Project on Airlines SECTOR

Aviation Industry Dhaval .B. Shah {WRO 0280699} Jimit .C. Doshi {WRO 0280567} ICAI ICAI Bhawan November 17th-December 25th {5.00 pm. To 9.00 pm.}

CONTENTS Introduction History of Civil Aviation Industry The New Policy Changing Pattern of Government Regulations Recent Developments in Civil Aviation Domestic Air Carriers Airport Infrastructure Low Cost Airlines: A Preview PEST Analysis Segmentation Strategy 7 P’s of Marketing Mix Case Study – King Fisher Airlines

“The commercial use of aircrafts for the carrying of persons, mail and cargo and the name generally used in the aviation industry to describe the operations of fortified air carriers is known as the airlines/aviation industry.” Aviation me ans ‘Flying in the Air’ or the ‘Art of Flying’. Airlines are one of the fastest growing industries in the world. It is occupying a significant place in the transport management of today’s world. Both from pas sengers and goods oper-ation, the air transportation services have been playing an incremental role. Tale of the Airplane WRIGHT BROTHERS. The Wrights began their efforts to invent the airplane by carefully studying wha t others had done before. They studied the various hot air balloons trips and de cided to make the aircrafts. The Wrights followed the example set by Lilienthal and continued by Chanute of beginning with the glider. The Wrights also choose t o pattern their aircraft after the Chanute-Herring biplane, a sturdy and relativ ely successful biplane glider. Lilienthal s data on the lift of wing surfaces we re used in their design of the 1900 and 1901 gliders. By careful study, the Wrights identified the best features of past aircraft and employed aero-nautical theory about the lift of wings to design their first cra ft. Although it did not perform as expected, it was among the best gliders that had ever been built. History of Indian Aviation Sector Travel by air in the modern sense began in India only in 1877, when Joseph Lyna took off from the Lalbagh Gardens in Bombay, and ascended to an alti tude of about 7,500 feet and landed at Dadra. In the years that followed, there was a tremendous development of air transportation in India as in any other coun tries due to technological advances and cooperation from the government. India also has the distinction of organizing the first flight by an a ero plane in the world in February 1911. This flight piloted by French pi lot M. Picquet flew from Allahabad to Naini. However, it took more than 20 years for the country to have its own airline. In October 15, 1932, Tata Son’s Ltd – which later become A ir India International – commenced weekly airmail service with a Puss Moth airc raft between Karachi and Ma-dras via Ahmedabad and Bombay, covering ove r 1,300 miles. Later two more airlines – Indian National Airways in 1933 and Air Services of Indian in 1937 came up. At the time of independence, the number of air transport companies, wh ich were operating within and beyond the frontiers of the company, car rying both air cargo and passengers, was nine. It was reduced to eight,

 

The process of disinvestment of Government equity in national carriers has bee n initiated.e. The Government then nationalized the airlines industry in 1953. After 40 years. In all. virtually eliminating the need for agents. a visionary who had founded the first India airline in 1932 and he had himself piloted its inaugural flight. a process that began a decade ago. Additionally 34 applicants have been granted NOC by the Ministry of Civil Aviation for setting up non-scheduled air transport operation. was establi shed by the Government of India. Indian airports are likely to handle 60mn international passenger s and 300. The economy of a countr y is substantially determined by the quality of air transport. Alliance Air . Bharat Airways and Mistry Airways. Indian National Airways. Dec-can Airways. The airlines toda y have made themselves more popular among its customers by various marketing tac tics like: • • asy jet nd sell • • • • Reduced costs of air tickets for frequent flyers. Today. Selling tickets through online auctions.there are three private operators Jet Airways. Increase in aircraft capacity Changing Pattern of Government Regulations In India is perhaps the most striking example of the progress made in the liber alization of the Indian economy. In early 1948..D. in 1994 Air Corporation Act was repealed en ding the monopoly of the national air corporations and enabling entry of private operators. Tata. The aviation industry in India has grown by leaps and bounds in recent years in terms of kilometers flown as well as customers serviced. and assets of nine existing air companies were transferred to the two new corporations – Air India International and the Indian Airlines. These airlines were: Tata Airline s.000 tons of domestic and 1. private participation for airports has been further   .R. There are over 450 airports and 1091 registered ai rcraft in the country. There are also 4 1 non-scheduled air transport operators. Various freebies and accommodation offers provided at lower rates. Sahara India Airlines & Air Deccan. E-ticketing i. 1948 on th e Mumbai (Bombay)-London air route. a joint sector company. Improved and interactive staff. Ambi ca Airways. Its first flight took off on June 8. as a result of which private airlines have been flourishing. Estimates show that the domestic and international passenger traffic in India is pro-jected to grow annually at 12.5% and 7% respectively over the next decade.. with ena ctment of Air Corporation Act. India occupies an eminent position in the civil aviation sector with a large fleet of aircrafts. Civil air tr ansport business which hitherto had been the Government s monopoly has been comp letely liberalized. 56 airlines are operating scheduled a ir services to and through India and 22 foreign airlines are flying ove r Indian Territory. Reynar and E two of UK’s low cost carriers have eliminated travel agents completely a all their tickets online. Air service of India.with Orient Airways shifting to Pakistan. Indian Airlines.2mn tons of international cargo. In addition to the three public sector airlines Air I ndia. Air India International Ltd. The joint venture was headed by J.

Taxes and Tariffs In order to facilitate acquisition of aircraft Government of India has reduced ta-riffs for import of aircraft from 8% to Nil. Equity from foreign airlines is not permitted directly or indi-rectly. Even aircraft taken on lease do not attract cus-toms duties. • 40% of profits from infrastructure also deductible for financial institu tions providing long term finance for airport infrastructure projects. But with general elections round the corner this issue has been put on the backburne r with constant opposition from various sections of the society. as decided by Government from time to time. A variety of fiscal incentives has been provided to airport project.liberalized and the bilateral for operation of international services are being further encouraged. Investments Opportunities Foreign Equity Foreign Equity up to 40% and NRI investment up to 100% is permitted in domesti c air transport services. They are as follows: • 100% deduction in profits for purposes of Income Tax for first five year s. Participat ion is also open to foreign airport authorities. • Private participation is encouraged and opportunities are created for investors to realize adequate returns on their investments. Private participation in Airports Foreign equity participation is allowed in ventures for airports. 7. up to 74% automatic approvals and up to 100% with special permission. The ex-isting air services agreement with United States of America is an extremely liberal one as it allows any number of US airlines t o operate services from/to India. India also has a liberal Corporate Tax/Income Tax regime for airlines and encourages inves tment by allowance of high depreciation rates. 6. Only p re-entry scrutiny to verify financial soundness. This in turn has opened up immense opportunities f or investment in the civil aviation sector in India. 3. presently wholly owned companies of the Government. Disinvestment of the Government Equity in airlines Government of India decided to disinvest partly its shareholding in both Air Ind ia and Indian Airlines. 5. maintenance. Choice of aircraft type and size left to the operator. Entry-Exit barriers removed Barriers to entry and exit from this sector have been removed. • Full deduction to run for continuous 10 out of 20 fiscal years of assess ee s choice. Bilateral for operation of international air services The Government has been more liberal in granting addit ional entitlements to foreign airlines both in terms of capacity as well as in t erms of points of call. • Rapid up gradation of airport infrastructure to world class is encouraged with priority to the busiest airports and those handling international flights. • 30% deduction in profits for Income Tax purposes for next five years. Civil Aviation Policy Having drawn up a successful growth model for the civil aviation secto r. US airlines are also allowed to decide the siz e of aircraft and their frequencies. some of the major highlights of which are: • All players and stakeholders are assured of a level playing field. 2. The steps taken b y the government are as follows: 1.   . 4. the Govern-ment is now engaged in evolving a comprehensive and integrated new civil aviation policy. security a nd safety aspects of op-erations and human resource development proposal s is done.

