1. Analysing Challenges and Critical Success Factors The Srilankan Airline Industry Presented by Saatviga S.

2. 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

3. 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.

4. 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%

5. 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

6. Ten Year Review (2000 – 2009)

7. 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

8. Total Loss in the Year Huge Challenges Faced

9. 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 TonneKilometre) Average Staff Strength (significant decrease)

11. Challenges Faced Optimising Revenue Improving Service Delivery Enhancing Srilankan Engineering Increasing Fuel efficiency Increasing Productivity Technology Requirements

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. Some World’s Successful Airlines Singapore Airlines Cathay-Pacific Airways Qatar Airways Thai Airways Asiana Airlines Malaysian Airlines Emirates Airways Etihad Airways

21. 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

23. 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

24. 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

25. 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

27. Factors Influencing Success People Service Product/Promotions Route System Fleet Management Revenue/Cost Control Financial Management

28. 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

29. Thank You