The Airline Shaheen Air Tourism Essay Example
The Airline Shaheen Air Tourism Essay Example

The Airline Shaheen Air Tourism Essay Example

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  • Pages: 14 (3685 words)
  • Published: October 3, 2017
  • Type: Report
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Introduction Shaheen Air International, also known as Shaheen Air, is a private airline that provides passenger, cargo, and charter services. It operates in major cities of Pakistan and the Persian Gulf. The Government of Pakistan designated it as the 'Second National Carrier of Pakistan' on October 25, 1994, after its establishment in December 1993. Its main operations base is at Jinnah International Airport (KHI) in Karachi, with an additional hub at Benazir Bhutto International Airport (ISB) in Islamabad. In addition to domestic routes, Shaheen Air also serves significant international destinations.

Shaheen Air operates flights from Karachi, Lahore, Islamabad, and Peshawar in Pakistan to Dubai, Abu Dhabi, Al Ain, Kuwait, Doha, and Muscat. The airline was established in December 1993 as part of the Shaheen Foundation project and was named after the Peregrine falcon of the Pakistan Air Force. In Octob


er 1994, it became Pakistan's second national carrier and started international operations in February 1995 with a scheduled service between Peshawar and Dubai. Initially, most domestic flights by Shaheen Air were operated using leased Tupolev Tu-154 aircraft.

Shaheen Air International (SAI) initially held the title of being the "2nd national air hose of Pakistan" in its early years. However, this designation is no longer acknowledged. In July 2002, TAWA International Inc. of Canada took over the management of the airline, resulting in changes to its leadership. Khalid M Sehbai, the new president of Shaheen Air, made a foreign direct investment with the goal of replicating the airline's past success.

During November 2004, Shaheen Air introduced its first Boeing 737-200 Advanced for the Karachi-Lahore-Karachi route, replacing its Soviet Russian aircraft. In 2005, the cargo division of the airline expanded through

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agreements with Pakistan Post and British Airways Cargo. To facilitate cargo operations, Shaheen Air Cargo acquired Il-76 aircraft, which were deployed on Dubai-Karachi routes. The first two flights on January 3 and 5 transported around 100 metric tons of export cargo to Dubai, which was further delivered to Europe and the USA by British Airways flights. In 2006, Shaheen Air International (SAI) rebranded as Shaheen Air and unveiled a new livery and corporate website.

The air hose facilitated travel between Karachi and Quetta, as well as discussions on enhancing air connections between Pakistan and Iran. The Governor of Balochistan suggested that Shaheen Air should offer flights between Quetta and Zahidan. Initially, SAI operated eight flights linking Karachi-Quetta and Quetta-Lahore. Moreover, it was announced that SAI would be permitted to operate flights connecting Islamabad and Quetta. However, on May 22, 2006, the Civil Aviation Authority (CAA) halted all Shaheen Air flights due to SAI's significant outstanding debts to the CAA. Nonetheless, on May 25, 2006, the CAA granted Shaheen Air permission to resume both domestic and international operations.

The CAA issued a clearance notice after receiving a payment from SAI for outstanding dues. On September 18, 2006, it was disclosed that Shaheen Air planned to operate a four times weekly flight service from Islamabad to Robin Hood Airport Doncaster Sheffield in the UK; however, no flights were ever launched to Doncaster. In October 2007, Shaheen Air International declared at the World Travel Market in London their intention of starting flights from Islamabad to London Luton Airport. In November 2007, Shaheen Air International acquired two Airbus A310-300 aircraft from Saga Airlines, a Turkish company.

The first A310-300 (TC-SGC) featured an

all-white color scheme and prominently displayed Shaheen Air labels on both sides of the fuselage. This aircraft operated two weekly flights on the new Islamabad-Lahore-Kuwait route. On February 7, 2008, the airline started offering flights to Leeds Bradford Airport in the UK. The twice weekly service to Leeds Bradford Airport was later stopped, but no reason was given to the press. The A310-300s were returned to Saga Airlines in 2009 and all routes in the UK were discontinued.


