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PROJECT

ON
Pakistan International
Airlines

Submitted By

Shamilla Perveez
Class Roll No.01 (A)
Exam Roll No. 377

MBA (Banking & Finance) 4th Term


Session 2008-2010

Submitted To

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Mr. M.TUFAIL CHOUDHRY

TABLE OF CONTENTS

Introduction …………...…………………………………..………………………3
PIA’s Network………………………………….…………….……………………4
 Domestic Network
 International Network
Hierarchy of PIA………………..….…………………………………..…............5
 Faction of the Departments
Vision Mission & Values……………………………………………..……………7
 Corporate vision of PIA
 Corporate mission of PIA
 Values
SWOT ANALYSIS…………………………………….……………….…………8
 Strengths
 Weaknesses
 Opportunities
 Threats
Targeting Strategy of PIA……………….………………………………….……13
Positioning of PIA……………………………………………………….………..14
 PIA’s existing Positioning Strategy
 Positioning by Attributes
 Positioning by Price and Quality
 Introduction of Additional Low Cost Flights
 Positioning by Product User
Competitors Analysis………………………………………………………..….15
 Domestic Competitor
 International Competitors of PIA
PIA implementation Strategies………………………………………..……….17
PIA Evaluation Strategies………………………………………………..…….18

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References…………………………………………………………………..…...18

PAKISTAN INTERNATIONAL AIRLINES

INTRODUCTION

• Air transport is the given a lot of importance in the world .In Pakistan too, it has its
importance .It is essential to have air communication for maintain and improving relations with
other countries.
• Pakistan international Airlines Corporation (PIA) was founded by the government of Pakistan
on 11th March 1955.when PIA took over Orient Airways.(The first Muslim owned airline , was
founded in Calcutta,1946 by Mr.Isphahani)
• Keeping in the view the growing industrial and commercial requirements of the country, it was
necessary to develop quick and speedy means of communication.

• Today it maintains sizeable international route network, in addition to its services closer at
home, with a modern and expending fleet.

HISTORY

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When Pakistan was founded in 1947 it comprised two territories on either side of the expanse of India.
It was in this unusual circumstance that Pakistan International was formed in 1955. Despite wars and
economic trouble, the carrier survived to grow and prosper. Pakistan International Airlines is the flag
carrier airline of Pakistan, based in Karachi. It is the 16th largest airline in Asia, operating scheduled
services to 73 destinations throughout Asia, the Middle East, Europe and North America, as well as an
extensive domestic network linking 24 destinations.
Its main bases are Jinnah International Airport, Karachi, the Allama Iqbal International Airport,
Lahore and the Islamabad International Airport, Islamabad/Rawalpindi. The airline also has secondary
bases, including Peshawar International Airport, Faisalabad International Airport, Quetta International
Airport and Multan International Airport, from which it connects the metropolitan cities with the main
bases, the Middle East and the Far East. The airline is owned by the Government of Pakistan (87%)
and other shareholders (13%). It has 19,263 employees (at March 2007).

AIRLINE INDUSTRY IN PAKISTAN

There are 36 operational airports. Karachi is Pakistan's main airport but significant levels of both
domestic and international cargo are also handled at Islamabad and Lahore. Pakistan International
Airlines (PIA), the public sector airline, though facing the competition from a few private airlines,
carries approximately 70% of domestic passengers and almost equal domestic freight traffic.

PIS’s Network

 Domestic Network

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 International Network

HIERARCHY OF PIA

Board of
Directors
Chairman/CE
O
Human Cooperate
Recourses Planning
Flight
Marketing 5
Operations
Airport Services Finance
Financial
Flight Services
Monitoring

Work Store Purchases

Information Engineering
Technology
Quality Coordination
Assurance
Precision General
Engineering Services

Function of the Departments

 HUMEN RESOURSE
Deals with the administration, personnel, security policy procedures, manpower development and
MIS.
 COPRATE PLANNNG
Deals with the financial, administrative, shareholder and dividends corporate policies.
 FLIGHT OPERATIONS
Deals with the scheduled of flight, its coordination with CAA and international flight standards,
updating manual procedures and acquaintance with latest flights equipments and cockpit crew
scheduling.
 MARKETING
Deals with the sales, promotion and other marketing techniques such as tours, group traveling,
religious packages, sales agent agreements etc.
 AIPORT SERVICES
Deals with the passenger briefing, timely takeoff flights, arrival and departure and passenger
assistance.
 FINANCE
Monitor and control financial recourses. responsible for external and internal audits and budgeting.
 STORE PURCHASES
Procurement of material required by the user departments.
 FLIGHT SERVICES

