INTRODUCTION

India at present has twelve competing airlines in the domestic market as

against a single government owned airline in 1991. According to McKinsey
Quarterly(2005) the Indian aircraft market is the world’s second largest
commercial aircraft market. On-time performance and service levels have
risen dramatically and fares have dropped. Passenger traffic is expected to
grow by 20 percent annually over the next five years. Only a small percentage
of India’s population travels by air partly due to the high costs of domestic
flying. According to the Center for Asia Pacific Aviation(CAPA) consultancy,
new players will help domestic passenger numbers. The players in the current
airline market include airlines like Air Deccan with low-cost, low-fare and no
frills along with airlines like Kingfisher, which offers some frills, and
premium airline like Jet Airways. Competition has brought in some price
advantages to travellers and has converted many railway passengers to airline
travellers. This article examines customer satisfaction among travellers of four
major domestic airlines in India. Because of proliferated number of players in
the airline industry, airlines may enjoy new business opportunities along with
high competitive threats. The objective of this study is to understand the
customer satisfaction levels of the two major airlines viz. Jet Airways, and
Kingfisher.
A comparison of customer satisfaction based on service quality was done
among the two major airlines based on responses from frequent fliers. A flying
experience was divided into three stages- namely, pre-flight, in-flight and
post-flight experience. A questionnaire was designed in such a way that the

1
same sets of variables were measured among the customers of the two airlines
under study. Fliers who had flown any of the two airlines could answer the
questions pertaining to those airlines. The objective of this study was to
understand the satisfaction levels of the airline customers.

The Indian Aviation Industry

Introduction
Air India was set up by J.R.D. Tata, who ran it successfully until it was
nationalized in 1953. In the 1960s the “Maharaja”, as the national flag-carrier
was affectionately known, was flying to 32 destinations (it now flies to 46
destinations) 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 who
could afford it were the rich and powerful. In recent years, however, this
image of Civil Aviation has undergone a change and aviation is now viewed in
a different light - as an essential link not only for international travel and trade
but also for providing connectivity to different parts of the country. Aviation
is, by its very nature, a critical part of the infrastructure of the country and has
important ramifications for the development of tourism and trade, the opening
up of inaccessible areas of the country and for providing stimulus to business
activity 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, 1953
this monopoly was perpetuated for the next forty years. The Directorate
General of Civil Aviation controlled every aspect of flying including granting
flying licenses, pilots, certifying aircrafts for flight and issuing all rules and

2
procedures governing Indian airports and airspace. Finally, the Airports
Authority of India was entrusted with the responsibility of managing all
national 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 saw
some important changes. Most importantly, the Air Corporation Act was
repealed to end the monopoly of the public sector and private airlines were
reintroduced. Domestic liberalization took off in 1986, with the launch of
scheduled services by new start-up carriers from 1992. A number of foreign
investors took an interest. Modiluft closed after failing to meet financial
obligations to lessors and its technical partner, Lufthansa. In 1996-1998, Tata
and 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 in
1991 and partial open sky policy for international players only in November
2004. Increasing liberalisation and deregulation has led to an increase in the
number of players. The industry comprises three types of players full cost
carriers, low cost carriers (LCC) and many start-up airlines that are
making/planning an entry.

Present Indian Scenario

It is a phase of rapid growth in the industry due to huge build-up of capacity in
the LCC space, with capacity growing at approximately 45% annually. This
has induced a phase of intense price competition with the incumbent full
service carriers (Jet, Indian, Air Sahara) dis- counting up to 60-70% for certain
routes to match the new entrants ticket prices. This, coupled with costs

3
pressures (a key cost element, ATF price, went up approximately 35% in
recent months, while staff costs are also rising on the back of shortage of
trained personnel), is exerting bottom-line pressure.
The growth in supply is overshadowed by the extremely strong demand
growth, led primarily by the conversion of train/bus passengers to air travel, as
well as by the fact that low fares have allowed passengers to fly more
frequently. There has, therefore, been an increase in both the width and depth
of consumption. However, the regulatory environment, infrastructure and tax
policy have not kept pace with the industry’s growth.
Enactment of the open sky policy between India and Saarc countries, increase
in bilateral entitlements with the EU and the US, and aggressive promotion of
India as an attractive tourism spot helped India attract 3.2 million tourists in
2004-05. This market is growing at 15% per annum and India is expected to
attract 6 million tourists by 2010. Also, increasing per capita income has led to
an increase in disposable incomes, leading to greater spend on leisure and
holidays and business travel has risen sharply with increasing MNC presence.
Smaller cities are also well connected now. Passenger traffic has increased and
over 21 million seats have been sold, resulting in a growth of over 50%. The
Indian travel market is expected to triple to $51 billion by 2011 from $16.3
billion in 2005-06.

4
Key Players in Indian Industry

Airlines on International Routes

Air India is the national flag carrier airline of India with a network of
passenger and cargo services worldwide. It is one of the two state-owned
airlines in the country, the other being Indian Airlines. Air India has 44 world-
wide destinations. The airline has been profitable in most years since its
inception. In the financial year ending March 31, 2006, Air India has made a
net profit of Rs.97 million; earned a revenue of Rs.87,480 million -
representing a growth of almost 15 per cent over the previous year.

Airlines on Domestic Routes

SpiceJet is a low-cost airline. Their marketing theme "offering low 'everyday

spicey fares' and great guest services to price conscious travelers". Their aim
is to compete with the Indian Railways passengers travelling in AC coaches.

Air Deccan is an airline based in Bangalore, India. It was India's first low-
cost carrier, and as of May 2006, connects 55 cities within India. Air Deccan
has grown rapidly since it first started air operations in 2003, and despite its
almost disastrous maiden inaugural flight (which caught fire), it continued to
grow. The growing Indian economy and the increasing number of middle-
class people in India has greatly helped its growth.

5
GoAir The People’s Airline, a low cost carrier promoted by The Wadia Group
is a domestic budget airline based in Mumbai, India established in June 2004.
It’s a relatively small player as compared to other low cost airlines.

