A Case Analysis On Arik Air Nigeria Commerce Essay

A Case Analysis On Arik Air Nigeria Commerce Essay This essay is a case analysis on Arik air Nigeria and will therefore seek to identify the major threats and opportunity in the environment, analyse the strength and weakness of the company, identify the strategic position of Arik air, and suggest a strategy to be adopted by the airline in an effort to sustain its competitive advantage. BACKGROUND Arik Air is Nigeria’s biggest indigenous commercial airline offering domestic flights to major cities in Nigeria and with an expanding network of regional and international flight operations to major cities in the world (Eze, 2010). Presently, Arik Air flies to 17 Domestic destinations in Nigeria and 8 International destinations (Arik air, 2010: Online). Arik Air Nigeria The company’s corporate mission is: ‘To be a safe and reliable airline by selecting and operating new, modern aircraft and by employing the most experienced and efficient staff.’ (Airkair, 2010: Online) Vision: ‘To make Nigeria proud of its aviation industry’ (Arikair, 2010: Online) Strategic Intent: Arik’s strategic intent is to be the preferred airline carrier of choice in West Africa. (Airk Air, 2010: Online) EXTERNAL ANALYSIS: The external analysis was conducted using PESTEL Framework and Porter’s five forces as the basic tools (Thompson, 1997; Luffman et al, 1996; Welsh, 2005; Johnson et al, 2009) in an effort to understand the effect of changing environment on Arik Air’s operation. The findings based on pestel framework (See Appendix 1) and Poster’s five forces (See Appendix 2) are as follows: An analysis of the political environment revealed that governments around the world are tightening immigration regulations due to the surge in terrorism the implication of which is a reduction in the number of global traveller thus posing a threat to airline including Arik Air. (Stevermen, 2009; Cartar, 2010). However liberalization and Deregulation efforts are being made in several regions of the world with Asia setting a target for the full liberalization of its skies by the year 2015. This is projected to boost aviation industry performance by creating avenue for fair competition platform between more established airlines and the growing competitors like Arik Air(Bailey, 1986; Smith Ting, 2008). The rising fuel price is a matter of economic concern in the world, with Aviation fuel price estimated at $85 per barrel (IATA, 2010: online) the implication of which is an increase in running cost for airlines and this poses a high threat to Airlines. However, there is optimism that a global economic recovery is on the way with the world economy expected to grow 2.7% in 2010 (World Bank, 2010: Online) and the aviation industry is forecasted to reduce its loss from $5.8 Billion in 2009 to $2.8 Billion in 2010. (Financial Times, 2010). The World travel & tourism council (2010) projects an increase in the number of holiday travellers in 2010 with further growth expec ted in 2011. The 2010 world cup is expected to boost travel to Africa in 2010 (Eberl, 2010). Â   Percentage change vs. 05-Mar-10 Index* $/b cts/gal $/mt 1 week ago 1 month ago 1 year ago Jet Fuel Price 243.3 89.0 211.9 701.4 3.4% 4.1% 80.3% Source: IATA (2010: Online) source from Platts * 100 in 2000 (87 cts/gal) Â   Impact on this year’s fuel bill of the global airline industry: New fuel price average for 2010 Impact on 2010 fuel bill $85.5/b +$13 billion Estimated by IATA Source: IATA (2010: Online)