Fare Analysis of Air India

TABLE OF CONTENTS
1. INTRDUCTION
A. Airlines industry ..................................................................................................07
B. Research objectives ……………………………………………………………..09
C. Terms and definitions ……………………………………………………..........09
D. Abbreviations ……………………………………………………………...........10
2. LITERATURE REVIEW
A. Market structure- differentiated oligopoly............................................................11
B. Factors affecting consumer perception..................................................................12
C. Pricing in airlines....................................................................................................12
D. Frequent flier programs.........................................................................................13
3. ORGANISATION
A. History of AIR INDIA……………......................................................................15
B. Global Network......................................................................................................18
4. COMPETITIVE ANALYSIS
4.1 Major players in aviation industry.........................................................................23
4.2 Comparison of Players...........................................................................................28
4.3 Connectivity...........................................................................................................31
5. DATABASE AND ANALYSIS.........................................................................................33
6. INTERPETATION OF FARE TREND..............................................................................60
7. NEW DESTINATION (DOMESTIC).................................................................................61
8. SWOT ANALYSIS OF AIR INDIA..................................................................................65
9. FUTURE PLANNING & PROMOTIONAL SCHEMES..................................................67
10. RECOMMENDATIONS & SUGGESTIONS..................................................................68
11. REFERENCES..................................................................................................................69
12. APPENDICES....................................................................................................................70
1
CHAPTER 1: INTRODUCTION
A. AIRLINES INDUSTRY
The first commercial flight in India was made on February 18, 1911, when a French pilot
Monseigneur Piguet flew airmails from Allahabad to Naini, covering a distance of about 10
km in as many minutes.
Tata Services became Tata Airlines and then Air-India and spread its wings as Air-India
International. For many years in India air travel was perceived to be an elitist activity. This
view arose from the “Maharajah” syndrome where, due to the prohibitive cost of air travel,
the only people who could afford it were the rich and powerful.
Until less than a decade ago, all aspects of aviation were firmly controlled by the
Government. In the early fifties, all airlines operating in the country were merged into either
Indian Airlines or Air India and, by virtue of the Air Corporations Act, 1953; this monopoly
was perpetuated for the next forty years. The Directorate General of Civil Aviation controlled
every aspect of flying including granting flying licenses, pilots, certifying aircrafts for flight
and issuing all rules and procedures governing Indian airports and airspace. With the opening
up of the Indian economy in the early Nineties, aviation saw some important changes. Most
importantly, the Air Corporation Act was repealed to end the monopoly of the public sector
and private airlines were reintroduced.
 Consolidation of the market

The Indian airline market has seen a consolidation in last 12 months through a Deccan-
Kingfisher merger in December 2007, the state-run Air India and Indian combine and the Jet
buyout of loss-making Air Sahara, which means new entrants, will be confronted with larger
incumbents. Entering the market as a new company requires considerable capital (for
example, to acquire a fleet of planes); and, even for an existing company to begin operating
in India, the market may impose significant costs in terms of overheads, wages, and so on.
 Market analysis
The Indian airline industry generated total revenues of $8.3 billion in 2007, representing a
compound annual growth rate (CAGR) of 29.6% for the period spanning 2003-2007.
Industry volumes increased with a CAGR of 27.4% between 2003-2007, to reach a total of
47.2 million passengers in 2007.
Domestic flights dominated the Indian airline industry and accounted for 43.5 million
passengers in 2007, equivalent to 92.3% of the industry's overall volume. The performance of
the industry is forecast to decelerate, with an anticipated CAGR of 17.1% for the five-year
period 2007-2012, which is expected to drive the industry to a value of $18.3 billion by the
end of 2012.
Table 1.1: Indian airlines industry in $ billion 2003-07
Year $ billion INR billion % growth
2003 3 122.2
2004 3.6 150.4 23
2005 4.6 189.5 26
2006 6.6 272 43.6
2007 8.3 344 26.7
CAGR 2003-07 29.6
Source: Data monitor
 Market volume
The Indian airlines industry grew by 17.6% in 2007 to reach a volume of 47.2 million
passengers. The compound annual growth rate of the industry volume in the period 2003-
2007 was 27.4%.
Table 1.2: Indian Airlines Industry Volume: Passenger Million, 2003-07
Year Passenger (Million) % growth
2003 17.9
2004 22 23
2005 28.4 28.6
2006 40.1 41.4
2007 47.2 17.6

SOURCE: DATA MONITOR
 Passenger Traffic from March 08 to Mach 09
However 2008-09 was not a good year for the aviation industry with the growth in passenger
traffic taking hit and witnessing a sharp decline. The traffic which had grown above 4 million
by May 08 is now reduced to below 3.5 million in Mar 09. The total passenger traffic for Jan-
Mar 09 was 9.82 million which fell from 11.9 million in Jan-Mar 08.
Table 1.3: Passenger Traffic from March 08 to March 09
Source: Indiastat.com
B. RESEARCH OBJECTIVE:
 The ultimate objective of the project is to find out the trend of fares in last
two years of air India at international routes and comparison of AIR INDIA
with domestic players in terms of market performance, capacity share and
fares.
C. TERMS AND DEFINITIONS

 Aircraft: Any machine that can derive support in the atmosphere from the reactions of
the air other than the reactions of the air against the earth's surface;
 Aircraft departures: The number of take-offs of aircraft. For statistical uses, departures
are equal to the number of landings made or flight stages flown;
 Aircraft - type of: All aircraft of the same basic design including all modifications
thereto except those modifications, which result in a change in handling or flight
characteristics;
 Commercial air carrier: A carrier performing scheduled or non-scheduled air transport
services or both, available to the public for the carriage of passengers, mail or cargo
 Domestic Flight: A flight having exclusively domestic stages, See domestic flight stage;
 Domestic Scheduled airline: An airline, which operates any scheduled service within
the boundaries of the State where the airline is registered but which does not operate,
scheduled international services;
 International airport: Any airport designated by the Government of India an airport of
entry and departure for foreign airline for embarkation and disembarkation of scheduled
international air traffic, where the formalities incident to customs, immigration, public
health, agricultural quarantine and similar procedures are carried out;
 Traffic: For air transport purposes, traffic means the carriage of passengers, freight and
mail.
 Low cost carrier: An airline that offers generally low fares in exchange for eliminating
many traditional passenger services.
 Full legacy carrier: An airline revolving around a hub & spoke network and a corporate
structure including First Class/Business Class, Lounges, Frequent Flyer Programs,
Alliances, Frills/Perks throughout the cabin (food, beverage, and better service).
D. ABBREVIATIONS
FFP- Frequent Flier Programme
FSC- Full Service Carrier
LCC- Low Cost Carrier
LTC- Leave Travel Concession
NACIL- National Aviation Company of India Ltd.
MPI- Market Performance Index
PAX- Passengers
S.F. - Seat Factor
CHAPTER 2: LITERATURE REVIEW
A. MARKET STRUCTURE- DIFFERENTIATED OLIGOPOLY

Westermann, (2005) describes the aviation industry, especially with regard to passenger
airlines, follows a strictly oligopoly-type structure with the characteristics. (1) An industry
dominated by a small number of large firms (see market shares, below)
(2) Firms sell either identical or differentiated products (the only differentiation here being in
service quality and frills offered), and
(3) The industry has significant barriers to entry (which holds true both with respect to
regulations and huge capital investment required).
One sees the following characteristics with respect to the passenger airlines market –
 Few number of firms contributing to majority of the market share
 Products are differentiated in terms of service quality and offerings
 MR=MC
 p>MC
 Entry Barriers
 Firm is a price-setter
 Long run profit >= 0
 Strategy dependent on individual rival firm’s behaviour
In a differentiated oligopoly, a few firms produce products different enough for each firm to
have its own downward sloping demand curve. As with a perfectly competitive firm or a
monopoly, the differentiated oligopoly firm produces at a profit maximizing level of output
where marginal cost equals marginal revenue. The firm finds the price it will charge
customers at the profit maximizing level of output (Q m) from the demand curve, and sets
price to Pm. As we can see, the firm is earning economic profits since price exceeds average
total cost at the profit maximizing level of output.
Figure 2.1: Oligopoly structure
B. FACTORS AFFECTING CONSUMER PERCEPTION

The following factors have been identified that make the demand function of consumers.
a) Price
b) Service
c) Promotional Schemes
d) Loyalty programmes
e) Flight Schedules
f) Comfort with the brand
g) Corporate tie-ups
C. PRICING IN AIRLINES
(Malighetti, P., et al, 2000) studied the pricing strategies of Rainier’s European flights to
reach the following conclusions:
 The price tends to resemble a hyperbola as the date of departure nears
 A positive correlation between fares and route length, route frequency and the
percentage of fully booked flights was found
 Length and route frequency have a negative correlation to the dynamic pricing
intensity
 Fewer discounts were observed on long haul and high frequency routes
 Presence of competitors was not found as the major factor impacting the average
price. But the presence of competition increases the intensity of dynamic pricing
which implies higher discounts.
E. FREQUENT FLIER PROGRAMS

(Kim et.al, 2004) studied the adoption and design of reward programs in context of capacity
management. The research says that firms with perishable excess capacity have a strong
incentive to set a low price to sell more of its capacity. But the competitors also lower their
price with a fear of being unsold. This leads to price competitions in periods of low demand.
The paper says that reward programs are means to achieve lower available capacity in
periods of low demand by giving out capacity in form of rewards. Reward program provides
flexibility to the firms for adjusting capacity as per market demand and avoid price
competition. The flexibility allows firms to set higher initial capacity.
Frequent flier program (FFP) is the most widely used reward program in the airlines industry
across the globe. FFP is essentially a customer loyalty program using reward points. (Malloy,
1998) describes the objective of customer loyalty program as rewarding of repurchasing by
encouraging customers to repurchase to meet targets levels at which attractive rewards are
offered. The “Sweetheart Stamps” promotion run by Southwest airlines in the 1970s, allowed
business travelers to accumulate benefits with which they could take their spouse on a free
ticket and can be considered as an FFP. But the first formal FFP was launched in 1981 by
American Airlines. The program known as Advantage offered first class upgrades from
economy on 12000 miles and 20 percent off on roundtrip ticket for 20000 miles. The other
airlines soon launched their own FFP and as on today more than 70 airlines have an FFP
program of their own with a complex web of airline alliances and partnership.
FFP programs are structured into various tiers which segment members based on their
frequency of flying. Higher the tier more is the benefits which are offered to the member.
FFP also has air miles or points which is the currency which is used to redeem benefits. The
air miles are not only earned by flying but also by various other sources making purchases
through credit cards, or shopping at a chain.
CHAPTER-3
ORGANISATION
3.01 INTRODUCTION: AIRINDIA
Air India is the national carrier of India. Air India (formerly Air-India) is the national flag
carrier of India with a worldwide network of passenger and cargo services. It is one of the
two state-owned airlines in the country, the other being Indian (formerly Indian air Airlines.
The merger of Air India and Indian (formerly Indian airline) is in process. Its main bases are
Chhatrapati Shivaji International Airport, Mumbai and Indira Gandhi International Airport,
New Delhi with hubs at Chennai International Airport. The airline connects 95 destinations
around the world, including 12 gateways in India with Air India Express, which is a fully
owned subsidiary of Air India. The IATA and ICAO code of Air India is AI and AIC
respectively. Other details are given below in table 1:
AIR INDIA
IATA AI
ICAO AIC
Call Sign AIRINDIA
Founded 1932
Chhatrapati Shivaji International Airport, Mumbai
Hubs Indira Gandhi International Airport, New Delhi
Chennai International Airport, Chennai
Frequent
Flyer
Flying Return
Program
Member
Maharajah Lounges
Lounge
Fleet Size 56 (+61 orders)
Destinations 95
Parent
Air India
Company
Company
"Your Place In Sky"
Slogan
Headquarters Mumbai, India
Key Person Mr. Arvind Jhadav ( Chairman)
Website: http://www.airindia.in
Table 1: Important Information about Air India

