Project risk Managemnt final Report

T r a n s f e r r i n g R i s k s I n t o S u c c e s s P a g e | 1

Project Risk Management

Names : Mohammad Haider Haroon (1384306)

Muhammad Shehzad ( 1395125)

Samir Mirza (1384300)

Muhammad Waqas (1384337)

Section: MPM-2B

Instructor: DR Moin Uddin

Subject: Project Risk Management

Type: Project Report

Report Name: Transferring Risks into Success: An Easy jet Case study

comparison to Pakistan Aviation (Airblue).



Content:

Abstract……………………………………………………………………………………………3

Introduction………………………………………………………………………………………..4

Aviation Terms……………………………………………………………………………………5

Facts & Figures of Easy Jet ………………………………………………………………………6

SWOT Analysis…………………………………………………………………………………...7

Success Story of Easy Jet…..……………………………………………………………………..8

Pakistan National Aviation Policy ................................................................................................10

Pakistan Airlines ………………………………………………………………………………...12

Risk Management Implication: Airblue (After 2010 Margalla Crash) ………………………….13

Conclusion……………………………………………………………………………………….14

Bibliography……………………………………………………………………………………..15



Abstract

The following paper looks into the airlines of two different countries as a case study, narrating

the element of risk taken by airlines management to overcome the difficulties they faced and

making the airlines a success story later on. The paper then highlights the SWOT analysis of

UK’s Easy Jet Airline, looking into its successful transformation of threats into opportunities

with element of risk management. Later paper sees the national aviation policy of Pakistan and

then commercial airlines of Pakistan. Paper furthermore looks the case study of AIRBLUE

Airlines who successfully takes risk management step on the lines of UK’s Easy Jet and came

out of trouble. Lastly the paper concludes with overview of how risk management overtakes in

both scenarios and makes the cases a success story.

KEY WORDS: Commercial Aviation, Wet lease, Civil Aviation Authority (CAA), Risk

Management Implications, Low Cost Carriers, Settlements.



Aviation Terms:

Wet Lease: A wet lease is a leasing arrangement whereby one airline (the lessor) provides

an aircraft, complete crew, maintenance, and insurance (ACMI) to another airline or other type

of business acting as a broker of air travel (the lessee), which pays by hours operated.

Dry Lease: Rent Aircraft, without fuel, pilots, or general flight expenses. You have operational

control of the flights. Keep the aircraft with you on trips, no worries to “dead head” the aircraft

to home base.

Load Factor: It is generally used to assess how efficiently a transport provider "fills seats" and

generates fare revenue.

CAA Pakistan: Civil Aviation Authority of Pakistan: A government body that regulates civil

aviation in Pakistan.

LCC: Low Cost Carriers: An airline Model which is considered to have relatively low pricing

then other airlines. No meals are offered in-flight. Narrow body planes are used for it. Reverse

Pricing System is used in it.

EPS: Earnings per share (EPS) is the monetary value of earnings per each outstanding share of a

company's common stock.

Reverse Pricing System: In aviation it is the earlier you book a ticket the more cheaply you get.

Encourages online buying of tickets more.

Legacy Airlines: High quality airlines, having business and first class. They also have full

services compared to very few in LCC variants.

Narrow body: It’s a type of aircraft which carries passenger in range of 150 to 200. It travels in

short haul routes and is twin engine aircraft.

ICAO: International Civil Aviation Organization



Introduction:

Aviation Sector in United Kingdom witnessed an emergence of new type of airlines model in the

shape of Easy Jet. Easy Jet was a basic idea of a Greek entrepreneur Sir Stelious Haji Loanou.

He, in the Mid 90’s was the mastermind of starting an airline venture which would cost very low

for the flyers. The target of the airlines was to cater business class who wanted to travel from

point A to B in quick time and obviously significantly less rates the normal airlines operating in

the country. The Airline became a great Success in 2 decades time. It sees that how weaknesses

were converted into opportunities and hence later a success story in aviation of UK.

The paper then looks in the current National Aviation Policy of Pakistan and as well as the new

upcoming aviation policy of 2014-15 of Pakistan. Seeing various aspects of the nation policy

briefly comes the turn of Pakistani Airlines operated currently. Lastly Airblue has been

compared with the case study of Easy Jet as after a major accident in 2010, Airblue went on the

back foot and had to take some risk taking steps to come out of trouble and lately lead towards

the airlines getting back on track and lately started making good profit on domestic and

international sectors.



Facts & Figures of Easy Jet:

Initially Easy Jet took the skies with 2 wet lease Aircrafts of Boeing on wet lease term. The both

aircrafts were Boeing 737. It was in 1995 Easy Jet taken off. The risk of being a successful

airlines to grow in the aviation sector were less but the as risk was taken and it paid off.

