Marketing strategy of AZAL

MAMMAD RASHIDLI

M A RKE TI N G S TR ATE G Y
O F A ZE R BA I JA N
A I R LIN E S
INDIVIDUAL ASSIGNMEN T FROM
MARKETING

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28/11/2012 Marketing Strategy of AZAL – Analyzing 7P’s Mammad Rashidli

Table of Contents

INTRODUCTION ................................................................................................................... 3

MARKETING FOCUS ............................................................................................................. 3
Mission............................................................................................................................................................... 3
Values ................................................................................................................................................................. 4
Goals and Objectives ...................................................................................................................................... 4

PRODUCT ................................................................................................................................ 5
Azerbaijan Airlines........................................................................................................................................... 5
Silk Way Cargo Airlines .................................................................................................................................. 6

PLACE ....................................................................................................................................... 7
Internet .............................................................................................................................................................. 7
Corporate Travel Agents ................................................................................................................................ 7
Direct Sales to Corporations .......................................................................................................................... 7

PRICE ....................................................................................................................................... 8
Competitors and Partners ............................................................................................................................... 8

PROMOTION ........................................................................................................................ 10
Business and Travel Magazines, Outdoor Advertisement ...................................................................... 11
Branding .......................................................................................................................................................... 11
Frequent Flyer Program: AZAL Miles ....................................................................................................... 11

PEOPLE .................................................................................................................................. 12

PROCESS ................................................................................................................................ 12
Market Penetration ........................................................................................................................................ 13
Market and Product Development ............................................................................................................. 13

PHYSICAL EVIDENCE ........................................................................................................ 14
Awards and Reviews...................................................................................................................................... 14
Destinations .................................................................................................................................................... 15
Renewed fleet ................................................................................................................................................. 16

CONCLUSION ....................................................................................................................... 16

REFERENCES ....................................................................................................................... 17

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INTRODUCTION
A comprehensive 7P description plan for Azerbaijan Airlines particularly
focuses on its services, product differentiation, and price and customer
segments to ensure airline’s survival and quality status on the available
services provided by two main competitors – Aeroflot and Turkish Airlines.

The objective of this individual assignment is to asses marketing information
about Azerbaijan Airlines (AZAL). The task undertaken begins with
marketing focus, overview of the company, its products, competitors and
partners, services and advertisements. This information is being written in
order to better understand where Azerbaijan Airlines should focus its
marketing campaign and how it should differentiate its product. In
conclusion, the assignment will be finalized with an overall summary of the
company situation and its future marketing activities.

MARKETING FOCUS
Azerbaijan Airlines strategic
marketing plan for the future is
focusing on promote as the most
favorable airline in the local,
ex-Soviet and European market
by capacitating its brand name
and creating better attention of
the airline website and its
products amongst the
communities and businesses.

MISSION

The mission of Azerbaijan Airlines is to become a leading air carrier with
regional network coverage, thanks to its high quality of flight safety,
reliability, flight controlling, service quality and competitiveness while
maintaining its identity of the flag carrier of the Republic of Azerbaijan.

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VALUES

Flight safety and customer service are two crucial values that it is impossible
not to mention; thanks to the high quality service Azerbaijan Airlines
maintains its identity of being national flag carrier. Providing cheaper tickets
than competitors without any compromises and maintaining this process in
regular basis is another important value that Azerbaijan Airlines tries to
maintain. Having achieved great success in ranging from marketing, sales,
customer service, and ground operations, Azerbaijan Airlines took its place
among the giants of the ex-Soviet Republics aviation sector. Having high
quality and safety leads Azerbaijan Airlines to increase in passenger
numbers.

GOALS AND OBJECTIVES

One of the main goals of Azerbaijan Airlines is to become most favored
carrier on inland and international flights for both leisure and business
passengers. Linking other major cities in Europe and Asia between
Azerbaijan through hub Baku is another main goal of the company.

Stating about the main objectives, Azerbaijan Airlines mostly concentrates
on budget maximization. It includes increase revenue from flights and in
business segment in order to keep financial status high, aid to future growth
of company, and last but not least, to secure its product in world aviation
market.

