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
• 1911
first commercial flight airmails from allahabad to nani (10 km)
• 1932
the aviation department of tata sons ltd . Established
• 1938
tata airlines (successor to aviation sivision of tata son )
• 1946
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
 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
1995 Private Carriers permitted to operate scheduled services
2005 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
•
Regulatory Authorities
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
 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 NRI’s
  74% in cargo & non-scheduled airlines
 Competitive Pressure
Service

Low cost Carriers

changing the game

Indigo

Price
 MARKET SHARE
Others Airlines Market Share
Spice Jet 2%
6%
Kingfisher
8%
Jet Airwyas
Indian Airline
Jet Lite Jet Airways
Air Deccan
10% 35%
Air Sahara
Air Deccan Kingfisher
15% Spice Jet
Others
Indian Airlines
24%
The Kingfisher
AIRLINES
The king of good times
 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
 SWOT Analysis
• Strengths
 First airline with full new fleet of aircraft
 Quality hospitality provided to customers
 Route rationalization
 Already have training academy
• Weaknesses
 Service delivery to metros and other big cities
 Yet not in profit
 High ticket pricing
 High attrition in top brass


 Opportunities
 Under penetrated domestic market
 International market
 Untapped air cargo market
 Expanding tourism industry
 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 P’s
PORTERS FIVE FORCE
MODLE
 KINGFISHER AIRLINES
Performance

 Kingfisher 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

  Country’s 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, don’t 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
SWOT Analysis
 Market driver

 Experience exceeding 14 year

 Only private airline with international operation

 Market leader

 Largest fleet size

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

•
 7P’s
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 croresloss (2007-
08)
 Rs.27 crores profit
(2006-07)
- All Other Domestic Players showed loss(2006-

07)
THANK YOU