Airline Industry

Javeed budhwani

Airline Industry in India

454 airports and airstrips

(includes Operational, Non Operational, Abandoned and Disused Airports)

127 are owned & operated by AAI

16 - international, 7 custom airports, 28 civil enclaves

Scheduled domestic air services - available from 82 airports

May 2007- May 2008

25.5 million domestic & 22.4 million international passengers

20% growth – highest in the world

Growth Rate Projections (for next 5 yrs)

15% p.a (Passenger Traffic)

11.4% p.a (Cargo Traffic)

History• 1911 first commercial flight airmails from allahabad to nani (10 km)• 1932 the aviation department of tata sons ltd . Established • 1938 tata airlines (successor to aviation sivision of tata son )• 1946 Tata Air Lines converted into a public Company and

renamed Air India Limited• 1948 Air India International incorporated• 1953 Nationalization of Aircraft Industry Air India (serving the international sectors)

Indian Airlines (serving domestic sectors)

Deccan Airways, Airways India, Bharat Airways,

Himalayan Aviation, Kalinga Airlines, Indian National

Airways and Air Services of India

History1986 Private Sector Players permitted as Air taxi operators

Players including Jet, Air Sahara, NEPC, East West,

Modiluft, etc started service

1990 Open sky policy

1994 Private Carriers permitted to operate scheduled services

2003 Entry of low-cost carriers

2007 Merger of Indian Airlines into Air India

Acquisition of Air Sahara by Jet Airways

2008 Kingfisher acquired 49% stake in Deccan Aviation

Regulatory Authorities• Ministry of Civil Aviation

Responsible for the formulation of policy, development and regulation of Civil Aviation. Its functions also extend to overseeing airport facilities, air traffic services and carriage of passengers and goods by air

• Other Attached/Autonomous Organizations:

Directorate General of Civil Aviation (DGCA)

Promote safe and efficient Air Transportation through regulation and proactive safety oversight system

• Bureau of Civil Aviation Security (BCAS)

Regulatory authority for civil aviation security in India• Airport Authority of India (AAI)

Accelerate the integrated development, expansion and modernization of the operational, terminal and cargo facilities at the airports

PoliciesOpen Sky Policy

FDI

Airports

100% for green field operations

74% for existing airports - 100% with special permissions

100% tax exemptions for 10 yrs.

Airlines

49% in domestic airlines - 100% for NRI’s

74% in cargo & non-scheduled airlines

Competitive Pressure

Ser

vice

Price

Low cost Carriers changing the game

Indigo

Jet Airways 35%

Indian Airlines24%

Air Deccan 15%

Jet Lite10%

Kingf isher8%

Spice Jet6%

Others2%

Airlines Market Share

Jet Airwyas

Indian Airlines

Air Deccan

Air Sahara

Kingfisher

Spice Jet

Others

MARKET SHARE

The Kingfisher AIRLINESThe king of good times

Kingfisher airlines• Dr Vijay Mallya is the Chairman and CEO of Kingfisher

Airlines• Kingfisher Airlines Limited launched scheduled airline

services on May 9, 2005 with 4 daily flights between BOM & BLR and one A-320 aircraft.

• There are tools for mood lighting such as web chat, inseat plugins for music, liveTV with 16 channels on each seat

• 100 percent E ticket airline

VISION

• The Kingfisher Airlines family will consistently deliver a safe, value-based and enjoyable travel experience to all our guests

 

STP

•Geographic Region•Density•Social Classes•Income Level

Segmentation

•Kingfisher First•company executives •Kingfisher Class•lower middle, upper middle, lower upper segment

Targeting

•Lifestyle•Benefits•Quality

Positioning

SWOT Analysis• Strengths

First airline with full new fleet of aircraft

Quality hospitality provided to customers

Route rationalization

Already have training academy• Weaknesses

Service delivery to metros and other big cities

Yet not in profit

High ticket pricing

High attrition in top brass

Opportunities

Under penetrated domestic market

International market

Untapped air cargo market

Expanding tourism industry

Threats

Existing Operators

Infrastructure issue

Fuel price hike

Economic slowdown

 

PESTEL ANALYSIS

POLITICAL FACTORS

1) Open sky policy

2) FDI limits: 100% for Greenfield airports

74% for the existing airports

100% through special permission

49% for airlines.

ECONOMICAL FACTORS

1) Contribution to the Indian economy.

2) Rising cost of fuel.

3) Investment in the sector of aviation.

4) The growth of the middle income group family affects the aviation sector.

  

SOCIAL FACTORS

1) Development of cities leads to better services and airports.

2)Employment opportunities.

3)Safety regulations.

4) The status symbol attached to a plane travel

TECHNOLOGICAL FACTORS

1) The growth of e-commerce and e-ticketing.

2) Satellite based navigation system.

3) Modernisation and privatisation of the airports.

4) Developing green field airports with private sector for example in Bangalore the airport corporation limited.

 

ENVIRONMENTAL FACTORS

1)The increase in the global warming.

2)The sudden and unexpected behavior of the atmosphere and the dependency on whether.

3)Shortage of the infrastructural capacity

4)Tourism saturation.

LEGAL FACTORS

1) FDI limits

2) Bilateral treaties

3) Airlines acquisitions and the leasing cost.