Kingfisher Airlines is an airline based in Bangalore, India. Services started

on 9 May 2005, following the lease of 4 Airbus A320 aircraft. It initially
operates only on domestic routes. The airline promises to suit the needs of air
travellers and to provide reasonable air fares. Kingfisher are pushing for an
amendment of the present Indian government rule which requires an airline to
fly a minimum of five years on domestic routes before it can start flying
overseas.

IndiGo Airlines is a new and a private domestic airline based in India. IndiGo
placed an order for 100 Airbus A320 aircraft during the 2005 Paris Air Show.
The total order was worth US $6 billion; one of the highest by any domestic
carrier during the show. The new low-fare carrier has started operations from
August 4, 2006.

Indian is India's state owned primarily domestic airline, under the federal
Union Ministry of Civil Aviation The Company was formerly known as Indian
Airlines. Indian Civil Aviation Minister, Praful Patel, announced Government
of India's plan to merge Air India and Indian into one giant airline consisting
of 130-140 aircraft.

6
Jet Airways a “regular” airline which offers normal economy and business
class seats. Jet Airways, along with Air Sahara, is the only airline which
survived the dismal period of 1990s when many private airlines in India were
forced to close down. Jet Airways is an airline based in India serving domestic
and international routes. The airline operates over 300 flights to 43
destinations across the. It currently controls about 32% of India's aviation
market

GLOBAL SCENARIO

At the macro-economic level Asia Pacific growth is impressive. India and

China are growing between 8 and 10% each year. China is now the world's 4th
largest economy. Excluding Japan, Asian economic growth was 7%—doubles
the world average of 3.5%. Global airline traffic is expected to rise steadily
until 2008 in line with an anticipated good performance by the world
economy, according to the United Nations'(UN) aviation agency. The UN
International Civil Aviation Organization found in its medium-term forecast
that airline traffic would grow 6.1 per cent in 2006, 5.8 per cent in 2007, and
5.6 per cent in 2008. And strong economic growth will continue. But growth
means nothing if the bottom line is red. Globally airlines lost US$6 billion in
2005. US carriers lost US$10 billion. European carriers made about US$1.3
billion. Asian carriers led profitability with US$1.5 billion. Even within Asia
it is a mixed picture. Some carriers are among the most profitable. Others
however are struggling. In the region operating margins averaged less than

7
2%, still the best performance in the world. Most are below the 7 to 8%
needed to cover the cost of capital and give investors an acceptable return.

Impact of Rising Fuel Prices on the Industry

The high price of fuel is killing the profitability. In two years the industry fuel
bill more than doubled to nearly US$100 billion—23% of operating costs.
And there is no relief in sight. So what are airlines to do? Improve efficiency
is the answer. Progress to date has been dramatic. The break-even price of fuel
rose from US$22 per barrel in 2003 to nearly US$50 in 2005. Unfortunately,
fuel prices are above that. Airlines will not return to profitability until 2007
when we expect a break-even fuel price of US$55. Even then the projected
profit is only US$6 billion. Asia will remain profitable in 2006 posting US$2
billion in profit. But do not start opening the Champagne. That is still less than
a 2% net margin.

Global Impact of LCCs

Low cost carrier competition is new to this region. Asian network carriers are
better prepared than many of their US or European counterparts. Their
operating costs are 6 US cents per ATK on route lengths of 1500km. But the
competition will also be tough. Air Asia's costs are the lowest in the world—
2.5 US cents per ATK. Labour costs in Asia are the lowest in world—19% of
operating cost. This is a significant advantage against US and European
carriers with an average cost of above 30%. If we compare Asian network
carriers to their low cost rivals, the story changes. Average labour costs can be

8
up to 7 times lower at low-cost startups. There is no finish line in the race to
reduce costs and improve efficiency. Some analysts are of the view that
Countries in the Asia-Pacific region, which entered the industry much later,
have emerged as important players in the past decade. In comparison, the
Indian civil aviation industry which is much older still operates from a small
base even though its domestic market potential and skilled man power should
have given it intrinsic advantages to emerge as a globally important player in
the civil aviation industry by now.

Path Forward for India

The escalating fuel bill would eventually translate into costlier air tickets for
the Indian travellers, who have for the first time sampled air travel at fares that
match first-class railway tickets. Even as some airlines hiked fares by ten per
cent and others toyed with the idea to offset their ballooning fuel bill, the
government dealt them another blow by withdrawing the withholding tax
exemption on aircraft lease agreements. In the absence of this tax exemption,
aircraft leasing cost is expected to shoot up between 20 to 67 per cent - a
move that could deter new entrants and existing players from leasing more
aircraft. Although poor airport infrastructure remains a concern, we need to
maintain a positive outlook on the sector as the government allows private
participation and FDIs in construction and maintenance of air-traffic
infrastructure. This also hints at the huge opportunity in terms of infrastructure
development and maintenance in the aviation sector for foreign construction
and engineering companies. For now, as more and more Indians take to the
skies, the country is set to emerge as the fastest growing aviation market.

9
Overview

The history of civil aviation in India began in December 1912. This was with
the opening of the first domestic air route between Karachi and Delhi by the
Indian state Air services in collaboration with the imperial Airways, UK,
though it was a mere extension of London-Karachi flight of the latter airline.
Three years later, the first Indian airline, Tata Sons Ltd., started a regular
airmail service between Karachi and Madras without any patronage from the
government.

At the time of independence, the number of air transport companies, which

were operating within and beyond the frontiers of the company, carrying both
air cargo and passengers, was nine. It was reduced to eight, with Orient
Airways shifting to Pakistan. These airlines were: Tata Airlines, Indian
National Airways, Air service of India, Deccan Airways, Ambica Airways,
Bharat Airways and Mistry Airways.

In early 1948, a joint sector company, Air India International Ltd., was
established by the Government of India and Air India (earlier Tata Airline)
with a capital of Rs 2 crore and a fleet of three Lockheed constellation
aircraft. Its first flight took off on June 8, 1948 on the Mumbai (Bombay)-
London air route. At the time of its nationalization in 1953, it was operating

10
four weekly services between Mumbai-London and two weekly services
between Mumbai and Nairobi. The joint venture was headed by J.R.D. Tata, a
visionary who had founded the first India airline in 1932 and had himself pilot
edits inaugural flight.

