UNIVERSITY OF MUMBAI

PROJECT REPORT ON

IN PARTIAL FULLFILMENT FOR MASTERS OF

COMMERCE
2019-20

PROJECT GUIDE
PROF.FARHAT SHAIKH

SUBMITTED BY
ASMITA RAVINDRA

SPECIALISATION IN
COMMERCE

MAHATMA EDUCATION SOCIETY’S

PILLAI’S COLLEGE OF ARTS, COMMERCE & SCIENCE
[AUTONOMOUS]
NEW PANVEL
 UNIVERSITY OF MUMBAI

MAHATAMA EDUCATION SOCIETY’S

PILLAI COLLEGE OF ARTS, COMMERCE & SCIENCE (AUTONOMOUS)

NEW PANVEL

CERTIFICATE

To whom so ever it may concern

This is to certify that the work of SAVITA SHIVRAM KHODAKE, Sem III M.com part II have successfully
completed a project report on, “COMPARATIVE STUDY OF ONLINE AND OFFLINE SHOPPING” terms
of the academic year 2019-20 in the collage norms laid down by the college authority.

Project Guide M.com Co-Ordinator

PROF.FARHAT SHAIKH PROF. GAJANAN WADER

Principal External Examiner

Date:
Place:NEW PANVEL
 DECLARATION

I, Savita Shivram Khodake Student of “M.com Part-II Sem-III”, MAHATMA EDUCATION

SOCIETY’S PILLAI COLLEGE OF ARTS,COMMERCE & SCIENCE, hereby declare that

I have completed the project report on “COMPARATIVE STUDY OF ONLINE AND OFFLINE
SHOPPING” in the academic year 2019-20. The information submitted by me is true and original to the
best of my knowledge

Submitted By- SAVITA SHIVRAM KHODAKE

 ACKNOWLEDGEMENT

Written words have an unfortunate tendency to degenerate gratitude into a stilted formality.
However this is the only way to record permanently one’s gratitude.

I take this opportunity to express my thanks to PROF.FARHAT SHAIKH for constant

support and especially her valuable suggestion in helping me to complete the project on due
time. I also thank office staff member of Pillai’s College who were involved in providing
with the information required to make this project.

I also express my thanks to all teaching and non-teaching staff who directly and in-directly
guided me with moral support to complete this project. I would also like to thank the
librarian who helped me towards providing the needed reference books, which has been an
immense value for collection of the information.

Last but not the least I am thankful to my parents and my friends for their encouragement
and co-operation during the time of my work.
 TABLE OF CONTENTS

Sr.no. Particulars Page no.

I. Certificate 2

II. Declaration 3

III. Acknowledgement 4

1. Introduction to project 7

2. Review of Literature 12

3. Profile of company and Research methodology 15

4. Analysis and Interpretation 35

5. Appendices 75

6. Conclusion 87
 EXECUTIVE SUMMERY

Following report has been made on the “Indian Aviation Industry”. All the data has been
collected from the internet, research papers and surveys.

Indian aviation industry has changed to a more open and investment friendly sector. It
plays a greater role in the development of the Indian economy. The increase in the income
of people, entry of low cost carriers (LCC), FDI, new government policies, growth in other
businesses, globalization etc. are reasons for the growth of the Indian aviation industry.
The aviation sector in India is expected to have a bright future.

The report gives information on different aspects of the Indian aviation industry. For
simplicity it is divided into various parts and information. Some of the key points are:

• Introduction to the Indian aviation industry and defines its importance to the economy.

• The industry analysis. Under this the following objectives are studied.

• Market segmentation

• PEST analysis

• Business diversification

• Mergers and acquisitions

• SWOT ANALYSIS

The whole project gives us detail information about the Indian aviation industry.

In the end of the study we have given up certain recommendations which we think are
important from the point of view of the Indian Aviation Industry.
 INTRODUCTION

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
studyof them.

• A market survey of the existent fliers in order to know their taste and To come up with
constructive ideas for the benefit of the industry.

To study the Indian Aviation Industry

To study the industry in various

marketing models.

To study the major branding

strategies.

To study the flier preferences.

 RESEARCH METHODOLOGY

Managers need information in order to introduce products and services that create value in the
mind of the customer. But the perception of value is a subjective one, and what customer’s
value this year may be quite different from what they value next year. As such, the attributes
that create value cannot simply be deduced from common knowledge. Rather, data
(information) must be collected and analyzed. The goal of Marketing Research (analysis) is to
provide the facts and direction that managers need to make their more important marketing
decisions.

The analysis involves the following steps:

• Define the problem.

• Determine research design.

• Identify data types and sources.

• Determine sample plan andsize.

• Collect the data.

• Analyze and interpret the data.

• Prepare the research report.

For the purpose of study, data from the in-house survey conducted by the marketing department
(secondary data) has been used and also for coming out with the recommendation. It was also
felt that mere secondary data would not provide in-depth information for the analysis, hence it
was decided that interactive discussions with the managers and the head of every department
would help in an in-depth and true understanding of challenges faced by the department.
I have decided to do the project in two parts. The first part of the project is comprised of the
study of the Indian Aviation Industry as a whole and the second part deals with the fliers
perception regarding different brands of airlines and different facilities with them.

The first part of the project i.e. descriptive study comprises an overall study of the Indian
Aviation Industry, the different brands of airlines, the strategies followed by them besides
learning the various applications of marketing concepts in the industry. It will greatly be done
with the assistance of the secondary sources such as the available books, research papers, the
company websites and magazines.

The second part of the project will try to bring out the brand preferences and the components
of the brands and their services that made them score over the other brands. This shall be done
by firsthand experience gained through the meetings with the existing fliers. Self Administered
questionnaire would be the tool in the implementation of the programmed.

SURVEY DESIGN

For the purpose of studying the population sample of 50 will be chosen among the fliers.
Population will not be segmented on any basis for the purpose.

RESEARCH INSTRUMENT

The work will be carried out through self administered questionnaires. The questionnaire will
include both open ended and close ended questions.

DATA COLLECTION

The data which will be collected for the study can be broadly classified into two categories:

Primary Source: It includes questionnaires, interviews and word of mouth.

Secondary source: It includes company records, past data records, internet sources and
books. As the project entails analysis of existing strategies a lot of secondary source of data
is to be banked upon.
DATA ANALYSIS

The data will be analyzed by using mathematical techniques. Various statistical tools would
be considered and used to accomplish the job.

Primary Secondary
Sources Sources
 REVIEW OF LITERATURE

As a part of Industry Analysis of the Aviation Sector in India, 10 articles, reports and newspaper
articles were referred for the subject matter. A literature review involves the review of the previous
study that has been carried out in reference to the same subject.

A Literature review can help us better understand:

(i)To learn what has been studied in the past.

(ii)To save time on trying to conduct a primary search, when the topic may have already
been studied.

(iii)To understand the opinion expressed by the experts and researcher

• Growth in the Airline Industry

Shah (2008), this article extensively speaks about the period of grandeur that the aviation sector in India
has seen. This growth was an outcome of many macro-economic factors such as government reforms
and market lead dynamics. Further the articles talk about the Marketing concept of POD- Point of
Differentiation which various airlines use in order to attract the customers to fly with them.

Airline companies are using techniques such a multiple pricing policies, wherein the prices of the airline
tickets change in seconds and are sold to customer at different prices based on the availability of the
seats and the date of travel. All the airlines have to adhere to some bare minimum barriers such as
minimum number of fleet size, equity, and minimum 5 years of domestic operation to be able to fly
internationally.

