Download - Low Price Carriers in India
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Low Cost CarriersLow Cost Carriers
BUZZBUZZ
Section BSection B
Image courtesy of Boeing
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AirlinesAirlines
“Once you get hooked on the airline business, it's worse than dope.”
“This is a nasty, rotten business.”
“Air transport is just a glorified bus operation.”
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Global CarriersGlobal Carriers
US
Ireland
Ireland
Malaysia
Australia
Saudi Arabia
Singapore
Germany
UK
US
Southwest Airlines
Ryanair
Easy jet
AirAsia
Virgin Blue
Air Arabia
Valueair
Air Berlin
Air Southwest
US Airways
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World Scenario - Low Cost AirlinesWorld Scenario - Low Cost Airlines
The successful low cost airlines are more profitable than established carriers
Ryanair has a market capitalisation of about £3 billion Globally, the largest and most successful low cost airline is
Southwest in the US Operating Margins of different international airlines:
RyanairSouthwestUnited AirlinesLufthansaAir FranceKLMBritish Airways
22.7%21.8%11.9%
5.7%3.5%1.5%0.9%
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Aviation Industry in India : Aviation Industry in India : CharacteristicsCharacteristicsHuge PotentialUnder penetrated market
o Total Passenger Traffic : 50 milliono Passenger trips per annum :
India : 0.05
United states : 2.02
Untapped air cargo market
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Aviation Industry in India : Aviation Industry in India : CharacteristicsCharacteristics
India GDP : 9.6 % per annum
Domestic air travel : 20 – 25 %
WTTC Travel & Tourism : 8.8 %Over next 10 years
Medium Term Growth Forecast :
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Aviation Industry in India : Aviation Industry in India : CharacteristicsCharacteristics
Constraints :o Infrastructure constraintso Shortage of airport facilitieso Parking bayso Air traffic control facilitieso Takeoff and landing slots.o Less than 100 airports having more than one daily service.
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Macro Environment AnalysisMacro Environment AnalysisMain Factors :
Political EconomicSocio-cultural
TechnologicalOther Factors :
Demographic Natural Environment
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Macro Environment Analysis : Macro Environment Analysis : PoliticalPolitical
Open Sky PolicyDeregulations in different spheresLow entry barriersFDI limits :
o 49 % for airlines o 100% for airports
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Macro Environment Analysis :Macro Environment Analysis :EconomicEconomic Growing middle class income Consistent GDP growth of more than 8%
and projected rate in two digits Hike in average salary 14%(highest) in the
world Tourism industry growth :8.8 %in 2005
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Macro Environment Analysis :Macro Environment Analysis :Socio-culturalSocio-culturalGrowing middle class :
o 1993-1999 : 39.5 m to 56.7 m householdso 2005 : 300 mo 2010 : 400 m (Estimated)
Increase in leisure travel by tourists by 15 % in 2005
Foreign tourists in 2006 : 3.2 mnStatus symbol to travel in plane.
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Macro Environment Analysis :Macro Environment Analysis :TechnologicalTechnologicalModernization & Privatization of Airports
Modern Technology for efficient handling of aircraft, passenger and cargo.
Example : ILS, CAT-3
Developing Greenfield Airports with Private Sector
Example : Bangalore Airport Corporation Ltd.
