Airlines

An Oligopoly
 What is Oligopoly !

 Few number of firms contributing to the entire

market share.
 Products are differentiated in terms of service
quality and offerings
 Entry barriers
 Firm is a price-setter
 Strategy dependent on individual rival firm’s
behavior
 
 Current Players !
 Full Cost Airlines  Low Cost Airlines

 Kingfisher  Air Deccan.

 Jet  Go-Air.
 Indian Airlines  Spice.
 Indigo.
 Flight no: LCC
Destination: India
 India's aviation sector has become the
fastest-growing in Asia
 Rise in domestic air capacity whooping
46% .
 Not a new concept abroad
 Remarkable jump of 466%

-data as per 2005

 The Growth Story !
Year ended 31 March Domestic Sector Year-on-Year
Passenger Growth
(millions)
1996 10.4
1997 11.2 7.7%
1998 11.5 2.7%
1999 12.0 4.3%
2000 12.7 5.8%
2001 13.7 7.9%
2002 12.8 -6.6%
2003 13.9 8.6%
2004 15.7 12.9%
2005 19.9 26.8%
2006 25.5 27.9%
Is it really sustainable in Long
run?
YES !Its a cost cutting model to
Survive .
 “no-frills airlines”

 Several options to costs.

 Online Tickets.

 No FREE meals.
 “no-frills airlines”
 No News papers.

 Lean and Mean approach to staffing.

 Optimum utilization of space.

 “no-frills airlines”

 Point to point contact.

 Higher aircraft Utilization.

 Lease air crafts to minimize debt to

investment ratio.
 “no-frills airlines”

 Use secondary airports.

 Standardization of aircrafts.

 NO business class.
 Challenges !

Fuel

Capital

Others
 Pricing Strategies

 Revenue Management .
 Increased profits
 Implements peak-load pricing
 Implements third-degree price discrimination
 Implements an inventory control system
Current Affairs !
 Kingfisher
acquiring
Air Deccan
 The CZARS unite !
Jet – Kingfisher . Almost a Cartel
Hurting Fuel costs.
Flourishing Railways…

A cross-price competitor!
So why are we still in business ?
Do we continue Boarding
or
Do we de-plane ?
Hope u had a nice flight !