Marketing plan of royal nepal airlines

6 June 2016

Nepal Airlines Corporation (NAC) which is one of the oldest airlines corporations in the south Asia region has not been able to compete with the airlines which have been in operation only since last decade. During the royal regime in Nepal, it used to be called as Royal Nepal Airlines Corporation. Currently, it is not being able to lead the market share and its market share has been eroding each time with the introduction of new airlines company in Nepal.

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This report has been produce with a view of making Nepal Airlines Corporation as competitive as other along with a dominant market position within the next 4 years. This report begins with analysing the current situation of NAC in which different product and services, competitors, different products and services, target customers, SWOT analysis and management team of the company has been discussed.

Objectivity of the marketing plan, strategy to achieve the objective and different marketing tactics and actions along with control actions are discussed in later part of the report. It is concluded that to obtain the objective of the marketing plan, the management has to focus on increasing the fleet size, increasing the level of customer service by the use of new technology and developing new market. 2. INTRODUCTION: It is a very essential for Nepal Airlines Corporation to have an extensive marketing plan to compete in the domestic and international aviation market. With increase in the number of domestic and international airlines in Nepal and increasing number of foreign investment, there is going to be a huge competition in Aviation sector in near future.

The objective of this marketing plan is to increase the international market share of Nepal Airlines Corporation in Nepal from 2.3 % (Nepal airlines market hits all-time low of 2.3%, ekantipur 2013) to 20% in 4 years. In this report, a comprehensive study of the airlines has been undertaken with company’s overview, current position, potentialities and clear analysis of the competition faced by the company from other airlines. SOSTAC model has been adopted as the theoretical framework in preparation of this report.

Details of the steps have been described in Appendix 1. Different models like SWOT analysis, marketing mix, budgeting, and Ansoff Growth Matrix has been used to make the report easy and understandable. 3.SITUATION ANALYSIS OF NAC.

Marketing audit is an important factor to be considered while making marketing plan. It helps to understand how different factors are affecting the product and services of a particular company. Similarly, possible target customers, strengths and weaknesses, different product and services from different airlines company that affects NAC are discussed. In this report, political, economic, social, technological, environmental and legal issues (PESTEL analysis) are discussed where relevant while analysing the current situation of NAC.

3.1 Product and services: Since its incorporation in 1 July 1958, Nepal Airlines has been in continuous operation in domestic and international level. It has been providing service to the citizens moving in and out of the country for employment, education and holiday purpose. It used to operate the mountain flights for the tourist visiting Nepal in early days but it ceased this operation due to lack of sufficient aircrafts. It has got only two aircraft Boeing 757 which are in operation since 1987 at international level. It has helped to connect the Nepalese people to the external world in late nineties when there were very few international airlines in operation in Nepal. Since the economic condition of airlines is very poor and due to lack of sufficient investment from government, it is unable to add new product and services. 3.2 Market and competition:

The Nepal Airlines Corporation, the national flag carrier airlines of Nepal, is in ailing condition since the last decade. The airline has got only two Boeings 757 to operate in International route since 1987. There has been no addition of any aircraft since then. It is only flying in four major routes Hong Kong, Kualalumpur, Doha and Bangkok via its hub Tribhuvan International Airport in Kathmandu. Since the aircraft are very old, there is disruption in the regular flights due to technical problem that often arises in the aircraft.

Sometimes both aircraft faces technical problems and airlines lost the market position. There are often questions on the reliability and punctuality of the airline. The market share of the company in the last decade has been shown in the diagram below. In the recent years, the condition has got even worse and the market share has gone as low as 2.7%.

Source: The Kathmandu Post, 5 august 2010
3.3 Competitors: International Airlines companies have been constantly threatening Nepal Airlines directly and indirectly since its early days. Since there is only one International Airport in Nepal, it has been occupied by different airlines company and captured the lucrative routes. The major competitor of Nepal Airlines since its operation is Air India, the flag carrier airline of India. New Delhi being the transit point for Nepal to the third world, Kathmandu- New Delhi route is the busiest route for the Nepal Airlines.

Due to huge pressure from the airlines, Nepal Airlines has ceased its operation in this route. Similarly, Qatar Airways has captured Kathmandu-Doha route and Thai Airways has occupied the Kathmandu-Bangkok route. Due to this, only Kathmandu – Hong Kong and Kathmandu- Kualalumpur are only the routes that are under airlines control. In recent days, the introduction of Air Asia and Dragon Airways has significantly reduced the number of flights in these destinations by the airlines. NAC is unable to compete with other airlines due to technological advancement available in those airlines. 3.4 Competitor’s product: Most of the airlines has got diverse product.

Air India, Jet Airways, Qatar Airways and Thai Airways have extensive range of products. They have categorised their product as economy class, upper economy class and business class. Apart from this, they provide cargo facilities. Similarly Air Asia, operating as budget airlines, is providing cheap holiday tickets for leisure travellers.

3.5 Competitive advantage of NAC.
The most important factor that distinguished Nepal Airlines from other airlines is its cheap fare. The one way fare from Kathmandu to Bangkok can be available as cheap as Rs 11,828( Nepal airlines,2013) which is less than £100( £1=Rs133.70 as per exchange rate on 23 May 2013) (Nepal Rastra Bank,2013) whereas the price on same route in Thai Airways can cost up to Rs 22928 which is almost twice the fare. Similarly, the hospitality for the customers is regarded as one of the best in the world. Passengers can enjoy varieties of Nepalese dishes along with continental dishes.

Another important factor that helps to make it stand out of the crowd is due to its domestic service. Tourist can explore the high hills of mountain of Nepal by using its own small size aircraft from Kathmandu and other major cities. Other onboard service along with exclusive passenger gates and passport control at low fares enables it to become one of the most preferred airlines among various group of passengers. 3.6 Target customers: Since there is huge number of Nepalese communities living in places likes Hong Kong, Bangkok, New Delhi and Kualalumpur they are the real customer of the Nepal Airlines. They are more than happy to use their national flag carrier Airline rather than using other alternatives.

Apart from them, thousands of Chinese and Thai citizens who visited Lumbini, the birth place of Gautama Buddha, each year can be the regular customer of Nepal airlines. Similarly Nepalese youth working in countries like UAE, Malaysia and India, Nepalese students who are pursuing their higher education in cities like New Delhi, Bangkok and Kualalumpur are the customers of Nepal Airlines. Nepalese diplomats working in various Nepalese embassies, Government officials who often visit in international seminars and programmes, athletes, actor and actresses are the customers of Nepal airlines. 3.7 SWOT ANALYSIS

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