Significance of Air Transport

Air transport is the most modern, the quickest and the latest addition to the
modes of transport. Because of speed with which aero planes can fly, travel by
air is becoming increasingly popular. As far as the world trade is concerned it
is still dominated by sea transport because air transport is very expensive and
is also unsuitable for carrying heavy, bulky goods. However, transportation of
high value light goods and perishable goods is increasingly being done by air

transport.

Foreign Airlines

Foreign airlines carrying international passenger traffic to and from India

existed long before Independence. Their operations are governed by bilateral
agreements signed from time to time between the Government of India and
the governments of respective countries. In 1980-81, the number of such
airlines was 35. It rose to 49 in 1996-97.

The share of foreign airlines in India's scheduled international traffic has

increased. In 1971, their share was 55.58 per cent which went up to 65 per
cent and declined to 58 per cent during 1972-75. It fell to 55.72 per cent in
1976 and further to 55.02 per cent in 1977. Between 1978 and 1990 it

11
gradually increased and rose to 75.93 per cent. In 1996, the share was nearly
72 per cent.

Open-Sky Policy

The Open-sky policy came in April 1990. The policy allowed air taxi-
operators to operate flights from any airport, both on a charter and a non
charter basis and to decide their own flight schedules, cargo and passenger
fares. The operators were, however, required to use aircraft with a minimum
of 15 seats and conform to the prescribed rules. In 1990, the private air taxi-
operators carried 15,000 passengers. This number increased to 4.1 lakh in
1992, 29.2 lakh in 1993, 36 lakh in 1994 and 48.9 lakh in 1995.

The 1996, private air taxi operators carried 49.08 lakh passengers which
amounted to a 41.14 per cent share in the domestic air passenger traffic. Seven
operators viz NEPC Airlines, Skyline NEPC, Jet Air, Archana Airways,
Sahara India Airlines, Modiluft and East West Airlines have since acquired the
status of scheduled airlines. Besides this there were 22 nonscheduled private
operators and 34 private operators holding no-objection certificate in 1996.
The number of plus 120 category aircraft in the private sector was 34 and the
total fleet strength was 75 in June, 1996. Two out of seven scheduled air taxi
operators suspended their operations in 1996 because of the non-availability
of aircraft.

12
Infrastructure and Related Facilities

Airport Authority of India:

set up on April 1,1995 by amalgamating the international Airport Authority of
India and the National Airport Authority of India, the Airport Authority of
India was to handle all matters relating to infrastructure for civil air traffic and
transport at the international and the domestic airports and enclaves in the
country.

Indira Gandhi Rashtriya Uran Akademi:

It was set up at Fursatganj to standardize and improve the flying training
facilities in the country. Till January 1997 it had trained 289 pilots on fixed
wing aircraft and 20 pilots on rotary wing aircraft.

Flying/gliding training clubs:

On December 31,1996, besides the above Akademi, 41 flying clubs/institutes
and their branches including nine private institutes were imparting flying

13
training. Five gliding clubs, seven gliding wings of flying clubs and a
government Gliding Centre, Pune, were imparting training in gliding.

Development of Civil Aviation

The repeal of the Air Corporation Act from 1 March 1994 enabled private
operators to provide air transport services. Six operators were given the status
of schedule doperators on 1February1995.

Currently there are five international airports and 87 domestic airport in the
country with 28 civilian enclaves for defence purposes.
The Airport Authority of India plans to invest Rs 35,000 million for the
construction and upgradation of airports.

Budgetary support of Rs 485.50 million was allocated to AAI in 1996-97.

In august 1996, in a major policy decision, the government allowed the private
sector to set up air cargo complexes in a bid to ensure smooth movement of
export cargo.

Domestic and foreign investors including NRIs have been invited to

participate in the development of infrastructure support at select airports.
With a market share of 43% Indian airlines is the biggest player in aviation.
Rs 24,710 million have been marked for development of the civil aviation
sector in the annual plan for 1997-98.

14
 The Indian Air Cargo Market

The growth of air cargo in India has also been manifold though it might not
have kept pace with the progress made all over the world. Table 1 shows how
both international and domestic air cargo traffic has increased, reflecting an
overall year on year growth.
Table 1: Trends in cargo traffic at five international airports in India.
(Figures in '000 tonnes)

Period International Cargo Domestic Cargo Total Percentage Increase

1972-73 47.4 33.6 81 -
1982-83 165.4 84.6 250 209%
1992-93 300.5 90.9 391.4 56.56%
1999-2000 494.2 183.0 677.2 73%

(Source - Transport India 2000)

15
 Future Outlook Of The Industry

Future projections reflect that the air cargo industry both in the domestic
sector and the international sector will continue in its upward trend of growth.
Fig.1 reflects that the domestic air cargo will continue at a somewhat steady
rate of growth whereas the international air cargo movement as illustrated in
Fig.2 shows a steeper rate of growth indicating that international air cargo
trade will flourish at a higher rate of growth. Both Domestic cargo and
International cargo are poised to grow according to the projections.

The major reasons, which can be attributed to this increase, are

Increase in overseas trade

Indian economic policies
Customer service orientation
Inventory concerns
E-commerce development

An airline provides air transport services for passengers or freight, generally

with a recognized operating certificate or license. Airlines lease or own their
aircraft with which to supply these services and may form partnerships or
alliances with other airlines for mutual benefit.

Airlines vary from those with a single airplane carrying mail or cargo,
through full-service international airlines operating many hundreds of

16
airplanes. Airline services can be categorized as being intercontinental,
intracontinental, or domestic and may be operated as scheduled services or
chartered planes.

Ticket Revenue

Airlines assign prices to their services in an attempt to maximize profitability.

The pricing of airline tickets has become increasingly complicated over the
years and is now largely determined by computerized yield management
systems.

Because of the complications in scheduling flights and maintaining

profitability, airlines have many loopholes that can be used by the
knowledgeable traveler. Many of these airfare secrets are becoming more and
more known to the general public, so airlines are forced to make constant
adjustments.

Most airlines use differentiated pricing, a form of price discrimination, in

order to sell air services at varying prices simultaneously to different
segments. Factors influencing the price include the days remaining until
departure, the booked load factor, the forecast of total demand by price point,
competitive pricing in force, and variations by day of week of departure and
by time of day. Carriers often accomplish this by dividing each cabin of the
aircraft (first, business and economy) into a number of travel classes for
pricing purposes.

