marketing strategy of azal

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M A M M A D R A S H I D L I

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MARKETING STRATEGY OF AZERBAIJAN

AIRLINES

INDIVIDUAL ASSIGNMENT FROM MARKETING

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Table of ContentsINTRODUCTION...................................................................................3

MARKETING FOCUS............................................................................3Mission.........................................................................................................3Values...........................................................................................................4Goals and Objectives....................................................................................4

PRODUCT.............................................................................................5

Azerbaijan Airlines........................................................................................5Silk Way Cargo Airlines................................................................................6

PLACE...................................................................................................7Internet.........................................................................................................7Corporate Travel Agents..............................................................................7Direct Sales to Corporations........................................................................7

PRICE...................................................................................................8Competitors and Partners.............................................................................8

PROMOTION.......................................................................................10Business and Travel Magazines, Outdoor Advertisement..........................11Branding.....................................................................................................11Frequent Flyer Program: AZAL Miles........................................................11

PEOPLE...............................................................................................12

PROCESS............................................................................................12Market Penetration.....................................................................................13Market and Product Development..............................................................13

PHYSICAL EVIDENCE.........................................................................14Awards and Reviews...................................................................................14Destinations................................................................................................15Renewed fleet.............................................................................................16

CONCLUSION.....................................................................................16

REFERENCES.....................................................................................17

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INTRODUCTION

A comprehensive 7P description plan for Azerbaijan Airlines particularly focuses on its services, product differentiation, and price and customer segments to ensure airline’s survival and quality status on the available services provided by two main competitors – Aeroflot and Turkish Airlines.

The objective of this individual assignment is to asses marketing information about Azerbaijan Airlines (AZAL). The task undertaken begins with marketing focus, overview of the company, its products, competitors and partners, services and advertisements. This information is being written in order to better understand where Azerbaijan Airlines should focus its marketing campaign and how it should differentiate its product. In conclusion, the assignment will be finalized with an overall summary of the company situation and its future marketing activities.

MARKETING FOCUS

Azerbaijan Airlines strategic marketing plan for the future is focusing on promote as the most favorable airline in the local, ex-Soviet and European market by capacitating its brand name and creating better attention of the airline website and its products amongst the communities and businesses.

MISSION

The mission of Azerbaijan Airlines is to become a leading air carrier with regional network coverage, thanks to its high quality of flight safety,

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reliability, flight controlling, service quality and competitiveness while maintaining its identity of the flag carrier of the Republic of Azerbaijan.

VALUES

Flight safety and customer service are two crucial values that it is impossible not to mention; thanks to the high quality service Azerbaijan Airlines maintains its identity of being national flag carrier. Providing cheaper tickets than competitors without any compromises and maintaining this process in regular basis is another important value that Azerbaijan Airlines tries to maintain. Having achieved great success in ranging from marketing, sales, customer service, and ground operations, Azerbaijan Airlines took its place among the giants of the ex-Soviet Republics aviation sector. Having high quality and safety leads Azerbaijan Airlines to increase in passenger numbers.

GOALS AND OBJECTIVES

One of the main goals of Azerbaijan Airlines is to become most favored carrier on inland and international flights for both leisure and business passengers. Linking other major cities in Europe and Asia between Azerbaijan through hub Baku is another main goal of the company.

Stating about the main objectives, Azerbaijan Airlines mostly concentrates on budget maximization. It includes increase revenue from flights and in business segment in order to keep financial status high, aid to future growth of company, and last but not least, to secure its product in world aviation market.

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28/11/2012 Marketing Strategy of AZAL – Analyzing 7P’s Mammad Rashidli

PRODUCT

Since beginning of functionality, Azerbaijan Airlines provides comfortable economy and business class travel for their passengers to every destination from hub Baku. Constantly, Azerbaijan Airlines improves its economy and business class to the highest level possible, to gain the leadership in competition with its major competitors. Azerbaijan’s national flag carrier offer several services and broad benefits that differentiate it from other airlines; such as space between seats, comfortable seats, and in-flight services by providing authentic gestures. For example in flight magazines contain information about Azerbaijan and meal services to the existing economy and business class passengers. Airline’s innovative and qualitative approach must be seen and positioned on the target market as it meet the needs of both leisure and business travelers. According to Central Asian Cellular Forum, from the year of 2012 Azerbaijan Airlines signed contract with “Nar Mobile” to provide in-flight communication system. By the availability of this feature passengers can make in-flight calls, send SMS, and surf on the internet using “Nar Mobile” network. (http://3gca.org/nar-mobile-enables-in-flight-phone-calls-on-azerbaijan-airlines/, 2012)

