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Comparative Case Study Between Two Airline

Comparative Case Study Between Two Airline

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Published by tushaaar
project for economics
project for economics

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Published by: tushaaar on Apr 11, 2009
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12/13/2012

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INTRODUCTION
India at present has twelve competing airlines in the domestic market asagainst a single government owned airline in 1991. According to McKinseyQuarterly(2005) the Indian aircraft market is the worlds second largestcommercial aircraft market. On-time performance and service levels haverisen dramatically and fares have dropped. Passenger traffic is expected togrow by 20 percent annually over the next five years. Only a small percentageof India’s population travels by air partly due to the high costs of domesticflying. According to the Center for Asia Pacific Aviation(CAPA) consultancy,new players will help domestic passenger numbers. The players in the currentairline market include airlines like Air Deccan with low-cost, low-fare and nofrills along with airlines like Kingfisher, which offers some frills, and premium airline like Jet Airways. Competition has brought in some priceadvantages to travellers and has converted many railway passengers to airlinetravellers. This article examines customer satisfaction among travellers of four major domestic airlines in India. Because of proliferated number of players inthe airline industry, airlines may enjoy new business opportunities along withhigh competitive threats. The objective of this study is to understand thecustomer satisfaction levels of the two major airlines viz. Jet Airways, andKingfisher.A comparison of customer satisfaction based on service quality was doneamong the two major airlines based on responses from frequent fliers. A flyingexperience was divided into three stages- namely, pre-flight, in-flight and post-flight experience. A questionnaire was designed in such a way that the
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same sets of variables were measured among the customers of the two airlinesunder study. Fliers who had flown any of the two airlines could answer thequestions pertaining to those airlines. The objective of this study was tounderstand the satisfaction levels of the airline customers.
The Indian Aviation IndustryIntroduction
Air India was set up by J.R.D. Tata, who ran it successfully until it wasnationalized in 1953. In the 1960s the “Maharaja”, as the national flag-carrier was affectionately known, was flying to 32 destinations (it now flies to 46destinations) and making profits.For many years in India air travel was perceived to be an elitist activity. This view arose from the “Maharajah”syndrome where, due to the prohibitive cost of air travel, the only people whocould afford it were the rich and powerful. In recent years, however, thisimage of Civil Aviation has undergone a change and aviation is now viewed ina different light - as an essential link not only for international travel and trade but also for providing connectivity to different parts of the country. Aviationis, by its very nature, a critical part of the infrastructure of the country and hasimportant ramifications for the development of tourism and trade, the openingup of inaccessible areas of the country and for providing stimulus to businessactivity and economic growth. Until less than a decade ago, all aspects of aviation were firmly controlled by the Government.In the early fifties, all airlines operating in the country were merged into either Indian Airlines or Air India and, by virtue of the Air Corporations Act, 1953this monopoly was perpetuated for the next forty years. The DirectorateGeneral of Civil Aviation controlled every aspect of flying including grantingflying licenses, pilots, certifying aircrafts for flight and issuing all rules and
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 procedures governing Indian airports and airspace. Finally, the AirportsAuthority of India was entrusted with the responsibility of managing allnational and international airports and administering every aspect of air transport operation through the Air traffic Control.With the opening up of the Indian economy in the early Nineties, aviation sawsome important changes. Most importantly, the Air Corporation Act wasrepealed to end the monopoly of the public sector and private airlines werereintroduced. Domestic liberalization took off in 1986, with the launch of scheduled services by new start-up carriers from 1992. A number of foreigninvestors took an interest. Modiluft closed after failing to meet financialobligations to lessors and its technical partner, Lufthansa. In 1996-1998, Tataand SIA tried to launch a domestic carrier, but the civil aviation minister had publicly stated his opposition on numerous occasions (Airline Business 1998).The Indian government introduced the open sky policy for domestic players in1991 and partial open sky policy for international players only in November 2004. Increasing liberalisation and deregulation has led to an increase in thenumber of players. The industry comprises three types of players full costcarriers, low cost carriers (LCC) and many start-up airlines that aremaking/planning an entry.
Present Indian Scenario
It is a phase of rapid growth in the industry due to huge build-up of capacity inthe LCC space, with capacity growing at approximately 45% annually. Thishas induced a phase of intense price competition with the incumbent fullservice carriers (Jet, Indian, Air Sahara) dis- counting up to 60-70% for certainroutes to match the new entrants ticket prices. This, coupled with costs
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