Operating Cost

17
Full-service airlines have a high level of fixed and operating costs in order to
establish and maintain air services: labor, fuel, airplanes, engines, spares and
parts, IT services and networks, airport equipment, airport handling services,
sales distribution, catering, training, aviation insurance and other costs. Thus
all but a small percentage of the income from ticket sales is paid out to a wide
variety of external providers or internal cost centers.

Moreover, the industry is structured so that airlines often act as tax collectors.
Airline fuel is untaxed, however, due to a series of treaties existing between
countries. Ticket prices include a number of fees, taxes, and surcharges they
have little or no control over, and these are passed through to various
providers. Airlines are also responsible for enforcing government regulations.
If airlines carry passengers without proper documentation on an international
flight, they are responsible for returning them back to the originating country.

Airlines follow a corporate structure where each broad area of operations

(such as maintenance, flight operations, and passenger service) is supervised
by a vice president. Larger airlines often appoint vice presidents to oversee
each of the airline's hubs as well. Airlines employs lawyers to deal with
regulatory procedures and other administrative tasks. The headquarters of Air
India are in Mumbai, India.

18
 Introduction to UB group

UB group based in Bangalore, is a conglomerate of different companies with a

major focus on the brewery(beer) and alcoholic beverages industry. The
company markets most of its beer under the Kingfisher brand. The group is
headed by Dr.Vijay Mallya. The UB Group was founded by a Scotsman,
Thomas Leishman in 1857. Kingfisher, the Group's most visible and profitable
brand, made a modest entry in the sixties. During the 1950's and 60's, the
company expanded greatly by acquiring other breweries. First was the
addition of McDowell as one of the Group subsidiaries, a move which helped
United Breweries to extend its portfolio to wines and spirits business.
Strategically, the Group moved into agro-based industries and medicines when
Mallya acquired Kissan products and formed a long-term relationship with
Hoechst AG of Germany to create the Indian pharmaceutical company now
known as Aventis Pharma , the Indian subsidiary of the global pharma major
Sanofi-Aventis.

The logo
The Pegasus, which is the symbol of the United Breweries, first found its
place as the Group logo in 1940. The UB Group’s Brewing Entity - called

19
United Breweries Limited (UBL) - has also assumed undisputed market
leadership with a national market share in excess of 50%. Through a process
of aggressive acquisition and market penetration, The UB Group today
controls 60% of the total manufacturing capacity for Beer in India.

20
 An Introduction to Kingfisher Airlines

Kingfisher Airline is a private airline based in Bangalore, India. The airline is

owned by Vijay Mallya of United Beverages Group. Kingfisher Airlines
started its operations on May 9, 2005 with a fleet of 4 Airbus A320 aircrafts.
The airline currently operates on domestic routes. The destinations covered by
Kingfisher Airlines are Bangalore, Mumbai, Delhi, Goa, Chennai, Hyderabad,
Ahmedabad, Cochin, Guwahati, Kolkata, Pune, Agartala, Dibrugarh,
Mangalore and Jaipur.

In a short span of time Kingfisher Airline has carved a niche for itself. The
airline offers several unique services to its customers. These include: personal
valet at the airport to assist in baggage handling and boarding, exclusive
lounges with private space, accompanied with refreshments and music at the
airport, audio and video on-demand, with extra-wide personalized screens in
the aircraft, sleeperette seats with extendable footrests, and three-course
gourmet cuisine.

Vision:

The Kingfisher Airlines family will consistently deliver a safe, value-based

and enjoyable travel experience to all our guests.”

Safety:
This is an overriding value. In this line of business, there is no compromise.

21
Service:
In hospitality business customer satisfaction is very important and building
trust, goodwill and loyalty of customers is at prime focus.

Happiness:
Kingfisher seeks to build an organization with people who choose to be happy,
and will endeavor to influence their guests and co-workers to be happy too.

Teamwork:
Kingfisher believes We will succeed or fail as a team. Each one of us must
respect our colleagues regardless of their rank, and we must work together to
ensure our mutual success.

Accountability:
Every employee in kingfisher will be held accountable for the successful
execution of their duties, commitments and obligations, and they will strive to
lead by an example.

Product: Premium class seats

1. Sleeperette seats with extendable footrests. 48" seat pitch and a 125°

recline. Fully-adjustable headrests.

2. Laptop and mobile phone chargers in each seat.

22
3. Comfortable pillows and snug blankets.

Price:

Initially Kingfisher airlines didn’t differentiate between business class and

economy class. But eventually they decreased the prices of business class
and called that seats as premium seats. Fares were very average as it had to
target middle class as well as premium class people.

Place: King fisher airlines connects 23 cities like Ahmedabad, Goa,

Delhi, Kolkata, Hyderabad, Guwahati, Jaipur, Udaipur, etc.

Promomtion:

Various promotional strategies has been adopted by Kingfisher airlines

like

o The 'Power Flyer' a consumer incentive offer targeted at the

corporate traveler
o Passengers are offered in flight entertainment options and

contests like `Kingfisher flying face of the month' and

attractive discounts of branded merchandise.

23
 o Offer in-flight silent auctions for lifestyle products and in-

flight sales of dry packaged food and beverages

o The marketing department showcased the airlines as “The new

flying experience”.

o KINGFISHER Airlines has announced special fares for all

personnel serving in the Indian Armed Forces, the Union
Government, State governments, and employees of all public
sector units in the country. The immediate families of these
personnel.
o The company has just launched Kingfisher First, which is a
print campaign to promote its first class service. It is a
personalized campaign, which has Vijay Mallya, signing off by
saying, "I have created a product which is better than what I
would have created for myself."

Kingfisher Airlines Limited is an airline based in Bangalore, India. It is a

major Indian airline operating 218 flights a day and has an extensive network
to 37 destinations, with plans for regional and long-haul international services.
Its main bases are Bangalore International Airport, Bangalore, Chhatrapati
Shivaji International Airport, Mumbai and Indira Gandhi International Airport,
Delhi. Kingfisher Airlines, through one of its holding companies United
Breweries Group, has acquired 26% stake in the budget airline Air Deccan
and has option to buy further of 20% stake from the secondary market.