Civil Aviation sector has been liberali zed with a view to draw benefits of efficiency. Given below are a few of the political factors with respect to the airline industry: • The airline industry is very susceptible to changes in the political env ironment as it has a great bearing on the travel habits of its customers.Maharaja of Air India • Schemes—Frequent flyer programmes of various airlines PEST Analysis: The Indian Airline Industry A PEST analysis is an analysis of the external macro-environment that affe cts all firms. one can never over-look the political factors which influence ea ch and every in-dustry existing in the country. Lufthansa) • Chartered airlines (Evergreen.g. AAI maintains the airports in India.G. Government has also opened doors to foreign participation in investme nt in this sector.Public Relations by Richard Branson of Virgin • Brand Mascot.• International cooperation in aviation and development in t une with interna-tional trends and best practices.T. Let us look at the PEST analysis of the Indian aviation sec-tor: 1) P .S. Airlines get the routes and landing rights.   . For this reason.E. There is a s ignificant difference in prices. and T echnological factors of the external macro-environment. These are controlled by the agencies like Airports Authority of India. Like it or not. Marketing: Airlines use conventional marketing methods for attracting customers. Such external factors us ually are beyond the firm s control and sometimes present themselves as threats. • Advertising – The Singapore Girl campaign of Singapore Airlines • PR. Deccan Aviation) • Private helicopter services (Pawn Hans) • Corporate aircraft (Reliance) • Transport (Fed EX owns planes) Airports: The airplanes don’t own the airports. Air India gave unused Delhi-London route to Virgin) Classes: • Passengers can avail different types of classes in airlines: • Economy class • Business class • First class The difference lies in various facilities like reclining seats etc. E. Social. is an acronym for the Political. safety and quality in service. After four decades of control. regarding traveling to a particular country. the political in terference has to be present eve-rywhere.Political Factors In India. P. Economic. consiste nt with airspace sovereignty is promoted. An un stable political envi-ronment causes uncertainty in the minds of the air travele rs. Recent Developments in Civil Aviation Civil Aviation: The different types of civil aviation are: • Domestic airlines (Indian Airlines) • International airlines (Air India. some say that "pest" is an ap-propriate term for these factors . These can be either used by them or swapped ( e.

even a company li ke Citibank was forced to cut costs to increase profits for which even the top l evel managers were given first class railway tickets instead of plane tickets. & the heavy control &interference of the government. which has been dis-cussed later. In India. • The recent Gujarat riots & the government’s inability to control the sit uation have also led to an increase in the instability of the political arena. For e. which further f uelled the recession as spending decreased due to the rise in unemployment. Especially. since India is a land of extremes there are people from variou s religions and castes and every individual traveling by the airline would expec t customization to the greatest possible extent. Unless governments of the two countries trade with ea ch other. the labour regulations which make the management less flexible in taking decision due to the presence of a strong union. Durin g recession. The destination. The events oc-curring on September had special significance for the airline industry since airplanes were involved. A Jain would be satisf ied with the service only if he is served jain food and it should be kept in min d that the customers next to him are also jain or at least vegetarian. airline is considered a luxury & therefore spending on air travel i s cut which leads to reduce prices.g. the world economy plunged into global re cession due to the depressed sentiment of consumers. free seats to ministers. kind of food etc all has to be chosen carefully in accordance with the tastes of the ir major clientele. The airlines have to rec-ognize these individuals and should serve them ac cordingly. The immediate results were a huge drop in air tr affic due to safety & security concerns of the people. 2) E. there are people from varied income gr oups.Social Factors The changing travel habits of people have very wide implications for the a irline industry.Economic Factors Business cycles have a wide reaching impact on the airline industry. The loss of income for airlines led to higher operational costs not only d ue to low demand but also due to higher insurance costs. Even the SARS outbreak in the Far East was a major cause for slump in the airline in-dustry. The st ate owned airlines also suffers from archaic laws applying only to them such as the retirement age of the pursers & hostesses. • International airlines are greatly affected by trade relations that thei r country has with others. During prosperity phase people indulge thems elves in travel & prices increase. . This affects the qu ality of the service delivery & therefore these airlines shave to think of in-no vative service marketing ideas to circumvent their problems & compete with the p rivate operators. which increased after t he WTC bombing. After the September 11 incidents.g. bribes have to be paid for every permit & license required. Pakistan & India) • Another aspect is that in countries with high corruption levels like Ind ia. Therefore consta nt liasoning with the minister & other government official is necessary. there could be restrictions of flying into particular area leading to a loss of potential air traffic (e. The state owned airlines suffer the maximum from this problem. Even the Indian carriers like Air India was deeply affected a s many flights were can-celled due to internal (employee relations) as well as e xternal problems. In a country like India. • The most significant political event however has been September 11.• Overall India’s recent political environment has been largely unstable d ue to interna-tional events & continued tension with Pakistan. etc which a privately owned airline need not do. Air India needs to focus on their clientele which are mostly low inco me clients & their habits in order to keep them satisfied. These airlines h ave to make several special considerations with respect to selection of routes. 3)S. This prompted the industry to lay off employees.

g.Another good example would be the case of South West Airlines which occupi es a solid position in the minds of the US air travelers as a reliable and conve nient. AAI is now leasing these hangars to international airlines and is earning huge profits out of it. A proposal for restructuring the existing airports at Delhi. What South West di d was it made the environment inside the plane very consumer friendly. AAI has also tried to utilize space that was previously wasted installing a lamination machine to laminate the luggage of tra velers. dividing passe ngers into busi-ness travelers and economy travelers (mostly leisure travelers). The common strategy is to squeeze as much profit as possible from business clas s passengers who are attracted by superior services and corresponding high price s and.       . luxuriou s lounges. But amongst oth er perks. For e. whi ch can help reduce maintenance cost. A good example of the impact of technology would be that of AAI. Some of these extras range from seats equipped with faxes and tel ephones. Segmentation: The Airline Industry Most airlines use a very traditional segmentation strategy. wherein w ith the help of technology it has converted its obsolete and unused hangars into profit centers. It also facilitates more flights to such de stinations. and no frills airline. Following are the popu lar segments: 1) Business passengers They are crucial for airlines profitability. Today business passengers account for approximately 48% of passengers. navigation. The premium prices they pay prov ide wider and more comfortable seats. Airlines can choose from a multitude of premium services to offer to busin ess travelers. This activity earns AAI a lot of revenue. Setting up of new international airports at Ban galore. This will help in attracting investments in improving the infrastructure and services at these airports. massage services and suit ironing servic es in the recently introduced arrival lounges. they agree to pay a premium price for a premium service . to gambling machines. to try and fill the rest of the seats and ensure growth by attracting economy class passengers with lower fares. Business passengers believe it is worth extra money if they can save time and arrive looking fresh for an important meeting. fun. means better handling of airplanes. USTDA (US trade & development association) is funding a feasibility study and work-shops for the Airports Authority of India as part of a long-term effort to promote Indian aviation infrastructure. better choice of meals and seats. Air Sahara has introduced a service through the internet. Mumbai. wherein the unoccupied seats are auctioned one week prior to the departure. These technological changes in the environment have an impact on Air India as well. and air traffic management systems for I ndia s aviation sector that will help the country meet the expected growth and d emand for air passenger and cargo service over the next decade. Better airport infrastructure. flexible reservation services are probably the most important to them. at the same time. With less spare time and mor e cash in their pockets. surveillance. Business passengers will avoi d transit flights even if a longer flight could save them money. updated flight information & handling of customer comp laints. Air India also provides many internet based services to its customer such as online ticket booking. 4)T-Technological Factors The increasing use of the Internet has provided many opportunities to airl ines. which indirectly red uces the costs and makes the consumers feel comfortable. The crew neither has any uniform nor does it serve any lavish foods. low fare. Hyderabad and Goa with private sector partici-pation is also envisaged. showers. and these 48% contribute 66% of airlines revenue. The Authority is developing modern c ommunication. The major element of its success wa s the augmented marketing mix which it used very effectively. Chenn ai and Kolkata through long-term lease to make them world class is under conside ration.

