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How Has Internet Changed the Airline Industry (Itb Projrct)

How Has Internet Changed the Airline Industry (Itb Projrct)



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Published by Sadaf Zuberi
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Published by: Sadaf Zuberi on May 06, 2012
Copyright:Attribution Non-commercial


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The Internethas had a notable affect on the airlinebusiness.In the '80s airline revenues were dependent ontravelagents, who primarily took a cut out of every ticket. This wascostly for the airlines and costly for the customer. The industry found itself struggling witha third-party cost it couldn't effectively control. However, when San Diego StateUniversity rolled out the first iteration of the commercial Internet, all bets were off.Aviation Industry in India is one of the fastest growing aviation industries in the world.With the liberalization of the Indian aviation sector, aviation industry in India hasundergone a rapid transformation. From being primarily a government-owned industry,the Indian aviation industry is now dominated by privately owned full service airlines andlow cost carriers. Private airlines account for around 75% share of the domestic aviationmarket. Earlier air travel was a privilege only a few could afford, but today air travel hasbecome much cheaper and can be afforded by a large number of people.
Aviation industry in India
In early 1948, Government of India established a joint sector company, Air IndiaInternational Ltd in collaboration with Air India (earlier Tata Airline) with a capital of Rs 2crore and a fleet of three Lockheed constellation aircraft. The inaugural flight of Air IndiaInternational Ltd took off on June 8, 1948 on the Mumbai-London air route. TheGovernment nationalized nine airline companies vide the Air Corporations Act, 1953.Accordingly it established the Indian Airlines Corporation (IAC) to cater to domestic airtravel passengers and Air India International (AI) for international air travel passengers.The assets of the existing airline companies were transferred to these two corporations.This Act ensured that IAC and AI had a monopoly over the Indian skies. A thirdgovernment-owned airline, Vayudoot, which provided feeder services between smallercities, was merged with IAC in 1994. These government-owned airlines dominatedIndian aviation industry till the mid-1990s.In April 1990, the Government adopted open-sky policy and allowed air taxi- operators tooperate flights from any airport, both on a charter and a non charter basis and to decidetheir own flight schedules, cargo and passenger fares. In 1994, the Indian Government,as part of its open sky policy, ended the monopoly of IA and AI in the air transport
services by repealing the Air Corporations Act of 1953 and replacing it with the AirCorporations (Transfer of Undertaking and Repeal) Act, 1994. Private operators wereallowed to provide air transport services. Foreign direct investment (FDI) of up to 49percent equity stake and NRI (Non Resident Indian) investment of up to 100 percentequity stake were permitted through the automatic FDI route in the domestic air transportservices sector. However, no foreign airline could directly or indirectly hold equity in adomestic airline company.By 1995, several private airlines had ventured into the aviation business and accountedfor more than 10 percent of the domestic air traffic. These included Jet Airways Sahara,NEPC Airlines, East West Airlines, ModiLuft Airlines, Jagsons Airlines, ContinentalAviation, and Damania Airways. But only Jet Airways and Sahara managed to survivethe competition. Meanwhile, Indian Airlines, which had dominated the Indian air travelindustry, began to lose market share to Jet Airways and Sahara. Today, Indian aviationindustry is dominated by private airlines and these include low cost carriers such asDeccan Airlines, GoAir, SpiceJet etc, who have made air travel affordable.Airline industry in India is plagued with several problems. These include high aviationturbine fuel (ATF) prices, rising labor costs and shortage of skilled labor, rapid fleetexpansion, and intense price competition among the players. But one of the majorchallenges facing Indian aviation industry is infrastructure constraint. Airportinfrastructure needs to be upgraded rapidly if Indian aviation industry has to continue itssuccess story. Some steps have been taken in this direction. Two of India's largestairports-Mumbai and New Delhi-were privatized recently. Two greenfield airports arecoming up at Bangalore and Hyderabad in southern India. Investments are pouring intoalmost all aspects of the industry, including aircraft maintenance, pilot training and aircargo services. The future prospects of Indian aviation sector look bright.
Effect of internet
 The effect of internet on aviation industry can be discussed in details taking up thebenefits one by one. Following are the benefits and effects of internet on aviationindustry including the effect on the customers too:-
Greater Flexibility
Airlines industry in America took advantage of the new technology first, when itintegrated its formerly stand-alone Sabre computer system with the Net. The newcapability resulted in an ability to manage and store 36 million fare records that in turn,were able to produce 1 billion fare offers on-demand. As a result, this practicalinnovation lead the airline to become one of the most efficient, and successfulcompanies the industry's history.
Wider Selection
For the customer, the ability to individually research, negotiate and purchase ticketsdirectly has altered the competitive equation between buyer and seller. Before theInternet, ticket choices were primarily limited to the major airlines, and regional airlineswere not able to market effectively against the larger carriers. However, once smallercarriers and customers could connect effectively, this synergy created a host of new,cheaper travel options. As an example, between 1984 and 1996, the airline industrygrew more than 40 percent in gross terms, and much of that expansion can be directlytied to new efficiencies associated with networked marketing, sales and point-of-salesystems.
Ticketless Travel 
In the past, customers expected to wait up to two weeks for paper tickets to bedelivered, and even the fastest ticketing processes offered only 24-hour turnarounds.The only way to get a ticket on demand was to go to the airport and stand in line at thecounter. However, with the advent of the Internet, followed by ticketless travel, acustomer could make ad-hoc travel plans in as little as 10 minutes.
 Decreased Indirect Costs
Indirect costs affect an airline's bottom line in different ways. For example, eliminatingthe travel agent as a cost center created all kinds of additional revenue margin that wasthen redirected to marketing, equipment, systems and staff growth. This subsequentlylead to customer-centric, globally distributed ticketing processes that additionallyreduced point-of-sale costs across the board.

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Leo Tse reviewed this
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Either Robert Boyle or Zadaf Zuberi is a copycat! http://www.sita.aero/content/technological-trends-and-their-impact-airline-industry
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