In recent years, for almost 2 decades the concentration of Easy Jet has been narrow body

Aircrafts. From earlier Boeing 737 to now Airbus A319 and A320 aircraft, narrow body aircrafts

has been the work power of the airlines. At of recent October 2014, Easy Jet has 202 planes in its

massive fleet. Airbus A319 Aircraft stands at a total of 137 planes , the highest number of planes

by any airlines in the world & A320 stands with 65 planes with 87 brand new on order. Easy jet

has also acquired the latest state of art narrow body Airbus A320 NEO. Its order is of mammoth

100 jets with total of 187 planes on order. The latest NEO plane has more seats and is more fuel

efficient then earlier ones.

Easy Jet hands in hand with Ryan Air have been leading in Europe market for low cost carriers.

Easy Jets has expanded its route mostly all of the Europe connecting the European major cities

with the UK cities. With 134 destinations Easy Jet is constantly growing in number of routes. It

operates in 30 plus Countries. It is classified as UK’s Largest LCC and European’s 2nd largest

LCC. Easy Jet has more than 8500 employees and is based in Luton Airport London.



SWOT Analysis:

SWOT Analysis is as under.

Strengths:

• Connects to all the major destinations.

• A convenient airliner for the low budget traveler.

• Attractive pricing.

• Airport network & market share.

• Reserve pricing strategy.

• Encouraging internet reservations.

• Quick turnaround flights.

• Highly distinctive branding.



• Feature on television airline series.

• Website painted on the aircraft.

• Bright orange color.

• Catchy slogan: “Come on, let’s fly!”

Weaknesses:

• Cost base not as low as Ryanair.

• Brand vs. Legacy carriers.

• Seasonality of earnings.

Opportunities:

• Market growth.

• Further cost cutting.

• Increase in Fleet.

• Business passengers.

• Allocated seating.

Threats:

• Airport price increases.

• Labor unrest.

• Increasing complexity.

• Return of competitor capacity growth.

• Stagnant economies.

• Fuel price & currency movements.



• Air travel taxes.

• Accidents & failures.

Success Story of Easy Jet:

Easy Jet over past 2 decades has seen an immense growth in the UK aviation sector. The success

of Easy Jet lies in the statistics above mentioned. Passenger flown has seen a great increase in

years. The load factor of planes has been high compared to last year flown. The profit of the



airlines has also increased in the current time with last Net profit witnessed for 398 £. Sep 2013

statistics reveal that passenger flown were 60757809 with a load factor of 89.3% .This Load

factor clearly shows that airline has done a great work in filling up its seats for any route. The

Earning per share has also increased as time has gone by with latest of almost 101.3. Case of

turnover is also positive direction showing that the revenue generated in increasing as time

passed by. In Sep 2000 it was approx 263 million pound and recently it has been recorded with a

huge 4258 Million pounds turnover. Hence everything indicates that Easy jet has been a huge

success in recent years showing all the trends of statistics in positive direction.

Pakistan National Aviation Policy:

Pakistan National Aviation Policy was made in 2000 under the regulatory body of CAA Pakistan

(Civil Aviation Authority). Following are the highlights of 2007 draft which in addition is being

finalized for the 2014-15 National Aviation Policy of Pakistan.

CAA has the following VISION for commercial aviation in Pakistan.

“A progressive, liberalized, and efficient aviation sector based on competition and fair

opportunities; regulated to safeguard public & National interest, provide impetus to national

economy and to achieve international standards of safety and security”.

Following are the Objectives of CAA:

(a) To serve national and public interests.

(b) To comply with ICAO standards of Safety, Security and Regularity.

(c) To promote aviation sector in the country by allowing market forces to determine the price,

quality, frequency and range of air services options.

(d) To encourage development of passenger hubs and cargo transshipment hubs to support and

facilitate the objectives of National Transport Master Plan and National Trade Corridor.

(e) To regulate standards of services of airports and airlines.

(f) To separate regulatory function from all other functions of Civil Aviation Authority.



CAA looks into International Operations, Domestic Operations, and Charter Operation of all the

aviation related companies in Pakistan. It issues licenses to new airlines and also has the

authority to nullify operation if anything goes wrong with the company.

National Policy encourages private ventures such as Sialkot Airport to come and grow the

aviation sector in the country. The policy also encourages that institutes should come up to

develop a human resource for Pakistan in the field of commercial aviation such as pilots ,

engineers , technicians & Air traffic controllers Etc.

National Aviation Policy 2007 encourages civil military cooperation so that operations for

efficient sharing of civil and military airspace to make the operations cost effective and

convenient for all operators, coordination shall be effected between civil and military users of the

airspace. It also sees ground handling companies related with the airlines operations.

CAA looks into the security as well. Furthermore CAA issues pilot license when he/she is done

with initial flying for Commercial Flying License (CPL). CAA also looks into Accidents

occurred in aviation and seeks compensation given to victims families.

National Aviation Policy of Pakistan 2014-15



At current the new aviation policy is being prepared and drafted for the coming years ahead.

Apart from above mentioned areas the main focus of it is to bring investment in the following

areas of aviation sector:

Installing new equipment for aviation,

Up gradation for radars,

Encouraging new airlines.

Making new airports in new cities

Upgrading the existing airports with state of the art equipment.