who usually book at the last minute. however. Many airlines design special pro-motional programs that target corporate booker s and meeting planners. a company relying mostly on business travelers will often end up flying half-empty planes. There are exceptions . few airlines catering solely to economy class passenger s can be suc-cessful because a low fare carrier must fill the entire plane if it is to generate revenue from its low-margin operations. They can even get busi-ness travelers to fly them despite the lack of pre mium services because no other airline would get them there. By improving services and red ucing prices for economy class pas-sengers. but with insuffi cient revenue to gain a profit. it risks losing its economy class passengers to another airline. need to target both the business an d the leisure segments they may also target different ethnic and geographical se gments differently. while ke eping enough seats reserved for business travelers. 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. This kind of segmentation serves airlines well enough when implemented wit hin one company.business or leisure . for example. Since business class passengers are not many. for example. airlines risk that some business pas sengers will switch to economy class. The best way to reach business travelers is through printed advertising. de-pending on the markets from which they draw the majority of their customers. with the exception of wealthy travelers. even though Japan Airlines advertise extensively to the Ameri   . 2)Leisure Travelers They represent a totally different market. By and large. Thus. On the other hand. A good yield manager knows the approxim ate proportion of business and leisure travelers for each flight in advance. Southwest is a clas sic example. bas ed on sophisticated statistical models. if an airline focuses on business class passengers. The lower the airfare. the economy seats at a cheaper price. this segment will n ot pay extra for premium services and will agree to change several planes during their trip if this option costs less than a direct flight. leisure travelers are very important to an airline s bottom line. This has already happened with Japan Airlines. which was forc ed to elimi-nate business class seats on some of its flights. The allocation of business and economy class seats on a plane is determined th rough a process called yield management. Major international carriers.Reservations for business trips are often made just a couple of days in advance . airlines are counting on the leisure segment to provide further growth. are in a better position to implement a low price p olicy. proving that low cost carriers can thrive. A no penalty cancellation policy is also very important to business passengers . For example. losing the potent ial revenue generated by lower priced economy seats. How can airlines benefit from the growth opportunities in the leisure segm ent without los-ing immediate profit opportunities in the business segment? This is a tough issue in airline marketing management. who are responsible for business trips reservations. Keeping just the right amount of business seats reserved is important: selling too few economy seats in ad-vance may result in a less-than-full plane w hile selling too many economy seats may result in a full plane.successfully. such as "The Economist" or "The Wall Street Journal" are som e of the best publica-tions through which airlines can reach business travelers. Thus he/she tries to sell early. The most important consideratio n for most of them is the price.small regions that serve destinations where the maj ors do not fly. B usiness news media. Fre quent flyer programs are an added bonus for business passengers. On the other hand. Despite lower margins provided by this segment. the more people will fly the respective airline. It would be very difficult for any single airline to target jus t one of these two seg-ments .

food on board. through check-in. Good design or style of service can form th e basis of differentiation. by developing an image of a friendly airline distinctive from other airline serving the route. Passengers t astes determine airlines strategies. duty free shopping quick and efficient checking of baggage. business class were introduced. two national carriers may also focus on different dest inations. While British Airways focuses on comfort a nd luxury. LEVELS OF PRODUCT FOUR PRODUCT LEVELS 1) The Core Service The core service of the airlines industry is to transport goods and servic es to various destinations. If the product isn t what the market wants. no amount of price adjustment or b rilliant promotion will encour-age consumers to buy it.           . for e. on the ground services. In-flight services. their message -"Your needs. The on-the-ground services include a convenient airport with car parking facilit ies. Singapore airlines wer e the first to introduce small 8”television screen for every passenger. Different classes like economy class. reservation counter provide goes a long way in develop-ing customer loyalty. The airh ostesses are trained to provide polite. 2) The Supplementary Services The airline industry has many players they had a brand name like ‘Air Indi a’. All of them had some common services to o ffer like connecting flights. appreciated by North American busin ess travelers. The airline product is q uite a complex one since it comprises of a service of incorporating the temporar y user of airline seat and certain tangible products such as free flight bags or a free bottle of duty free spirit to encourage booking.can public.g." seems to work best for th e traditional Japanese audience. Eagle Airlines created an entire ly new market between New I York and Bermuda. Differentiating the Product It is important to recognize that what es also need to be efficient and po lite. MARKETING STRATEGIES Airlines formulate their Marketing Strategies keeping in mind the 7 P’S of the M arketing Mix The 7P’s of Marketing Mix 1) Product Mix Getting the product right is the single most important activity of marketing . This enables the com-pany to create a personality fo r its service. or features of products bu t the benefits they offer. certain airlin es were able to develop distinct personalities. The service provided inside is intangible and is highly variable. etc. which is the case with Canadian Airlines and Air Canada. The airline product includes of two types of services: 1. Your Airline. an d complementary gifts etc. nonetheless. 2. valued by European pas-sengers. transport to the airport. The design and decor of the aircraft provides op-portunities to p ersonalize their product as well as periodically to update them when differen-ti ation under IATA regulations was virtually excluded. The courteou s service that the repre-sentatives at the baggage counter. A similar style was evident in Richard Branson s Virgin Airways. warm and courteous service. Producing added benefits thus helps the marketer to d istinguish one product from another. Air Canada equips its business class seats with plugs for laptops and telephones. Air concessions are given to school students. efficient serv ice at reservation counter. the con-sumers are demanding are not products.’ Jet Air-ways’. The free bies are actually win-win deals be-tween airlines and other services.’ British Airways’. tele check in. The travel agents of th e airline. old people etc. Inside one country.

As competition increased and the customers wanted more the ne xt phase evolved and that is the augmented service. Navi gation. Pricing Strategies a)Premium Pricing: The airlines may set prices above the market price either to reflect the image of quality or the unique status of the product.All these added service helps the customer to decide upon which airlines h e wants to travel. super sonic speed. b)Value for Money Pricing: The intention here is to charge the average price for the product and emp hasize that it represents excellent value for money at this price. T he players intro-duced online booking. This enables the airline to achieve good levels of profit on the basis of established reputat ion. This decreases the time thus reducing the cost. it’s more spacious and comfortable. Pricing can be classified in three ways. Acquisition/ Depreciation & Insurance 13% and balance other expenses. 3) The Augmented Service This phase is where the customer’s expectations are met. which was very convenient for the service users. British Airways business class has showers. with increased competition service will beco me the final differentiation. varies 30-40 % depending on aircraft utilization. The concept of fair price is paramount.         . The product features are n ot shared by its competitors or the company itself may enjoy a strong reputation that the brand image alone is sufficient to merit a premium price. Buyers judge wh ether a product is fairly priced by seeing whether it represents value for money . The major constituents of the operating cost in respect of domesti c airlines in India are the Aviation Turbine Fuel (ATF) the basic raw material f or this service industry. fat free. som ething like air tax-is. For Eg. The diagrammatical representation of the core and supplementary services in the airline industry is shown below: 2) Price Mix Price plays as much a tool of marketing as promotion plays a critical role in the marketing mix. the service provi ders kept working on new methods to meet the ever-changing customers’ demands. DIVISION OF FARES: The final fares charged to the passengers include the following components: o Basic fares o Insurance o Inland Aviation Travel Tax (IATT). Manpower 12%. Landing & Parking costs 7-10%. di-abetic etc. Sahara airlines offer its passengers six different types of cuisin e like vegetarian. the future is unknow n. The customers may be looking in for more frequent inexpensive air travel. Repair and Maintenance 13%. 4)Future Service As mentioned above the customer needs keep changing. This phase is the most crucial one. o Passenger Service Fee (PSF) The basic fares include the operating cost incurred by the airlines and the p rofit margin.