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Deals with the cabin crew scheduling monitoring of cabin crew staff, replacement of the duties and
procedures.
 WORKS
Airlines building, furniture and physical fixed assets and installation.
 INFORMATION TECHONOLOGY
Deals with disbursement of information, internet connectivity supporting system hardware and soft
where.
 ENGEERING
Deals with complete engineering infrastructures, maintains overhaul and wide body hanger.
 QUALITY ASSURANCE
Deals with quality services to passengers and aircraft facilities.
 COORDINATION
Coordination with other airlines and among various departments for the purpose of assistance and
supporting.
 PRECISION ENGEERING
Deals with production of aircraft parts with collaboration of main world aircraft producing
companies.
 GERNAL SERVICES
Deals with employees welfare services including food ,medical and accidental facilities.

VISION MISSION & VALUES


CORPORATE VISION OF PIA
‘To be a world class airline exceeding customer expectations through dedicated employees
‘Committed to Excellence’

CORPORATE MISSION
“As a Symbol of National Pride, We Aspire to be a Choice Airline, Operating Profitably
on Modern Commercial concepts and Capable of Competing with the Best in the
International as well as Domestic markets.”

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VALUES

 Customer Expectations
PIA is the most trusted name in the industry. The reason of its goodwill is according the expectation of
their customers that PIA has fulfilled always. By providing competitive tariff, extensive care and
convenience to their valued and potential customers.’
 Service
PIA aims at providing valuable and unique services to its customers. They are more personalized and
courteous to their customers. The services are valuable and rare; this is the reason why customers trust
PIA.
 Innovation
PIA currently has a number of 43 fleets and aims at increasing this numbers to 53 by the next few
years.PIA is adoptive to changes and believe in innovation that’s create new ideas and translating
these ideas into action.
 Reliability
PIA is the most experience airline with its service with more than 53 years. This has built in PIA has
become the most reliable airline. PIA is known for its loyalty and consistency.
 Safety
The most challenging responsibility of any organization is to provide complete satisfaction to its
employees and customers together. This satisfaction rewards favorable and easy working conditions.
The in-flight services are customers friendly and the organizational the organizational environment is
also employees oriented
 Cohesiveness
PIA has 12 departments working in their own direction and also provides a number of services
including speeded courier service, catering etc. The most impressive part is these all department and
services are integrated in a cohesive way.

SWOT ANALYSIS
STRENGTH
LEADING MARKET POSITION

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PIA is one of Pakistan’s leading air carriers, with more than 800 daily flights. Around 150,000
passengers a month fly on PIA, making it one of the major operators in the domestic market in terms
of passenger kilometers. PIA’s international market share was 43.5%, In the Domestic market, its
market share was 69.4%. On a system-wide basis, PIA’s market share was 51.2% at the end of year
2007.Its strong market position is driven by consistently low fares as well as reliable service, frequent
and convenient flights, use of new technologies like e-ticketing and self check-in terminals,
comfortable cabins and superior customer service.
BRAND RECOGNITION
PIA has high brand recall. It is recognized by travelers all over the country. PIA is a national airline,
operating passenger and cargo services covering eighty-two domestic and foreign. PIA has earned the
number one ranking in customer satisfaction. This strong market position gives the company a scale
advantage and helps it strengthen its brand image.

SUPERIOR OPERATING STRUCTURE


PIA has maintained its position as the low cost carrier. It has been first class Pakistani airline to use
the latest technology. Factors’ contributing consists of different series of Boeing and Airbus and an
efficient, high-utilization and point- to-point route structure. Flying one type of aircraft significantly
simplifies scheduling, maintenance, flight operations, and training activities. PIA has continually
achieved high asset utilization and employee efficiency. Superior operating structure serves as the
primary competitive advantage of PIA.

NETWORK PRESENCE
PIA enjoys a strong network in key domestic and international destinations. The company’s network
includes three the major airports in Pakistan, as well as major international airport such as Dubai
International Airport. Having a strong network means that PIA can generate traffic feed for both its
domestic and international Flights.

HUB AIRPORT AT KARACHI


PIA operates from its hub in Jinnah International Airport, Karachi. Jinnah International is one of the
world’s busiest airports in terms of number of passengers carried. It is also one of the largest
international gateways to Asia. It is also the leading international air passenger (and cargo) gateway to
Pakistan. The company’s strong presences in airports with heaviest traffic levels in Pakistan give it a
competitive advantage.

