spice jet lcc

8/9/2019 Spice Jet LCC

1/33

APROJECT ON

EFFICIENCY MANAGEMENTAT SPICE JET

Submitted To:Ms. Subhra Behl

Submitted By:Deepak Agarwal

Jagannath Dash

Manisha Gupta

Nitish Kumar

Poonam Yadav

Praveer Saini


2/33

Plan Outline

1. Executive Summary2. Objectives3. Introduction4. Marketing Audit

Market Trends

Key Factor Affecting Aviation Industry

5. Competitors6. Situation Analysis

PEST Analysis

Porter Five Forces Analysis7. Competitive AnalysisValue Chain Analysis

8. STP9. Marketing Mix10. Key Issues & Opportunities

SWOT AnalysisTOWS Analysis

11.Marketing Strategy for chosen optionsCorporate and SBUs StrategyFunctional Strategy

12.Overall Competitive Strategy & Action PlanValue Addition to Customer

Perceptual Mapping

Branding Strategy

Blueprinting

Moments of Truth

Cause & Effect Chart for Airline Departure Delays

13.SERVQUAL Analysis14.Conclusion


3/33

Executive Summary:In this project we have studied the cost efficiency management at Spice jet. The various

marketing strategies followed by it like cost focus, focusing to new market segment,

follower strategy, visionary strategy etc. We have also quantified the customer satisfaction

level by determining the service quality of Spice jet using SERVQUAL Method.

OBJECTIVESTo find out the various factor of strategy which makes spice jet more efficient?

To find out level of customer satisfaction of spice jet.

INTRODUCTIONSpice Jet is a low-cost airline based in Delhi, India. It began service in May 2005 and by2008, it was India's second-largest low-cost airline in terms of market share. Earlier it was

known as Royal Airways. And this was the first private company which had kept their step

into Indian Aviation Sector. Spice Jet marked its entry in service with Rs. 99 fares for the

first 99 days, with 9,000 seats available at this rate.

It was voted as the best low-cost airline in South Asia and Central Asia region bySkytraxin2007. Spice jet had its own 11 Boeing 737 to 800 aircraft. And currently it is operating 83flights daily which are connected to the 14 destination and it is highest in India for the

utilization of aircraft.

In the year 2008 the Spice jet is awarded as emerging company of the year. It is ranked

among the top 10 airlines in Asia.

It had enjoyed the market share of 8%. Rising fuel costs and increasing competition

resulted in Spice Jet posting a loss in the first quarter of 2008-09.

In August 2008, Spice Jet announced plans to raise US$100 million through foreign

investment in terms of market share. Spice Jetis one of Indias leading LCCs with a marketshare of 10%; during the past three years of its operations, the airline has flown more than

6 mn passengers. Currently Delhi-centric, the airline covers 17 sectors; Spice Jet plans to

attain a strong pan-India presence by expanding into Tier II cities such as Indore, Raipur,

Bhubaneswar, and Trivandrum, amongst others.
http://en.wikipedia.org/wiki/Low-cost_airlinehttp://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Rupeehttp://en.wikipedia.org/wiki/South_Asiahttp://en.wikipedia.org/wiki/Central_Asiahttp://en.wikipedia.org/wiki/Skytraxhttp://en.wikipedia.org/wiki/Skytraxhttp://en.wikipedia.org/wiki/Skytraxhttp://en.wikipedia.org/wiki/US$http://en.wikipedia.org/wiki/US$http://en.wikipedia.org/wiki/Skytraxhttp://en.wikipedia.org/wiki/Central_Asiahttp://en.wikipedia.org/wiki/South_Asiahttp://en.wikipedia.org/wiki/Rupeehttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/Low-cost_airline


4/33

Spicejet operates 20 Boeing 737-800/900ER aircraft and has a 12% share of the Indian

market. In 2010, it was ranked India's No. 1 low cost airline in a nation wide survey.

