Research Proposal on "Arik Air"

Research Proposal 13 pages (3615 words) Sources: 6 Style: Harvard

[EXCERPT] . . . .

Market Analysis: Arik Air Based in Lagos, Nigeria

Arik Airlines - Mission, Vision, Values, Objectives & Goals

Arik Airlines -- Safety Management System

Arik Air: Market & Strategic Analyses

Infrastructure and Associated Challenges Identified

Market Statistics

Competition

Government Investment in Nigerian Airlines Industry

MARKET ANALYSIS: ARIK AIR BASED IN LAGOS, NIGERIA

In a July 17th 2009 report published by 'The Guardian' in the 'Travels' section it is stated that "Nigerian airlines are bleeding, bleeding as a result of frittering away flight rights to foreign airlines and others under suspicious circumstances...The future looks bleak. It will take a miracle for them to wriggle out of the mess occasioned by the global economic down turn and other self inflicting injuries that is capable of driving them out of business." (The Guardian, 2009) This report claims that challenges include those posed "by the mega European carriers, which have muscled them out of the market, even in their own country, supported by the Ministry of Aviation's policy of frittering away route rights. " (The Guardian, 2009)

The Nigerian government, according to this report "Rather than assist Nigerian airlines on how to ameliorate their sufferings occasioned by the global meltdown and lack of unfavorable operating environment through rescheduling of their debts and reduction in custom duties..." (The Guardian, 2009) While the Nigerian government does not care to see the airlines collapse it is reported that both the American and British government "...quickly offered to help their airlines remain afloat in the face of the recession. The idea was to help the government avoid monumental social crisis that might likely break out should the airlines go under." (The Guardian, 2009)

Finally it is reported that "...airlines like Kenya Airways, Emirates, Ethiopian Airlines, and Qatar among others have increased their capacity. Apart from operating to Lagos Airport, Ethiopian Airlines, Delta operate to Abuja and Kano, thereby making life miserable for Arik, Bellview and Virgin Nigeria. As a result, Virgin Nigeria and Bellview have withdrawn from both the lucrative London and Johannesburg routes, as they could not compete with the likes of Emirates, South Africa Airways." (The Guardian, 2009) The report concludes by stating as follows: "Our carriers' continuous withdrawal on the international route is troubling and disturbing. I think we need to start a process of rebuilding our bilateral and commercial agreements while preparing a market bailout for them which should be heralded by a regulated consolidation." (The Guardian, 2009)

I. Arik Airlines - Mission, Vision, Values, Objectives & Goals

The stated vision of Arik Airlines is to "make Nigeria proud of its aviation industry." (ArikAir.com, 2009) The stated mission of Arik Airlines is: "To be safe and reliable airline by selecting and operating new, modern aircraft and by employing the most experienced and efficient staff." (ArikAir.com, 2009) Arik Airlines 'Values and Goals' are stated as follows:

(1) We take care of the safety of our guests, of our colleagues and our own by observing all safety precautions and regulations;

(2) We exceed our guests' expectations through the continuous pursuit of excellence;

(3) We are considerate and respectful of, and responsive to, the needs of our guests and fellow employees;

(4) We act with integrity at all times;

(5) We open our minds to new ideas and encourage innovation; and (6) We grow profitably and are financially responsible in all our dealings. (ArikAir.com, 2009)

The goals and objectives stated by Arik Airlines include those of:

(1) To operate within the highest standards of safety and security;

(2) To offer a superior level of customer service and to deliver on promises we make to our guests;

(3) To provide our shareholders with an attractive return on their investment;

(4) To be the most punctual airline in Nigeria;

5) To provide continuous quality training and development to all our employees; and (6) To conduct our business with the highest level of integrity, business ethics and moral values. (ArikAir.com, 2009)

II. Arik Airlines -- Safety Management System

Arik Airlines states that they are committed to "...the maintenance of a safe, healthy and sustainable working environment and to conducting their operations strictly within the requirements of law regarding safety." (ArikAir.com, 2009) Safety commitments stated by Arik Airlines include:

(1) To achieve the highest levels of aviation safety performance;

(2) To seek to achieve zero harm to people and minimal impact on the environment through our business operations;