AZERBAIJAN AIRLINES

After the fall of Soviet Union Azerbaijani state announced to set up its own airline being independent from Aeroflot, the long-time provider of air services for the Soviet Republics. Being member of International Air Transport Association, Azerbaijan Airlines has been founded on 7th of April 1992. Its main base is Heydar Aliyev International Airport. (http://www.azal.az)

In November 1994, Azerbaijan Airlines started to broaden its destinations. Following this expansion Azerbaijan Airlines added several major cities like

http://www.azal.az/

Baku Heydar Aliyev International Airport international capacity by carrier (seats per week)

Source: CAPA – Centre for Aviation & Innovata

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Dubai, Istanbul, Tehran, Tel-Aviv, London, and St. Petersburg to its route map. (http://www.azal.az)

An information from Center of Aviation says, Azerbaijan Airlines is Azerbaijan’s leading carrier with about a 43% share of capacity in the country’s international market. The flag carrier accounts for 46% of international capacity (seats) at Baku, according to Innovata data. (http://centreforaviation.com/)

In 2008, Azerbaijan Airlines has kept its position ranked as one of the fastest-growing airlines in terms of capacity and traffic growth. When considering the economical crisis affecting many European Carriers and leading them to decrease their operations; Azerbaijan Airlines did not face with heavy consequences.

SILKWAY AIRLINES

Silk Way Airlines is a cargo airline based in Baku, Azerbaijan. It is head office and flight operations are in Heydar Aliyev International Airport. The company was founded in 2001 and offers cargo services linking Europe to Asia. Airline’s name refers to Silk Road which is a trading route between two continents.

http://www.azal.az/

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PLACE

Azerbaijan Airline uses a Multi-level marketing strategy to make sales. This Multi-level marketing strategy contains direct sales and indirect sales through the internet and corporate travel agencies.

INTERNET

Using internet sales in order to attract leisure and business travelers, Azerbaijan Airlines selected its one of the best strategy. With renewed website AZAL tries to attract more people and it will allow direct sales from website. This way of sales allows cheap and efficient distribution costs. New designed website allows customers to interact with operator directly through internet. As other airlines do, customers also can make reservations for their flights and online purchasing payment. In addition, website also shows detailed information on offers.

CORPORATE TRAVEL AGENTS

Azerbaijan Airlines offers to its customers a distribution channel to make their reservation. It is another advantageous point.

DIRECT SALES TO CORPORATIONS

In order to gain attention and attract corporations, Azerbaijan Airlines contacts the travel departments of corporations and businesses to agree on

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new contract. To realize this, airline manages a team that will deal with the building of relationships. Direct sales to corporations’ policy will help Azerbaijan Airlines to greatly differentiate itself and underline the benefits of its product compared to competitors.

PRICE

The main goal of Azerbaijan Airlines is to maintain price leadership by offering lower flight prices to its travelers. While maintaining leadership, pricing helps AZAL to achieve its financial goals, for example making profit. Following table shows the price difference in AZN (Azerbaijani Manat) and in Euro between Turkish and Azerbaijan Airlines on Baku-Istanbul-Baku flights:

AIRLINE DATE PRICE DIFFERENCE

01/02/201310/02/2013

200 AZN

197 EUR 77 AZN75 EUR277 AZN

274 EURInformation source: (http://azal.az/, 2012) (http://www.turkishairlines.com/en-tr/, 2012)

Based on this table, passengers travelling to Istanbul would be willing to buy Azerbaijan Airlines ticket. Having lower prices, AZAL doesn’t act as substitute for absence of product quality, and it can be viewed consistent with other competitors in aviation market. Some ways of promotion may affect the price, however to maintain regular price, AZAL will not support any extensive marketing promotion campaigns as it costs high amount of money; i.e. T.V. ads.