Promoted by - Ajay Singh and the Kansagra family.Headquarters -Delhi, IndiaSecondary Hubs - MumbaiDestinations - 18Key executives - Sanjay Aggarwal (CEO), J.S. Dhillon (Exec. VP), Samyukth Shridharan(CCO)Fleet Size 20 (+9 orders)Website -www.spicejet.com

MARKETING AUDITMarket Trends Existing Market

o India - Fastest growing tourism destinationso Robust economic growth, higher disposable incomes, and growth in tourism

& business travel, are the major demand drivers.o Low-cost carriers (LCCs)

Resulted in middle-income people and self-employed shifting from premium classtravel in trains to air travel. Domestic air passengers grew at a 38.5% with 35.3million passengers flying in FY07 against 25.5 million in FY06. The Centre for AsiaPacific Aviation (CAPA) predicts that the domestic traffic would grow at 25%-30%annually until 2010* *Recent slump due to high ATF prices

Market Trends Emerging Marketo Well-suited to emerging markets of Asia - many first time travelers as well as

budget conscious short-stay holiday takers.o Different Traveler tribes which may emerge in the next 10-15 years, and that

have the potential to transform how the airline industry delivers productsand services

o Global Executives
http://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Indiahttp://www.spicejet.com/http://www.spicejet.com/http://www.spicejet.com/http://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Delhi


5/33

o Elite business travelers that want a private jet type experience,predominantly from emerging economic markets such as Brazil, Russia, Indiaand China.

o Active Seniors:o The wealthy, healthy older travelers, aged between 50 and 75, that will

continue to travel for cultural and leisure pursuits.o Cosmopolitan Commuters:o Those that live in one city but work in another and will use air travel to

commute.

Key factors affecting domestic aviation industry in 2008-09:i. Aviation Turbine Fuelii. USD Exchange Rateiii. Faresiv. Economic Slowdown

Major players in the Industry:

Launch: 1st August 1953Current Fleet: 91Variable fare, all frills.

Flies to over 80

destinations over the

world. Largest airlines in

India.

Launch: 1st August1953

Variable fare, all frills.

Merged with Indian

Airlines in 2007.

Launch: May 2005Current Fleet: 105Variable fare, all frills. Its

economy class

subsidiary Jetlite. Flies to

over 62 destinations

both domestic &

international.

Launch: August 03Low, variable fare, no

frills. Only EconomyClass. Mix of metro and

cross-country

destinations.

Was acquired by

Kingfisher and later

renamed Kingfisher Red

Launch: May 2005Current Fleet: 94

Variable fare, all frills.

Single Kingfisher class.

Premium in-flight

service. Only metro

destinations.

Launch: May 2005Current Fleet: 21

Low, variable fare, but

not cheap quality

service. Low frills, small

complimentary snack.


6/33

Situational AnalysisPEST ANALYSIS

PoliticalOpen Sky Policy

Deregulations in different spheres

National and airport security

FDI : 49 % in Airlines, 100 % in airports

Freedom to determine faresUp gradation of airport infrastructure

EconomicIncome for salaried class up : 14 to 16 %

GDP growth of 8 % - 9 % in last 5 years

Nil Import tariff on Aircraft

Seat inventory Pricing

Tourism industry growth :14 %in 2005

SocialIncreasing travelling lifestyles

Increasing business travelling

Launch: August 2005Proposed Fleet: 8USP: Low fare, all frills.

Only Business Class at

less than economy fares.

Mostly non-metros.

Focus South India.

Launch: November2005

Proposed Fleet:19Low-cost, low frill

airline. Mix of metro

and cross-country

destinations.

Launch: October 2005Current Fleet: 17USP: Low-cost, low-frill

airline. Mix of metro and

small cities. Initial focus

to be western India.


