THE INDIAN AVIATION INDUSTRY

GROUP 6

     

Deepali Lavangare M.E. Kailash Mamta Singh Maruti Nandan Tripathi Mithilesh Pamnani Nagalakshmi.S

09020541031 09020541032 09020541033 09020541034 09020541035 09020541036

THE INDIAN AVIATION SECTOR

Introduction
—

CAGR of 18 per cent per annum, worth US$ 5.6 billion in 2008. The market growth rate is16% for international and 20% for domestic (base year 2006) , which is one of the highest in the world. Rapid transformation Post liberalization Private airlines account for 75% market share India has jumped to 9th position in world's aviation market from 12th in 2006. The scheduled domestic air services are now available from 82 airports as against 75 in 2006.

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—

—

—

—

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…contd
— The

Airport Authority of India (AAI) manages a total of 127 airports in the country include 13 international airports, 7 custom airports, 80 domestic airports and 28 civil enclaves. carriers currently have a fleet size of 310 aircrafts, but have 480 aircrafts on order, scheduled for delivery by 2012.

— — which

— Indian

The Transformation

—1953-

Air corporation Act-Air India and Indian airlines monopolized the market.

—1990

‘open sky policy’ adopted by the government Jet Airways, Air Sahara, NEPC sky liner, East west Airlines started services

— 1994-Air

corporation law was abolished to end the monopoly of IA-AI and to allow private players into the aviation sector under the new Air corporation law

— 2003:

Entry of Low Cost Carriers. - Air Deccan, Go Air, Spice Jet, Indigo, Paramount Airways — 2006-the private carriers accounted for around 75% share of the domestic aviation market
—

 

The airlines in India are into three basic SBU’s —Passenger flights —Cargo —MRO The passenger flights are of three types —Full cost carriers —Low cost carriers (LCC) —Other start-up airlines
—

 

Regulating bodies

Regulating Bodies in the Aviation Sector in India are :
—Directorate

(DGCA) —Airports authority of India (AAI) —International Civil Aviation Organization (ICAO)
  

General of Civil Aviation

Common terms used in aviation

—Load/Seat

factor: Measures the percentage of available seats that are filled during a specific period Fuel

—

—ATF: Aviation Turbine — —CODE SHARING

Jet Airways
— Jet Airways is India’s premier private airline. — second largest airline in India, next to

Fact file
— April 1, 1992,established as an air taxi operator. — May 5, 1993- The commercial airline operations

—

Kingfisher, with 84,000 passengers.

started — January 1995-received its scheduled airline — March 2004, started international operations with a flight to Srilanka — April 2007, took over Air Sahara, which was later on renamed as JetLite.

Domestic passenger traffic(for Jul 09)
— —Jet Airways-JetLite —Kingfisher Airlines —NACIL - 16.2%
 

combine - 26.3%* - 23 %

Low-cost carriers —Indigo - 14% —Spicejet - 12.5% *SOURCE: CMIE

 

Marketing Segmentation-jet

Demographic segmentation — Jet has two economy class subsidiaries, namely Jet Lite and Jet Airways Konnect Psychographic segmentation — Golden Jet Escapes — Jetkids which is a special program for children aged 2 to 12 — Jet mall in partnership with ELVY-premier and domestic Behavioral segmentation — Jet Privilege- for frequent flyers — Jet Mobile
—

  

 

Marketing Segmentation-Air India
— —Demographic

class

- Business and economy

—Psychographic
 

national carrier as a household name.

—Behavioural

still preferred airline for the govt staff and old clientele.

— — —

Market Positioning-Jet
a. User postioning

Three-dimensional billboards in Mumbai to hardsell the company’s message on more leg room

b.Quality Positioning

c.Benefit postioning

Air Indiaa. Attribute positioning
—The

Maharaja mascot exists since 1948 -positioning using years of existence

b. User positioning

c. Benefit postioning

d. Price postioning

Strategies Adopted-Jet Airways
—

— Refilling

ATF in hubs in north east for its flights where people switch connecting flights Reason- ATF prices low sharing and alliance a new hub in Brussels, the first of its

— Code

— Opened

kind

— Planning

—

to build a five star hotel near Brussels airport at a sprawling 15 acres airline which has exclusive fleets AmritsarLondon-Toronto

— Only

BCG Matrix for Jet Airways SBU – Passenger Flights

BCG TABLE
S.B.U Market Market Share Relative Share (Largest Market (Jet Competitor) Share Airways Kingfisher Jet lite)% Market Quadrant in Growth Rate which the % SBU lies

Passenger 23 . 7 (as Traffic on 30th
June 09)

25 . 3 (as on 0.936
30th 09) June

-3.062

(FY08-09)

Question Mark

Overall Average Market Growth of passenger flights = -6.8% ( Fiscal Yr . 08 - 09 ) Average Market Growth of passenger flights of JET AIRWAYS = - 3 . 08 % ( Fiscal Yr . 08 - 09 )