COMPETITORS AND PARTNERS

Recently, Azerbaijan Airlines started to operate to Istanbul’s second airport, Sabiha Gokcen. Signing code-share agreement with Turkish LCC Pegasus Airlines, which is based in Sabiha Gokcen, made this project to come true.

http://www.turkishairlines.com/en-tr/

http://azal.az/

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This agreement between two airlines involved reciprocal mileage accumulation benefits for passengers travelling on both of the airlines. Having less LLC penetration with 2%, Pegasus Airlines doesn’t operate to Azerbaijan. Like most other Central Asian countries, Pegasus is unable to launch services to Azerbaijan due to bilateral restrictions. But Pegasus is willing to forge partnerships with local carriers such as Azerbaijan Airlines to access new markets.

The AZAL - Pegasus partnership will bring beneficial financial results to both companies in both local Baku - Istanbul market and great Baku - Europe market as Pegasus cover large European network offers connections from Sabiha Gokcen International Airport (SAW). In this case, this partnership will allow efficient competition between Turkish Airlines.

As the largest foreign carrier in Azerbaijan, Turkish Airlines is now well positioned to carry a large share of traffic between Azerbaijan and Europe, particularly markets which are not served non-stop by any carrier.While being outside of the European Union, Azerbaijan signed a horizontal agreement with the EU in Jul-2009 which removed nationality restrictions within the existing 19 bilateral air services agreements it had with EU Member States. Under the agreement, any Azerbaijan or EU carrier can operate services between any EU Member State and Azerbaijan if there is an existing bilateral air services agreement. (http://centreforaviation.com/analysis/azerbaijan-airlines-expands-network-as-azerbaijan-aims-to-raise-tourism-profile-75963, 2012)

Partnership agreement provides individual airlines to handle passengers with tickets purchased from partner airlines and register these passengers and their belongings once. Under these circumstances, passengers buying tickets from Azerbaijan Airlines may also travel with partner airlines and vice versa. This opportunity provided helps passengers to travel easily. Following airlines are the major partners of Azerbaijan Airlines:

http://centreforaviation.com/analysis/azerbaijan-airlines-expands-network-as-azerbaijan-aims-to-raise-tourism-profile-75963


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(http://azal.az/en/company-partners/, 2012)

http://azal.az/en/company-partners/

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PROMOTION

Azerbaijan Airlines promotional strategy is to keep target customer in mind. The flag carrier is not going to spend time and money on ineffective advertisements such as advertisements on Television channels. Other types of promotional strategies in order to maintain the company name is to increase sales promotion, participating in business trade shows, promoting the airlines directly to the target audiences. One of the major promotion campaigns of Azerbaijan Airlines is promotion its product on social websites like Facebook and Twitter.

The picture on the right shows the official page of Azerbaijan Airlines with 5430 fans. 105 people are talking about this page.

Picture on the leftillustrates airlines

official Twitter page. It has 322

followers.

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BUSINESS AND TRAVEL MAGAZINES

Currently, Azerbaijan Airlines is not highly concentrated on advertisements on magazines and billboards. Important part of the marketing strategy is going to be focused on advertising with leading corporate and travel magazines. Azerbaijan Airlines plans to advertise on billboards and underground posters as well.

BRANDING

Rapidly growing fleet and new innovations show to its customers through high quality, the airline implements solutions of growth and development. Based on these values Azerbaijan Airlines will get success and takes steps forward to become global airline and brand name recognition.

Azerbaijan Airlines tries to keep its brand image in the region with its logo and unique slogan “We are created for you” which has been used in advertisements for quite some time. Azerbaijan isn’t investing on promotions. It tries to keep brand image by showing high quality of service and by making special offers.

Azerbaijan Airlines is trying to keep its brand image by sponsoring AZAL Professional Football Club.

FREQUENT FLYER PROGRAM: AZAL MILES

Azerbaijan Airlines provides with an opportunity of enjoying the bonuses and benefits on its flights to its customers. Flying with Azerbaijan Airlines, points will be added corresponding to distance of journey. Members earning certain number of points will get free baggage allowance (economy class 1 piece 23kg, business class 1 piece 32 kg),

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free upgrade from economy “Y” to business “C” class, and free airline ticket. On birthdays and public holidays of the Republic of Azerbaijan, the Participant using Gold and Silver cards shall receive additional points.(http://www.azal.az/en/azal-miles-view/19/, 2012)

PEOPLE

The most important “P” in Azerbaijan Airlines is People. Main services like selection, training, and motivation of employees are provided by people. In providing service, flight hostesses at Azerbaijan Airlines come in contact. However cockpit crews are the employees who contribute to the service product but do not come in direct contact with customers. Air hostesses in Azerbaijan Airlines posses a pleasing personality with polite service handling. The front line staff at Azerbaijan Airlines plays a core role to guarantee that the service is delivered to the passengers and customers as warranted. This issue increases some amount of reliability and influences responsibility of the crew which is expected from customers. Main goal of front line staff is to show empathy to customers by listening, adaptation and being flexible. After achieving targets employees get several kinds of bonuses.