7/33

Growing Middle classo 1993-1999 : 39.5 m to 56.7 m householdso 2005 : 300 mo 2010 : 400 m (Estimated)

LCC as mass Transport mediumAir travel: from luxury towards necessity

TechnologicalModernization & Privatization of Airports

Modern Technology for efficient handling of aircraft,

passenger and cargo

IT revolution

Online Ticketing

Best price shopping services

PORTERS FIVE FORCE ANALYSISCompetitive Rivalry within the Industry:

o Competitive and over-crowded market,o Commoditized nature of product - Aggressive pricing, efficient distribution

and innovative communication mixeso Differentiation eg., narrow versus wide customer baseo regional towns versus main citieso Competition with conventional carriers - With low fares but a higher level of

service (more frills and main airport servicing) they are a big threat.o Consolidation in the market - Mergers, acquisitions and alliances (eg.,

Kingfisher Airlines acquired Air Deccan, Jet Airways acquired Air Sahara andmerger of Air India with Indian Airlines)

o Net Impact HIGHThreats of new entrants:

o Entry Barrierso High start up costs capital intensive industryo Over-crowded low cost airline market (too many budget airlines in the

Indian skies)o Dearth of aviation professionals (pilots, aviation engineers)o Limited infrastructure facilities


8/33

o Price wars against newcomers.o Exit Barrierso Long gestation periodo Net Impact - LOW

Bargaining power of suppliers:o No control over ATF (Aviation Turbine fuel) priceso Negotiate favourable deals with most of their suppliers ( eg., Airline

operators do not have their own catering department for on-flightconsumables. )

o Leased aircraftso Specialized spare parts and limited number of manufacturerso Net Impact - HIGH

Bargaining power of customers:o Price dominated short-haul market with little or no product differentiation.o Low switching costso Price conscious consumers - little or no customer loyalty.o Net Impact - HIGH

Threats of substitutes:o Videoconferencing and other telecommunication technologieso Super fast trains for short haul flightso Net Impact LOW

COMPETITIVE ANALYSIS:VALUE CHAINValue chain analysis, the company is split into primary and support activities. Primary activities are

those that are related with production, while support activities are those that provide the

background necessary for the effectiveness and efficiency of the firm, such as HRM. The primary

and secondary activities of the firm are discussed in detail below.

Primary activities-The primary activities of the company include the following-

Inbound logistics:-


9/33

These are the activities concerned with receiving the materials from suppliers, storing these externally

sourced materials, and handling them within the firm.

Buying the plans

Buying the software and other supportive system.

Operations-These are the activities related to the production of products and services. This area can be split into more

departments:

Creating a climate for positive behaviour

Recruiting right people and offering proper training

Outbound logistics-These are all the activities concerned with distributing the final product and/or service to the customers.

Ways of boarding the customer

Marketing and sales-This functional area essentially analyses the needs and wants of customers and is responsible for creating

awareness among the target audience of the company about the firms products and services.

Advertisement

Service:There is often a need to provide services like pre-installation or after-sales service before or after the sale ofservice.

Efficiency

Helpfulness of staff

Cabin crew in air & ground staff at check-in

Support activities-The support activities of a company include the following:

Procurement:This function is responsible for purchasing the materials that are necessary for the companys operations. An

efficient procurement department should be able to obtain the highest quality goods at the lowest prices.

Fuels & Oil
http://www.coursework4you.co.uk/sprtopem5.htmhttp://www.coursework4you.co.uk/sprtopem5.htmhttp://www.coursework4you.co.uk/sprtopem5.htm


10/33

Human Resource Management:Human resources are increasingly becoming an important way of attaining sustainable competitive

advantage.

Recruiting

Training & Development

Retention of Employees

Welfare of Employees

Technology Development:This is an area that is concerned with technological innovation, training and knowledge that is crucial for

most companies today in order to survive.