and how the target market buy. aware of their rights and in a majority of the cases a re found to be sophisticated and therefore the promotional efforts have to be cr eative.g. where. is the first step in designing the marketing channel.g. why. we need more creative efforts bec ause the potential users in a majority of the cases don’t prefer to use air serv ices. e. Sea-sonal fares are also fixed. They are as follows : . Since these low-cost airlines a re trying to woo the customers by providing air travel in exceptionally low pric es. fax. email and also onlin e e-booking 4) Promotion Mix The formulation of an ideal promotion mix is essential to inform sense and persuade the users. a sub-stantial amount of money is not returned. The users appears to be more conscious. they prices are made cheaper by booking the tickets long bef ore the flight date. executives. politicians. it is pertinent that they mak e optimum use of different components of promotions. 3) Place Mix Marketing-channel distributions are among the most critical decisions facin g the man-agement. people are given very cheap rates only if tickets are booked atl east before the specified time period. "Marketing channels are sets of ‘interdependent’ organizations involved in the process of making the service available for consumption". but overall profits are achie ved. The companies chosen channel ultimately affect all the other marketing decisions. Fares for ea ch class are different since the facilities provided and the comfort and luxury level is different in each class. • Direct through home leased system. The marketer must understand the service output levels desired by the target market and types and levels of serv ices that the people want and ex-pect when they purchase the service. Many airlines are facing financial crunch. the airlines provide very low prices for the fl ight tickets. E. SOTC • Affiliated with companies: As the name defines. when. Phone. d)Low-cost Pricing: With the advent of the low-cost airlines in the Indian aviation industry. • Tour Operator/ Travel Agent: Customers approach travel agents or tour op erators who book the tickets from the airline and take commission. Unit profits are low. Airlines usually practice differential pricing. Air India and Indian Airlines have slashed their prices to meet the competi tion of private airlines so that they can consolidate their position in the mark et. In the Indian perspective. e)APEX Fares In this scheme. actors. Distribution channels The Four methods of distribution are as following: • Consolidation: The direct sale of tickets from airport to the passenger on the airline desk. The Executive or Business Class and The Economy Class. Understanding what. But the draw-back here is that if the boo king is cancelled. In low-pricing strategies. There are three classes: The First Class.c)Cheap Value Pricing: The objective here is to undercut the competition and price is used to trigg er the purchase immediately. high spending touri sts etc are some of the users of the air services. airlines gets affiliated with compa-nies who carry all its trips with a same airline who in turn gives s pecial discounts or offers in return. a price-band kind of pricing has to be de-signed. a different low-cost flying concept has come up. fares rise dur ing the peak holiday times. The business magnets. Also.

b)Publicity Publicity is an important component of promotion mix. which allow customers to pay in installments. ers narrate outstanding merits or salient features of services used If you travel by Air India and are satisfied with the services which the pr opinion lead by them. tour operators and all of them who process the services and the passengers and business houses who use the services. The travel agents contribute a lot to the promotion of airlines business and t herefore the need to think of them in their favor on their priority basis. the scenic beauty. The telecast media and print media are important for promot ing the air business.a)Advertising Airlines need creative advertisements to promote their business. The domestic flights should use radios because due to increasi ng access to FM. the frontline staff also must be given priority. such as the travel agents. Also the airlines should keep in mind the qual ity and the nature of the target markets and the level of expectations.g. meetings. Receptionist. While advertising it is impact generating that one should select an oppor-tune moment of flight is an attractive scene of take off. rich cultural heritages or which would attract number of tourists. It is also essential that while advertising airlines sho uld also keep in mind the image of our country. and so on. Henc e they should be offer some incentives this will motivate them to promote the p roduct. The PRO. The user also deserves incentives. tourist attra ctions. Strengthening the PR activi-ties is essential to promote airlines business . In ad dition the tour operators. advertisements should be budget optimisti c vis-à-vis optimal. We can’t deny the fact that both Indian airlines and Air India have been facin g image prob-lems. get together. The incentives may be in the form of confessional services. This is essential to make advertisements proactive for the expansion of busine ss. EMIs. public relations officers provide their help. c)Sales promotion The sales promotion measures are meant for both the related sources channel si ng and using the business. E. Media people are very important people i n publicizing the business. e) Word of mouth ‘Customer Loyalty Ladder’ This happens to be an important constituent of the promotion mix in omoters act as a hidden sales force. The marketing professionals can seek the cooperat ion of media people by organizing dinners. a small gift etc. Airlines can also use broadcast media. The ads may be efficacious in transmitting the facts and remo ving the image problem. The airlines have to make sure that whatever strategic decision they make to promote the businesses are in a position to establish an edge over co mpetitor’s promotional meas-ures. They are also required to assign due weight age to the efforts made for proj ection of positive image. The satisfied groups of users. d) Judo Tactics ‘Easy Jet’ A] GO flight which was supposed to be the media event for BA resulted into a Dis aster be-cause ‘easy Jet’ bought 10 tickets of the flight and gave free coupons of easyJet to the 148 passengers. It is very instrumental in sensitizing the persuasion pr ocess provided the media people. also giving them small gifts and motivating them to publish news items which are in favor of airlines. B] Awareness on the wing of its Rivals: Contest on web offering FREE flight vouc hers for guessing how much BA’s GO would lose during the year. press confere nce etc. In the view of rising cost of inputs and the increasing impact of worldwide econom ic depression on the airlines. It is a process of persu a-sive communication. Travel agents. offered by t .

In the airline industry. airlines ensure that the service is delivered as promised and this is often totally with in the control of the front-line staff. require possessing high analytical and technical attribut es. on the achievement of the sales target. Because people provide most services. While delivering services. demand and nature of service. airlines hire the right personnel with essential requirements . The succe ssful completion of this training motivates the staff to stay on with the air-li ne. For e. To start off. These employees are provided with effective and sufficient support syste ms and are motivated in a manner. The process begins at the time of reservation goes on to the co nfirmation of seats. Empathy implies that these personnel will listen. The quality of service that the front-l one staff provides is highly depended on his/her ability to communicate their cr edibility. Air-lines deliver caring and individualized attention to customers t hrough their airhostesses. responsiveness. Many service organizati ons trust their people enough to empower their front-line personnel to resolve c ustomer problems. the travel agent who helps to create the service exchange but is not a part of the s ervice. Also the appe arance of an employee are important aspects as it forms the tangible dimensions of quality along with other factors like service quality.g. publicity may also be ineffective but word of mouth can never be ineffective 5) People Mix In the service industry. This ensures some amount of re-liability. while the cock-pit crew are employees who contri bute to the service product but do not come in direct contact with the customers . caring attitude. there is also the ancillary service personnel. They are more treated as customers. and be flexible in delivering what in-dividual customers need. they trust in you and therefore the stimulation process is on. travel agency offices. Services with high contact are more difficult to control and manage because of the degre e of variability in the quality.: Computer reservation system of Indian Ai rlines enables any reservation request from anywhere in the world to be auctione d in minutes. The mo ment your friends and relatives get an oppor-tunity to travel they find Air Indi a their first choice. offices of the tour operators or so form where the services flow & reach to the ultimate users. ada pt. The airhostess in any airline come in contact with the customers in the pro cess of provid-ing the service. The reservation facility is accessible through all-major computeri . Delta Airlines recruit s an employee.hem then it is natu-ral that you will share your experiences with your friend’s relatives. For example. service personnel come in direct contact with th eir customers in the course of production and consumption of the services. initiative. training. employees should exhibit competence. 6) Process Mix The process of airline service lays emphasis on the involvement of channe ls. and goodwill. The physical presence and the percentage of time the customer is present r eflect the customer contact and extent of contact respectively. the selection. Ads may be ineffective. Ideally. they stick to the organization. and motivati on of em-ployees can make a huge difference in attaining customer satisfaction. The service contact personnel in the airline industry is an airhostess who is expected to possess a pleasing personality with polite service hand ling. decor etc. They recruit the right people and develop. rather than employees. front line staff. This in turn affects the degree Of responsiveness sought from customers. These employees are sen t to places like the US and Frankfurt on a 21 day training pro-gramme. being categorized as a low con tact personnel. problem solving ability. While on the other hand the cock pit crew. and train them to deliver quality s ervice. They are provided with offers such as one-month bonus or some incentive. and moulds him to cater to their demands.

