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DOMESTIC AIRLINES
gratitude to each and every one of them but a whole hearted attempts
Airlines, Jet Airways and so has a Airlines for their concerted help.
deeply indebt to Prof. Maninder Singh and Prof. Sumanta Sharma for
1. EXECUTIVE SUMMARY
3. RESEARCH METHODOLOGY
• Air Deccan
• Go Air
12. BIBLIOGRAPHY
EXECUTIVE SUMMARY
There has been a dramatic rise in the levels of passenger and cargo
passengers in 2005. During the last ten years the growth in passenger
traffic has been a spectacular 125%. By 2010, the forecast of the air
7% over the next decade. This growth potential, coupled with the
aviation market also presents foreign firms with significant export and
investment opportunities.
INTRODUCTION
The history of Indian Aviation Industry dated back to the early 1930s,
when one of the leading Indian business houses, the Tata, established
Tata Airlines. There was limited activity in the sector over the next two
decades despite eight more private companies entering the airline
industry. In 1953, the Air Corporation Act came into force, and all the
assets of the existing nine airline companies were transferred to two
companies namely Indian Airlines Corporation (IA) and Air India
International (Air India). While Air India offered international air
services, IA offered domestic services. The Air Corporation Act 1953
prohibited any person or company to operate any scheduled air
transport services from, to or across India. Therefore, the two
corporations enjoyed a monopoly status in the scheduled air transport
services market. In 1962, Air India International was renamed as Air
India Limited.
From March 1994, the market was opened to any company that
fulfilled the statutory requirements of scheduled airline services. The
government approved eight private carriers to start domestic
operations. They were Jet Airways, Air Sahara, Indian International,
Archana Airways, East West Airlines, NEPC Airlines, Modiluft and
Damania Airways. While Indian International was the first licensee after
the open skies policy came into force, East West was the first
scheduled airlines to take off from the ground.
In 1995, the Airports Authority of India (AAI) was formed after the
merger of the National Airports Authority (NAA) and the International
Airport Authority of India (IAAI). The AAI offered infrastructure facilities
to all airlines. There were five international airports-Delhi, Mumbai,
Kolkata, Chennai and Thiruvananthapuram for scheduled international
operations by Indian and foreign carriers.
By late 2000, however, most private players went out of business after
incurring heavy losses. The reasons included lack of experience in the
aviation field, inadequate planning and poor promoter support.
According to analysts, none of the private carriers had the staying
power or the professional expertise required for the aviation industry.
As a result, by mid 2001, only Jet Airways (JA) and Sahara managed to
stay afloat among the private carriers. In fact, they went step ahead by
grabbing a major market share from Indian Airlines, which had been
enjoying a monopoly. By mid 2001, Jet Airways commanded 42% of the
domestic market and Sahara claimed for 13% leaving and 39% for
Indian Airlines as per financial year 2003-04.
In early 2003, the Indian government expressed concerns that the civil
aviation industry remained a part-monopoly, with only three players.
To introduce more reforms, in August 2003, the government
established a committee under the chairmanship of Naresh Chandra,
former cabinet secretary, to prepare a road map for a civil aviation
policy. The committee recommended that the foreign direct
investment limit in the domestic civil aviation sector should be
increased to 49% from the permitted 40%, which the government
accepted. The government also stressed the need for making air travel
more affordable. The recommendations were accepted and excise duty
on Aviation Turbine Fuel (ATF) was cut to 8% from 16%. The
government also did away with the 15% inland air travel tax (IATT).
The two major airports at Mumbai and Delhi are facing significant
capacity constraints and will require a massive infusion of capital
investment over the next five years. The restructuring of the first
phase of Delhi airport is expected to be complete by 2009 at a cost of
Rs 1.9 billion. Expansion and upgradation of the current facility at
Mumbai is already under way. Work has started on a new international
airport at Bangalore. Apart from strengthening of the Hyderabad
runway at a cost of Rs 700 million, a new international airport is also
being planned at a cost of Rs 13 billion. The government has also
decided to modernize 25 airports in non-metro cities. Improvement of
another 55 airports is also on the way. The selection of airports will be
done based on their commercial and traffic growth potential. The
Airports Authority of India (AAI) is in the process of appointing Indian
Financial consultants (IFC) and Global Technical Advisors (GTA) who
will assist AAI in conducting techno-economic feasibility studies and
evolve an appropriate model based on viability of the project.
The national carrier Air India, which has been facing a severe capacity
constraint, is set to acquire new aircraft for its fleet. The fleet size of
Air India would be enhanced from the current 34 to 74 by the year
2012-13. In the interim, Air India will go in for dry leasing of aircraft to
launch new flights to a number of destinations. Air India proposes to
expand its network and target an annual growth of 20-25% by leasing
passenger aircraft until the delivery of its new aircraft begins in 2007-
08. Air India has also undertaken major interior refurbishment on the
six B747-400 and eight A310-300 aircraft that it owns. Air India has
started flights to Shanghai and Los Angeles and also introduced
terminator flights from Ahmedabad to London. Air India has identified
need for non-stop operations to USA and is tailoring its fleet acquisition
accordingly. Services to 12 new destinations - San Francisco,
Washington, Houston, Toronto, Manchester, Beijing, Seoul, Taipei,
Sydney, Lagos, Mauritius and South Africa - are being introduced in a
phased manner.
The government has adopted a limited open sky policy under which
designated private airlines can operate additional services to and from
India subject to the existing terms of commercial agreement with the
public sector Air India/Indian Airlines. The response to the scheme has
been overwhelming, with private airlines putting in a request for
operation of more than 2,400 additional flights (equivalent to 500,000
seats) to different airports in the country during the November 2004-
March 2005 period. This move is expected to assist greater
connectivity to/from India and ensure that confirmed passengers are
assured of their seats. In keeping with the government's policy of
allowing designated airlines of all countries that have signed the Air
Services. Agreement with India to operate 7 flights/week to any two
international airports in India, the airlines of Austria, Finland, Republic
of Korea, Maldives, Armenia and Yemen have been offered additional
capacity subject to reciprocal rights to Indian carriers.
