Professional Documents
Culture Documents
Project 2
Project 2
“COMPETITIVE AIRLINES”
-An analysis of the strategies followed by airlines in
India with special focus on low-cost airlines
ASMITA NIKAM
0|Page
FINAL REPORT
“COMPETITIVE AIRLINES”
An analysis of the strategies followed by Airlines in India
with special focus on low-cost airlines
Submitted to
Prof. FARHAT
SHAIKH
Submitted
by
ASMITA
NIKAM
1|Page
AUTHORISATION
Place: MUMBAI
Date: NOVEMBER 20, 2019 ASMITA NIKAM
ACKNOWLEDGEMENT
PROJECT DESCRIPTION........................................................................5
OBJECTIVE OF THE PROJECT….............................................................6
RESEARCH METHODOLOGY…..............................................................7
INDIAN AVIATION INDUSTRY…............................................................9
- EVOLUTION...................................................................................09
- PESTE ANALYSIS.............................................................................13
- PORTER’S FIVE FORCE ANALYSIS….................................................19
- SWOT ANALYSIS.............................................................................22
- PORTER STRATEGIES.......................................................................24
JET AIRWAYS….....................................................................................25
KINGFISHER AIRLINES..........................................................................27
SPICEJET…............................................................................................29
INDIGO…...............................................................................................31
PARAMOUNT AIRWAYS….....................................................................32
GO AIR…................................................................................................33
DECODING THE SURVEY….....................................................................34
QUESTIONAIRRE….................................................................................42
APPENDIX…...........................................................................................44
- MODELS….........................................................................................44
- REPORT…..........................................................................................45
REFERENCES…........................................................................................53
PROJECT DESCRIPTION
Since its maiden flight in the chilled winters of December 1912, from
Karachi to Delhi, Indian aviation Industry has traversed a long journey
evolving synchronously and has metamorphosed into one of the most
competitive airline industry in the globe. From being a privilege of the
hedonist class, it has transformed into a more utilitarian way of
travelling and is catering to more value seeking functionalist and
pragmatist class of consumers too, in the form of no frill low cost
airlines. The hegemony of the government owned monopoly of the
sector has been thwarted long back with the effect of open sky policy
of April 1990. As a repercussion, a plethora of airlines has pullulated
and has transformed the arena into adrenaline gushing venture. As the
percentage of fliers among the Indian population is only a paltry 0.8%
and in order to survive and grow the airlines have been devising
various strategies. It would be interesting to extricate the intriguing
strategies adopted by these players parrying and pummeling the
opponents. The study aims at learning the financial, marketing and
operational strategies the airlines in India are following, albeit with a
clinical approach. The project shall envelope studying the airlines
industry in India in relation to various business models and also come
up with suggestions, whose implementation would be in favour of the
sector. The project aims at analyzing individual brands in the industry
and chooses their strong points and come up with an idle hypothetical
brand. A market survey of the existing fliers is planned to know their
likings and disliking.
OBJECTIVE OF THE PROJECT
To have a holistic study of the industry, analyze the current
scenario in perspective of models such as PASTE Analysis, SWOT
analysis etc., thus gain a multidimensional insight of the industry.
To study business models of the existing airline majors in the
country.
To list up various strategies adopted in the industry by various
players and have a clinical study of them.
A market survey of the existent fliers in order to know their taste
and preferences.
To come up with constructive ideas for the benefit of the industry.
Primary Secondary
Sources Sources
Research
Questionnaires
Papers
Personal
Internet
Interviews
Passenger traffic is projected to grow at a CAGR of over 15 per cent in the next 5 years.
The Vision 2020 statement announced by the Ministry of Civil Aviation, envisages
creating infrastructure to handle 280 million passengers by 2020.
Investment opportunities of US$ 110 billion envisaged up to 2020 with US$ 80 billion in
new aircraft and US$ 30 billion in development of airport infrastructure.
Associated areas such as maintenance repair and overhaul (MRO) and training offer
high investment potential. A report by Ernst & Young says the MRO category in the
aviation sector can absorb up to US$ 120 billion worth of investments by 2020.
Aerospace major Boeing forecasts that the Indian market will require 1,000 commercial jets in
the next 20 years, which will represent over 3 per cent of Boeing Commercial Airplanes’
forecasted market worldwide. This makes India a US$ 100 billion market in 20 years.
PESTE Analysis
The literature on marketing provides one, particularly useful, model for the study of a firm’s
Marketing Environment. This model proposes that the relevant factors should be divided into
the categories of Political, Economic, Social, Technological and Environmental. These factors
are not mutually exclusive but then the classification helps in understanding each ones
influence. Following are the factors -
Political factors
Economic
factors Social
factors
Technological factors
Environmental
factors
POLITICAL FACTORS
The political situation of the country has a direct impact over the aviation industry of the
country. The policies taken up at this level such as the nationalization of the carriers, open sky
policy, and taxation all have impact on the marketing policies of the carriers.
Open Sky Policy and Deregulations
Throughout its history, the airline industry has been constrained by decisions made by
politicians and governments. Governments have controlled where airlines can fly, and aspects
of their product planning and pricing policies. They have also had a major involvement in the
industry through the ownership of airlines. Finally, political decisions have often affected the
extent, nature and geographical distribution of demand.
In recent years India has open up its sky to the foreign players. It has signed up with nations all
over the world (though not all of them) to allow use of their respective airspace for the
commercial flights. It has led to increase in the number of players in the sector and has beefed
up the competition. Currently there are 76 carriers from 49 countries operating as an outcome
of ‘Open Sky policy’.