PROCESS

Azerbaijan Airlines process services emphasize involvement of front line staff, travel agency offices, tour operator offices, and other services that helps to reach users easier. The process starts from reservation until confirmation of seats. The reservation is possible from all system in the world. Customers get assistance about booking by giving their details.

Airport facilities like baggage handling, flight information and etc. are organized in a way that customer feel comfortable themselves. This helps to deliver high quality service.

Providing high quality of in-flight services like meal service, entertainment, newspapers and magazines, and convenience enables

NEW TERMINAL

http://www.azal.az/en/azal-miles-view/19/

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the travelers to have a pleasant journey.All these procedures are followed to deliver quality service.

MARKET PENETRATION

Developing new in-flight services is major action that can differentiate Azerbaijan Airlines from others. Arranging different in-flight product, such as hospitality, catering can attract more travelers to travel with Azerbaijan Airlines. Communication system like in-flight entertainment and planned future project of in-flight communication is a major advantage of Azerbaijan Airlines.

MARKET AND PRODUCT DEVELOPMENT

Azerbaijan Airlines has great opportunities to expand its routes to connect major cities of European and Asian countries.

Product development focuses on renewing fleet and creating new long flights from Baku.

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physical evidence

Environment of service delivery and the place where the service industry and customer interact is called physical evidence. Comfortable seating and in-flight food and entertainment at Azerbaijan Airlines, can be mentioned as physical evidence.

Azerbaijan Airlines mostly uses Boeing and Airbus commercial aircrafts. The seats are comfortable and have enough leg space.

Construction of new Heydar Aliyev International Airport terminal will increase the number of parking planes and passengers, enhanced with good interior.

AWARDS AND REVIEWS

According to world leading airline rater SKYTRAX, Azerbaijan Airlines is marked as three stars airline.

B767-300

Business Class

Economy Class

B757, A320/319, ATR72

Business Class

Economy Class

The average rating from 6 reviews is 7/10. (http://www.airlinequality.com/Forum/azerbaijan.htm, 2012)

The IATA Operational Safety Audit (IOSA) program is an internationally recognized and accepted evaluation system designed to assess the operational management and control systems of an airline. IOSA's quality audit principles are designed to conduct audits in a standardized manner. Benefits

http://www.airlinequality.com/Forum/azerbaijan.htm

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With the implementation and international acceptance of IOSA, airlines and regulators achieve the following benefits: A reduction of costs and audit resource requirements for airlines and regulatorsContinuous updating of standards to reflect regulatory revisions and the evolution of best practices within the industryA quality audit program under the continuing stewardship of IATAAccredited audit organizations with formally trained and qualified auditorsAccredited training organizations with structured auditor training coursesA structured audit methodology, including standardized checklistsElimination of audit redundancy through mutual acceptance of audit reportsDevelopment of auditor training courses for the airline industry(http://www.azal.az/en/company-view/100/, 2012)

DESTINATIONS

Azerbaijan Airlines have 23+6 destinations. Airline tries to increase its destinations. All of the destinations are direct flights, where 23 of them are operated by Azerbaijan Airlines and 6 by code share agreement.

ROME

http://www.azal.az/en/company-view/100/

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RENEWED FLEET

According to Center for Aviation, Azerbaijan Airlines operates a widely varied fleet with six aircraft types and two new aircraft types on order, though it only currently operates just over 20 aircraft. The airline operates three A319s, seven A320s, two A340, two ATR 42-500s, four ATR 72-500s, four Boeing 757-200s, two 767-300Fs, and two 767-300ER. The airline also operates one VIP A319 and 767-300ER on behalf of the Azerbaijan Government. The airline ceased operating Soviet-era aircraft in late 2010, and now operates an entirely Western-built fleet.

