to enable rapid identification of unused bags
Closing of airport offices overseas
Enhancing Srilankan Engineering
Marketing programmes to increase awareness of SriLankan
Engineering’s capabilities as an MRO, in order to attract new
customers and enhance revenue
Major Contract with Indian Carrier IndiGoue to carry out maintenance
checks
Training more aircraft engineers for Airblue, and to carry out
maintenance checks for the Pakistani carrier
Continued emphasis on key areas like fuel efficiency and punctuality
Structural modifications to the fleet in-house resulting in cost-savings
Increasing Fuel Efficiency
Use of diesel-operated Ground Power Units to power internal
systems and air-conditioning on aircraft parked at BIA, instead of
using Auxiliary Power Units of the aircraft
Reduce fuel burn while landing
Flying shorter routes whenever possible.
Re-evaluation of the choice of alternate airports
Stopping of over-fuelling of aircraft, to reduce weight
Focusing on having ‘clean’ aircraft to reduce drag while in flight
Tankering more fuel than required from cheaper points
Increasing Productivity
Continuing to review company structure for greater effectiveness and
productivity
Customising development intervention programmes to the
requirements of user departments and business demands
No-Pay Schemes, to reduce staff costs
Continuous improvement of welfare facilities
Engaging employee unions in the decision-making process
Enhancement of recruitment processes for the future
Technology Requirements
Consolidation of Data centers in Colombo and Katunayake
Maximizing the utilisation of existing systems to user departments
Creating a common customer database to integrate different sub
business units which interacts with customer profiles
Revamping the Corporate website
Increase penetration levels for internet bookings
Rich features for customers and content management tools for internal users
Introduction of a CRM system
In-house developments of new systems for cost saving
Minimise IT risks through IT security audits
Some World’s Successful Airlines
Singapore Airlines
Cathay-Pacific Airways
Qatar Airways
Thai Airways
Asiana Airlines
Malaysian Airlines
Emirates Airways
Etihad Airways
Singapore Airlines- Strategies Used
Fully branded product/service differentiation strategy
First to introduce hot meals, free alcoholic and non-alcoholic
beverages, personal entertainment systems, and video-on-demand
in all cabins.
Maintains the youngest fleet of aircraft among all major air carriers
▪ Low maintenance or replacement costs
New aircrafts are sub-branded further to distinguish from others
Invests heavily in R&D, innovation and technology as an integrated
part of the business strategy
Singapore Airlines- Strategies Used
The famous Singapore Girl
Rigorous training programs for the cabin
and flight crew
Strong Financial and cash position to
internally fund purchases and limit interest costs
Continuous price-premium strategy and satisfactory passenger load factors
SIA carefully hedge up to 50 % of its fuel contracts 2 years in
advance to avoid cyclical and often large volatility in fuel prices
Emirates Airlines – Strategies Used
Operates wide-body aircraft and flies mostly long haul
lowers its per-seat-mile costs so it can be competitive on pricing
Newer fleets resulting in low maintenance and replacement costs
Attracts higher paying customers
latest in-flight amenities and entertainment systems
Distinctively uses Asian elements to create a premium product that
appeals not only in its home markets but also to a Western audience.
High-level services provided especially for 1st class section
Latest technologies used to enable faster and more efficient handling
of functions such as ticketing, baggage and cargo handling
Emirates Airlines – Strategies Used
Sporting event sponsorships for promoting brand awareness
major events in football, horse racing, yacht racing, rugby, golf, cricket and
tennis.
Recruitment from over 100 countries around the world and provide
training to them to the highest standards
Invest millions of dollars to provide advanced engineering support
Huge investments on promotion campaigns
Thai Airways – Strategies Used
User-friendly website to book and confirm flight reservations
Development of catering service
In the process of implementing e-ticketing to save time and
reduces the need for check-in personnel
Established a Tourism Alliance to promote Thailand tourism and
travel industry
Increased cooperation at the domestic and
regional levels as well as with other global alliances
to strengthen the airline’s competitive edge and
expand market share
Thai Airways - Strategies Used
Implementation of the Customer Relationship Management
system
Automated Self Service System for domestic travel only to
facilitate passengers’ demand in areas of reservations and check-in
Frequent Flyer Programs
Promotions through media, co-marketing efforts with hotel chains
and credit card companies and travel agents
Maintaining high safety standards - Compliance with ISO 9000
Factors Influencing Success
People
Service Product/Promotions
Route System
Fleet Management
Revenue/Cost Control
Financial Management
References
Srilankan Airlines Annual Report 2008/2009
http://www.srilankan.aero/aboutus/SriLankan_Airlines_Annual_Report_2008_2009.pdf
http://www.brandchannel.com/features_profile.asp?pr_id=209
http://goliath.ecnext.com/coms2/gi_0199-6720187/CASE-STUDY-EMIRATES-Long-
haul.html
http://www.hicbusiness.org/biz2003proceedings/Niti%20Dubey-Villinger.pdf
file:///C:/Users/Sudhahar/Desktop/Airlanka/facts_5242839_airline-industry-key-success-
factors.html
http://gbr.pepperdine.edu/064/airlines.html
http://www.ehow.com/facts_5242839_airline-industry-key-success-factors.html
Thank You