Thes e sort of tangible clues act as identification marks for the airline & help the customer to evaluate on airline from another. help the customers. the seating configuration meant to be comfortable and spacious. Booking offices. They also offer concession. expanded seat back height for a more insulated envi-ronment etc. All these procedures form a part of the total process designed to deliver q uality service. must be spacious and well designed with g ood looks. provide excell ent customer service developing a well trained and highly motivated workforce. 7) Physical Mix Physical Evidence refers to the environment in which the service is delivered a nd where the service industry and customer interact. The seating is such that it is comfortable and there is enough leg space. Delta Airlines has introduced new sleeper seats with electric controls for reclining lumbar support. etc. Further the air crafts must be given good exteriors and must be maint ained wel1. the baggage handling. all the se facilities go a long way in increasing pas-senger convenience. flight information. by not chargi ng any cancellation charges and also giving them the option to make a change in the reservation status if he re-quests so on the presentation of ticket. Domestic lounges are enhanced with good interiors and basic amenities whic h will make it an ideal place to conduct business. W e aim to revolutionize the way India flies. etc. The Boeing Company and The Airbus Industry are the best commercial aircraft makers and almost all airline industries make use of one of these airlines. the travelers to have an enjoyable and convenient travel. The aircraft must have elegant interiors and must be incorporated with all basic facilities. By giving details of where to book and how to book airlines help in providi ng quality ser-vices to the customers. in-flight amenities. Passengers are requested to indicate their reference at the time of reserva-tion itself. The aircraft by itself.zed reservation system of the world. The aircrafts must have well designed seats with more leg room esp ecially in the business class. important aspect. Then facilities at the airport. entertain or relax. In the aircraft the meal service. thus pr oviding highly comfortable seating. also helps in de-livering quality service and making travel a pleasure. etc . in-flight entertainment. a wide selection of meals is offered to the passengers. ABOUT KINGFISHERS . leg rest ext ension. Some of the bigger aircrafts have more than the usual facilities on board. is used a cue to trigger of a reminder of the customer’s experience at Jet & also of all the v alues that jet airways stands for. Airlines are making every effort to constantly redefine service procedures to enhance service satisfaction levels. The in-flight food is another. The physical evidence would also include the other facilities in the aircraft. and the in-flight f ood provide physical evidence to the airline service. ticket counters. reading material. To provide safe and efficient operations. The jet logo prominently displayed on each of its aircrafts. set industry standards.

The little details The Kingfisher Class experience begins even before you step on board. Consultation KINGFISHER is moving more actively into the role of consultant today. knowledge about c uisine etc. SERVICES PROVIDED BY KINGFISHER AIRLINES In-flight entertainment to take-off with Personalized screens and headphones broadcasting 5 video channels and the exclus ive Kingfisher Radio – 10 audio channels to make your journey an entertaining ex perience. Ex-tensive training is provided to in-flight attendants regarding h andling customer queries. knowledge about the airplane itself. with the seats we’ve got in store for you. Bon appetite A special selection of food and beverages are available on board. which the customers m ight demand. Indulgently wide. Another aspect to consultation is when the customer approaches the airline regar ding traveling to particular destination. At spacious termin als. i nternational-class cabin crew and a whole host of comforts and delights. ticket fares. Kingfisher Airlines offers Full Service at True Value and promises an unparalleled experience to the Indian air travele r. In case of airline industry. Fly the Good Times with King-fisher Airlines. Our superbly groomed flight attendants will e nsure that you’re well taken care of. In some cases also design special menus & benefits in consultation with its freq uent fliers by keeping in constant touch with them & asking them for suggestion as to what they want in their airline which will make their experience more comf   . Als o on offer are extra-wide seats and spacious legroom. plenty of legroom and adjustable headrests. information about promotion schemes etc a vailable to customers. At the convenient self Check-in counters. Kingfisher Airlines offers world-clas s in-flight entertainment with personal video screens for every seat. They are d oing away with the travel agents & designing & selling packaged tours to consume rs directly. OTHER FEATURES OF KINGFISHERS Information Customers can avail of information literally at their fingertips today with KING FISHER starting its own website which gives complete details to the customer & a lso entertains que-ries. For the first time in the Indian skies. delicious gourmet meals.Kingfisher Airlines is India s first and only private airline to commence operat ions with a brand new fleet of aircraft. up to date information reg arding flight schedules. the benefits he will get the mode of travel he should choose etc. they gives him a variety of choices of routes that he can take. Feeling comfortable. by giving him advi ce & sug-gestions regarding the type of plan he can choose. Kingfis her Airlines also facilitates doorstep delivery of tickets on guest request. There’s a wide selection of 5 video channels and 10 audio channels available on-board. In this aspect they often act as consultants to the customer. It also includes providing information to employees regarding new policies affec ting the airline & equipping them with enough information. When you b ook your ticket online in the comfort of your home or office. now? You will.

Frequent fliers are also given special payment privileges. Exceptions Special requests – They very often receive special requests form customers with regards to meal preferences. The emphasis h ere is on fast booking & at the same time getting the required information form the custom-er. He is looked after on board the flight ri ght up to the point flight reaches the destination and he is received by his gua rdian. Billing & payment The billing procedure is simple. special amenities for elderly people or children. There are 24 hours reser-vations. easily understood & fast . Bagga ge allow-ances are offered about 30 kgs of check-in baggage is allowed. The hospitality aspect of KINGFISHER is tested right form the time of the reserv ation (courtesy of the booking official) to the airline’s desk at the airport to the actual in-flight travel (the attitude of the flight attendants) to the post flight help extended.ortable.. The important a spect to be noted here is that the procedure is smooth. Hospitality & Caretaking With the increased competition today in the airline industry & the increasing si milarity of services offered by each airline. The options available to the customer are plent y including credit card & travelers Cheques. these needs have to considered & acceded to wherever possible . Safekeeping The safekeeping issue is that of safeguarding the customer’s baggage. hospitality has emerged as a key-d ifferentiating factor be-tween one airline & the other. medical needs etc. Reservation of airline tickets is now easy and reliable since it is fully comp uterized. KINGFISHER use the open account sys tem with their corporate clients. This is done by establishing a standard reservation procedure & f ormat thus reducing the risk of inconsistent service delivery. . Order taking The order taking procedure is essentially the booking procedure. Children and infants usually travel along with their parents and guardian. The cust omers entrust his baggage to KINGFISHER & it is then their responsibility to kee p it in a proper condition. and email methods of booking. The online bookin g system also facilitates better order taking & processing. customer service staff renders all assistance like checking in and es-corting up to the aircraft and handing over to the senior-mos t cabin attendant on board the flight. The scheduling aspect assumes importance as reservations on the wrong flight to the wrong place are likely to be unpopular. KINGFISHER uses the telephone. fax. In ca se of un-accompanied minors. Passengers can specify their seat pr eferences at the time of reservation.

