COMPANY PROFILE -All Nippon Airways (ANA)
Business Sector :Aviation
Operating Geography :Japan, Asia, Global
About All Nippon Airways (ANA) :All Nippon Airways Group (ANA) is the largest airline in Japan and headquartered in Tokyo, Japan. The company offers air and cargo transportation, travel, ground handling and trading services through various subsidiaries. The company operates in air transportation segment by mix of full service airlines like All Nippon Airways, ANA Wings and Air Japan; and low cost carriers like Vanilla Air. The group provides airline related services, tour packages and also operates in trade and retail segment through ANA Trading Co. The company has more than 13,000 employees as of March 2017.
All Nippon Airways (ANA) Revenue :¥1,791,187 million – FY 2016
Competitive Analysis of All Nippon Airways (ANA)
|1. Strong market presence in domestic and international services|
2. Complementary Service portfolio by presence in ancillary services
3. Member of Star Alliance network
|1. Decline in revenues from cargo and travel segments|
2. Dependence on Japan for majority of revenues
|1. Business expansion plan can help in identification of future growth opportunities|
2. Growth in tourism in Japan due to Tokyo Olympics and Paralympic Games in 2020
|1. Aging population in Japan leading of reduction in growth opportunities|
2. Intense competition in both domestic and international fronts
3. Volatility in jet fuel prices which is significant operating expense for the company
4. Regulatory issues pertaining to continuing operations in both domestic and international segments
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Detailed SWOT Analysis of All Nippon Airways (ANA)
1) Strong market presence in domestic and international services: According to the ranking given by IATA, the company is currently 8th among global airlines in terms of the number of passengers carried within the domestic services and 14th in terms of total number of passengers, including those within international services. ANA is also the largest domestic carrier in Japan providing service to 42.664 million domestic passengers and holds a share of 44.41% in the Japanese domestic passenger services market. Moreover, ANA carried 8.2 million international passengers in 2016. Such strong market presence enables the company to maintain a leadership position and provides a competitive advantage over its peers.
2) Complementary Service portfolio by presence in ancillary services: The company has business operations in following segments: Air Transportation, Airline Related, Travel Services, Trade and Retail and Others. In air transportation segment the company provides domestic and international passenger transportation services along with cargo and mail operations. The Airline Related segment includes ground support services such as baggage handling, passenger check-in and cargo loading services. The Travel Services segment carries out the sales of tickets and branded travel packages. The Trade and Retail segment includes operations of ANA FESTA airport shops, ANA Duty Free stores and the ANA Shopping style mail-order site. Other business segment provides building maintenance and real estate business services. It also offers information systems, product sales, logistics and aircraft parts and repair services. The strong and extensive service offerings through both vertical and horizontal enhance the revenue stream of the company by balancing the overall business risk and providing synergies across segments. It also creates a unique value chain for the company and acts as a differentiation in the highly competitive market segment of operations.
3) Member of Star Alliance Network: ANA is a member of Star Alliance Network, which has 28 member airlines serving through more than 4,631 aircraft across 1,300 airports in 190 countries. Founded in the year 1997, Star Alliance was the first and is the largest airline alliance carrying over 689.98 million passengers annually. The alliance enables its members to provide more services and benefits than any airline cannot provide on its own. Services offered include a broader route network, Co-location at selected airports, opportunities to earn and redeem frequent flyer miles across the combined Star Alliance network along with access to more than 1100 airport lounges. As a result of this the company is able to offer more seamless mode to transportation across destination to its customers and improve its load factor which ultimately results in increased profitability.
1) Decline in revenues from cargo and travel segments: We can see from the annual report that the revenue from cargo declined by 2.59% from ¥32584 million in 2015 to ¥31740 million in 2016 for domestic operations and 9.1% from ¥124772 million in 2015 to ¥113309 million in 2016 for international operations. This can be attributed to the fact that cargo volume decreased by 1.8% and 3.7% in domestic and international segment caused due to decrease in shipments in both domestic and international markets as a result of softening demand conditions. For the travel segment the revenues declined by 1.02% from to ¥169078 million in 2015 to ¥167349 million in 2016. The domestic segment revenue increased but the international segment was down which can be attributed to yen depreciation and unforeseeable terrorists attack in Europe. This can have material impact on the revenues of the company and lead to lower financial performance.
2) Dependence on Japan for majority of revenues: ANA gets substantial portion of its revenue from domestic operations. This can be substantiated from the annual report where 82.3% of the total revenues was attributed due to operations in Japan and rest was from overseas operation. This high dependency on Japanese market may have an adverse effect on the health of the company due to some negative local conditions or lower than expected growth conditions. It makes the company vulnerable to changes in the economic and political situation of the country. Thus, the company’s high reliance on home market exposes it to risks of downturns created by the country’s macroeconomic conditions resulting in risk in revenue generation.
The unpublished sections of the entire All Nippon Airways (ANA) SWOT analysis is available in the 'Complete Report' on purchase.
1. ANA Annual Report 2016: https://www.ana.co.jp/group/en/investors/irdata/annual/pdf/16/16_E_00.pdf
2. Star Alliance facts https://portal.staralliance.com/employees/about/bottom-left/the-star-alliance-network
3. Financial ratios https://financials.morningstar.com/ratios
4. Population report Japan https://data.worldbank.org/indicator/SP.POP.65UP.TO.ZS?locations=JP&name_desc=false
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