AIR INDIA EXPRESS 1

Air India Express

Student Name

Student Code

Tutor

Word Count
 AIR INDIA EXPRESS 2

Introduction

Air India Express has surpassed its annual targets and generated a profit of $33 million from May to
December in 2017. However, the CEO of the airline noted that profit could reach $36 million by the year
end even though the increase in aviation fuel cost and declining demand in the Gulf way. Air India
Express plans to expand its operations during the summer schedule that commenced on 25 March 2018,
by raising the number of weekly departures from 561 to 586. The airline experience complaints mostly
from Indian expatriates for the past three years based on cancellations, delays, lack of service, and
pending refunds. However, recently the airline has attained popularity among its passengers by offering
convenient schedules, excellent point-to-point connectivity, on-time departures, low fares, giving
passengers free meals, and the overture of refurbished or new aircrafts. Air India Express carries
approximately 4.84 million passengers annually and links 140 city pairs under its reliable flight services
and cost effectiveness. The airline enjoys 16.4 percent market share for Gulf routes market in India and
7.1% for global travel market in the Indian market share.

Overview of Air India Express

Air India Express is was established in March, 2005 as a wholly owned subsidiary of Air India,
headquartered in Cochin, Kerala. It is established as a low-cost carrier in 2005 operating from bases at
Cochin International Airport, Calicut International Airport, and Trivandrum International Airport (S.,
2019). The aim was offering convenient connectivity to medium and short haul global routes in the
South East Asia and the Gulf at affordable rates. Air India Express targeted segments are budget
travelers, Indian expatriates, and tourists. The carrier is flying in approximately 31 cities comprising a
domestic destinations and airports in Kuwait, Bahrain, Qatar, Malaysia, the United Arab Emirates (UAE),
Singapore, and Saudi Arabia (Air India Express, 2020). The airlines is famous for its aircraft insignia, each
of that sports an exceptional tail design that demonstrates some factors of Indian history, culture or
tradition. For the first time the airline was able to generate a net profit of $53 million or INR 361.68 crore
in the financial year 2015-2016. The year marked the turnaround for the airline. The airline continued to
perform better despite the adverse conditions. The airline has a fleet size of 24 aircraft with a 9.9 years
average fleet age (Bowen, 2019).

Mission Statement

The airline mission is offering the best flight schedules with most competitive fares with the needs of
client at the heart of all strategic decisions. Pay priority to safety, convenience, and punctuality of
services. Air India Express persistently embraces technological improvements to upgrade systems,
services and process and improve value proposition to workers, passengers, owners/shareholders,
vendors, and travel partners. The airline has a mission to develop and keep sufficient pool of motivated
and competent workers. It also grows and expands its operations with focus on enhancing profitability
and productivity to complement the operations of parent company (Air India). Benchmark work
methods/practices against best airline in the sector and accomplish the greatest productivity’s level from
all assets (Bowen, 2019).
 AIR INDIA EXPRESS 3

Vision statement

Air India Express vision is to becoming the most preferred and efficient LCC of India on international and
regional routes and expanding the airline’s reach to other possible markets over the time; persistently
exceeding expectations of passengers in terms of affordability, quality, comfort, and convenience (Air
India Express, 2020).

Goals/Objectives of the airline

Air India Express commenced as a low-cost carrier on April 29, 2005 having an objective of offering
convenient connectivity to medium or short haul international routes in the South East Asia and the Gulf
at affordable rates. The goal of the airline was to offer no frills and non-stop services to its clients across
all the routes. The primary goal of Airline India Express is offering efficient and quick services to their
clients (Air India Express, 2020).

Present operations

Air India Express currently operates an inspiring 24 Boeing 737-800 NG (Next Generation) aircraft fleet
which promote its low-cost arrangement. Its modern and young fleet includes aircraft that are both
ecologically and economically efficient. The aircraft permit for comfortable and safe flying and are suited
for medium or short term haul flights. The airline offers on-board services. It offers complimentary
snacks, coffee/tea on board. Besides, the airline offers meals at affordable rates that may be pre-booked
online (Gillen and Morrison, 2017).

Competitors

Air India Express has several competitors in the markets such as Indigo, Spicejet, Scoot, Air Arabia,
Emirates, ETIHAD Airways, Oman Air, Saudi Airlines, Royal Jordanian and flydubai. Air India Express is
positioned number 12 among its top competitors (Graham, 2017).

Air India Express strategy

The airline services are exceptional above the others. Even though the airline adheres to the market
rules of a low cost carrier, they leave no effort to ensure passenger quality and comfort of the services
whereas delivering affordable rates for their clients. The unique aspect about them also is offering
complimentary snacks, coffee, and tea on board along with meals at affordable rate (Gross and Lück,
2016).

