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Group Presentation MARKETING

AIR DECCAN

The Story of Indias First Low Cost Airline

AIR DECCAN

Aviation Industry in India


Before 1953 - The History Feb-1911 A distinct Start - First Flight by Aero plane piloted by French Pilot Mr. Picquet Flewfrom Allahabad to Naini In Oct-1932 - Own Airlines Tata Sons Ltd.( later converted into Air India international) 1933 Indian National Airways and 1937 Air Service of India (1953-1990) The era of Govt. Dominance Strict Interference by Govt. of India through Air Corporation Act, 1953 Nine Existing AIR Companys Assets transferred to TWO DOMINANT Players INDIAN AIRLINES, Primarily serving Domestic Sector

AIR INDIA INTERNATIONAL serving International Sector


(1990-1993) Semi Liberalized Govt. Policy Private Sectors allowed to operate as Air Taxi Operator but not in Scheduled Services New Entrances Jet, Air Sahara, Modiluft, Dalmiya Airways, AEPC Airlines, East West Airlines (1994-2004) Fully Liberalized Govt. Policy
Air Corporation Act Repealed - Pvt. Carriers allowed to operate in Scheduled Services
Only Two continued Jet & Sahara August 2003 AIR DECCAN Ventured into Scheduled Services 2005 Four New entrances Spice Jet, Go Air, Kingfisher and Paramount

Aviation Industry in India (Cont)

Recent Development in Aviation Industry:

Naresh Chandra Committee Report Road Map for Civil Aviation Sector Domestic Air Lines being Allowed to Fly Overseas

Emergence of no Frills Airlines

Present Key Industry Characteristics

Highly under penetrated Market (Average Air Travel is 0.014 trips per person

per year against 2.02 trips per person per year in US)
High fixed cost operating environment (High fuel charges as compare to International Airlines) Regulatory and Infrastructure constrains Relatively limited reach across the country

Aviation Industry in India (Cont)


What are the Sector operating in Industry? What are the Key Demand Drivers?
High Economic Growth Increasing Consumerism and Affordability Growth in Tourism

Air Cargo

NonScheduled

Domestic

International

What is the Growth in Domestic Sector over the last eight years?
20
Passnegers in Millions

19.9 15.7 11.2 11.55 12 12.7 13.7 12.8 13.9

15 10 5 0 7991 8991 9991 0002

1002
Year

2002

3002

4002

5002

Deccans Entry in Aviation Sector


Commenced operation as chartered aircraft service provider in 1997 Initially Helicopter service

2001 it added first fixed-wing aircraft


2003 got permission to operate in Scheduled sector Currently operates in two segments: Non-Scheduled Sector No. of Helicopters

10

No. of Fixed-wing Aircraft


Scheduled Sector
Air Craft Type ATR No. of Passengers 48 48 72 Airbus 180 Model 42-320 42-500 72-500

12

No. of Air Craft 5 9 4 11

Avg. Age in years 12 8.56 3 3

A320-200

Competitive Landscape in Domestic Sector


Particulars Year of Operation Description
AIR DECCAN

Jet Airways 1995


Pvt. Full service carrier operates on domestic and selected international route

Air Sahara 1996


Pvt. Full service carrier operates on domestic and selected internationa l route

Indian Airlines 1953


Govt. Airline operates on Domestic as well as Internatio nal route

Spice Jet 2005


Pvt. Low Cost Airline operates on domestic route

Kingfishe r 2005
Pvt. Airline operates on domestic route

Go Air 2005
Pvt. Low Cost Airline operates on domestic route

Paramou nt 2005
Pvt. Airline operates on domestic route

2003
Pvt. Low Cost Airline operates on domestic route

Fleet Size Fleet type

29 ATR 42, 72 and Airbus A320

53 Airbus 340, Boeing 737 and ATR 72 43 306

27 Boeing 737 and CL 600

70 Airbus A300 A320 and Dornier D-228 58 294

5 Boeing 737

9 Airbus A320

2 Airbus A320

1 Embraer

No. of Domestic Destination No. of Domestic Flights

52 226

24 134

11 67

15 88

15 28

6 17

Competitive Strength
New Business Model:
No Frills, low-cost Business Model. It includes
Low Fares

More choice for selecting Routes


Reduced cost High air-craft utilization Ancillary services

Strength
First Mover Advantage Simplyfly! Strong Management Team Load Factor and Yield Management by Dynamic Pricing

Consumer Behaviour

Targeting and Positioning


Targeting
Targeted Three Market segment
Leisure Travelers Business Travelers Corporate Travelers

Positioning as a low cost carrier


Offers no in-flight service Single class aircraft configuration Internet booking and cheap fares

Marketing Strategy & Branding


Strong focus on Low Fare Communicates value proposition through public relations, advertising, direct marketing, internet. Emphasis on fly made possible and better lifestyle through Air travel To convey messages it used R.K.Laxmans Celebrated Indian Mascot the Common Man as its Brand Ambassador Offers ticket package called Value Flier to the Leisure Customers Advertised through Print, Radio and billboards and to the lesser extent Television

Marketing Strategy & Branding


Advertising Agreement with Bennet, Coleman & Co. Ltd. to advertise through print media for four years. In-flight Magazine for revenue generating. In-flight Shopping Scheme called Brand for Less - AVA Merchandising In-flight Advertising Cutting Edge Media Tie-up with Cafe Coffee Day

Flight Fare Comparison


Place Mumbai-Bangalore Mumbai-Delhi Mumbai-Chennai Delhi-Bangalore Delhi-Mumbai Delhi-Chennai Chennai-Bangalore Chennai-Mumbai Chennai-Delhi Bangalore-Chennai Bangalore-Mumbai Bangalore-Delhi Deccan Air Economy Class 2224 2024 1724 7274 2024 4749 824 3278 3224 1249 1524 5424 Spice Jet Economy Class 2399 2599 2799 7399 2899 5799 1399 3199 4499 1199 2699 6499 Go Air Economy Class 3100 3400 3600 N.A. 3200 5900 N.A. N.A. 3900 N.A. N.A. N.A. Air India Economy Class 2962 3171 3335 N.A. N.A. N.A. 1481 N.A. N.A. 2962 3171 3335

Selling and Distribution Strategy


Centralized Reservation System (CRS) Direct Selling:
Internet Booking System (approx. 31% of the ticket Booking) 24/7 Call centre (approx. 9% of the ticket Booking) Airport Desk (approx. 11% of the ticket Booking)

Indirect selling: (approx. 47% of the ticket Booking)


Conventional & Non-Conventional Travel Agents

ICICI-Air Deccan-travel agent purchase card Tie-ups with the HPCL and Reliance Web World

Result
Carried Aprox. 4.1 million passengers Expanded its fleet to 29 aircraft 226 Flights daily
Flight Route for 52 Airports Market Share of 14.2% (present 21%, Second Largest airlines) Lowest EPA of 76
Air Sahara, 9.7 Air Deccan, 14.2

Spice Jet, 6.1

Kingfisher, 7.8 Jet Airways, 36.1

Go Air, 1.8 Paramount, 0.3

Indian Airlines, 23.9

Area of Improvement
In-flight Infrastructure should be upgraded. Proper seat allocation to the passengers. Proper training and education should be provided to the existing employees. Need to increase number of pilots. Need to arrange for more departure gate.

Thanks
If its on the map, we will get you there---Air Deccan