Evaluation of Two Organizational Structures
Every enterprise has its organizational structure, which corresponds to its particular strategic objectives and entails both advantages and disadvantages. Qatar Airways employs the divisional strategy, which implies a certain level of decentralization within the company and distribution of leadership roles among different subsidiaries (Daft, 2019). Namely, apart from its carrier business, the airline is also active in the areas of private-jet travel with the company Qatar Executive, cargo transportation by air (Qatar Airways Cargo), and it operates the Hamad International Airport. Naturally, every aforementioned branch requires its own team of specialists to ensure effective management of the divisions. This situation has both positive and negatives aspects.
On the one hand, the company is efficient since all employees focus strictly on their particular areas of expertise and have clearly-defined hierarchies within their departments. Such structure also leads to better relationships among the staff and improved corporate cultures because people function in smaller teams and interact with the same colleagues on a daily basis.
On the other hand, the divisional approach can lead to conflicts among executives about the future of the company and its general strategic goals. The decentralized nature of the divisional structure inherent to the enterprise may lead to difficulties with getting all subsidiaries to adhere to one strategy. The range of products offered by Qatar Airways’ subsidiaries is diverse yet mostly targeted at affluent people. Qatar Airways positions itself as “World’s 5 Star Airline,” which entails higher ticket prices (Aquilina-Spagnola, Ellisa, and Pagliaria, 2020). It provides the company with an advantage of affluent clientele willing to pay extra for their travel experience, but the lack of affordable tickets prevents it from attracting passengers with moderate spending habits.
Compared to Qatar Airways, Air Arabia has a different organizational structure in place, namely the functional one, which possesses both benefits and shortcomings. Essentially, functional structure implies dividing a company into several departments responsible for overseeing their specific types of activities, such as sales or operations (Daft, 2019). For instance, in addition to standard departments such as human resources, Air Arabia maintains an internal control department to ensure sound audit policies and practices (Al Nahyan and Al Qasimi, 2019).
Such structure is effective in the case of Air Arabia because it is a medium-sized enterprise which requires a strong hierarchy. Thus, the primary advantage of this type of structure is simple control mechanisms which allow the CEO and other executives to directly communicate their ideas to the employees and correct their course of action (MacKay et al., 2020). The main disadvantage of the system is the possible lack of coordination among several departments, which can result in conflicts and inefficient business operations.
Air Arabia is a low-cost carrier which means that it offers affordable ticket prices and does not feature business or first-class services, and focuses instead on a cheap but reliable travel experience. According to its official website, Air Arabia’s clients can choose only from basic and extra fare types, which do not vary significantly in terms of amenities (The Air Arabia new fare, 2017). Low-cost products of Air Arabia allow it to target a large group of customers who wish to keep their travel expenses at a minimum. Yet, the absence of premium options discourages more affluent people from traveling with Air Arabia. Due to the fact that Air Arabia has a limited selection of products and functions only in the field of passenger transportation by air, it has a simple organizational structure.
How Organizational Structure Must Be Linked to Products, Services, Clients, and Revenue
Qatar Airways’ divisional organizational structure has to take into consideration the needs of the customers and requirements for excellent delivery of products to maximize the company’s revenues. For instance, the company is extremely popular among people who are willing to pay large sums of money to travel in comfort and not together with strangers. To respond to this demand, Qatar Airways launched a separate subsidiary Qatar Executive which provides charter on-demand flights using jet aircraft (Qatar Executive, 2021).
The executives understand that managing different fields of work becomes difficult when only one company is responsible for overseeing all of the areas since it generates excessive bureaucracy. Therefore, Qatar Airways actually choose to maintain the divisional organizational structure. It also helps in terms of revenue because subsidiaries can clearly realize how many resources they have and devise strategies to increase profits.
Air Arabia’s organizational structure based on the allocation of responsibilities and tasks to particular departments within one structure also has to reflect the company’s needs concerning products, clients, and revenue. Since Air Arabia is a low-cost carrier, its primary objective must be minimizing expenses and increasing efficiency without compromising on the reliability and safety of passengers. The functional organizational structure used at Air Arabia allows it to employ fewer people and effectively manage its resources. Moreover, the company provides only an economy-class level of service which means that it does not have to hire numerous professionals specializing in niche products such as first-class flight attendants. Thus, Air Arabia utilizes the organizational structure, which optimizes its operations and fits well the needs of the company.