To achieve strong and consistent profitability, expand SAI wings further through sustainable efficient service, and serve as a model for other airlines.


To provide reliable, efficient, and friendly service to all passengers at a competitive price nationally and internationally.

Airline globalization

The airline industry has experienced rapid global development since World War II and is now one of the fastest-growing and most technologically advanced industries worldwide. Globalization of the airline industry contradicts international agreements on landing rights through bilateral agreements between countries. However, private airlines maintain important relationships with government entities, specifically the state government and foreign governments. In terms of international aviation policy, states are often concerned about commercial aircraft from other countries flying through their airspace. The main concern is with aircraft that intend to land within their territory for the purpose of transporting commercial traffic.

What is commonly referred to as 'the right to choose.'

Market factors:

Customers can travel within the country using coach or rail transport systems, but travel between countries is mainly done through ocean and air transport. Ocean transport is

only possible to certain locations and is also time-consuming. The only transportation system that can cross borders within minutes is air travel, and there is no close substitute for it, resulting in homogeneous customer demands.

National and international consumers:

Customers in the airline industry are looking for the best support from the company, as well as exciting onboard facilities such as meals and the latest technology, like internet access. They also prioritize safety during their journey and seek a travel experience that they will remember fondly and consider the best.

So if the company provides these installations regardless of the state, customers can easily remain loyal.

Multinational planetary customers: Business operating globally must be present in all customer locations. According to Yelp (1992), customers require the best service worldwide. These customer preferences are driving growth in the global airline industry. Technological advancements and globalization over the past two decades have eliminated national boundaries and significantly increased international travel, resulting in an influx of global customers for the airline industry. The airline industry is a dynamic market, with advertising campaigns, pricing, and promotional activities having a significant impact on company performance.

Factors affecting costs:

The reduction of a company's average production costs is known as economies of range, which can be achieved by introducing new products or services. Airlines can achieve economies of range by increasing the number of destinations served, which SAI is lacking in. This can be accomplished through partnerships, franchising, and code sharing with other airlines. Economy of scale is achieved by expanding the business into other countries. Scale economies occur when unit costs

decrease as total production increases.

If a company can achieve the same amount of traffic at a lower cost, it achieves economies of scale. These can come from returns to scale, learning, specialization, and distributing fixed costs over a longer production period (Gsell, 2005). Larger planes tend to be more efficient (in terms of cost per unit) than smaller planes. Many companies have responded to this perceived need for more accurate cost estimates by implementing activity-based costing systems (Schiff, 1991). The main costs for carriers include labor, information technology, infrastructure, purchasing new flights, signaling, and landing costs. These costs can vary significantly among airlines depending on the country they operate in and the type of business strategy involved. For example, labor and maintenance costs in Asian markets like Pakistan and India are cheaper than in Western countries. However, the most common cost fluctuates over time and accounts for about 10-20% of operating costs: fuel costs.

All air hoses are subject to cost, but certain air hoses employ fuel hedge techniques to receive partial benefits. Government policies have a significant influence on the air hose industry, and any changes in these policies can have a considerable impact on it. The World Trade Organization (WTO) and General Agreement on Tariffs and Trade (GATT) have played a role in decreasing trade barriers among countries. The existence of universal technical standards like ISO 9001 2000 and ISO 9000 has made it easier to produce air hose products that are accepted worldwide.

Concerns of host authorities:

The attitudes and policies of host authorities favor globalization. To illustrate, the open sky agreement between the UK and the USA has led

to an increase in the number of flight routes and more companies entering the global markets. However, Pakistan and India are facing significant losses in terms of time and cost due to the closed sky agreement.

Reasons for localisation

Leading countries

The UK, the USA, and some EU companies have a stronger financial position, are advanced in technological innovation, and have a strong presence in their respective countries.