In 1953, the Air Corporation Act led to nationalization of the airlines. It changed the landscape
of the airline industry in India. It was in 1994 that the Air Corporation Act was repealed and
thus this allowed private operators to operate in the domestic airline and aviation industry.
Today FDI up to 49% into airlines and 100% for airports. A brief of the various decisions taken
by the government in deregulation of the sector and opening to the foreign policy.
Aviation Policy
100 per cent FDI under automatic route is permissible for Greenfield airports.
For existing airports, FDI up to 74 per cent is permitted through automatic approvals
and up to 100 per cent through special permission (from FIPB).
Private developers allowed to setup captive airstrips and general airports 150 km away
from an existing airport.
100 per cent tax exemption for airport projects for a period of 10 years.
49 per cent FDI is permissible in domestic airlines under the automatic route, but not by
foreign airline companies. 100 per cent equity ownership by Non-Resident Indians
(NRIs) is permitted.
74 per cent FDI is permissible in cargo and non-scheduled airlines.
The Indian government plans to set up an Airport Economic Regulatory Authority to
provide a level playing field to all players.
Major Investments
Over the past year, various companies have shown an interest in the Indian aviation industry.
Investment in airport infrastructure was over US$ 10 billion in 2015 and will go up US$ 20
billion by 2024, of which close to US$ 6.8 billion is expected to come through public private
partnerships (PPP) model, according to a study by research firm Frost & Sullivan.
Tata Advanced System Limited (TAS), a unit of the Tata Group, will set up a US$ 113.63
million helicopter manufacturing unit at the Aerospace Special Economic Zone (SEZ) in
Adhibatla village near the Hyderabad international airport. Further, the company has
formed a joint venture with US-based Sikorsky Aircraft to make aerospace components
in India.
US aircraft maker, Boeing Co, will deliver 100 planes worth US$ 17 billion over the next
four to five years to India.
Changi Airports International is ready to enter into joint ventures with more Indian
companies in developing airports. The company, which has picked up a 26 per cent
stake for US$ 20 million in Bengal Aerotropolis Pvt Ltd (BAPL) is looking at other
opportunities.
State-owned aerospace firm Hindustan Aeronautics Limited (HAL) has signed an
agreement with Boeing to supply flaperons for the Boeing's 777 series commercial
jetliners. It is understood that HAL will supply 600 units of flaperons to Boeing which will
be delivered in phases by 2019.
Airport Infrastructure
Mumbai and Delhi airports have already been privatized and are being upgraded at an
estimated investment of US$ 4 billion over 2006-16.Greenfield airports are operational
at Bangalore and Hyderabad. These are built by private consortia at a total investment
of over US$ 800 million.
A second Greenfield airport being planned at Navi Mumbai is going to be developed
using public-private partnership (PPP) mode at an estimated cost of US$ 2.5 billion.
35 other city airports are proposed to be upgraded. The city side development will be
undertaken through PPP mode.
Over the next five years, AAI has planned a massive investment of US$ 3.07 billion—43
per cent of which will be for the three metro airports in Kolkata, Chennai and
Trivandrum, and the rest will go into upgrading other non-metro airports and
modernizing the existing aeronautical facilities.
An investment of US$ 623 million will be made by industries in the Aerospace and
Precision Engineering Special Economic Zone at Adibatla, Ranga Reddy district.
The country's first special economic zone (SEZ) dedicated to the aerospace industry has
been inaugurated in Belgaum district, Karnataka. The SEZ—promoted by Quest Global,
an aerospace engineering and manufacturing company—was undertaken at an
investment of US$ 32.5 million. [Nov 16]
Abolishment of Taxes
Foreign Travel Tax (FTT) Rs500 and 15% inland air travel tax (IATT) charged on Basic airfare has
been abolished by the government w.e.f from January 9, 2004 to reduce fares.
Reduction on Excise Duty
From January 9, 2004, the excise duty on ATF was reduced from 16 to 8 per cent. The average
domestic price of ATF is 99 per cent higher than prices in foreign countries and affects domestic
airlines drastically as ATF accounts for 30 to 40 per cent of operating costs.
Landing Charges abolished
Landing charges for aircraft with less than 90 seats were abolished and landing charges for
larger aircraft have been reduced by 15% with effect from February 11, 2004.
ECONOMIC FACTORS
The demand for air travel is characterized by very high income elasticity. Therefore, as the
world economy grows, so the demand for air travel can be expected to increase too. This
continuing growth gives both enormous opportunities and great challenges to the airline
industry. The opportunities come with the chance to exploit a growing market, something
which would be the envy of managers in many other industries. The challenges are to
accommodate the growth through suitable infrastructure development and without
unacceptable environmental consequences, and to exploit the demand whilst achieving the
stable profits which the industry has so often found elusive. Besides a clear pattern of growth,
growth rates are uneven through time. Just as one would expect, air transport industry growth
rates are tied closely to those in the world economy. If growth in the economy is rapid in a
particular year, so is the increase in air travel demand. Periods of economic stagnation see a
significant slowing of the rate of increase in demand. This pattern has immense strategic and
marketing implications. It is not sufficient for carriers to implement policies which allow for
profits during prosperous periods if these same policies result in heavy losses or bankruptcy
during the downturns in the trade cycle. The rising income of the Indians will see a rise in the
air travelers, however the recent recession showed up we must be cautious in capacity
increment. The down turn had led to losses worth millions due to inadequate capacity
utilization.
SOCIAL FACTORS
Trends in social factors will have widespread consequences for airline marketing – indeed, in
some senses, this is the most significant component of the PESTE analysis model as far as
marketing policies are concerned.
Change in Lifestyle
The changing demographics have profound effect on the marketing strategies of the airlines.