The article also sheds light on popular merger and acquisition that have happened recently in the Indian
Aviation Sector such as Kingfisher Airlines with Air Deccan, Jet Airways with Sahara Airlines.
 • Major orders in the Aviation Industry

The article about the “Indian Airlines Show Vitality”, talk about how the Indian Airline companies
are not able to manage their cash flow and do not have enough cash reserves to carry their
operations, overburdened by high fuel prices which are always on rise along with heavy airport
charges and lack of sales due to expensive ticket fares as per the Indian Markets.

Indigo Airlines has placed one of the biggest order of the aviation history of 180 out of which 150
are A320 Neo Planes with Airbus. Indigo has also order and upgraded most of its planes with
SHARKLETS which is a different shaped wings that improves the fuel efficiency and thus help
save a lot on cos

• Aviation Strategy of Indian Civil Aviation

The aviation industry is growing at an exponential rate. According to Thomas “The estimated
compound annual growth rate (CAGR) of passenger traffic to be planned for, in the aggregate,
would be conservatively of the order of 15 per cent (roughly twice the GDP growth rate) and,
perhaps, even more if the stimulating effect of low fares is considered. This means a doubling of
passenger traffic in about five years. At this rate, by 2020, the nominal end point of the new Vision,
there would be a whopping six fold increase in passenger traffic.” (Thomas, 2007). To capture this
growth a strong aviation strategy is required for all the players in the market. Thomas further
discusses that there is a lack of explicit aviation strategy “In the absence of an overarching super
ordinate goal that is widely shared, the concerted and sustained efforts of the assorted players
involved in this complex, time-, space- and capital-intensive sector may not be forthcoming and
actions on the ground and over time may be at cross purposes. Instead of affecting the desired
paradigm shift in civil aviation, we would end up with a dubious non – strategic drift.” (Thomas,
2007). Further to gain competitive advantage in the future in aviation market Thomas suggested
that “Indian aviation needs to be "democratised", which requires moving from an elitist to a "mass
transit" mode, for which cost – effectiveness is an imperative.” (Thomas, 2007).

• Merger and Acquisitions

Due to the development of the Aviation sector the infrastructure has also developed to a great extent
which is proving to be beneficial for the economy to a large extent due to its cyclical effect.

All the companies are continuously engaged in innovation and are now able to attract more and
more new customers due to various pricing policies. Companies have expanded exponentially due
to merger and acquisition except Kingfisher and Air Deccan which has added to losses. Government
of India has also refined the Foreign Direct Investment (FDI) policies which are now attracting
foreign investors to invest in Indian Aviation Sector.

• Challenges of Indian aviation industry

Deregulation of the Indian airline industry was in 1990 and due to many rules and regulations it has
become impossible for carriers to be efficient. There have seen many restrictions on foreign
ownership and labor laws which has kept the industry away from innovating. Instead of protective
measures like survival fund, bailouts, airlines have to work with government in order to tackle long
term problems.

There are few missions of the airline industry like introducing more low cost carriers for an average
Indians who dreams to travel by air once in life and also building more runways, efficiently running
the airports and reigning labor costs. There are shortage of workers and professionals, concerns
about safety, lack of accompanying capacity and infrastructure in the airline industry this has led to
stiff competition and rising of the fuel prices.
THE INDIAN AVIATION INDUSTRY

The history of civil aviation in India started with its first commercial flight on February 18, 1911. It was
a journey from Allahabad to Naini made by a French pilot Monseigneur Piguet covering a distance of
about 10 km. Since then efforts were on to improve the health of India's Civil Aviation Industry. The
first domestic air route between Karachi and Delhi was opened in December 1912 by the Indian State
Air Services in collaboration with the Imperial Airways, UK as an extension of London-Karachi flight
of the Imperial Airways.

The aviation industry in India gathered momentum after three years with the opening of a regular airmail
service between Karachi and Madras by the first Indian airline, Tata Sons Ltd. However this service
failed to receive any backing from the Indian Government.

At the time of independence nine Air Transport Companies were operational in the Indian Territory.
Later the number reduced to eight when the Orient Airways shifted its base to Pakistan. The then
operational airlines were Tata Airlines, Indian National Airways, Air service of India, Deccan Airways,
Ambica Airways, Bharat Airways and Mistry Airways.

With an attempt to farther strengthen the base of the aviation sector in India, the Government of India
together with Air India (earlier Tata Airline) set up a joint sector company, Air India International, in
early 1948. With an initial investment of Rs. 2 crore and a fleet of three Lockheed constellation aircrafts,
Air India started its journey in the Indian aviation sector on June 8, 1948 in Mumbai (Bombay)-London
air route.

For many years since its inception the Indian Aviation Industry was plagued by inappropriate regulatory
and operational procedures resulting in either excessive or no competition. Nationalization of Indian
Airlines (IA) in 1953 brought the domestic civil aviation sector under the purview of Indian Government.
Government's intervention in this sector was meant for removing the operational limitations arising out
of excess competition. In 1953, the Air Corporation Act nationalized all existing airline assets and
established the Indian Airline Corporation and Air India International for domestic and international air
services respectively.
These two companies enjoyed monopoly power in the industry until 1991, when private airlines were
given permission to operate charter and non scheduled services under the ‘Air Taxi’ scheme to boost
tourism. These carriers were not allowed at the time, to fly scheduled flights or issue air tickets to
passengers. As a result, a number of private players including Jet Airways, Air Sahara, Modiluft,
Damania Airways, NEPC airlines and East West Airlines commenced domestic operations. In 1994,
following the repeal of the Air Corporation Act, private players were permitted to operate scheduled
services. Ultimately the carriers with more efficient operations and strategies survived and by 1997, only
Jet Airways and Air Sahara made the cut from the original group The next big change in the industry
came in late 2003 with the emergence of India’s first no-frill airlines, Air Deccan. It revolutionized the
industry, offering fares as low as INR 500 (USD 10 roughly), compared with Full Services fares offered
by the incumbents, averaging about INR 3000 or more. Since then, Spice Jet (restructured Royal Airways
and Modiluft), Go Airways and Kingfisher Air have also entered the industry. Paramount Airways is
another player, though it is positioned on the other end of the spectrum, as an ‘all business class’ airline.
With the further advent of online ticket sales through companies such as makemytrip.com, prices have
crashed and tickets are available for as little as INR 0.99. In fact, now many airline tickets can be bought
for a price comparable to an upper class railway ticket for the same route. In December 2004, Indian
scheduled carriers with a minimum of 5 years of continuous operations and a minimum fleet size of 20
aircrafts, were permitted to operate scheduled services to internationals destinations. On January 11,
2005 the government designated four scheduled Indian carriers (Air India, Indian Airlines, Jet Airways
and Air Sahara) to operate international services to and from Singapore, Malaysia, Thailand, Hong Kong,
the UK and the USA.

As a consequence today we have, six private scheduled operators viz., Jet Airways(India) Ltd., Air india
express., Spice jet,Air india Airways Pvt. Ltd , Go Airways, and Inter Globe Aviation
Ltd.(IndiGo),Vistara ,Air Asia were operating as Scheduled Private Airlines. In addition to these private
airlines, two more airlines namely Alliance Air, subsidiary of Indian Airlines and Air India Express,
subsidiary of Air India also commenced their operations in 1996 -97 and 2005-06 respectively. Air India,
Air India Express, Jet Airways and Jet Lite Airlines Ltd as the designated airlines of the Government of
India under various bilateral air services agreements have been authorized to operate long and medium
haul scheduled international air services
Market share of Indian airlines as on march 2019(source: DGCA)
 Sector structure/Market size

The Indian aviation industry is one of the fastest growing aviation industries in the world.
The government's open sky policy has led to many overseas players entering the market and
the industry has been growing both in terms of players and number of aircrafts. Today,
private airlines account for around 75 per cent share of the domestic aviation market.