Present operation state

The airline has seven operational bases in India and one in Dubai to satisfy its mission of offering
convenient and point-to-point connectivity (Gross and Lück, 2016).

Stakeholders and culture

 AIR INDIA EXPRESS 4

The airline team is dedicated to offering memorable services and cheapest flights at the airports and
onboard. The airline ensures its stakeholders comprising the dispatch, security, commercial, catering,
operations; cargo, engineering, and crew accelerate departures. The airline is the first global low-cost
carrier in India. Air India Express complies with the safety standards and norms, to serve clients in the
most effective way. The airline has committed employees who offer the best in-flight experience to their
clients (Minkova, 2011).

PESTEL and Porters Five Forces Analysis

PESTEL analysis framework is applied to examine the external aspects acting on the corporation and to
identify their effect on the corporation. PESTEL acronym in full is political, economical, socio-cultural,
technological, and legal aspects.

Political aspects

In a country such as India, we may not see any company without experiencing political influences. This is
an open secret that each problem has a political interference in the country. Part of these aspects is: The
way between Kashmir and other key nations was closed by the airline because of the border issues with
Pakistan. Besides, terrorism is the prime issue that was stopping several foreign tourists to visit India.
The September 11 event is another political issue for many years has affected the airline sector because
of the fear of terrorism and the air planes involvement in the sector, a massive decline in air traffic
happened. In the corruption engineered country such as India, state own sector Air India Express
experience several issues in route permits, clearances, and offering free seats to politicians and licences.
Because Air India Express is a state owned corporation, it maintained the routes that are yielding
persistent losses as open due to prestigious issues that may push the company into losses (Minkova,
2011).

Economic aspects

The economic aspects that was influence Air India Express are due the financial recession the recent
years, people perceive that air travel is expensive and luxury. Therefore, a substantial drop in the number
of passengers occurs that in return results in decline in ticket prices. The Corona virus outbreak in China
has been the key for decline in the airline sector. The Indian carriers such as Air India Express was deeply
affected since most of the flights were cancelled because of the internal and external issues. The drop in
Air India Express income results in huge insurance costs and more operational costs that was upsurge
after WTC devastation. It leads to a dismissal of its workers promoting recession because spending
declined because of the increase in unemployment (Papatheodorou, 2016).

Social aspects

The social aspects illustrate the impacts of social issues and social groups on the organization. These
include the fast changing in the passengers’ traveling habits has a great impact on airline sector. Mostly
in the developing world such as India, travelers emanate from different income groups. The airline has to
focus on each group and has to offer satisfactory services. A majority of the Air India Express passengers
 AIR INDIA EXPRESS 5

emanate from low income group, therefore, it has to focus on the low income group passengers and
their travel habits and have to provide to them quality services. Since India is a multi-culture nation, the
passengers will come from different religious and anticipates more customization. The airline has to
enhance its services in the airline to develop a user-friendly environment in the airplane (S., 2019).

Technological

The growing utilization of the internet offers huge opportunities for the airline sectors. Air India Express
offers several online services for its clients like online ticket booking, customer queries, and flight
information updates. However, there is still some inconsistence in the flight updates. Majorities of the
international airline are offering internet access for their passengers; the service has a poor performance
in Air India Express that can make the clients to select other airlines. Provision of total body scanners at
the airports in India will results in feel more security for the passengers that in turn make them feel
secure and comfortable to travel (Wang et al., 2017).

Legal aspects

The aspect explains about the barriers and laws for the organization according to different legal aspects.
Since Air India Express is a subsidiary of a state owned firm, it experiences many legal matters to make a
resolution since the resolution has to process via different management levels. The airline has to pass
through government process to get route clearances and licenses beginning from aviation minister and
engaging several legal matters. Government interference and control affects the type of services and
quality of service that has to be offered to satisfy all their clients from different cultures and countries
(Wang et al., 2017).

Porter’s Five Forces for Air India Express

The New entrants’ threats

New entrants’ threats for the airline are high. The original investment for new entrants into the airline
sector is huge amount of money during older days. It was then difficult to commence a new airline firm.
However, in recent years, banks have become a savior in the sector offering good opportunities to these
new entrants in the industry by giving them long-term loans that bears minimal interest rate. Therefore,
it will be a threat to Air India Express from the new and upcoming domestic and international airlines (S.,
2019).

Threats from competitors

Air India Express experiences high level of threats from competitors. The competitive rivalry in the airline
sector is intense, since most major airlines operate the flights to similar destinations across the globe. Air
India Express faces threats from the sector competitors such as Emirates, Indigo, Etihad, Oman Air and
Scoot. These major airline firms are aggressively competing one another by providing travelers with
privileges for loyal clients, reduced fares and providing high quality services to draw more clients than
their rival firms (Gross and Lück, 2016).
 AIR INDIA EXPRESS 6

The buyers’ bargaining power

Buyers’ threat is high for company such as Air India Express. Since more international and domestic
airline firms operate their flights to similar destinations with minimal traveling fairs, a client may select
from a wide range of travelling plans provided by different firms. Buyer’s power is high because
competition between the firms is more (Gillen and Morrison, 2017).

