Chapter 5

(Competitor Analysis)
PIA
History
PIA was founded on 29 October 1946 as Orient Airways, and was initially based in Calcutta,
British India, before shifting operations to the newly independent state of Pakistan in 1947.
Orient Airways was nationalized and merged with the new PIA in 1955 to form the Pakistan
International Airlines Corporation (PIAC)

Mission Statement
Employee team will contribute towards making PIA a global airline of choice through: Offering
quality customer services and innovative products. Using state of art technologies.

Vision
Vision and Mission PIA's vision is to be world class airline exceeding customer expectations
through dedicated employees, committed to excellence, innovation products and absolute safety
Objectives
The objective is to make PIA a leading international airline that is sustainable, profitable and
plays an important role in Pakistan's economy

SWOT Analysis of PIA

SWOT analysis is a strategic planning method used to evaluate the strengths, weaknesses,
opportunities and threats involved in a project or business venture. It involves the specifying
internal and external factors that are favorable and unfavorable to achieving that objective. This
technique is credited to Albert Humphrey who led a convention at Stanford University in the
1960s and 1970s using data from Fortune 500 companies.

Strengths: Attributes of the person or company that is helpful to achieving the objectives.

Weaknesses: Attributes of the person or company that is harmful to achieving the objectives.

Opportunities: External conditions that is helpful to achieving the objectives.

Threats: External conditions which could do damage to the objectives.

STRENGTHS
Strengths are found in the internal environment of the organization. They are the backbone of an
organization. Strengths of an organization can overcome any kind of weaknesses that the
organization is facing. PIA has a number of strengths due to which it is still one of the leading
airlines in Pakistan. These are as following:-

1. PIA has states of being Flag Carrier of Pakistan.

2. Highest market share at domestic network.
3. Multilingual staff on board.
4. Booking offices in all major cities both in domestic and international.
5. PIA has well established brand as its oldest airline in Pakistan.
6. Halal meat available at all flights.
7. Highly professional staff.
8. Having government protection.

WEAKNESSES
Weaknesses are also found in the internal environment of the organization. Weaknesses if more
in quantity can break down an organization easily. They can overcome the strengths as well. PIA
also faces a number of weaknesses.
1- Old aging feet of PIA causing higher operating cost
2- Huge burden of employees which cause financial burden.
3- Inadequate space of aircraft
4- Charging of high fares as compare to competitors
5- Lack of marketing activities as compared to competitors
6- Poor quality of food and services on board

Opportunities
Opportunities exist I the external environment. They need to be recognized and used
according to the business. An opportunity utilized at the right time will be the strengths of
tomorrow. Such kind of opportunities also exist for PIA which are as follows:
1- PIA has huge potential market in Middle East if PIA upgrades its fleet.
2- PIA has largest domestic network and by proper route planning PIA can generate huge
amount of money
3- PDC provide favorable market for domestic as well as international sectors for the airline.
4- PIA can generate more revenue by attracting customers through web and mobile
reservation systems.

THREATS
Every organization faces external threats which could do damage to the business’s
performance. These threats can damage the business and could be the reason of bankruptcy.
 No doubt, PIA is well established airline and seasoned organization. Yet there are certain
threats being posed by the external environment. Some of them are as follows:
1- Negative rising perception about the country, regarding terrorism
2- Political instability and law and order situations.
3- Rising fuel prices in the world
4- Over staffing at all levels
5- Frequently rising airline fares
6- Fast growing domestic and international competitors
7- Effective promotion strategies adopted by other competitors like emirates and shaheen
and airblue.

Segmentation

 Demographic
 Geographic
 Behavioural
 Psychographic

Targeting

Differentiation

Positioning

………………………………………………………………………………….

Segmentation and Targeting

Demographic Segmentation
PIA targets the income and occupation oriented people.

 Income Segmentation
From income segmentation of PIA, those who falls under the category of upper class and upper
middle class.

 Occupation Segmentation
From occupation Segmentation that PIA is taking in to account, there are two main sub heads of
working class and business class. The working class includes all those who are working as an
employee inside and outside the country. In business class all those people are included who are
having business.

Geographic Segmentation

PIA serves 19 domestic and 24 international destinations in 16 countries across Asia, the
Middle East, Europe and North America. Jeddah, Medina and Dubai are the major focus city for
the airline, with flights
from Islamabad, Karachi, Lahore, Peshawar, Multan, Sialkot and Faisalabad.

Behavioural Segmentation
 Hajj’s Occasion.
When Hajj operation in going all those people flying from different cities of Pakistan to Saudi
Arabia for the performance of Hajj.

 Eid’s Occasion.
When Eid occasions are near people within the cities and outside the country move to their
homes for having Eid Occasion together with family.

 New Years’ Occasion.

