Volume 8 • Issue 2 • 1000341Arabian J Bus Manag Review, an open access journal
ISSN: 2223-5833
Research Article Open Access
Arabian Journal of Business and
Management Review
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ISSN: 2223-5833
Alabdulaal et al., Arabian J Bus Manag Review 2018, 8:2
Keywords
: Airline; Flydeal; Performance; Leadership strategy
Introduction
Strategic choice of Saudia Airlines: “Strategy is simply resource
allocation. When you strip away all the noise, that's what it comes down
to. Strategy means making clear cut choices about how to compete.
You cannot be everything to everybody, no matter what the size of your
business or how deep its pockets” by Jack Welch.
Overview of the regional market
e Middle East airline market is relatively new with a few
dominating regional players such as Qatar Airways, Emirates, Etihad,
Turkish Airlines and Saudia [1]. ese full-service airlines compete
in providing more routes and better services. However, the market
potential for low-cost carriers is quite untapped. FlyDubai, Air Arabia,
Flynas and Nesma Airlines are the major budget players. In 2015,
FlyDubai and Air Arabia recorded more than 170 million dollars in
net prot. Saudi Arabian carriers are not public companies and do
not disclose prots. According to the General Authority of Statistics
in 2016, Saudi airlines performed 219,482 ights serving around 55
million passengers. is is almost twice the cumulative numbers of
trips and passengers of all foreign airlines operating from Saudi Arabia.
For Saudi Arabia the 2000s was a decade of prosperity and growth.
e job market grew rapidly which was fueled mainly by the recovery in
oil prices [2]. Consumer purchasing power and willingness to pay also
had increased in 2006, when Flynas and Sama Airlines entered the Saudi
airline market. Prior to their entry Saudia Airlines held full monopoly-
it was the only Saudi air company. Sama Airlines, based in Dammam,
ceased operations in 2010 with 266 million dollar loss. Flynas, on the
other hand, still operates from two major hubs in Riyadh and Jeddah
performing codeshare service with Etihad and Pegasus Airlines,
oering baggage transfer and other services. e 2014 oversupply of oil
pushed down GDP of Saudi Arabia from 756 billion dollars in 2014 to 654
billion dollars in 2015. In order to diversify the economy and decrease oil
dependence, Saudi Arabia initiated large-scale transformation plan, Vision
2030. Tourism and logistics were identied as two sectors the Vision could
contribute in building and expanding. e drop of in purchasing power
increased the demand for low-cost carriers. And Saudia Airlines had
to make a strategic decision on how to adapt to the new reality-loss of
monopoly, availability of other carriers for some destinations, increased
savviness of the customers who can now easily compare prices and book
cheaper tickets via Internet. It became evident that the value airline
market in Saudi Arabia had emerged and there is there is a growth
opportunity there [3].
Learning from the US industry and making the choice
Saudia most likely had two major options for entering low-cost
air market-create a cheap ticket product line or create a value airline
ospring [4,5]. Interestingly, copying low-cost airlines along with
operating regular ights in the region is considered a new strategy
(Flynas, FlyDubai, Turkish Airlines); while it is well known that this
strategy have failed in the United States [6]. For example, Continental
Airlines and United Airlines attempted to replicate Southwest Airlines;
another example was JetBlue and their new ventures Continental Lite
and Ted. e new strategy did not work out for any of those companies.
e essence of the problem was that both airlines lost their competitive
advantage and could not duplicate Southwest business model despite
their extensive experience in running commercial ights, strong brand
recognition, well-established network and low transaction costs [7].
Research indicates that the failure is most likely to result from the
weak strategy and its implementation [8]. It turns out that running
low-fare airlines requires quite dierent structure, business model and
targeted customer segments when compared to legacy airlines. Legacy
airlines could not lower their operational costs via reducing waste. For
example, their operational model largely depends on baggage transfer;
while such service would never be demanded by low-cost customers
since they travel short distance with no transfer. In lean management,
waste is dened as the non-added value processes to the customers [9].
