Sharjah International Airport
Sharjah international airport is an airport in United Arab Emirates, which is located 13 kilometers from the town of Sharjah. The airport occupies an area of about 3,800 acres (Arif, Gupta & Williams, 2013, p. 2). Sharjah international airport is ranked third among the largest airports in the Middle East. There are many airlines, including Air Arabia, Airblue, EgyptAir and Qatar Airways, which operate charted and regular schedule flights in Sharjan Airport. Air Arabia is the airlines, which has the largest number of destinations. This part of the paper focuses on the components of Sharjah international airport where the Air Arabia is based.
Just like many other major airports in the world, Sharjah has some components, which include control tower, runway and terminal buildings. These components play important roles in the development of the airline but facilitating its business activities. The terminal is an important component of Sharjah airport to Air Arabia because it provides spaces, which are used by the passengers to board fights (Arif, Gupta & Williams, 2013, p. 3). It also offers the required space for the passengers to alight from the airplane. The terminal building at Sharjah airport has all require facilities, which ensure that passengers are conformable when they are traveling using the airport.
The Terminal building has spaces for the passengers to clear the customs and check-in the luggage. Space also acts as the lounges for the passengers to wait after alighting or before boarding the airplane. The terminals have facilities like lounges, cafes, and bars, which acts as the waiting bay for the passengers. The terminal of Sharjah airport is designed to ensure that passengers have the best experiencing before and after traveling. Sharjah airport has the most beautiful terminal globally (Arif, Gupta & Williams, 2013, p. 4). The terminal is unique because it has striking architecture, which leaves the passengers with a memorable experience of beauty. The beauty of the airline is enhanced by natural and cultural surroundings. With the aim of expanding the operation of the airport, Sharjah airport has created an exclusive executive terminal, which is aimed at supporting private jets. The Airport has passenger and cargo terminals to ensure smooth flow of passengers and cargos. Sharjah airport has five freight terminals, which are designed to handle different types of the airplanes. The cargo terminals are used for import, cargo holding, cargo forwarders, customs, and overflow export and imports (Arif, Gupta & Williams, 2013, p. 6). The airport has an office and warehouse spaces in cargo terminals which are leased to people who are willing to do business.
Another important component of Sharjah airport is runways. The runways at Sharjah International Airport are made out of concrete, asphalt, or natural surfaces. This component of Sharjah international airport is useful for the airplane to take off or land. The runways in this airport are designed to handle different types of airplanes. In the year 2014, Sharjah international airport opened a new runway that had the capacity to handle the largest airplanes in the world, which include Boeing 747-800, Airbus A380 and the Antonov 225 (Arif, Gupta & Williams, 2013, p. 7). This runway is four kilometers long and 6o meters wide.
Control tower is another important component of Sharjah international airport. Air traffic control is useful in the airport to provide controllers so as to guide airplanes in the airspace and airport premises. The control tower is designed in such a way that it is taller than other building in the airport so as to ensure that the air traffic controller can clearly view all incoming airplanes. The coordination of air traffic controller and the pilots helps in preventing collisions from taking place (Madichie & Madichie, 2013, 65). Control towers are also used to prevent the unrecognized airplane from arriving at controlled air space.
The positive relationship between Sharjah international airport and Air Arabia is useful to facilitate business and marketing strategies. The management team at the airport work is extremely hard to ensure that all airlines using the airport have the best experience of performing their businesses. By creating cargo and passenger terminals, the airport help in ensuring that Air Arabia has adequate spaces for it passengers to board or alight from the airplane. The cargo terminals in the airport help the Air Arabia to undertake its business for transporting freights (Arif, Gupta & Williams, 2013, p. 7). Ensuring that airport has all required facilities help in making sure that there is work efficiency, which helps Air Arabia to attract more passengers to the airlines. Increasing the number of passengers would help the airline earn more revenue and profits. Having facilities, like terminals, help in marketing the services offered by Air Arabia.
The management at Sharjah International Airport has created runways that are helpful when the plan are landing or taking off. The management at this airport undertakes the maintenance processes on the runways to ensure that they are safe for all airlines. By ensuring those runways are safe, the airport management ensures that Air Arabia is not involved in the accident (Madichie & Madichie, 2013, 69).
It is recommended that Air Arabia come with strategies of cutting operational costs with the aim of increasing the amount of revenue earned and the profit margin. One of the ways of reducing operational costs relates to buying airplanes that have fuel efficiency. Fuel is one of the major sources of cost in the airline business. Thus, to ensure that the airline maximizes its profits, it is recommended that Air Arabia buy airplanes that are fitted with high technology engine, which burn the fuel efficiently. As a result, the airline will significantly cut the operational cost, which will have a positive impact on the growth and development of the airline.
- Another recommendation relates to improving the communication process between the clients and the support team in the company. Air Arabia is a service company, which is required to offer exceptional services to ensure that passengers travel safely, and reach their destination on time. The management team of the company needs to invest heavily on communication process to ensure that customers are offered the required information, at the right time. Employing effective communication channel will ensure that passengers get accurate information on travel schedules and possible delays.