Completion of New Islamabad Airport etc

Pakistani Airlines:

Pakistani aviation consists following 4 airlines.

1. Pakistan International Airlines

2. Shaheen Air International

3. Airblue

4. Air Indus

Pakistan International Airlines (PIA) is the national flag carrier of Pakistan. It is a full legacy

airline. Airlines have more than 30 operational aircrafts and flies all around the world to various

countries. 18000+ employees are the workforce of it.

2nd most prominent airline in Pakistan namely is Shaheen Air International. It has operational

fleet of 20 aircrafts including narrow body and wide body aircrafts. The airlines operate on major

domestic routes and concentrates internationally on Middle East sectors. The planes are

configured on all economy class and meals are swapped with snacks on domestic routes. All of

its planes are dry lease aircrafts consisting of Boeing 737, Airbus A320 and Airbus A330

aircrafts.

Airblue is the 3rd major airlines in Pakistan. It’s been 10 years since its operation began. The

airline performs domestic as well as some Middle Eastern routes. Airlines owns only 1 aircraft

rest 7 are mix of dry and wet lease. All the planes are in all economy configurations.



Lastly a relatively new airline in Pakistan skies is Air Indus. It currently has 3 dry leased Boeing

737 aircraft in operation. The airline is expanding domestically. It is also has the all economy lay

out. The airline is doing well in domestic sector with comparatively cheap tickets then all other

airlines have to offer.

A Shaheen B737-400 , An Air Indus B737-300 and PIA B 747 300 are pictured above.

Risk Management Implication: Airblue

(After 2010 Margalla Crash)

Airblue was growing at a good speed in the Pakistani aviation until the tragedy of

Margalla Crash took place in 2010. Air blue’s A321 Aircraft crashed into the hill of

Margalla killing all 152 passengers onboard. The report concluded up with the pilot

(Human) error being the root cause of incident. This accident has damaged Airblue a lot

as far as their customers were concerned. The load factor dropped immensely on the

respective routes flown by Airblue at that time.

Due to this accident Airblue had to use Risk management techniques to come out of the

trouble as the airlines was now making losses all over.

Airblue, on the verge of bankruptcy took bold steps to revamp its organization and hence

came out of the trouble in nick of time. Airblue withdrew from business and economy

seating to just all economy layouts on all its fleet. Airblue now started to focus more on

reverse pricing system, on the lines of Easy Jet so that it can attract more passengers.



The salaries of cockpit crew, management, engineers were also slashed in the range of 25

% to30%. All the employees had to work hard and get less salaries but it was later

undone when airlines started generating good revenues and profits.

Airblue was successful in settling arrangement of post accident money to 104 passengers

with Rs 5 Million. Remaining passenger’s cases are in court for settlement issue.

The airlines in the time of crises didn’t stop its operation and soon launched more routes.

Saudi Arabia routes of Jeddah and Riyadh have been of great success leading Airblue to

generate a lot of profits. The load factor on these routes has been above 90 %.

All in all Airblue did a good job to come out of trouble and with its good risk

management implications it succeeded to operate in difficult Pakistani Aviation Industry.

Conclusion:

Seeing both cases in the paper I would conclude that Project Risk Management

Implications play a very vital role. Aviation Industry is very much risk oriented. Airblue

example shows us clearly that the risk implications on correct time enabled the airline to

come out of trouble and later lead them to successfully compete with all airlines. Taking

risk is important. Risk taken on timely manner can lead towards a success.

If the Risk is not identified and coped at the right time, can lead towards a total disaster.

Had Airblue not taken the following risk coping strategies their company could go

completely bankrupt. Fortunately the case for Airblue was good and they tackled it

professionally. As for Easy Jet, the confident of the entrepreneur to take a initial step to

launch a low cost airline paid off massively. In 2 decades airline growth is considered one

of the best in the region. The way it opened a low cost mode of airline shows that if risks

are taken successfully with an aim to do something positive then sky is the limit.

It is a timely process and can take a lot of time but in the end success can overcome all

the time taken lately.



References:

http://124.29.236.151/Format2/Draft%20NAP.pdf

http://www.easyjet.com/EN/Routemap/

http://www.airblue.com/corp/about

http://i.dawn.com/2012/04/caa_investigation_report_abq202.pdf

http://www.caapakistan.com.pk/upload/AT/NAP_2000.pdf

http://tribune.com.pk/story/414387/2010-airblue-crash-around-50-families-yet-to-

be-compensated/

http://124.29.236.151/Format2/Draft%20NAP.pdf

http://www.easyjet.com/EN/Routemap/

http://www.airblue.com/corp/about

http://i.dawn.com/2012/04/caa_investigation_report_abq202.pdf

http://www.caapakistan.com.pk/upload/AT/NAP_2000.pdf

http://tribune.com.pk/story/414387/2010-airblue-crash-around-50-families-yet-to-be-compensated/

http://tribune.com.pk/story/414387/2010-airblue-crash-around-50-families-yet-to-be-compensated/

Project risk Managemnt final Report

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