Impact of Current External Factors on the Organizations
The primary external factor affecting the whole air travel industry worldwide is the COVID-19 pandemic and the border restrictions which ensued in the lights of its fast spreading. Due to closed borders, people were not allowed to go on vacations, business trips, and simply visit friends and family members in other countries, which significantly impacted carriers. Qatar Airways is not an exception, and in September of 2020, the company reported $1.9 billion in losses due to the situation with the pandemic and the subsequent drop in the number of passengers (Gambrell, 2020). Another external factor affecting Qatar Airways is the rise of climate change concerns and the carbon footprint of large companies.
Like any airline, Qatar Airways emits large volumes of greenhouse gases which ultimately contribute to the pollution of the atmosphere and climate change. According to some estimates, the aviation industry accounts for more than two percent of CO2 emissions, which translates into a substantial impact on global warming (Ritchie, 2020). The situation with climate change leads to the pressure from technological factors, namely, solutions to contain the emissions. Governments may pass legislation which would mandate airlines to use expensive biofuel to reduce the impact on the environment. Thus, Qatar Airlines faces considerable challenges due to the need to implement new technologies.
Air Arabia experiences a similar effect of the COVID-19 pandemic on its operations, and the uncertainly related to the prospects of open borders continues to negatively impact the company. In 2020, Air Arabia posted more than fifty million dollars in losses despite the fact that it provided transportation services to four million people (Air Arabia posts, 2021). Nevertheless, the pandemic is an extraordinary event which is unlikely to affect the general trend of the gradual increase in tourism activity in the United Arab Emirates in the long run. According to official statistics, in 2016, the travel and tourism sector accounted for five percent of the country’s GDP, yet this share is expected to grow to twelve percent in 2027 (The United Arab Emirates, n.d.).
Thus, it can be assumed that after the lift of the travel restrictions, Air Arabia will continue experiencing positive effects of the tourism growth in the UAE. The rise in the number of tourists is linked to political factors which play an equal role in the success of Air Arabia. The UAE enjoys stability and peace, as well as excellent governance on the part of authorities which stimulates the economic development of the country and benefits Air Arabia.
Two Current Issues at the Organizations
Despite the fact that strict lockdowns have been largely abandoned by the majority of countries due to the advancements in vaccination efforts and general achievements in partial herd immunity, the pandemic still poses risks. Thus, the main issue for Qatar Airways, which affects its service delivery, is safe operations during a situation when traveling is allowed, but the threat of the disease is still high. Therefore, the company has to focus on ensuring safety for its passengers and personnel by implementing mechanisms to counter the spread of the COVID-19. Qatar Airways has already made certain steps in this field by, for instance, the company was the first in the world to operate a fully vaccinated flight which implied that the crew and the passengers received a vaccine (Qatar Airways to operate, 2021).
Another issue currently affecting Qatar Airways is the boycott of Qatar by Bahrain, Saudi Arabia, the UAE, and Egypt, which also covered the restrictions on airspace access. Despite the fact that countries reached a deal on lifting the blockade, there are still no details on how Qatar Airlines will be able to operate in the countries (Qatar Airways flight lands, 2021). The lack of access to the markets of these countries forces Qatar Airlines to lose large sums in potential revenues and change certain routes of its flights.
Apart from the pandemic, which remains a topical issue for the majority of airlines worldwide and enables carriers to transform their operations, Air Arabia has two more problems. The first one concerns the pilot shortage, which affects the airline industry as a whole since the number of these professionals has been declining before the pandemic and is expected to rise slightly in the coming years (Hemmerdinger, 2020).
Nevertheless, pilots are still in great demand, which creates numerous opportunities for them but becomes financially burdensome for carriers. Air Arabia, as a budget airline, which has small operating margins because it has to decrease its costs, is particularly vulnerable in the face of the problem. This situation enables Air Arabia to invest in training its own specialists and offering large remunerations to the existing crews, which translates into higher ticket prices and fewer clients how can afford the company’s services. Additionally, the company has a fleet consisting of Airbus A320 and A321 aircraft, the model which was first launched in the 20th century (Arabian Aerospace, 2020). To ensure meeting safety requirements, Air Arabia will soon need to buy new planes, which will cause the ticket prices to increase once again.