India is the 3 rd largest aviation market in the world. According to the Ministry of Civil
Aviation, around 135 million passengers traveled to/from India during 2015-16, an increase
of 16.6 per cent on previous year. It is predicted that international passengers will grow up
to 65.48 million by 2020. Further, due to enhanced opportunities and international
connectivity, 69 foreign airlines from 49 countries are flying into India.

INDIAN SCENARIO

The Indian Aviation is now an open, friendly to the investor, and a liberalized one which
is quite different what it was 10years ago. The entrance of LCCs has contributed to a
growth of the sector, with an improvement in the infrastructure and an increase in the
operating airlines.

Following are some of the key points in reference to the Indian Airline industry:

i. 100% increase in the FDI limit has been given by the government for the airlines and
Greenfield airports.

ii. Increase in the number of airlines including the LCCs, leading an increase in the
competition and reduction of the fare resulting in growth of air traffic.There had been a
number of fleet acquisitions with 300 aircrafts.

iii. MRO facilities need to be set up because of the rise in the fleet size and also

iv. The modernization of the airports. The expansion of fleet of India has tempted many

v. players across the globe such as Boeing, Airbus, SIA Engineering, ST Aerospace and
Lufthansa Technik to come up with the same services in India.
vi. There is a big pressure on airlines because of high tax structure, fuel costs and more
user charges, which has raise the need and trend of mergers and acquisitions

EVOLUTION OF AIRLINE INDUSTRY IN INDIA

YEAR MAJOR MILESTONES

< 1953 Nine Airlines existed including Indian Airlines & Air India

1953 Nationalization of all private airlines through Air Corporations Act;

1986 Private players permitted to operate as air taxi operators

1994 Air Corporation act repealed; Private players can operate schedule services

1995 Jet, Sahara, Modiluft, Damania, East West granted scheduled carrier status

1997 4 out of 6 operators shut down; Jet & Sahara continue

2001 Aviation Turbine Fuel (ATF) prices decontrolled

2003 Air Deccan starts operations as India’s first LCC

2005 Kingfisher, Spice Jet, Indigo, Go Air, Paramount start operations

2007 Industry consolidates; Jet acquired Sahara; Kingfisher acquired Air Deccan

2010 Spice Jet starts international operations

 2012 Government allows direct ATF imports, FDI
proposal for allowing foreign carriers to pick up to
49% stake under consideration

2013 Signing of the Jet Airways-Etihad Airways deal.

2013 AirAsia and the Tata Group queuing up to start two

new airlines in India.

2014 Commencement or expansion of commercial

operations by four global airlines — Etihad, AirAsia,
Singapore Airlines and Tiger Airways.

.
ROLE OF AVIATION INDUSTRY IN THE ECONOMY

• Major roles

Air transport is an important factor of transport infrastructure of a country, and has a significant
contribution in the development process by creating employment opportunities, improving the
productivity and more efficient transportation of goods and services. It also enhances business
growth, tourism and trade across the economy. International trade of India has seen a boom because
of the reliability and speed across long distances by air transport. Sectors such as pharmaceuticals,
office and electronic equipment, which are relying on air transport for international trade have a
great value.

Thus, aviation industry is the backbone of many services which have shown high growth. Air
transport enhances the connectivity because of its reliability and speed and countries having a strong
aviation sector have the ability to attract Foreign Direct Investment.

Aviation sector has a huge impact on the development of the Tourism Industry. 2.8 billion
Passengers were transported in 2011, which connected the cities across the world with 36,000
routes. It is so because 2009,

90% of the visitors from different countries arrived to India through air transport

Table 1.2: Trend of Foreign Tourist Arrivals during the period 1995-2010
Growth

The Indian Civil Aviation market grew at a compound annual growth rate (CAGR) of 18 per cent, and
was worth US$ 15.6 billion in 2018. Airlines recorded a double-digit growth in air traffic in August
2019, according to data released by the industry regulator Directorate General of Civil Aviation
(DGCA).

Domestic airlines flew 11.67 million passengers in August 2018, as against 9.69 million in the
corresponding period last year—an increase of 26 per cent.

By 2020, Indian airports are expected to handle more than 100 million passengers including 60 million
domestic passengers and around 3.4 million tones of cargo per annum.

Moreover, significant measures to propel growth in the civil aviation sector are on the anvil. The
government plans to invest US$ 9 billion to modernize existing airports by 2020. The government is
also planning to develop around 300 unused airstrips.

India ranks third after US, China and Japan in terms of domestic passengers volume. The number of
domestic flights grew by 69 per cent from 2015 to 2018. The domestic aviation sector is expected to
grow at a rate of 9-10 per cent to reach a level of 150-180 million passengers by 2020.

The industry witnessed an annual growth of 12.8 per cent during the last 5 years in the international
cargo handled at all Indian airports. The airports handled a total of 1020.9 thousand metric tonnes of
international cargo in 2016-17.

Further, there has been an increase in tourist charter flights to India in 2018 with around 686 flights
bringing 150,000 tourists. Also, there has been an increase in non-scheduled operator permits – 99 in
2018 as against 66 in 2017.Aviation industry is a catalyst for the growth of other industries which is
in itself an important contribution of growth.Public finances are also supported by aviation sector,
which include taxes paid by passengers, airline companies, airport operators, etc. These also include
income tax and MRO firms by the employees, and also collection of the revenue. Thus, Aviation
sector is a major source of tax revenue to the Indian government of approximately 87,500 each
year.Indian Aviation sector is the 3 rd largest in the world, which serves approximately 120 million
domestic and 41 million international passengers every year. Indian Airlines is connected well by
over 5 Indian airlines and 86 international airlines.
Low cost services

Major full-service carriers have converted around half their capacity into low-cost services, which has
resulted in bringing down the average fares of airlines as a whole by about 30 per cent and thereby
increasing demand from the domestic passenger market.

Jet Airways have converted around half their capacity into low-cost services. While, government carrier
Air India plans to launch a low-cost model in the domestic skies. It already has a low-cost airline called
Air India Express which operates on international routes.

Jet Airways has also increased the number of low-cost seats in the system by around 50 per cent.

Low cost carriers (LCCs) such as Indigo and Spice Jet have increased the total number of seats by 40 per
cent and 53 per cent, respectively, in the past year.

SpiceJet is also working on a plan to start international operations next year, making it the third private
Indian carrier after Jet Airways and Kingfisher to fly overseas

• Low cost v/s low fare

In India, the airlines that offer low fares are in reality not low cost operations. They are Low cost carriers
(LCCs) in name only. Among the LCCs in India, Spice Jet has the lowest unit cost at 6.2 cents per ASK,
which is comparable with Southwest, Easy Jet, and Jet Blue. But this is more than twice that of the best
performer, Air Asia with unit cost of slightly over 3 cents per ASK.

Typically, LCCs provide point-to-point service avoiding connecting flights and baggage transfers while
FSCs base their operation on a hub-and-spoke system.

There are serious doubts about whether LCCs (as we know them elsewhere in the world) exist in India.
According to Bill Franke, the Managing Director of leading airline investment firm Indigo Partners,
―There is not a single airline in India that operates a true low cost structure, only low-fare and low-margin.‖
• Is the low-cost carriers‟ business model in India sustainable?