Online check-in service

Inflight email system

Notify

Airport lounges

Firm Infrastructure:This includes planning and control systems-

Finance, accounting, and corporate strategy


11/33

The Porter Value Chain of Spicejet

FIRM INFRASTRUCTURE (4.41%)

SERVICE

(1.427 %)MARKETING

& SALES

(2.611 %)

OUTBOUND

LOGISTICS(1.339%)

TECHNOLOGY DEVELOPMENT (12.33%)

HUMAN RESOURCE MANAGEMENT (8.36%)

PROCUREMENT (2.13%)

INBOUNDLOGISTICS

(2.704%)

OPERATIONS

(3.735%)

(-0.523%)

(-0.523%)

Primary Activity 11.806%

Support Activity 27.23%

Support Activity > Primary Activity

So it indicates that company is occurring loss.

STPSegmentation- Demographic segmentation on the basis of income.Target- Middle class family- who are currently travelling in AC 1st class railway, frequentbusiness executive traveler.

Positioning- Tofulfill everyones dream of flying


12/33

7PS OF MARKETING MIXPRODUCTThe Core Service: The core service of the airlines industry is to transport goods andservices to various destinations. As the needs of the people increased the entire system

became more organized and formal. After this stage comes the various supplementary

services.FLEET: The SpiceJet fleet consists of the following aircraft as of April 2010.

SpiceJet Fleet

Aircraft In Service Orders Passengers(Economy) Notes

Boeing 737-800 15 9 189 Deliveries re-starting 2010.

Boeing 737-900ER 5 212

Total 20 9

The Supplementary Services: As per Government of India regulations and for the comfortof our Guests, smoking is not permitted on any SpiceJet flights. SpiceJet also does not

permit the serving or consumption of alcohol on any of its flights.

SpiceJet sells snacks/refreshments and juices on selected flights subject toavailability. Water is provided free of cost on all flights of SpiceJet

The Augmented services : This phase is where the customers expectations are met; theservice providers kept working on new methods to meet the ever-changing customers

demands.

Spicejet provides online booking, which is very convenient for the service users.
http://en.wikipedia.org/wiki/Boeing_737http://en.wikipedia.org/wiki/Boeing_737http://en.wikipedia.org/wiki/Boeing_737http://en.wikipedia.org/wiki/Boeing_737


13/33

This phase is the most crucial one; with increased competition service will become the final

differentiation.

PROCESSThe process of airline service lays emphasis on the involvement of channels, front line staff,travel agency offices, offices of the tour operators or so form where the services flow &reach to the ultimate users. Spicejet Airlines India offers daily flights to almost allimportant domestic destinations like Mumbai, New Delhi, Bangalore, Chennai, Goa, Kolkata,Pune, Ahmedabad and many more.

Purchasing process: Go to Spicejet Airlines India website. Spicejet India online ticketbooking is very simple, you just need to follow few steps. On the top left side, one is Round

tripand second one is One way. You can choose according to your requirement. Then select

your city and destination where you want to go. Now choose your date, month and day oftravelling. After then choose number of seats for people who would travel. You get your

Spicejet India ticket booked after clicking on the find flights button.Forms of payment: SpiceJet accepts MasterCard, VISA and American Express credit

cards. SpiceJet also accepts Internet Banking.

Check in Procedures: Guests require "Indian Armed Forces" Identity card to becarried, for the contract of carriage to be fulfilled. The identification proof should be

produced at the time of check-in & must be in possession of the guests throughout the

journey. The same will also be checked at time of boarding at the Boarding gate.

Check-in Time Guests are required to report at the Airport at least 2-hours prior todeparture time, at SpiceJet Check-in counters for all flights. Check-in counters for all our

flights close 30 minutes prior to departure.

Baggage AllowanceChecked Baggage SpiceJet allows a free checked baggage allowance of 20 kgper Guest. Excess Baggage will be charged at Rs. 100 per kg per flight.

Assigned SeatingSpiceJet offers assigned seating for all the guests at the Airport check-incounters.As a further value to its customers, SpiceJet allows Guests bookingthrough its internet website/ 24x7 Reservations Center/ AirportTicketing Counters to make an advanced seat selection of their choice at thetime of their booking on payment of a fee of Rs.50/- per seat selection.


