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Presented By: Pankaj Sharma Avinash Patel Vijay Raiyani Ashwin Prajapati Tarun Sharma

Presented To: Shweta Mehta


The Government nationalised the airlines industry in 1953. I. Air India International II. Indian Airlines In 1962, Air India International was renamed Air India Ltd. In 1986,Private Airlines were allowed to operate an Air Taxi scheme. A third government-owned airline, Vayudoot was also a domestic carrier in the early 1990s. By 1994 Indian Airlines had taken over Vayudoot. In 1994, the Government approved 8 eight private carriers to start domestic operations.

Indias two national carriers, which ruled the countrys skies, found it difficult to retain their market share in competitive atmosphere. Indian Airlines that enjoyed a market share of 65 per cent in 1978-98,slid to 38 per cent in 2004-05.

More Players in the Market

1. Air Deccan 2. Kingfisher Airlines 3. Royal Airways Spice jet (Modiluft) 4. Go Air 5. Paramount Airways 6. Indi Go Airlines 7. Indus Airways 8. Premier Airway 9. Air Dravida 10. City Air 11. Eastwest Airlines 12. Kerala Airlines 13. Air Sahara

Problems Specific to Indian Airlines and Air India 1. Marketing Problem Intense Competition by Domestic and International Players 2. HR Problem Huge Staff Strength Poaching of Manpower

3. Finance Problem Problem of higher expenses

4. General Management Problem Controlling in the hands of political leaders

Actions/Strategies of state-owned carriers in the past

Focus on reduced pricing Investments in improving the ground support facilities Increasing the use of capacity Offering excellent customer service Focusing on new brands and logo Utilisation IT Focusing on cargo operations

Actions Suggested by Research Firm Marketing Strategy Improve Customer Care and Public Relations Utilisation IT Advertisement HR strategy To prevent poaching problem Redeploying the existing staff Improving on-time performance

General Management Strategy To create a powerhouse that could withstand growing competition.

Finance Strategy Improve the financial conditions

SWOT Analysis Air India(Strength): 1. Strong Backing by the government of India 2. Brand New Fleet of aircraft 3. It is known for its unique and high quality "Maharaja" advertising 4. Air India has its presence in nearly 19 countries 5. It covers approximately 50 destinations in India

Air India (Weakness):

1. Labour Problems and political intervention is a cause of worry 2. Financial crisis leading to payment issues of employees

Indian Airlines(Strength):

1. Nationwide Connectivity 2. Indian Airlines operates with 63 aircrafts 3. It has good IT support 4. Hub of retail courier services

Indian Airlines(Weakness):
1. Higher Maintenance problem 2. Huge staff strength 3. Lack of infrastructure facilities at airports 4. Shortage of key airports

Opportunities of AIR INDIA & INDIAN AIRLINES 1. Dedicated set of customers. Can leverage on brand new fleet 2. Expansion of routes and international destinations 3. Solving internal issues regarding workforce can hugely boost image and operations


1. Rising Labour Costs 2. Rising Fuel Costs 3. Losing Market Share due to other carriers


1. Concerns of an Airline
Competitive within the airlines-This is the rivalry with other airlines in your existing markets or future markets. Take for example of Malaysia Airlines, The possible market segments are: Geographical markets Demography Travel purposes. Let view one of the segment, geographical for Malaysia. Then we can see straight away the prominent competitor which is Air Asia. The competitor will be one of the considerations for us to develop or strategy.

2. Threat on new entrance

Like the case of the two airlines in Malaysia and Air Asia, there is always possibility that another airline will be formed to service the existing market. The likeliness of another airlines being formed, will depend so much on the barrier to entry and the lucrativeness of the business

3. Threat from substitution

Let have a look at the market segment based on travel purposes. So one of the purpose of travelling is for business dealing, like meeting or discussion. With the advance in internet , some of the discussion can be done online, either trough video conferencing or the simple chatting. Now we can see the real meaning of the threat to substitution.

4. The Power of the Buyers

Some company have small number of customers which purchase a high volume of the products. Taking the example of Malaysian Helicopter Services(MHS) who has customer like SHELL and PETRONS, will acknowledge the power these two buyers have. They can dictate what type of helicopter to operate and the price of the tickets. For airline such as MAS , with multiple segments and without single large customer, the power of buyer is not too obvious.

5. Supplier Power
Some airline operate using a single type of aircraft, for example Boeing. Then the seller, will have greater power over the airline. For that reasons, most airlines will opt for multiple suppliers. It will also has the added advantage of getting a better deal, because the like of Boeing knows that if the deal is not attractive, the airline will go to Airbus.

Current Scenario
The recent growth in the Civil Aviation Sector has been more than encouraging. During the last ten years the growth in passenger traffic has been a spectacular 125 per cent. Domestic and international passenger traffic in India is projected to grow annually at 12.5 per cent and 7 per cent over the next decade. Similarly, Air cargo exports from India are expected to rise from the present 0.8 million tonnes while domestic cargo will rise from 300000 tonnes to over 1 million tonnes by 2010. Liberalization of air services in the last one year has created history, which has resulted into increased connectivity and also helped in lowering fares.

Modernization of 30 airports by 2009 has been proposed by the ministry and the process of raising an amount of approximately US $1.2 billion has begun. Private sector and the government are expected to invest about US $30 billion in this sector in the next 5 years. Airbus forecasts that the number of new aircraft it would sell to Indian carriers would go up to 400 by the year 2023. This will make the India the third largest market for new aircraft in Asia, behind China (1,790) and Japan (640), according to Airbus' Global Market Forecast 2004-2023. By 2010, the forecast is that air traffic will increase to around 90 million.

Boeing expects India to buy aircraft worth $35 billion in the next 20 years. The Center for Asia Pacific Aviation (CAPA) estimates India's domestic airlines would need 650 new aircraft by 2012 India has a civil aviation network comprising 449 airports/airstrips . Delhi and Mumbai airports handle 70% of the passenger traffic and contribute 80% of revenue. Both the airports are facing significant capacity constraints. The Indian government plans to spend $20 billion over the next 5 years upgrading airports

1. Key areas that state-owned players possess that might give them some competitive advantage: To compete both locally and globally Increase the use of capacity and customer base Offering excellent customer service Focus on reduced pricing Investments in improving the ground support facilities

2. We would advise to pursue to deal with the challenges of these two stateowned players in the next five years: Brand Building: There should be a sincere attempt to revitalize the promotion mix through aggressive advertising like hoardings/direct mail/ internet Customer Services: By utilizing IT, customer services can be improved such as making complaints, receiving compensation when appropriate, sending regular updates on services and flights via SMS text messages. CRM: Improve customer care and public relations station to handle customer queries and other issues

3.Consider the option of combining these two players, will the combined management be stronger : At present Air India and Indian Airlines have 39 and 63 aircrafts respectively So that there is total more than 100 aircrafts, Air India operates on long haul routes like US and Europe and Indian Airlines has nationwide connectivity. If we talk about better utilisation, Indian Airlines introdused Netravel an e-ticketing process for online booking. While in 2005,it also started mobile air ticket booking in India in collaboration with Reliance Infocomm.

4. The rationale and strength behind price reduction is adopted: Market Share Increases More and more travellers take to the skies Growth of the Company growth of middle class Low cost airlines strive to achieve the lowest possible price for their products and services low cost airlines can increase the number of seats on their aircraft.