Low-fare airlines outside India have many features in common – a single type of aircraft to facilitate pilot
training, maintenance and aircraft utilization; no free food service to save costs and reduce turnaround
times; no inter-line transfer of baggage; direct selling to avoid commissions to travel agents, etc.

These features are easy to replicate and are an integral part of the low cost airlines in India. As a result of
their replicability, they do not, by themselves, offer a sustainable competitive advantage.

The dynamics of a low-cost airline are equally important. Typically, a successful low-fare airline chooses
routes that are not already operated by other low-fare airlines. It increases demand for air traffic by cutting
fares, and provides frequent services to saturate the route. In contrast, head-on competition between two
low-fare carriers on the same route often results in a price war that benefits consumers but is not profitable
to the airlines themselves.

The low cost airlines in India are not targeting distinctive routes. Instead, they seem to be moving towards
creating huge capacities on the trunk routes. Since shorthaul services impose other cost disadvantages on
an airline, quick turnarounds to achieve high utilization become critical. Clearly, on-time passage is an
important value proposition for this type of service and delays are extremely annoying to passengers.

Running a low-fare airline is a major managerial challenge. In addition, the government will need to
improve airport infrastructure quickly if this model is to succeed. The increase in air traffic is not matched
with the increase in the infrastructure at the airports. The airlines prefer to halt and ply between only
metros and airports which have sufficient landing and parking place, this leads to long halts and waiting
of these planes at metros and also traffic congestion and delays besides loss of precious air fuel.

In India, air fuel and not salaries & wages constitute the largest share in expenses of airlines as the airlines
have to procure their Air fuel from oil companies. The under- developed commodity hedging market also
puts a stumbling block on these companies to hedge Against fluctuating prices of air fuel.

The cost of procuring new fleet also needs consideration because; they should be able to have at least 80%
occupancy of seats to be viable in long run. Now if most of the flights operate on the popular routes chosen
due to above reasons, there would surely be a saturation of market sooner or later. Therefore, these airlines
must think of exploring low-cost routes, less time taking routes, rather than hauling on the same popular
routes, if they wish to remain viable in long run. For example the north-east region of our country
completely remains outside the gamut of competition from these LCC's.The requirement for trained
commanders to operate these flights also is another issue that needs urgent attention.

• challenges for the low cost carriers

Due to the liberalization of aviation industry in India there has been a boom for domestic and
international passenger carriers. There has been a growth rate of 44.6% and 8.7% in the domestic
passenger and cargo traffic and there has been a growth rates of 15.8% and 13.8% in the international
passenger and cargo traffic during 2016. The Airport Authority of India (AAI) manages total 122
airports in the country including 11 international and 94 domestic airports and 28 civil enclaves. 70%
of the passenger traffic in the country is handled by top 5 airports and out of that Delhi and Mumbai
together account for more than 50% of the passenger traffic.

According to the latest data compiled by Airport Authority of India (AAI) shows that all the airports
handled 90.44 million passengers during the year 2016 as compared to 67.95 million passengers
handled during the same period in the previous year. Indian Aviation Industry has seen substantial
growth due to-

• Low-cost carriers (LCC) like Spice Jet ,Go Air , etc.

• Scheduled domestic air services are available now from 75 airports which was 50 earlier.
Road Ahead

• The Indian aviation sector is likely to see clear skies ahead in the years to come.

• 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

Many policies supporting infrastructure are now in place.

➢ 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.

• 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.
 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.

• 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 of 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

▪ Lower air fares

▪ Tourism in India

▪ Growing outbound travel in India

▪ Growth potential Liberalization of sector

▪ Modernization of non metro airports

▪ Rising share of low cost carriers

▪ Fleet expansion by state owned carriers

▪ The opening up of new international routes by Indian government

▪ Establishment of new airports and restructuring of old airports

Weakness

▪ Poor infrastructure at airports.

▪ Acute shortage of trained pilots and technicians.

▪ Stiff rules and regulations for operation.

▪ High operational cost for airlines.

▪ High security threats in the subcontinent.

▪ Training infrastructure incompatible both in terms of quality and quantity.

▪ Shortage of qualified instructors due migration to schedule operation.

▪ Pressure on quality standard of inducted pilots.

▪ 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.

▪ India's civil aviation ministry expects 100 million passengers by 2020.

▪ India anticipates doubling of passenger traffic over the next decade.

▪ Economic Growth

▪ Vibrant middle class: Increasing Consumerism and Affordability ”common man

▪ Under-penetrated markets

▪ Growth in Tourism

▪ Currently domestic passenger market is growing at 50%

Threats

▪ Government Regulations; though the govt. is making changes in the regulations, it

needs to move at a much faster pace on this.

▪ Aviation in India is over regulated and needs to free itself from govt. shackles.

▪ Inadequate infrastructure.

▪ Acute shortage of Pilots and maintenance engineers.

▪ Security and safety.

▪ Low profit margins and high operating costs.

▪ Other faster means of transportation

 MARKETING STRATEGY OF INDIAN AIRLINES

This project is all about the “Marketing initiatives taken by Indian Airlines” with a rapidly changing
technological, social, economic, political-legal and the trend towards globalization of business and
industry, emerging of various private airlines; effective marketing management has become a very
challenging job. In this project I have analyzed the different marketing strategies implemented by
Indian Airlines and have given feedback regarding their effectiveness and whether they should be
continued or discontinued on different sectors.

The product that Indian Airlines sells are ‘SPACE’ it may be its seats or cargo space. This product is
highly perishable and costly. Airlines earn revenue by selling this space. This means that higher the
seats sold more is the revenue generated. Thus if the plane goes in the air with empty space, this means
that much space has perished. Thus the life cycle of the airline’s product begins and ends with each
flight.The marketing concept of building an organization around the profitable satisfaction of customer
needs has helped firms to achieve success in high-growth, moderately competitive markets. However, to
be successful in markets in which economic growth has leveled and in which there exist many
competitors who follow the marketing concept, a well-developed marketing strategy is required. Such
a strategy considers a portfolio of products and takes into account the anticipated moves of competitors
in the market

❖ TURN AROUND STRATEGY:

On 1st March 1997 Indian Airlines became a Public Limited Company. Till now It had only emphasized
on distribution, with marketing as a non-issue. Since the company was faced with increasing
competition, lack of resources and mounting losses, it had to formulate and implement a Turn Around
Strategy. To find its place in the sun again, It has unleashed an aggressive marketing & advertising
exercise backed by service up gradation & customer friendly overturns. The new plan consisted, of
the following:

HRD Initiatives-
 As the first step free and frank discussions with a cross section of the employees were held. Top

management undertook extensive tours of all stations to communicate the details and vision behind all
major policy initiatives and to get their response to them. Focus on training of personnel was enhanced
to increase effectiveness. A greater transparency was built into recruitment and transfer policies with a
view to boosting their trust and confidence. In interactions with unions and Associations a firm but
fair attitude was taken.

Increased Utilization of Aircraft

With a view to increasing aircraft utilization, pilots needed to be made to put in more flying hours and
steps had to be taken to increase the number of Commanders. Productivity of Engineers also had to be
linked to the daily availability of aircraft.

Increased International Operations

▪ Indian Airlines went in for increasing the number of destinations to neighboring countries. In 1997
Indian Airlines operated 12 international stations, which went up to 17 stations in 1999. The new
stations added are Doha, Kuala Lumpur, Kuwait, Bahrain and Yangon.