Hence, the customers dictate the value of services and processes that
airlines provide. Airlines companies are able to reduce services that do
not add values to the customers without losing customers [10]. Quite
the opposite, they are able to attract more customers who mainly look
at price when it comes to booking ights.
We would like to draw an analogy of copying a budget airline with
copying an electronic text. Using copy-and-paste functions allows
replicating the text very quickly. is works, however, only for copying
the full text. Trying to copy only a piece of text and pasting it into
another document oen leads to loss of coherence and meaning. In
this case the newly copied text would not deliver the same integrated
interlocked message and will not add the same value it had added
to the original document. us, in order to copy southwest and get
comparable results, one would need to copy all their business activities
that enabled them to provide low fares. For example, having cheaper
*Corresponding author: Haider A Alabdulaal, Student, Prince Mohammed Bin
Salman, College of Business and Entrepreneurship, Makkah, Saudi Arabia, Tel:
+966 125106111; E-mail: [email protected]
Received Febraury 18, 2017; Accepted May 18, 2018; Published May 31, 2018
Citation: Alabdulaal HA, Ghassab RA, Alkhalawi S (2018) Flyadeal: A Replicate of
Southwest or Continental Lite. Arabian J Bus Manag Review 8: 341.
Copyright: © 2018 Alabdulaal HA, et al. This is an open-access article distributed
under the terms of the Creative Commons Attribution License, which permits
unrestricted use, distribution, and reproduction in any medium, provided the
original author and source are credited.
Flyadeal: A Replicate of Southwest or Continental Lite
Haider A Alabdulaal*, Razan Al Ghassab and Salman Alkhalawi
Prince Mohammed Bin Salman, College of Business and Entrepreneurship, Makkah, Saudi Arabia
Abstract
According to Michel Porter there are two generic strategies-cost leadership and differentiation. Using the case
of a newly established Saudi airline company Flydeal we attempt to analyze how one of these strategies is selected
and applied in real-life business, instigate how activities and business processes are used to support the selected
strategy, try to identify sources of competitive advantage and discuss if the new company will be able to sustain it.
Citation: Alabdulaal HA, Ghassab RA, Alkhalawi S (2018) Flyadeal: A Replicate of Southwest or Continental Lite. Arabian J Bus Manag Review 8:
341.
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Volume 8 • Issue 2 • 1000341Arabian J Bus Manag Review, an open access journal
ISSN: 2223-5833
and older planes is not enough to reduce the costs and yield low fares. It
takes duplicating the whole interconnected realm of business activities.
Continental and United who provide full service might have failed to
copy-paste all of Southwest activities [11].
In business strategy, the more unique integrated activities a
business has the harder it gets to duplicate it [12]. High integration of
business activities enables the organization to achieve a good strategic
t between all of its actions and processes [13]. It also makes it easier
to achieve operational eectiveness, decrease waste and, consequently,
shrinks overall operating costs. us, southwest fully integrated
interlocked strategic system of activities empowered them to vividly
gain a competitive advantage over Continental Lite. e strategy of
organizations is about making choices and allocating resources to
serve these choices. Hence, it is sometimes hard to pivot away from
a strategy as resources were already directed to serve that choice. In
the case of Continental and United, they decided to compete in the
low-cost market by lowering their prices without developing a network
of activities that would empower them to achieve cost [7]. ey
introduced non-added values services to low-cost airlines travelers
such asmeals, baggage transfer, and business lounges. ey competed
only in operating excellence domain without reducing waste, this trade-
o of (services vs. low price) was not easy to achieve. Eventually, they
could not continue to protability compete as low-cost carriers [6].
On the other hand, implementation is about closing strategy
to performance gaps [6]. Hence, in low-cost airlines, this translates
mainly the capability of the enterprise ecosystem to pass a low price
to its customers as a result of achieving a cost leadership. In other
words, the strategy derives the implementation [8]. Hence, setting
the strategy to achieve a cost-leadership would relocate resources into
implementing activities that support the cost-leadership. In the case
of Continentaland United, they attempted to lower implementation
cost to achieve cost-leadership strategy which is quite hard task. In
conclusion, strategy dictatesimplementationbut not vice versa.