Asiatic and underdeveloped states, including Pakistan, face challenges in competing in their domestic market due to a lack of innovative advancements and sufficient capital. Localization primarily occurs as a result of ineffective corporate communication and inadequate business strategies, particularly stemming from a limited understanding of cultures, languages, and regions.

The business environment of any industry relies on both its general and industrial environments. These environments play a crucial role as any alterations in political, economic, sociological, technological, or legal aspects can have varying impacts on the industry or business. These factors are interconnected, and future consequences may differ from past experiences.

Air travel is a fundamental and ever-changing industry that contributes to economic growth, international trade, investment, and tourism. It plays a crucial role in the globalization of various sectors.
PESTEL analysis:
Political and Legal factors:
The geopolitical landscape is constantly changing as emerging nations gain economic power and establish new political alliances. National governments have authority over airline operations. During times of war, national emergencies, or defense-oriented situations, airlines may be obligated to provide airlift services to the government. The allocation of a significant number of aircraft and crew to the Air Mobility Command can have negative impacts on their operations.

Extensive government regulations govern the airline industry, leading to increased costs, disruptions in operations, restrictions on flexibility, decreased demand for air travel, and competitive disadvantages.

Airlines can comply with both domestic and international regulatory demands. The airline industry has been greatly affected by the political instability between India and Pakistan. After the December 2001 assault on India's parliament, which was attributed to Kashmir separatists backed by Pakistan, air connections between the two nations were cut off. This ban has caused financial challenges for numerous airlines, particularly Indian ones, as they now have to take a two-hour longer route for flights to Central Asia and Europe. The present government of Pakistan functions under a presidential parliamentary democracy.

With an unstable justice system and law enforcement, the political situation in Pakistan has worsened. Terrorism also poses a significant threat. The country is currently grappling with an unpredictable and chaotic political climate as the Pakistan People Party (PPP) holds power. Although it is the largest democratic party, the economy is declining as a result. However, despite these challenges, the airline industry continues to thrive in this democratic nation.

Shaheen air international is a key player in the competitive environment of Pakistan's economy. Recognized as the 'Second National Carrier of Pakistan' by the Government in 1994, it has been making significant contributions.

Economic factors:

The rise in global travel and RPM (gross per average mile) is closely linked to GDP. The growing economies of developing nations lead to higher demand for air travel.

China and India account for 40% of the world's population, and air travel in this area has been growing at

a rate of up to 9% annually, with expectations of rapid future growth. SAI is facing negative impacts on its profits due to various factors including rising oil prices, inflation, exchange rates, government economic policies, as well as economic booms and recessions. Currently, SAI operates 22 domestic and 28 international flights per week, making a significant contribution to Pakistan's economy.
Sociological trends:
In the last two decades, the airline industry has expanded significantly due to the influence of globalization. People's preferences, cultures, tastes, and lifestyles have undergone transformations.

Countries have achieved financial stability and individuals now have the means to travel by air. Governments in developing countries recognized the economic benefits of tourism and took steps to attract tourists from wealthy countries in Western Europe and North America by developing resorts and infrastructure. This has resulted in an economic boost for developing countries, particularly Asian nations like Pakistan and India. As the economies of these countries continue to grow, their own citizens are also becoming future international tourists.

In addition, business travel has expanded as companies increasingly operate on a global scale with investments, supply chains, and customer bases spanning multiple countries. The rapid growth of world trade in goods and services, as well as international direct investment, has further contributed to the increase in business travel.

Weather and natural catastrophes and outbreak diseases can have a significant impact on travel behavior. The airline industry is particularly vulnerable to the outbreak of diseases that affect travel behavior. In 2003, there was an eruption of Severe Acute Respiratory Syndrome (SARS) that had a negative impact primarily on our Asia operations. More recently, there have been concerns about a potential outbreak

of avian flu. In April 2009, the airline industry experienced a sharp decline in stock prices due to fears of a swine flu outbreak.