Substitutes’ threats

Substitute’s threats are less for Air India Express. Airlines are considered the fastest ways to travel from
one place to another; hence, there is less substitute products’ threat. However, in the case of local level,
consumers may opt for roadways or railways that connect different places even though this still consume
more time (Air India Express, 2020).

Suppliers’ bargaining power threats

Supplier’s bargaining power threats is moderate for the airline. Vendors for Air India Express are Airbus
and Boeing. For the global aviation, there is no stiff competitor between Airbus and Boeing, thus fewer
chances to bargain with a client (Alves and Barbot, 2017).

Critical Issues that Air India Express should address

The airline sector is a labor intensive and capital intensive. The labor comprises unskilled workers and
highly skilled workers and it is unionized. The aviation industry management of labor relations is strained
that leads to frequent strikes. The ATF price rises sporadically that impedes all airlines revenue. Besides,
a tax levied on the ATF increases operations cost. Another critical issue is the airport charges that should
be addressed for the airline industry growth in India. Indian airports charge the highest levies being the
second among the Gulf and Asian countries. Hence, Indian airports need to look into their charges to
enable airlines to operate smoothly and at affordable rates mostly the low cost carriers such as the Air
India Express (S., 2019).

The restricted commercial pilots availability, inflexible labor laws, and high cost of capital are the
structural issues facing Air India Express. It has increased with the government support and sector-wide
capacity added extras. Aspects like security or cost of fuel have a direct effect on risk management and
operational effectiveness of the Air India Express. The effect of cyclicality and seasonality is high in the
airline sector. The issues need to be resolved to facilitate productivity and profitability in airline sector
(S., 2019).

The Indian airline industry is highly controlled by the government. The sector is featured by a large
number of customers (cargo and passengers) as compared to the small number of airlines with
substantial market share, substantial cost barriers to entry in the market, competitive companies, and
differentiated services. Many airline firms in India such as Air India Express use over 15 percent of their
earnings on maintenance that is the second highest cost element to fuel charges (Papatheodorou, 2016).
 AIR INDIA EXPRESS 7

Besides, the domestic demand for long-haul flights cannot earn adequate traffic to maintain a point-to-
point network arrangement. Further, the LCC airlines such as Air India Express pure no frill idea adapted
and included in the in-flight services that would in return decrease utilization hours and increase
turnaround period. Air India Express to address this issue is to adapt the low cost arrangement by
initiating some components of a network carrier to draw adequate passengers and cargo. Another
challenge to address in low cost carriers is finding the low-cost distribution structure. The internet
penetration in the country is slow and credit card utilization is low creating low cost carrier distribution
network of online selling a challenging task. Hence, the airline needs to have additional distributor that
might harmonize its online sales (Bowen, 2019).

Low cost carriers such as Air India Express experience some critical challenges that need to be resolved.
One critical issue is in the air transport expansion in the Indian market has been persistent upsurge in
airport tariffs. The Indian airport operators charge higher fees than most of their Gulf and Asian
countries charge (Graham, 2017).

SWOT Analysis for Air India Express

The aim of a comprehensive SWOT analysis for Air India Express is to examine the airline’s external and
internal environments. It is considering the airlines weaknesses and strengths. Besides, it seeks to
illustrate the opportunities that Air India Express need to pursue and the potential threats that it should
watch out for in its operating environment.

Strengths for Air India Express

The airline has pre-set snacks, coffee/tea on board without extra cost. Air India offers cheapest tickets
for its clients without compromising on the quality of services offered. The airline also operates from
several airports. The airline managed to have crew with local languages’ knowledge. Air India Express
also offers in-flight entertainment to its customers. It is the only profitable associates of Air India.
Further, Air India is well-known for it is as a leader in service provider, offering quality services to its
clients (Graham, 2017).

Weaknesses

Some of the weaknesses experienced in Air India Express airline are frequent interference from the
Indian government. The airline also needs cabin crew polishing to enhance its service provision. The
airline faces an increasing competition based because of low-cost carrier entrants. It also operates
through big domestic and international markets (Gross and Lück, 2016).

Opportunities

Large population in India offers wide range of opportunity for Air India Express to capitalize on the
domestic market that proves not difficult to initiate. The airline has expansion opportunities in the local
sector. Further, the airline has well-groomed cabin crew increasing its capacity to deliver quality services
for the lower price. The airline can also increase its destinations capitalizing on the increased demand
for tourists globally (Wang, 2014). The de-regulation in the sector makes Air India Express open to the
 AIR INDIA EXPRESS 8

overseas skies than before as this offers prospects for global growth for the airline. The number of global
investors and tourists of India is increasing fast; hence, the airline needs to capitalize on the prospects to
expand its market share (Bowen, 2019).