Saudia decided not to repeat mistakes of the US airlines and
selected to leave the current business as it create a rst in the market
value airline separate company with its own set of business activities
[3,4].
“Despite incredible growth, airlines have not come close to
returning the cost of capital, with prot margins of less than 1% on
average over that period.” e Economist, 2014.
Look on the decision through the lens of Porter's 5 FORCES
Looking at the strategic choice of Saudia through the lens of the
Porter's 5 Forces Model [6], we come to understand that the choice
most likely was the right one to make:
New entry threat: e Saudi airlines market, as the most airline
markets, is highly regulated. Barriers to enter and exit are very high
[14]. A new airlines business cannot be established quickly without
meeting many safety regulations and policies, etc. Moreover, the initial
investment is very high as the entrant has to hire an experienced crew,
lease planes and sign long-term contracts with airports. However,
Saudi Arabia is a ripe market and becoming more attractive, especially
with the swi implementation of vision 2030. As country becomes
more attractive for foreign investments, one of the global players may
decide to enter the market [15].
Buyer's power: e customers barely dierentiate between
dierent airlines [16]. e customers have a very strong power over the
airline company; they can easily switch to a dierent provider. In fact,
our market research showed that 88% of passengers in Saudi Arabia
were booking their tickets online mainly for convenience and to nd
cheaper fares. We also found that most passengers would not rank the
brand name of the airlines as a factor in booking their fares.
Suppliers' power: ere are very few suppliers of airplanes in the
world. e list of commercial aircra manufacturers is characterized
as an oligopoly; where few big major companies dominate the market;
mainly, Boeing and Airbus [17]. ese factors make it unattractive
for completely new players to enter airlines market. Manufacturers
have the power to dictate prices. In the same time, this situation will
not prevent an established global airline from entering the market.
For example, Turkish airlines having all needed connections and
experience in dealing with suppliers, as well as eet to be soon retired,
entered market of Kyrgyzstan via creating a low cost airline Pegasus-
Kyrgyzstan which was recently branded as Air Manas [18]. is entry
signicantly aected all other players as they all were full-service
airlines with higher ticket prices [19].
reats of substitutes: Saudi Arabia is building a network of
modern rail transportation system [20]. It will link major metropolitan
areas such as Makkah, Jeddah, KAEC, Yanbu, and Madina via Al
Haramain high-speed rail project. In addition, there is a new project
that would establish a new route between Riyadh and Jeddah. Travelers
will be able to take the train all for the established routes between
Dammam and Riyadh and all the way westward to Jeddah [21]. is
new modern rail transportation system, along with a 627,000 km road
transportation system could raise a threat to Flyadeal's competitive
advantage. For example, opening a high-speed train line between
Moscow and Saint-Petersburg in Russia dramatically reected on the
local airlines focusing on the transportation between these two mega
polices [22]. Currently, the plane ticket is oen cheaper that the train,
as the fast train provides more convenience without much travel time
dierence.
Competitive rivalry: Flynas, Nesma Air, and Saudia Airlines are
the only competitors inside the Saudi local market. However, Flyadeal
could leverage its existing business network of sister companies to gain
an edge on competitors in operational eectiveness. Saudia created its
ospring low-cost sister company not to compete against it; but rather
to integrate it with the bigger organization and increase its total market
share.
In short, sitting exclusively in the “premium” airfare segment
would be very risky for Saudia. e company had to nd a way not to
lose its market share to the rivals, potential newcomers and substitutes.
e Case for Flyadeal
Competitive advantage
“A competitive advantage becomes a sustainable competitive
advantage when other companies cannot duplicate the value a rm
is providing to customers” Chuck Williams (Founder of Williams-
Sonoma).
Flyadeal was established in 2016 and began operations in the last
quarter of 2017. It is characterized as a low-cost airline with major
hub located in the busiest airport in Saudi Arabia, King Abdulaziz
International Airport in Jeddah. Based on the market trends, we
hypothesized that a low cost airline is competing based on the cost
leadership strategy. In this case study, we are trying to analyze
information available on Flydeal to see if its activities support our
hypothesis and if the selected strategy well. To answer this question,
Citation: Alabdulaal HA, Ghassab RA, Alkhalawi S (2018) Flyadeal: A Replicate of Southwest or Continental Lite. Arabian J Bus Manag Review 8:
341.