Leisure Travelers / Passengers They represent a totally different market. By a nd large. Business passengers will avoid tran sit flights even if a longer flight could save them money. Part of the reason is that technological progress in the area of tele-conferencing and increased use of the internet for business co mmunications is expected to reduce the number of business travelers. DIVISION OF FARES: The final fares charged to the passengers include the following components: • Basic fares • Insurance • Inland Aviation Travel Tax (IATT). KINGFISHER has a multitude of premium services to offer to business travelers. Pric ing can be classified in three ways. Today business passengers account for approximately 48% of passengers. with the ex-ception of wealthy travelers. KINGF ISHER is counting on the leisure segment to provide further growth.     . Reservations for business trips are often made just a couple of days in advance. Buyers judge whether a product is fairly priced by seeing whether it represents value for money. The most important consideration for most of them is the price. this segment don’t not pay e xtra for premium services and don’t agree to change several planes during their trip if this option costs less than a direct flight. luxurious lounges. The concept of fair price is paramount. The premium prices they pay provide wider and more comfortable seats. they agree to pay a premium price for a premium service. the more people will fly. S ome of these extras range from seats equipped with faxes and telephones. better choice of meals and seats. and these 48% contribute 66% of their revenue. With less spare time and more cas h in their pockets. massage services and suit ironing services in the recen tly introduced arrival lounges. flexible reservation services are probably the most important service being offered to them. PRICE ANALYSIS Price plays as much a tool of marketing as promotion plays a critical role in th e marketing mix. A no penalty cancellation policy is also very important to bus iness passengers. to gamb ling ma-chines. Thus. But amongst other per ks. showers.TYPES OF CUSTOMERS OF KINGFISHER Business passengers They are crucial for KINGFISHER’profitability. leisure travelers are very impor tant to their bottom line. Business passengers believe it is worth extra money if they can save time and ar rive looking fresh for an important meeting. Despite lower margins provided by this segment. The lower the airfare.

KINGFISHER have slashed airlines so that they can KINGFISHER usually practice differential pricing. Repair a nd Maintenance 13%. How are fares arrived at? In capacity (seats) and frequency (flights) between any two points. The company itself enjoy a strong reputation that the brand image alone is sufficient to merit a premium price. to sales. Cheap Value Pricing: The objective here is to the purchase immediately. market resea rch the route in order to arrive at the total potential for that segment. Pricing or fare levels ar e arrived at after taking into consideration various factors. This enables them t o achieve good levels of profit on the basis of established reputation. This leads to a fare war wherein the airlin e either tries to protect its market share or responds to another airline which tries to increase its own market share. the capacity and fre-quency is tailored to the size of the market. VARIOUS PRICING STRATEGIES Premium Pricing: KINGFISHER sets prices above the market price either to reflect the image of qu ality or the unique status of their product. the pricing structure is also arrived at. configuration of aircraft (number of seats). In short.• Passenger Service Fee (PSF) The basic fares include the operating cost incurred and the profit margin. fares rise duri ng the peak holiday times. In ot her words. The m ajor consti-tuents of the operating cost in respect are the Aviation Turbine Fue l (ATF) the basic raw ma-terial for this service industry. and minimum breakeven cost. connections and so on. Fares for eac h class are different since the facilities provided and the comfort and luxury l evel is different in each class. Landing & Parking costs 7-10%. Acquisition/ Depreciation & Insurance 13% and balance other expenses. competitor activi ty. The product features which are not shared by its competitors. service. there is an immediately alerted t o enquire into the causes for this. type of aircraft. Why do fares fall? When the yield drops or the seat factor falls. . Navigation. the y embark upon a series of marketing activities. A ccordingly. a diff     undercut the Unit profits their prices consoli-date competition and price is used to trigger are low. density of route. There are three classes: The F irst Class. Low-cost Pricing: With the advent of the low-cost airlines in the Indian aviation industry.¬ Value for Money Pricing: The intention here is to charge the average price for the product and emphasize that it represents excellent value for money at this price. . but overall profits are achieved to meet the competition of other private their position in the market. In order to achieve the breakeven seat factor and thereafter maximize loads. The yi eld or the bottom line is the income generated from ticket sales less costs incu rred on the route. Manpower 12%. These will vary from a publicit y campaign hig-hlighting various facets of the Product. The Executive or Business Class and The Economy Class. ideal departure and ar-rival timings. varies 30-40 % depend ing on aircraft utilization. Sea-sonal fares are also fixed. the entire focus is to increase the yield and load factor (seat factor). punct uality.

But the draw-back here is that if the bo oking is cancelled. a price-band kind of pricing has to be de-signed. Also.erent low-cost flying concept has come up. people are given very cheap rates only if tickets are booked at least before the specified time period. the prices are made cheaper by booking the tickets long before the f light date. In low-pricing strategies. APEX Fares: In this scheme. Since these low-cost airlines are try ing to woo the customers by providing air travel in exceptionally low prices. a sub-stantial amount of money is not returned. ANALYSIS OF TICKET BOOKING PATTERN OF KINGFISHER IN 2007 AND 2008 INCREASE AND EXPECTED INCREASE IN THE TWO MAJOR SOURCES OF INCOME OF KINGFISHER 1) INCREASE IN CARGO (MILLION TONNES) (DOMESTIC) . KINGFISHER provide very low prices for the flight tic kets.

There has been a 70% incre ase in the number of flights between the two cities . best terminals. frequent flig hts.INCREASE IN PASSENGER REVENUE (%) Thus it is very clear that over the years KINGFISHER has shown a tremendous incr ease in its revenue. COMPARITIVE EARNING OF OTHER AVIATION INDUSTRY IN INDIA AGAINST KINGFISHER IN TH E YEAR 2006 (Rs.3% of its total revenue. Hence they all provided the best facilities like best seats. It has ac-counted for 11. IN CRORE) For KINGFISHER Mumbai to Dehli sector has been the major source of revenue. It is not only a revenue generat ing sector but also a major profit generating sector for kingfisher. best scheduled flights between Mumbai and Dehli. IN CRORE) COMPARATIVE EARNING OF KINGFISHER AGAINST OTHER INTERNATIONAL AVAITION INDUSTRY IN THE YEAR 2006 (Rs.