Private oil firms like Reliance and Essar have not been able to grab a
pie of the aviation refueling market so far as very few airports have
land to spare for more oil storage facilities. But the state-owned oil
companies have responded by offering to form an airline refueling joint
venture with the AAI, putting on the table a mixed package of equity
and profit-sharing. This has sparked a fierce debate. The government
oil companies say competition already exists as all major airports have
at least two players supplying fuel while airports at the four metros
have all the three players – Indian Oil, Bharat Petroleum and Hindustan
Petroleum.
Foreign Direct Investment
Aviation Regulator
• Customer rejection
Life seems to have cruised a full circle in the India’s aviation industry.
Almost a decade after a dozen-odd carriers took to the Indian skies and
then quietly folded up, a whole new generation of entrepreneurs- nine
at last count-are now preparing to try their hand at doing business
30,000 feet up in the sky.
Albeit this time round, a good chunk of these new entrants want to
take the frills out of flying and are aiming to provide budget air travel –
with fares that are about 30% lower than those of the existing full
service carriers –in the Indian skies.
Air-India Express:
The first true budget carrier in the Indian skies, Air Deccan led the
price war with announcements of offering limited one-way air tickets at
as low as Rs 700. Though not too many passengers could claim to have
traveled at that cheap fare, the announcement did generate
excitement in the market and helped bring a lot of traditional train
travelers to the airport. The main base of this airline is Bangalore.
Spice Jet:
Kingfisher has also leased 4 brand new Airbus A-320-200 aircraft from
Debis Air Finance, a Company of Daimler Chrysler, which has delivered
directly from the Airbus factory in Toulouse beginning April 2005. Debis
is also a significant investor in Kingfisher Airlines with over US$ 200
million assets placed.
Indus Airways:
Go Airways:
Air One:
Easy Jet:
Among the pioneers of budget travel in the international skies, Easy Jet
is also seeking an entry into the market. But with the Indian laws not
allowing foreign airlines to, directly or indirectly, buy into the domestic
market, its promoter Stelios Haji-Loannou is planning to take the
franchisee route.
RESEARCH METHODOLOGY
Research Objectives
Domestic Airlines: –
• Indian
• Jet Airways
• Sahara Airlines
• Go Air
• Air Deccan
Type of study
the airlines.
A sample size of 100 was taken which consisted of people in the age
Primary source
b) Data was also gathered by informal chats with the employees of the
Once the data was obtained it was tabulated and analyzed keeping in
Statistical analysis
TOOL OBJECTIVE
Organization Profile
The history of flying in India dates back to over a 100 years. Joseph Lin
attempted the first flight across the Indian skies, in a balloon from Lal
Bagh in Mumbai in the year 1887, which rose to a height of 7500 feet.
India was also among the few to witness the first airmail flight on 18th
January 1911 when the French flier Henry Piquet carried the mail from
Allah bad to Naini.
After the First World War, in May 1945, the Government of India
announced a new policy for the development of Air transport Services.
In the first two years after it came into existence, the Government
gave license to 11 companies to operate air services in different
regions. Taking into considerations to deteriorating financial position
of the private airlines, the Government of India nationalized air
transport industry through the Air Corporation Act of 1953 and with
this incorporation began the “Saga of Indian Airlines on the 1st
August 1953”.
The National Domestic Airline came into being with the amalgamation
of all the private Airlines. Indian Airlines took to the sky with a fleet
included 74 DC-3 (Dakota), three-sky master, 12 Viking, 5 Sentinel and
1 each of a Twin Beach – a single beach, an Avro-XIX. A D.H. Dove and
a Saab Safir Aircraft. Ever since Indian Airlines has been constantly
innovating and upgrading its fleet to emerge as a Proud Symbol of
Modern India.
Today Indian Airlines has 30 such aircraft along with 10 A 300s as part
of its fleet. From the era of piston–engines to the modern day jets,
Indian Airlines has come a long way. In the last four decades, Indian
Airlines has grown from strength by keeping an excellent track record
of manpower and infrastructure development.
"With the young staff, attractive ad campaigns and offers galore, the
newly-launched airlines are a force to reckon with," says an industry
analyst. The ministry of civil aviation estimates that air transport grew
24%, Indian Airlines Limited (IAL) needed to act, and fast.
In flying colors
More important was the dropping of the suffix "Airlines" from the
name. "It seems simple, but is anything but that," pointing out how the
image and name change also involves a change in mindset -- from a
plodding public sector undertaking to an airline that is ready to take on
private airlines.
Indian Airlines Limited (IAL) announced its new look with a television
campaign that ran for two weeks across all major cable channels. But
Indian Airlines becoming Indian is such big news that the coverage it
generated left all paid advertising in the dust. News channels covered
the makeover extensively. Almost all the daily ran photographs of the
new A 319, the new logo and the new name -- creating more publicity
for the airline through word-of-mouth than any paid advertisement
could ever hope to achieve.
But a logo and name change is just part of the story. More important is
the overall image of the airline. If the new look has to seep into every
visible part of the airline, that means reigning close to 60 touch points
- from the ticket, the counter, the colour of the floor inside the aircraft,
to the uniforms and the standard of service.