(3) To manage aviation safety matters in a system manner;

(4) To audit and review the safety implications of all our aviation activities rigorously;

(5) To consult with staff and encourage active participation at all levels within our businesses;

(6) To learn and benefit from our experiences and the experiences of others; and (7) To promote a culture in which all Arik Air staff share these commitments. (ArikAir.com, 2009)

Safety Management Systems of Arik Airlines includes constant review of safety management systems and processes in order to better enable Arik Airlines to:

(1) Identify, evaluate and manage hazards, impact and risks arising from our aviation activities;

(2) Meet, and where possible, exceed legislative and regulatory requirements imposed externally;

(3) Train and deploy competent people and allocate responsibilities and tasks commensurate with individuals' sets of skills;

(4) Set, achieve and report against objectives and targets to demonstrate continual performance improvement;

(5) Identify areas for improvement through comprehensive incident reporting and investigation; and (6) Maintain an open and honest internal business culture that encourages a blame-free process of reporting aviation safety issues. (ArikAir.com, 2009)

III. Arik Air: Market & Strategic Analyses

In a June 2009 report entitled: 'Arik Air: Pressing Ahead with International Plans" it is reported that while many carriers "are battening down the hatches and clawing capacity back during the economic crisis, managing director of ambitious Nigerian carrier Arik Air International, Michael Arumemi-Ikhide, says the airline is pressing ahead with its aggressive international expansion." (Dunn, 2009)

Arik is stated to have constructed a strong position in the Nigerian and African regional market over the last three years and in fact, Arik is stated to have launched its "move onto the international stage by launching on the Lagos-London Heathrow route in December 2008. It is related as well that London will following with flights from Lagos to Johannesburg in the second quarter and New York JFK flights in the third quarter as the third of its new Airbus A340-500s, an order it opportunistically took over from Indian carrier Kingfisher, arrive." (Dunn, 2009)

Having built a strong position in the Nigerian domestic and African regional market since launching three years ago, Arik in December launched its move onto the international stage by launching on the Lagos-London Heathrow route. London will be followed by flights from Lagos to Johannesburg in the second quarter and New York JFK flights in the third quarter as the third of its new Airbus A340-500s, an order it opportunistically took over from Indian carrier Kingfisher, arrive. (Dunn, 2009)

It is reported that Michael Arumemi-Ikhide, managing director for Arik Airlines international development plan that this will result in taking Arik Airlines to eleven destinations in the next five years including Asia and the Middle East. London-Lagos is described as "...an absolutely priority and Arumemi-Ikhide "believers the carrier can make its mark in service levels on a highly competitive market." (Dunn, 2009) The following points are made by Arumemi-Ikhide in the Flightglobal Airlines Business (2009) report:

(1) There are challenges in that we are going up against some well-established legacy carriers, but there is an opportunity to differentiate yourself…"

(2) We want to offer a world class product.

(3) We believe we have revolutionized the flying experience in Nigeria," he says, pointing to the carrier's introduction of new regional jets and Boeing narrowbodies on domestic and regional services. He says the carrier intends to bring this into the international market, providing a level of service not previously provided by Nigerian carriers and competitive with international carriers.

(4) For far too long, not just Nigerian carriers but foreign operators, would use older aircraft [on Nigerian routes]. The attitude of third world, second rate had prevailed for too long,,," (Dunn, 2009)

It is reported that the timing of Arik's international launch…coincides with the deepening economic crisis and Arik is stated to have failed in its accounting for the global situation but states the claim that the airlines has "come in terms of the recession. Nigeria has not been insulated from the problems but as a cash economy has not suffered in the same way as other credit-dependent economies." (Dunn, 2009)

Competition has increased and this had Virgin Nigeria suspending its long-haul operations due to several factors which included competition from Middle East operators. Arik had not accounted for the economic crisis at the time of its international launch. Because the population of Nigeria is underserved Arumemi-Ikhide believes that the Nigerian market is different from the transatlantic market "where there is over-capacity. It is a perfect scenario for growth. We are still going ahead with our growth." (Dunn, 2009)

Arik's fleet plans include the following:

(1) Bombardier… READ MORE

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