- It is also recommended for the Air Arabia to increase the use of the online platform for booking. Allowing customers to book flights online will help in saving time. It also improves the efficiency because clients can search and get the required information relating to specific airline and flights. Online channel will help in increasing the number of customers accessing booking service at a given time. Reducing the time taken to serve client will in turns increase the number of passengers in every flight. This will translate into increased earnings, which will help in the growth for the airline.
The management team of every company must measure the financial health so as to determine the performance of the business. Measuring the financial performance of the company is important so as to identify areas that require adjustment so as to ensure the set goals are realized at a given time. This part of the paper focuses on the financial performance of Air Arabia.
Table 1: Financial Performance of Air Arabia
|Revenue AED Mil||2832||3184||3729||3826||3778|
|Operating Margin %||425||435||566||513||509|
|Net Income AED Mil||15||13.7||15.2||13.9||13.5|
|Number of passengers (m)||5.3||6.1||9.5||14.5||17|
|Passenger load factor (%)||82||80||84||87||86|
Source: (Morningstar, 2017)
The table 1 above shows financial performance of Air Arabia from the year 2012 to the year 2016. The data contained in this table relate to revenue, cost, operating margin, net income, the number of passengers and passenger load factor. The main reason for focusing on this financials is that they help in explain the financial performance of the business.
Figure 1: Graphical representation of Financial Performance of Air Arabia
According to figure 1 above, the revenue of Air Arabia increased from the year 2012 to the year 2015 then decreased from the year 2015 to the year 2016. The revenue of Air Arabia increased from 2832 AED Mil in the year 2012 to 3826 AED Mil in the year 2015. The revenue then decreased from 3826 AED Mil in the year 2015 to 3778 AED Mil in the year 2016. This means that the performance of Air Arabia improved from the year 2012 to the year 2015 before declining in the year 2016.
The figure 2 above shows that the costs of Air Arabia increased from 2418 AED Mil from the year 2012 to 3778 AED Mil in the year 2016. This means that the operational cost of Air Arabia increased steadily from the year 2012 to the year 2016. Thus, it can be said that the costs in Air Arabia increased with increase in revenue from the year 2012 to 2015. The figure shows that the operating margin increased from 425 in the year 2012 to 566 in the year 2014 before it began decreasing in the year the year 2015 to the year 2016. The net income also decreased from 15 AED Mil in the year 2012 to 13.7 AED Mil in the year 2013 the increased in the following year before decreasing again in the year 2015. The number of passengers in Air Arabia increases steadily from 5.3 in the year 2012 to 17 in the year 2016.
The Air Arabia employs various strategies, which include engaging the customers and targeting, to manage revenue. The management team at Air Arabia has realized the importance of customers in influencing the amount revenue that the company gets. As a result, the company has focused on the process of engaging the customers so as to improve their loyalty to the business. The management team of the airline engages the customers by asking them to offer views and opinions relating to the process of growing the business. When the customers are involved in decision making process, they feel valued. As a result, the develop trust to the company, which influence their purchase decision (Arif, Gupta & Williams, 2013, p. 7). This help in increasing the revenue realized by airline within a given time. The airline also targets different groups of customers so as to charge them different prices. The airline has an economy and business class, which allow the customers choose the one they can afford. This help in encouraging to use the airline because there can choose the class that suits their income.
The main strategy employed by Air Arabia to manage cost relate to resource planning. The management team at Air Arabia defines the resources required to undertake various business activities. This help in effective management required material, time, labor and equipment, which help in controlling the cost of doing business (Marcus &Anderson, 2008, p. 259).
The strategy employed by Air Arabia to manage yield relates to setting a price that will influence the behaviors of the customers. The airline set competitive prices compared to their competitors so as to attract more customers. By attracting more customers, the airline can maximize its yield.
It is recommended for Air Arabia to choice the source of the fund so as to effectively manage its finances. The airline needs to secure monetary resources to fund different projects and operation. However, there is need to consider the cost of credit when borrowing money to ensure that it focuses on sources of credit that less expensive (Arnold, 2008, p. 51).
It is also recommended that the airline invests on most profitable ventures so as to maximize the return on investment. There is a need for the management team in Air Arabia to carry out research to identify available investment resources (Marcus &Anderson, 2008, p. 262). After identifying the investment opportunities, the team must carry out project appraisal to ensure that airline gets the most of their investments.
There is a need for management of cash by involving the finance manager to make a decision relating to the allocation of cash. This will help in making sure that cash is spent effectively in different areas, including paying salaries, water, and electricity bill, payment of credit and purchase of raw material. This helps in ensuring that wastage of cash is eliminated.
Arif, M., Gupta, A. and Williams, A., 2013. Customer service in the aviation industry–An exploratory analysis of UAE airports. Journal of Air Transport Management, 32, pp.1-7.
Arnold, G., 2008. Corporate financial management. Pearson Education.
Brigham, E.F. and Ehrhardt, M.C., 2013. Financial management: Theory & practice. Cengage Learning.
Madichie, N.O. and Madichie, L., 2013. City brand challenge 101: Sharjah in a globalised UAE context. International Journal of Business and Globalisation, 11(1), pp.63-85.
Marcus, B. and Anderson, C.K., 2008. Revenue management for low-cost providers. European Journal of Operational Research, 188(1), pp.258-272.
Morningstar, 2017, Air Arabia PJSC Airarabia. Retrieved from http://financials.morningstar.com/ratios/r.html?t=AIRARABIA