Vijay Mallya. we will give the low cost carriers a run for theirs. Now. Used to competing with o nly Sahara (never a worthy opponent anyway). Ever since Mallya launche d Kingfisher in May 2005. Jet Airways. IN MILLIONS) DOMESTIC MARKET SHARE OF KINGFISHER AND OTHER AVIATION INDUSTRIES IN INDIA IN THE YEAR 2008 KINGFISHER V/S JET AIRWAYS (MALLYA V/S GOYAL) On October 28. Mallya has group United Breweries (with a market capitalisation of $5 billion                     . Mallya is "not exact ly an orphan"." says a close associate who was on his board but has since resigned. in just two years and following Mallya s buyout of Air Deccan. it s the world s biggest carriers he wants to take on. Kingfisher s meteoric rise has taken rival and unquestioned number one domestic carrier in the country. quite by surprise. he d probably wish away the last two years. Goyal appears to have found his first worthy opponent. Jet enjoyed several years of unfett ered success after it had trounced Indian Airlines s monopoly and market. And if Jet has never had a problem raising money befor e. is commanding the same market share as Jet Airways and Jetlite. On Octo-ber 28. This supremacy has now been challenged by a nimble and aggressive Kingfisher whi ch. If Goyal has managed to hire professionals and build a brand.QUARTERLY SCHEDULE OF OPERATING REVENUE OF KINGFISHER (Rs. If Goyal is we ll connected and knows how to keep the politicians beaming. at a ceremony to unveil Air Deccan s new-look aircraft in Mumba i. Mallya is a past-m aster at building brands. Few things have gone right for his airline since the second half of 2005. sa id with characteristic flourish: "We have given the full service carriers a run for their money. chairman of Unit-ed Breweries group and Kingfisher Airlines." Though he did not refer to any one airline. it was clear his statement was direc ted at Jet Air-ways and Jetlite (formerly Air Sahara). In Mallya. He may not publicly admit it but Goyal s troubles began soon after Kingfisher to ok to the skies. making it number one in India has been a foregone conc lusion. at a ceremony to unveil Air Deccan s new-look aircraft in Mumbai. "If Naresh Goyal had a magic wand. becomi ng India s premier airline since 1993.

it t otted up losses over Rs 100 crore). cooler yet equally efficient option. many in the industry had questioned its survival. it needed to raise money and the intention w as to do that through foreign currency convertible bonds (FCCB) of $400 million. upwar dly mobile In-dian who aspires to fly Kingfisher simply because he identifies wi th Mallya and his style statement of living life king-size.300 crore (Rs 23 bil lion) for it. "It was like a bee in his bonnet. With the amount I travel. Mallya is proving to be "maniacal" about being on time. I appreciate things like this. Goyal offered Rs 2. no matter which part of the world he s in . taking Jet head-on." There are few who appreciate Jet s subtle." he says. better food and a slicker.a clear indication of what the market thought of the Sahara buy. Mallya s passion for his airline (some call it obsession) is very clears. even though everyone warned him it wasn t a great buy. a pretty high price for the airline.000 crore (Rs 100 billio n) to Rs 4.                         . Kingfisher is trying to attract the young. Jet saw this as a natural extension to its business (a nd one where it enjoys first-mover advantage) and ordered new aircraft. When only tion the Kingfisher started. Jet s share price reacted adversely and has never recov ered to what it listed at. Agai nst the advice of his senior colleagues. quiet efficiency when it s up against Kingfisher s flamboyance. Jet s initial troubles were compounded by its messy buyout of Air Sahar a which many feel was simply a move to thwart Kingfisher from acquiring it. but even today it is tr ading below the price at which it listed. Mall ya is spending money like water (the airline lost Rs 400 crore in the first year ) and has left no stone unturned to grab Jet s market.00 0 miles on it. Other than the corporate flyer. In its initial avatar Kingfisher was aiming to be a low-fare carrier. who accumulate d 400. In 2006. Gopal Sarma. officer on special duty to civil avia minister Praful Patel. The moment the deal was called up. With competition rising and losses deepening (in the first half of 2006-07. As was widely predicted. At roughly the same time the civil aviation ministry threw open international ro utes to private carriers. launching direct advertis ing campaigns asking Jet fliers to convert to Kingfisher. he refused to back down. He received a Kingfisher Gold card in the mail and has already accumulated 80.558 crore (Rs 45. the share price recovered somewhat .000 miles on Jet Airways frequent flier service. they give me incredible ser-vice.58 bil-lion). every delay is examined threadbare in a much dreaded early morning conference which he conducts over the telephone with his senior executives. but soon a fter its launch Mallya converted it to premium service. "Not has it survived. "one simply cannot deny that Kingfisher s product is best in the industry. luring them with miles .) backing him." says Kamal Choubey. CEO of Feedback Ventures. "If I call Kingfisher and ask to be put on a flight in two hours. The company s total market capitalisation following t he announcement of the Sahara deal fell from over Rs 10. says he now often choose s Kingfisher simply because its service on the ground is so superior. Once he set his mind to it." says a senior off icial who has since left Jet.

and the new competition cut prices to take on Air Deccan.were sucked into it. Kingfisher s chief financial officer. passing the inte nse scrutiny of lenders. Mallya made a calculated move. "As the court battle with Sahara proceeded.But with the share price languishing in the Rs 600-800 range.but withdrawing proved harder than he d expe cted.most investment firms and brok erages are maintaining a "reduce" position on Jet stock. while Jet s management has been struggling to make sense of what it inherite d in the Sahara deal. It is ng term story.which will pay off only later . What has compounded problems for Jet is its chairman." He says that the airlin e has got Rs 500 crore (Rs 5 billion) in equity. during the middle of this year. the issue was postponed. so the joke in Jet is that "whenev er anything of significance happens. major decisions exclude top officials.full service or low-fare . Goyal s centralised style of function-ing (according to sources he only trusts board member and confidant Vic Dungca. Around the same time as Jet announced its buyout of Sahara. The group s backing is a pillar for us. leading to an exodus at the middle and senior mana gement levels over the last two years. based in London). Air Deccan listed. who was p rivy to the goings-on. CEO of Centre of Asia Pacific Aviation. That Goyal hasn t b                             . With losses on do-mestic operations rising and the launch of internati onal operations . it was far from evident what the fin al judgment would be. A Raghunathan. Says Gautam Roy. you have to carry your troops with you. "All the players ." says Kapil Kaul." It has now been two years since Jet has been trying to 0 million through some form or the other (earlier through an FCCB. our own balance sheet is not strong enough. buying out Air Deccan for what many feel is a "song". These events coincided with a bloodbath in fares in the domestic market as Air D eccan cut prices to take on new competition. I think he (Goyal) chose to go in for a known position rat her than an uncertain one. aviation analyst with Mumbai-based financial services weiss: "We are not very optimistic on Jet s immediate prospects. So. which could be worse. argues that this is one of Kingfisher s big strengths vis-vis Jet. industry sources say they ll only believe it when they see it. so obviously everyone started making losses. Goyal would have b een forced to dilute a larger portion of his equity than he was willing. now issue) and it s proved more elusive than Goyal could have imagined. loans and guarantees from the g roup to raise finances. "Obviously. Then. they should be able to raise the funds. So. to deftly match Jet and Jetlite s mar ketshare." says a Jet official. Mallya is capitalising on Deccan s advantages and has ente red a segment that s sure to give returns in India. and that Jet has raised over $2 bil lion in the past from interna-tional loans on its own strength. Jet loyalists are quick to point out that using group funds to get into a sector where you bleed is not good business sense. senior officials are the last to know"! "To be an able general. firm Edel more a lo raise $40 a rights Although Jet officials say that by end January. B y then Goyal had seen Air Sahara at close quarters and even he realised it was n ot worth the money he d committed . Often.

