Airline Industry

Javeed budhwani

Airline Industry in India

454 airports and airstrips (includes Operational, Non Operational, Abandoned and Disused Airports) 127 are owned & operated by AAI 16 - international, 7 custom airports, 28 civil enclaves Scheduled domestic air services - available from 82 airports May 2007- May 2008 25.5 million domestic & 22.4 million international passengers 20% growth highest in the world Growth Rate Projections (for next 5 yrs) 15% p.a (Passenger Traffic) 11.4% p.a (Cargo Traffic)

History
first commercial flight airmails from allahabad to nani (10 km) the aviation department of tata sons ltd . Established tata airlines (successor to aviation sivision of tata son ) Tata Air Lines converted into a public Company and renamed Air India Limited 1948 Air India International incorporated 1953 Nationalization of Aircraft Industry Air India (serving the international sectors) Indian Airlines (serving domestic sectors) Deccan Airways, Airways India, Bharat Airways, Himalayan Aviation, Kalinga Airlines, Indian National Airways and Air Services of India 1911 1932 1938 1946

History
1986 Private Sector Players permitted as Air taxi operators Players including Jet, Air Sahara, NEPC, East West, Modiluft, etc started service 1990 Open sky policy 1994 Private Carriers permitted to operate scheduled services 2003 Entry of low-cost carriers 2007 Merger of Indian Airlines into Air India Acquisition of Air Sahara by Jet Airways 2008 Kingfisher acquired 49% stake in Deccan Aviation

 Ministry of Civil Aviation Responsible for the formulation of policy, development and regulation of Civil Aviation. Its functions also extend to overseeing airport facilities, air traffic services and carriage of passengers and goods by air Other Attached/Autonomous Organizations: Directorate General of Civil Aviation (DGCA) Promote safe and efficient Air Transportation through regulation and proactive safety oversight system Bureau of Civil Aviation Security (BCAS) Regulatory authority for civil aviation security in India Airport Authority of India (AAI) Accelerate the integrated development, expansion and modernization of the operational, terminal and cargo facilities at the airports

Regulatory Authorities

Policies
Open Sky Policy FDI Airports 100% for green field operations 74% for existing airports - 100% with special permissions 100% tax exemptions for 10 yrs. Airlines 49% in domestic airlines - 100% for NRIs 74% in cargo & non-scheduled airlines

Competitive Pressure Service Low cost Carriers changing the game

Indigo

Price

MARKET SHARE
Others 2% Spice Jet 6%
Kingf isher 8%
Jet Airwyas Indian Airlines Air Deccan

Airlines Market Share

Jet Lite 10%

Air Deccan 15%

Jet Airways 35%

Air Sahara Kingfisher Spice Jet

Others

Indian Airlines 24%

The Kingfisher AIRLINES

T h e ki n g o f go o d t i m e s

Kingfisher airlines
Dr Vijay Mallya is the Chairman and CEO of Kingfisher Airlines Kingfisher Airlines Limited launched scheduled airline services on May 9, 2005 with 4 daily flights between BOM & BLR and one A-320 aircraft. There are tools for mood lighting such as web chat, inseat plugins for music, liveTV with 16 channels on each seat 100 percent E ticket airline

VISION
The Kingfisher Airlines family will consistently deliver a safe, value-based and enjoyable travel experience to all our guests

STP
Segmentation
Geographic Region Density Social Classes Income Level

Targeting

Kingfisher First company executives Kingfisher Class lower middle, upper middle, lower upper segment

Positioning

Lifestyle Benefits Quality

SWOT Analysis
Strengths Opportunities First airline with full new fleet of Under penetrated domestic aircraft market Quality hospitality provided to International market customers Untapped air cargo market Route rationalization Expanding tourism industry Already have training academy Weaknesses Threats Service delivery to metros and Existing Operators other big cities Infrastructure issue Yet not in profit Fuel price hike High ticket pricing Economic slowdown High attrition in top brass

PESTEL ANALYSIS
POLITICAL FACTORS 1) Open sky policy 2) FDI limits: 100% for Greenfield airports 74% for the existing airports 100% through special permission 49% for airlines. ECONOMICAL FACTORS 1) Contribution to the Indian economy. 2) Rising cost of fuel. 3) Investment in the sector of aviation. 4) The growth of the middle income group family affects the aviation sector.

SOCIAL FACTORS 1) Development of cities leads to better services and airports. 2)Employment opportunities. 3)Safety regulations. 4) The status symbol attached to a plane travel TECHNOLOGICAL FACTORS 1) The growth of e-commerce and e-ticketing. 2) Satellite based navigation system. 3) Modernisation and privatisation of the airports. 4) Developing green field airports with private sector for example in Bangalore the airport corporation limited.

ENVIRONMENTAL FACTORS 1)The increase in the global warming. 2)The sudden and unexpected behavior of the atmosphere and the dependency on whether. 3)Shortage of the infrastructural capacity 4)Tourism saturation. LEGAL FACTORS 1) FDI limits 2) Bilateral treaties 3) Airlines acquisitions and the leasing cost.