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Volume 8 • Issue 2 • 1000341Arabian J Bus Manag Review, an open access journal
ISSN: 2223-5833
we will draw Flyadeal’s activities map to assess its value proposition
and the alignment between its key activities and its strategic goals.
en, compare and contrast its individual components to Southwest’s
business activities. Whereas, Southwest’s model is well described in
research [6], recreating the Flydeal’s business activities is not a very
straightforward task. Being a privately held company, Flydeal does
not disclose full information. Nevertheless, our extensive research of
their publications, business articles, and information available online
provided sucient data to establish the basis for the comparative
analysis.
“Flyadeal will focus on “delivering value for money to cost
conscious customers,” Saudia Director General Saleh Bin Al Jasser said
on the Twitter account (Appendix 1). He also claimed that “Flyadeal
will be a single class low fare carrier which means we are focused on
getting people from A to B for a fair price,” says its Twitter account
(Gulfnews). How is Flyadeal able to provide such a service while
maintaining some certain standard which customers are used to in
other airlines like Flynas (Appendix 2).
Flyadeal is focusing on servicing high demand domestic routes
only. is approach insures high capacity and trac on every ight
which takes o and contributes to ability to charge cheaper fares;
which is dierent than their cost leadership strategy as the former is
a nancial and operational result of the latter. At its launch in early
Q4 2017, Flydeal launched direct daily routes from Jeddah to Riyadh,
Dammam and Qasim. Hence, they are only capitalizing on busy routes
and attempting to achieve low fares brand recognition to achieve
market penetration.
Unlike its sister company Saudia, Flydeal targets the cost conscious
individuals who are willing to give up on certain services in order to
receive a cheaper fare (Appendix 2).
Flydeal introduced to the market “building your ticket” proposition.
e company lets passengers opt-out of certain paid services such as extra
carry-on baggage, baggage to be shipped, food, and option to choose a seat.
Flyadeal’s activity map
Using Flyadeal activity map, we could diagnose its competitive
advantage in the market and how it is able to connect its value
proposition to the activities while measuring the strategic t and the
boundary of activities (Figure 1). Based on our study and the publicly
available information, we discovered 5 major strategic positions of
Flyadeal: Limited passenger services, no airlines Alliance, based in
King Abdulaziz International Airport, lean and cost eective crew and
a provider of very low prices. We looked further into their operation
model, provided services and overall business model to identify further
minor activities (Figure 2). One may conclude that Flyadeal successfully
duplicated the Southwest model; yet, the rest of the problems should
remain in the implementation phase especially as they scale up their
business from 3 planes as of Q4 2017 to minimum of 25 planes in 2020
according to their expansion plan, which is a result of Flyadeal's goal
of decreasing running cost and leveraging the benet of having unied
planes, such as unied training for crew, lower maintenance and lower
cost of switching planes even in the same route.
e following activities support cost leadership strategy chosen
by Flyadeal. Unlike Nesma airlines and Flynas, Flydeal relies on a
standardized eet of Airbus A320; which means uniform maintenance
procedures and the capability of swapping planes when needed without
large operational loss. Smaller airplanes also lead to fewer passengers
and less gate turnaround which, in turn, decreases some of the airlines’
operational costs.
e concept of paying for baggage is new to the area but it could
prove to be attractive to customers who are price sensitive and willing
to give up that service to save money. is option could be executed
in tickets sales as a cash-back at checking out to further stress that
passengers save when not checking in baggage. Another example of
positioning as an airline helping customer to save money is discount
oered for buying tickets directly at the company’s website and for
buying tickets in advance. e colors, brand, marketing campaigns,
Figure 1: Flyadeal’s activity system.
Citation: Alabdulaal HA, Ghassab RA, Alkhalawi S (2018) Flyadeal: A Replicate of Southwest or Continental Lite. Arabian J Bus Manag Review 8:
341.