The Indian population is going through a transition phase. The high percentage of youth
coupled with increasing job avenues certainly hints at the growing income and the aspirations.
There have been rise in the old aged population also due to medical breakthroughs. And the
society is more open to embrace new ideas of single parent children, nuclear families, live in
relationships, childless couples, etc. All these calls for newer approaches to design of
promotional strategies. For example, Spice Jet has taken special initiative to take care of child
travelers without guardians.
Rise in Leisure travel
There has been a significant rise in the number of the tourists in the country. India had
acquired a total 5.5 million tourists traversing the country. Number of foreign tourists has seen
a growth of 5.6% whereas the domestic tourists’ numbers have seen a growth o 8.5%. This is
seen as a huge booster to the airlines industry.
The Female business Traveler
Female population has shown a higher numbers in the business scenario. The growing numbers
have led to call for the decrease in sexually provocating skimpy clad air hostesses. Moreover
there has been rise in the number of male steward among the cabin crew. This meant there has
been a change in the attitude towards the crew staff.
TECHNOLOGICAL FACTORS
Technology is one of the most important and interesting factor which can be both an ally as
well as an enemy. Technology has enabled aviation sector to soar greater heights with more
efficiency. Larger aircrafts like the Boeing 787 can take up to 840 passengers reducing the per
capita fuel consumption whereas Embraer with greater are just the idle for shorter distances.
The CAT technology employed in International airports of the country has helped the pilots to
take off and move in even during the low visibility hours. But then some of the technological
developments have posed to be fierce competitors.
Video Conferencing
Video conferencing has enabled to make real time meetings possible at the minimum of cost.
This has helped the organizations to cut down on the cost. But that leaves the aviation industry
of greater challenge to attract the business travelers.
Internet
Internet has enabled to provide real time information of flight schedules and availability. It has
also enabled check in facility. Even some of the airlines are providing internet facility over the
flight however internet has raised questions over the distribution channel commission.
Surface Transport Investment
The investment in the surface transport has lead to major losses of domestic passengers. With
the plans in anvil to launch high speed bullet trains in some corridors, if that comes to reality
that shall take away a major portion of the revenue.
ENVIRONMENTAL FACTORS
As the concerns for the environment grows with the rise in global temperatures. It becomes
obvious that the airlines are criticized all over the world by the pro environmentalists.
Government too in order charges higher taxes in order to dissuade the short distance travelers
from taking the air routes. There are high ATF charges. On the other hand the available
infrastructure is not conducive to handle the burgeoning airlines
SWOT Analysis
Strength
Tourism in India
Weakness
Infrastructural constraints.
Opportunities
The number of air travelers is about 0.8 per cent of the population
India's civil aviation passenger growth, at 20 per cent, is among the highest in the world.
Economic Growth
Under-penetrated markets
Growth in Tourism
Threats
Inadequate infrastructure.
The First class service (see the picture on right) available in the airlines has
been rated by Skytrax as the 14th best in the world. These are the first fully
enclosed suite provided by any Indian airline. They are equipped with 21
inch LCD screen and AVOD besides all the features of premiere class. They
have received 3 star rating for its service by skytrax.
The Economy class is provided with 10.5 inch LCD and AVOD. All the three classes feature
Mood Lighting that adjusts itself to the time of the day.
The Jet Lite division has withdrawn the complimentary food service
and has implemented buy on board. Unlike the parent airline Jet lite
has its hub at New Delhi. The airline is also into charter flights and
helicopter service.
Jet Konnect airways is the other low cost no frill airline by the Jet airways group. To
complement the Jet Lite service it focuses more on southern states.
In Flight Entertainment
All the Jet Airways flight provide, “Jet Screen”, which offers audio-video on demand
programming. It has over 100 movies, 80 TV programmes, 11 audio channels and a CD library of
125 titles. The system operates via individual touch screen monitors at each seat, and is
available in all classes.
Airport Lounges
Jet Airways Lounges are offered to First and Première Class passengers, along with Jet Privilege
Platinum, Gold or Silver card members. The international lounge at Brussels has showers,
business centre, entertainment facilities and children's play areas. Lounges are located in
Bangalore, Chennai, Kolkata, Delhi, Hyderabad, Jaipur, Mumbai.
Marketing Strategies
Frequent Flier Programme
Jet Mall
This is the unique mall provided by the Jet Airways to shop souvenirs at 30000 feet.
Jet Wings
Jet Travel
Jet has alliance with a number of hotels Such as Leela and Taj where the passengers can get
discounts if they are privilege members of the Jet.
They provide special service for infants, olds, medical emergencies, expectant mothers and
animals. Check in can be done by SMS, on Net, and Kiosks. Their Website has the option to
choose from a plethora of language to cater to understanding of people from different parts of
world.
INTRODUCTION
SpiceJet is a low-cost airline based in Delhi, India. It began service in May 2005 and by 2008, it
was India's second-largest low-cost airline in terms of market share. SpiceJet was earlier known
as Royal Airways, a reincarnation of ModiLuft. It is promoted by Ajay Singh and the Kansagra
family. The Airlines has its base at Delhi and covers the major 18 airports throughout the length
and breadth of the country with its fleet of 21 aircrafts. SpiceJet was voted as the best low-cost
airline in South Asia and Central Asia region by Skytrax in 2007. Spicejet also wins World Travel
market 2009 award.
Strategies
SpiceJet marked its entry in service with Rs. 99 fares for the first 99 days, with 9,000 seats
available at this rate. This deal was followed up with a Rs. 999 promotional scheme on select
routes. Their marketing theme is ‘offering low, everyday spicy fares’ and great guest services to
price conscious travelers. Their aim is to compete with the Indian Railways passengers
travelling in air conditioned coaches. SpiceJet too follows the hub and spoke model.