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EFFECTIVE USE OF TECHNOLOGY
PIA has successfully incorporated latest technology in all its systems, giving it an edge over
competitors. PIA takes credit for introducing most new technologies to the Pakistani market. It was the
second carrier in Pakistan to incorporate the c-ticketing system and the second in South Asia to
introduce self check in systems at the Jinnah International Airport, Karachi.

WEAKNESS
FORMULATION OF GOVT. RULES
The Basic flaw of this organization is its consolidation that is centralized system. The key policies,
strategies and set of laws are designed by the upper management. The centralized system is one of the
biggest obstacles of long term success of PIA. PIA centralizes structure lead to barrel between
different level of management, decreased motivation, and hard access to information.

HIGH DEPENDENCE ON PASSENGER REVENUES


Passenger revenues accounted for 87 percent of the PIA’s total revenue in 2007. Cargo services allow
airlines to generate additional revenues from existing passenger flights. In addition, cargo revenues are
usually counter cyclical to passenger revenues and have lower demand elasticity than passenger
business, which allows airlines to pass on fuel price hikes to customers.

DEBT
PIA has a significant amount of 42 billion debts. Current and future debts could have important
consequences for stakeholders of the company. For example, debt could impair PIA ability to make
investments and obtain additional financing for working capital, capital expenditures, acquisitions or
general corporate or other purposes. Debts could also put PIA at a competitive disadvantage to
competitors that have lesser debt and could also increase the company’s vulnerability to interest rate
increases.

RELIANCE ON OIL PRICES


PIA’s sustainability, growth and revenues directly depend on oil prices. A steep rise in oil prices can
seriously damage the long term viability of any airline. Recently many airlines around the world went
bankrupt due to rising oil prices. Airlines need to hedge against this risk by taking proper measures.

OPPORTUNITIES
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HAVING THE MAXIMUM ROUTE AND FLEET
PIA is having the maximum route and fleet domestic and international destinations network in
Pakistan as compared to its Competitors. Route and fleet expansion will positively impact the
company’s operations by increasing revenues.

GROWING DEMAND FOR LOW COST AIRLINES


The growing demand for air travel is driven by lower fares and consumer confidence. A survey by
International Aviation Authority showed that ticket price is the number one criterion for passengers
when selecting a flight, well ahead of the availability of a non-stop service.

CUSTOMER LOYALTY
PIA’s frequent flyer and loyalty programs can help it retain customers. PIA’s Awards+plus (frequent
flyer program) was established to develop passenger loyalty by offering awards and services to
frequent travelers. Such schemes encourage repeat travel on PIA, as passengers seek to accrue the
benefits given to regular travelers. This enables the airline to retain customers and reduce costs, as it
does not have to spend money targeting new customers to replace those lost to other airlines.

SHIFTING CUSTOMER NEEDS


The needs of air passengers are increasingly changing, as they are becoming more and more price
sensitive. If PIA succeeds in making its prices more competitive, then the company will be able to gain
significant market share.

INDUSTRY RECOVERY
Market analysts believe that the global airline industry will experience an upturn in fortunes over the
next few years. This represents an opportunity for PIA, as it could generate increased revenues and
command market share if it capitalizes on increases in demand.

THREATS
GH INTEREST RATES
The past few years have seen State Bank of Pakistan impose high as well as low interest rates to check
inflation and the over heating of Pakistani economy. Inflation in Pakistan may see another raise in the
short-term.

ACCIDENTS

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There had been five accidents with PIA listed as below:
• Pakistan International Airlines Flight PK 705 was a Boeing 720 – 040 B that crashed
while descending to land on Runway 34 at Cairo International Airport on May 20, 1965
resulting in 119 fatalities.
• Pakistan International Airlines Flight PK740 was a Boeing 707-340C that crashed after
takeoff from Jeddah International Airport on November 26, 1979. All 156 aboard were
killed.
• Pakistan International Airlines Flight 268 was an Airbus A300B4-203, registration AP-
BCP, which crashed on approach to Kathmandu's Tribhuvan International Airport on
September 28, 1992. All 167 on board were killed.

• PIA Flight 554 is the flight number of a Pakistan International Airlines (PIA) Fokker
F27 that was hijacked on May 25, 1998. The flight started its journey at Gwadar in
Baluchistan after originating in Turbat, and was flying to Pakistan's southern port city of
Karachi. The aircraft was carrying 24 passengers and 5 crew members.
• Pakistan International Airlines Flight 688 (PK688, PIA688) was scheduled to operate
from Multan to Lahore and Islamabad at 12:05 pm on July 10, 2006. It crashed into a field
after bursting into flames a few minutes after takeoff from Multan International Airport.
All 41 passengers and four crewmembers on board were killed. PIA has to continuously
ensure utmost safety and security of its passengers.