"A new look comes with strings attached," as per said by the brand
analyst. "Indian will have to pay attention to the customer-airline
interface as well. The only worry is the company struggling to live up to
the expectations. A brand is not just about cosmetic changes but about
the experience, too. In the pipeline are new uniforms for the staff
(although the saree may still not make way for western outfits for the
female cabin crew); new interiors for the craft and new crockery and
flatware; and upgraded in-flight entertainment such as personal
screens, radios and so on. The new brand name will find its way onto
everything associated with the airline over the next month -- signage’s,
tickets, baggage tags, stationery, boarding passes and so on.
Of course, the bigger physical changes will take time. While all the new
aircraft will be emblazoned with the new logo, the old aircraft will be
repainted only during their "major maintenance" cycles -- every 12 to
18 months -- when they are painted anyway.
It is taken for granted that a private company will have a fresh image
and a PSU needs to look like a drab dowager.
For Indian Airlines, which is on course for a modest Rs. 60-65 crore net
profit in 2004-05 the first time in the last eight years, the last few
years have been a revelation. After reporting a Rs. 40 crore profit in
2001-02, Indian Airlines suddenly had seen its market share drop and
its supremacy challenged.
Pilots left the airlines in hordes to more lucrative jobs with the private
operators, which resulted in under utilization of its Boeing fleet.
Passengers, too, suddenly realized that there were airlines willing to
offer that little extra bit that means so much, and Indian Airlines
suddenly saw its market share drop to 53% from its earlier
unassailable position.
(a) The wage bill kept shooting up and was more than double in first
three years while the operating cost remained much the same.
(b) The lowest paid employee in IA, sweeper or a peon take home
Rs. 8000 to 10000 every month, and there are 800 – odd
sweepers as regular employees which constitute a heavy load on
the operating cost.
The first thing that the management under managing director and
chairman Mr. P.C. Sen, did was to establish employee confidence, a
new productivity – linked incentive scheme was started, the jet
engine overhaul centre in Delhi was hiked off into an autonomous
profit centre. A 100% subsidiary, Alliance Air, was started in a bid to
match the pilot salaries being offered by the competitors.
A new marketing strategy too helped put IA back on the rails. The
airlines decided to increase its international operations, and capture
the NRI traffic. IA focused on two factors: one the cultural identification
factor, and two, because it links smaller towns, IA can take a
passenger closest to his home town, IA has also increased the
frequencies on several sectors, and upgraded the meal services.
Besides, IA has undertaken changes in the seating arrangement to
provide greater legroom on the flights.
All these steps helped improve the aircraft utilization levels from the
abysmal low 1600 hours per aircraft per annum to 2700 hours per
aircraft per annum. The average passengers flying IA operated 220
flights to 58 domestic and 17 foreign destinations too.
AFTERMATH
To rectify the melody that has been slowly but surely creeping,
resulting in crippling results and damaging reputation. Indian Airlines
took resort to the turn around strategy.
As the first step free and frank discussions with a cross section of
the employees were held. Top management undertook extensive
tours of all stations to communicate the details and vision behind all
major policy initiatives and to get their response to them. Focus on
training of personnel was enhanced to increase effectiveness. A
greater transparency was built into recruitment and transfer policies
with a view to boost their trust and confidence. In interactions with
unions and Associations a firm but fair attitude was taken.
Productivity Lined Agreements, where the inflows exceed the
outflows despite the fact that market wages were being given, were
entered into.
The first of such profit centres was the state-of-the-art Jet Engine
Overhaul Shop at Delhi. Similarly the Central Training Establishment
at Hyderabad was also converted into a Profit Centre. On conversion
as Profit Centre the earnings of CTE from outside party jobs after
fully meeting the requirement of Indian Airlines, increased from Rs.
390 lacs in 1997-99 to Rs. 690 lacs in 2003-04.
I. PRODUCT IMPROVEMENT
1999-00
EXTRA SEAT-PITCH:
WIDER SEATS:
CHOICE OF MEALS:
2000-04
CHICK-IN PLUS:
DIET SPECIAL:
MEAL SPECIAL:
TRANSIT SPECIAL:
FESTIVAL FOODS:
REPORTING TIME:
• Off the 53 domestic stations where Indian Airlines flights are being
operated presently, 52 stations are equipped with computerized
reservation facility.
• Indian Airlines and Air India jointly under National Marketing Division
(NMD) are distributing Systems Interface for Travel Agents
Reservations (SITAR), which is the state-of-the art technology from
SABRE
6. Incentive Schemes
7. Price
COMPANY PROFILE
With its corporate office in Mumbai, Jet Airways has flown other B/45
million passengers from May 1996 till January 2001, which includes
about 22% traffic originating abroad to with (tourist and businessmen)
thereby earning considerable foreign exchange.
Jet Airways currently operates with an average system wide seat factor
of around 75% and flies and flies to 27 cities in India – Ahmedabad,
Aurangabad, Bangalore, Kolkata, Calicut, Chennai, Cochin, Coimbatore,
Delhi, Goa, Guwahati, Hyderabad, Indore, Jaipur, Jammu, Jorhat,
Lucknow, Mangalore, Mumbai, Nagpur, Pune, Srinagar,
Thiruvananthapuram on an average the airline operates flights daily
that gives it a share of 27% of the domestic aviation market with a
fleet of 25 new generation Boeing 737 aircraft’s. With on estimated
turnover of Rs. 1,000 cr.
VISION
The founders of Jet Airways set up the airline based on the vision that
Jet Airways would be an airline, which would upgrade the quality and
standard of domestic air travel in India, by achieving the standards of a
world-class domestic airline. This was sought to be achieved by
offering reliable and safe operations and high standards of service,
whilst simultaneously ensuring profitability and providing its
employees with an environment for excellence and growth.
CORPORATE 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.