Air India Mascot ‘Maharajah’
3.02 HISTORY OF AIR INDIA

Air India was founded as Tata Airlines in 1932, a division of Tata Sons Ltd. (now Tata
Group) by J. R. D. Tata.
On 29 July 1946 Following the end of World War II, regular commercial service was restored
in India and Tata Airlines became a public limited company under the name Air India.
In 1948 49% of the airline was acquired by the Government of India, with an option to
purchase an additional 2%. In return, the airline was granted status to operate international
services from India as the designated flag carrier under the name Air India International.
On 1 August 1953, the Government of India exercised its option to purchase a majority stake
in the carrier and Air India International Limited was born as one of the fruits of the Air
Corporations Act that nationalized the air transportation industry...
In 1954, the airline took Delivery of its first L-1049 Super Constellations and inaugurated
services to Singapore, Bangkok, Hong Kong and Tokyo.
IN 1960 Air India International entered the jet age when its first Boeing 707, named
Nandadevi and registered VT-DJJ, was delivered. Jet services to New York via London were
inaugurated that same year in May 1960. On June 11, 1962 Air India became the world's first
all-jet airline.
In 1993, Air India took Delivery of the flagship of its fleet when the first Boeing 747-400
named Konark and registered VT-ESM made history by operating the first non-stop flight
between New York and Delhi.
In 1994 the airline was registered as Air India Ltd. In 1996, the airline inaugurated service to
its second US gateway at Chicago O’Hare international airport.
In May 2004. AI started its low cost subsidiary named AI Express. AI Express has been
operating exclusively on Gulf routes and has proved to be a successful international low cost
airline, a rare phenomenon.
In March 2004 Air India started non-stop flights from Ahmadabad’s Sadder Vallabhbhai Patel
International Airport to London, Heathrow, making it the third station from India (after
Mumbai and Delhi).
15 JULY 2007Air India has also been granted permission from the Government of India to
merge with Indian Airlines, the two flag carriers of India. The name of the new airline will
remain Air India, since it is known worldwide. The two airlines will formally become one
when they receive the new Boeing 777-200, with the new livery of the merged airline. The
new airline's headquarters will remain in Mumbai, and will have a strong fleet of 130+. After
the merger, the 2 airlines will apply for membership with Star Alliance, to make their network
bigger; Lufthansa will back Air India's application. Alliance Air and Air India Express are
also to merge as the new airline's low-cost arm.
3.03 Passenger operations:

Air India has 67 (two of them only covered by Air India Express) world-wide destinations. It
also has code-sharing agreements with international airlines to expand coverage. The airline
carried 4.48 million passengers during the financial year ending March 2008 and achieved a
load factor of 71.6 per cent, substantially higher than the 66 per cent load factor recorded in
the preceding year. Air India offers three classes of service - First Class, Executive Class and
Economy Class. Flat bed seats are offered for first class passengers. The airline also offers a
frequent flyer programme alone and in collaboration with many of its alliances.
3.04 Maharajah Lounges:

Currently Air India offers 5 Lounges at five of its major destinations. These lounges are
called the "Maharajah Lounge" translated this means, King's Lounge. The five lounges Air
India offers to its First and Executive class passengers are:
 Delhi, India
 Mumbai, India
 Chennai, India
 New York, USA
 London, United Kingdom
Air India will add more lounges worldwide, once the merger is complete, and it offers more
destinations worldwide.
3.05 SUBSIDIARY AIRLINE:

Air India has also launched a new subsidiary airline - Air India Express, effective April 29,
2005. Air India Express, with thirteen aircraft in its fleet, presently operates 57 flights per
week from nine points in India * Amritsar, Chennai, Delhi, Kochi, Kozhikode, Mangalore,
Mumbai, Pune and Thiruvananthapuram to six destinations in the Gulf - Abu Dhabi, Dubai,
Al Ain, Muscat, Salalah and Sharjah and to Singapore. Air India Express, with its attractively
low fares, has helped make travel affordable, thus spurring growth in travel.
3.06 Merger of Air India and Indian:

The merger turn the new entity into a large airline, with a combined fleet of about 120
aircraft and a staff strength of 30,000, capable of taking global competition head-on. The
public sector character of the merged airline would continue.
By 2010-11, when all the new aircraft ordered by the two carriers are inducted into the fleet,
the merged entity's employee-aircraft ratio would come down to about 200:1, comparable
with any major global airline. While Air India has ordered 68 Boeing planes, Indian has
finalized the acquisition of 43 Airbus aircraft.
3.07 Cargo operations:

In 1954, Air India Cargo started its freighter operations with a Douglas DC-3 Dakota
aircraft, giving Air India the distinction of being the first Asian airline to operate freighters.
The airline operates cargo flights to many destinations. The airline also has ground truck-
transportation arrangements on select destinations.
Air India has also sent 6 of its Airbus a310-300aircraft for a complete cargo conversion in
Germany, this conversion is at the cost of $7 million each. With the arrival of first two
converted freighter aircraft, air India has introduced scheduled services to Frankfurt and
Paris. It has added two weekly cargo flight from Paris and five weekly flights from Frankfurt,
with a total of 14-destinons involved.
3.09 NETWORK:
In its ever-growing quest for providing direct services from various points in India, Air India
currently operates flights from Mumbai, and 13 other Indian cities, viz. Ahmadabad,
Amritsar, Bangalore, Chennai, Delhi, Goa, Hyderabad, Kochi, Kolkata, Kozhikode,
Lucknow, Pune and Thiruvananthapuram. Commencement of international operations from
these cities has obviated, to a very large extent, the need for passengers from these regions to
necessarily travel to Mumbai and Delhi, the traditional main gateways, for taking
international flights. Passengers boarding or deplaning in these cities can now complete their
immigration and custom formalities at their city airport, both at the time of departure and
arrival. The global network of air India is shown below
CURRENT GLOBAL NETWORK, (REGON WISE)
UK London And Birmingham
Europe Paris And Frankfurt
Asia pacific Bangkok, Dhaka, Hong Kong, Jakarta,

Kualalumpur,Osaka,Shanghai,
Singapore And Tokyo
Gulf and Middle Abu Dhabi, Bahrain, Dammam, Doha,

East Dubai, Jeddah, Kuwait, Muscat and
Riyadh.
USA And Canada Chicago, Los Angeles, New Jersey, New

York and Toronto.
Africa Dar-es-Salaam and Nairobi.
3.10 FUTURE STRATEGIES:

“After merger of air India and Indian, air India would throw open its engineering services for
other domestic players. Civil aviation minister Praful Patel said at Mumbai on June 16. Post
merger Air India would leverage engineering services to other. Air India has also tied up with
Boeing to set up maintenance, repair and overhaul (MRO) facility at Nagpur. Acc to Air
India’s CMD A.JHADAV MOU is ready to sign between the carrier and Boeing for this
purpose. Air India will increase its revenue by providing services to other carriers. At present
domestic players look to the gulf for carrying out repair and maintenance work for their
aircrafts.
CHAPTER 4: COMPETITIVE ANALYSIS
A. MAJOR PLAYERS IN THE AVIATION INDUSTRY

FULL LEGACY CARRIERS LOW COST CARRIERS (LCCs)
NACIL AI & IC Jet Konnect 9W
Jet Airways 9W JetLite S2
Kingfisher IT Kingfisher Red DN
Spice Jet SG
IndiGo 6E
Go Air G8
B. COMPARISON OF PLAYERS
Different airlines players have been compared and analysed on three different parameters:
market performance, fleet strength and reach.
4.1 ANALYSIS OF MARKET PERFORMANCE
Market performance is analyzed by taking all the domestic sectors and also comparing only
ex-Delhi sectors separately.
 MARKET PERFORMANCE (DOMESTIC)
The market performance of the airlines is based on 3 parameters:
a) Market Share
b) Seat Factor
c) Capacity Share
Figure: 4.1 Number of passengers flown from different airlines in April 09.
Volume for domestic airlines in Apr 09

9.5
8.5
7.5
passengers in lacs
6.5
5.5
4.5
3.5
2.5
1.5
0.5
air india jet air- jetlite kingfisher spicejet goair indigo para-
ways mount
volume 5.83 5.52 2.44 8.61 3.87 1.45 4.54 0.750000
0000000
13
Source: indiastat.com
In terms of number of passengers in the month of April 09, Kingfisher (including Kingfisher
Red) is the leader in market share with 8.61 lakh passengers. Air India has the second highest
market share with 5.83 lakh passengers. Jet Airways has 5.52 lakh passengers but including
JetLite, it becomes the second highest market shareholder with 7.96 lakh passengers. Among
the LCC’s Indigo has the best market share with 4.54 passengers followed by SpiceJet with
3.87 lakh passengers.
a) Market Share: Market share is the number of passenger bookings by one airline as a
percentage of total passenger bookings among all the airlines.
Figure: 4.2 Market Shares of Domestic Airlines in April 08 and April 09
Apr-08 Apr-09
Spicejet Others Others
10.1% 1.2% 2.5% NACIL
NACIL
GoAir 15.1% Spicejet 17.6%
4.6% GoAir 11.7%
4.4%
Indigo
11.5%
Indigo
13.7%
Jet Airways &Jetlite Jet Airways &Jetlite
29.6% 24.1%
Kingfisher &K- Kingfisher &Kingfisher Red

ingfisher Red 26%
27.9%
Source: livemint.com
With respect to previous year for the month of April, market share for Jet Airways including
JetLite has substantially fallen from 29.6% last year to 24.1% in this year. Market share for
Kingfisher has declined from 27.9% in April 08 to 26% in Apr 09. Market share for NACIL
has increased from 15.1% in April 08 to 17.6% in April 09. Share for all the LCC’s increased
except for GoAir which had a fall of a marginal 0.2%. Indigo had the highest market share
among LCC’s with an increase from 11.5% to 13.7%.
b) Seat Factor: - The seat factor is the percentage of the number of seats occupied by the
passengers in the flights. For e.g.:- if the seat factor of an airline is said to be 75% it
implies that of all the seats available in airlines, 75% were booked by the passengers.
Figure 4.3: seat factor for domestic airlines in April 09

Seat factor for dometic airlines in Apr 09
95
85
75
65
Seat factor in %
55
45
35
25
15
5
air india jet air- jetlite kingfisher spicejet goair indigo para-
ways mount
seat factor 59.9 65 68.7 64.2 68 72 72.1 88.5
Paramount had the highest seat factor in April 09 followed by Indigo and GoAir. In fact all
the LCC’s had a market share of above 65%. Among full service carriers Jet Airways had the
highest seat factor with 65%.
c) Capacity Share: Capacity share is the percentage of seats available with the airline w.r.t.
the total seats available in the market.
Figure 4.4: capacity for airlines in April 09
Capacity for domestic airlines in Apr 09

air india jet airways jetlite kingfisher
spicejet goair indigo paramount
2% 19%
13%
4%
11%
17%
27% 7%
Kingfisher had the maximum capacity share of 27% for April 09. Jet Airways including
JetLite had a capacity share of 24%. Air India has a capacity share of 19%. SpiceJet has a
capacity share of 11% and Indigo has a capacity share of 13%. GoAir has a capacity share of
4%.
4.2 MARKET PERFORMANCE (EX- DELHI)
Following is the analysis of market performance of different players on sectors only through
Delhi on the basis of capacity share, market share and seat factor.
Table 4.1: Different players are compared on capacity share, market share and seat
factor and MPI in April 07-March 08
APR’ 07 – MAR’ 08
Seat
Utilisation Capacity Market
Airline Capacity Passengers Factor Share Share MPI
IC 1994810 1440986 72% 20% 21% 1
Jet
Airways 2306024 1510381 65% 23% 22% -1
Kingfisher 1210244 759274 63% 12% 11% -1

