Prestige Institute of Management and Research

Submitted To: Submitted By:Prof. Satnam Ubeja Anjali Gupta

Atika Joshi Shilpa Singh

Shirin Khan Shushila Jamwal

Topic : Airlines Industry

Airlines As A Service Industry

•The Airline industry came into existence during the 17th centuries.

•Origin of Indian aviation industry can be traced back to the year 1912.

•Air travel remains a large and growing industry. It facilitates economic growth, world trade, international investment and tourism and is therefore central to the globalization taking place in many other industries

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)

Entry Of

Private Players

Top 10 Airline Companies Of India

S.No Site

1. Indian Airways

2. Kingfisher

3. Air India

4. Air Deccan

5. Lufthansa India Airlines

6. Air Sahara

7. Indigo

8. Alliance Air

9. Paramount Airways

Private

10. Jet Airways

Types of Air Services

•Scheduled Air Transport Service

•Non-Scheduled Operation

•An air cargo service

Competitors

•International market - British Airways & South West Airlines

•Domestic market - King fisher, Indian Airlines, GoAir ,Spice jet & Indigo

Key characteristics of low cost airlines

•High seating density and load factors

•Uniform aircraft types (usually the 737-300)

•Direct booking (internet/call centre - no sales commissions)

•No frills such as “free” food/drinks, lounges or ‘air miles’

•Simple systems of yield management (pricing)

•Use of secondary airports to cut charges and turnaround times

SWOT Analysis

•Strengths-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

Determinants Of Pricing

ATF•ATF refers to air turbine fuel which is used by airlines in its operations.•ATF contributes to the 40 % of operation cost

•It includes freight charges from gulf to India ,

Customs Duty, Domestic Transportation and various taxes.•India usually Pay higher ATF charges as compared to other countries.

Airport Charges

• It is the basic fees that is charged by airports from airlines

• This include parking fees, landing fees , stop paging fees and

aero bridge expenses

• New airport charges more than established one to cover up all

the cost incurred.

Other Factors

• Advertising and Promotional Expenses

• Technology employed by the airlines

• Current Financial position

• Prices set by other airlines competing in the present

environment.

• Pilot fees

• Government regulation.

PEST Analysis

•Political 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

STP

Primary 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

PRODUCT

PRICE PLACE PROMOTION

PEOPLE

PROCESS

PHYSICAL

EVIDENCE

RAINBOW OF SERVICE MARKETING MIX

Product • Special Services

o Infant and child care, wheel chair assistance, expectant

mothers, unaccompanied minors, medical emergencies,

travelling with animals & carriage of stretchers

• Jet Mobile

• Jet Kids

• Jet Escapes

• Cargo

Price

Premium pricing:- Use a high price where there is a uniqueness about the product or service. Such high prices are charge for luxuries

Cheap-value pricing:- This approach is used where external factors such as recession or increased competition force companies to provide 'value' products and services to retain sales

APEX fares:- Apex or advance purchase fares are special fares valid on economy class on specified sectors. They are much lower than the normal fares.

Place

• Online 24-hour reservation Systems.• Tour Operator• Travel Agent

Promotion

• Advertising- keep in mind the image of the country, • tourist attraction, cultural heritage• Publicity- Travel agent, PRO, media people• Sales promotion- Tour operators, frontline staff

People

•Employees •Pilot, Cabin Attendants, Engineers, Customer Service Agents, Securities, Marketing, Sales & Reservation employees

•Customers

Process

•People Processing

•People physically enter the service system to receive the service. Aircraft is the service factory where service is delivered.

•Possession Processing

•Cargo•Luggage & Courier

Physical Evidence

Services cape

Services cape usage - Interpersonal

Complexity of Services cape - Elaborate

Flight

Offices - Org. & Ticket Booking Agents

Virtual Services cape

AirFare

WAR

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 Airways

• Jet Airways has its market share 31% including Air Sahara.

• Average entertainment services.

• Jet Airways won Double Honor Travel Trade Gazette Travel award.

• They are plan to start training academy.

Flower Of Services

Core -Transport

Information

Consultation

Order Taking

Hospitality

Safe Keeping

Exceptions

Billing

Payment

• Information - Reg. the org., flight schedules, ticket fares, promotion schemes etc.

Through website, call service, sms, employees etc.

• Consultation - Reg. the choices of class, routes to a destination & special menus for frequent fliers

• Order taking - Booking - through phones, fax and internet

Ticket Office, Call Centres, Company Website & Agents

• Hospitality - Most important differentiating factor (from ticket booking to post flight help)

• Safe keeping - Luggage & Children

• Exceptions - Special requests reg. meal preferences, special amenities for elderly people or children, medical needs etc.

• Billing - Charges split, E-mail bills etc.

• Payment - Credit card, Travellers cheque, Special payment privileges for frequent fliers

Challenges

• Initializing privatization in the airport activities • Modernization of the airlines fleet to handle the pressure of

competition in the aviation industry • Rapid expansion plans for the major airports for the increased

flow of air traffic • Development for the growing Regional Airports • Waving of Tax Exemption on leasing from government• Costs pressures (ATF Prices & Staff Cost)

Indian Aviation

Full Service Airlines

Air India, Jet

Airways etc.

Low Cost Airlines

Air Deccan,

Spice ,Jet etc.

Regional Airlines

Emric Air,Air

Dravida etc.

Charter Airlines

Club One Air,

Deccan Aviation etc.

CargoAirlines

Blue Dart,Aryan Cargo Express etc.

Conclusion

•The price cutting schemes will be feasible as long as external factors for pricing are under control•Government should encourage private participation•The success of the “open sky” policy in the first phase of economic reforms in the domestic aviation sector, international cargo, airport infrastructure .•The opening of the Airports sector with new ‘Green field Airports ’to the private sector, has been a step forward.•The Disinvestment of shareholding in the public sector airlines still remains to be completed.•Reforms like allowing foreign airlines to buy stake in domestic carriers and rationalization of central and state levies on jet fuel implemented for a sound sustained grow

THANK YOU