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Final PPT - Airline 4april

Final PPT - Airline 4april

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Published by Sadanand Ramugade

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Published by: Sadanand Ramugade on Jun 12, 2012
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Total Distribution Cost

Group 5
Amita Mistry Santosh More Manish Nangalia Aquil Nomani Vivek Oza Bipin Pal Mayank Parekh Sadanand Ramugade Nina Raste 241 242 243 244 245 246 247 249 250

Total Distribution Cost What is total distribution cost? • Cost or expense incurred by the Company for delivering its products from the point of production to the point of consumption. Airline distribution cost includes     Commissions Credit card fees Computer reservations system fees Cost of the airline's own reservations counters .

Case Study Scenario Pre US deregulation in 1978  State-owned airlines enjoying legal monopoly  Entry barriers for new airlines  No common platform for reservations  Unorganized hospitality industry .

To increase revenues it launched 3 websites: Travelocity.Sabre Evolution A computer reservation system developed by American airlines Primary channel for booking and reservation  Access to travel agents with travel related content like fares. 36 railroads and 220 tour operators to thousand of travel agents around the world.com. Virtually There and Get There . schedules etc. 37 car rentals. Availability to real time travel information In 2005. 9 cruise lines. 60. Sabre connected 400 airlines.000 hotels.

it started charging additional $10 per ticket booked through GDS. Northwest encouraged direct selling as a low cost alternative to GDS through internet by using its own website To discourage the use of GDS. Northwest paid $180 m as GDS fees In 2004. .Northwest Airlines Strategy to reduce distribution costs GDS fees formed a major portion in airlines total distribution cost In 2003.

Indian Scenario Type of Airlines Services Full Service Airlines In-flight services Ground handling services Bigger aircrafts where business class and economic class are separate Low Cost Airlines Minimum In-flight services No Frills Only Standard class .

pay roll. .Distribution Cost of FSA includes Global Distribution Systems GDS is a computer reservation system that airlines use to book and sell tickets Galileo. Overheads includes maintenance cost. Sabre. reporting and r emitting procedures of IATA Accredited Passenger Sales Agents Travel Agent Commission Overheads Airlines spend around 10 % of ticketing charge on payment as commission to agent. etc. and Amadeus LOGO Billing & Settlement Plan BSP is a system designed to facilitate and simplify the selling.

no frill airline Providing the lowest airfares and connectivity to unconnected towns and cities Despite a disastrous maiden flight which caught fire. Deccan continues to grow . G R Gopinath with a vision to provide affordable and point to point flight service India's first low cost.Deccan Profile Started air operations in 2003 by Capt.

Expenditure – Airline Industry Aviation fuel Uncontrollable Expenditure Aircraft lease rental LOGO In-flight Service cost Controllable Expenditure Ground handling cost Distribution cost .

Total Cost Structure LOGO Aviation Fuel Global distribution Service 40% 40% On Billing and settlement plan On travel agent on other over heads 3% 4% 10% 3% Others .

Strategies to reduce Distribution Cost LOGO Pioneer in introducing internet based computer reservation system E-ticketing In-house development of Airline Distribution System (ADS) Elimination of GDS. BSP and Travel Agent Cost .

Ticket Price Comparison Particulars X Airlines LOGO Air Deccan Aviation fuel Travel Agent GDS BSP Other Over heads for distribution Others (in-flight services. lease) Cost of Ticket 40 10 4 3 3 40 100 40 0 0 0 1 30 71 . Ground handling.

flexibility. cost and convenience Merits Easy Connectivity Receive Bookings 24/7 Cost Benefit Low Maintenance Cost Demerits Phishing De-motivation to travel agents .Merits and Demerits LOGO Online Booking offers many advantages for both travelers and airlines. including security.

htm  http://www.in/sites/default/files/Air%20Deccan.fiaindia.in/member/airdeccan.htm  http://www.com/money/2006/may/15spec5.fiaindia.cio.References  http://www.in/issues.rediff.pdf  http://www.htm .

Thank You .

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