with India and its gigantic market . people come and people go. who d spent 20 years with Jet. things like this will happen. "Yes. not just for his airline. Jet Ai rways is a one-man show (without Naresh Goyal or Vijay Mallya. He says that Jet s a ttrition rate has been constant and that in any industry with competition and ne w opportunities. as Saroj Datta puts it.) In contrast. people are le aving. Jet has been through and s urvived worse. But unlike Kingfisher. United Breweries group and Kingfisher air line executives don t have many complaints against their chairman. and he doesn t thi nk that the rise of one airline . It has a phenomenal network and will expand by 20 aircraft from April 200 7 to March 2008 (it now has 70 aircraft). but are loads fall-ing?" asks a Jet source. who after being publicly c astigated by Goyal for a flight delay has been in a huff and is looking to quit. making it a shared weakness." says he. "We have 10. Swot Analysis S-STRENGTHS • HUGE BRANDNAME. However. his point being that Mal lya should not un-derestimate Goyal s strengths. "While things may look rosy for Kingfisher right now. the last two years have been tough for the entire avi-ation industry in India. Goyal s problems on this front inte nsified when four senior executives of the airline resigned together in April 20 07. Like rival Kingfisher. Even if 100 people leave." says a former board mem-ber of Jet. both companies wo uld be rudderless).000 employees. We had seen it and have been well prepared for it. Eight former employees that Business Standard spoke to said that the chairman s style of functioning "left a lot to be desired". According to Wolfgang Prock Schauer.has to ne cessarily coincide with the fall of another. barr ing erratic timings and odd schedules. Several Kingf isher senior officials are old UB hands who have spent 25-30 years with the grou p. what started off as a steady trickle has become a virtual flood. including highly trusted vice president for corporate and public affairs. arguing that disgruntled employees will have grouses. Na ndini Verma. head of airport services. The latest who s planning to abandon the Jet stable and jump onto the Kingfisher bandwagon is Charles Soon.een able to do.One of the most important strength of kingfisher is tha                   . Jet already ha s one. With Kingfisher and several other career options coming up." says a former Jet Airways board member. (Executive director Saroj K Dat ta and chief executive officer (CEO) Wolfgang Prock-Schauer refused to comment o n this. it s not very significant. which is yet to build a strong foundation.

EXPECTED MARKET.05 trips per annum as compared to dev el-oped nations like United States have 2.t it has a huge brand name. Moreover. in turn. • UNTAPPED CARGO MARKET. The estimated growth of d o-mestic passenger segment is at 50% per annum and growth for international passenger segment is 25% • RISISNG INCOMES.Due to the rise in income levels.02 trips per annum. • REGIONAL CONNECTIVITY. a new market segme nt W-WEAKNESS • UNDER PENETRATED MARKET.Air cargo market has not yet been fully taped in the Indian markets Hence much of the earning scope is lost. Hence Kingfisher needs to work hard in this direction to attra ct more passengers by providing them better services for which it might have to spend more towards customer welfare.Kingfisher has one of the best staff in Indian aviati on industry. • INDAIN MENTALITY.Kingfisher is one of the airlines which is capable to bear losses be-cause of the huge finance support it enjoys. the industry is unable to retain talented employees.There is clearly a shortage of trained and skilled m an-power in the aviation sector as a consequence of which there is cut-throat co mpetition for employees which. • CAPITALISATION. There i s a huge investment requirement for physical infrastructure for airports.Due to growth in tourism.which can gives it market share. • GROWING TOURISM. caring staff makes passengers feel at home while flying. O-OPPORTUNITIES • EXPECTED INVESTMENT• investment of about US $30 billion will be made.Most of the Indian people still prefer railway travel ing to air-lines. The name this company has earned for itself is enou gh to speak for it.Kingfisher is providing services to almost all p art of India. • INFRASTRUCTURE CONSTRAIN. It is also providing services to many parts outside India. is driving wages to unsustainable levels .The total passenger traffic was only 50 milli on as on 31st Dec 2005 amounting to only 0.The infrastructure development has not kept p ace with the growth in aviation services sector leading to a bottleneck. the disposable inco me is also higher which are expected to enhance the number of flyers. Customers have trusted this company for years.Average growth of aviation sector is about 25%-30% and the expected market size is projected to grow upto100 million by 2010. • EFFICIENT STAFF. there has been an increase i n number of the international and domestic passengers. • EMPLOYEE SHORTAGE.. T-THREATS . helpful.kingfisher it backed by the great vision of Vijay Mallay Who can take king-fisher to the world • THE DECCAN DEAL. The most enthusiastic. • VISIONOR.

which will lead to more competition. • Jet any appoint cabin crew which who can speak the regional language of the place where the flight is distinct. Here are some Recommendations which Jets Airways should implement to meet its co mpetitors and to increase its market reputation in terms of tangible & intangibl e value • The efficiency should be such that aren’t any delays or cancellation of flights which forces customers to turn towards other airlines. This would contribute in the revenue of the airlines. This in turn would stimulate demand and lead to growth. are not fully exploited.As fuel prices have climbed. • To meet the needs of passengers and to get additional customers it needs to think from the customer’s point of view. RECOMENDATIONS THUS FROM ALL THE ABOVE ANALYSIS OF I’SERVICES.like regional food. EARNINGS AND GOODWILL. • It needs to be consistent with its technical services (like booking syst em. • Security is the key factor. • The Airlines should time and again declare various attractive ticketing schemes along with gifts and discounts. • The Airlines should give special privilege and best deals to its regular customers. • HIGH INPUT COST. • It should expedite the procedure of its alliance with Jet Airways. All this has resulted in lower returns for all operators. the input cos ts are also high. The en try of new players would en-sure that air fares are brought to realistic levels. route chosen etc. • Due to increasing competition in the aviation industry it is important f or KINGFISHER to increase its working standard to match its competitor’s levels. They should als o take into consideration those food habits of senior citizens. as it will lead to better cost and rev-enue management. This will indeed popularize the brand among the masses resul ting into more business. Increasing growth prospects have attracted & are l ikely to attract more players. • The technical services like the booking system. • The Airlines should market itself very effectively with the help of big Brand Ambassa-dors. PEST ANALYSIS. Security should be in both the terms that is from external sources like hij ackers and also inter-nal safety like safe landing etc.• INCREASING FUEL PRICE. durin g a time of escalating costs. as loyalty rewards. one regional food option should be provided.the safer the airline the more preferable it is. the rising fuel prices have led to increase in the air fares. SWOT ANALYSIS WE CAN SAY THAT THE FOLLOWING ARE THE MAIN AREA WHERE KINGFISHER NEEDS TO CONCENTRATE TO BRING ABOUT MODIFICA-TION IN ORDER TO ENHANCE ITS BUSINESS. REVE NUE ANALYSIS. . • DECLINING YEILD. increased productivity and better services. • They should provide more personalize services to passengers so that need of each passenger is taken care of. • It needs to distinguish itself from the rest of its competitor by provid ing unique servic-es. • One Indian.LCCs and other entrants together now command a market share of around 46%. the check in timings sho uld be the most convenient of all other airlines. Legacy carriers are being forced to match LCC fares. so th at their flights are more cost effective in this recession period. entertainment etc. One of the reasons for inability to realize t he full potential of the trunk routes is the lack of genuine competition.) so that it does not disturb the passengers.Apart from the above-mentioned factors. the inverse relatio nship between fuel prices and airline stock prices has been demonstrated. • TRUNK ROUTEIt is also a matter of concern that the trunk routes. Some of the reasons for high input costs are:Withholding tax on interest repayments on foreign currency loans for aircraft ac quisi-tion. at present. MARKET STRUCTURE ANALYSIS. Moreov er. Increasing manpower costs due to shortage of technical personnel. COMPETITON ANALYSIS.

T. .) • they should also start advertising on television. SUMMARISED STUDY OF THE ABOVE THROUGH POWERPOINT SLIDES. (That is that there should not be any fr equent changes. or put up some hoardin g during special offers. give regular up dates in newspapers • They can also have some famous personality as their brand ambassador (li ke some movie star or some sports personality etc) to further promote their serv ices to local public.• The method of booking tickets. P. the flight timings and the route should r emain the same for as long as possible. • Also this will help kingfisher to create a vibrant image and secure the number one position in the market.O.

Recommendations 1 .

Recommendations 2 .

Sign up to vote on this title
UsefulNot useful