Many flights to and from Mexico were cancelled by several states, resulting in an overcapacity of planes and air hose staff and reduced air hose profits. Air travel can also be affected by terrorist attacks. Following the September 2001 attacks on the World Trade Centre (WTC), the number of air travelers significantly decreased as people no longer felt safe flying. This greatly impacted the economy of Pakistan, creating a negative image for the country worldwide. As time passed and terrorist attacks, such as daily bomb blasts, continued to occur within Pakistan, the social situation worsened. This indirectly affected Pakistani airlines like PIA, SAI, and Air Blue, as tourists stopped visiting Pakistan and passengers felt insecure.

Technological factors:

From the introduction of the Boeing 247 and Douglas DC3 in the 1920s to the Boeing 747 and Douglas DC10 in the 1970s, the airline industry witnessed significant technological advancements.

Airlines heavily rely on technology to operate their business, and this dependency is increasing. In the 1960s, airlines were among the first major industries to extensively use computers. Technological advancements have transformed the industry from small planes carrying 10 passengers to large planes like the Boeing 747, which can transport over 400 passengers and reduce operating and maintenance costs. Airline industry heavily relies on technology for various purposes, including online reservation systems, office tasks on computers, telecommunication systems for code sharing and traffic signaling, laser-coded baggage tickets and machine-clear tickets, automated luggage processing, and advanced technology for security challenges. SAI utilizes the latest technology in all

seven of its self-owned Boeing 737 aircraft for both national and international flights.

Environmental concerns:

Although aircraft is one of the least polluting forms of travel globally, aircraft engines still emit noise pollution, gases, particulate emissions, and contribute to global warming.

The aviation industry is rapidly evolving, with an increasing number of new planes entering into service to meet the growing demand from riders. However, this expansion poses a threat to the environment. The construction of domestic and international airports requires a significant amount of agricultural land for runways, leading to further environmental concerns. Moreover, most airports are located in suburbs, necessitating long-distance travel for customers using their own vehicles or public transportation systems, which results in high fuel consumption. In response to pressure from ICAO and IATA, the EU has issued a warning to 4000 companies to reduce their environmental impact or face a ban from European airports. As a small company, SAI takes these global issues seriously.

Porter 's 5 Forces Analysis

Threat of entry:

Within the Pakistani airline industry, new entrants are uncommon in the modern aviation sector.

Existing participants such as PIA, Air Blue, and SAI are protected from new competitors due to scale economic systems. These systems make it difficult for new entrants to replicate hubbing operations, where short-haul carriers connect passengers to long-haul services on a large scale. The response from current participants seems to be limited to defending their own routes and not expanding into routes from nearby rival airports. The most significant responses are focused on paths that were previously concentrated. However, incumbents do experience short-term increases in passenger numbers when these

menu cuts take place.

Capital is an important issue for new entrants in the industry. If borrowing is cheap, the likelihood of more airliners entering the industry increases. As more new airlines enter the market, concentration increases for everyone. It is always possible for a new entrant to purchase support services such as maintenance and ground handling.

Several air hose companies have established subsidiary businesses that provide various services. These companies are willing to sell their services to new competitors, even if the competitors' business plans involve competing with them. However, it is challenging for a new entrant to gain customer loyalty, as many legacy and national carriers already have strong relationships with their customers. This challenge can be overcome by making significant investments in advertising campaigns and offering lower prices.

Today, the majority of air agencies employ an executive workforce who have advanced within the organization and often possess more than 20 years of experience. Acquiring experience is a challenging task. Providing competitive salaries to attract highly skilled pilots and other staff members is essential.

Power of buyers:

According to Porter, the bargaining power of buyers significantly impacts the profitability of firms across all industries. A company that possesses a larger customer base usually enjoys successful operations, while customers themselves have limited negotiating power.

