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Key success factors

Aer Arann has created a new market by targeting public and encouraging them to consider air travel to be a form of leisure activity and not an all out luxury. A large share of the initial development and progress that Aer Arann experienced was because of the Public Service Obligation Routes it managed to attain from the Irish Authorities. This not only led to the development of the airline in the early stages but also gave way to increase the number of domestic routes that the airline operated on.

Public Service Obligation routes are subsidized by the government and €18. 5 million of the revenue that Aer Arann made in the last year was from government subsidies on these Public Service Obligation routes. Aer Arann managed to obtain four of the six operation contracts from the Irish Government to operate on a domestic basis in Ireland from Dublin to Sligo, Donegal, Kerry and the birthplace of Aer Arann, Galway. All in all, Aer Arann faces very diminutive competition in the Public Service Obligation routes it operates in.

The subsidies allow Aer Arann to save a large amount of money which would have otherwise led to loss for the airline. On the other

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hand, it cannot be denied that the cost for operating on commercial routes still remains very high. But Aer Arann has tackled that problem by exercising cleverly designed operating mechanisms that include third parties. For commercial routes, Aer Arann exercises cost saving by using understandings with third party suppliers in order to save on costs that would otherwise be a heavy burden on the organization.

Bulk discounts are obtained when purchasing aviation fuel from suppliers and airports. Besides this, Aer Arann has saved up in the very first step of its foundation. This has been possible by leasing its fleet of eleven aircraft from the aircraft manufacturer, ATR. The company is also realizing the importance of the internet and the role it can play in the increasing of the sales volume. For airlines in particular, services as basic as booking and as convenient as travel consultation have all come to the internet (Black Pool Borough Council, 2008).

Aer Arann is aggressively marketing its “aeraran. com” slogan to its customers in order to encourage more and more people to visit the website and make use of it since it allows Aer Arann to save up on even more sources while giving the customers the convenience of booking their flights and getting information regarding future flights directly from the website, anywhere in the world, at any time, without having to wait for a travel agent.

Major recent changes Air travel remains an ever growing industry. Even when international situations become critical, governments continue to encourage air travel because of not only the revenue it brings but also the sources of revenue it brings and the jobs it serves to create (Palepu, Peek, Bernard, & Healy).

However, the international scenario has not been in a high degree of favor for the airline industry with a recording of a mere 7% growth rate in the last year as more and more people choose to switch to trains and other cheaper modes of transport in light of the recent economic downturns. Yet the demand for air travel maintains an upward trend as people continue to choose air travel for business as leisure and statistics show over a billion passengers having used air travel in the previous year.

In times like these, in order to survive, an airline needs to change its operational mechanism in order to cut costs without losing customers. Aircrafts such as the Boeing 747 and other such carriers make air travel an affordable and convenient option for passengers (Kroo, I. , 1999). Also, it has become necessary to target the business class in order to keep the revenue rolling in because more and more people are choosing to establish their own businesses in the import/export industry.

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