▪ On the domestic front – IA is planning to start Shuttle type flights on major metro routes like Mumbai–
Bangalore, Mumbai–Chennai, and Delhi-Bangalore. It has already started launching shuttles on the
heavy Mumbai–Delhi routes.

Marketing Initiative

Indian Airlines took a number of economic initiatives and brought about significant
improvements in its product. Sustained and meaningful campaign was launched to
disseminate information about these improvements.
CONSEQUENCES OF TURN AROUND STRATEGY

1.Aircraft utilization increases -

A good average utilization of aircraft is 2600 hours per aircraft per annum, which was down to a low of
1600 hours in 1997. Efforts were made to increase aircraft utilization by increasing the productivity of
engineers, pilots and by increasing the number of commanders. Aircraft utilization now well exceeds
the desired norm of 2600 hours per annum.

2-Productivity of pilots rises –

With the implementation of the turnaround strategy, pilot productivity rose substantially. In fact,
the monthly average flying increasing from 50 to 63 hours initially, and then to 75 hours.

3-Productivity of engineers grows -

The number of aircraft made available for operation per day measures engineering productivity. The
aircraft availability improved significantly over the last three years. The availability of A300s went up
from a mere 4 aircraft per day in 1997 to 8 in 2000 and A320 from 20 in 1997 to 27 aircraft in 2000.

4-Creation of Commanders –

Indian Airlines had lost 166 pilots to private airlines. After the revised training pattern, the number of
new commanders added to the fleet strength each year rose dramatically, from 20 new commanders
added in 1997-95 to 67 in 1999-97.
❖ Market Segmentation

Market Segmentation is the marketing strategy that divides the broad target market into subsets of
consumers with common needs. It is designed and implemented to target specific customer
segments, addressing their needs or desires that are common in the segments.

It is very difficult to for the companies to fulfil the needs and demands of each and every customer
but the companies try their level best to fulfil their needs and demands and for this they follow an
approach called target marketing.

Main objectives of market segmentation are –

1. Markets have a variety of product needs and preferences

2. Markets can better define needs of the customers

Market is segmented on the basis of age, family size, gender, household income , occupation ,
education religion ,etc.

Airlines segment the market according to the demand of services. There are mainly two types of
segments in which the airline industry has divided its customers-

1-Segment in which the customers are willing to pay for better services offered by the airlines.
They can buy tickets even if the cost is high for better services

2-The second segment is the one in which the customers look for discounts and they focus mainly
on the fares rather than the services offered by the airlines.25

• Market Segmentation of various Airlines

Market Segmentation of Indigo Airlines

Indigo’s market segment is mainly for cost conscious passengers and their target group is lower
middle class or middle class people who are conscious about the fares and are concerned mainly
about the price not services.26 It positioned it’s services on high efficiency and nice experience, they
differentiated their services in such a way that the customers would perceive it not only as a low-
cost carrier but also the one which is affordable, hassle-free and efficient.27

Market Segmentation of Jet Airways

They are concerned more about the services than the fares ,their segment is mainly upper class people
who are ready to pay any price for the services provided. They have two segments business class and
economy class.28

Market Segmentation of SpiceJet

Indigo’s market segment is mainly for cost conscious passengers and their target group is lower middle
class or middle class people who are conscious about the fares and are concerned mainly about the price
not services. Their services offered are well received by the customers.29

Market Segmentation of AirIndia

AirIndia’s market segment is middle class people and their main aim is to look towards the needs and
demands of each and every customer and provides them with the best fares with very good services as
compared to the other airlines.

❖ BUSINESS DIVERSIFICATION

Business Diversification is a term, which means extension of business into disparate fields. In
this, we will have a close look on few of the companies or groups, which at present other than
running an Airlines company have any other businesses or is it a standalone company. The few of
the Airlines companies can be listed as follows:

1) Indigo Airlines:

This airline is the best Airline in the country both in terms of low cost & services. The parent
company of Indigo (InterGlobe Aviation) is InterGlobe Enterprises. InterGlobe Enterprises was
founded on September 13, 1989. Its headquarters is in Gurgaon, Haryana. Other than Airlines its
business is also diversified in other sectors such I.T. (InterGlobe Technologies), Hospitality
(InterGlobe Hotels), Travel (InterGlobe Air Transport) etc. Indigo started its operation on 4th
August 2006.

2) Spice Jet:

Spice Jet is a division of Sun Group, which is based in Chennai, Tamil Nadu. Sun Group is one of
the largest media network in the country. Other than Spice Jet, divisions, which the company has,
are Dinakaran, Sun Pictures, Sun TV, Red FM 93.5 etc. The company also owns an Indian IPL
team ‘Sun risers Hyderabad’.

3) Go Air:

Go Air is a part of Wadia Group which was founded in the year 1736 by Lovji Nusserwanjee Wadia.
The company also consists of three independent companies which are also listed on Bombay Stock
Exchange. These include: Bombay Dyeing- which comes under textile industry, Bombay Realty-
which deals with Real Estate & Britannia Biscuits- a company which sells Biscuits.

4) Air India:

Air India is a standalone company, which is under Govt. of India. It does not have any other
business, which means it is completely into Aviation Sector. Its parent company is Air India Ltd.
The subsidiaries of the company are Air India, Air India Express (Cargo) & Air India Regional.

Business Diversification

AIRLINES DIVERSIFIACTION

Air India Limited Standalone

Jet Airways and JetLite Standalone

SpiceJet Standalone

Go Air Conglomerate
 IndiGo Conglomerate

❖ Mergers and Acquisition

Since 1950s acquisition and merging has started and yet it is happening till now. It is obvious to
happen because these phenomenons always bring better competitive and technological strength in
the concerned business. Before the discussion of analysis of the Indian civil aviation it is better to
put a glimpse on the concepts of acquisition and merger.

• ACQUISITION OF AIR SAHARA BY JET AIRWAYS

Air Sahara’s 100% shares were acquired by Jet Airways, on 20th.April 2007 which was 15
months later the signing of the purchase agreement. Air Sahara was taken over for INR14.5
billion34 by Jet Airways which was 35% lower than the initial deal. After acquiring Air Sahara the
name was changed to JetLite.

Minor Details of the Acquisition

Announcement Day – 20th.January, 2006

Place – New Delhi

Speaker – Mr. Naresh Goyal (CEO Jet Airways)

Closing Day – 21st. April, 2007

Place – New Delhi

• MERGER OF AIR INDIA AND INDIAN AIRLINE

The merger of Air India and Indian Airlines was approved by the government of India in the year
2007. The two airlines are merged into a new company called National Aviation Company of India
ltd. The merger entity will operate its flights under the brand name ‘AIR India’. It operates its flights
on the domestic as well as international sectors. Now Air India has a combined fleet of 112 aircrafts
 • Aim of the Merger

Following are the reasons why the acquisition took place:

▪ Create the largest airline in India compared with other airlines.

▪ Provide an integrated service of both international and domestic that will enhance customer
proposition.

▪ Use the resources optimally without incurring extra cost.

▪ Provide an opportunity to use the employees with the optimum potential.

▪ Enable routes rationalization and eliminating of unprofitable routes by offering more

competitive price.

▪ Potential to launch new business that gives profit.

• TATA JOINT VENTURE WITH SINGAPORE AIRLINES

Tata sons are a holding company of Tata groups. As FDI in aviation industry is up to 49% so the
Singapore airlines ventured with Tata with 49% share and Tata with 51% in full services carrier
groups in Air Asia42.Indian conglomerate Tata group and Singapore Airline planned to set up a
new full service airline in India. The two companies plan is to invest 100 million initially in the
new airline. Tata own 51%and Singapore airline owns 49%. Due to the losses in Indian Aviation
industry it opened to foreign investments last year.