JetLite 946918 675205 71% 10% 10% 0
Air
Deccan 1048260 741115 71% 11% 10% -1
Spice Jet 1179927 903309 77% 12% 13% 1
Go Air 606780 448249 74% 6% 6% 0
IndiGo 643140 49335 77% 6% 7% 1
Total 9936103 6971854 70%
Table 4.2: Different players are compared on capacity share, market share and seat
factor and MPI in April 08-March 09
APR’ 08 – MAR’ 09
Seat
Utilization Capacity Market
Airline Capacity Passenger Factor Share Share MPI
Air India (IC) 1988726 1233216 62% 18% 18% 0
Jet Airways 2161557 1232107 57% 19% 18% -1
Kingfisher 2093723 1156581 55% 19% 17% -2
JetLite 1023462 621363 61% 9% 9% 0
Kingfisher Red 587250 409651 70% 6% 6% 0
Spice Jet 1560331 1046541 67% 14% 16% 2
Go Air 446220 260238 58% 4% 4% 0
IndiGo 1197900 823219 69% 11% 12% 1
Total 11059169 6782916 61%
The average seat factor has declined from the last fiscal year clearly showing signs of effects
of recession in the economy. LCCs such as SpiceJet & Indigo have increased their capacity
because they are doing very well and giving a stiff competition to the Full Service Carriers
increasing their combined market share from 20% to 28%.
Air India has been performing well having a better seat factor than the average seat factor for
the entire industry in both the years. It has reduced its capacity which has also led to a
decrease in the market share. Jet Airways with its subsidiary JetLite has an MPI of -1 and
Kingfisher with low cost carrier Kingfisher Red has an MPI of -2 for the year 2008-09.
Market Performance Index (MPI) is market share minus capacity share. This indicates how
well the airline has been able use its capacity vis-à-vis other airlines. A positive MPI is
always desirable for any airline.
According to the above table, it is visible that Jet Airways (including JetLite) is doing very
well in Northern Region having the maximum market share and capacity share though it has
a negative MPI. It is followed by Kingfisher and third comes Air India. Among LCCs, Indigo
has seen the greatest improvement, increasing its capacity share from 6% to 11% and market
share from 7% to 12% maintaining a positive MPI.
a) Comparison of seat factor for major players month wise (Ex-Delhi)

Figure 3.5: Comparison of seat factor for major players from April 08- March 09
75%
70% NACIL (I)
Jet Airw ays

65%
Kingfisher
60% LCCs
55%
50%
It can be seen that seat factor for NACIL has been the maximum since June 08 among the
Full Service Carriers bettering even the LCCs in few months. Kingfisher had the lowest seat
factor after June 08.
b) Comparison of market performance in most voluminous routes in April ‘09
Table 4.3: Market performance of different players on Delhi Bombay route
DELHI-BOMBAY
AIRLINES FLTS CAP PAX S.F. CAP MKT MPI
IC 292 46824 27245 58.2 19.4 19.9 0.5
JET 257 44975 27429 61.0 18.6 20.0 1.4
JETLITE 93 16800 8506 50.6 6.9 6.2 -0.7
KINGFISHER
RED 30 5400 2899 53.7 2.2 2.1 -0.1
KINGFISHER 284 50444 26004 51.6 20.8 19.0 -1.9
SPICE JET 122 23702 12911 54.5 9.8 9.4 -0.4
GO AIR 170 30600 17642 57.7 12.6 12.9 0.2
INDIGO 129 23220 14310 61.6 9.6 10.4 0.9
1377 241965 136946 56.6
 Delhi-Mumbai (DEL-BOM): Air India had the largest number of flights in this
sector followed by Kingfisher in turn followed by Jet Airways for April 09. Jet
Airways and Indigo has the best seat factor in this sector. Kingfisher has the
maximum capacity share though Jet Airways is the leader in market share in this
sector. Jet Airways has the maximum MPI. Jet Airways has the best performance for
this sector.
Table 4.4: Market performance of different players on Delhi-Kolkata route

DELHI-KOLKATA
IC 60 9183 5767 62.8 13.1 13.8 0.7
JET 81 12555 7492 59.7 17.9 17.9 0.0
JETLITE 30 6000 3389 56.5 8.6 8.1 -0.5
SPICE JET 60 11340 6720 59.3 16.2 16.0 -0.1
KINGFISHER 89 15664 7836 50.0 22.4 18.7 -3.7
INDIGO 85 15300 10677 69.8 21.8 25.5 3.6
405 70042 41881 59.8
 Delhi-Kolkata (DEL-CCU): Kingfisher has the maximum number of flights to

Kolkata which accounts for its largest capacity share in this region. But it has a huge
negative MPI which means it has not been able to utilize its capacity well vis-à-vis
its counterpart airlines. Indigo has the best performance in this sector clocking the
second highest capacity share and the highest market share and good positive MPI.
Table 4.5: Market performance of different players on Delhi-Chennai route
DEL-MAA
IC 119 18875 12333 65.3 26.0 27.0 1.0
JET 115 17825 9860 55.3 24.5 21.5 -3.0
JETLITE 30 6000 3465 57.8 8.3 7.6 -0.7
SPICE JET 58 10962 8112 74.0 15.1 17.7 2.7
KINGFISHER 52 9152 4690 51.2 12.6 10.2 -2.3
INDIGO 55 9900 7298 73.7 13.6 15.9 2.3
429 72714 45758 62.9
 Delhi-Chennai (DEL-MAA): Air India has the maximum number of flights

operating in this sector which accounts for its highest capacity share and also has the
highest market share. It has a positive MPI which explains that it has been able to
manage its capacity very well. SpiceJet is another top performer in this sector.
Table 4.6: Market performance of different players on Delhi-Bangalore route
DEL-BLR
IC 120 15957 9358 58.6 14.8 13.9 -0.9
JET 89 13795 7238 52.5 12.8 10.8 -2.0
JETLITE 74 14800 8235 55.6 13.7 12.3 -1.5
SPICE JET 89 16821 10979 65.3 15.6 16.3 0.7
KINGFISHER 178 31328 20357 65.0 29.1 30.3 1.2
INDIGO 84 15120 11031 73.0 14.0 16.4 2.4
634 107821 67198 62.3
Delhi-Bangalore (DEL-BLR): Kingfisher has the maximum number of flights

operating in this sector which accounts for its greatest capacity share in this sector. It
also has the largest market share and a positive MPI indicates it has been using its
capacity well making it the best performer in this sector. The next best performer is the
LCC Indigo having the second best market share and a positive MPI.
Table 4.7: Market performance of different players on Delhi-Hyderabad route
DEL-HYD
IC 80 11117 6748 60.7 14.9 14.8 -0.1
JET 59 9145 4532 49.6 12.3 9.9 -2.3
JETLITE 37 6845 4194 61.3 9.2 9.2 0.0
KINGFISHER
RED 29 5220 3790 72.6 7.0 8.3 1.3
KINGFISHER 59 10384 4913 47.3 13.9 10.8 -3.2
SPICE JET 86 16254 10465 64.4 21.8 23.0 1.1
INDIGO 86 15480 10907 70.5 20.8 23.9 3.2
436 74445 45549 61.2
Delhi-Hyderabad (DEL-HYD):- SpiceJet and Indigo have the maximum number of
flights flying in this sector. Though SpiceJet has the highest capacity share but Indigo
has the highest market share making it a better performer than SpiceJet in this sector.
Air India has performed the best among the full service carriers in this sector.
4.2. COMPARISION OF PASSENGER FLEET
As of May,2009 NACIL has a fleet of 154 Aircraft with 66 orders which is distributed
amongst Air India , Air India Express , Air India Cargo and Indian Airlines , Air India
Regional.
NACIL will expand its Fleet to around 160 by the end of the next fiscal, inducting as many
as 30 new aircraft manufactured by the US-based Boeing Commercial Airplanes and France-
based Airbus S.A.S. over the next 12months.
NACIL will induct 4 737-800s, 3 777-200LRs and 4 777-300ERs from Boeing Commercial
Airplanes & 8 A319-100s, 4 A320-200s and 7 A321-200s from Airbus S.A.S.. By March
2011 all 111 new aircraft would have joined into fleet to bring down the average age of
aircraft to 18 months. These are part of 111 (68 Boeing and 43 Airbus) aircraft order placed
in January 2006.
Figure 4.6: Comparison of Total No. of aircrafts with Domestic Airlines
180
160
140
120
100
80 154
60
109
40 79
20
20 19
0
air india jet airways kingfisher indigo spicejet
Total aircrafts
Source: DGCA
The above graph shows the total number of aircraft fleet with every domestic airline. Air
India has the largest number of aircrafts with 155 followed by Jet Airways with 109 aircrafts
and third is Kingfisher with 79 aircrafts.
Figure 4.7: Variety of fleet with Air India
variety of fleet with Air India

Airbus A310-300
3% 3% 3% Airbus A310 Frieghter
3%
2% 5% Airbus A319-100
1% Airbus A320-200
4% 10% Airbus A321-200
Airbus A330-200
ATR 42-320
14% Boeing 737-200/Adv
Boeing 737-200
Boeing 737-800
5% Boeing 747-400
30%
Boeing 777-200
4% Boeing 777-200ER
5% Boeing 777-200LR
8% Boeing 777-300ER
1% Boeing 787-8
Bombardier CRJ700
Figure 4.8: Variety of fleet with Jet Airways
variety of fleet with Jet Airways
6% 7% ATR 72-500
9% 6% ATR 72-212A
2% Airbus A330-200
11% Boeing 737-300
Boeing 737-400
1% Boeing 737-700
2%
Boeing 737-800
Boeing 737-900
Boeing 777-300ER
38% 18%
Boeing 787-8
CL-600-2B19
Figure 4.9: Variety of fleet with Kingfisher

Variety of fleet with Kingfisher
6% 10%
10%
ATR 42-500
ATR 72-500
Airbus A319-100
Airbus A320-200
Airbus A321-200
34%
Airbus A330-200
35%
4%
Air India has the largest variety with 16 types of aircrafts out of which 30% fleet consists of
A320-200. Jet Airways has 11 types of aircrafts and 38% of its fleet consists of 737-800.
Kingfisher has 6 types of aircrafts and has 36% of its fleet as A320-200.
Table 4.8: comparison of players according to seat capacity ranges of fleet

Airlines 0-50 50-100 100-150 150-200 200-250 250+
Air India 7 4 75 34 13 17
Jet Airways 7 14 64 2 12 10
Kingfisher 8 27 3 36 5
SpiceJet 14 5
Indigo 20
GoAir 10
Source: DGCA
The above table shows the various capacities of the entire fleet range. Full service carriers
have a fleet in almost all capacity ranges except for Kingfisher who does not have fleet in
capacity range of 250+. LCCs generally have fleet in seat capacity of 150-200 except for
SpiceJet which has few fleets in the range of 200-250.
All the players have a young fleet except for Air India but even Air India has ordered for new
Aircrafts which will reduce the average age of its fleet.
4.3 CONNECTIVITY
Reach is defined by the number of destinations covered by the players in the domestic and
international sector.
Table 4.9: No. of daily flights flown by different players to different destinations
Players No of daily Destinations Destinations Daily flights
fights from Delhi from Delhi
NACIL (IC 306 94 50 56

