Strategic Marketing Management
Royal Jordanian Airlines
Q 1. Select and name any Company you are familiar with and describe its business?
Over the years, airlines have successfully streamlined their operations, improved efficiency, made substantial technological advances, and tightened costs. Value-adding benefits such as reward systems have also been incorporated, as well as vast improvements in services provided and safety of travel. The impact of these changes has been passed on to the end consumer in the form of lower ticket prices and better quality of service. Noteworthy is the fact that in spite of the extensive investment made by airline companies, the tremendous growth in operations and revenues, and the successful endeavors at cost cutting, the airline industry does not appear to be reaping the rewards of its efforts.
Royal Jordanian Airlines was established as Jordan’s national carrier in 1963, with three aircrafts travelling to four regional destinations. It has since expanded to incorporate a fleet of 33 aircrafts, travelling to almost sixty destinations worldwide. The Company’s paid up capital amounts to 84.37 million shares/JOD. The Company’s operations include the carrying out of scheduled and chartered air transport of passengers, cargo, and mail, in addition of offering aircraft handling services. In February 2001, the Company was transformed into a public shareholding company in preparation for its privatization as part of Jordan’s privatization programme. The first stage in the privatization process entailed the selling-off of non-core operations, which included the duty-free shops, maintenance, catering and training businesses. Finally, in 2007, the Government of Jordan sold 71% of its stock to the public through an initial public offering, and allocated 7.7% of the stock to the Royal Jordanian Employees Fund, thereby retaining its position as the Company’s largest shareholder. Currently, the Government’s stake in RJ stands at 26.0%. Royal Jordanian Airlines operates regular flights from Jordan to 59 cities across the globe. RJ operates one of the youngest fleets of aircraft, and currently is undergoing a modernisation of several of its aircrafts. During 2011 and 2012, six old aircrafts will be phased out to be replaced by seven new aircrafts under operating leases. Moreover, the Company has eleven Boeing 787 aircrafts on order, seven of which will be purchased directly and four will be leased.
RJ is a market leader within the catchment area of the Levant, facing little competition. Jordan is also one of two Arab countries that flies to Israel, and RJ was the first airline to fly to Iraq after the second Gulf war. RJ currently has the highest number of flights to Iraq, but is constrained by the Iraqi Government in the number of daily flights it can have. Prior to the Arab Spring, RJ was using its strategic positioning in the region to its advantage, picking up Lebanese and Syrian traffic.
Royal Jordanian as a company is in the last stages of growth and early stages of maturity in the product life cycle, and is doing a good job to maintain their position and improve it. Royal Jordanian was named the Arab “Airline of the Year” for 2010 by the Arabian Business Magazine for its quality service and future expansion plans. In positioning a product\ services in the product life cycle we need to find how the company are doing to maintain their position in the market and not to decline, so they need to be strong among their competitor and keep their market share and increase its prices and services and that’s what the royal Jordanian are doing. Royal Jordanian operates flights from Jordan to 59 cities across the globe, facing direct competition in only 28 of those destinations. so they are working so hard to keep their market share. RJ operates one of the youngest fleets of aircraft, and currently is undergoing a modernization of several...
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