Singapore airline is Asia’s 2nd biggest carrier by market capitalization. The FDI of 49% allowed is
to provide an opportunity for the foreign investor to invest in domestic carriers. It will increase the
growth of aviation industry.

The investment is happening in India at appropriate time. By this the investors will show interest in
investing in Indian market. This should be approved by different agencies like DGCA, tax
department etc. to commence their operation.

• TATA JOINT VENTURE WITH MALAYSIAN CARRIER AIR ASIA

Malaysian low cost carrier Air Asia entered into the aviation sector of India. As FDI increased from
26% to 49% Malaysian’s Air Asia decided to take a venture with Tata son’s ltd and Arun Bhatia’s
Telstra Trade Place Pvt Ltd. Tata sons will hold 30% in the joint venture and Hindustan aviation of
the Bhatia will hold 21% stake43.

It is the first investment in the airline industry after the FDI is allowed Air Asia said that it should
start its operations from Chennai and focus on connecting to Tier-2 and Tier-3 cities.

The three partners signed the agreement and gave the proposal to the Indian government. It should
evaluate this agreement and believe that the investment will produce better results. The government
strongly believes in introducing low cost carriers that will stimulate the growth in the market. They
are trying to focus on the cost structure which will benefit the Indian consumer.

• JET AIRWAYS AND ETIHAD AIRWAYS DEAL

Etihad airways took 24% stake of Indian Carrier Jet airways for $379 million44. Etihad airways
currently operated to 9 Indian destinations with a total of 59 flights per week.

Following are some of the important points related to the deal-

1. The deal will create a network of 140 destinations.

2. The passengers of Jet Airways will gain a direct access to global network from 23 cities.

3. New fights will be introduced by Jet Airways from Hyderabad and Bangalore.
4. Jet Airways position will be strengthened by the investment of US$600 million45.
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 2017. Spicejet also wins World Travel market 2018 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)

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 programmed on need to member of Privilege Pass.

For the service men and women SpiceJet gives special discount up to 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
received 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 2019 in the category of Aviation.
 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 management 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 2019.
 INDIAN AIRLINES

Indian Airlines, India‘s premier airline, has now been renamed as Indian. But Indian Airlines (IA)
had establish itself as such a strong brand name that majority of people are still not aware that its
name has been changed to Indian. Indian Airlines is fully owned by the Government of India and
came into came I to being with the enactment of the Air Corporations Act 1953.

Indian Airlines began its operation on 1st August 1953 and was entrusted with the responsibility of
providing air transportation within the country as well as to the neighboring countries. Indian Airlines
came into existence after nationalization of eight private airlines. At the time of nationalization, Indian
Airlines inherited a fleet of 99 aircraft consisting of various types of aircrafts. With nationalization
Indian Airlines started modernization in Indian civil aviation industry.

Presently, Indian Airlines, together with its fully owned subsidiary Alliance Air, has a fleet of 70
aircraft (3 wide bodied airbus A300s, 47 fly-by-wire airbus A320s, 3 Airbus A319s, 11 Boeing 737s,
2 Dornier Do-228 aircraft and 4 ATR-42). Another 43 new aircrafts (i.e. 19 A319s, 4 A320s & 21
A321s ) are expected to be inducted in IndianAirlines by November 2026. Indian Airlines transport
network spans from Kuwait in the west to Singapore in the east and covers 76 destinations (58 within
India and 18 abroad). The Indian Airlines international network covers Kuwait, Oman, UAE, Qatar
and Bahrain in West Asia; Thailand, Singapore, Malaysia and Myanmar in South East Asia and
Pakistan, Afghanistan, Nepal, Bangladesh, Sri Lanka and Maldives in the South Asia sub-continent
Potential for Growth

According to recent estimates by The International Air Transport Association (IATA), India is
likely to be a significant player in the global civil aviation business, which was estimated at US$
5.6 billion in 2008. The Indian Civil Aviation market grew at a compound annual growth rate
(CAGR) of 18 per cent, and was worth US$ 5.6 billion in 2018 The government is planning to
upgrade 45 big and small airports across India. For green field airports, foreign equity up to 100
per cent is allowed through automatic approvals. For upgrading present airports, foreign equity up
to 74 per cent is allowed through automatic approvals and 100 per cent through special permission
(from FIPB). The Centre for Asia Pacific Aviation (CAPA) has forecast that domestic traffic will
increase by 25 per cent to 30 per cent till 2020 and international traffic growth by 15 per cent,
taking the total market to more than 100 million passengers by 2020

India's civil aviation passenger growth, presently at 20 per cent, is one of the highest in the world,
and is expected to surpass countries like China, France and Australia. By 2020, 400 million Indian
passengers are likely to be airborne. By 2020, Indian airports are expected to handle more than
100 million passengers‘ including 60 million domestic passengers and around 3.4 million tonnes
of cargo per annum. Domestic air traffic is likely to more than double and touch 86.1 million
passengers by 2020, up from 32.2 million passengers in 2017, states the market research firm
PhoCus. Moreover, significant measures to propel growth in the civil aviation sector are on the
anvil. The government plans to invest US$ 9 billion to modernize existing airports by 2020. The
government is also planning to develop around 300 unused airstrips, and subsequently, Boeing and
Airbus, along with Embraer (Brazil), Bombardier (Canada), Sukhoi (Russia), ATR (France) and
BAE System (UK) are now looking at foraying into the Indian jet market.
 DECODING THE SURVEY

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.

DEMOGRAPHIC PROFILE OF THE

SAMPLE

Sample Size :50

Location : CSIA AIRPORT, MUMBAI
▪ Maximum – 55
▪ Minimum – 17 year
year
▪ Mean s 33
.4
▪ Media ye
Income
: ▪ Maximum –
▪ Rs.1500000
▪ Averag - Rs.517000
e - Rs.
▪
 LIMITATIONS OF THE STUDY

The results obtained from the survey and the outcomes along with suggestions and recommendations
have been presented in the following pages. However at this stage of the report it is needed to keep the
following limitations of the study in mind.

• A sample size of only 50 may or may not elucidate the true picture prevailing in the population.
Hence the results must not be generalized for the whole population.

• It is believed that the respondents have revealed the true views. However any false details on the part of
the respondent will spoil the picture.

• Comparison of only Low Cost airlines has been considered while other has not been taken into
consideration which could have given some more reasons.

• The study will reflect the scenario present only in the present economic scenario which is going through
extreme volatile conditions and may change with the change in market conditions.

• The sample chosen are of the above mentioned area and the findings will reflect the scenario of that area
only.

• Due to constraint of time, a larger sample size could not be chosen

• The respondents may not have divulged their true feelings.

• Marketing strategy of a company is indeed a closely guarded secret especially in the face of stiff
competition as in the case of the airlines sector in India. Therefore, to extract

• information on the marketing strategy was a difficult task.

• Minor errors may have been introduced due to fatigue, etc.

1.What is your preferred mode of travel between distant cities in India?

Preferred mode of Travel

Car

Rail

Coach

Airlines

other

0 5 10 15 20 25 Others Cars Airlines Rail Coach

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 Traveler Leisure/ personal Both

40% 28%

32%

32% or 16 of the respondents acknowledged that they use airway for leisure and personal reasons. As it
has tipped the number of business travelers, it’s a good sign that shows that the average residual income
of the Indians is increasing. In the recent years leisure or vacation has turned up to be an important factor
pushing up the number. The success of Incredible India campaign has turned India into a major tourist
destination. In addition to that HR policies of organizations have recognized recreation, leisure as an
important employ motivation factor. They are also paying up for the employee vacations. This has also
given fillip to the growth factor. On the other hand this may have been because of cutting on air travel
by organizations due to recession. Decrease in business travel might have helped leisure/ personal factor
to dominate the scene.