Threats

Air India Express faces stiff competition on its overseas routes from some of the biggest airlines in the
world such as Etihad, and emirates; besides, small domestic airlines along with their price wars poses a
threat to the airline. The Indian Railway has improved reliability and speed on its medium to long-
distance ways, attracting passengers away from air reliability offering rates close to the low-cost carriers
such as Air India Express. The airlines lucrative routes were taken away and handed over to other private
airlines decreasing its revenue generation streams. Besides, negative Indian government interference has
discouraged the workers and affected its earnings. Further, the recent Covid-19 pandemic adversely
affected the operations of the airline disrupting most of its scheduled flights in most part of the year.
Some passengers were forced to be re-funded their money back due to cancellation of their flights as the
pandemic continued to disrupt business operation globally (Air India Express, 2020).

Recommendations

People –centered service industry –The airline should employ high caliber employees. Air India Express
should initiate training programs concentrating on front-line communication skills to promote customer
services.

It is recommended that the airline should operate the carrier in base or hub in an airport to benefit from
the economies of scope and economies of scale. This will serve as a structural entry obstacle to new
entrants and other airline players in the market. It will also reduce costs of marketing and sales, flight
cancellation costs, and customer service utilities because of the increase in the base size.

The company is also recommended to initiate flexibility to switch slots where they can switch crew
employees from one route to the other. Besides, there is need for flexibility to alter the connections with
the variation in the demand as in the case of these Covid-19 pandemic there demand has declined. This
will create better negotiation power to draw striking time slots along with other services from the
airports.

The airline should invest in technology to assist in mitigating risks because of the rise in capacity by
opening new routes by completion; thus, to redeploy aircrafts and secure ground personnel and gates
immediately to respond to a competition. Improved technology will enable the airline to respond
directly to price wars, better user-friendly online booking sites that ensure safety monitoring and fleet
reliability.

Air India Express can diversify into hospitality sector through joint ventures with shops in the airports,
hotels, and restaurants to initiate more routes which have less of traffic jams and congestion free.
 AIR INDIA EXPRESS 9

Conclusion

The airline is the only one that operates on the low cost carrier model and provides free snacks,
coffee/tea to its customers. The airline provides convenient connectivity to medium or short haul
international ways in the South East Asia and the Gulf countries. The airlines prime target segments
comprise budget travelers, tourists, and Indian expatriates. It offers no frills, non-stop service to its
clients across all the routes. Air India Express believes in creating flights affordable for everybody without
compromising on innovation, quality, and convenience with their slogan “Simple priceless.” The company
also needs to work on its weaknesses and threats to avoid being overtaken in the industry capitalizing on
its strengths to take up the imminent opportunities available at its disposal in the market. Besides, the
airline needs to understand its external environment by considering political factors, economical factors,
technological factors, social factors, and legal factors that might influence its operation both domestically
and globally to enable it expand and growth its business in India and overseas.

Reference List

Air India Express. (2020). About air India express | India's first international budget airline. Low Cost

Airline In India | Book Cheap Flight Tickets Online. https://www.airindiaexpress.in/en/about-

us/our-company
 AIR INDIA EXPRESS 10

Alves, C. F., and Barbot, C. (2017). Price discrimination strategies of low-cost carriers. Low Cost

Carriers, 301-319. https://doi.org/10.4324/9781315091617-23

Bowen, J. (2019). Low-cost carriers in emerging countries. Elsevier.

Gillen, D., and Morrison, W. (2017). Bundling, integration and the delivered price of air travel: Are

low cost carriers full service competitors? Low Cost Carriers, 277-286.

https://doi.org/10.4324/9781315091617-21

Graham*, B. (2017). Carriers within carriers: A strategic response to low-cost airline competition.

Low Cost Carriers, 353-374. https://doi.org/10.4324/9781315091617-27

Gross, S., and Lück, M. (2016). The low cost carrier worldwide. Routledge.

Minkova, V. (2011). Low cost carriers - Business model, impacts of its expansion and challenges. GRIN

Verlag.

Papatheodorou, A. (2016). Aviation and tourism: Implications for leisure travel. Routledge.

S., J. (2019). Air India express: The changing phase for a low-cost international carrier.

https://doi.org/10.4135/9781526474629

Wang, K., Zhang, A., and Zhang, Y. (2017). Airline performance in China and India: What drive airline

efficiency and pricing. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2927344

Wang, S. W. (2014). The moderating effects of involvement with respect to customer relationship

management of the airline sector. Journal of Air Transport Management, 35, 57-63.

https://doi.org/10.1016/j.jairtraman.2013.11.006