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Macro Environment Analysis :Macro Environment Analysis :Demographic and NaturalDemographic and NaturalChanging pattern of consumersHighest percentage people of age group 20-
25Educational environmentShift towards family conceptHigh energy cost
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Low Cost Carriers in IndiaLow Cost Carriers in India
Air DeccanSpiceJetIndiGo AirlinesGo AirJetlite (Formerly known as Air Sahara)
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Business Model of Low Cost Business Model of Low Cost CarriersCarriers 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 rolesUnbundling of ancillary charges to make the
Headline fare lower
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Aviation Industry in India : Aviation Industry in India : Market ShareMarket Share
The Domestic Aviation Market Share
34%
20%21%
8%
8%6%
2%
1%
Jet airways
Indian
Air Deccan
Air Sahara
Kingfisher
Spicejet
Goair
Others
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Market Share in LCC SegmentMarket Share in LCC Segment
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Airline Industry in India : Airline Industry in India : Service Vs Price GraphService Vs Price Graph
S
E
R
V
I
C
E
P R I C E
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Air DeccanAir DeccanCome SIMPLIFLY With Us…Come SIMPLIFLY With Us…
Market Share : 21.2 %
Image courtesy of Air Deccan
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Vision and MissionVision 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 StrategyMarketing 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
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Marketing StrategyMarketing Strategy
Advertisement through print, radio and billboardsIn flight magazine for revenue generatingIn flight shopping scheme called “Brand for less” –
AVA MerchandisingTie-up with Café Coffee DayICICI-Travel agent purchase cardTie-ups with HPCL and Reliance Web World
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How Air Deccan cutsHow Air Deccan cutscost?cost?Quicker turnaround time Lower distributions costs All economy seating configuration No free catering on boardAlternative revenue channels 100% web enabled bookings – e ticketing Enhanced cash flow management
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SWOT AnalysisSWOT Analysis
Strengths : Leader in LCC segment :
First to target the middle class : First mover advantage Highest load efficiency Flies to destinations in the hinterland A ‘Lean-and-Mean’ approach to staffing
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SWOT AnalysisSWOT Analysis
Weaknesses : Focuses mostly on South Indian market Image plagued by frequent breakdowns and near
misses Very limited advertising Reached at the threshold of cost efficiency
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SWOT AnalysisSWOT 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 AnalysisSWOT 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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SpiceJetflying for everyone
Market Share : 6 %
Image courtesy of SpiceJet
Source : http://www.airteamimages.com
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Vision and Mission Vision and Mission
Vision : To ensure that flying is no longer only for CEOs and business travelers, but for everyone
Mission : To become India’s preferred low-cost airline, delivering the lowest air fares with the highest consumer value, to price sensitive consumers
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Marketing StrategyMarketing Strategy
Entered with Rs. 99 fares for first 99 days offering ‘low everyday spicey fares’
Aims to compete with Indian Railway’s AC segment
Aims at future fleet expansion to increase market share
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ChallengesChallenges
Small fleet structureSmall load efficiency compared to Air
DeccanCompetition with new entrantsMarket share of East-central IndiaHigh attrition rate
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GoAirThe People’s Airlines – to FLY SMART
Market Share : 2 %Image courtesy of GoAir
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Strengths and WeaknessesStrengths and Weaknesses
Strengths :Promoted by Wadia groupGoAir FreeFares
Weaknesses : Small network : Only in Southern and Western IndiaSmall fleet structureLoad efficiency
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IndiGoAlways affordable, no gimmicks, hassle free
Market Share : 0-1%
Image courtesy of IndiGo
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Marketing StrategyMarketing Strategy
Focuses on One thing :
One type of airplane, fare, customer service, route etc.
Uses new Airbus A320-200 aircraftEfficient processes
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An ExampleAn Example Images courtesy of www.chillnite.com
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Current Trends :Current Trends :Consolidations All AroundConsolidations All Around
Kingfisher-Air Deccan Dealo 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
Jet airways and Air Sahara mergero Air Sahara name changed to JetLite
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Future TrendsFuture 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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Future Trends : Passenger ForecastFuture Trends : Passenger Forecast
Source : www.civilaviationweek.com
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Future Trends : Proposed AdditionFuture Trends : Proposed Addition
Source : www.civilaviationweek.com
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Thank YouThank You
Jai Prakash Mundhra -071221
Kamal Agarwal -071222
Kartik Rawal -071223
Kaushal Dixit -071224
Ketan Mardikar -071225Image courtesy of Boeing
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ReferencesReferences
http://www.wikipedia.org
http://www.flyairdeccan.net
http://www.goair.in
http://www.spicejet.com
http://www.hinduonline.com
http://www.civilaviationweek.com
http://www.businesstravelindia.com
http://www.yahoo.com
http://civilaviation.nic.in
http://www.skygod.com /quotes/
http://www.flykingfisher.com
http://www.goindigo.in
http://indiaaviation.aero