3.Which class do you usually travel in by air?

Which Class?
First
Business 8%
26%

66%
 Economy Business Fi
rst

33 13 4

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?

Chart Title
35

30

25

20

15

10

0
1to 5 6to 10 11to 20 21to 30 31and above

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.

5.What factors do you consider before buying a ticket?

Price of the Quality and Airport Safety and Availability

Ticket service location reliability of seat

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.
 Airline company
office
6% 22%

Travel agent
72%

6.How do you book your airline tickets?

Internet Travel Airline

agent company
office

11 36 3

Travel agents are the most important medium of ticket booking in the country. This is reflected in the
survey also. Because travel agents give big concessions to the customers from their commissions it is
favored by the customers. Moreover Travel agents also help in proper selection of airlines as they have
up to date information about all the offers and schemes given by the airlines at any point of time. To
gain same amount of information it would require a lot of time collecting the data. Besides internet
providing 24 hour booking facility, the presence of online agents such as makemytrip.com, yatra.com
has helped internet to gain popularity.
7. How do you rate the Indian low cost airlines on the following parameters against their peers
worldwide?

30
28
25 26
24
20
Pricing
15
13 14
Safety
10 10
Quality

Poor Satisfaction Good Very Good Excellent

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.

Grooming or Friendliness Staff cabin staff Total service

Appearance of staff attitude presence consistency
throughout
flight

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.

Seating Comfort Cleanliness Onboard Reading

Catering materials

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

Thisquestion 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-

AIR INDIA - Euphoric, sentimentalist

JET AIRWAYS- functionalist,

SPICEJET- pragmatist.

GO AIR-pragmatist,informative. INDIGO- informative

VISTARA- Functionalist

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.

- 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.

- Some of the strategies to improve brand image-

- People- the recruited people are the face of the organization. Attitude, friendliness and
Grooming are the desired qualities of them.

- Keeping some quality magazines on board will go a long way from increasing customer
satisfaction to customer delight.

- International recognitions and awards help in better recognition.

- Investing in internet marketing is a cheap and better way of targeting customer.

- Concession in fares for the defence people, and retirees.

- If it is low cost airlines one need not promote through celebrities. Ordinary people as models
will help the cause.
 A survey on people preferences about airlines

This research is being done for academic purpose only. All the information provided shall be kept
confidential.

NAME:……………………………………………………………………………………………………
…………………………………….

AGE:………………. OCCUPATION:………………………………..
ANNUAL INCOME:………………………………………….

CONTACT
:………………………………………………………..…………………………………………………
…………………………………….

3.What is your preferred mode of travel between distant cities in India? Car Rail Coach
Airline Others

4. How would you categorize yourself in terms of air travel? I am mostly a business traveler.

I am mostly a leisure/personal traveler. I am a bit of both.

5. Which class do you usually travel in by air?

Economy Business First

6. 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

7. What factors do you consider before buying a ticket?

(Please allocate a priority from 1 to 5, 1 being the most preferred and 5 being the least.) Availability
of the ticket

Airport location Price of the ticket Quality and Service Safety and reliability

8. 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 Internet

office

9. How do you rate the Indian low cost airlines on the following parameters against their peers
worldwide?

Poor Satisfaction Good Very Excellent

good
A survey on people preferences about airlines

10. 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

11. 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 1
0
0
12. Please list up the names of the low Cost Airlines in India.
a……………………………………………………………………………………….

b……………………………………………………………………………………….

c………………………………………………………………………………………..

d……………………………………………………………………………………….

e……………………………………………………………………………………….

f………………………………………………………………………………………..

g……………………………………………………………………………………….

h……………………………………………………………………………………….
 APPENDICES

Airlines typically follow two types of business models: The Point to Point and the Hub-and- Spoke.

Point to Point Model:

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.
Hub and Spoke Model:

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 six private scheduled operators.
Of these six, 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 six as on 31st
March 2018. 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 indigo 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 domestic 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 engaged 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 against 9.5% for private carriers during 2017 -18.

The market share in terms of domestic passenger carried was highest for indigo 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 indigo 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.
 INTERNET SOURCES/BIBILOGRAPGY

➢ www.tcil.com (Transport Corporation Of India Ltd.)

➢ www.civilaviation.nic.in

➢ www.dgca.nic.in (Director General of Civil Aviation)

➢ www.wikipedia.org

➢ www.indianairlines.com

➢ www.indianairlines.net

➢ www.indian-airlines.nic.in

➢ www.indianairlines.indiatimes.com

➢ www.airliners.com

➢ www.airindia.com

➢ www.123articles.com

➢ www.bloomberg.com

➢ www.capitaline.com

➢ www.foolonahill.com
➢ www.findarticles.com

➢ www.google.com\ www.goair.in www.iata.com

➢ www.Indian-airlines.nic.in

➢ www.invvestopedia.com

➢ www.scribd.com

➢ www.spicejet.com

➢ www.wikipedia.com

➢ www.yatra.com www.ibef.net

➢ Websites of JET AIRWAYS, SPICEJET,INDIGO, Go Air, VISTARA,AIR ASIA

➢ Indian Aviation Industry – Opportunities & Challenges by Ravi Kumar V.V. ;

published by ICMR

➢ Strategic Management in the Aviation Industry by D.Pitfield

➢ Journal of Transport Geography

➢ The Civil Aviation Act, 2000 (Draft) Economic Survey, 2008Articles (Alliance Library)

➢ 4 P‘s Marketing November 2008 Edition Business Line/India Today

➢ IIM –B Report-Blue Sky/Prabhudas Liladhar Report Investments –Bodie Keane Marcus

➢ Investment Analysis & Portfolio Management –Prasanna Chandra

 RECOMMENDATION/SUGGESTION

The research study and the analysis of various aspects tapped lead to the following
recommendation:

➢ 141 should be outsourced to a call center to deal with the enquiries. Non-availability of
help lines has been the most common complaint of agents and passengers. IVRS should be
provided for the agents/passengers waiting for their call to be attended by the operator. Some
of the government organizations have successfully done outsourcing help lines.

➢ With the oncoming of the Private Airlines on the country the customer awareness and
aspiration of quality of service has been enhanced considerably. So Indian Airlines should
emphasis on providing more efficient services both on the ground and in the air as done by Jet
Airways to a large extent.

➢ Dedicated counters should be made to handle last minute reservation, preferably for
reservations being done on the day of the flight.

➢ Ticket counters can be placed at major corporate houses which have a substantial
amount of travel budget: wherein all the information about the schemes is available. These ticket
counter are to be maintained at the expense of Indian Airlines.

➢ There should be internal and external audits to look in to the working of various
departments
.

➢ An incentive scheme should be launched for the people at the front desk of the agency
such as the ticketing agents. The ticketing agents should be provided with a unique identity
number that they would have to quote on the tickets. The points would automatically credited
to their account. On the accumulation of certain number of points they will be given FOC’s.
This will also help in checking false ticketing.

➢ Apex-7 and Apex-21 fare (scheme) should be continued on account of its popularity.

➢ Scheme like Smart Apex fare scheme for business class passengers can be introduced.

➢ Flexibility in Smart Apex fare scheme should be increased.