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PRODUCT
Since beginning of functionality,
Azerbaijan Airlines provides
comfortable economy and business
class travel for their passengers to
every destination from hub Baku.
Constantly, Azerbaijan Airlines
improves its economy and business
class to the highest level possible, to
gain the leadership in competition
with its major competitors.
Azerbaijan’s national flag carrier offer several services and broad benefits
that differentiate it from other airlines; such as space between seats,
comfortable seats, and in-flight services by providing authentic gestures. For
example in flight magazines contain information about Azerbaijan and meal
services to the existing economy and business class passengers.
Airline’s innovative and qualitative approach must be seen and positioned
on the target market as it meet the needs of both leisure and business
travelers. According to Central Asian Cellular Forum, from the year of 2012
Azerbaijan Airlines signed contract with “Nar Mobile” to provide in-flight
communication system. By the availability of this feature passengers can
make in-flight calls, send SMS, and surf on the internet using “Nar Mobile”
network. (http://3gca.org/nar-mobile-enables-in-flight-phone-calls-on-
azerbaijan-airlines/, 2012)

AZERBAIJAN AIRLINES

After the fall of Soviet Union Azerbaijani state announced to set up its own
airline being independent from Aeroflot, the long-time provider of air
services for the Soviet Republics. Being member of International Air
Transport Association, Azerbaijan Airlines has been founded on 7th of April
1992. Its main base is Heydar Aliyev International Airport.
(http://www.azal.az)

In November 1994, Azerbaijan Airlines started to broaden its destinations.
Following this expansion Azerbaijan Airlines added several major cities like

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Dubai, Istanbul, Tehran, Tel-Aviv, London, and St. Petersburg to its route
map. (http://www.azal.az)

An information from Center of Aviation says, Azerbaijan Airlines is
Azerbaijan’s leading carrier with about a 43% share of capacity in the
country’s international market. The flag carrier accounts for 46% of
international capacity (seats) at Baku, according to Innovata data.
(http://centreforaviation.com/)

In 2008, Azerbaijan Airlines has kept its position ranked as one of the
fastest-growing airlines in terms of capacity and traffic growth. When
considering the economical crisis affecting many European Carriers and
leading them to decrease their operations; Azerbaijan Airlines did not face
with heavy consequences.
Baku Heydar Aliyev International Airport international capacity
by carrier (seats per week)

Source: CAPA – Centre for Aviation &
Innovata

SILKWAY AIRLINES

Silk Way Airlines is a cargo airline based in Baku, Azerbaijan. It is head
office and flight operations are in Heydar Aliyev International Airport. The
company was founded in 2001 and offers cargo services linking Europe to
Asia. Airline’s name refers to Silk Road which is a trading route between
two continents.

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PLACE
Azerbaijan Airline uses a Multi-level marketing strategy to make sales. This
Multi-level marketing strategy contains direct sales and indirect sales
through the internet and corporate travel agencies.

INTERNET

Using internet sales in
order to attract leisure
and business travelers,
Azerbaijan Airlines
selected its one of the
best strategy.
With renewed website
AZAL tries to attract
more people and it
will allow direct sales
from website.
This way of sales
allows cheap and
efficient distribution costs. New designed website allows customers to
interact with operator directly through internet. As other airlines do,
customers also can make reservations for their flights and online purchasing
payment. In addition, website also shows detailed information on offers.

CORPORATE TRAVEL AGENTS

Azerbaijan Airlines offers to its customers a distribution channel to make
their reservation. It is another advantageous point.

DIRECT SALES TO CORPORATIONS

In order to gain attention and attract corporations, Azerbaijan Airlines
contacts the travel departments of corporations and businesses to agree on
new contract. To realize this, airline manages a team that will deal with the

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building of relationships. Direct sales to corporations’ policy will help
Azerbaijan Airlines to greatly differentiate itself and underline the benefits
of its product compared to competitors.