On July 15, 2008 Billionaire Wilbur Ross suggested he would invest $80 million (about Rs 345
crore) in the low cost airline. The board of directors of SpiceJet accepted an offer in-principle
from the US-based PE firm that would make available about Rs 345 crore to SpiceJet, a joint
statement issued by SpiceJet and WL Ross & Co. They have tried to achieve better efficiency by
quickly imbibing the learning curve and experience curve among the crew. For the same they
have utilised the service of only single type of aircraft namely Boeing 737.
Boeing 737-800 (189 passengers)
Spicejets on-time performance is amongst the best in India and coupled with a
Technical Dispatch Reliability of 99.6%, makes it an airline with least cancellations.
SpiceJet passengers are insured against a premium (included in the fare) of Rs 129 of any
accidents, flight delays, baggage loss, flight cancellation, accidental medical reimbursements,
etc with the Tata AIG. This has helped the organization to decrease the loss out of the above
mentioned circumstances.
Marketing Strategies
Spicejet has tied up with the finest hotels that bring you a host of
great offers.It includes hotels such as Sheraton, Golkonda, Trident, Ista, Maidens, Rain Tree,
The Park and the Kenilworth Goa. To avail the programme on need to member of Privelege
Pass.
For the service men and women SpiceJet gives special discount upto
100% discount on base fare.
Corporate Benefit Program addresses the business traveler's needs. The program is a
customized program designed to provide maximum cost savings to the organization while
offering loads of benefits for the individual business traveler. The tickets are provided at
discounted price of up to 50% and are coupled with various other incentives on volume basis.
Similarly volume based incentives are also available for group bookings.
SpiceJet has tied up with State Bank of India and its debit card can be
used to book tickets. In this context it is to be mentioned that most
of the airlines provide the booking facilities only against credit cards.
It has appointed i-Vista Digital Solutions to
handle its online marketing initiatives.
Services
SpiceJet does not provide complimentary food, however they have the facility to buy on board.
Mineral water is provided free of charge. There are no entertainment facilities.
One of the most innovative programme started by SpiceJet is that they take care of the
unaccompanied minor from the take off airport to the destination airport without any extra
charge. This means now one can even leave there young ones also under the guardianship of
SpiceJet.
The website provides all the information regarding PNR status, flight status, bookings, and also
web check in, besides the promotional offers and corporate governance activities.
Introduction
IndiGo is a private domestic low-cost airline based in Gurgaon, Haryana,
India. It operates domestic services linking 17 destinations. Its main base
is Delhi's Indira Gandhi International Airport. IndiGo Air is owned by an
Indian named Mr Rahul Bhatia. The airline commenced operations on 4
August 2006 and today it has 23 aircrafts to its fleet.
Strategies
Indigo connects to 17 destinations all within India. They have only Airbus A320 – 200 under its
fleet to garner quicker from the learning and experience curve. They have the youngest fleet in
India with an average age of only 2 year as on April 2009. Large expansion plan is on anvil.
IndiGo placed an order for 100 Airbus A320 family 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 carrier has set a target of serving approximately 30 Indian cities by 2010 with a fleet size of
40 A320 and A321 aircraft. The airline will receive all 100 A320 family aircraft by 2016. The
Indian Government has approved the airline's aircraft import plan "in principle". It focuses on
the Eastern region much more than others.
Services
Being a low cost carrier, IndiGo does not offer a complimentary meal
service to its passengers. However, it does offer a buy-on-board food
service where items such as sandwiches, parathas, cookies, nuts and soft
drinks can be purchased. Mineral water is provided free of charge.
They emphasize on the punctuality and have been maintaining the best record in the industry
in that aspect. On time performance
MONTH PERCENTAGE
MAY’19 85.7
JUN’19 86.9
JUL’19 86.5
AUG’19 88.3
SEP’19 88.4
They have tried to keep things simple by cutting the cost in every possible manner. They focus
only on their core business and have refrained from any tie ups with business of other spheres
like hotel and travel. As recognition of their feat in passing the benefits of to the consumers it
has been recognised by a number of organizations. This is the only other airline to provide
tickets on debit cards
Indigo bagged the NDTV Profit Business Leadership Award 2009 in the category of Aviation.
Indigo also won the CNBC AWAAZ Travel Award ‘09 and was adjudged the best low cost
carrier.
INTRODUCTION
Wadia Group owned, GoAir is a low cost airline based in Mumbai. It operates domestic
passenger services to 11 cities with 385 weekly flights. Its main base is Chhatrapati Shivaji
International Airport, Mumbai. GoAir took the wings on 9 June, 2005.
Strategy
It started by leasing of Airbus A 320. Today it has 8 A320s in its fleet. Choosing a single type of
aircraft has helped them get efficiency quicker. It also follows hub and spoke model. They have
tied up with TATA AIG to cover insurance for all its passengers for all delays, accidents,
cancellations, baggage loss, etc. GoAir has outsourced all reservation and passenger
managemnt functions to Radixx International of Orlando.
Services
Being no-frills airlines, Go does not offer a complimentary meal service to its passengers.
However, it does offer a buy-on-board food service where items such as sandwiches, parathas,
cookies, nuts and soft drinks can be purchased. Mineral water is provided free of charge.
However for the business class they provide complimentary food. They also allow up to 35 kgs
of free baggage which is one of the highest in the sector.