➢ All the promotional schemes and services should be extensively advertised to bring
awareness to make itself better known to the potential customers. They should be advertised
through e-mails, corporate presentations and through road shows. Executive class bonanza
scheme should be started again.

➢ Holiday packages should be sold only through Indian Airlines booking offices and not
through agents, as there is every chance of the agents offering parallel deals to the customers.

➢ Indian Airlines should schedule more number of flights to and from stations like
Mumbai, Delhi, Chennai, and Kolkata as these sectors account for high Pax load.

➢ Indian Airlines can introduce late bird/night bird flights between metros.
➢ The check-in time should be minimal. Wherever there is likely to be long cues more
counters should be opened.

➢ The process of ticketing and cancellation should be made more easy, smooth and as
flawless as possible as most of the respondent are not happy with the present ticketing
procedure.

➢ Delayed flight, which is a very painful experience for the travelers, should be attended to as
top priority because the main clientage is business men and they are time bound.

➢ Indian Airlines should acquire (induct) new aircraft to upgrade product quality in order
to build brand image and retain passengers.

➢ AASL should be given more autonomy so that it could conduct some of the activities
related to marketing at its own to add up innovative schemes and generate in revenues

➢ Alliance Air authorities should be made in easy approach to the passengers for the
grievance handling and complaints. Service innovations like automated flight schedules, over
the phones, provision for customizing meals, in-fight mail order shopping etc. should be
introduced to lure the passengers.

➢ Indian LCC Airlines needs to undertake aggressive marketing.

➢ Indian LCC Airlines should undertake customer satisfaction surveys.

➢ IA should make provisions to add up more financial benefits for its passengers.

➢ International desk of Indian LCC Airlines should be made more accessible.

➢ Flight status should be made available through SMS. Should concentrate on reducing
the ticketing costs by implementing the front operations effectively.

➢ The routes must be optimized to the possible extent and the logistics as well.

➢ Upgrading of airports is already in a process and must be observed it will be a

continuous process.
➢ The air traffic must be handled effectively. Packages with value added services must
be rendered to the customers.

➢ The turnaround times must be improved for maintenance purpose.

➢ Baggage clearance charges should be checked so as to increase the efficiency of the

fuel.

➢ The lean organization approach is advised to follow for the operational advantage

➢ Liberalization should be still increased and generalizing the budget model is

advisable

SUGGESTION BY THE PASSENGERS

➢ There should be more transparency (clarity) in the announcement of the flights.

➢ To open separate counters for single baggage and last minute departure.

➢ Check-in time should be reduced.

➢ Security checks need improvement. Personnel need to be more humane.

➢ Easy information should be available to passengers regarding transit baggage.

➢ More decent, polite and cheerful staff.

➢ The baggage tags should have a solid glue system. The present plastic tags are very
easy to tamper with.

➢ Fare charges should be same for foreigners as for Indians..

The above are the observations and the recommendations that are made to diagnose them.
We expect the Airline industry to come across the barriers and fly high.
 CONCLUSION

The healthily competition of domestic airlines has set new trends in the quality of service.
Previously in the monopolistic environment of Indian Airlines the quality and the desire to win
over the constraints was totally dismal. With the oncoming of IndigoAirways and vistara
Airlines there is sea change in the quality of service and the pride of the job.

Hence today it is a matter of great significance that the Indian Airlines staff now cares about the
passenger comfort and take pains to see that the flight is on time. Indian Airlines so should try
the high percentage 98% of on time service is the hallmark of their quality of service.
Advertisement has brought awareness among the people regarding Indian LCC Airlines . The
most preferred feature of the advertisement happens to be presentation for Indian Airlines. As
regards Indigo Airways people are moderately aware of it and also travel by it. Most liked
feature of the advertisement is the message. Similarly in air india Airlines the feature most
preferred is the media.

This shows that people who are aware of the airline are not just verbally aware but also prefer to
travel by that airline. This depicts that the effect of advertisement of is directly proportional to
the uses to the airlines.

Besides the high percentage of Indian Airlines travelers can be attributed to the fact that for the
government officials it is mandatory to travel by IA.

Customer grievance and prompt redressal should also be rated as top priority as this will not
only provide the necessary input and the feedback but also would go a long way in improving
the image of Indian Airlines.

With a growth rate of 18 per cent per annum, the Indian aviation industry is one of the fastest
growing aviation industries in the world. The government's open sky policy has lead to many
overseas players entering the market and the industry has been growing both in terms of
players and number of aircrafts. With the liberalization of the Indian aviation sector, the
aviation industry in India has under gone a rapid transformation. From being primarily a
government-owned industry, the Indian aviation industry is now dominated by privately
owned full-service airlines and low-cost carriers. Private airlines account for around 75 per
cent share of the domestic aviation market. Indian carriers currently have a fleet size of 310
aircrafts. Earlier, air travel was a privilege only a few could afford, but today air travel has
become much cheaper and can be afforded by a large number of people. With this move,
airlines are likely to prune their airfares considerably. Indigo Airways, the country's largest
private carrier, has slashed domestic fares by 40 per cent and national carrier Air India has
announced that it will cut basic fares anywhere between 45 per cent and 60 per cent in
February 2020 following a drop in ATF prices. India has jumped to 3th position in world's
aviation market from 9th in 2006. The scheduled domestic air services are now available
from 82 airports as against 75 in 2016. Challenges that faced airlines and the aviation
industry as a whole over the last few years, has forced the industry to rethink how they do
business on both a financial and operational level. Most airlines have faced up to these
challenges, and as a result have been remarkably successful at turning around ailing
companies, in many cases completely reinventing themselves.
Although high fuel prices are affecting profitability, airlines are now in a much stronger position
then 2010, due to unprecedented demand for air travel. There is no doubt that the aviation industry
has come through one of the toughest periods in over 30 years. The industry is now in an excellent
position to face the challenges ahead The Aviation industry in India encompasses a wide range of
services related to air transport such as passenger and cargo airlines, unscheduled service operators
--- private jets and helicopters, airport management, and support services like Maintenance, Repairs
and Overhaul (MRO), ground handling, in-flight catering, and training. The Aviation sector has
reaped massive benefit from the entry of private carriers, especially from those of the low fare ones.
The growth of the airlines sector has caused a sharp upturn in demand for allied services including
MRO, ground handling, and catering services. The booming aviation industry, along with its tertiary
services, has wreaked a major talent crunch, boosting opportunities for training service providers.
The ever-expanding Indian economy and increased demand for trade has pushed the need for air
cargo services to a new high. Increasing number of entrants in the sector has forced airports to
expand their cargo handling capacities.

The aviation sector is still a small part of the travel and transportation services sector in India. 2016-
17 posted annual passenger traffic of about 96 million, as compared to nearly 6 billion passengers
carried by the railways. The industry has already bumped into several challenges; inadequate
infrastructure being the most crucial.

The airlines suffered losses of around USD 500 million in 2006-07. The high cost of operations,
intense competition, and unsustainably low fares have contributed to these losses. While initiatives
have been taken to remove bottlenecks to growth, a need for further investments in capacity is felt
more than ever. A recent spate of mergers, however, has come to some relief. The decelerating profit
margin does not entail a slump in revenue generation. It is the increasing costs that have thrown the
aviation industry into the present plight. India‘s aviation sector stands up to the crisis and races
against its fastest growing global competitors. Improved affordability and connectivity add to the
expected improvement in both passengers and cargo traffic. Large public and private investments in
air travel infrastructure, supported by government initiatives, are expected to pour in.