PRICE
The main goal of Azerbaijan Airlines is to maintain price leadership by
offering lower flight prices to its travelers. While maintaining leadership,
pricing helps AZAL to achieve its financial goals, for example making
profit. Following table shows the price difference in AZN (Azerbaijani
Manat) and in Euro between Turkish and Azerbaijan Airlines on Baku-
Istanbul-Baku flights:

AIRLINE DATE PRICE DIFFERENCE
200 AZN

01/02/2013 197 EUR 77 AZN
10/02/2013 277 AZN 75 EUR

274 EUR
Information source: (http://azal.az/, 2012)
(http://www.turkishairlines.com/en-tr/, 2012)

Based on this table, passengers travelling to Istanbul would be willing to buy
Azerbaijan Airlines ticket. Having lower prices, AZAL doesn’t act as
substitute for absence of product quality, and it can be viewed consistent
with other competitors in aviation market. Some ways of promotion may
affect the price, however to maintain regular price, AZAL will not support
any extensive marketing promotion campaigns as it costs high amount of
money; i.e. T.V. ads.

COMPETITORS AND PARTNERS

Recently, Azerbaijan Airlines started to operate to Istanbul’s second airport,
Sabiha Gokcen. Signing code-share agreement with Turkish LCC Pegasus
Airlines, which is based in Sabiha Gokcen, made this project to come true.
This agreement between two airlines involved reciprocal mileage

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accumulation benefits for passengers travelling on both of the airlines.
Having less LLC penetration with 2%, Pegasus Airlines doesn’t operate to
Azerbaijan. Like most other Central Asian countries, Pegasus is unable to
launch services to Azerbaijan due to bilateral restrictions. But Pegasus is
willing to forge partnerships with local carriers such as Azerbaijan Airlines
to access new markets.

The AZAL - Pegasus partnership will bring beneficial financial results to
both companies in both local Baku - Istanbul market and great Baku -
Europe market as Pegasus cover large European network offers connections
from Sabiha Gokcen International Airport (SAW). In this case, this
partnership will allow efficient competition between Turkish Airlines.

As the largest foreign carrier in Azerbaijan, Turkish Airlines is now well
positioned to carry a large share of traffic between Azerbaijan and Europe,
particularly markets which are not served non-stop by any carrier.
While being outside of the European Union, Azerbaijan signed a horizontal
agreement with the EU in Jul-2009 which removed nationality restrictions
within the existing 19 bilateral air services agreements it had with EU
Member States. Under the agreement, any Azerbaijan or EU carrier can
operate services between any EU Member State and Azerbaijan if there is an
existing bilateral air services agreement.
(http://centreforaviation.com/analysis/azerbaijan-airlines-expands-network-
as-azerbaijan-aims-to-raise-tourism-profile-75963, 2012)

Partnership agreement provides individual airlines to handle passengers with
tickets purchased from partner airlines and register these passengers and
their belongings once. Under these circumstances, passengers buying tickets
from Azerbaijan Airlines may also travel with partner airlines and vice
versa. This opportunity provided helps passengers to travel easily. Following
airlines are the major partners of Azerbaijan Airlines:

(http://azal.az/en/company-partners/, 2012)

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PROMOTION
Azerbaijan Airlines promotional strategy is to keep target customer in mind.
The flag carrier is not going to spend time and money on ineffective
advertisements such as advertisements on Television channels. Other types
of promotional strategies in order to maintain the company name is to
increase sales promotion, participating in business trade shows, promoting
the airlines directly to the target audiences. One of the major promotion
campaigns of Azerbaijan Airlines is promotion its product on social websites
like Facebook and Twitter.

The picture on the
right shows the
official page of
Azerbaijan Airlines
with 5430 fans.
105 people are
talking about this
page.

Picture on the left
illustrates airlines
official Twitter
page. It has 322
followers.

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BUSINESS AND TRAVEL MAGAZINES

Currently, Azerbaijan Airlines is not highly concentrated on advertisements
on magazines and billboards. Important part of the marketing strategy is
going to be focused on advertising with leading corporate and travel
magazines. Azerbaijan Airlines plans to advertise on billboards and
underground posters as well.

BRANDING

Rapidly growing fleet and new innovations show to its customers
through high quality, the airline implements solutions of growth and
development. Based on these values Azerbaijan Airlines will get
success and takes steps forward to become global airline and brand name
recognition.

Azerbaijan Airlines tries to keep its brand image in
the region with its logo and unique slogan “We are
created for you” which has been used in
advertisements for quite some time. Azerbaijan isn’t
investing on promotions. It tries to keep brand image
by showing high quality of service and by making
special offers.