When a house has a limited number of clients, the bargaining power of clients is higher. In the SAI, however, the bargaining power of purchasers is low. It is important to consider the high costs associated with exchanging airplanes, as well as the ability to compete on service. Airline companies differentiate themselves with only a small advantage, unlike other business sectors.

The seats offered by all economic

class airlines, the time customers travel, and the onboard food service are approximately the same. The advancement of technology has increased the power of buyers. With the advent of the Internet, average consumers can easily search for the lowest airfare and complete transactions without intermediaries, resulting in an increase in buyer power as a significant industry force.

Power of suppliers:

When a company relies exclusively on monopoly suppliers for vital resources, these suppliers have the ability to set prices. The Boeing 747 was introduced for airline use in 1970 and remained unchallenged by any other aircraft for the next 25 years because there were no other long-range aircraft with more than 400 seats available as alternatives.

The air hose supply market is mainly controlled by Boeing and Airbus, resulting in limited competition among providers. Financially, airlines must place orders well in advance, which poses a risk as industry growth cannot be predicted. There are also competitor airlines like PIA and Air Blue that offer better services, facilities, and pricing compared to SAI.

If the plane was purchased four years ago during a strong economic boom and is delivered during a recession, it becomes an additional cost for airline operators as there is already excess capacity.

Threat of Substitutes:

Substitution happens when companies in other industries discover a new and improved way of meeting the same customer needs that the existing player is targeting. There are several substitute issues affecting airlines currently. Business travelers are traveling less due to the availability of video conferencing, teleconferencing, and email.

Email has significantly decreased the need for physical transportation of documents by air and the establishment of air cargo businesses. However, when it comes to cross-border

travel, there is currently no alternative that can fully replace passenger transportation. Compared to other modes of transportation such as trains, buses, ferries, and personal cars, the lack of a high-speed passenger transit system worldwide has made air travel a viable choice for customers. The absence of viable alternatives to the airline industry that effectively meet consumer travel needs is advantageous, although it has certainly affected other industry factors, such as the threat of new entrants.

Competitive Competition: Competitive challengers refer to organisations offering similar products and services targeted at the same customer group. Highly competitive industries typically generate low profits due to the high costs associated with competition. In challenging economic times, this situation can lead to disaster. The SAI is currently dealing with intense competitive competition. The level of competition is determined by the threat of new competitors and the bargaining power of buyers.

While the threat of substitutes is low and the bargaining power of suppliers has largely remained unchanged, these factors have been countered by changes in buyer power and new entrants, resulting in overall poor industry performance. The entry barriers are low and the competition is increased by the influx of new entrants over a long period of time.


The main opportunities for the airline industry include a decrease in oil prices per barrel, economic growth, government liberalizations, an increase in developing countries, growth in student and business travel, advancements in information technology and outsourcing. As a Second National Carrier of Pakistan, SAI has a great opportunity to enter the European market as it possesses similar facilities compared to other Pakistani airlines such as PIA and Air Blue. Additionally,

labor and maintenance costs in Asian markets are cheaper than Western countries. SAI also has 18 years of experience in serving airline customers, establishing a strong brand name and customer awareness.

Threats The air hose industry is vulnerable to the failure or malfunction of computer, communication, and other technology systems. Any disruptions, such as natural disasters, power outages, terrorist attacks, equipment or software failures, computer viruses, and hackers, can significantly impact operations and customer service. This can result in the loss of important data, revenue decline, increased costs, and overall damage to business. Concerns over terrorism, war, volatile fuel prices, labor strikes, weather conditions, and other factors can also disrupt seasonal patterns. Rising oil prices, economic recessions, terrorist attacks, adverse weather conditions, and diseases pose significant threats to the entire air line industry. Particularly for Asian airlines, like Pakistani Airline, these threats have been persisting for years and are expected to continue in the future. The unstable political situation in Pakistan is also a major threat for SAI.

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