STRONG COMPETITION BY AIRBLUE

PIA is now competing against carriers such as Air blue and .PIA remains Air
blue’s strongest competitor because of the huge market it has gained over time, strong brand image
and customer loyalty.
PIA has started new low-fares subsidiary “PIA Express” to stop the Air blue market share growing to
fast. Moreover, major legacy airlines have been focusing on restructuring costs, which has improved
their competitiveness. With costs restructured, the legacy airlines are becoming more formidable
competitors in terms of increasing capacity, matching prices and leveraging their frequent flier
programs. Increasing competition could adversely affect the company’s margins.

INTEREST AND FOREIGN CURRENCY EXCHANGE RATES


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Fluctuating foreign currency exchange rates can have a significant impact on PIA’s earnings. For
example, as PIA is providing its services to the UK. Negative or positive effects arise from exchange
rate movements as change in expenses.
Strengthening of foreign currencies against the British Pound will positively impact PIA and vice
versa.

DECLINE IN AIRLINE INDUSTRY


A number of factors have caused the current decline in the airline industry. For example, the threat of
further terrorist attacks since September 11 and a fall in the number of business travelers have both
caused passenger numbers to fall.

These and other factors may continue to affect demand for air travel in the future, which will affect
revenues of PIA. The threat of terrorism may discourage people from traveling by air and could
especially reduce the number of passengers traveling on international flights.

TARGETING STRATEGY OF PIA


PIA’s Existing Target Audience
From the Demographic Segmentation, PIA is targeting the income and occupation oriented people.
The classification of both categories is as follow.
 Income Segmentation
From income segmentation of PIA, those who falls under the category of upper class and upper middle
class.
 Occupation Segmentation
From occupation Segmentation that PIA is taking in to account, there are two main subheads of
working class and business class. The working class includes all those who are working as an
employee inside and outside the country. In business class all those people are included who are
having business. From the Geographic Segmentation of PIA. All the audience from the domestic and
international regions are included. In domestic people within the country are included and people
residing outside Pakistan.
From the Behavioral Segmentation PIA‘s target audience is categories as follow. In the occasion
based market segmentation of PIA.

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 Hajj’s Occasion.
When Hajj operation in going all those people flying from different cities of Pakistan to Saudi Arabia
for the performance of Hajj.
 Eid’s Occasion.
When Eid occasions are near people within the cities and outside the country move to their homes for
having Eid Occasion together with family.

 New Years’ Occasion


Now people prefer to have New Year with their family that’s why all those people coming back to
Pakistan from different countries or moving outside Pakistan to different countries and also all those
people moving within the country are targeted over here.
 Loyalty Status.
PIA gives different benefits to the fliers. But all those who travel a lot get the benefit of frequent fliers
which carries few discount rates on the tickets. To such audience PIA not only gives the discount
facility but also the facility of pick and drop to them.
From the Psychographic Segmentation of PIA, the target audience of PIA will be the following.
 Social Class
In Social Class PIA targets the tourists, religious travelers and Pakistani Expatriates.
 Tourists
All the tourists from different regions of the country or from different countries come to
Pakistan for tourism purpose or go outside the country. Because PIA is having highest rate of linking
the remotes areas of Pakistan.
 Religious Travels
All the religious travelers for example people going for Hajj etc are targets over here.
 Pakistani Expatriates
As PIA is a national flag carrier airline that’s why people residing outside the country feel a unique
sort of feeling to get into the National Airline. PIA is not just and Airline but also acts as the
ambassador of Pakistan in the whole world.

POSITIONING OF PIA (existing Positioning Strategy)


Currently PIA positions itself within the following positioning strategies.

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Positioning by Attributes
In this strategy PIA positions itself in the mind of the consumers as the reliable air transport service
provider. Because from all the airline companies of the world PIA haste least crash rate. By
positioning the reliability attribute of the airline in the minds of the consumers, people prefer to travel
from PIA. Because of the safety attached with the PIA.
Attribute of safety is also associated with the airline as PIA has the following certifications.
 European Aviation Safety Agency (EASA)
 IATA Operational Safety Audit (IOSA)
 Civil Aviation Authority of Pakistan ( in accordance with the International Civil Aviation
Organizations Standards)

Positioning by Price and Quality


In this positioning strategy, PIA paints the image of being the less price taker and providing high
quality to the customers as compare to the competitors. An example is given below.

