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AVIANCA

ERRC

ELIMINATE

MATRIX

RAISE

The num ber of Aircraft by


purchasing
50 new Airbus.
Elim inate full m eals on short
flights in econom y class.
Increasing
Eliminate presence in Low traffic
routes.

Aircraft occupancy
Im proves online sales
channel.
Im prove custom er service.

REDUCE

CREATE

M arketing investm ent that is


above average.
Renegotiating the fixed
costs paid at the airports.
Sim plify and integrate the
operational processes.

Create W EB check-in For self


serve
Partnering with airlines in
Central and South Am erica.
New routes with high dem and.
LONDON- Non stop.
Create a new loyalty program .

Avianca is the leading company in the commercial airlines industry in Colombia and South
America. It specializes in the transportation of commercial passengers as well as cargo. In
2013 the company recorded revenues of USD $ 2.4 Billion. It has 18,000 employees. In
2009 Avianca underwent some organizational changes, and merged with TACA airlines. As a
result of this merger it was necessary to implement some initiatives presented in the ERRC
Matrix. This company is in a red Ocean with strong competitors in the industry.

Eliminate
1-The company should consider eliminating full meals on short flights in economy class.
This would minimize the in-flight services that add no major value to the customer experience.

Instead light refreshments could be offered and the cost savings could be transferred to the
customer
through
better
ticket
prices
on
highly
competitive routes.
The market trend is to lower ticket prices on routes of high demand and keep operational
costs low by eliminating in-flight meals. This strategy seeks to protect the company from losing
its competitive advantage in the industry and with its customer base.
2-Eliminate presence in Low traffic routes that makes the company incurring losses.
Raise
1-Increasing the number of its aircraft by purchasing 50 new Airbus A320s. This strategic
option gives Avianca the opportunity to optimize the security of its operation as well to sustain
the highest possible number of aircraft flying hours. Having a fleet of new aircrafts in excellent
condition makes the company also more competitive in terms of fixed costs.
2-Increasing aircraft occupancy: Increasing last minute sales promotions to domestic routes.
This Strategic option protects the competitiveness of the company.
3-Improve online direct sales channel. This strategic Option increases the airline power
and ability to bargain down the commissions of
ticket sales agents.
4-Improve customer service by improving punctuality also flight entertainment. (Trend)
Reduce
1-The marketing investment that is above average. This is a trend to protect the company
from unnecessary cost to support competitive position.
2- The airline should consider renegotiating the fixed costs paid at the airports and
destinations they serve, while seeking to negotiate costs with other low-traffic airports. Is a
Strategic option: Having lower fixed costs can give a competitive advantage to the company,
allowing it to launch promotions with lower prices on highly competitive routes.
3-Simplifying and integrating its operational processes. Strategic option: This would
improve the airlines productivity while streamlining its operation, maximizing its resources,
lowering costs and increasing profitability.
Create
1-Create WEB check-in For self serve to access to services.
This Strategic option
added value to the customer also minimizes Aviancas dependency on the number of staff
required for check in purposes and ensures that the final channel - the client indirectly
contributes to the airlines goal of reducing operational costs and passing some of these cost
savings to the customer.
2-Partnering with airlines in Central and South America. This Strategic option would
protect the company from new entrants in the industry. making it possible to cover routes
not currently served.

3- Create new routes with high demand, for example Nonstop flights to LONDON. This
Strategic Options increases coverage and minimizes the entry of new competitors. Therefore if
AVIANCA becomes the main airline offering this direct service, it would be beneficial to the
overall profitability and market value of the company.
4-Create a new loyalty program. LifeMiles. This is a trend, generally improves the
customer service experience of the average passenger. They gain the loyalty of frequent
travelers.