AIR BLUE HISTORY

Established in 2003, Air blue is a private airline which offers passenger and cargo.
Transportations are both the domestic and foreign destinations. There are nine
destinations of Air blue. It is credited as the first private carrier of Pakistan to operate the
Airbus A320 and introduce e-ticketing, wireless check-in and self check-in kiosk
facilities. The major departments include: Human Resource, Marketing, Sales, Finance,
Operations and Systems Support and IT.
The size of the organization is not as huge as PIA and mostly comprises of young
employees. It is the first airline to have employees trained according to international
standards. It is technologically advanced though the size of the fleet is not comparable to
that of PIA. The fleet size of Air blue is eight.
The organ gram of the organization follows. It shows that the employees report to their
divisional heads that in turn are answerable to the Chief Executive Officer.

Is a private airline with its head office in the 12th floor if the Islamabad stock exchange
tower in Islamabad, Pakistan. It is Pakistan’s second largest airline with over 30% share
of the domestic market. Air blue operates scheduled flights operating 30 daily services
linking four domestic destinations and international services to Dubai, Abu Dhabi,
Sharjah, Muscat and Manchester. It carried 1.4 million passengers on domestic flights in
the 2008-2009. It was the private carrier of Pakistan to operate in the airbus A320 when it
initially started. Air blue has been expanding rapidly despite experiencing competition
from the other three airline operators in Pakistan.

The air blue was lunched it service in Quetta but due to some reasons it closed its
services in Quetta. But now the air blue has decided to again open it services in Quetta.
Vision statement

To provide exceptional customer services at low prices.

Mission statement
Air blue will be a cost effective airline aiming to provide
affordable and convenient air travel with luxury and elegance.

Marketing mix

• Product
• Price
• Promotion
• Place
• Processes
• People
• Physical evidence

I. Product:

1.1 Levels of products:

• The Core Product,

Which is the most basic level of the product i.e. the benefit that the
product offers, the basic of using the Air blue services are the convenient,
fast and high quality mode of traveling

• The actual level of product, The actual product is Air blue airlines, and having
the following characteristics:

1. Quality level: They are maintaining their quality mainly through all the
competitive advantages gaining strategies namely, their product
differentiation, service differentiation channel differentiation, image
differentiation and people differentiation.
2. The Augmented Level of Product: They provide high service
augmentations to their product i.e. product classification, individual
product design etc.
 1.2Range of services:
The range of service means the number of services provided. So,
Air blue provides the transport as well as cargo services and

• e-Ticketing :

Air Blue has introduced the concept of total e-ticketing for the convenience of passenger,
first time in Pakistan. E-Ticketing System is an online seat reservation service which
facilitates all the travelers that they can reserve their seats and also they can retrieve their
seat reservation and they can also postpone their reservation e-ticketing needs a lot of
high tech infrastructure and skilled employees which increases their cost and providing
high valued services.

• .Product attributes :

Product attributes like Branding, Packaging, Labeling and product support services. Air
Blue aims to focus passenger comfort at prices that offer value for money and that
explains its decision to have leather-upholstered seats in the Business class and offering
in-flight entertainment not offered by any other airline, including the PIA, on the
domestic sector. The airline has also made arrangements with quality caterer outside to
serve what it calls "exquisite cuisine" to the travelers.
• Cargo services:

Air blue offers more than 70,000 kgs cargo space on more than 18 fleet everyday. Their
certified Air blue cargo Agents book cargo directly on-line, saving time and cutting costs.
Air blue is proud to help businesses to ship goods faster and more reliable than ever
before. Pickup and drop-off centers are conveniently located near city airports. To
participate as an agent of cargo of air blue we have to fill the form on this website
address:

II. Price:
Generally price is the amount of money for which the customer is willing to
pay. From the marketers’ point of view, an efficient price is a price that is very close to
the maximum that customers are prepared to pay. In economic terms, it is a price
that shifts most of the consumer surplus to the producer. The effective price is the
price the company receives after accounting for discounts, promotions, and other
incentives.
PRICING OBJECTIVES:
A well chosen price should be planned to achieve some specific objectives;
Pricing objectives of air blue are given as under;

1. Achieve financial goals of the firm (i.e. profitability)

2. Fit the realities of the marketplace (will customers buy at that price?)
3. Support positioning and be consistent with the other variables in the
marketing mix.
4. Cost determination

Fit the realities of the marketplace:

(Will customers buy at that price?):

The prices set by Air Blue targeted the elite class including the business travelers and
vacationers. Its differentiated and quality services generated loyal and satisfied
customers. The prices by Air Blue have been set keeping in view the
competitive environment and customer buying patterns. The tickets by Air Blue
are affordable and economical to every customer and set by them after analyzing their
potential customer needs.