Introduction of Additional Low Cost Flights “PIA express”


PIA has introduced additional low cost flights. PIA expresses at 20% less fare.
 This facility is available in Business Plus, Economy plus & Economy C lass.
 No meals.
 Stand by fares applicable.

Positioning by Product User


PIA positions itself as an ambassador of Pakistan in the world. Pakistani expatriates residing outside
the country feels proud when they see an airline of their own home-country carrying the national flag.
This arise the loyalty factor in the hearts of the expatriates and they prefer to travel by PIA.

COMPETITORS ANALYSIS
Competitor analysis in marketing and strategic management is an assessment of the strengths and
weaknesses of current and potential competitors. Created by Michael Porter competitor analysis
focuses on four key aspects: competitor's objectives, competitor’s assumptions, competitor's strategy,
and competitor's resources and capabilities.

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Competitive Advantages of PIA
• Reliability and safety.
• Has best engineering facilities.
• Has best trained pilots?
• National flag carrier.
• Pakistani expatriates when step in the PIA plane they get they homely feelings because of the
national airline which plays a role of ambassador.
• High linkage to the remote areas of Pakistan.
• Using state of art technologies and highly equipped engineering.

Competitive Position of PIA


The competitive position of PIA is diffrertation because PIA has created highly differentiation
products e.g. for the economy class and for the business plus class.PIA has different and unique
product characteristics and features which cater the needs of the respective customers.

Competitive Moves
PIA is having 48.4% market share internationally and 65% domestically, and PIA has the Market
Leader Competitive Move in Pakistan.

Competitor Attack Strategy


The attack strategy of PIA against its competitor Air Blue is Flanking Attack Strategy. Air Blue has
not that much access to the remote areas of Pakistan than PIA has. Due to this weak point of Air Blue,
PIA is attaining the flanking attack strategy against the Air Blue.

Existing Competitors of PIA


PIA operates both domestically and internationally. So it has different competitors on both scales of
operations.

Domestic Competitor

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Within the country PIA has Air blue as a competitor. Air blue is a private airline based in Karachi,
Pakistan. It is a scheduled domestic and international airline operating 30 daily services linking seven
domestic destinations and international services to Dubai and Manchester. Its main base is Jinnah
International Airport, Karachi. Air blue was the first airline in Pakistan to introduce e-ticketing,
wireless check-in and self check-in kiosk facilities.

Achievements and Recognitions


 Pakistan's fastest growing airline.
 First airline in Pakistan and only the third carrier in the region behind Emirates Airline and
Royal Jordanian to introduce the latest self service check-in facilities at Jinnah International
Airport, Karachi
 First private airline in Pakistan to fly long-haul international route (Islamabad-Manchester)
with a refueling stop at Ankara, this has since been moved to Trabzon.
International Competitors of PIA
PIA is having market share of 48.4% in the international market and having tough competition from its
international competitors. Following are the international competitors of PIA.
 Thai Airline
 Ethan Airways
 Qatar Airways
 Singapore Airline
 Emirates Airline

PIA IMPLEMENTATION STRATEGIES


PIA implementation strategies are the overall step taken to communicate and put into action the PIA
Policy and the following best practices were indentified.

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a) To facilitate buy-in, establish a senior management committee to make decisions on the need
for a PIA and who review all PIA reports.
b) Develop in internal policy to integrate the PIA policy requirements with other information
management policy requirements.
c) Develop an implementation plan as a guide for the implementation of the PIA policy and
guidelines.
d) One department found an ATIP policy advisory committee was helpful in providing advice on
the PIA implementation plan.
e) All the shareholders need to be at the table at the start of the planning process.
f) Develop a workflow on the short template to lead managers to a decision on wither or not a
PIA is required.
g) Appoint a senior executive to champion the implementation of the PIA process.

PIA EVALUATION STRATEGIES


The proposed strategy is evaluated twice a year to cheek weather its performance is good or not .The
PIA management measures its performance by matching it with some pre-settled standard. if it show
weak performance then management takes corrective actions in order to enhance its performance.

Text References
1. Strategic Management by JAE K. SHIM, JOEL g. SIEGEL.
2. Principle of Strategic Management 11th Edition by Lawrence J.Gitman.

References
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 www.google.com
 www.Scribd.com
 www.shlideshare.net
 www.pakistanimbajimdo.com

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