Marketing Strategies
GoAir invests a lot into brand promotion. GoAir airliners come in green,
orange, blue, and pink. This has been done consciously to grab the
attention of people. They have also roped in Preity Zinta to become the
brand ambassador of the airline. GoAir is positioned as ‘The Smart
People's Airline’. Its captivating theme, ‘Fly Smart’ is aimed at offering
passengers a consistent, quality-assured and time-efficient service. It’s unique product
portfolio comprises of some of the most innovative offerings in the industry including GoSave,
GoFlexi, GoHappy and a bundle of Red Eye flights. From time to time they launch variety of
offers to boost the sale of tickets. For group bookings they give special discounts. They also give
special discounts to Defence, Paramilitary and police personnel. They also help in booking of
buses and hotels through their websites.
It has the distinction of least cancelled flight – 0.9% between June and November 2009.
DECODING THE SURVEY
INTRODUCTION
The survey for the purpose was conducted in Mumbai Domestic Airport in between Oct 25,
2019 and Oct 30, 2019. The sample was picked up from CSIA Airport, Mumbai. The sample
size is 50 with respondents between 17 and 55 years of age. The average age of the
respondents is 33.4 years and the median age is 35 years. The income of the respondents
varied from a yearly income of Rs. 2,75,000 to Rs. 15,00,000. The average income of the
respondent is Rs. 5,17,000 and the median income is Rs.4,46,000. The respondents were
chosen without any class differentiation. The survey was conducted through structured
questionnaire besides a lot of informal discussion was done with respondents.
Others 0
Airlines
Airlines 17 34%
Rail
Coach 8 Coach 42%
16%
Rail 21
Car 4
From the sample of 50, 21 people equivalent to 42%, preferred railway as the mode of travel to
transverse long distant cities within the country. Railways are preferred because unlike airports
they are situated inside the cities. This helps in better connectivity. Moreover they escape the
hassle of reporting much ahead the departure time to comply all the security check ups,
besides railways being much cheaper. This situation is particularly true for distances around
500 kms. Superfast trains like Shatabdi Express and Rajdhanis help in commuting at much
cheaper rate with comfort and saves time related to pre departure issues. Airlines are
preferred over larger distances as it definitely saves a great amount of time and people find it
worth paying in that case. In addition one more important point to be considered is that that as
the taxes and air fuel surcharge for all the distances remain the same in India, over the long
distances the price seems to be much more economical. Car And Coaches are neither cheap nor
as comfortable as the other two. However for distances around 500 kms it is still preferred for
going on vacations and family visits as it provide people with greater convenience. As other
long distance mode of travel like waterways airships are not popular In the country and even
we can consider them to be nonexistent we did not find any respondent using those mode.
2. How would you categorize yourself in terms of air travel?
Self Reflection
Business TravelerLeisure/ personal Both
40% 28%
32%
Low cost airlines have revolutionized the travel industry. It has made air travel within the reach
of middle class. No surprise we find 66% of the respondent are travelling by economy class.
This low cost no frill service gives the middle class value for the money. Even the organizations
are utilizing the service. This has helped them to reduce the cost. Business class is preferred by
rich and the top level executives. First class is again utilized by higher class.
4. How many times did you travel by air in the last one year?
C unt
o your numbers
30
20
10
0
1 to 5 6 to 10 11 to 20 21 to 30 31 and above
1 to 5 6 to 10 11 to 20 21 to 30 31 and above
24 11 8 5 2
We find around half the sample has travelled by air less than 5 times in the last one year and
around two third has is under the double digit number. This proves that Indians still does not
use air travel as frequently as people in America and Europe. The double digit number is
touched mainly by the persons who are travelling due to business reasons. Again higher
frequency is generally touched by the business class and first class travelers. So these classes
are more profitable and CRM techniques must be employed to serve them better. Having a
team to attend to the organizational travelers is important as they are the more frequent
travelers.
As most of the sample was favoring the economy class it’s obvious it was the money that was
the prime factor. Lowering of fares has resulted in zooming of numbers of fliers. Airlines often
employ several promotional methods to lure the customers. Quality of service is again very
important especially for those who travel by business and first class. Comfortability and
legspace are important aspect under this service factor. Location of airport arrives at a third
distant evaluation choice. But it is an important factor when one considers a distance around
500 kms or so. Under such circumstances there may not be much difference between the travel
time of airline and other mode of transport. Safety and reliability is an important factor
considered by all. As most of the airlines maintained a high safety standard it is the reliability
that draws the attention. No wonder some of the airlines are boisterous in reflecting their on
time performance. Availability of seat is of least consideration.
6. How do you book your airline tickets?
Airline company
office 6% Internet
22%
Travel agent
72%
30
28
25 26
24
20
Pricing
15 13 14
Safety
10 9
10 Quality
5 6 5
4 3
2
0 10
Poor Satisfactio Good Very Excellen
n Good t
In all the categories most of the respondents have conveyed to be just satisfied. This translates
that if foreign players join the competition then it may pose a threat to the Indian Players. Air
Asia is already launched service in the country. Pricing is a big factor. With the cheaper fuel in
other countries foreign players have an advantage. In this case government can help by reducing
the taxes and ATF charges. Most of the Indian LCA players are using aircraft which are not old
enough to replace. But then perhaps it has been influenced by tarnished image of the old
players. However the lack of quality trained pilot is a concern for the country. This has resulted
into skidding of air planes on runways as the pilots are not trained enough. Also the airports
infrastructure is to be blamed as they are not equipped with latest technology. Service wise
some foreign have clearly identified as benchmarks. Indian Players need to catch up with them.
8. Rank the following qualities 1 being the most desired and 5 being the least
desired among the cabin staff.