MARKETING STRATEGIES
With an eye on the future Jet Airways (JA) aspires to take off into the
best practices in airspace to make air travel a smoother and enjoyable
experience. Working on the principle lay down by its chairman Naresh
Goyal “ never take the customer for granted” and “if the product is
right the customer will come”. Jet Airways has pressed the latest
Information Technology into service and has adopted a professional
attitude by hiring Lintas for developing the corporate identity and logo,
the IMRB to do the market survey and Anderson Consultancy to do a
feasibility study and help prepare the strategic business plan. Their
motif the yellow rose is the international symbol for friendship, warmth
and caring.
The main strength of Jet Airways lies in the excellent services provided
both on the ground and in the air, their quality consciousness and their
youngest fleet consisting of most advanced aircrafts.
Flight Information
Computerized Reservations
Baggage Allowance
They fly the latest, most modern 737-300/400 aircraft and now also
India’s first 737-500. Their pilots are veterans, with extensive
training abroad, and with a great deal of lying experience. They
also have a technical commendation from Boeing, for achieving
99.5% reliability.
The cabin crew dressed in designer’s out fits are trained to provide
the customer with warm and courteous service – of a standard
that’s unmatched by any other airline. They’ll welcome the
customer with refreshing hot or cold towels. Offer a welcome drink,
Serve fabulous meals. And make the flight as easy as possible.
Food and Beverage If you are a frequent flier with Jet Airways
there is very little chance you will tire of the in-flight cuisine as we
rotate meals every 8 days and change the entire menu every six
months.
Beef and pork are not served on board any Jet Airways flight. All
our food is cooked in pure vegetable oil. Special meals-diabetic, low
cholesterol, medical, Jain and baby meals are also available.
However passengers with special dietary requirements must inform
us of their needs at the time of making their reservations and at
least 24 hours prior to departure.
Electronic Devices
Jet Privilege
Jet Privilege is the Frequent Flier Program of Jet Airways. The Jet
Privilege Program offers members an unmatched mix of rewards
and privileges. In addition to facilities like priority wait listing, tele-
check-in, excess baggage allowance etc., as a Jet Privilege member
you can now exchange your miles for free flights on the British
Airways worldwide network spanning 174 destinations across the
world. Jet Privilege members can also exchange their miles on the
KLM global network, covering more than 81 countries across 6
continents or on Northwest network covering more than 400 cities
in the world.
As a Jet Privilege member, can exchange their miles for free flights
on KLM/Northwest global network, covering 400 cities and 80
countries spanning 6 continents. The KLM/Northwest partnership
now offers daily flights from India to Amsterdam with excellent
connections within Europe and to the USA and Canada. Thus the Jet
Airways and KLM/Northwest airline partnership gives you access to
a worldwide route network.
4. Other Services
Coach Service
Interline Transfers
Towels
Sleep Easy
Reading Material
5. Pricing
Under the “Visit India” scheme valid for 15 days the travel is to be
completed by the midnight of 15th day and “Visit India” for 21 days
on the mid-night of the 21st days from the date of commencement
of the journey.
With a view to promoting tourism the 15day Visit India tickets will
be available for USD 550 and 21day Visit India tickets will be
available for USD 800 per adult passenger for travel in the
Economy Class. These fares are available for non-resident Indians
and Foreign nationals.
Night flights help a traveler pack more into his working day. At the
same time saving the traveler a hefty 25% on ticket prices. A night
saver flight gives a customer great value when he travels on
business. He gets a full working day-no curtailed meeting no
unfinished work and he flies Jet Airways for a cost less.
THE SAHARA AIRLINES
A CORPORATE PROFILE
Sahara airlines are a part of the 4000 crore Sahara India Group.
The Sahara India group, which began with a very modest investment in
Gorakhpur in 1978, today, has a business level of Rs.6000 cr with over
1280 offices all over India.
Establishment
Profit Sharing:
The policy of profit sharing is also very unique. The company gives:
25% towards social development, 35% towards company’s net owned
funds, 40% towards the welfare of Karmyogi workers.
SAHARA INDIA
Sahara India Group has business interests in the following sectors:
4. Mass Communication:
(c) Print Production: One of the largest and fully integrated, Pre-press
one-press and post press print production facilities in India.
(d) Audio-visual Production: House in Bombay is the biggest and the
best Audio-visual facility in India, in the Pvt. Sector.
INGREDIENTS OF SUCCESS
The airline has its own NDT shops, Wheels and Brake assembly shop,
battery charging shop, Avionics shop and Seat Repair shop. Sahara
airlines are the only domestic airline that had its own Hangar for
Aircraft maintenance. The airline has successfully completed a ‘D’
check and 7’C' checks.
The airline has interline agreements with Air India, Air U.K., Anselt
Australia, Air Lanka, Air Mauritius, Air France, Asian Airlines, British
Airways, Canadian International, Delta Airlines, Everest Air, Emirates,
Ethiopian Airlines, ELAL, Egypt Air, Gulf Airways, JAL, KLM, Korean Air,
Kuwait Airways, Quantas, Royal Brunei, SAS, Singapore Airlines, UA
etc.
MARKETING STRATEGIES
Sahara Airlines is all about customer care. A service offered in all its
flights to all it passengers is high on quality. At Sahara, it is a firm
belief to uphold the highest standards of traditional Indian hospitality,
culture and courtesy. Sahara’s highly trained personnel ensure that a
clients trip is not only comfortable, but a memorable one right from the
time of check Sahara’s value additions such as Valet Service, Tele
Check personalized reading kit and meal preferences ensure highest
standard in customer care and customer satisfaction.
An examination of the above four aspects reveals the areas where the
organization should concentrate upon to create the benefit or value
customer are looking for. Understanding the rationale behind customer
requirements can be obtained by studying the demographic and
Psychographic factors pertaining to the target customer group. This
clearly indicates what specific product features and ‘add-ons’ are to be
offered to ensure value acquisition by the customers.