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Volume 8 • Issue 2 • 1000341Arabian J Bus Manag Review, an open access journal
ISSN: 2223-5833
website user interface, business model and all of Flyadeal’s strategic
activity seem to target younger population which is a growing segment
in Saudi Arabia, and traditionally is a price sensitive segment. However,
we also identied six activities which if not addressed could undermine
Flyadeal’s cost leadership strategy (Figure 2). ose activities are:
1. Paid seating options increases boarding time and gate time
expenses,
2. Current low aircra utilization rate-is a negative factor, however,
it is mainly due to the very young age of the company,
3. Operational eectiveness at Jeddah Airport-the airport is
outdates and has a lot of delays [23-26],
4. Daily limited routes
5. Cannibalization of Saudia (Mother Company) market share
which would raise a potential conict of interest with the mother
company.
As of last quarter of 2017, there were 103 Flyadeal employees
registered on LinkedIn and only 8 of them were previously employed
by Saudia. is indicates that Flyadeal is independent in its human
resources. e senior management did not come from Saudia; rather,
they were hired based on their experience in airlines consultancy
and low-cost airlines establishment. For example, the current chief
executive ocer, Con Koratis, was responsible for the establishment
of Jetstar Asia (LinkedIn). e rest of senior management also came
with regional or international experience with focus on low-cost
airlines business. Such team forming decision had important strategic
implications as management with specic experience in low-cost
airlines would be more capable of setting up the operations and in
tackling the potential conict of interest with Saudia while sustaining
growth of an independent o-spring entity.
e current low aircra utilization could be shied as the
company push for more routes assuming demand remains strong.
e operational eectiveness at Jeddah airport has been on the table of
many airlines and would not be solved completely till the opening of
the new airport, which is project to happen in 2018.
If we compare Flydeal’s and Soutwest’s activities map, then we
may conclude that Flyadeal's value proposition and activities are quite
similar to Southwest; which could indicate that Flyadeal has a good
chance of delivering its proposed value proposition and sustain its
competitive advantage in the budget airlines business as a cost leader in
the Middle East region (Figures 1 and 2). Moreover, it could retain and
sustain its competitive advantage if it leverages its relationship with
its sister companies. For example, if aggregate accounting prot was
positive but its cash ow was negative; then, sister companies could
extend the maturity of Flyadeal’s account balance.
One might be skeptic about the level of success such new carrier
could achieve without the existence of true independent market share
data. Based on our big data analytics, we found that Flydeal successfully
captured 5-15% of the low-fares market based on the internet search
index method (Appendix 2). Within its rst quarter and with the
current limited routes, Flyadeal celebrated its 100,000 passenger in
December 2018 (SaudiGazette).
Growth opportunity
Flyadeal’s CEO Con Koratis stated “Saudi Arabia and the region
at large, has a very young and digitally savvy population, who has
an increasing thirst for low fare travel domestically and across the
region” (ArabNews). Recognizing the multiple options available a
click away from their customers, Flyadeal’s main strategy is to appeal
to young Internet users as a provider for low-cost airfare. Saleh bin
Nasser Al-Jasser, chairman of Flyadeal and director general of Saudi
Arabian Airlines Corporation said: “Flyadeal is on track to provide a
comprehensive network that reaches all customers in Saudi Arabia and
Figure 2: Southwest’s activity map [6].
Citation: Alabdulaal HA, Ghassab RA, Alkhalawi S (2018) Flyadeal: A Replicate of Southwest or Continental Lite. Arabian J Bus Manag Review 8:
341.
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Volume 8 • Issue 2 • 1000341Arabian J Bus Manag Review, an open access journal
ISSN: 2223-5833
the region" (Arabian Business) In fact, we found that 88% of airlines’
customers were booking their tickets online where 40% booked their
tickets through mobile applications while the 48% booked them via
their computers based on our market research (Appendices 3 and 4).