24
Kingfisher is one of only 6 airlines in the world to have a 5 star rating from
Skytrax, along with Asian Airlines, Malaysia Airlines, Qatar Airways,
Singapore Airlines and Cathay Pacific Airways.Kingfisher Airlines, through
one of its holding companies UB holdings Ltd, has acquired 26% stake in the
budget airline Air Deccan and has option to buy further of 20% stake from the
secondary market.

Introduction to Jet Airways

Jet Airways is India’s premier private airlines. Naresh Goyal is currently the
chairman of Jet Airways. Jet Airways operates over 320 flights daily to 43
destinations in India and currently controls about 40% of India's aviation
market. Jet Airways was the first private airline of India to fly to international
destinations. It operates daily international flights to Colombo, Kathmandu,
Singapore, Kuala Lumpur and London (Heathrow). Jet Airways has won a
number of awards in recognition of standards of its service and has also
received the ISO 9001:2000 certification for its In-flight Services.

Jet Airways was established on 3 May 1991 with a fleet of 4 Boeing 737-300
aircraft, with 24 daily flights serving 12 destinations. Jet Airways presently
operates 55 aircrafts and is now a public limited company.

Jet Airways (India) Ltd. is an airline based in Mumbai, India, operating

domestic and international services. It operates over 330 daily flights to 50
destinations across the country and 6 overseas. Its main base is Chhatrapati

25
Shivaji International Airport, Mumbai, with hubs at Indira Gandhi
International Airport, Delhi, Anna International Airport, Chennai, Netaji
Subhash Chandra Bose International Airport, Kolkata, Bangalore International
Airport, Bangalore and Brussels Airport, Brussels.

According to the latest available figures, its share of India's domestic aviation
market has increased to over 43% (up from less than 27% a few months ago),
and this is still greater than any other Indian domestic operator's market share.

Jet Airways was incorporated as an "air taxi" operator on 1 April 1992. It

started commercial airline operations on 5 May 1993 with a fleet of 4 Boeing
737-300 aircraft. In January 1994 a change in the law enabled Jet Airways to
apply for scheduled airline status, which was granted on 4 January 1995. It
began international operations to Sri Lanka in March 2004. Plans to acquire
rival Air Sahara, announced in January 2006, after some rough patches deal
got through. The airline is owned by Tailwinds (owned by Naresh Goyal)
(80%) and public shares (20%) and has 10,017 employees.

On April 12, 2007 Jet Airways agreed to buy out its smaller rival Air Sahara
for 14.5 billion rupees ($340m).Air Sahara would be renamed as Jet Lite
hereafter and it has been placed between a low cost carrier and full fledged
airliner. It may be noted that Jet Airways with the acquisition of Air Sahara is
all set to refurbish the fleet and crew with new livery and uniform and plans
are in pipeline to start a freighter by the year end. The deal will give the
airline a combined domestic market share of about 32%. Jet Airways serves
52 destinations, including 6 cities outside India.

26
Jet Airways sought to take maximum advantage of this ruling by adding new
international scheduled routes to destinations within the commercially viable
flying range of its growing fleet of "Next Generation" Boeing 737-700/800
series narrow bodied jets, such as Singapore and Kuala Lumpur. This first led
to a decision to lease three Airbus A340-300E wide-bodied from South
African Airways to enable it to commence non-stop flights to London
Heathrow in the UK and to subsequently place a large order for a fleet of
brand-new Airbus A330-200 and Boeing 777-300ER wide-bodied airliners to
permit further expansion, especially to additional destinations in Europe and
North America. In 2006 Jet Airways has international services to Kathmandu,
Colombo, Singapore, Kuala Lumpur, London Heathrow, operating from
Mumbai, Delhi, Chennai and Amritsar.

Jet Airways started three times-a-week service from Ahmedabad to London

Heathrow on April 3, 2007 to cater to the travel requirements of the ethnic
Gujarati community in the UK. The airline is using its recently delivered
Airbus A330-200s on both the Amritsar and Ahmedabad services while "Next

27
Generation" Boeing 737-800s equipped with winglets are used on all Bangkok
sectors.

It also claimed that its international operations were profitable, with the sole
exception of its long-haul flights between India and London-Heathrow.

Airline Agreements

Jet Airways has commercial agreements with the following airlines:

• Air France
• American Airlines
• Austrian
• British Airways
• Brussels Airlines
• Gulf Air
• KLM
• Lufthansa
• Northwest Airlines
• Qantas

28
 • South African Airways
• Swiss International Airlines
• Thai Airways International

Jet Airways is proud that we are one of the few airlines in the world to receive
the ISO 9001 certification for our in-flight services.

PEST Analysis: The Indian Airline Industry

A PEST analysis is an analysis of the external macro-environment that affects

all firms. P.E.S.T. is an acronym for the Political, Economic, Social, and
Technological factors of the external macro-environment. Such external
factors usually are beyond the firm's control and sometimes present
themselves as threats. For this reason, some say that "pest" is an appropriate
term for these factors. Let us look at the PEST analysis of the Indian aviation
sector:

29
Political Factors

In India, one can never over-look the political factors which influence each
and every industry existing in the country. Like it or not, the political
interference has to be present everywhere. Given below are a few of the
political factors with respect to the airline industry:

o The airline industry is very susceptible to changes in the political

environment as it has a great bearing on the travel habits of its customers.
An unstable political environment causes uncertainty in the minds of the air
travellers, regarding travelling to a particular country.
o Overall India’s recent political environment has been largely unstable due
to international events & continued tension with Pakistan.
o The Gujarat riots & the government’s inability to control the situation have
also led to an increase in the instability of the political arena.
o The most significant political event however has been September 11. The
events occurring on September had special significance for the airline
industry since airplanes were involved. The immediate results were a huge
drop in air traffic due to safety & security concerns of the people.
o International airlines are greatly affected by trade relations that their
country has with others. Unless governments of the two countries trade
with each other, there could be restrictions of flying into particular area
leading to a loss of potential air traffic (e.g. Pakistan & India)
o Another aspect is that in countries with high corruption levels like India,
bribes have to be paid for every permit & license required. Therefore

30
 constant liasoning with the minister & other government official is
necessary.