Creating and Delivering the Value: Cost competitiveness of a
company’s value creation, delivery process, its uniqueness and
sustainability, provide the company with a long term competitive
advantage that cannot be watched by both existing and potential
opponents. To achieve this, value creating activities within the firm
should be organized and managed in a manner that help in creating
the customer value in a unique and cost-competitive way.
BUSINESS SUCCESS
Since the early 80’s, several firms have either collapsed or been taken
over; some have moved up the performance ladder and new ones have
been formed. A close examination of these firms reveals that there are
a number of attributes that characterize success or failure in today’s
world of business. These attributes are listed in the table below:
1. Newspapers
2. Magazines
3. Television
4. Internet
6. Hoardings.
1. Packages
The Sahara Holiday plan to Goa was launched primarily to promote the
Del-Goa-Del Sector. For this, purpose the cur line had tied up with
premium hotels like the heritage village club, Holiday Inn, Bogmalo
Beach Park Plaza Resort, Cidade de Goa, Taj Holiday Village and Fort
Aguada Beach Resort.
Priced at nominal rates for 3 nights and 4 days, the package included:
• Air fare Del-Goa-Del (Economy class) for a single person
• Casino coupon worth Rs. 100 per room, once during the stay.
This was a plan launched primarily for the promotion of Banglore and
Delhi sectors. Sahara, tied up with hotel ‘Le-Meridian (Banglore) and
The Park (New Delhi) to attract more and more corporate travelers and
by providing value added services.
This plan was similar to the Goa plan. In addition to a return ticket on
Delhi – Banglore Delhi sector, a customer could avail of 2 nights and 3
days stay at the Taj Residency, at Bangalore.
2. Direct Mailers
1. Updates
2. Sales kits
3. Schedules
4. Discounts etc.
3. Familiarization Trips
INDIAN AIRLINES
Flying Returns:
This FFP brings to the customer free tickets both domestic and
international, choice of over 110 designations on IA’s extensive
network. There is also exclusive tie up to earn Add on Mileage Points
(AOMP) and Club Mileage points with the spouse.
Option 1
Option 2
Jet Privilege:
baggage allowance etc., one can exchange the miles for free flights on
the world. Jet privilege members can also exchange their miles on the
the world.
SAHARA AIRLINE
The Sahara Club Crown offers 3 level of benefits: Sahara Silver, Sahara
Gold, Sahara Platinum based, add on points. The provisions are for
redeeming the points instantly for gifts or accumulate them for more
expensive gifts. The other privileges includes priority wait listing, extra
MAEKTING MIX
Product: Product:
Product:
• Meal special - • Sahara Royal –
better • New generation Business class
presentation aircrafts 1 Boeing enjoys premium Rs.
with weekly 737-500, 3 300-400 because of
changes. Boeing 737-400, add on
• Festival foods - 4 Boeing 737- conveniences.
special food and 400. Advance
festival. Generation
Boeing 737-700 • Customize in-flight
and 737-800. cuisine – special
meal – Jains – no
• A large variety of
onion, diabetics and
meal preferences
child meals.
(15 different
variety) In flight library –
Bestseller books
• Airport launches
magazine, international
for Club Premium
daily, personalize reading
Passenger.
material kit are provided.
• In flight service
comforts example
reading material
first aid box,
smoke detectors
in toilet.
• Seat request
facility at the
time of
reservation.
Physical Evidence: Physical Evidence:
Promotion:
Promotion:
• Strong
Promotion:
aggressive • Advertisements in
advertising • Aggressive newspaper,
campaign by advertising magazine, TV,
Nexus Equity campaign-print Internet,
Advertising media by Lintas participation in
Company. 3 Ad. Agency. travel trade events.
separate
• Cellular phones • Holiday packages –
campaigns
and sim cards to Up to Sep. – lean
highlight IA’s
customer in period – to maintain
strength, fleet
association with load factor they
size
Messer’s More have tie-ups with
maintenance
Touch. Chain of Hotels for
and
free stay holiday
infrastructure • Interline
packages to Goa,
and consumer agreements with
Mumbai and
benefits. more than 100
Bangalore.
international
• Senior citizen
airlines for • Direct mailer on
discount 50%.
transfer of board and
• Touchdown passenger. reservation counter
board at 6 major about updates, sale
metros to keep kits, schedule
passenger discount voucher to
informed about convey about the
relevant airline performance.
development.
• Sponsoring mega
• Incentive events like Sahara
schemes for cricket cup, Gold
agents – 3% Lake Open Tennis
sector linked Championship etc.
incentive
commission.
Process:
• Manage large
size effectively
Process: Process:
by separating
the whole • Fully • Exclusive Sahara
activities and computerized valet services for
creating reservation baggage handling.
separate profit system. First
• Tele check-in
centre. airline to be co-
system for all
hosted with
• Waiving of passengers both
SABRE.
cancellation class.
charge provided • Specially
reservation is designed check-in
cancelled 3 hrs counter for club
before schedule premium
and permitting passenger.
postponing of
• Tele check-in 3
ticket without
hrs prior to
extra charge.
departure.
• Tele check-in
• Speedy baggage
Business class.
clearance and
• Dialer coach service –
cancellation of auto motive
ticket. baggage
reconciliation
• Cargo handling
system for
80% market
matching
share. It has
baggage tags
exclusive tie –
with boarding
ups with GATI
passes.
for door-to-door
service.