7 Ps
Fleet Size Aircrafts International Foray

Product

Promotions

Advertisements Magazine and Newspaper ads Exposure at non-corporate event Participation in International Airshows Endorsing celebrities like Katrina Kaif and Yana Gupta

Booking the ticket - online booking or tele-booking or from any of the kingfisher outlet

Process

Physical Evidence

Personal valets Exclusive lounge space Hi! Blitz Gourmet cuisine world class cabin crew 5 trendy video- Fun TV; 10 music stations -Kingfisher Radio

Price

Dynamic pricing model - Multiple fare levels Uniform rules No hidden restrictions. Pricing model - 8 different levels Discounts provided from time to time

People

Backbone of the brand Extensive trainings Hospitality industry and consider their customer as guests Interpersonal skills, aptitude, and service knowledge

Place

Online Booking - www.flykingfisher.com Online Booking - Yatra.com, MakeMyTrip.com, ezeego1.com Credit Cards & Debit Cards Payment SMS / Call Outlets in every major city and at every airport across the country

PORTERS FIVE FORCE MODLE

Virgin Atlantic Quantas Airways

Fuel supplier

Jet Airways Indian airlines LCC

Economic & demographic changes Increasing awareness Exposer to globle brand

Other models of transport

KINGFISHER AIRLINES Performance

Kingfisher Airlines has posted a net loss of Rs 577 crore in the financial year ended March 2007, the balance sheet of UB Holdings, which owns the airline, shows.

Jet Airways
Founded in 1993, Chairman - Mr.Naresh Goyal HQ in Mumbai Countrys second largest international airline Largest domestic airline - 31% Primary base - Mumbai's Chaatrapathi ShivajiAirport Secondary hubs - Bangalore, Brussels, Chennai, Delhi, Hyderabad, Kolkata and Pune. April,2007 - Acquired Air Sahara - JetLite Now JetLite integrated into Jet Airways

Mission Statement
Jet Airways will be the most preferred domestic airline in India. It will be the automatic first choice carrier for the travelling public and set standards, which other competing airlines will seek to match. Jet Airways will achieve this pre-eminent position by offering a high quality of service and reliable, comfortable and efficient operations. Jet Airways will be an airline which is going to upgrade the concept of domestic airline travel - be a world class domestic airline. Jet Airways will achieve these objectives whilst simultaneously ensuring consistent profitability, achieving healthy, long-term returns for the investors and providing its employees with an environment for excellence and growth

STP
Primary Segments (Geographic) - Domestic & International Customer Segments First class, Premiere(Business) class & Economy class Target Segments Premiere(Business) class Business travelers, contribute 48% of passengers & 66% of revenues, ready to pay higher prices, last time booking, dont like transit Economy class Leisure travelers, prefer low cost airlines, ready for transit if there is cost advantage, large % of passengers Seat Allocation Yield Management Technique Positioning High value for High price Unique Selling Price Customer relationship and Punctuality

Strengths Market driver Experience exceeding 14 year Only private airline with international operation Market leader Largest fleet size

SWOT Analysis

Weaknesses Loosing domestic market share Old fleet with average age around 4.79 years Scope for improvement in in-flight service Weak brand promotion

Opportunities Untapped air cargo market Scope in international service and tourism Threats Strong competitors Fuel price hike Overseas market competition

PEST Analysis
Political Issue License issue for international operation Infrastructural constraint ATF price policy Economic Effects Rising income level Reduced fare but yet not enough

Social Effects Sound Pollution Plane hijacking 9/11 Incident

Technology Effects Modernization of aircrafts Modern technology like CAT3 and ILS

7Ps
Price Economy & Club Premiere Fare Discounted fare for senior citizens & defense personnel Advance Passenger Excursion/ APEX Fares One Fare Night Saver Fares Check Fares US Dollar Fares & Visit India Fares Place Place of Service - Aircraft Various Destinations

Promotion Offers Companion Free Offer, One Fare, Concessional fares, JetPrivilege Offers, Jet Airways Citibank Credit Cards, Corporate Deal Offers, International Specials, Camp Rock contest, Festival specials, Student specials, Surprises etc. Advertising and Branding Hoardings Brand Ambassadors Sponsorships Event Organization

Process People Processing People physically enter the service system to receive the service. Aircraft is the service factory where service is delivered. Possession Processing Cargo Luggage & Courier Physical Evidence Servicescape Servicescape usage - Interpersonal Complexity of Servicescape - Elaborate Flight Offices - Org. & Ticket Booking Agents Virtual Servicescape

Jet Airways - Performance

Annual Revenues - Rs.9481.5 crores (2007-08) Rs.7401 crores (2006-07) Profit(Loss) After Tax - Rs.253 crores loss (200708) Rs.27 crores profit (2006-07) - All Other Domestic Players showed loss(200607)

Kingfisher
Kingfisher is one of the latest Airlines in INDIA. Overall growth in year 2006-07 is 37%. Kingfisher acquired 46% share in Air Deccan. Domestic airlines poised to go international flights

Jet Airways
Jet Airways is the experienced airline in INDIA. Overall growth in year 2006-07 is 16%. Jet airways acquired Air Sahara in 2006. Jet Airways already has domestic as well as international flights.

Kingfisher In a short span of 2 years its market share has become 28% including Air Deccan. Personal in-flight entertainment in every seat. It was awarded the Best New Airline Of the Year award. Already have training academy

Jet Airwayss Jet Airways has its market share 31% including Air Sahara. Average entertainment services. Jet Airways won Double Honour Travel Trade Gazette Travel award. They are plan to start training academy.

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