Azerbaijan Airlines ordered 4 Embraer 170 and 2 Embraer 190. Azerbaijan Airlines’ other two aircraft orders are for the 787-8, which it expects to receive in 2014. The carrier aims to use its 787s to launch services to the US.

(http://centreforaviation.com/analysis/azerbaijan-airlines-expands-network-as-azerbaijan-aims-to-raise-tourism-profile-75963, 2012)

CONCLUSION

In conclusion, Azerbaijan Airlines needs to maintain and develop new ideas on servicing well both leisure and business market. Reservations will be done in easier way by making accessible website. For leisure market AZAL’s marketing strategy will be addressed via media sources and provide more direct sales. The one of the core issues in this paper is to highlight marketing objectives and draw attention of business class and economy class travelers in comparison with competitors. Outdoor billboards and posters on buses and underground can be mentioned as most effective media. As impact of internet to our modern world increases, social websites would be advantageous to keep and develop brand awareness and to use as advertising tool. Considering these actions, Azerbaijan Airlines can achieve its goal as well as maintain its place in aviation sector.



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REFERENCES

Azerbaijan Airlines official website (2012). About us. Available at: http://www.azal.az/en/company/ (Accessed: 16 November 2012)

Central Asian Cellular Forum (2012). Nar Mobile enables in-flight phone calls on Azerbaijan Airlines. Available at: http://3gca.org/nar-mobile-enables-in-flight-phone-calls-on-azerbaijan-airlines/ (Accessed: 17 November 2012)

Centre for Aviation (2012). Azerbaijan Airlines expands network as Azerbaijan aims to raise tourism profile. Available at: http://centreforaviation.com/analysis/azerbaijan-airlines-expands-network-as-azerbaijan-aims-to-raise-tourism-profile-75963 (Accessed: 17 November 2012)

Skytrax (2012). Azerbaijan Airlines Passenger reviews and customer trip reports. Available at: http://www.airlinequality.com/Forum/azerbaijan.htm (Accessed: 19 November 2012)

Silk Way Airlines (2012). About us. Available at: http://www.silkway-airlines.com/ (Accessed: 20 November 2012)

Azerbaijan Airlines Booking (2012). Buy ticket. Available at: https://booking.sita.aero/asp/asp/azal;locale=en (Accessed: 22 November 2012)

Turkish Airlines Booking (2012). Flight ticket. Available at: https://online.turkishairlines.com/internet-booking/availabilityInt.tk;jsessionid=YcBJQQvTGs3n1HsNfMLr9c7h4rD82vVL82XQL1SttMRhywRXHYM2!-430413108 (Accessed: 22 November 2012)

Azerbaijan Airlines (2012). Partners. Available at: http://azal.az/en/company-partners/(Accessed: 24 November 2012)

http://azal.az/en/company-partners/

https://online.turkishairlines.com/internet-booking/availabilityInt.tk;jsessionid=YcBJQQvTGs3n1HsNfMLr9c7h4rD82vVL82XQL1SttMRhywRXHYM2!-430413108



https://booking.sita.aero/asp/asp/azal;locale=en

http://www.silkway-airlines.com/

http://www.airlinequality.com/Forum/azerbaijan.htm



http://3gca.org/nar-mobile-enables-in-flight-phone-calls-on-azerbaijan-airlines/

http://3gca.org/nar-mobile-enables-in-flight-phone-calls-on-azerbaijan-airlines/

http://www.azal.az/en/company/

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Azerbaijan Airlines (2012). About the program. Available at: http://www.azal.az/en/azal-miles-view/19/(Accessed: 26 November 2012)

Azerbaijan Airlines (2012). Certified by IATA Operational Safety Audit (IOSA). Available at: http://www.azal.az/en/company-view/100/

(Accessed: 28 November 2012)

Azerbaijan Airlines (2012). Flights map. Available at: http://www.azal.az/en/company-view/9/ (Accessed: 29 November 2012)

Shaw S. (2004). Airline Marketing and Management. 5th edition. UK: Ashgate Publishing Ltd.

Doganis R. (2006). The Airline Business. 2nd edition. USA: Routledge Publishing.

Doganis R. (2009). Flying off course – Airline economics and marketing. 4th edition. USA: HarperCollins Academic.



http://www.azal.az/en/azal-miles-view/19/