Price:
• “Make up
Price:
strategy” i.e.
slash in price Price: • Drastic Reduction in
for the make up prices on trunk
of losses. It was • Jet Airways has
route during lean
followed up by announced US
many airlines period.
dollar “Visit India
as a quick Fares” for travel • Stand by fares –
penetrating
on its network in special 20% of on
strategy to
draw in big India round the gross normal fare
crowds. year. on all sectors
salable to both
• There can be Caring for disabled
classes 3 hrs before
15% bulk handicapped and
discount to schedule.
infirm passenger and
passenger get preference in
groups allotment of seat and
depending on
service.
market
conditions. Special attention to
kids Jet Kids – in flights
• Point-to-point program for kids,
fares have which include variety
been
in meals, cold drinks
rationalized (a
special discount and Jet Kids in flights
of 9% is offered magazine.
on 135 specific
routes) and
excess
baggage
payments are
accepted in
credit cards.
COMPARATIVE MARKETING STRATEGIES
From the above table it is evident that Jet airways are by far the only
challenger to IA’s domination over Indian skies with Sahara India the
only contender a distant third in position. With the entry of Jet
Airways the Indian passenger got a taste of service they desired. Its
unique selling proposition (USP) is as follows:
• Fresh recruits trend in Jet ways rather than people from other
airlines who carry the badge of the old culture with them. The
positive and helpful attitude of the frontline staff is the hallmark
of Jet service.
AIR DECCAN
To keep overall costs of the company low, Air Deccan took the
following measures:
Food: Unlike full service airlines, Air Deccan did not provide any
food on board. However, it sold snacks and water bottles on its flights
for a price. Serving and consumption of alcohol were not permitted.
The company felt that for short-distance domestic flights, most
passengers did not want food. It said the savings on food were passed
on to passengers in the form of lower fares.
Extra Seats: Since Air Deccan did not provide food, it did not require
space for storing meals. The saved space was utilized for putting in
extra seats. The company also reduced leg space compared to full
service airlines. This helped increase the seating capacity by another
20%. For example: An A-320 is having 140 seats in case of existing
airlines. Air Deccan has an advantage of over 20% extra seating
capacity as aircraft will have 180 seats.”
Distribution Costs: Air Deccan did not sell tickets through travel
agents but did so through its websites and call centres. At the time of
booking, passengers got a booking number, which they had to quote to
air Deccan staff at the airport and show an ID with a photograph to
collect a boarding pass. This system did away with commission
charges for agents, printing charges for tickets and saved the company
close to 11% to 15% of total costs. Air Deccan outsourced its call
center connectivity to Bharti and Internet reservation system to the
Delhi-based Inter-Globe Enterprises.
Lower Employee Costs: Air Deccan operated with a small crew size,
which ranged between 4 and 6 and used only one airhostess per flight.
The company recruited employees on contracts. This helped reduce
was also 20% less than that of FSAs.
Other Measures: Air Deccan did not hire any consultants for its
various operations or for preparing the company’s project report, thus
saving on project costs.
• Analysts felt that there was huge growth potential for LCAs in
India due to the country’s huge 200-million middle-income group
population. Mr. Gopinath expected that at least one-fourth of this
population would use LCAs in the near term. He pointed out that
India had 15million rail travelers everyday. Of these 1,70,000
traveled in the air-conditioned class, and were potential
customers for Air Deccan owing to the comparable prices.
• The media reported that passenger feedback for Air Deccan was
largely positive. A few passengers felt they had a similar
experience to that in FSA’s.
Presently major network careers are Air India, Indian Airlines, Jet
Airways and Air Sahara. Whereas Air Deccan is the first and only low
cost/no frills airlines.
The LCC business is certainly set to grow more than that of the
network carriers and, hence, gain a higher market share.
Low Cost Carriers in 2004 had 400 orders out for new planes, whereas
the old network carriers had only 150 planes on order around the
world. Low Cost Carriers seem certain to grow and capture more
market share, and many of them profitably.
i . ex e
After 5 years of phenomenal growth, low cost airlines in Britain account
for 41% of seats on domestic flights and 32% on routes to continental
destinations.
In India, only Low Cost Carriers Air Deccan has been chipping
away the market share from Indian Airlines largely, then Air
Sahara and then Jet Airways.
The successful Low Cost Carriers have ensured that the basic elements
of punctuality, safety, baggage handling, housekeeping and ease of
booking have been in place. In fact, airlines such as Southwest, Easy
Jet and Ryan Air have achieved even greater degrees of punctuality
and less number of flight cancellations than the network carriers.
In India, the new entrants like Kingfisher and Spice Jet are succeeding
in pulling human resources like Pilots, Engineers and Technicians from
network carriers such as Air Sahara, Jet Airways and Indian Airlines.
Sometimes, resignations of pilots in large number have created even
cancellations of flight. This situation will be more complicated when
some more Low Cost Carriers like Air One, Go Airways and Indus
Airways will have footprints in the civil aviation industry in India. The
cost of labor again contributes a major portion to the Low Cost Carriers
cost advantage and this labor cost, therefore, likely to reduce over
time.
This cost creep at Low Cost Carriers due to the above, as well as the
cost reductions the network carriers have achieved and are targeting
for the future, have gradually reduced the difference between network
carriers and Low Cost Carriers. Even in other aspects such as the
airports they use, and the services and frills offered, these models
have started having some similarities. Some of the bigger Low Cost
Carriers also have started offering limited connections, moving towards
the hub and spoke model of the network carriers.
Thus its seems as if there is some kind of convergence in the two basic
models. How far these models converge and how much they retain
their basic differences is yet to be seen. For now, it is
Advantageous for Low Cost Carriers.
GO AIR
Profile
The Mumbai-based Go Air, yet another new entrant in the civil aviation
map, is launching its services on the Coimbatore - Mumbai sector
Go Air is from the Wadia group, which has Bombay Dyeing, Britannia
and Bombay Burmah Trading Corporation amongst the other entities in
its fold.
Go Air would be India's third low cost, no-frills carrier after Air Deccan
and Spice Jet. The first aircraft was an Airbus A-320 with 180-all
economy seats.