1
2
3
4
5
Friendliness and Staff Attitude came up to be the most desired qualities. It is obvious that the
airline industry is gives a lot of training to its staff to help them imbibe this qualities. A well
groomed with right attitude and friendly staff can become a great factor in retaining the
customers. They are the face of the airlines and their interactions have immense impact in the
brand image of the organization. Cabin staff presence throughout the flight may not be
required as the distance is not too large within the country. However it is desired they help out
when called.
9. Given below are few desired qualities of on board products. Rank them.
1
2
3
4
Cleanliness is the most desired quality by the fliers. They don’t like left over glasses and pet
bottles of water. This is often the phenomenon in non one go flight. Seating comfort has been
placed by the respondents second on the list. Leg space, seat texture, seat width are taken in to
consideration. As the distance between two cities in India do not take a long time onboard
catering is not of much important aspect. However they appreciate good reading materials as
that help in recreation and passing time.
10. Please list up the names of the low Cost Airlines in India.
TOMAS
1
2
3
4
5
6
7
This question was designed to know the top of the mind brand among the fliers. Though indigo
and jet airways have the largest market shares in the domestic market, it was surprise to note
that Spice jet has topped the chart when the respondents were asked to write the names of
Low Cost Airlines of India. The probable reason could have been umbrella branding.. In fact it
was a Jet airway that was coming to the mind of the respondents. Similarly air asia Red has not
been able to come out of shadow of its parent brand. This is benefit for the low cost divisions
of these two companies but then may also dilute the brand image of parent companies in long
period. Go air ranks 5, probably because the frequency of flights of go air in Eastern India is
low. Air india has maintained the distinction because of its focus strategy to portray the image
of low cost airline only.
FINDINGS AND SUGGESTIONS
Though all of these Low cost Airlines are targeting the same crowd, with almost same product
that is benefit for the money, but their associations and little alterations in product has led to
different perceptions among the passengers. Following is the perception of individual brand-
Some of the Strategies that help in bringing down the cost of airline operation-
- Leasing of aircraft. It helps in acquiring the aircrafts with the latest technologies for
operation with the minimum cost.
- Hedging of fuel – it helps to reduce avoid the fluctuations in the price of fuel.
- Code Share Agreement- it helps in maximum utilization of aircraft.
- Employing E-jets- better fuel efficiency and avoid taxes in the short routes.
- Scheduling flights in non peak hours.
- For new organizations point to point destination is better choice of operation for bigger
players it the hub and spoke model.
- Pricing- the industry is price sensitive hence revenue management is an important
aspect to lure in the customers. Switching is more frequent in case of low fare airlines
whereas business segments are more brands loyal.
- Using similar kind of aircrafts.
- Outsourcing the non core activities will help in better focus in core activities.
- Co-Branding helps in increasing efficiency and reducing cost. Strategic partnerships with
hotel chains, tour operators, and credit card issuers are beneficial to both the parties.
- Debit Cards- As low cost airlines are targeting middle class where Debit cards are more
pervasive it is prudent to include debit cards also for paying the fares.
- A well managed sales team and relationship managers are to be employed to establish
relationship with corporate who constitutes almost a third of the fliers.
- On board purchase of goods and food will help in increasing revenue and lowering cost.
NAME:……………………………………………………………………………………………………………………………………………………….
AGE:………………. OCCUPATION:……………………………….. ANNUAL INCOME:………………………………………….
CONTACT :………………………………………………………..……………………………………………………………………………………….
1. What is your preferred mode of travel between distant cities in
India? Car Rail Coach Airline Others
4. How many times did you travel by air in the last one year?
1 to 5 6 to 10 11 to 20 21 to 30 31 and above
6. How do you book your airline tickets? Please select one from each of the pair.
Internet Travel Agents
Travel Agents Airline company office
Airline company office Internet
7. How do you rate the Indian low cost airlines on the following parameters against their peers
worldwide?
Poor Satisfaction Good Very good Excellent
Pricing
Safety
Quality
A survey on people preferences about airlines
8. Rank the following qualities 1 being the most desired and 5 being the least desired among the cabin
staff.
Grooming and Appearance Friendliness of
staff
Staff attitude
Cabin staff presence through the
flight Total service consistency
9. Given below are few desired qualities of on board products. Please assign points based on your
assessments so that the total points add up to 100. The higher the number allotted to a particular sector
the higher its importance is to you and vice versa.
Seating comfort
Cleanliness
Onboard catering
Reading Materials
Total 100
Airlines typically follow two types of business models: the Point to Point and the Hub-and-
Spoke.
This model is based on flights that are provided to and from a city. Unit costs are lower in this
model as aircraft are utilized more often because they do not have to wait for connecting
flights, thus reducing fixed costs, which accounts for a large percentage of operating costs.
Costs are spread out over many hours of flying, thereby driving down the unit cost. Low fare
airline INDIGO AIRLINES is example of airline following the point to point system. See figure
below.
This model is used by most of the major airlines including Jet Airways, Kingfisher, Spicejet, etc.
The Hub and Spoke system allows the airlines to maximize passenger enplanements on each
flight by offering connections to both domestic and international destinations. This more
complicated route system provides customers with a much larger number of route options,
which in turn maximizes revenue opportunities. The downside to this is the increase in aircraft
wait time and lower aircraft utilization time, which increases the airlines' unit cost. See figure
below.
Highlights of the Yearly Report (20017-18) [source: DGCA]
Domestic Indian Carriers
The country has twelve domestic carriers with four National Carriers and eight private
scheduled operators. Of these eight, Jet Airways and Indigo operate on international sectors as
well.