The state owned airlines suffer the maximum from this problem. These
airlines have to make several special considerations with respect to selection
of routes, free seats to ministers, etc which a privately owned airline need not
do. The state owned airlines also suffers from archaic laws applying only to
them such as the retirement age of the pursers & hostesses, the labour
regulations which make the management less flexible in taking decision due
to the presence of a strong union, & the heavy control &interference of the
government. This affects the quality of the service delivery & therefore these
airlines shave to think of innovative service marketing ideas to circumvent
their problems & compete with the private operators.

Economic Factors

Business cycles have a wide reaching impact on the airline industry. During
recession, airline is considered a luxury & therefore spending on air travel is
cut which leads to reduce prices. During prosperity phase people indulge
themselves in travel & prices increase.
After the September 11 incidents, the world economy plunged into global
recession due to the depressed sentiment of consumers..
The loss of income for airlines led to higher operational costs not only due to
low demand but also due to higher insurance costs, which increased after the

31
WTC bombing. This prompted the industry to lay off employees, which
further fuelled the recession as spending decreased due to the rise in
unemployment.
Even the Indian carriers like Air India was deeply affected as many flights
were cancelled due to internal (employee relations) as well as external
problems, which has been discussed later.

Social Factors

The changing travel habits of people have very wide implications for the
airline industry. In a country like India, there are people from varied income
groups. The airlines have to recognize these individuals and should serve them
accordingly. Air India needs to focus on their clientele which are mostly low
income clients & their habits in order to keep them satisfied. The destination,
kind of food etc all has to be chosen carefully in accordance with the tastes of
their major clientele.

Especially, since India is a land of extremes there are people from various
religions and castes and every individual travelling by the airline would
expect customization to the greatest possible extent. For e.g. A Jain would be
satisfied with the service only if he is served jain food and it should be kept in
mind that the customers next to him are also jain or at least vegetarian.

Technological Factors

The increasing use of the Internet has provided many opportunities to airlines.
For e.g. Air Sahara has introduced a service through the internet, wherein the

32
unoccupied seats are auctioned one week prior to the departure. Air India also
provides many internet based services to its customer such as online ticket
booking, updated flight information & handling of customer complaints.

USTDA (US trade & development association) is funding a feasibility study

and workshops for the Airports Authority of India as part of a long-term effort
to promote Indian aviation infrastructure. The Authority is developing modern
communication, navigation, surveillance, and air traffic management systems
for India's aviation sector that will help the country meet the expected growth
and demand for air passenger and cargo service over the next decade.

A proposal for restructuring the existing airports at Delhi, Mumbai, Chennai

and Kolkata through long-term lease to make them world class is under
consideration. This will help in attracting investments in improving the
infrastructure and services at these airports. Setting up of new international
airports at Bangalore, Hyderabad and Goa with private sector participation is
also envisaged. A good example of the impact of technology would be that of
AAI, wherein with the help of technology it has converted its obsolete and
unused hangars into profit centers. AAI is now leasing these hangars to
international airlines and is earning huge profits out of it. AAI has also tried to
utilize space that was previously wasted installing a lamination machine to
laminate the luggage of travelers. This activity earns AAI a lot of revenue.

These technological changes in the environment have an impact on Air India

as well. Better airport infrastructure, means better handling of airplanes,
which can help reduce maintenance cost. It also facilitates more flights to such
destinations.

33
 Segmentation: The Airline Industry

Most airlines use a very traditional segmentation strategy, dividing passengers

into business travelers and economy travelers (mostly leisure travelers). The
common strategy is to squeeze as much profit as possible from business class
passengers who are attracted by superior services and corresponding high
prices and, at the same time, to try and fill the rest of the seats and ensure
growth by attracting economy class passengers with lower fares.

Business passengers
They are crucial for airlines' profitability. With less spare time and more cash
in their pockets, they agree to pay a premium price for a premium service.
Today business passengers account for approximately 48% of passengers, and
these 48% contribute 66% of airlines' revenue. The premium prices they pay
provide wider and more comfortable seats, better choice of meals and seats,
luxurious lounges.
Airlines can choose from a multitude of premium services to offer to business
travelers. Some of these extras range from seats equipped with faxes and
telephones, to gambling machines, showers, massage services and suit ironing
services in the recently introduced arrival lounges.
Business passengers believe it is worth extra money if they can save time and
arrive looking fresh for an important meeting. Business passengers will avoid
transit flights even if a longer flight could save them money. But amongst
other perks, flexible reservation services are probably the most important to
them. Reservations for business trips are often made just a couple of days in

34
advance. A no penalty cancellation policy is also very important to business
passengers.
The best way to reach business travelers is through printed advertising Many
airlines design special promotional programs that target corporate bookers and
meeting planners, who are responsible for business trips reservations.
Frequent flyer programs are an added bonus for business passengers.

Leisure Travelers
They represent a totally different market. The most important consideration
for most of them is the price. The lower the airfare, the more people will fly
the respective airline.
By and large, with the exception of wealthy travelers, this segment will not
pay extra for premium services and will agree to change several planes during
their trip if this option costs less than a direct flight.
Despite lower margins provided by this segment, leisure travelers are very
important to an airline's bottom line. Part of the reason is that technological
progress in the area of tele-conferencing and increased use of the internet for
business communications is expected to reduce the number of business
travelers. Thus, airlines are counting on the leisure segment to provide further
growth.
How can airlines benefit from the growth opportunities in the leisure segment
without losing immediate profit opportunities in the business segment? This is
a tough issue in airline marketing management. By improving services and

35
reducing prices for economy class passengers, airlines risk that some business
passengers will switch to economy class.
Since business class passengers are not many, a company relying mostly on
business travelers will often end up flying half-empty planes, losing the
potential revenue generated by lower priced economy seats.
On the other hand, few airlines catering solely to economy class passengers
can be successful because a low fare carrier must fill the entire plane if it is to
generate revenue from its low-margin operations.
Thus he/she tries to sell early, the economy seats at a cheaper price, while
keeping enough seats reserved for business travelers, who usually book at the
last minute. Keeping just the right amount of business seats reserved is
important: selling too few economy seats in advance may result in a less-than-
full plane while selling too many economy seats may result in a full plane, but
with insufficient revenue to gain a profit.