14/33

Boarding: Guests should be at the boarding gate at least 30-minutes prior todeparture as the boarding process closes 20-minutes prior to departure.

Special AssistanceThe use of wheelchairs is limited to only 4 guests per flight, which needs tobe booked in advance through our guest Sales & Service Reservation center.There is no charge for this service. Spice Jet also offers appropriate assistanceto blind guests. In-flight Services

Spice Jet Airline Flight Status:Spice jet flight status gives real time information about flight departures, arrivals

and even delays of all Spicejet flights across the country. You can find your flights

information via flights status. You can fill your flight information in the online form;

first you select your location and arriving location. Then select your flight date and

next flight number and get your flight status.

PR0MOTIONA successful product or service means nothing unless the benefit of such a service can be

communicated clearly to the target market.

Previously they were not doing any promotional activity. But later on they went for it.

They do promotion through

i. Newspaperii. Onlineiii. Television

Promotional Activities

SpiceJet: Spicing it up on TV A set of five commercials of 25 seconds each, in Hindi and English, will kick start the

campaign. The commercials have started live from January 25, 2010, prominent

Hindi and English, news, infotainment and movie channels.
http://book.spicejet.com/skylights/cgi-bin/skylights.cgihttp://www.afaqs.com/perl/advertising/creative_showcase/index.html?id=18763&media=TVhttp://book.spicejet.com/skylights/cgi-bin/skylights.cgi


15/33

Sam Sridharan, COO, SpiceJetSam believes that since LCCs in India are only 3 years old, in the consumers mind, theyreall the same. Most of the LCCs are still very price driven, and have not built a distinct brandpositioning yet.SpiceJet brand stands for, Sam answers, warmth, Indian-ness, Masti(fun) and vibrancy.SpiceJet launches new 'Get more' brand campaignThe airline will spend between Rs 3 crore and Rs 5 crore to launch its new campaign, 'Get

more when you fly SpiceJet', in magazine media and radio advertising.

SpiceJet SBI CardNOW Keep flying and get rewarded!The Card gives you 5 Reward Points for every Rs 100 you spend to buy Spicejettickets on the Card. Thats not all, you get 1 Reward Point for every Rs 100 spent on

the Card otherwise.

Quick Reward Points = Free Tickets!* You can request for Spicejet Vouchers once you earn a minimum of 1000 Reward

Points. Redemption of reward points would happen only for buying Spicejet

Tickets.

50 lacs of Personal Air accident Insurance coverThis insurance cover is meant to provide indemnity to Spicejet SBI MasterCard

Holder in case accidental death is caused while traveling by spicejet Airline only.

PLACEHubs Delhi

Secondary Hubs Mumbai Focus cities Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Pune Online Booking - www.spicejet.com Online Booking - Yatra.com, MakeMyTrip.com, ezeego1.com Credit Cards & Debit Cards Payment, SMS / Call Outlets in every major city and at every airport across the country.
http://www.spicejet.com/http://simpliflying.com/wp-content/uploads/samyuth-sridharan-chief-commercial-officer-spicejet-airlines.jpghttp://www.spicejet.com/


16/33

Destinations: Hyderabad, Visakhapatnam, Guwahati, IGI Delhi, Vasco da Gama,Ahmedabad, Jammu, Srinagar, Bangalore, Kochi, Mumbai, Pune, Jaipur, Chennai,

Coimbatore, Agartala, Varanasi, Kolkata, Siliguri.

DISTRIBUTION NETWORKDirect Sales is becoming the norm for Low Cost Carriers. While implementing an Internetbased airline distribution for a LCC in Asia, InterGlobe Technologies (IGT) architected asolution that providesstandard XML basedinterfaces to other saleschannels like banks, travelportals etc.


17/33

PRICESpice jet plays on the low cost segment.

Now it sets its standards high as it competes with the Indian Railway passengers

traveling in the AC coaches; this speaks tremendously for the cheap and discounted

SpiceJet airfares.