Only)
Jet Airways 748 98 29 96
Kingfisher 492 69 28 65
Indigo 162 14 13 30
SpiceJet 166 18 16 30
According to the table Jet Airways has the maximum flights operating daily in the domestic
region. Both Jet Airways and Air India cover the more than 90 destinations though Air India
covers the maximum destinations ex-Delhi. Though Air India covers maximum destinations
through Delhi, Jet Airways has the maximum flights operating from Delhi.
FARE STRUCTURE OF AIR INDIA
Fares might be Published or Unpublished:
# Published Fares: These are those fares that are published to the world at large through
industry standard channels ,notably the airline Tariff publishing company (ATPCO) and
SITA’s AIRFARE SYSTEM. If applicable to international markets and arrived at by
resolution at an IATA traffic conference, they might be referred to IATA Fares. They can
usually be broken down into full or normal fares & special and discounted fares.
# Normal or Full Fare: This is unrestricted, on-demand fare charged for travel in a particular
cabin (First, Business or economy class) in a market at any given time. The normal or full
fare can be looked upon as the pricing platform for a carrier’s service price offers in a
particular cabin in any given market.
#Special or Discounted Fares: These are discounted off the price platform in each cabin and
are available in most markets subjects to restrictions; they are associated with alphanumeric
code that varies widely from market to market. Airline commonly break them down into
promotional fares available to any body willing to meet restrictions on booking and
preferential fares available by reference to factors such as age or employment status.
# unpublished fares: These are also known as DGCA fares and offered through specific
distribution channels which involve prices that are unavailable through general channels.
# Net Fares: These are a feature of several international markets in particular and are notably
important in Asia. It is the gross fare for a block of seats sold to an agency less standard
commission and any other fare adjustment typically applied in the market concerned, the net
fare is the net fare less any volume or other incentive including travel agency commission
offered by the airline to a particular agency with which it has targeted a special relationship.
The lower the net fare available to an agency, the lower the price it is able to charge retail
consumers.
CHAPTER-5
DATABASE REGARDING FARES
DOMESTIC INTERNATIONAL
MUMBAI (BOM) DUBAI (DXB)
KOLKATA (CCU) SHANGHAI (SHA)
CHENNAI (MAA) HONG KONG (HKG)
BANGLORE (BLR) TOKYO (TYO)
HYDRABAD (HYD) LONDON (LON)

ANALYSIS OF PRICING
DOMESTIC (MAY-JUN)
Figure 5.1: Fares for DEL-BOM route on different days for different players
8000
7000
6000
Air India(IC)
5000 Kingfisher
Kingfisher Red
4000 Jet Airways
JetLite
3000 Spicejet
Indigo
GoAir
2000
1000
0
d day d+1 day d+10 days d+20 days d+30 days d+45 days
Table 5.1: Fares for DEL-BOM route on different days for different players
Airline d day d+1 d+10 d+20 d+30 d+45

day days days days days
Air India(IC) 5810 5810 5357 5131 5519 2979
Kingfisher 6536 6392 6450 5853 4643 3754
Kingfisher Red 4748 4656 4548 3798 2935 2951
Jet Airways 6773 6658 6040 5788 3478 3478
JetLite 4582 4438 4079 3727 3727 2782
SpiceJet 4286 4286 3984 3683 3438 2577
Indigo 4286 4329 3984 3683 3440 2581
GoAir 4312 4226 3928 3675 3257 2574
The following observations were made from the data.
 There is variation in the fares regarding the proximity of date of departure. It is

generally going up when the departure date arrives except Air India for 30 day fare,
Kingfisher for 10 day fare and Indigo for 1 day fare.
 Air India generally offers lower fare than its competitor FSCs except for a 30 day fare
which was significantly higher than its competitors.
 45 day fare for Air India is very competitive with even the LCCs.
 LCCs charged about 30% lower fare than FSCs.
 There was no significant difference of fares charged on the weekdays to the
weekends.
 There was high correlation among the fares of LCCs. The correlation coefficient is
above 0.9.
Figure 5.2: Fares for DEL-CCU route on different days for different players
Average Fares for Del-Ccu Route

14000
12000
10000
8000
6000
4000
2000
0
Air India (IC) Kingfisher Kingfisher Red Jet Airways

JetLite Spicejet Indigo
Table 5.2: Fares for DEL-CCU route on different days for different players
d+1 d+10 d+20 d+30 d+45

Airline d day day days days days days
Air India (IC) 6595 6595 5357 5131 4810 2979
Kingfisher 6549 6543 6040 5788 3482 3482
Kingfisher Red 12252 13288 10644 8420 8285 5775
Jet Airways 6543 6543 6040 5788 3478 3478
JetLite 5179 5179 3687 3630 3085 2624
SpiceJet 5293 5293 3366 3222 3007 2577
Indigo 5365 5293 3972 3339 2910 2581
The following observations were made from the data:-

generally going up when the departure date arrives except Kingfisher Red for 1 day
fare and Indigo for 1 day fare.
 Air India offers the best prices for 10 days, 20 days and 45 days fare among FSCs.
 Kingfisher Red had such a high fare because it does not have a direct flight to
Kolkata. It takes a route via Guwahati.
 Fares for SpiceJet and Indigo were almost the same.
 There was high correlation between fares of LCCs other than Kingfisher Red.
 There was no significant difference in the prices of weekends and weekdays.
Figure 5.3: Fares for DEL-MAA route on different days for different players
Average Fares for Del-Maa Route

8000
7000
6000
5000
4000
3000
2000
1000
0

Table 5.3: Fares for DEL-MAA route on different days for different players
d+1 d+10 d+30 d+45

Airline d day day days d+20 days days days
Air India (IC) 6266 6611 5879 5622 5490 3949
Kingfisher 6983 6945 6126 6610 5408 4388
Kingfisher
Red 6530 6254 5422 4986 5884 3390
Jet Airways 7084 6707 6523 5868 4878 4383
JetLite 6366 5780 5422 4783 4993 4783
SpiceJet 6558 6070 5297 5020 4332 3888
Indigo 6631 6394 5778 5481 5164 4130
The following observation was made from the data:

generally going up when the departure date arrives except for Kingfisher for 20 day
fare except Air India for 1 day fare, Kingfisher for 20 day fare, Jet Airways and
JetLite for 30day fare & no significant difference between fares of weekend
&weekdays. There is high correlation between fares of LCCs.
 Air India had the best fare among the FSCs except for 30 days fare. In fact its 45 day
fare is competitive with the LCCs and even lower than a few LCCs.
Figure 5.4: Fares for DEL-BLR route on different days for different players
Average Fares for Del-Blr Route

8000
7000
6000
5000
4000
3000
2000
1000
0
Air India Kingfisher Jet Airways JetLite

Spicejet Indigo GoAir
Table 5.4: Fares for DEL-BLR route on different days for different players
d+1 d+10 d+30

Airlines d day day days d+20 days days d+45 days
Air India 6451 6227 5881 5816 5430 3708
Kingfisher 7029 6749 6661 6162 4953 3633
Jet Airways 7252 7011 6923 6084 5125 4383
JetLite 6082 5807 5607 4848 4252 3721
SpiceJet 6470 6092 5918 4966 4200 3726
Indigo 5994 5897 5567 5180 4868 3377
GoAir 6546 6297 6093 5509 4805 3758
The following observations were made from the data:-

generally going up when the departure date arrives for all the airlines unlike other
routes which have a few exceptions.
 Air India had the best fares for the route among the FSCs except for 30 day fare and
45 day fare.
 Kingfisher had the best 45 day fare even better than the LCCs except Indigo.
 There was no significant difference between fares for weekends and weekdays.
Figure 5.5: Fares for DEL-HYD route on different days for different players
Average Fares for Del-Hyd Route

7000
6000
5000
4000
3000
2000
1000
0

Table 5.5: Fares for DEL-HYD route on different days for different players
d+1 d+10 d+20 d+30 d+45

Airlines d day day days days days days
Air India (IC) 5908 5810 5357 5131 5422 2979
Kingfisher 6530 6543 6169 5788 5461 3482
Kingfisher Red 6553 6057 4842 4591 3927 3862
Jet Airways 6543 6543 6040 5788 3478 3478
JetLite 6070 5883 6192 4532 4992 3987
SpiceJet 5451 5293 4689 4574 4229 3151
Indigo 5408 5522 4775 4488 3912 2753
The following observation was made from the data:-

generally going up when the departure date arrives except Air India for 30 day fare,
JetLite for 10 day fare and 30 day fare and Indigo for 1 day fare.
 Air India has the best fare for this sector except for 30 day fare.
INTERNATIONAL (JUL07-JUN09)
DELHI TO DUBAI (DEL-DXB)

One Way Fare
Period Pub. YQ + Gross Commission Net Other Taxes TTL PLB/INC NN After PLB
Fare YR Fare Fare
jul07 6320 2130 8450 3% 8130 225 8355 0% 8355

augs07 8500 2138 10638 3% 10213 225 1043 0% 10438
8
sep07 6500 2145 8645 3% 8320 225 8545 0% 8545
oct07 6500 2360 8860 3% 8535 225 8760 0% 8760
nov07 6500 2360 8860 3% 8535 225 8760 0% 8760
dec07 6500 2360 8860 3% 8535 225 8760 0% 8760
jan08 6500 2360 8860 3% 8535 225 8760 0% 8760
feb08 6500 2360 8860 3% 8535 225 8760 0% 8760
mar08 6500 2360 8860 3% 8535 225 8760 0% 8760
apr08 6500 2760 9260 3% 8935 225 9160 0% 9160
may08 6500 2760 9260 3% 8935 225 9160 0% 9160
jun08 6500 3160 9660 3% 9335 225 9560 0% 9560
jul08 6500 3160 9660 3% 9335 225 9560 0% 9560
aug08 6315 3160 9475 3% 9160 225 9385 0% 9385
sep08 6315 3160 9475 3% 9160 225 9385 0% 9385
oct08 4600 3160 7760 0% 7760 225 7985 0% 7985
nov08 4600 3160 7760 0% 7760 225 7985 0% 7985
dec08 4000 3160 7160 0% 7160 225 7385 0% 7385
jan09 4000 3160 7160 0% 7160 225 7385 0% 7385
feb09 3800 3360 7160 3% 6945 1529 7178 0% 7178
mar09 3800 3360 7160 3% 6945 1529 7178 0% 7178
apr09 3800 3160 6960 3% 6760 1529 8289 0% 8289
may09 3800 3160 6960 3% 6760 1529 8289 0% 8289
jun09 3800 3160 6960 3% 6760 1529 8289 0% 8289
JUL07-JUN09
FARE TREND
DEL-DXB ONE WAY FARE
12000
10000
8000
6000
Axis Title Pub. Fare
YQ + YR
4000
NN After PLB
2000
0
7
9
7
9
g0
b0
n0
g0
b0
n0
t0
c0
r0
t0
c0
r0
oc
oc
de
de
ap
ap
au
au
fe
fe
ju
ju
Axis Title
OBSERVATIONS & INTERPETATION OF FARE TREND:
 Fuel component (YQ + YR) jump up from 2130 in jul07 to 3160 in jun09.
 Published Fare decline from 6320 in jul07 to 3800 in jun 09 with dump in oct08 i.e. 4600.
 Net fare achieved the same level after many variations & major decline from sep08
(9385) to mar09 (7178).
 The dominating foreign airline on this route is Emirates airline which operates with 60%-
70% load factor. AIRINDIA has to give competitive fare w.r.t Emirates airline.
 The graph is in correlation.
 In the month of aug07 there was peak period and demand was more which leads to high
published fare as well as net fare.
 The change in net fare was more as compared to Published fare in apr08-sep08 because
the commission given to the agents was more than usual.
 Fuel surcharge increased due to ATF hike.
 Being a public sector unit, AIR INDIA can’t play with fares in that manner in which other
airlines can do.
 Almost 60%-70% of Europe business is grasped by Emirates Airline.
DELHI TO DUBAI (DEL-DXB)
Return Fare
Period Pub. YQ + YR Gross Commission Net Fare Other Taxes TTL PLB/INC NN After PLB
Fare Fare
jul07 7950 6020 13970 3% 13560 2528 16088 0% 16088

aug07 7950 6020 13970 3% 13560 2528 16088 0% 16088
sep07 7950 6020 13790 3% 13560 1958 15509 0% 15509
oct07 7950 6570 14520 3% 14084 1958 14727 0% 14727
nov07 7950 6570 14520 3% 14084 1958 14727 0% 14727
dec07 8500 6020 14520 0% 14520 624 15144 3% 14708
jan08 9000 6020 15020 5% 14520 636 15156 0% 15156
feb08 15265 6020 21285 0% 21285 636 21921 0% 21921
mar08 15265 6020 21285 0% 21285 636 21921 0% 21921
apr08 15262 6020 21282 3% 20522 585 21107 0% 21107
may08 15262 6020 21282 3% 20522 585 21107 0% 21107
jun08 15262 6020 21282 3% 20522 585 21107 0% 21107
jul08 15262 6020 21282 3% 20522 585 21107 0% 21107
aug08 15265 6020 21285 3% 20522 583 21105 0% 21105
sep08 15265 5220 20485 3% 19722 561 20283 0% 20283
oct08 15265 4420 19685 3% 18922 5567 24489 0% 24489
nov08 15265 4420 19685 3% 18922 558 19480 0% 19480
dec08 15265 4420 19685 3% 18922 555 19477 0% 19477
jan09 15265 4420 19685 3% 18922 556 19478 0% 19478
feb09 15265 4420 19685 3% 18922 556 19478 0% 19478
mar09 15265 4420 19685 3% 18522 556 19078 0% 19078
apr09 15265 3990 19255 3% 18492 567 19059 0% 19059
may09 17800 3976 21776 3% 20886 566 21452 0% 19026
jun09 15265 3960 19225 3% 18460 566 19026 0% 19026
JUL07-JUN09
DEL-DXB RETURN FARE

