Memo

All Nippon Airlines

Name of The Student

Institution

All Nippon Airlines (ANA) faced challenges of an incorrect financial forecast as AAJ ended its operation in October 2013 leading to the dissolution of a joint venture between ANA and AirAsia. AAJ strategy of low-cost energy failed to meet the Japanese market requirement and performed worse than all other Japanese LCCs due to internal disagreements with their partners the AirAsia. ANA was also unable to take advantage of the slot at Narita international airport by leverage it is AirAsia’s brand and resources which would have expanded its customer base and stabilized its development during the early growth face. The Japanese airline market had no online booking system hence AAJ faced difficulty finding local travel agents which had the main sales of flight tickets. Thus the alliance did little to address management of operations.

Both AAJ and AirAsia had a different view for the future of the LCC market. AAJ wanted to adopt practices used by AirAsia which was a proved model which had been texted and proved successful in the Asia market while AirAsia wanted to follow its successful LLC expansion strategy by focusing on cost reduction. ANA was focused on differentiation of LCC in the Japanese market with the aim of satisfying the market with the hybrid model. Due to these differences, AAJ was not able to achieve its goal of cost leadership and differentiation but instead spent much time trying to solve their disagreement.

New company crowded the LCC market in Japan leading to low customer base on the AAJ. Companies such as Spring Airline Japan which 33.3% owned by China begun to boom in the Japanese market which resulted in much losses for the AAJ.

Due to the challenges faced when choosing management strategy, other airlines like the Jetstar Japan benefited from the slot available at the Narita international airport leading to expansion of its market share which disadvantaged ANA.

ANA should continue with their management experiment phase in the LLC of ensuring premium quality flights with low cost. This is because their approach to airline business is sustainable and has already made great improvement as ANA is the largest airline in Japan. The company should permanently adopt this management strategy due to its competitiveness and sustainability because by ensuring lowest cost possible to provide the best quality, the company gets a competitive edge by attracting the customers and is able to remain in business as the low cost ensures that the airline is profitable thus it can sustain itself.

By adopting both low-cost approach and premium approach, the airline is able to target both luxurious customers and cost-conscious customers. This approach has led to much increase in the customer base of the airline. which have increased the profitability of ANA. By entering in the LCC market, ANA has a huge client targets of the holidaymakers, families, friends and normal cost-conscious customers rather than relying on few business class customers. The huge expansion of LCC markets to Europe and united states has provided ANA a potential market to.

 Reference

AirlineTrends » Innovative Airlines 2012: #10 All Nippon Airways. (2012, May 14). Retrieved from http://www.airlinetrends.com/2012/05/14/innovative-airlines-2012-all-nippon-airways/