The fleet size of the scheduled domestic airlines increased from 305 aircrafts in 2016-17 to 81
aircrafts in 2017-18, which indicated a total increase of 24.9 % in the fleet size.
Of the 381 aircrafts, only 146 belonged to the National Carriers in 2017 -18. Presence of
Private Carriers has increased from just two airlines (Jet Airways and indigo Airlines) till 2002
-03 to eight as on 31st March 2008. Number of aircrafts has also increased from 53 in 2002 -03
to 235.
The total operating revenue of all the domestic Indian carriers was Rs.344,877.4 million
during 2017-18 whereas the operating expenses for the same period was Rs.406,911.8 million
resulting in overall loss of Rs.62,034.4 million.
Both National and Private Carriers experienced a loss during 2017-18, the respective
amounts being Rs.2529.78 crore and Rs.3673.66 crore respectively. Only 2 airlines viz., Air India
and jet Airways had made a profit.
Carriers engaged in Domestic Operations
A total of 44.38 million passengers were carried by all the scheduled domestic Indian Carriers
during the year 2017-18.
The scheduled domestic traffic passengers witnessed a growth rate of 24% during 2017-18.
The corresponding figure for the year 2016 -17 was 42%.
The scheduled domestic cargo (including Blue Dart) grew by 14.50% during the year 2017-
18. While passengers carried by the National and Private Carriers are in the ratio 1:4, that of
freight carried is 1:2.
Scheduled Domestic Aircraft departures per day increased from 1153 in 2016-17 to 1367
during the year 2017-18.
The domestic average PAX load factor increased marginally from 68.8% in 2016-17 to 68.9%
in 2017-18. This factor was 59.3% for the National Carriers as against 7 1.6% for the private
carriers.
The domestic average weight load factor decreased from 67.1% in 2016-17 to 65.7% in 2017-
18 Weight load factor was 56.9% and 68.3% respectively for national and private carriers.
The number of pilots engaged by all the d omestic Indian carriers increased from 3302 during
2016-17 to 3997 in 2017-18.
The number of technical employees engaged by all the domestic Indian carriers decreased
from 13343 during 2016-17 to 13308 in 2017-18.
The number of cabin crew employees eng aged by all the domestic Indian carriers increased
from 9774 during 2016-17 to 11696 in 2017-18.
The average no. of employees per aircraft declined from 197 in 2016-17 to 169 in 2017-18.
Expenditure on personnel accounted for 17% of the total expenses in case of national
carriers as aginst 9.5% for private carriers during 2017 -18.
The market share in terms of domestic passenger carried was highest for Jet Airways
(22.01%) followed by Air Deccan (15.99%) and Indian Airlines (15.55%).
The market share in terms of domestic freight carried was highest for Jet Airways (31.03%)
followed by Indian Airlines (23.04%) and Blue Dart (17.79%).
Airport Statistics
Total passengers handled at the Airports were 116.7 million during the year 2017-18. Of
these, international airports handled 103.3 million and domestic airports 13.4 million only.
Total cargo (freight and mail) handled at the airports was 1.8 million.
On an average 3606 flights were handled per day by the airports in 2017 -18 with 2931
pertaining to domestic traffic and the remaining to international traffic.
Mumbai airport continued to be the busiest airport during the year 2017 -18. The average
no. of flights handled per day for international traffic was 169 whereas the average no. of
flights handled per day for the domestic traffic was 468. This was true for cargo movement
also.
The three busiest airports handling international traffic during the year 2017 -18 were
Mumbai, Delhi and Chennai.
The three busiest airports handling domestic traffic during the year 2017 -18 were
Mumbai,Delhi and Bangalore.
Terms and Definitions
Aircraft: Any machine that can derive support in the atmosphere from the reactions of the air
other than the reactions of the air against the earth's surface;
Aircraft departures: The number of take-offs of aircraft. For statistical uses, departures are
equal to the number of landings made or flight stages flown;
Aircraft kilometers performed: Aircraft kilometers equal to the sum of the product obtained by
multiplying the number of flights performed on each flight stage by the stage distance;
Aircraft movement: An aircraft take-off or landing at an airport. For airport traffic purposes one
arrival and one departure is counted as two movements;
Aircraft - type of: All aircraft of the same basic design including all modifications thereto except
those modifications, which result in a change in handling or flight characteristics;
Commercial air carrier: A carrier performing scheduled or non -scheduled air transport services
or both, available to the public for the carriage of passengers, mail or cargo for remuneration;
Distance flown per passenger: The average distance flown per passenger is computed by
dividing the passenger-kilometres by the related number of passengers carried;
Disembarkation: The leaving of an aircraft after a landing, except by crew or passengers
counting on the next stage of the same through -flight;
Domestic Flight: A flight having exclusively domestic stages, See domestic flight stage;
Domestic flight stage: Domestic flight stages include all flight stages flown between points
within the domestic boundaries of a State by an airline registered in that State;
Domestic Scheduled airline: An airline, which operates any scheduled service wihin the
boundaries of the State where t he airline is registered but which does not operate, scheduled
international services;
Embarkation: The boarding of an aircraft for the purpose of commencing a flight, except by
such crew or passengers as have embarked on a previous stage of the same through flight;
Flight commercial air transport: The operation of aircraft on one or more stages on a
scheduled or non-scheduled basis, which is available to the public for remuneration and for
hire;
Flight stage: The operation of an aircraft from take-off to its next landing;
Freight (or mail) tonne-Kilometres (performed): A metric tonne of freight or mail carried one
kilometre. Freight tonne-kilometres equal the sum of the products obtained by multiplying the
number of tonnes of freight, express, diplomatic bages carried on each flight stage by the stage
distance. Cargo and freight includes express and diplomatic bags but not passenger’s baggage.