30000
25000
20000
15000
YQ + YR
10000
NN After PLB
5000
0
t07
t08
08
08
09
09
7
9
7
8
c0
r0
c0
r0
g0
g0
feb
jun
feb
jun
oc
oc
de
de
ap
ap
au
au
Axis Title
 Fuel coefficient (YQ + YR) decline from 6020 in jul07 to 3960 in jun09.
 Published fare shows a drastic hike from 7950 in jul07 to 17800 in may09.
 Net fare also shows an increment from 16088 in jul07 to 19026 in jun09 & highest in
month of oct08 i.e. 24489.
 The dominating foreign airline on this route is Emirates airline which operates with
60%-70% load factor. AIRINDIA has to give competitive fare w.r.t Emirates airline.
 In the month of aug07 there was peak period and demand was more which leads to
high published fare as well as net fare.
 The change in net fare was more as compared to Published fare in apr08-sep08
because the commission given to the agents was more than usual.
 Fuel surcharge increased due to ATF hike.
 Being a public sector unit, AIR INDIA can’t play with fares in that manner.
 Almost 60%-70% of Europe business is grasped by Emirates Airline.
DELHI TO SHANGHAI (DEL-SHA)
ONE WAY FARE
Period Pub. YQ + Gross Commissio Net Other Taxes TTL PLB/INC NN After PLB
Fare YR Fare n Fare
jul07 19500 2127 21627 3% 20652 225 20877 0% 20877

aug07 19500 2127 21627 3% 20652 225 20877 0% 20877
sep07 19500 2145 21645 3% 20670 225 20895 0% 20895
oct07 19500 2100 21600 3% 20625 225 20850 0% 20850
nov07 19500 2285 21785 3% 20810 225 21035 0% 21035
dec07 19500 2481 21981 3% 21006 225 21231 0% 21231
jan08 19500 2481 21981 3% 21006 225 21231 0% 21231
feb08 19500 2497 21997 3% 21022 225 21247 0% 21247
mar08 19500 2555 22055 3% 21080 225 21305 0% 21305
apr08 18200 3321 21521 3% 20611 225 20836 0% 20836
may08 18200 4287 22487 3% 21577 225 21802 0% 21802
jun08 16200 4401 20601 3% 19791 225 20016 0% 20016
jul08 16200 4391 20591 3% 19781 225 20006 0% 20006
aug08 16200 4299 20499 3% 19689 225 19914 3% 19452
sep08 16200 4299 20499 3% 19689 225 19914 3% 19452
oct08 16200 4829 23029 0% 23029 225 21254 0% 21254
nov08 16200 4829 23029 0% 23029 225 21254 0% 21254
dec08 16200 4898 21098 0% 21098 225 21323 10 19703
jan09 16200 4898 21098 3% 19041 225 19266 10% 19119
feb09 10200 5180 15380 3% 14707 1529 14932 10% 13943
mar09 10200 5229 15429 3% 14966 1529 16495 10% 15506
apr09 10200 5229 15429 3% 14966 1529 16495 10% 15506
may09 10200 5082 15282 3% 14824 1529 16353 10% 15363
jun09 10200 4883 15083 3% 14640 1529 16169 3% 15872
JUL07-JUN09
DEL-SHA ONE WAY FARE
25000
20000
15000

10000
YQ + YR
NN After PLB
5000
0
7
8
7
9
8
9
7
8
g0
g0
c0
r0
c0
r0
b0
n0
b0
n0
t0
t0
oc
oc
de
de
ap
ap
au
au
fe
fe
ju
ju
Axis Title
 Fuel component (YQ + YR) remains almost constant from jul07 to jan09 then shows
downfall in feb09 i.e. 5180.
 Published fare also shows a constant trend from jul07 to mar08 then down trend from
apr08 to jun09 with dump in feb09 i.e. 10200.
 Net fare shows major fall from 20877 in jul07 to 15872 in jun09.The major downfall
period is from jun08 to feb09.
 The dominating airline on this route is Singapore airline which operates with 70%
load factor and covers long distance which helps in reducing per unit operation cost.
 There is major decline in net fare w.r.t publish fare in period May08-jul08 because of
the fuel surcharge component.
 The fuel surcharge increase because of the ATF prices.
 The decline in fares in period may08-jul08 was due to competitive pricing w.r.t
Singapore Airline.
 Singapore airline have big pockets and financially strong thus bear losses unlike AIR
INDIA
DELHI TO SHANGHAI (DEL-SHA)
RETURN FARE
Fare YR Fare Fare
jul07 30000 3954 33954 3% 32454 707 3316 0% 33161

1
aug07 30000 3954 33954 3% 32454 707 3316 0% 33161
1
sep07 30000 3990 33990 3% 32490 712 3320 0% 33202
2
oct07 30000 3900 33900 3% 32400 702 3310 0% 33102
2
nov07 30000 4270 34270 3% 32770 700 3347 0% 33470
0
dec07 30000 4662 34662 3% 33162 703 3386 0% 33865
5
jan08 30000 4662 34662 3% 33162 703 3386 0% 33865
5
feb08 30000 4694 34694 3% 33194 715 3390 0% 33909
9
mar08 30000 4810 34810 3% 33310 728 3403 0% 34038
8
apr08 28000 6342 34342 3% 32942 737 3367 0% 33679
9
may08 28000 8274 36274 3% 34874 740 3561 0% 35614
4
jun08 23000 8502 31502 3% 30352 777 3112 0% 31129
9
jul08 19500 8482 27982 3% 27007 787 2779 0% 27794
4
aug08 19500 8298 27798 3% 26823 727 2761 3% 27054
0
sep08 19500 8298 27798 3% 26823 727 2761 3% 27054
0
oct08 19500 9358 28858 0% 28858 875 2973 0% 29733
3
nov08 19500 9358 28858 0% 28858 875 2973 0% 29733
3
dec08 19500 9496 28996 0% 28996 883 2987 10% 27929
9
jan09 17000 9616 26616 3% 24457 850 2530 10% 25019
7
feb09 17000 9524 26524 3% 25728 869 2659 10% 24948
7
mar09 17000 10158 27158 3% 26343 2182 2852 10% 26876
5
apr09 17000 10158 27158 3% 26343 2182 2852 10% 26876
5
may09 17000 9864 26864 0 26058 2196 2825 15% 25781
4
jun09 12000 9466 21466 3% 20831 2154 2298 3% 22636
5
JUL07-JUN09
DEL – SHA RETURN FARE
40000
35000
30000
25000
20000
15000 YQ + YR
NN After PLB
10000
5000
0
7
8
7
9
8
9
7
8
g0
g0
c0
r0
c0
r0
b0
n0
b0
n0
t0
t0
oc
oc
de
de
ap
ap
au
au
fe
fe
ju
ju
Axis Title
 Fuel component (YQ + YR) shows downfall from 3954 in jul07 to 9466 in jun09 with
major dump in may08-jul08.
 Published fare shows constant trend from july07 –mar08 then major fall in mar08-
jun08 and continue falling to 12000 in jun09.
 Net fare shows overall decline from 33161 in jul07 to 22636 in jun09 with the major
downfall in may08-sep08 and again in apr09-jun09.
 The dominating airline on this route is Singapore airline which operates with 70%
load factor and covers long distance which helps in reducing per unit operation cost.
 There is major decline in net fare w.r.t publish fare in period May08-jul08 because of
the fuel surcharge component.
 The fuel surcharge increase because of the ATF prices.
 The decline in fares in period may08-jul08 was due to competitive pricing w.r.t
Singapore Airline.
 Singapore airline have big pockets and financially strong thus bear losses unlike AIR
INDIA
DELHI TO HONGKONG (DEL-HKG)

ONE WAY FARE
Fare YR Fare Fare
jul07 15600 2130 17730 3% 16950 225 1717 0% 17175
5
aug07 15600 2138 17738 3% 16958 225 1718 0% 17183
3
sep07 15600 2145 17745 3% 16965 225 1719 0% 17190
0
oct07 15600 2086 17686 3% 16906 225 1713 0% 17131
1
nov07 15600 2285 17885 3% 17105 225 1733 0% 17330
0
dec07 15600 2481 18081 3% 17301 225 1752 0% 17526
6
jan08 15600 2481 18081 3% 17301 225 1752 0% 17526
6
feb08 15600 2481 18081 3% 17301 225 1752 0% 17526
6
mar08 15600 2555 18155 3% 17375 225 1760 0% 17600
0
apr08 14950 3321 18271 3% 17524 225 1774 0% 17749
9
may08 14950 4287 19237 3% 18490 225 1871 0% 18715
5
jun08 14950 4401 19351 3% 18604 225 1882 0% 18829
9
jul08 14950 4403 19353 3% 18606 225 1883 3% 18404
1
aug08 13500 4355 17855 3% 17180 225 1740 3% 17020
5
sep08 13500 4355 17855 3% 17180 225 1740 3% 17020
5
oct08 14950 5417 20367 0% 20367 225 2059 10% 18532
2
nov08 14950 5417 20367 0% 20367 225 2059 10% 18532
2
dec08 13500 3419 16919 0% 16919 225 1714 10% 15794
4
jan09 13500 3487 16987 3% 15273 225 1549 3 + 10% 15393
8
feb09 12500 3513 16013 3% 15533 225 1575 10% 14545
8
mar09 12500 3676 16176 3% 15691 1529 1722 10% 16007
0
apr09 12500 3643 16143 3% 15659 1529 1718 0% 17188
8
may09 12500 3643 16143 3% 15659 1529 1718 3% 16824
8
jun09 12500 3436 15936 3% 15467 1529 1699 0% 16996
6
JUL07-JUN09
DEL-HKG ONE WAY FARE

45000
40000
35000
30000
25000
Axis Title 20000 NN After PLB

15000 YQ + YR
Pub. Fare
10000
5000
0 08
08
09
09
7
8
7
8
8
9
7
8
v0
v0
p0
p0
n0
n0
l0
l0
ay
ay
ar
ar
ju
ju
no
no
se
se
ja
ja
m
m
m
m
Axis Title
 Fuel component (YQ + YR) remains smooth from jul07 to jun09 with some variation
from may08 to jan09.
 Published fare shows a downfall from 15600 in jul07 to 12500 in jun09.
 Net fare remains smooth from July 07 to apr 08 then show rise trend & highest in
nov08.Then after major dump i.e. lowest in feb09 i.e14545
 From apr08-jul08, the rise in net fare was due to the additive effect of fuel surcharge.
 Fuel surcharge increased due to the ATF hike.
 From mar09-jun09, the net fare increase because of the more commission given to the
agents.
 The major foreign airlines which dominate on this route are Singapore and Cathay
Pacific airline. Cathay Pacific use Jumbo 747-ER and 747-LR aircrafts which covers
the destinations beyond Delhi. The operating cost per kilometre reduces because of
the long run distance, resulting into less operating cost and thus less fare.
 AIRINDIA is unable to operate Jumbo because of the less load factor and seat
utilization.
DELHI TO HONGKONG (DEL-HKG)

