How strategic quality change improved the performance of Etihad Airways?

Etihad Airways has come a long way since its inception in the year 2003. The major objective of Etihad was to grow profitably and sustainably through organic growth measures. In a span of mere 12 years, Etihad has a fleet of 104 and approximately 200 aircraft along with parallel alliance. In order to achieve this objective, Etihad has focused on varied aspects of quality management systems (QMS). For example, Etihad adopted a treasury management system (TMS) to manage risks related to cash and finances by enhancing its value and dependability (Coleman, 2010). The system also provided for assimilation of treasury and other systems along with management reporting. Furthermore, Etihad is highly focused on its customers. In spite of dropping demand, Etihad continues to concentrate on customer satisfaction and prepare itself for the future.

Etihad Airway’s strategic moves had, until 2014, failed to modernize and update its service quality. The quality offered by Etihad was considered being relatively inferior as compared to other airlines like Emirates (Cummins, 2019). This ultimately leads to customer dissatisfaction thus forbidding the company to achieve its overall strategic management objectives. To plan a strategic quality change for enhancing organizational performance, firstly it is essential to understand the gaps that are present in the existing model of Etihad. This can be presented in the form of Gaps Model as shown below.

Gaps Model to understand Etihad Airways service design
Figure 1: Gaps Model to understand Etihad Airways service design (Gilbert, 2003)

Considering the case of Etihad, Gap 1 is because Etihad concentrates on making its services available at lower prices to attract flyers without identifying customer expectations of superior quality, dependability, comfort and speed. Gap 2 is related to Gap 1. Due to presence of Gap 1, Etihad lacks in clearly translating customer expectations into service quality specifications properly. Hence Etihad fails to design an appropriate service delivery system that focuses on consumers and their expectations. Gap 4 and 5 are interrelated which too are present in the service delivery model of Etihad. It has developed customer expectations that are unable to fulfil through its service delivery mechanisms indicating the presence of Gap 4. There are gaps present in expected services by customers and actual services delivered which indicates the presence of Gap 5.

For example, Etihad promised and communicated the concept of ‘dine on demand’ to its first-class customers in flights from Abu Dhabi to Los Angeles (Lucky, 2014). But in the inaugural flight, Etihad was unable to deliver its promises as it ran out of food resulting in customer disappointment.

Strategic quality changes needed in Etihad Airways

In order to fill up the gaps in service systems identified above, it is indispensable for Etihad to undergo complete strategic quality change and understand various resources, tools and systems requirements to support business processes:

Human resources

In service organizations, human resources act as touchpoints for service delivery. Thus, Etihad needs to convert its human resources into a competitive advantage. This is possible through the promotion of employee participation culture along with extensive training and development programs. These efforts will not only help employees in gearing up for change programs but will also motivate them to take responsibilities and deliver quality services.

Technology

Technology is evolving at a very fast pace. Thus Etihad also needs to upgrade itself on a continuous basis to cope up with this change and gain competitive advantage (Boyle, 2009). Technological developments are required for enhancing service standards and fulfilling promises made to customers (Boyle, 2009). Other technical modernizations require extensive use of the internet, open-source software, service-orientated architecture and mobile computing (Boyle, 2009).

Systems infrastructure

Quality systems rotate around customer satisfaction by firstly understanding their expectations and then guiding organizations to develop standards accordingly (Dale, Wiele, & Iwaarden, 2013). Quality circles, on the other hand, are a team of employees designated solely for the purpose of resolving quality issues in an organization and thus enhance quality standards through appropriate measures (Pereira & Osburn, 2007). Etihad needs to implement both these systems to bring about a strategic quality change.

Implications of planned strategic quality change in Etihad Airways

By implementing quality change, Etihad will be in a position to enhance its business efficiency through lower costs and higher profit margins (Trkman, 2010). This will further facilitate expansion plans along with enhancing the quality of services offered to customers. Though appropriate HRM strategies and training programs, Etihad will not only enhance employee motivation but also augment their efficiency levels.

Improved brand reputation from strategic quality change

The aviation industry is highly competitive and thus gaining a positive brand reputation is indispensable (Belobaba, Odoni, & Barnhart, 2009). With the help of improvised business processes and systems, Etihad will be capable of gaining a competitive edge over others as well as to promote to its target audience. These strategic changes will help Etihad to not only deliver promised services but also outshine consumer expectations thus aiding to its brand reputation.

Talented and dedicated human resources

The human resource of a service organization like Etihad are responsible for delivering unswerving service quality efficiently (Wirtz, Heracleous, & Pangarkar, 2008). This aids in the achievement of sustainable reasonable benefit over other competitors. Through employee participation and skill development programs, Etihad will not only enhance their confidence but will empower them, enhancing their dedication levels.

Contentment of customers

Ultimately it is the customer contentment that matters to organizational success (Dabholkar & Overby, 2013). Contended customers not only stay loyal to the organization but also help in attracting new ones (Kumar, 2010). Through strategic quality change, Etihad will be able to revive its customer relations and effectively deliver quality services to them resulting in customer contentment.

Proposed systems to monitor the strategic quality changes in Etihad Airways

The implementation of strategic quality change in Etihad can be ideally monitored through Total Quality Management (TQM). The major objective of TQM is to enhance quality performance to extraordinary heights by encouraging participation of the entire organization. It covers all facets of the organization and thus addresses problems corresponding to each sphere.

Monitoring implementations is crucial to solving problems as and when they appear thereby minimizing chances of failures of the change strategy.  TQM monitors and analyzes overall organizational commitment towards quality and development for attaining desired results and thus achieving sustainability (Morfaw, 2009). Another inherent feature of TQM is that it facilitates monitoring of the implementation of strategic change through continuous quality improvement (Hughes, 2008).

Through this approach, Etihad Airways will be capable of focusing on various situations and processes where improvements are required and make decisions accordingly (Hughes, 2008). With the help of a TQM system, Etihad will get an opportunity to minimize service delivery defects and thus enhance organizational competitiveness, value and elasticity (DTI, n.d.). Through TQM, Etihad will be able to monitor each activity on a routine basis and control wastages of efforts if any thus taking proactive approach via preventive measures (DTI, n.d.).

Moreover, Etihad Airways will develop competencies by identifying its critical success factors (CSF) which are derived from its vision. These CSFs will aid in the accomplishment of organizational objectives and thus will be monitored through TQM (DTI n.d.).

References

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