7 P‘s of Jet Airways and Kingfisher Airlines

Product
• Business Class, Economy class

Price
• Price Mix, Discount as per frequent flyer program

Place
• It is connected to maximum cities

Promotion
• TV ads, Hoardings, Internet, Calendars

36
 People
• Well trained crew members

Process
• On Ground, simpler process for Boarding the Flight

Physical Evidence
• Good seats, Dinning facilities, Entertainment facilities

RESEARCH OBJECTIVES
1. To study the customer preference of service quality of each of the two
airlines under study.
2. To compare the service quality of the airlines under study.
3. To find out the dissatisfaction among the passengers if any.

4. After finding out the areas of dissatisfaction, to give related suggestions

to the Airlines company.

RESEARCH METHODOLOGY
Questionnaire Design
The respondents were asked to evaluate the service quality of the service
provided
by the airline, which they have travelled.
For example, the on-time services of the airline was measured through the
question.

37
Similarly, other good ground service – in-flight service and post-flight service
were measured. The questionnaire also had a question to check the response to
the loyalty programs provided by the airlines to frequent fliers. Other
questions relating to the Ticket Counter, Security Check, Express Baggage,
Delay of thee Flights etc were asked. Also the frequency and purpose of the
flights was asked. Also the reason for travelling by that flight were asked.

A sample size of 150 respondents was taken who have travelled by both, Jet
Airways and Kingfisher Airlines. Further 75 questionnaires were filled by
people on behalf of Jet Airways whereas 75 questionnaires were filled by
people on behalf of Kingfisher Airlines.

After the survey, a thorough analysis was done. Respective tables and pie
charts were formed accordingly. Various percentage were also found out.
Analysis of each question was done. After that findings, and limitations were
given. Also the suggestions were given.
FINDINGS/ANALYSIS

1) FREQUENCY OF FLIGHTS

Jet Airways Kingfisher Total

Every week 25 17 42
Fortnightly 23 40 63
Monthly 14 15 29
Depends 13 3 16
Total 75 75 150

Out of 75 responses for Kingfisher, 40 people had flights every fortnight.

38
And out of 75 responses for Jet, 25 replied for every week which was highest
in it and 23 in fortnightly

2) SERVICES BY RESERVATION AGENT

Jet Airways Kingfisher Total
Highly satisfied 12 19 31
Satisfied 36 29 65
Average 18 17 35
Dissatisfied 9 10 19
Total 75 75 150

Out of 75 responses for Kingfisher, majority of people, i.e. 29 were satisfied

with the services of reservation agent. Whereas 36 people, ie. Almost 50%
were satisfied with the services of reservation agent.
This shows that reservation services provided by Jet are more satisfactory than
that provided by Kingfisher.

3) TIME CONVENIENCE
Not at all Somewhat Very Total
Imp Imp Important
Kingfisher 43 12 20 75
Jet Airways 10 16 49 75
Total 53 28 69 150

Out of 75 responses for Kingfisher, 43 people responded that time

convenience was not at all important for them whereas majority in Jet, i.e. 49
people, summing upto 65.33% said that time convenience was very important
factor for them. Thus it shows that to the people for whom TIME
CONVENIENCE is an important factor, preferred Jet over Kingfisher.

39
 FREQUENT FLYER PROGRAM
Not at all Somewhat Very Total
Imp Imp Important
Kingfisher 54 19 2 75
Jet Airways 48 21 6 75
Total 102 40 8 150
Out of 75 responses, almost 72%, i.e. 54 people chose Kingfisher irrespective
of frequent flyer program. Also, Jet responses show that frequent flyer
program is not much an important factor in choosing this airline.

This throws light on the factor that both the airlines do not have the customers
because of frequent flyer program.

INFLIGHT SERVICES
Not Somewhat Very Total
important important important
Kingfisher 10 16 49 75
Jet Airways 14 23 38 75
Total 24 39 87 150

Out of the 75 people surveyed for Kingfisher, majority of them i.e.49 people
rated the In-flight services as very important.
Whereas out of the 75 people surveyed for Jet,38 people rated the In-flight
services as very important. Thus In-flight Services is also a major factor for
selecting the Airlines.

TRAVEL AGENT RECOMMENDATION

Not Somewhat Very Total
important important important
Kingfisher 20 21 34 75

40
Jet Airways 15 20 40 75
Total 35 41 74 150

Out of the 75 people surveyed for Kingfisher, majority i.e.34 flew with it as
their travel agent/Company had made reservations for it.
Whereas out of the 75 people surveyed for Jet, majority i.e.40 flew with it as
their Travel agent/Company had made reservations for it.

4) Was price a major factor in choosing the airline?

Kingfisher Jet Total

No 65 68 133
Yes 10 07 17
Total 75 75 150

Out of the 150 people surveyed, price was not a major concern for most of the
people. That is 133 people had gone for the airline irrespective of the prices.
Thus price was not a major factor.

5) What is your main purpose in taking this trip?

Kingfisher Jet Total

Business Purpose 41 38
Personal/Pleasure 34 37
Purpose
Total 75 75 150

41
The reasons for travelling by Jet and Kingfisher were for business as well as
personal and pleasure reasons. There was not much difference between the 2
reasons.

6) Please indicate the amount of time you waited for the following services?
Aircraft Boarding
Kingfisher Jet Total
5 minutes 30 24
10 minutes 36 40
11-20 minutes 09 11
Total 75 75 150

Out of the 75 people surveyed for Kingfisher, almost the same amount of
people waited for a period of 5 minutes and 10 minutes.
Whereas for Jet, majority of the people i.e. 40 people had to wait for 10
minutes.
But in both the cases, very few people had to wait for 11-20 minutes.

Boarding
Kingfisher Jet Total
5 minutes 10 11
10 minutes 38 35
11-20 minutes 27 29
Total 75 75 150

For Boarding in Kingfisher, majority of the people had to wait for 10 minutes
and 11-20 minutes.