RETURN FARE
Period Pub. YQ + Gross Commissio Net Other Taxes TTL PLB/INC NN After PLB
Fare YR Fare n Fare
jul07 24000 3960 27960 3% 26760 849 27609 0% 27609

aug07 24000 3976 27976 3% 26776 852 27628 0% 27628
sep07 24000 3990 27990 3% 26790 858 27648 0% 27648
oct07 24000 3866 27866 3% 26666 839 27505 0% 27505
nov07 24000 4270 28270 3% 27070 837 27907 0% 27907
dec07 24000 4662 28662 3% 27462 836 28298 0% 28298
jan08 24000 4618 28618 3% 27418 834 28252 0% 28252
feb08 24000 4694 28694 3% 27494 840 28334 0% 28334
mar08 24000 4810 28810 3% 27610 858 28468 0% 28468
apr08 23000 6342 29342 3% 28192 846 29038 0% 29038
may08 23000 8274 31274 3% 30124 871 30995 0% 30995
jun08 23000 8502 31502 3% 30352 889 31241 0% 31241
jul08 20175 8506 28681 3% 27672 890 28562 3% 27987
aug08 20175 8410 28585 3% 27576 882 28458 3% 27883
sep08 20175 8410 28585 3% 27576 882 28458 3% 27883
oct08 23205 10534 33739 0% 33739 963 34702 0% 34702
nov08 23205 10534 33739 0% 33739 963 34702 0% 34702
dec08 15205 6538 21743 0% 21743 975 22718 10% 21198
jan09 13915 6674 20589 3% 18822 984 19806 3 + 10% 19606
feb09 11520 6726 18246 3% 17699 990 18689 10% 17571
mar09 11730 7052 18782 3% 18219 2337 20556 10% 19418
apr09 11740 6986 18726 3% 18164 2326 20490 0% 20490
may09 11740 6986 18726 3% 18164 2326 20490 3% 20149
jun09 11740 6572 18312 3% 17772 2277 20049 3% 19707
JUL07-JUN09
DEL- HKG RETURN FARE

45000
40000
35000
30000
25000
Axis Title 20000 NN After PLB

15000 YQ + YR
Pub. Fare
10000
5000
0 08
08
09
09
7
8
7
8
8
9
7
8
v0
v0
p0
p0
n0
n0
l0
l0
ay
ay
ar
ar
ju
ju
no
no
se
se
ja
ja
m
m
m
m
Axis Title
 Fuel component (YQ + YR) shows overall decline from3960 in jul07 to 6572 in jun09
but highest in nov08 i.e. 10534
 Published fare also follow the same trend i.e. decline from24000 in jul07 to 11740 in
jun09
 Net fare shows smooth trend from july07 to mar08 & then shows major up down
variations i.e. highest in nov08 i.e. 34702 and lowest in feb09 i.e17571
 From apr08-jul08, the rise in net fare was due to the additive effect of fuel surcharge.
 Fuel surcharge increased due to the ATF hike.
 From mar09-jun09, the net fare increase because of the more commission given to the
agents.
 The major foreign airlines which dominate on this route are Singapore and Cathay
Pacific airline. Cathay Pacific use Jumbo 747-ER and 747-LR aircrafts which covers
the destinations beyond Delhi. The operating cost per kilometer reduces because of
the long run distance, resulting into less operating cost and thus less fare.
 AIRINDIA is unable to operate Jumbo because of the less load factor and seat utilizati
DELHI TO TOKYO (DEL-TYO)

ONE WAY FARE
Fare YR Fare Fare
jul07 20150 2537 22687 3% 21680 225 2190 0% 21905

5
aug07 20150 2554 22704 3% 21697 225 2192 0% 21922
2
sep07 20150 2554 22704 3% 21697 225 2192 0% 21922
2
oct07 20150 3271 23421 3% 22414 225 2263 0% 22639
9
nov07 20150 3277 23427 3% 22420 225 2264 0% 22645
5
dec07 20150 3277 23427 3% 22420 225 2264 0% 22645
5
jan08 20150 3660 23810 3% 22803 225 2302 0% 23028
8
feb08 20150 3695 23845 3% 22838 225 2306 0% 23063
3
mar08 20150 3785 23935 3% 22928 225 2315 0% 23153
3
apr08 20150 4530 24680 3% 23673 225 2389 0% 23898
8
may08 20150 5667 25817 3% 24810 225 2503 0% 25035
5
jun08 20150 5695 25845 3% 24838 225 2506 0% 25063
3
jul08 20150 5723 25873 3% 24866 225 2509 0% 25091
1
aug08 20150 5562 25712 3% 24705 225 2493 3% 24355
0
sep08 20150 5859 26009 3% 25002 225 2522 3% 24652
7
oct08 20150 6390 26540 3% 25533 225 2575 3% 25183
8
nov08 20150 6259 26409 0% 26409 225 2663 0% 26634
4
dec08 20150 6350 26500 0% 26500 225 2672 10% 24710
5
jan09 20150 6429 26579 3% 24020 225 2424 3% 24052
5
feb09 20150 6478 26628 3% 25829 225 2605 10% 24100
4
mar09 10480 6478 16958 3% 16764 1529 1829 0% 18293
3
apr09 10480 2871 13351 3% 13265 1529 1479 0% 14794
4
may09 11295 2822 14117 3% 14032 1529 1556 0% 15561
1
jun09 12000 2712 14712 3% 14280 1529 1580 3% 15459
9
JUL07-JUN09
DEL-TYO ONE WAY FARE
60000
50000
40000
30000
Axis Title NN After PLB
20000 YQ + YR
Pub. Fare
10000
0
08
09
08
09
7
8
7
8
8
9
7
8
v0
v0
p0
p0
n0
n0
l0
l0
ay
ay
ar
ar
ju
ju
no
no
se
se
ja
ja
m
m
m
m
Axis Title
OBSERVATIONS & FINDINGS:

 Fuel component (YQ + YR) show rising trend from 2537in jul07 to 6478 in feb09
then major dump & lowest in apr09 i.e. 2871
 Published fare also follows the same trend as that of fuel component from 20150 in
jul07 to 12000 in jun09.
 Net fare show drastic dump from 21905 in jul07 to 14794 in apr09 but shows upward
trend jul07-nov08.
 The dominating airline on this route is JAAL airline of Japan with the load factor of
60%-65%.
 From may08-nov08, the bounce in net fare is due to the additive effect of fuel
surcharge.
 Fuel surcharge increase due to the ATF hike.
 From feb09-apr09, JAAL airline drop their fares drastically and due to the
competitive pricing, AIRINDIA has to do the same.
 JAAL airline covers the destinations, across the globe, from TYO to DEL and then
FRA. The long distance coverage thus reducing per unit operational cost.
DELHI TO TOKYO (DEL-TYO)
RETURN FARE
Period Pub. YQ + Gross Commissio Net Other TTL PLB/ NN After

Fare YR Fare n Fare Taxes INC PLB
jul07 31000 4774 35774 3% 34224 225 3444 0% 34449

9
aug07 31000 4808 35808 3% 34258 225 3448 0% 34483
3
sep07 31000 4808 35808 3% 34258 225 3448 0% 34483
3
oct07 31000 6242 37242 3% 35692 225 3591 0% 35917
7
nov07 31000 6454 37454 3% 35904 225 3612 0% 36129
9
dec07 31000 6248 37248 3% 35698 225 3592 0% 35923
3
jan08 31000 7020 38020 3% 36470 225 3669 0% 36695
5
feb08 31000 7090 38090 3% 36540 225 3676 0% 36765
5
mar08 31000 7270 38270 3% 36720 225 3694 0% 36945
5
apr08 31000 8760 39760 3% 38210 225 3843 0% 38435
5
may08 31000 11034 42034 3% 40484 225 4070 0% 40709
9
jun08 31000 11090 42090 3% 40540 225 4076 0% 40765
5
jul08 31000 11146 42146 3% 40596 1054 4165 0% 41650
0
aug08 31000 11146 42146 3% 40596 1054 4165 0% 41650
0
sep08 31000 12218 43218 0% 43218 1214 4443 0% 44432
2
oct08 31000 12218 43218 0% 43218 1214 4443 0% 44432
2
nov08 28000 12400 40400 0% 40400 1316 4171 10% 38916
6
dec08 28000 12400 40400 0% 40400 1316 4171 10% 38916
6
jan09 28000 12558 40558 3% 37002 1330 3833 3% 37955
2
feb09 28000 12656 40656 3% 39436 1356 4079 10% 38076
2
mar09 17460 12656 30116 3% 29736 2656 3239 0% 32392
2
apr09 17460 5442 29902 3% 22739 2607 2534 0% 25346
6
may09 18820 5344 24164 3% 24004 2574 2657 0% 26578
8
jun09 20000 5124 25124 3% 24379 2535 2691 3% 26332
4
JUL 07- JUN 09
DEL-TYO RETURN FARE
100000
90000
80000
70000
60000
50000
Axis Title NN After PLB
40000
YQ + YR
30000 Pub. Fare
20000
10000
0 08
09
08
09
7
8
7
8
8
9
7
8
v0
v0
p0
p0
n0
n0
l0
l0
ay
ay
ar
ar
ju
ju
no
no
se
se
ja
ja
m
m
m
m
Axis Title
 Fuel component(YQ + YR) shows rising trend from 4774 in jul07 to 12400 in nov08
then show downward trend from 12400 in nov08 to 5124 in jun09 with lowest in
apr09.
 Published fare shows smooth trend from 31000 in jul07 to 28000 in nov08 then shows
downward trend from nov08-jun09 with lowest in month of mar09i.e 17460
 Net fare shows drastic change from 34449 in jul07 to 26332 in jun09 with rise trend
from jul07 –nov08 then major dump from feb09-jun09 with lowest in apr09 i.e. 32392
 The dominating airline on this route is JAAL airline of Japan with the load factor of
60%-65%.
 From may08-nov08, the bounce in net fare is due to the additive effect of fuel
surcharge.
 Fuel surcharge increase due to the ATF hike.
 From feb09-apr09, JAAL airline drop their fares drastically and due to the
competitive pricing, AIRINDIA has to do the same.
 JAAL airline covers the destinations, across the globe, from TYO to DEL and then
FRA. The long distance coverage thus reducing per unit operational cost.
DELHI TO LONDON (DEL-LON)
ONE WAY FARE
Fare YR Fare Fare
jul07 13500 3553 17053 3% 16378 225 1660 0% 16603