Mail tonne -kilometres are computed in the same way as freight tonne-kilometres;
Freight (or mail) tonnes carried (performed): The number of tonnes of freight carried is
obtained by counting each tonne of freight on a particular flight (with one flight number) once
only and not repeatedly on each individual stage of t hat flight. The only exception to this is for
freight flown on both the international and domestic stages of the same flight, which is
considered in computation both as a domestic and an international shipment or dispatch. The
same principle should be used in calculating mail tonnes carried;
International airport: Any airport designated by the Government of India an airport of entry
and departure for foreign airline for embarkation and disembarkation of scheduled
international air traffic, where the fo rmalities incident to customs, immigration, public health,
agricultural quarantine and similar procedures are carried out;
International Flight: A flight that contains one or more international flight stages;
International flight stage: A flight stage with one or both terminals in that territory of a State,
other than the State in which the airline is registered. Technical stops are not considered in
classifying flight stage;
International non-scheduled operator: An operator offering international service to the public
on a non-scheduled basis only. Such an operator may also offer domestic services on a non-
scheduled basis only;
International scheduled airline: An airline, which operates any scheduled international air
transport service regardless of the proportion of international service offered as compared with
all other kinds of services offered;
International traffic (of airports): For airport traffic purposes, international traffic means: a)
passengers, freight and mail disembarked at an airport located in a country other than of the
airport of embarkation, or vice versa; and b) Movements on flight of national or foreign aircraft
whose origin or destination is located in the territory of a State other than th at in which the
airport under consideration is located;
Mail: Dispatches of correspondence and other objects tendered by and intended for delivery to
postal administration;
Non-scheduled air transport operator: For statistical purposes an operator is nonscheduled air
transport operator if it offers air transport service to the public on a non - scheduled basis only;
Operating expenses per traffic-unit: This is a type of financial measurement, which relates the
traffic or capacity applicable to the operating expenses. It is computed by dividing the
operating expenses by the tonne -kilometres performed or by the tonne - kilometres available.
Operating revenue per traffic-unit: This is a type of financial measurement, which relates the
traffic or capacity applicable to the operating revenues. It is computed by dividing the operating
revenues by the tonne -kilometres performed or by the tonne - kilometres available.
Operator: A person, organization or enterprise engaged in or offering to engage in an aircraft
operations.
Passengers Kilometres performed: A passengers kilometre is performed when a passenger is
carried one kilometre. Calculatio n of passenger-kilometres equals the sum of the products
obtained by multiplying the number of revenue passengers carried on each flight stage by the
stage distance. The resultant figure is equal to the number of kilometres travelled by all
passengers;
Passenger load factor: Passenger-kilometres performed expressed as a percentage of seat-
kilometres available;
Passengers carried: The number of passengers carried is obtained by counting each passenger
on particular flight (wi th one flight number) once only and not repeatedly on each individual
stage of that flight, with a single exception that a passenger flying on both the international and
domestic stages of the same flight should be counted as both a domestic and international
passenger;
Passengers carried per aircraft: The average number of passengers carried per aircraft is
computed by dividing passenger-kilometres by the related aircraft kilometres flown;
Passenger revenue per traffic-unit: This is a type of financial measurement, which relates the
passenger traffic applicable to the passenger revenues. It is computed by dividing the
passenger revenues by the passenger -kilometres performed/ available.
Passenger weight: For converting aircraft passenger load into weight load, the number of
passengers is multiplied usually by 90 kilogrammes, which allows for the weight of the
passenger plus both free and excess baggage. However, in reporting, the conversion is left to
the discretion of the operator and conversion factors other than 90 kilogrammes may be used;
Revenue passenger: Refers to passengers paying 25% or more of the normal applicable fare;
Scheduled airline/air carrier: An air transport enterprise offering any scheduled air service;
Scheduled services: Services provided by flights scheduled and performed for remuneration
according to a published timetable, or so regular or frequent as to constitute a recognizably
systematic series, which are open to use by members of the public; extra revenue flights
occasioned by overflow traffic from scheduled flight; and preliminary revenue flights on
planned new air services:
Seat Kilometres available: Seat-kilometre is available when a seat is flown one kilometre. Seat
Kilometres available are equal to the sum of the products obtained by multiplying the number
of passenger seats available for sale on each flight stage by the stage distance. Seats not
actually available for the carriage of passengers because of the weight of fuel or other load
should be excluded in the calculations;
Speed flown per aircraft: This is an average per aircraft measure computed by dividing the
aircraft kilometres flown by the related aircraft hours.
Stage distance flown per aircraft: The average distance flown per aircraft is computed by
dividing the aircraft kilometres flown by the related number of aircraft departures.
Tonne: The mass equal to 1000 kilograms.
Tonne-kilometres available: A metric tonne of available payload space flown one kilometre.
Tonne-kilometres available equals the sum of the products obtained by multiplying the number
of tonnes available for the carriage of revenue load (passengers, freight and mail) on each flight
stage by the stage distance;
Tonne-kilometres performed: A metric tonne of revenue load carried one kilometre. Tonne-
kilometres performed equals the sum of the product obtained by multiplying the number of
tonnes of revenue load carried on each flight stage by the stage distance.
Traffic: For air transport purposes, traffic means the carriage of passengers, freight and mail.
60
CONCLUSION
chosen.
www.indianairlines.com
www.indianairlines.net
www.indian-airlines.com
www.indian-airlines.nic.in
www.indianairlines.indiatimes.com
www.jetairways.com
www.airsahara.com
www.airliners.com
www.airsahara.net