Delhi, Kolkata and other sectors were opened up in due course as the
other aircrafts get delivered. The airline would have 5 Airbus A-320
aircraft by the turn of its first year of its operations.
The Go Air terminal is sizzling with activity. Kingfisher Airline, which
had also made noises about being low-cost, is now being touted as a
full-service carrier. Go Air was claiming that they will be the lowest-fare
airline in India.
The airport service is an issue -- such as the turnaround time (the time
taken to get people from the lounge into the plane). For Jet Airways,
the turnaround time today is 45 minutes. For Air Deccan, it is 30
minutes for a 180-seater Airbus and 15 minutes for a 48-seater ATR.
"Go Air will have to be really fast on the ground," as a competitor. Also,
most low-cost carriers started with second-hand ground service
equipment like coaches and push back tractors. Coaches, which
transport passengers from the terminal to the plane, account for 15%
of the costs as a new coach is priced between Rs 35-45 lacs.
Having a low-cost airline may be the flavor of the season, but the cost
structure is completely different compared to a full-service airline.
• A. Fuel
• B. Maintenance
• C. Airport charge
• D. Capital cost
• E. Salaries
• H. Insurance
• I. Other
MARKETING OF GO AIR
A fleet of five Hyundai Getz cars will make their way from a dealer in
suburban Mumbai to the refurbished environs of the Rs 4,000 cr (Rs 40
billion). It will be a rally with a difference. The cars will drive in single
file, painted in bright turquoise blue and displaying a gigantic white
logo reading, "Go".
Current projections are that Go Air will take off with a fleet of three
180-seater used A-320 aircraft. The strategy is to go in for a
combination of leased and owned planes. Wadia claims that they will
have 20 leased planes beginning in the second year, at least some of
which will include Boeing 737-800 aircraft. "The first of our new aircraft
will come in from 2008," who has being to Paris to talk with both
Boeing and Airbus.
The latest A320 order from GoAir serves to highlight the outstanding
popularity that the A320 Family has enjoyed with both established and
start up low-cost carriers, including in the Asia-Pacific region, over the
past few years. Almost 480 A320 Family aircraft are already in service
with 38 carriers across Asia-Pacific.
GoAir have selected the A320 Family for there future fleet
requirements. The A320 Family is the preferred choice of all leading
Indian operators. This is the beginning of a long-term partnership
between GoAir and Airbus. GoAir epitomizes the new spirit of the
Indian air transport industry, with its focus on keeping costs low and
passengers satisfied. The A320 is the perfect aircraft to meet GoAir’
expectations, with its combination of low fuel burn & maintenance
costs, and its well-equipped, comfortable cabin.
They share the same airframe - only the fuselage lengths are different
- plus the same cockpits, systems and engines. With the most modern
design of any single-aisle aircraft, the Airbus A320 Family is best
placed to deliver the lowest running costs, making it the most
economic aircraft in its class. And with the widest cabin in their class,
passengers get more space, comfort and overhead stowage space,
making the Airbus A320 Family the preferred aircraft on short-to-
medium haul routes. The Airbus A320 Family also delivers many
features as standard, such as weight-saving carbon fiber primary
structure, a choice of engines and auxiliary power units, fuel-saving
aerodynamic design that includes wingtip fences, weight-saving carbon
brakes, cost-saving centralized maintenance, and category 3B auto
land. Wadia says that there are no tie-ups being considered for GoAir.
GoAir planning expansion and free tickets to lure in customers
The company had also started with a similar free ticket scheme when it
launched its operations in the Indian market. They started with
operations covering cities like Mumbai, Ahmedabad, Coimbatore, and
Goa initially. With the newly added destinations, GoAir would now be
serving customers from eight major cities in India.
GoAir has promised that they would rapidly expand their covered
destinations to more cities progressively. “The addition of new routes
substantiates our commitment to our passengers by connecting them
to important destinations in India. All four destinations have immense
business and leisure potential. Our services to these cities will not only
enhance our business but also increase tourist flow to these
destinations”.
ANALYSIS OF CUSTOMER PREFERENCE
Business 75%
Professional 15%
Holidays/leisure 7%
Others 3%
holidays/leisure Others
7% 3%
Professional
15%
Business
75%
It can be seen that as per the sample size taken there were 75% of the
Once in 3 months 2%
Once in 3
m onths
Once a m onth
2%
20%
Once in 2
w eeks
78%
The customers those travel once in 2 weeks constitute 78% these are
usually the business or professional purpose trips. While only 20% are
Econom y Class
58% Business Class
42%
the big companies, while 58% o the people prefer traveling in economy
class and factors like meal, comfort and other facilities does not matter
Jet Airways 18
Sahara 20
Go Air 6
Air Deccan 11
Air Deccan 11
Go Air 6
Sahara 20
Jet Airways 18
Indian 45
0 10 20 30 40 50
Food 15
Comfort 12
Safety 18
Crew 5
Economical 35
Economical
Crew
Safety
Comfort
Food
Courtesy
0 5 10 15 20 25 30 35 40
In case of in flight comfort the most important parameter of ideal
• Economical
All these had equal weight age i.e. all of them are on top priority.
provided to them irrespective of the class they travel. This shows that
the travelers are becoming all the more service conscious and do not
Indian 34
Jet Airways 20
Sahara 17
Go Air 8
Air Deccan 22
35
30
25
20
15
10
0
Indian Jet Airw ays Sahara Go Air Air Deccan
Indian 39
Jet Airways 11
Sahara 20
Go Air 8
Air Deccan 22
40
35
30
25
20
15
10
0
Indian Jet Airways Sahara Go Air Air Deccan
This shows that people a generally aware of Indian Airlines (as
compared to Sahara and Jet and actually travel by it also. The most
it and also travel by it. Most liked feature of the advertisement is the
media.