Support positioning :

(Be consistent with the other variables in the marketing mix)

As Air Blue aimed to position itself as a high end service provider, it offered premium
prices to the customers. This fit well with the image the company was trying to portray
viz. high quality services at a premium price. This is evident from Air Blue’s consistent
success despite its high prices. This shows that the target market of Air Blue is the upper
and middle class of the society that can afford luxuries.

Cost determination:

Cost set the floor for the price that the company can charge for its product. The company
wants to charge a price that both covers all its costs for producing distribution and selling
the product and delivers a fair rate of return for its effort and risk. A company’s cost may
be an important element in its pricing strategy. The Planes that Air Blue is using are all
reconditioned so that helps reduce the cost much but on the other hand they have been
providing high quality catering and efficient cabin crew with high language skills which
tend to increase their costs. Other factor affecting their cost is the e-Ticketing System
which is an online and paperless seat reservation service which needs a lot of high tech
infrastructure and skilled employees which increases their cost.
PRICING STRATEGIES OF AIRBLUE:
Air Blue is using the following pricing strategies.

1. Premium pricing:

Premium pricing also called prestige pricing, is the strategy of pricing at, or near, the high
end of the possible price range. People will buy a premium priced product because they
believe the high price is an indication of good quality. They believe it to be a sign of self
worth – “They are worth it.” It authenticates their success and status and acts as a signal
of people’s’ status and success. They require flawless performance in this application, the
cost of product malfunction is too high to buy anything but the best. In the airline
industry, PIA and Air Blue are offering a premium price as compared to their
competitors. Air Blue is a ‘full frill’ service despite its image as the contrary and superior
quality of their services is what differentiates them from competitors.

2. Penetration:

Penetration pricing is the pricing technique of setting a relatively low initial entry price, a
price that is often lower than the eventual market price. The expectation is that the initial
low price will secure market acceptance by breaking down existing brand loyalties.
Penetration pricing is most commonly associated with a marketing objective of
increasing market share or sales volume, rather than short term profit maximization. Air
Blue initially offered a penetration price. The ticket fares were relatively low, whereas
the quality of services was high when the company entered the market. The prices were
then increased as the company established a brand image.

3. Skimming:

Price skimming is a pricing strategy in which the marketer sets a relatively high price for
a product or service at first, and then lowers the price over time. It is a temporal version
of price discrimination/yield management. Until a few years back, PIA was offering
skimmed prices where the quality of services was not equivalent to the price being
charged for the tickets. Most of the customers did not receive a value for the money they
paid. Now, however, PIA has improved the quality of the services and is offering a
premium price. This kind of strategy is usually implemented when an organization
position itself in the mind of potential customers.

FACTORS TO CONSIDER WHEN SETTING PRICES:

Before setting prices here are some major factors which should be considered during
setting prices:
 1. Internal factors affecting pricing decisions:

The internal factors are;

 Marketing Objectives
 Marketing Mix Strategy
 Cost
 Organizational consideration

2. External Factors affecting Pricing Decisions:

In considering prices we should also considered some external factors which are
given as under:

 Nature of the Market and Demand

 Competition
 Other External Factors like promotional and special-event pricing

AIRBLUE FARES:
Air blue Airfares depend on the time you are making your reservation. Earlier
you make the reservation cheaper fare you will get.
To get the current fares for the trip of your choice, you will need to provide date and
flight details and you have to visit online reservations centre and select flight options to
see the available fares.
You save when you buy early: Save 10 to 90% on air blue flights just by planning ahead
and booking in advance.

Percentage discount given to children are shown in the following table

Category Age %age of discount
Child, 2-11 with seat 50% of Adult Full
Lap Infant Up to 2.5 years 10% of Adult Full
 AIRBLUE KARACHI-QUETTA
FARE YQ APT CED TOTAL
2,590 2,000 120 689 5,399 FULL
2,331 2,000 120 650 5,101 10%
2,072 2,000 120 611 4,803 20%
1,813 2,000 120 572 4,505 30%
1,554 2,000 120 533 4,207 40%
1,295 2,000 120 494 3,909 50%
1,036 2,000 120 455 3,611 60%
777 2,000 120 417 3,314 70%
518 2,000 120 378 3,016 80%