 

 

7 P’s

Product•Fleet Size•Aircrafts•International Foray

Promotions•Advertisements•Magazine and Newspaper ads•Exposure at non-corporate event•Participation in International Airshows •Endorsing celebrities like Katrina Kaif and Yana Gupta

Process •Booking the ticket - online booking or tele-booking or from any of the kingfisher outlet

Physical Evidence•Personal valets •Exclusive lounge space •Hi! Blitz•Gourmet cuisine •world class cabin crew •5 trendy video- Fun TV; 10 music stations -Kingfisher Radio

Price•Dynamic pricing model - Multiple fare levels•Uniform rules •No hidden restrictions.•Pricing model - 8 different levels•Discounts provided from time to time

People•Backbone of the brand•Extensive trainings•Hospitality industry and consider their customer as guests•Interpersonal skills, aptitude, and service knowledge

Place•Online Booking - www.flykingfisher.com •Online Booking - Yatra.com, MakeMyTrip.com, ezeego1.com•Credit Cards & Debit Cards Payment•SMS / Call •Outlets in every major city and at every airport across the country

 PORTERS FIVE FORCE

MODLE

Jet Airways Indian airlines

LCC

Virgin Atlantic Quantas Airways

Economic & demographic changesIncreasing awareness

Exposer to globle brand

Other models of transport

Fuel supplier

KINGFISHER AIRLINES Performance

• Kingfisher Airlines has posted a net loss of Rs 577 crore in the financial year ended March 2007, the balance sheet of UB Holdings, which owns the airline, shows.

Jet AirwaysFounded in 1993, Chairman - Mr.Naresh Goyal

HQ in Mumbai

Country’s second largest international airline

Largest domestic airline - 31%

Primary base - Mumbai's Chaatrapathi ShivajiAirport

Secondary hubs - Bangalore, Brussels, Chennai, Delhi,

Hyderabad, Kolkata and Pune.

April,2007 - Acquired Air Sahara - JetLite

Now JetLite integrated into Jet Airways

Mission Statement

Jet Airways will be the most preferred domestic airline in India. It will be the automatic first choice carrier for the travelling public and set standards, which other competing airlines will seek to match.

Jet Airways will achieve this pre-eminent position by offering a high quality of service and reliable, comfortable and efficient operations. 

Jet Airways will be an airline which is going to upgrade the concept of domestic airline travel - be a world class domestic airline. 

Jet Airways will achieve these objectives whilst simultaneously ensuring consistent profitability, achieving healthy, long-term returns for the investors and providing its employees with an environment for excellence and growth

STPPrimary Segments (Geographic) - Domestic & International

Customer Segments

First class, Premiere(Business) class & Economy class

Target Segments

Premiere(Business) class

Business travelers, contribute 48% of passengers & 66% of revenues,

ready to pay higher prices, last time booking, don’t like transit

Economy class

Leisure travelers, prefer low cost airlines, ready for transit if there is cost

advantage, large % of passengers

Seat Allocation – Yield Management Technique

Positioning – High value for High price

Unique Selling Price – Customer relationship and Punctuality

SWOT AnalysisStrengths

Market driver

Experience exceeding 14 year

Only private airline with international operation

Market leader

Largest fleet size

 

Weaknesses

Loosing domestic market share

Old fleet with average age around 4.79 years

Scope for improvement in in-flight service

Weak brand promotion

Opportunities

  Untapped air cargo market

Scope in international service and tourism

 

Threats

Strong competitors

Fuel price hike

Overseas market competition

PEST AnalysisPolitical Issue

License issue for international

operation

Infrastructural constraint

ATF price policy

 

Economic Effects

Rising income level

Reduced fare but yet not enough

 

Social Effects

Sound Pollution

Plane hijacking

9/11 Incident

 

Technology Effects

Modernization of aircrafts

Modern technology like CAT3

and ILS

7P’sPrice

Economy & Club Premiere Fare

Discounted fare for senior citizens & defense personnel

Advance Passenger Excursion/ APEX Fares

One Fare

Night Saver Fares

Check Fares

US Dollar Fares & Visit India Fares

Place

Place of Service - Aircraft

Various Destinations

Promotion

Offers

Companion Free Offer, One Fare, Concessional fares, JetPrivilege Offers,

Jet Airways Citibank Credit Cards, Corporate Deal Offers, International

Specials, Camp Rock contest, Festival specials, Student specials, Surprises etc.

Advertising and Branding

Hoardings

Brand Ambassadors

Sponsorships

Event Organization

ProcessPeople Processing People physically enter the service system to receive the service. Aircraft is theservice factory where service is delivered.Possession Processing Cargo Luggage & CourierPhysical EvidenceServicescape Servicescape usage - Interpersonal Complexity of Servicescape - ElaborateFlightOffices - Org. & Ticket Booking AgentsVirtual Servicescape

Jet Airways - Performance

Annual Revenues - Rs.9481.5 crores (2007-08)

Rs.7401 crores (2006-07)

Profit(Loss) After Tax - Rs.253 crores loss (2007-08)

Rs.27 crores profit (2006-07)

- All Other Domestic Players showed loss(2006-07)

Kingfisher•Kingfisher is one of the latest Airlines in INDIA.•Overall growth in year 2006-07 is 37%.•Kingfisher acquired 46% share in Air Deccan.•Domestic airlines poised to go international flights

Jet Airways

•Jet Airways is the experienced airline in INDIA.•Overall growth in year 2006-07 is 16%.•Jet airways acquired Air Sahara in 2006.•Jet Airways already has domestic as well as international flights.

Kingfisher•In a short span of 2 years its market share has become 28% including Air Deccan.•Personal in-flight entertainment in every seat. •It was awarded the ‘Best New Airline Of the Year’ award.•Already have training academy

Jet Airwayss

•Jet Airways has its market share 31% including Air Sahara.•Average entertainment services.•Jet Airways won Double Honour Travel Trade Gazette Travel award.•They are plan to start training academy.

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