Effect of People Practices on the Organizations
Qatar Airways is committed to employing only the best professionals in their respective fields of expertise to ensure an excellent level of service at all of the company’s subsidiaries. Thus, Qatar Airways engages in strategic workforce planning, which helps it align its people practices with the business and organizational goals, as well as protect the industry from potential risks such as shortages (Workforce planning, 2020). Qatar Airways understands that airline carriers are competing for skilled specialists in the aviation industry, and investing in training and developing staff can be a sound strategy in such circumstances. Thus, the company offers numerous training programs, including for cadet pilots, airport operations workers, and aviation managers (Al Darb Qatarisation, n.d.).
This approach allows the company to maintain the integrity of its divisional organizational structure by avoiding any shortages. It also reduces costs since the company can avoid hiring professionals with large salaries and instead train their own specialists. Moreover, Qatar Airways’ programs are available strictly to citizens of Qatar. Opting for the local employees instead of the foreign ones can also deliver benefits for the company’s organizational structure. People belonging to the same culture can communicate their ideas faster and more clearly when talking to one another. There also can be less conflict and misunderstanding within a mono-ethnic work environment.
Air Arabia is a medium-sized company which operates in one niche market of low-cost travel, which means that it has a constrained budget which it can use to better its people practices. Nevertheless, the company recognizes the fact that investing in the educational mechanisms within the organization can yield improved performance and streamline career advancements for employees, thus keeping them incentivized to continue working for the company. The special program for cadet pilots designed by Air Arabia seeks to address the existing issue with the shortage of pilots. Moreover, the program is inclusive since both men and women can apply to join it (Grow at Air Arabia, n.d.).
Air Arabia also provides on-job training for those who are already employed by the company and want to enhance their skills and knowledge. On-job training also facilitates the process of redeployment of employees to address shortages which ensures the stability of the organizational structure (Workforce planning, 2020). Additionally, the company does not discriminate against people of other ethnicities, and it employs more than one hundred nationalities (Meet our team, n.d.). Such an inclusive approach allows the company to find workers from a larger pool of professionals. It also helps Air Arabia improve its brand and employee value proposition as an equal-opportunities company (Workforce planning, 2020).
Impact of Technology on the Organizations
Technology is an integral part of every modern business which wants to stay competitive and attract clients by providing them with superior quality of products and services. Nevertheless, integration of technological solutions has to be performed only when their impact on the workforce is assessed. For instance, a large number of employees report that they require more expertise and knowledge after changing their use of technologies (Workplace technology, 2020). It demonstrates the fact that employers have to facilitate the process of adoption of new technologies by providing workers with proper training and presenting them with the most effective strategies for utilizing technology. The main technological solutions which are now being gradually adopted by companies in numerous industries are artificial intelligence, robotics, and automation. For example, in the aviation industry, enterprises use automated systems which help air traffic controllers to make better decisions in their work (Technology and the future, 2021). New technologies are also used in Qatar Airways and Air Arabia.
Qatar Airways always seeks to innovate and enhance its operations to streamline the processes and make the work of its employees easier and more efficient. Qatar Airways’ cargo subsidiary implemented a fully automated mail management system called Descartes Velocity Mail to increase the speed of mail processing (Qatar Airways cargo, 2018). This technology eliminates the need to employ manual entries and instead relies on automation which allows it to improve transparency and accuracy.
The company also introduced an automated documentation management system which lets it share information, as well as track operational manuals across all its subsidiaries (Qatar Airways moves, 2016). This technology promotes better efficiency and security since all of the procedural modifications introduced by the managers are kept within one system. This evidence shows that Qatar Airlines has adopted a technology-oriented approach and the scale of use of technology in the organization is substantial.
Air Arabia is also actively engaging in the promotion of new technological solutions to enhance its organizational performance and facilitate its operations. Despite the fact that the company does not have as many resources as Qatar Airways, it is still investing in new technologies to attain better efficiency. For example, the company utilizes Aviobook Electronic Flight Bag, a system which updates pilots on their current mission and ultimately helps them manage their workload more effectively (Air Arabia selects, 2018). The scale of technology use at Air Arabia is quite sizeable, and it is certain that the company will continue investing in new solutions to stay competitive.
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