SpiceJet marked their entry in the service with INR. 99 fares for the first 99 days and

then followed with an INR. 999 promotional fare for select sectors.

Spice jet offers 'every day spicy fares' to budget conscious travelers.

Low cost airlines that offers budget travel at discounted rates with the best of services.Physical EvidencePhysical Evidence includes:

i. Spice jet SBI Cardii. Ticket Counteriii. Flight Infrastructureiv. Spice jet replica (Terminal 1D of IGI Airport New Delhi)

PEOPLEThis mix of marketing constitutes of 3 factors.
http://www.afaqs.com/perl/advertising/creative_showcase/index.html?id=19451&media=OOH


18/33

v. Employeesvi. Consumersvii. company

Employees: These are the people who are present at the time of delivering the service.These are boarding staff, pilots, air hostess, and security officers. These are well trainedprospects so as to meet the expectation level of travelers.

Consumers: These are travelers. These are in contact with the employees from the time ofarrival at the air port till the end of the board.Company: These mainly imply the people at the back end i.e. the technicians, the peoplehelping spice jet to function at the customer end.

KEY ISSUES & OPPORTRUNITIESTHE EXTERNAL ENVIRONMENTThis sector is largely affected by the tourism sector as well as the policies of Indiangovernment. key factors like the growth of tourism sector; number of passenger isanticipated to increase and increasing wealth and lifestyle of Indian middle class as keyopportunities. Because increase in purchasing power allows them to travel frequentlythrough airlines.

THE INTERNAL FACTOR ESTIMATIONThe foremost strength of this company is its promise for the lowest fare at any route whereit exists. It is also important from this prospective that it has grown up its image in themindset of customers as the cheapest airline. This company also has the tie-up with Indiasleading bank State Bank of India (SBI) for ticketing. Its management team is also proving asstrength for them as they have international experience ofmanaging low cost airlines.

SWOT ANALYSIS :STRENGTH

i. Cheapest airline in customers mind.ii. Second in LCC segment.iii. Fleet with highest no. of seats.iv. Tie-ups with SBI for ticketing.v. First to target middle classs


19/33

WEAKNESSI. Very limited advertising.II. Reached at the threshold of cost efficiency (not profit generating).III. Small load efficiency.

OPPORTUNITIESI. Growth in tourism sector.II. Increase in purchasing power of Indian middle class.III. International fleets.

THREATSI. High attrition rate.II. Huge competition in LCC (Indigo, Go Air, Air Deccan).

TOWS MATRIX

SO Strategy1. Can start on some new route to grab

huge market potential.2. Company should come up with new

schemes for those new markets.

WO Strategy1. Can purchase new high efficient

carrier with the help of FDI investorsfor cost efficiency.

2. Initially these new carriers can beused for new route so new customer

will feel happy with the service.


20/33

ST Strategy1. Contract with pilot training institutes

and pilots to stop attrition.2. Added services for competitive

advantage.

WT Strategy1. It can launch new marketing

campaign showing its servicesdespite of bad infrastructure and

services.

In the TOWS matrix we use companys internal strength, weakness and externalopportunities, threats to make strategy.

SO Strategies:As company is known among customer as the cheapest airline of India as well as India has ahuge market potential. So, Spice Jet should act aggressively and start services on somemore route, it can also enhance its market by starting in Bangladesh, Nepal and Burma. Bydoing this they can take first mover advantage because there is no low cost airline existingon this route.

WO Strategies:Spice Jets major weakness is its cargo efficiency and its carriers which are on lease. Spice

Jet can do one thing is that there are FDI investors available to give financial aid so it canreturn its low efficient leased carrier and purchase new high efficient carrier. It will alsohelp it in cost controlling.

ST Strategies :There are many threats where we cannot do much but for few we can make

strategy.i. There is a shortage of pilots in India so they can make a contract with pilot

training institutes for pilots. To stop attrition rate they can sign a long termcontract with pilots so they became legally bound and cannot leave company.

ii. Because of high competition in the segment there are a very little margins,for more margins they can start giving added services like showing movie inflight or describing the outer scenario as on where we are flying etc. These


21/33

services can be charged or given for free but these services can give Spice Jeta competitive advantage.