AIRBLUE QUETTA-LAHORE
FARE YQ APT CED TOTAL
4,420 2,000 120 963 7,503 FULL
3,978 2,000 120 897 6,995 10%
3,536 2,000 120 830 6,486 20%
3,094 2,000 120 764 5,978 30%
2,652 2,000 120 698 5,470 40%
2,210 2,000 120 632 4,962 50%
1,768 2,000 120 565 4,453 60%
1,326 2,000 120 499 3,945 70%
884 2,000 120 433 3,437 80%

AIRBLUE QUETTA-ISLAMABAD FARE

FARE YQ APT CED TOTAL
5,168 2,000 120 1,075 8,363 FULL
4,651 2,000 120 998 7,769 10%
4,134 2,000 120 920 7,175 20%
3,618 2,000 120 843 6,580 30%
3,101 2,000 120 765 5,986 40%
2,584 2,000 120 688 5,392 50%
2,067 2,000 120 610 4,797 60%
1,550 2,000 120 533 4,203 70%
1,034 2,000 120 455 3,609 80%

AIRBLUE QUETTA-FAISALABAD
FARE YQ APT CED TOTAL
3,210 2,000 120 782 6,112 FULL
2,889 2,000 120 733 5,742 10%
2,568 2,000 120 685 5,373 20%
2,247 2,000 120 637 5,004 30%
1,926 2,000 120 589 4,635 40%
1,605 2,000 120 541 4,266 50%
1,284 2,000 120 493 3,897 60%
963 2,000 120 444 3,527 70%
642 2,000 120 396 3,158 80%
III. Place :
Place refers to the location of service providers and their accessibility, which is not
related to only physical place but it also relates to distribution channels and other means
of contact and communications. For example, travel agents and other intermediaries etc

A. Distribution channels:

A distribution channel is a set of inter dependent organization involved in the process of

making a product or a service available for consumption by the final consumer.
Like other organizations Air Blue also uses intermediaries (TRAVEL AGENTS) to bring
their products to the market. Running an Airline is a kind of business which also needs a
distribution channel.

B. Number of Channel Levels:

Air Blue is using direct Marketing Channels as well as Indirect Marketing Channels.
Where direct marketing channel has no intermediary levels but direct relationship of
customer and service provider, while indirect marketing channels containing one or more
intermediary levels.
Air Blue uses an indirect marketing channel to reach its customers. It sells its products to
its consumer directly as well as through Travel Agents in all the major areas of Quetta
city.

C. Number of intermediaries

Air Blue Uses Exclusive Distribution which is, giving a limited number of dealers the
exclusive rights to distribute the company’s products in their territories.

D. Air blue routes:

Air Blue is currently operating in Karachi, Islamabad, Peshawar and Lahore as frequent
fleet and also daily fleet to Sukkur, Faisalabad, Gwadar, and Multan and internationally
Dubai, Abu Dhabi, Sharjah, Muscat, Manchester, Oman and UK. And planning to start
fleet to Saudi Arabia, Qatar etc

Air blue Quetta Routes:

• Karachi – Quetta
 • Quetta – Lahore
• Quetta – Peshawar
• Quetta – Dubai
• Quetta - Manchester

IV. Promotion:
This includes various methods of communicating with markets. The major
methods of promotion are:
1. Advertising
2. Personal selling
3. Sales promotion
4. Publicity
5. Public relations

Since, air blue uses the following two methods of promotions;

1. Sales promotion:
 Sales promotions are rebates or discount of money during purchasing of services or
products. Major sales promotion tools are;

Cash Refund Offer (Rebates):

Air Blue offers a complete cash refund on cancellation of tickets prior to 24 hours of
departure; the refund will be shown in full as a separate item in passenger sales history
report. And within 24 hours of flight departures, a penalty of Rs. 300 applies.

Advertising specialties:

Useful article imprinted with an advertiser’s name, given as a gift to consumers. Air blue
gives key chains and toys as souvenirs to their passengers during the flight.

V. People:
Two types of people are included in service organizations which are;
 Service producers
 Administration personnel
Air blue utilizes personnel utilities regarding their services as in their organization chart
given as under:
It is the first airline to have employees trained according to international standards. It is

technologically advanced.

The organo-gram of the organization shows that the employees report to their divisional

heads that in turn are answerable to the Chief Executive Officer.

VI. Physical evidence:

This includes the following elements like;

Physical environment:

Furnishings, colors, layout, noise of airplanes as well as offices are all very best provided

by Air blue to position their image in the mind of prospects.

Facilitating goods:

It enables the services to be provided like the food provided music during flight etc

Other tangible goods:

It includes packaging, tickets formats etc.