Now people prefer New Year with their family that’s why all those people coming back to
Pakistan from different countries or moving outside Pakistan to different countries and all those
people moving within the country are targeted over here.
  Loyalty Status.
PIA gives different benefits to the fliers. But all those who travel a lot get the benefit of frequent
fliers which carries few discount rates on the tickets. To such audience, PIA not only gives the
discount facility but also the facility of pick and drop to them.

Psychographic Segmentation

 Social Class
In Social Class PIA targets the tourists, religious travellers and Pakistani Expatriates.

 Tourists
All the tourists from different regions of the country or from different countries come to
Pakistan for tourism purpose or go outside the country. Because PIA is having highest rate of
linking the remotes areas of Pakistan.

 Religious Travels
All the religious travellers for example people going for Hajj etc. are targets over here.

 Pakistani Expatriates
As PIA is a national flag carrier airline that’s why people residing outside the country feel a
unique sort of feeling to get into the National Airline. PIA is not just and Airline but also acts as
the ambassador of Pakistan in the whole world.

( https://vustudents.ning.com/group/mkt619finalprojectmarketing/forum/topics/mkt-619-
final-project-on-pricing-strategy-of-qatar-airways-and-pi )

Differentiation

 Reliable and safe

 Best engineering facilities
 Best trained pilots
 National flag carrier
 High link to the remote areas of Pakistan
 State of art technologies and highly equipped engineering

Positioning
Positioning by attributes
 Reliability
 Speed
 Safety

Positioning by price and quality

 Introduction of Additional Low Cost flights
 “PIA Express”, a flagship courier service

Positioning by product user

 PIA is Pakistan’s ambassador in the world

( https://www.slideshare.net/zees786/rebranding-of-pia )

Micro environment

Macro environment (PESTLE Analysis)

Micro Environment
Micro environment consists of the Porter’s 5 Forces.
Bargaining Power of Suppliers
Due to following reasons bargaining power of suppliers is high in PIA:
 In Pakistan, there are some competitor in airline industry: ex: Public air travel, Boeing and
Airbus.
 Oil companies giving fuel on credit basis to PIA
 Ministry of defence handling ground rules and operation procedure dependent on Airport
and Aviation rules and regulations.

Bargaining Power of customers

Due to following reasons bargaining power of suppliers is low in PIA:
 Airline monopoly
 Low competition ex: Air Bus
 Pakistanis by the first world had also decreased alarmingly due to security concerns

Threat of Substitute Products

The threat of substitute products is compare with other traveling facilities because
passengers are not used to travel by sea and other substitutes

Threat of New Entrants

Threat of new entrant is low: Reasons as follows:
 All international destinations covered by PIA: Monopoly
 Pakistan bargaining market is very limited

Technology Development
Technology and development is a major driver of airline industry and specially
innovation and the reservation in the booking system. Internet reservation key system
role in e- ticketing as customer can easily reserve tickets and check the status of the
flight. PIA was the first airline in the Pakistan to introduce and installed e ticketing
followed by the market leader.

( https://www.ukessays.com/essays/management/strategic-analysis-of-pakistan-
international-airlines-management-essay.php )

Macro Environment
Macro environment consists of the PESTLE analysis
  (P)olitical
 (E)conomical
 (S)ocio-Cultural
 (T)echnological
 (L)egal
 (E)nvironmental

POLITICAL FACTORS:

Per Ireland R. et al (2008), political factors always have a great influence on the way where
businesses operate in the airline industry and the spending power of customers.

Pakistan has achieved some political stability in recent years. If the management of PIA believes
that the present government will perform well (consistently), then there will be more investment
in the form of purchase of new airplanes and latest technology.

ECONOMIC FACTORS:

Currently, Airlines industry has three major (local) players: PIA, an Airblue, Aero Asia and
Shaheen Airlines. Their target market includes domestic travellers as well as Pakistanis living
abroad particularly in the UK and USA. Economically, the new millennium has been highly
volatile; the September 11 attacks revolutionized the whole world. Consequently, there was a
global depression in the North America, South America, Australia and Europe.

SOCIAL FACTORS:

Customers are more aware of market conditions and available options and want to get best
value for their money (Johnson & Scholar, 2001). They spend considerable time and money on
entertainment hence increasing the need of in-flight entertainment systems.

Hajj attracts a huge number of customers.

TECHNOLOGICAL FACTORS:

Major technological changes are taking place in the airlines industry with innovations in the
reservations and booking systems. In-flight entertainment systems and auto check in counters
are two examples of such innovations. Internet plays a key role in e-ticketing as consumer can
easily reserve tickets or check the status of the flight.

LEGAL FACTORS:

Airlines legislations and policies have a direct impact on the performance of PIA. PIA has
attacked new legislation which will force them to pay greater compensation to customers in the
event of overbooking, cancellations and delays.

ENVIRONMENTAL FACTORS:

PIA, as a symbol of national pride, should be a choice airline operating profitably on modern
commercial concepts, capable of competing with the best in its entire international and
domestic markets, consistently exceeding customer expectations. It should be a choice employer
deploying modern technology in all spheres of its activities.