Jet Airways (Combined)
0%

M A R K E T

-6.5%

G R O W T H
-13% 1 0

RELATIVE MARKET SHARE

GE MATRIX JET AIRWAYS OMBINED WITH JET LITE , JET KONN

FACTORS

MARKET ATTRACTIVENESS WEIGHTAGE GRADE
3

TOTAL
0.75

MARKET GROWTH 0.25 RATE MARKET SIZE 0.25

2

0.5

COMPETITIVE ENVIRONMENT PROFITABILITY

0.20

3

0.6

0.20

2

0.4

DEMAND PATERN 0.10

2

0.4

TOTAL

1.0

12/25

2.65

SBU ’ S STRENGTH
FACTORS
MARKET SHARE

WEIGHTAGE
0.25

GRADE
4

TOTAL
1

BRAND SRENGTH 0.20

4

0.8

RELATIVE PRICE

0.20

3

0.6

QUALITY

0.15

3

0.45

MANAGEMENT STRENGTH

0.20

3

0.6

TOTAL

1.0

14/25

3.45

GE

MATRIX
5
STRONG

SBU STRENGTH
3.67
MEDIUM

2.33

WEAK

1

MARKET ATTRACTIVENESS

3.67
PASSENGER FLIGHTS JET AIRWAYS ( Combined )

MEDIUM

HIGH

.7 23 %

2.33

( 3 . 45 , 2 . 65 )

LOW

1

Ansoff Matrix for Jet Airways

J t A i a ys e rw
Product Market Present Present New

Market Penetration

Product Development

New

Market Development

Diversification

Market Penetration Market Penetration

§ Jet Airways JP Miles for frequent flyers § Jet Cargo Services § Advertisements § Jet Lite Service §
 

Market Development

§ International Star-Alliance membership § § Targeting potential customers travelling in AC by rail

Product Development
• • Jet Konnect—a new service 15% cheaper than Jet airways launched in domestic and very soon in international routes. • • Jet Escapes travel package

Diversification
• • • Jet Mall for lifestyle products

HELPFUL ( in achieving the INTERN objective ) STRENGTHS AL  ORIGIN Financial restructuring (attri Access to financial resources Product , Price, Place butes of the organi sation
)

SWOT ANALYSIS
WEAKNESSES

HARMFUL ( in achieving the objective )

3 billion $ debt due to expansion Massive fleet expansion Acquisition of loss making Air Sahara 1450 crores it became a big liabilty. Low capacity utilization.(low seat factor)

EXTERN OPPORTUNITIES AL  ORIGIN New expansion to middle east ( attr routes  ibutes Increase FDI stake can raise of the foreign capital  enviro Untapped air cargo markets nment)

THREATS
 

High and rising ATF prices. Economic recession Competition Advancement in telecom technology for example teleconferencing, telepresence

MARKET SURVEY
ON

AVIATION INDUSTRY

OBJECTIVE
• TO UNDERSTAND THE CONSUMER BEHAVIOR OF INDIANS TRAVELLING BY AIR. • TO DETERMINE THE CURRENT SCENARIO IN AVIATION INDUSTRY. • •

1. How do you choose an airline to travel ?

2. Number of times u have travelled by air in past three months?

3. Reasons for last air travel?

4. In Which class do you normally fly?

5. How do u rate services offered by following airlines?

6. What do you think about no frill/low cost airlines?

7. how do you perceive Jet as a brand?

8. What factors do you consider before buying a airline ticket ?

9. What do you think about the following economy classes of Jet?

10. Which discount is attractive?

CONCLUSION
• Thus we see in our survey that there is a sustained demand for low-cost carriers triggered by the economic downturn. Jet’s low cost carriers Jet Konnect & Jet Lite will enable Jet to survive in this environment.

• • •
• Once the economy bounces back to its bullish levels Jet can expect a huge growth in revenues from its full service carrier and until then low cost

Suggestions
§ People welcome economy class flights.

§
§ Low cost airlines need to advertise more to position themselves in the minds of people

§
§ Jet is perceived as a comfort brand

§
§ People look for discounts more than any other factor when choosing an

Questionnaire
Ø Who is the chairman of Jet?

Ø What is the code of Jet Airways?

Ø Name the recently introduced low cost carrier of Jet?

Questionnaire
Ø Which airline was taken over by Kingfisher?

Ø Name the brand ambassador, a famous personality who had recently quit from the Board of Directors of Jet Airways ?

Ø Who is the owner of Go-Air?

Questionnaire
Ø Which is the biggest factor leading to decline in aviation sector? Ø Ø Name the European hub of Jet Airways? Ø Ø What is A.T.F.? Ø Ø Name the two aircraft manufacturing companies supplying to the Indian airline industry?

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