3
aug07 17000 3568 20568 3% 19718 225 1994 0% 19943
3
sep07 13500 3469 16969 3% 16294 225 1651 0% 16519
9
oct07 13500 3469 16969 3% 16294 225 1651 0% 16519
9
nov07 13500 3869 17369 3% 16694 225 1691 0% 16919
9
dec07 13500 3869 17369 3% 16694 225 1691 0% 16919
9
jan08 17000 3857 20857 3% 200007 225 2023 0% 20232
2
feb08 13570 4095 17665 3% 16987 225 1721 0% 17212
2
mar08 18000 4144 22144 3% 21244 225 2146 0% 21469
9
apr08 17000 4923 21923 3% 21073 225 2129 0% 21298
8
may08 17000 5965 22965 3% 22115 225 2234 0% 22340
0
jun08 12990 6127 19117 3% 18468 225 1869 0% 18693
3
jul08 15000 6131 21131 3% 20381 225 2060 3% 20179
6
aug08 15000 5983 20983 3% 20233 225 2045 0% 20458
8
sep08 15000 5983 20983 3% 20233 225 2045 0% 20458
8
oct08 15000 6304 21304 0% 21304 225 2152 10% 20029
9
nov08 15000 6304 21304 0% 21304 225 2152 10% 20029
9
dec08 6930 6834 13764 0% 13764 225 1398 5% 12643
9
jan09 6930 6919 13849 3% 13305 225 1353 5% 13322
0
feb09 4830 7242 12072 3% 11711 1529 1324 5% 13006
0
mar09 4830 6933 11763 3% 11410 1529 1293 5% 12705
9
apr09 4830 7242 12072 3% 11710 1529 1323 5% 13005
9
may09 4830 7108 11938 3% 11580 1529 1310 5% 12875
9
jun09 6230 6813 13043 3% 12661 1529 1419 5% 13888
0
JUL 07-JUN
25000
20000
15000
Pub. Fare
Axis Title
10000 YQ + YR
NN After
PLB
5000
0
7
9
7
9
t0
b0
n0
t0
b0
n0
g0
g0
c0
r0
c0
r0
oc
oc
de
de
ap
ap
au
au
fe
fe
ju
ju
Axis Title
DEL-LON ONE WAY FARE
 Fuel component (YQ + YR) shows overall rise from 3553 in jul07 to 6813 in jun09.
 Published fare shows zig zag trend during period jul07-jun08 then shows major dump
in the month of dec08.
 Net fare also shows the zig zag trend with overall rise from jul07 to nov08 then
sudden fall in dec08 then smooth rise trend follows.
 The dominating airlines on this route are Virgin airline, Lufthansa airline, British
Airways, Ethihad Airways with AIRINDIA.
 The rise in net fare was due to the more demand in jul07. The net fare increase w.r.t
the published fare because of the commission given to the agents and fuel surcharge
also increase.
 The fuel surcharge increase due to the ATF hike.
 The zigzag motion is due to the comparative fares w.r.t the other foreign airlines.
DELHI TO LONDON (DEL-LON)
RETURN FARE
Fare YR Fare Fare
jul07 23900 6806 30706 3% 29511 3499 3301 0% 33010

0
aug07 26900 6836 33736 3% 32391 3537 3592 0% 35928
8
sep07 23900 6858 30758 3% 29563 3557 3312 0% 33120
0
oct07 23900 6636 30536 3% 29341 3454 3279 0% 32795
5
nov07 23900 7446 31346 3% 30151 3531 3368 0% 33682
2
dec07 19990 7414 27404 3% 26405 3328 2973 0% 29733
3
jan08 19990 7414 27404 3% 26405 3328 2973 0% 29733
3
feb08 24240 7890 32130 3% 30918 3326 3424 0% 34244
4
mar08 24500 8088 32588 3% 31363 3541 3490 0% 34904
4
apr08 23900 9546 33446 3% 32251 4151 3640 0% 36402
2
may08 21800 11630 33430 3% 32340 3498 3583 0% 35838
8
jun08 21800 11954 33754 3% 32664 3627 3629 0% 36291
1
jul08 22900 11962 34862 3% 33717 5324 3904 3% 38389
1
aug08 22900 11824 34724 3% 33579 5264 3878 0% 38782
2
sep08 22900 11824 34724 3% 33579 5264 3878 0% 38782
2
oct08 22900 9900 32800 3% 31697 4744 3644 10% 32800
1
nov08 22900 9900 32800 3% 31697 4744 3644 10% 32800
1
dec08 9900 13368 23268 0% 23268 4582 2785 5% 25355
0
jan09 6900 13538 20438 3% 19896 4595 2449 3% 24085
1
feb09 6900 13566 20466 3% 19852 6021 2426 5% 23929
4
mar09 6900 13566 20466 3% 19852 5712 2556 5% 25229
4
apr09 6900 14184 21084 3% 20451 6020 2647 5% 26137
1
may09 6900 13919 20819 3% 20194 6087 2628 5% 25947
1
jun09 8900 16026 22226 3% 21568 6379 2794 5% 27516
7
JUL 07-JUN 09
DEL-LON RETURN FARE
45000
40000
35000
30000
25000
Axis Title 20000 Pub. Fare

YQ + YR
15000
NN After PLB
10000
5000
0
7
8
7
9
8
9
7
8
g0
g0
c0
r0
c0
r0
b0
n0
b0
n0
t0
t0
oc
oc
de
de
ap
ap
au
au
fe
fe
ju
ju
Axis Title
 Fuel component (YQ + YR) shows overall rise trend from 6806 in jul07 to16026 in
jun09.
 Published fare shows drastic dump from 23900 in jul07 to 8900 in jun09 with major
downfall nov08- may09.
 Net fare shows upward trend from 33010 in jul07 to 38782 in sep08 then major
decline in sep08-feb09.It shows overall decline trend.
 The dominating airlines on this route are Virgin airline, Lufthansa airline, British
Airways, Ethihad Airways with AIRINDIA.
 The rise in net fare was due to the more demand in jul07. The net fare increase w.r.t
the published fare because of the commission given to the agents and fuel surcharge
also increase.
 The fuel surcharge increase due to the ATF hike.
 The zigzag motion is due to the comparative fares w.r.t the other foreign airlines.
CHAPTER-6
INTERPETATION OF FARES TREND (INTERNATIONAL)
Fares are fluctuating because of following reasons:
 The fluctuations in fares at these international routes are due to cyclic variation in
aviation industry. Aviation industry is in trap of recession from last two year and the
overall growth is also declining.
 As far as fuel component (YQ+YR) is concerned, the ATF hike is one of the
dominating factors in fluctuation of the fares.
 The fares of other international airlines also affect the fares of AIRINDIA because of
the market characteristics and competition.
 AIRINDIA is losing its market share because of the declining capacity utilisation and
load factor. The other airlines thus fetching up the passengers.
 Published fare decline due to recession that is still affecting the aviation industry. So
to maintain the loyal passenger AIRINDIA lower down its fares.
 Most of the airlines have big pockets i.e. they can afford losses but the same story is
opposite in case of AIRINDIA.
 Most foreign Airlines use Jambo747-ER and 747-LR aircraft on the particular route
that covers the long journey resulting into lowering down per unit cost.
 The fare trends fluctuate because of the financial condition of the AIRLINE itself.
 The Foreign Airlines i.e. Emirates, Cathay Pacific, Gulf Air, Singapore Airlines are
dominating at their particular routes and much potential in terms of finance.
CHAPTER-7
NEW DESTINATIONS
A. DOMESTIC
There are a few destinations which have not been exploited to the maximum. This is because
of the proximity of these places via road and rail transport. Two of these places are Agra and
Uttarakhand. Both of the places have a substantial number of tourists coming to these places
every year.
Agra gets a good number of international tourists as it has the Taj Mahal which is one of the
seven wonders of the world. Agra also has a few other sites which are of historical
importance. A flight can be started from Delhi to Agra by an ATR so that it can be
commercially viable. The seats offered should be in only economy class as the time of flight
will be very less.
Uttarakhand is a destination which attracts mostly domestic tourist as it has a lot of places
having religious significance. It has an airport 25 kms away from capital city, Dehradun,
which has been recently upgraded to handle A 320 fleet as well. Dehradun is the centre from
where pilgrims can go to Badrinath, Kedarnath, Haridwar, Rishikesh etc. and holiday tourist
can go to places like Mussoorie. Kingfisher Red is the only big operator on this route offering
a ticket at Rs. 8500. As the flight duration is only for 45 minutes the seats should be offered
only in the economy class.
Both the places can fetch good business for LCCs segment with both the places attracting
many domestic and international tourists. It should be kept in mind that airlines would not be
competing on these routes not only with competitor airlines but also with road and rail
transport. Therefore, the airlines should make the marketing mix accordingly.
Destinations not covered by Air India

Out of all destinations where Air India doesn’t fly in the domestic sector, there are six
destinations where Jet Airways flies and thirteen destinations where Kingfisher flies. There
are three destinations to which both Kingfisher and Jet Airways fly. The table 6.1 shows the
destinations to which Kingfisher flies and Air India doesn’t fly and their frequency. The table
6.2 shows the destinations where Jet Airways flies and Air India doesn’t.
Table 6.2: Destinations where Kingfisher flies and Air India doesn’t
Destination City connected Flights/week
Belgaum Bangalore 4
Bhavnagar Mumbai 7
Bhuj Mumbai 7
Nagpur (via Mumbai) 7
Dharamsala Delhi 7
Hubli Bangalore 7
Mumbai 7
Hyderabad (via Bangalore) 7
Kandla Mumbai 7
Kolhapur Mumbai 7
Nasik Mumbai 14
Rajahmundry Hyderabad 7
Vishakhapatnam (via Hyderabad) 7
Sholapur Mumbai 4
Shimla Delhi 14
Tuticorin Chennai 7
Vijayawada Hyderabad 7
Bangalore 7
Table 6.2: Destinations where Jet Airways flies and Air India doesn’t
Destination Connecting city Flights/week
Bhavnagar Mumbai 7
Bhuj Mumbai 14
Diu Mumbai 6
Gorakhpur Delhi 5
Porbandar Mumbai 6
Rajahmundry Hyderabad 6
The fig 6.1 shows the number of flights originating from the destinations where Air India
doesn’t fly and Kingfisher or Jet flies.
Figure 6.1: Existing flights from where only Kingfisher or Jet Airways fly
21
16
15
14 14 14 14 14 14
13 13
12
11
10
9
8
7 7 77 7
6 6 6
5 5
4 4 4
3
2
1
Go Diu
Tu a
uj
sik
i
Ko la
um
jay n
a
la
ur
ur
r
r
r
Sh y
bl
ga
da
pu
ad
i
Sim
dr
nd
Bh
sa
or
ap
Hu
ap
Na
lga
na
an
aw
un
kh
am
tic
Ka
ol
lh
av
Be
rb
ra
m
ar
Bh
jah
Po
Dh
Vi
Ra
According to the number of flights originating from a destination following are the top six
potential destinations:
 Bhuj
 Bhavnagar
 Hubli
 Nasik
 Shimla
 Vijayawada
Jet Airways and Kingfisher both fly to Bhuj and Bhavnagar. The airlines fly only economy
class on the route. The ticket to Mumbai from Bhavnagar is around Rs. 3000 and from Bhuj
is around Rs. 3500. The duration of flights to Mumbai is around an hour from both the
destinations. The destinations are attractive for operating smaller planes in the LCC business
model.
Hubli is a city in Northern Karnataka and is situated 20 KM from Dharwad which is the
commercial and business centre for Northern Karnataka. It is connected to Mumbai,
Bangalore and Hyderabad (via Bangalore) with 14 flights per week departing from Hubli.
Kingfisher’s LCC Kingfisher Red is the only carrier flying from Hubli.
Nasik is located in Maharashtra around 180 Km from Mumbai and is referred as the “Wine
capital of India”. Nasik is the third most industrialized city after Mumbai and Pune in
Maharashtra. Nasik is also connected by Kingfisher Red to Mumbai and has very low fares
of around 1500 and duration of flight to Mumbai to around an hour.
Vijayawada is the third largest city of Andhra Pradesh and has gained the name of Business
capital of Andhra Pradesh over the years. It is 275 Km from Hyderabad and is connected to
Hyderabad and Bengaluru Kingfisher Red with prices around 4500 for Hyderabad and 3000
for Bengaluru.
Shimla is the capital of Himachal Pradesh and is a popular tourist destination. It is 365 Km
from New Delhi by Kingfisher Red. The fare on the route is high with prices around Rs 9500.
All the six destinations have varying level of fares but are operated primarily by Kingfisher
Red using the ATR aircraft (except for Bhuj where Kingfisher operates 320). The destinations
have short duration flights with capacity in each flight varying around 50. These destinations
can be attractive if operated in the LCC mode.
CHAPTER-8
SWOT ANALYSIS OF AIR INDIA
Strengths:
 It has the best Reach among the players.
 It has the largest and the most diverse fleet strength.
 Air India has a wide range of promotional schemes among the players. It offers the
best coupon schemes amongst the airlines and provides the covers a broader market
in terms of discounted fares provided compared to Jet and Kingfisher.
 It has the best holiday packages in terms of number of destinations covered and
combinations offered. Prices of the holiday packages are also competitive.
 It has strong Brand name and oldest Airline.
 It has strong Govt.backup & monopoly in various international routes.
 It has established infrastructure and prime parking slots & space
Weaknesses:
 Manual inventory management compared to automated inventory management used
by Jet and Kingfisher
 Despite best fleet and reach Air India is only third in terms of market share. The
seat factor was lowest among the players for the first quarter of 2009.
 Poor HR Strategies and management.
 Poor cost control and loss of market.
 Highest manpower ratio to aircraft.
 Air India lags behind Jet Airways and Kingfisher in terms of airline and non airline
partners. This is significant for the FFP especially when the three FSCs offer similar
benefits to the passengers.
Opportunities:
 As per “Airports Authority of India, Foundation for Aviation & Sustainable Tourism”,
the domestic traffic will witness a six to seven percent growth till 2017. The growth
presents an opportunity to improve capacity utilization.
 It can tap the various international routes where other airline is not operating as it
has wide code sharing.
 Airlines can charter into routes where there are very less players operating and can
gain a competitive advantage.
Threats:
 LCCs have become strong players and eating the market share of FSCs. The market
share of Indigo and Spice jet increased to 14 percent and 12 percent from 10 percent
each last year.
 There has been an alliance between Jet and Kingfisher who together own more than
50 percent of capacity and the market share.
 Only FSC without a well famed LCC in the domestic market.
Challenges:
 Shedding the negative image of Air India.
 Excess capacity leading to frequent fare drops/ dilution of yields.
 Prolific Expansion of low cost carriers.
 Retaining customers who have experienced deficiency in services.