Azerbaijan Airlines is trying to keep its brand image by sponsoring
AZAL Professional Football Club.

FREQUENT FLYER PROGRAM: AZAL MILES

Azerbaijan Airlines provides with an opportunity
of enjoying the bonuses and benefits on its flights
to its customers. Flying with Azerbaijan Airlines,
points will be added corresponding to distance of
journey. Members earning certain number of
points will get free baggage allowance (economy
class 1 piece 23kg, business class 1 piece 32 kg),
free upgrade from economy “Y” to business “C”

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class, and free airline ticket. On birthdays and public holidays of the
Republic of Azerbaijan, the Participant using Gold and Silver cards shall
receive additional points.
(http://www.azal.az/en/azal-miles-view/19/, 2012)

PEOPLE
The most important “P” in Azerbaijan Airlines is People. Main services like
selection, training, and motivation of employees are provided by people. In
providing service, flight hostesses at Azerbaijan Airlines come in contact.
However cockpit crews are the employees who contribute to the service
product but do not come in direct contact with customers. Air hostesses in
Azerbaijan Airlines posses a pleasing personality with polite service
handling. The front line staff at Azerbaijan Airlines plays a core role to
guarantee that the service is delivered to the passengers and customers as
warranted. This issue increases some amount of reliability and influences
responsibility of the crew which is expected from customers. Main goal of
front line staff is to show empathy to customers by listening, adaptation and
being flexible. After achieving targets employees get several kinds of
bonuses.

PROCESS
Azerbaijan Airlines process services emphasize involvement of front line
staff, travel agency offices, tour operator offices, and other services that
helps to reach users easier. The process starts from reservation until
confirmation of seats. The reservation is possible from all system in the
world. Customers get assistance about booking by giving their details.
NEW TERMINAL
Airport facilities like baggage handling, flight information
and etc. are organized in a way that customer feel
comfortable themselves. This helps to deliver high quality
service.

Providing high quality of in-flight services like meal
service, entertainment, newspapers and magazines, and convenience enables
the travelers to have a pleasant journey.
All these procedures are followed to deliver quality service.

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MARKET PENETRATION

Developing new in-flight services is major action that can differentiate
Azerbaijan Airlines from others. Arranging different in-flight product, such
as hospitality, catering can attract more travelers to travel with Azerbaijan
Airlines. Communication system like in-flight entertainment and planned
future project of in-flight communication is a major advantage of Azerbaijan
Airlines.

MARKET AND PRODUCT DEVELOPMENT

Azerbaijan Airlines has great opportunities to expand its routes to connect
major cities of European and Asian countries.

Product development focuses on renewing fleet and creating new long
flights from Baku.

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PHYSICAL EVIDENCE
Environment of service delivery and the place where the service industry
and customer interact is called physical evidence. Comfortable seating and
in-flight food and entertainment at Azerbaijan Airlines, can be mentioned as
physical evidence.

Azerbaijan Airlines mostly uses Boeing and Airbus commercial aircrafts.
The seats are comfortable and have enough leg space.

Construction of new Heydar Aliyev International Airport terminal will
increase the number of parking planes and passengers, enhanced with good
interior.

AWARDS AND REVIEWS

According to world leading airline rater SKYTRAX, Azerbaijan Airlines
is marked as three stars airline.
B767-300

Business Class
Economy Class

B757, A320/319, ATR72
Business Class
Economy Class

The average rating from 6 reviews is 7/10.
(http://www.airlinequality.com/Forum/azerbaijan.htm, 2012)

The IATA Operational Safety Audit (IOSA) program is an
internationally recognized and accepted evaluation system
designed to assess the operational management and control
systems of an airline. IOSA's quality audit principles are
designed to conduct audits in a standardized manner.

Benefits

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With the implementation and international acceptance of IOSA, airlines and
regulators achieve the following benefits:

A reduction of costs and audit resource requirements for airlines and
regulators
Continuous updating of standards to reflect regulatory revisions and the
evolution of best practices within the industry
A quality audit program under the continuing stewardship of IATA
Accredited audit organizations with formally trained and qualified auditors
Accredited training organizations with structured auditor training courses
A structured audit methodology, including standardized checklists
Elimination of audit redundancy through mutual acceptance of audit reports
Development of auditor training courses for the airline industry
(http://www.azal.az/en/company-view/100/, 2012)

DESTINATIONS

Azerbaijan Airlines have 23+6 destinations. Airline tries to increase its
destinations. All of the destinations are direct flights, where 23 of them are
operated by Azerbaijan Airlines and 6 by code share agreement.