WT Strategies:

i. As we already mentioned that the airport infrastructure is not goodand it is affecting service of Spice Jet. Spice Jet can highlight this in itsadvertising that despite the poor infrastructure and facilities we are providingcheaper and good services. It can be helpful to get customers attention.

ii. The biggest threat is the intense competition and price war so the best way toeliminate this is horizontal integration. They should act aggressively and acquireGo Air.

MARKETING STRATEGY FOR CHOOSEN OPTIONSMarketing StrategiesSpiceJet has a unique marketing strategy that focuses on word-of-mouth marketing, supported by

print and Internet media initiatives. To build further on its branding value, SpiceJet has introduced

on-board merchandise sales such as goggles, airplane models, perfumes, caps and watches. Sales of

branded merchandise will also be available through the company's website.While there is stiff competition in the low-cost carrier market in India, the competitive edge for

SpiceJet lies in the quality of service offered during the flight. This has resulted in 42% repeat flyers,

45% of business travel and over 90% of passengers recommending the airline through word ofmouth.

Strategies for Future sustenancea) Expansion PlansSpiceJet started its operations with 5 Boeing aircrafts in its fleet and ramped it up to 18 aircrafts

covering 17 destinations and 117 flights daily by May 2008. It reported a net loss of Rs. 133.51

crores in the year 2007-08 and a loss of Rs. 17.91 crores in 3rd quarter of 2008-09. SpiceJet still has

major expansion plans. It has another 30 aircrafts on order for delivery between 2008 and 2011.

b) Op en to Foreign investments as well as buyoutsOn July 15, 2008 Billionaire Wilbur Ross invested $80 million (about Rs 345 crore) in the low cost

airline.

"If any foreign airline comes on board as a strategic partner, we will certainly welcome them.If the

right opportunity is presented SpiceJetcould be a buyer too." Chief Executive Officer, Sanjay


22/33

Aggarwal on Feb 18, 2009. He expects consolidation in the Indian airline industry over the next 12

to 24 months as the landscape is too small for so many players.

c) Convenience to passengers

It plans to initiate roaming agents wherein passengers without baggage are assisted by the roamingagents at the airport to skip check-in are some of the other initiatives. In future, Spicejet plans to

start Web Access Protocol (WAP) on the mobile phones of the passengers and SMS check-in

through which passengers can skip check-in by just showing the barcode or the notification on their

mobile phones.

d) Ancillary RevenuesSpiceJet have entered into a Joint venture with The UK based online retailer UnderFivePound.com.

The company through its website, sells a range of mens, womens and childrens clothing along

with other items such as jewellery and houseware gadgets, all for less than 5 and is known for its

discounts and freebies.

Keeping the pricing of the merchandise in sync with the image of a LCC, SpiceJet expects to sell

value-for-money items on board, to its customers.

e) Automation to sustain expansionSpiceJet has automated its cargo business processes to support its aggressive expansion plans for

its domestic cargo operations. This will ensure an integrated management of cargo reservations

and ground operations including flight planning, inbound cargo operations, billing and shipment

tracking. SpiceJet becomes the first Indian LCC to use this high-end business solution.

HIERARCHY OF STRATEGIES

Corporate & SBUs Spice Jets mission is to become Indias preferred low-costairline, delivering the lowest air fares with the highest consumer value, to price sensitiveconsumers. We hope to fulfill everyones dream of flying.

With India's economic and business growth, the percentage of traveling population isburgeoning. More and more Indians are traveling for both business and pleasure andeveryone needs to save both time and money. SpiceJet's vision is to address that andensure that flying is for everyone.


