CASE: AIR DECCAN

Low Cost Carriers

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World Scenario - Low Cost Airlines
 The successful low cost airlines are more profitable than
established carriers
 Globally, the largest and most successful low cost airline is
Southwest in the US
 Operating Margins of different international airlines:

Ryanair 22.7%
Southwest 21.8%
United Airlines 11.9%
Lufthansa 5.7%
Air France 3.5%
KLM 1.5%
British Airways 0.9%

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Low Cost Carriers in India
Air Deccan
SpiceJet
IndiGo Airlines
Go Air
Jetlite (Formerly known as Air Sahara)

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Business Model of Low Cost
Carriers
 A single Passenger class
 A single type of airplane reducing training
and service cost
No frills such as free food/drinks, lounges etc.
Emphasis on direct sale of ticket through Internet
avoiding fee and commission paid to travel agents.
Employees working in multiple roles
Unbundling of ancillary charges to make the
Headline fare lower

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Aviation Industry in India :
Market Share
The Domestic Aviation Market Share
1%
2%
Jet airways
6%
8% Indian
34%
8% Air Deccan
Air Sahara
Kingfisher
Spicejet
21% Goair
20%
Others

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Market Share in LCC Segment

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Airline Industry in India :
Service Vs Price Graph

S
E
R
V
I
C
E

PRICE
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Air Deccan
Come SIMPLIFLY With Us…

Market Share : 21.2 %

Image courtesy of Air Deccan

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Vision and Mission
Vision :
Empower every Indian to fly

Mission :
To demystify air travel in India by providing reliable, low
cost and safe travel to the common man by constantly
driving down the air fares as an ongoing mission

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Marketing Strategy
Common Man :
The Brand Ambassador for Air Deccan, the people’s airline
is Mr. R.K Laxman’s ‘Common Man’

Free Tickets :

Images courtesy of Air Deccan 10

How Air Deccan cuts
cost?
Quicker turnaround time
Lower distributions costs
All economy seating configuration
No free catering on board
100% web enabled bookings – e ticketing
Enhanced cash flow management

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SWOT Analysis
Strengths :
 Leader in LCC segment :
First to target the middle class : First mover advantage
 Highest load efficiency
 A ‘Lean-and-Mean’ approach to staffing

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SWOT Analysis
Weaknesses :
 Focuses mostly on South Indian market
 Image plagued by frequent breakdowns and near
misses
 Very limited advertising

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SWOT Analysis
Opportunities :
 Extensive network to capitalize Air Cargo
business
 Plenty of scope for expansion of operations
 Strengthen its position in Chartered flight
segment
 Could start ‘Contractual Employment’

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SWOT Analysis
Threats :

 High attrition rate

 The threat of new entrants into Low Price Segment
especially IndiGo, Go Air and SpiceJet
 High Risk Perception

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Current Trends :
Consolidations All Around
 Kingfisher-Air Deccan Deal
o Kingfisher buys out 26 % stake for Rs.550 crore.
o They have combined Market share of 33%
o They are second biggest player after Jet Sahara deal
o Slogan: Simplify------ “ The Choice is Simple”
o Re-branding : Kingfisher Red

o 10 % cash back offer – Promotional campaign to attract customers.

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Future Trends
 The projection for Indian Aviation for 2020 is estimated
at:
o 400 million passengers
o Including 180 million domestic passengers
o 1,000 aircraft in the civil aviation sector
Likely to follow the footholds of International Low Price
Carriers e.g. Air Arabia, Southwest Airlines etc.
More emphasis will be on Arabian and South-East Asian
circuits.

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Thank You

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