This shows that people who are aware of the airline are not just
verbally aware but also prefer to travel by that airline. This depicts
to the airlines.
to travel by IA.
Ques8. Which ticketing procedure you prefer the most?
From the responses of the traveler it is evident that the most preferred
the Internet, while travel agents also play vital role in ticket bookings
ticketing offices.
Travel agents
Fully computerized
Hotel Arrangement 8
Restaurant Service 12
0 10 20 30 40 50
and rules.
Ques10. Did you ever have bad experience with the airways?
Grievance Handling
Only 29% confessed that they had a bad experience with airlines.
Among these the 79% of the travelers had the main reason for the bad
Yes
29%
No
71%
When asked to share a particular experience, among the 29% with bad
experience, 62% revealed that the bad experience was mainly because
of delayed in flights and the staff not being courteous to inform them
Baggage loss 8
Cancelled flight 30
Delayed flight 62
0 20 40 60 80
Ques11. Which is the most Preferred Domestic Airlines in
terms of service?
Go Air
Indian
7%
21%
Sahara
Airlines
30%
airlines followed by the Air Deccan and then the Indian airlines, with jet
The research study and the analysis of the various aspects tapped lead
classes.
The healthy competition of domestic airlines has set new trends in the
the quality and the desire to win over the constraints was totally
dismal. With the oncoming of Jet Airways and Sahara Airlines there is
sea change in the quality of service and the pride of the job.
about the passenger comfort and take pains to see that the flight is on
service.
It’s rush hour in the Indian skies. But this is making everyone
associated with the aviation industry, from the government to the
airline operator and finally to the traveler grinning.
While the government is under the glory of opening-up the skies and
increasing air connectivity both within the country and outside world-
the operators are raising a toast over the rapidly increasing number of
air passengers.
Air Fares-with the advance purchase (APEX) schemes- are already at a
record low and if airlines are to be believed, the coming few months
will see domestic ticket prices dropping by another 30-40% and, a host
of new no frills and low-cost carriers will lead this second wave of fare
cuts- nine at last count-waiting for take-off this summer.
Official statistics reveal that air travel in India since the introduction of
APEX fares, has seen an over 20% jump year-on-year and scope for the
growth, government officials say, is immense.
With a host of new airlines starting operations this year with promises
to drop airfares, the number of passengers in India is expected to grow
to 50 Million in 5 years. The global success of this low-fare model is
now creating huge new investment opportunities in airline startups and
restructuring older airlines.
While the scenario might seem similar to the early 1990s-when a host
of entrepreneurs rushed-in to set up aviation ventures that folded up at
an equally fast pace- analysts are confident that the industry is today
more resilient.
The UPA Government with Airport Authority of India has been busy
these days for mega plans to transform the airport infrastructure
across the country.
Rs. 3000 crores has been earmarked for the short-term upgradation of
the non-metro airports alone. In addition, around Rs 20,000 crore is
expected to invest in modernizing the infrastructure and the facilities
at the Delhi and Mumbai airports.
The upgrades do not cover just runway extensions and navigation aids.
The focus is on having user-friendly airports and terminals that provide
a pleasant and clean ambience. The new concept for upcoming
terminal buildings, the official adds, include features such as
structured steel with toughened glass glazing and walkways.
The other facilities being planned include in-line baggage screening for
check-in, escalators, improved parking in the city-side for passengers,
and a common user terminal system that will enable passengers to
check-in from any counter.
Besides using both the private and public sector enterprises, the
government is now planning to get air travelers to also pay for
development of new Greenfield airports across India.
That leaves the more price sensitive ACI and ACII class travelers of
Rajdhani trains who are more likely to switch their loyalty to air travel.
But once again, the airlines will have to cut their price down
dramatically as the Rajdhani Vs Air Travel story could be summed up
as a low fares Vs less Time battle. While Apex fares make air travel
affordable and comparable to Rajdhani fares, such tickets are limited in
number and not readily available.
Over 2000 travel agents across the country threatened to suspend the
sale of Air India tickets to protest the national flag carrier’s decision to
cut agent commission from 7% to 5%.
This is evident that these commercial agents for the aviation industry
in India generate Rs 20,000 cr of revenues
Airlines in the domestic sector have blamed the high cost of aviation
turbine fuel (ATF) and the high sales tax on fuel ranging from 4% to
32%. Recently the government has reduced ATF for turboprop aircraft
to 4% of declared goods category under the central sales tax act, 1956
and exempted from Inland Air Travel Tax (IATT) operations in the
north-east, Andaman and Nicobar and Lakshadweep.
With this tax exemption it is privileges for the low profile airlines by
bringing turboprop plane like ATR-42 and ATR-72, which is very
economic to operate.
Fuel Costs of Rs. 32,250 per kilolitre of Aviation Turbine Fuel (ATF)
during April 2005, compared to Rs. 27,250 last month. The ATF rate for
April is close to November’s all time of high of Rs. 33,600 per kilolitre.
It is expected that the first casualty would be the heavily discounted
fares offered by the LCA (low cost airlines).
• The response of people to the questionnaire was not free from the
some compression did not respond frankly. Moreover, all the Central
• The sample size was limited to 100 travelers only. This too was not
Indian Airlines.
The comparison of private and public company has the inherent draw
NAME: ____________________________________
ADDRESS: ________________________________
OCCUPATION: ________________________________
Business
Professional
Holidays/leisure
Others
10. Did you ever have bad experience with the airways?
Yes No
Indian
Jet Airways
Sahara Airline
Go Air
Air Deccan
2004, 2005.
• Press Release of Jet Airways, Sahara Airlines, Indian, Go Air & Air
Deccan
www.jetairways.com
www.nic.in/indian-ailines
www.goair.com
www.airdeccan.net
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