Air Deccan – The First Low Cost Aviation

in India
 About Indian Aviation Industry
• Tata's established Tata Airlines in 1930.
• In 1953, the air corporation act came into
existence.
Two corporations:
Indian Airlines Corporations.
Air India International.
• In 1986, private airlines were allowed to
operate under an ‘Air Taxi’ scheme.
• In 1994, the government approved 8 private
carriers to start domestic operations.
• In 2003, the government established
committee to introduce reforms.
AIR DECCAN
 INTRODUCTION

1.Kingfisher Red, known formerly as

Simplifly Deccan.
2.Prior to that as Air Deccan.
3.It is headquartered in Bangalore, India.
Cond…

• It was started by Captain G.R.Gopinath and its first flight took

off on 23 August 2003 from Hyderabad to Vijayawada.
• It was known popularly as the common man's airline,
signifying that it was now possible for the common man to fly.
• Air Deccan was the first airline in India to fly to second tier
cities.
 Expansion of Air Deccan
• In 1995 Gopinath started Deccan Aviation.
• On August 25, 2003, started air link to smaller
cities with only two 48-seater air crafts.
• In September 2003 extended flight service to
AP & TN.
• In December 2003 started flying long routes in
India.
• In 2004 Air Deccan had leased 7 A-320 aircraft.
• In July 2004 Air Deccan announced lowest fare
than theirs peers in the market.
• On May 31, 2007, King fisher air lines acquired
26% stake for Rs.5.5 billion.
• Analyze Air Deccan’s low cost business model.
2] what value proposition does full service
airlines offer to their customers and how can
they differentiate there services in the wake
of competition from low cost airlines ?
Understand your competitors' strengths -
The first step in addressing the challenge of low-cost competitors is to
understand what drives their success
Low-cost carrier business model practices include:

• A single passenger class

• A single type of aircraft (commonly the airbus a320 or boeing 737

families), reducing training and servicing costs

• A minimum set of optional equipment on the aircraft, further reducing

costs of acquisition and maintenance, as well as keeping the weight of the
aircraft lower and thus saving fuel:
o no in-flight entertainment systems made available
o No seat recliners, seat pockets, window blinds or seat headrest covers
• A simple fare scheme, such as charging one-way tickets half that of round-
trips

• Flying to cheaper, less congested secondary airports and flying early in the
morning or late in the evening to avoid air traffic delays and take advantage
of lower landing fees
•Fast turnaround times

•Unreserved seating

•Simplified routes, emphasizing point-to-point transit instead of transfers at

hubs

•Encourage the use of direct flights. Luggage is not automatically transferred

from one flight to another, even if both flights are with the same company.

•Generation of ancillary revenue from a variety of activities, commission-based

products

•Emphasis on direct sales of tickets, especially over the internet

•Employees working in multiple roles, for instance flight attendants also

cleaning the aircraft or working as gate agents
•A disinclination to handle special service passengers, for instance by
placing a higher age limit on unaccompanied minors [1] than full service
carriers

•Aggressive fuel hedging programs

•Passengers paying charges for extras, such as hold luggage, online

check in and priority boarding

•Avoiding using jetways to board and alight passengers by using a

mobile stairway which is a cheaper alternative.

•Not supplying meals in a flight, but offering snacks, sandwiches and

drinks instead to purchase on board
3] Air Deccan’s promotion strategy highlighted its ‘low cost’
services to tap the target market. With many companies planning
to offer low cost airline services in India, do you think Air Deccan
should make changes in its promotion strategy in the near future?
Why or why not?
 Supporting points
• India has huge growth potential
• Only 1% of the potentials are tapped
• Upper middle class and lower middle class
• Television and print media
• Strategies to reduce costs
 food
 extra seats
 turnaround time
 distribution cost
 lower employee cost
 on flight add
 connecting flights
 Challenges
• Encouraged many new entrants
• Reduction of fares by the counterparts
• Put pressure on Deccan
• Global LCA’s could reduce cost substantially
• Crew below threshold limit could affect
customer services
• No cut in distribution cost
• High ATF taxes and fuel
A I R A S I A - TONY FERNANDES