With increasing demand [27], Flyadeal is working to expand
their outreach by creating more routes and recruiting more planes
of dierent sizes. Despite current focus on dominating the domestic
air travel market, Flyadeal also has an intention to expand and
internationally. Recognizing the large number of people from the
Indian subcontinent who reside in the Middle East, Flyadeal intends
to tap into this international market in the near future. In fact, 20% of
expatriates are of Indian subcontinent origins with a majority being of
a limited monthly income of SAR 2,500 (Saudi Expatriate). is target
segment would jump at the opportunity at low-cost airfare. is would
also appeal to corporations and entities employing expats from those
areas. Even with growth, Flyadeal intends to preserve its position as a
low-cost airline.
With increased government spending and interest from foreign
investors an upcoming positive trend in the tourism sector is
anticipated. Recent statistics reveal that annual visitors for Umrah
amounted to 8 million people and additional 3 million people came
for Hajj. According to projections by 2023 18 million will annually
come for Umrah, thus indicating the need for year-round demand
for ights (Wahbah). e number of inbound and domestic visitors
will remain controlled at 8.8 million with a compound annual growth
rate of 4.2% beyond 2016. It stands to reason for Flyadeal to position
itself in providing aordable means of transportation especially within
the MENA region where religious tourists hail from (Stats.gov.sa).
“Religious tourism is set to grow at an increasingly high pace with the
Kingdom investing around US$50 billion worth of project to upsurge
the number of Hajj and Umrah pilgrims over the next three years”
(Saadi).
A Euromonitor International Tourism Forecast report anticipates
a growth by 2020 within the Saudi Arabian domestic tourism segment
by 40%. According to the General Authority on Statistics, up to 94% of
Hajj and Umrah pilgrims visit to Saudi Arabia via air. e Kingdom is
actively increasing the airport’s capacity to 50 million travelers in 2020
and 80 million by 2035. e government plans to double this number
by 2020. Moreover, the tourism sector is experiencing a boom in
investment and growth encouraged and facilitated by the Saudi Vision
2030. According to the World Travel and Tourism Council, the travel
and tourism sector is expected to contribute 81 billion dollars to Saudi
Arabia’s gross domestic product (GDP) by 2026 (Arab News). Hence,
the need for aordable transportation will be increasing dramatically
in the next few years, which makes the Jeddah based low fare airlines
Flyadeal perfectly positioned for growth.
e strategy alignment to customers’ needs
An online survey was conducted and disseminated through social
media to understand customers’ needs. We found that Flyadeal, which
has been around for 3 months only, achieved penetration rate of
2%. Interestingly, Flyadeal CEO’s statement of a young online savvy
population is in fact validated by our survey. Results display that almost
90% of the population make their bookings online through a computer
or mobile application. is supports the Flyadeal’s tactics of avoiding
retail oces and travel agencies as a part of overall cost leadership
strategy. 80% of the survey respondents stated that price and timings
of ights were the main drivers of choosing one airline over another.
Around 70% of our sample showed approval of the limited passenger’s
services in handling baggage in exchange for lower cost. We also found
that overall 8% of respondents consider Flydeal as their preferred low-
cost airline. Since price and time of the ights were the major factors in
booking tickets, we analyzed survey results of preferred airlines versus
price and time (Figure 3). e price-time analysis gave us an insight
about the perceived customer value and suggested that Flyadeal’s
unique positioning in order to gain a competitive advantage over rivals
might work out.
Sustaining the Competitive Advantage
Flydeal’s marketing includes eorts to educate customers about
giving up some of the traditional airline services in exchange for
charging lower fares. is approach might be mimicked by local and
regional rivals. Such replication is very likely to increase the pressure
on Flyadeal to reduce its prices in order to protect its slogan and
market share as low-cost provider. is might trigger a price-war,
when everyone is losing in a short term, and those who can sustain
the losses survive and have a chance to thrive later on. It might be to
the advantage of Flydeal that all other airlines in the region are not
true low-costers. Being full service air companies, the rivals are not very
likely to succeed in copying Flydeal’s oering. We analyzed Flyadeal’s
value, rarity, costly to imitate and how those value are organized to
capture values and organized our ndings (Table 1). VRIO analysis
were used to investigate the value creation and if Flyadeal is sustaining
a competitive advantage.
ey are likely to be running into the fallacy of copying one single
aspect of Flydeal’s activity, for example, replicating product oerings
such as lower ticket price with baggage opt-out. It will be immensely
dicult for the rivals to be sustainable with copied oerings. Copy-
pasted oerings will not t into the activity systems of the existing
rivals and eventually they will have to raise prices. Flydeal on the other
hand, might be in a position to maintain low fares for quite some time,
because all activities and processes are intentionally designed for this
mode of operations.