 Resource and Strategic Management
 Regaining the faith and reliability on MAHARAJA i.e. AIR INDIA
Problems:
 Lack of selling efforts in interior cities.
 Tracking of productivity data for various incentive or PLB schemes.
 Agents not authorized to re-issue or revalidate tickets on international ticketing.
 Interface problem between GDS system.
 Inadequate staff in customer interface areas such as Reservations, Sales, etc. which
hampers effective customer services.
 Poor attention towards the Passenger and service quality.
FUTURE PLANNING AND PROMOTIONAL SCHEMES
 AIR INDIA is going to create F&J cell to promote High Yield Business in Mid
August09.
 Dedicated sales officer for customized servicing of F&J passengers.
 Compilation of Exhaustive data bank of High net worth passengers, corporate, CEO’s
etc.
 Development of newsletter to high yield passengers with updates of products,
schemes etc.
 Personalized letter to potential and actual F&J passengers for post flight feedback.
 Enhancing reach to Trade Bodies such as ASSOCHAM, FICCI, CII etc.
 Special deals with corporate and GOI.
 Participation through sponsorship in high profile events.
 Conducting road show/Presentation to Agents and Corporate highlighting the New
AIR INDIA.
 Integration of NACIL and Sales team.
 Companion free scheme for West-USA/EUROPE up to Nov09.
 AIR INDIA will launch bonus free travel for spouse in first and executive class (F&J)
for Paris, London and New York.
 AIR INDIA will offer 30KGS free Baggage allowance for travel to London, Paris and
FRA.
 Complimentary pick-up and drop for F&J class passengers till 31st march 2010.
 AIR INDIA is going to Introduce New One India D.G.C.A commissionable fares in
August09.
 AIR INDIA is offering 3% IATA commission on basic fare plus fuel surcharge till
March 2010 and no Fuel surcharge will be charged on infant fares from India to
USA/CAN/UK/EUR.
 Introduction of Corporate Super Saver Scheme to strengthen the high yield
passengers.
 Special discounted Domestic and International night fare (25%) between 2300 to
0500 hrs. from Sep09 onwards.
RECOMMENDATIONS & SUGGESTIONS
Air India is a strong player in the market with the potential to become the leader once again.
It covers widest range of destinations, has the best fleet and offers competitive fares. Based
on the study following areas can be targeted in the quest to become the leading Indian player.
 Evaluating new destinations to Agra, Uttarakhand, Bhuj, Bhavnagar, Hubli, Nasik,

Shimla, and Vijayawada to better utilize capacity and increase overall seat factor.
 Implement dynamic pricing. Currently the pricing is not correlated to other players
and can lead to a high response time to change in market.
 Evaluating possibility of launching or acquiring an LCC to compete with the rapidly
growing Indigo and SpiceJet and to get to a level field with Kingfisher and Jet
Airways.
 Publicity blitzes focused on Products/Fares/Special Offers.
 Good PR with media to avoid negative publicity.
 Using the Sports personalities on our rolls, for publicity and sales promotion.
 Participation in Mega events such as World class sports events, Cultural shows etc.
 Using customer data base for direct publicity using SMS blast.
 Updating passengers through in –flight announcements and magazines.
 Develop software for effective tracking of productivity for successful implementation.
 Built up Preferred agent Scheme which will give major boost to sales efforts.
 Adequate number of trained staff at Customer contact points viz. call center, sales,
reservation, airport and in-flight.
 Sales kit for sales officer including Laptops and internet facility.
 Allow agents to re-issue tickets on international ticketing.
 Valet services for F & J passengers and use of premium cars for limo services.
 Creation of informative and interactive web portal for agents /passengers.
 Adopting flexible nature in corporate deals with the aim of getting F&J passengers.
Once business is retained, yield can be increased.
 Have to have a popular Brand Ambassador.
REFERENCES
 Dieter Westermann (2005), (Real time) dynamic pricing in an integrated revenue

management and pricing environment: An approach to handling undifferentiated fare
structures in low-fare markets, Journal of Revenue and Pricing Management Vol. 4.
 Paolo Malighetti, Stefano Paleari, Renato Redondi (2000), prices strategies of l

airlines: The Ryan air case study, Journal of Air Transport Management,
doi:10.1016/j.jairtraman.2008.09.017.
 Barry C. Smith, John F. Leimkuhler, Ross M. Darrow, Yield Management at American

Airlines, Franz Edelman Award Papers (Jan. - Feb., 1992), Vol. 22.
 http://www.indianairlines.in/index.aspx
 http://www.airindiaholidays.in
 http://www.indiastat.com
 www.iata.org
 www.dgca.nic.in
 www.airindia.com
 Air India Data Base

APPENDICES
Appendix A: Fleet
Appendix A.1
NACIL Passenger Fleet
Capacit
Aircraft Owned Leased Orders Notes
y
4 owned, 3 dry leased, 2 wet leased;

202 operated by Air India; will be replaced by
Airbus A310-
4 4 0 the Boeing 787-8.
300
4 owned will be converted to freighters
for Air India Cargo.
Airbus A310
4 - - Operated by Air India
Freighter
144
Airbus A319-
11 5 9 120 Operated by Indian Airlines
100
122
Airbus A320- 146 Operated by Indian Airlines, All old

30 16 4
200 124 A320-200s will be replaced by 2014.
Airbus A321- 172

12 0 8 Operated by Indian Airlines.
200
Airbus A330- 279 Operated by Air India; will be replaced

0 2 0
200 by the Boeing 787-8.
ATR 42-320 0 7 0 48 Operated by Indian Airlines
Stored since 2000s; previously operated

Boeing 737- 119 by Air India Regional (Alliance Air);
6 0 0
200/Adv converted to freighters for Air India
Cargo.
Boeing 737- 119

7 - - Operated by Indian Airlines
200
Boeing 737- 15 7 4 189 Operated by Air India Express.

800 186
Boeing 747- 293 Operated by Air India; to be retired by

6 0 0
400 2016.
Boeing 777- 272

0 1 0 ex-United Airlines; operated by Air India.
200
Boeing 777- 292 Ex-United Airlines; operated by Air

0 3 0
200ER India.
Boeing 777- 238 Operated by Air India, exclusively for

5 0 3
200LR 241 non-stop flights to the United States.
Boeing 777- 300

5 0 10 Operated by Air India.
300ER
Will be operated by Air India; to replace

Boeing 787-8 0 0 27
all dry leased A310-300s and A330-200s.
Bombardier 74
0 4 0 Operated by Indian Airlines.
CRJ700
Total 105 49 65
Source: - DGCA
Airline Partners
19 partners
Code- sharing
8 code share partners.
Conversion Partners
10 conversion partners
Hotel Partners
20 hotel partners
Other Partners
8 other partners

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TABLE OF CONTENTS

 Consolidation of the market

Year Passenger (Million) % growth

2005 28.4 28.6

2006 40.1 41.4

2007 47.2 17.6

C. TERMS AND DEFINITIONS

A. MARKET STRUCTURE- DIFFERENTIATED OLIGOPOLY

B. FACTORS AFFECTING CONSUMER PERCEPTION

E. FREQUENT FLIER PROGRAMS

3.01 INTRODUCTION: AIRINDIA

Table 1: Important Information about Air India

3.02 HISTORY OF AIR INDIA

3.03 Passenger operations:

3.04 Maharajah Lounges:

3.05 SUBSIDIARY AIRLINE:

3.06 Merger of Air India and Indian:

3.07 Cargo operations:

CURRENT GLOBAL NETWORK, (REGON WISE)

UK London And Birmingham

Europe Paris And Frankfurt

Asia pacific Bangkok, Dhaka, Hong Kong, Jakarta,

Gulf and Middle Abu Dhabi, Bahrain, Dammam, Doha,

USA And Canada Chicago, Los Angeles, New Jersey, New

Africa Dar-es-Salaam and Nairobi.

3.10 FUTURE STRATEGIES:

CHAPTER 4: COMPETITIVE ANALYSIS

A. MAJOR PLAYERS IN THE AVIATION INDUSTRY

Volume for domestic airlines in Apr 09

Kingfisher &K- Kingfisher &Kingfisher Red

Figure 4.3: seat factor for domestic airlines in April 09

Capacity for domestic airlines in Apr 09

Kingfisher 1210244 759274 63% 12% 11% -1

a) Comparison of seat factor for major players month wise (Ex-Delhi)

70% NACIL (I)

Jet Airw ays

Table 4.4: Market performance of different players on Delhi-Kolkata route

 Delhi-Kolkata (DEL-CCU): Kingfisher has the maximum number of flights to

 Delhi-Chennai (DEL-MAA): Air India has the maximum number of flights

Delhi-Bangalore (DEL-BLR): Kingfisher has the maximum number of flights

Figure 4.6: Comparison of Total No. of aircrafts with Domestic Airlines

variety of fleet with Air India

Figure 4.8: Variety of fleet with Jet Airways

variety of fleet with Jet Airways

Figure 4.9: Variety of fleet with Kingfisher

Table 4.8: comparison of players according to seat capacity ranges of fleet

NACIL (IC 306 94 50 56

Fares might be Published or Unpublished:

DATABASE REGARDING FARES

MUMBAI (BOM) DUBAI (DXB)

KOLKATA (CCU) SHANGHAI (SHA)

CHENNAI (MAA) HONG KONG (HKG)

BANGLORE (BLR) TOKYO (TYO)

HYDRABAD (HYD) LONDON (LON)

Airline d day d+1 d+10 d+20 d+30 d+45

 There is variation in the fares regarding the proximity of date of departure. It is

Average Fares for Del-Ccu Route

Air India (IC) Kingfisher Kingfisher Red Jet Airways

d+1 d+10 d+20 d+30 d+45

The following observations were made from the data:-

 There is variation in the fares regarding the proximity of date of departure. It is

Average Fares for Del-Maa Route

Air India (IC) Kingfisher Kingfisher Red Jet Airways