ROME

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RENEWED FLEET

According to Center for Aviation, Azerbaijan Airlines operates a widely
varied fleet with six aircraft types and two new aircraft types on order,
though it only currently operates just over 20 aircraft. The airline operates
three A319s, seven A320s, two A340, two ATR 42-500s, four ATR 72-500s,
four Boeing 757-200s, two 767-300Fs, and two 767-300ER. The airline also
operates one VIP A319 and 767-300ER on behalf of the Azerbaijan
Government. The airline ceased operating Soviet-era aircraft in late 2010,
and now operates an entirely Western-built fleet.

Azerbaijan Airlines ordered 4 Embraer 170 and 2 Embraer 190. Azerbaijan
Airlines’ other two aircraft orders are for the 787-8, which it expects to
receive in 2014. The carrier aims to use its 787s to launch services to the US.

(http://centreforaviation.com/analysis/azerbaijan-airlines-expands-network-
as-azerbaijan-aims-to-raise-tourism-profile-75963, 2012)

CONCLUSION
In conclusion, Azerbaijan Airlines needs to maintain and develop new ideas
on servicing well both leisure and business market. Reservations will be
done in easier way by making accessible website. For leisure market
AZAL’s marketing strategy will be addressed via media sources and provide
more direct sales. The one of the core issues in this paper is to highlight
marketing objectives and draw attention of business class and economy class
travelers in comparison with competitors. Outdoor billboards and posters on
buses and underground can be mentioned as most effective media. As
impact of internet to our modern world increases, social websites would be
advantageous to keep and develop brand awareness and to use as advertising
tool. Considering these actions, Azerbaijan Airlines can achieve its goal as
well as maintain its place in aviation sector.

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REFERENCES
Azerbaijan Airlines official website (2012). About us. Available at:
http://www.azal.az/en/company/
(Accessed: 16 November 2012)

Central Asian Cellular Forum (2012). Nar Mobile enables in-flight
phone calls on Azerbaijan Airlines. Available at: http://3gca.org/nar-
mobile-enables-in-flight-phone-calls-on-azerbaijan-airlines/

Centre for Aviation (2012). Azerbaijan Airlines expands network as
Azerbaijan aims to raise tourism profile. Available at:
http://centreforaviation.com/analysis/azerbaijan-airlines-expands-
network-as-azerbaijan-aims-to-raise-tourism-profile-75963

Skytrax (2012). Azerbaijan Airlines Passenger reviews and customer
trip reports. Available at:
http://www.airlinequality.com/Forum/azerbaijan.htm

Silk Way Airlines (2012). About us. Available at:
http://www.silkway-airlines.com/

Azerbaijan Airlines Booking (2012). Buy ticket. Available at:
https://booking.sita.aero/asp/asp/azal;locale=en

Turkish Airlines Booking (2012). Flight ticket. Available at:
https://online.turkishairlines.com/internet-
booking/availabilityInt.tk;jsessionid=YcBJQQvTGs3n1HsNfMLr9c7
h4rD82vVL82XQL1SttMRhywRXHYM2!-430413108

Azerbaijan Airlines (2012). Partners. Available at:
http://azal.az/en/company-partners/

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Azerbaijan Airlines (2012). About the program. Available at:
http://www.azal.az/en/azal-miles-view/19/

Azerbaijan Airlines (2012). Certified by IATA Operational Safety
Audit (IOSA). Available at: http://www.azal.az/en/company-view/100/

Azerbaijan Airlines (2012). Flights map. Available at:
http://www.azal.az/en/company-view/9/

Shaw S. (2004). Airline Marketing and Management. 5th edition. UK:
Ashgate Publishing Ltd.

Doganis R. (2006). The Airline Business. 2nd edition. USA:
Routledge Publishing.

Doganis R. (2009). Flying off course – Airline economics and
marketing. 4th edition. USA: HarperCollins Academic.

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