Another aspect which will help Flydeal to sustain its competitive
advantage is relations with parent company Saudia airlines. is
gives to Flydeal quite clear competitive advantage in the selected cost
leadership strategy.
Figure 3: Flynas market position based on the price of the fares and the time
of the ights. The current fares are positioned to be cheaper than Flynas;
however, Flyadeal at the current stage is not providing many ights.
Citation: Alabdulaal HA, Ghassab RA, Alkhalawi S (2018) Flyadeal: A Replicate of Southwest or Continental Lite. Arabian J Bus Manag Review 8:
341.
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Volume 8 • Issue 2 • 1000341Arabian J Bus Manag Review, an open access journal
ISSN: 2223-5833
Resources and
capabilities
Value Rarity Costly to imitate Organized to capture value Value creation
Network of sister
companies
(Saudia airlines,
Saudia catering,
Saudia ground
services,
Yes Yes-It is very rare to nd or
establish such conglomerate that is
focus on airlines support.
Yes-The network involves ground
services, catering, nance, crew
training and airport management.
Yes-If those relationship were
leveraged to support the cost
leadership
Realized
Sustainable
competitive
advantage
Jeddah based Yes-Religious
tourism
No-With vision 2030 and easing
regulation, new airlines could enter
this ripped attractive market.
No-With vision 2030; we expect new
comers to uses Jeddah new airport as a
hub which could reduce their seed cost
Yes - Working from Jeddah airport
utilized most the sister companies
leverage and increase route
utilization.
Temporary
competitive
advantage
Limited passenger
services
Yes-Contributes
to cost leadership
strategy.
Yes-Most regional airlines offer
full services to some extent that
includes FlyDubai, FlyNas and
Nesma.
Yes-Full services airlines are not
positioned to market themselves with
limited services.
Yes Realized
competitive
advantage
Standard eet of
Airbus A320
Yes-Supports
controlling
operational cost
and time.
Yes-Most airlines in the region use
heterogeneous eets.
Yes-For existing rivals, switching and
training costs are high.
Yes Realized
competitive
advantage
No airlines alliance Yes-It reduces
obligations,
dependencies, and
gate turnaround.
Yes-Most regional airlines are
engaged in alliances.
No Yes Realized
temporary
competitive
advantage
Strict Website
Sales force
Yes-Market
research revealed
that % prefer
making their
bookings online.
Yes-Most regional players use
different channels (sales force,
travel agents & retail ofces)
Yes-It would require cutting contracts
with sales forces and travel agents,
close retail ofces and lay off staff.
Yes-Support lowering operational
cost which is a result of the cost
leadership strategy
Realized
competitive
advantage
Table 1: Flyadeal’s VRIO analysis.
Conclusion
Flyadeal carefully copied the low-cost business model while
adjusting for the local market. e company selected cost leadership
strategy; and consequently, passes discounted and cheaper ticket prices
to their customers to maintain its competitive advantage. Its business
activities, relationship and network support the selected strategy
and suggest that the company will be able to sustain the competitive
advantage over time. While Flynas and Nesma Airlines lost their
identity with time and became squeezed between the world of full-
service airlines and the attempt to deliver lower price, Saudia made
the right choice of establishing Flydeal as a separate company where
everything is set up to t the cost leadership strategy.
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Citation: Alabdulaal HA, Ghassab RA, Alkhalawi S (2018) Flyadeal: A Replicate of Southwest or Continental Lite. Arabian J Bus Manag Review 8:
341.
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Volume 8 • Issue 2 • 1000341Arabian J Bus Manag Review, an open access journal
ISSN: 2223-5833
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