42
Same was the case with Jet.
Whereas only 21 people had to wait for 5 minutes.

Security Check
Kingfisher Jet Total
5 minutes 39 36 75
10 minutes 28 29 57
11-20 minutes 08 10 18
Total 75 75 150

For Security Check, both in Jet and Kingfisher, majority of the people had to
wait for a period of only 5 minutes and 10 minutes.
Whereas only 18 people had to wait for a period of 11-20 minutes.

COURTESY OF THE STAFF

43
For Kingfisher, out of the 75 people surveyed, maximum people i.e. 48 people
rated the courtesy of the staff as very good, whereas only 2 people rated it as
bad.

For
Jet, out the 75 people surveyed, maximum people i.e.44 people rated the
courtesy of the staff as very good. Whereas only 6 people rated it as bad.
SELF ARRANGEMENT OF TICKETS

44
Here we see that out of 75 people, only 48 people had made self arrangements
to fly whereas remaining 102 people had done their reservations either
through an agent or the company they were working for.

In Kingfisher, out of the 75 people only 38 people had done self arrangements
whereas 112 people had done their reservations through agents or the
company they were working for.

DISATISFACTION LEVEL

45
Out of the 75 people surveyed for Jet, maximum people i.e. 93 people had
complaints at the Security Check, 22 people had complaints at the Ticket
Counter, 20 people had complaints at the Express Baggage.15 people had no
complaints at all.

Out of the 75 people surveyed for Kingfisher, maximum people i.e. 75 people
had complaints at the Security Check, whereas 36 people had complaints at
the Express Baggage, 16 people had complaints at the Ticket Counter.23
people had no complaints at all.
PERSONNEL COMPLAINTS

46
Regarding Personnel complaints, out of the 75 people surveyed for Jet,
maximum people i.e. 54 people had complaints at the Security Check
personnel, whereas 48 people had personnel complaints at the Ticket Counter,
27 people had complaints at the Express Baggage whereas 21 people had no
complaints at all.

For Kingfisher, out of the 75 people surveyed, maximum people i.e.45 and 43
had complaints at the Security Check and Ticket Counter. Whereas 38 people
had no complaints at all.

47
PERSONAL DETAILS

11) What is your occupation?

Jet Kingfisher Total

Executive 35 25 60
Academics 0 0 0
Professionals 20 23 43
Salesmen 0 0 0
Secretary 0 0 0
Homemaker 04 07 11
Student 08 10 18
Self-Employed 07 15 22
Retired 0 01 1
Total 75 75 150

48
For Jet, out of 75 people, maximum people i.e. 60 people fell in the age group
of 36-45, whereas 51 people fell in the age group of 26-35. Only 17 people
were in the age group of 18-25.

For Kingfisher, out of 75 people, it was just vice-versa. Maximum people

i.e.60 fell in the category of 26-35, whereas 51 fell in the category of 36-45.
Only 18 fell in the category of 18-25.

49
 FINDINGS

1) More of fortnight flights were taken in Kingfisher and almost equal in every
week and fortnight in Jet. The maximum number of people who flew every
week or fortnightly were Businessmen, Executives, Professional.
Whereas people who flew monthly flew for rare business trips or for pleasure
purpose.

2) The dissatisfaction with the reservation agent was mostly due to the failure in
informing about the delay of flights.

3) It shows that to the people for whom TIME CONVENIENCE is an important

factor, preferred Jet over Kingfisher.

4) Both the airlines do not have the customers because of frequent flyer program.

5) In-flight Services is a major factor for selecting the Airlines. Almost all the
respondents were highly satisfied with the in-flight services of the airlines.

6) Price was not a major factor for selecting the airline as both the airlines are at
par and are both highly priced.

7) Waiting time was not a major issue by almost all the respondents. The average
waiting time did not exceeded 10 minutes in both of the airlines.

8) Very few of the respondents were discontent with the courtesy of the flight
attendants.

9) Maximum respondents had dissatisfaction at the Security Check-point level.

50
 SUGGESTIONS
1. Kingfisher should increase the frequency of flights to the most
commonly preferred destinations from Ahmedabad.

2. Kingfisher should focus on the timing of the flights and should

introduce early morning and late evening flights specially for the
Business Travellers.

3. Since Jet has its competitor as Kingfisher, Jet should also focus more on
providing a personalized touch to the services.

51
 LIMITATIONS

1. The findings of this study are limited to the domestic airline industry in
India.

2. This study has not considered industry measures to measure service

quality.

3. We have measured only the customer preference of service quality in

Ahmedabad.

4. The survey could be done by taking the sample size of just 150 people.

52
 FURTHER SCOPE OF STUDY

1) This project can also be used by Jet Airways and Kingfisher Airlines for
further improvement.

2) Travel Agencies can also use this project to know the existing scenario
among frequent fliers.

3) The three dimensions of the SERQUAL i.e. Tangibles, Reliability and

Assurance are related here. But the remaining two dimensions i.e.
Responsiveness and Empathy can also be related and studied.

4) This study can be further carried on to the International Airline Industry

as well.

5) This study can be further extended to other airlines like Air Deccan,
Spice Jet, Indian Airlines, etc.

53
 BIBLIOGRAPHY

REFERENCE BOOKS

1) Zeithaml and Bitner (1996), Services Marketing,

Tata McGraw Hill, New Delhi
Venkatesh et al, Service Quality.

2) Parasuraman, A., Zeithaml, V. A.,& Berry, L. L.

(1985).A conceptual model of service quality

and its implications for future research.

3) Cunningham, L. F., Young C. E., & Lee, M. (2002).

Cross-cultural perspectives of service quality
and risk in air transportation.

4) Marketing Management, 11th edition

By Philip Kotler.

NEWSPAPERS

1) The Times Of India.(15/03/2008)

2) Gujarat Samachar.(15/03/5008)

3) Divya Bhaskar.(16/03/2008)

54
 WEBSITES

1. http://www.jetairways.com/Cultures/en-US/India/
2. http://en.wikipedia.org/wiki/Airline#Airline_personnel
3. http://www.indianchild.com/india_civil_aviation.html

4. http://kingfisherblog.wordpress.com/2008/03/17/fly-kingfisher-indias-
only-5-star-airline/
5. http://en.wikipedia.org/wiki/Kingfisher_%28beer%29
6. http://www.iloveindia.com/economy-of-india/aviation-industry.html

55
THANK YOU

56