23/33

-The power to fly for everyoneWith a dynamic fare structure, SpiceJet offers fares that are affordable and significantlylower than most airlines. With contemporary interiors, modern graphics and vibrantcolours, SpiceJet is very much like todays traveler - practical yet stylish. A SpiceJetter will

feel this is the smart, international way to travel, I've made the smart choice. SpiceJet iscommitted to make sure you feel good at the end of a flight, arriving at your destination -fresh and on time.

The pow er of technologySpiceJet's new generation fleet of aircraft is backed by cutting edge technology andinfrastructure to ensure the highest standards in operating efficiency. With maintenancesupport by KLM and state of the art technology from world leaders like Star Navigation,Russell Adams and Tech Log there will be no compromise on safety, reliability or on-timetravel. The company has tied up with Navitaire the worlds renowned low -cost support for

reservations and revenue management. E-booking and e-ticketing facilities are availableonline along with tele-booking.

The power of performance.From aircraft to crew and ground staff the focus is on performance. Each SpiceJet employeeis groomed to be smart, friendly, efficient and well-informed, ensuring that any interactionwill make you feel welcome and looked after. Experienced pilots, well-trained cabin crewwill make every flight a comfortable one. The philosophy is no-frills but high-performance.

The pow er of safetySpiceJet invests heavily in safety, impeccable maintenance and a high level of expertise.Experienced pilots, engineers and maintenance crew go through rigorous training and arehand-picked for their technical knowledge and expertise. So you can rest assured that thereis no cut-back in this key area of modern day flying.

The power behind the power to flySpiceJet's key management personnel are all senior, seasoned professionals and havesignificant international experience in both launching and managing low-cost airlines. Withthousands of cumulative man hours in the industry, the management is committed to bring

to customers in India all the benefits of the global revolution in the skies. SpiceJet aims tomake travel comfortable, affordable and refreshingly efficient experience for all.

Strategy at Functional level-Cost Focus- Spicejet is operating at very low cost. The aim of Spicejet to provide betterservice at lower cost. It is able to achieve low cost because its operational cost is very low.


24/33

Functional Strategies Marketing Strategies

Product-Market definition and analysis

Ansoffs Product-Market Expansion grid

ANSOFFS PRODUCT/MARKET

EXPANSION GRID

CURRENT NEW

PRODUCTS PRODUCTS

CURRENT

MARKETS

NEW

MARKETS

1.More purchasing andusage from existing

customers

2.Gain customers from

competitors

1.Product modification vianew features

2.Different quality levels

1.New market segments

2.New distribution

channels

1.Joint venture

2.Mergers

3.Acquisition/take-

over

Spice jet

ProductDevelopmentStrategy

DiversificationStrategy

MarketDevelopment

Strategy

MarketPenetration

Strategy

Competitive position-Market follower- There is Air-Deccan has already operating in LCC (low cost carrier)segment. It entered in the market as a market follower. It followed the strategies like low

pricing and aircraft on lease etc.

Entry Level


25/33

The Chasm

Early Late Markets

Techies Visionaries Pragmatists Conservative Sceptics

CHASM

Company

Innovator Early

AdopterEarlyMajority

LateMajority Laggard

Consumer

Spicejet

It is Visionary because in 2003 the LCC segment has introduced and in 2005 Spicejet has

entered in that segment. Spicejet entered in the market in growth stage before CHASM.

VALUE-ADDITION TO CUSTOMERSSpiceJet has introduced online travel insurance in partnership with TATA AIG with

which they have maintained a consistent rate of 28 per cent of sales since the introduction

of the product.

It provides value-adds to clients by having internet banking for customers, wherein

they can select any bank with which they have an account and can use their own login

credentials, which is essentially for customers not owning a credit card or not inclined to

using one, are among the other major initiatives.

Apart from these, it provides efficient information flow to clients, wherein the

system gives the clients a recorded call giving information about the flight; creating a portal

for crew (pilots and cabin crew), which enables them to communicate with each other.

SpiceJet plans to introduce an on-board wireless telephone system for all Spicejet

passengers.


26/33

PERCEPTUAL MAPPING


27/33

Branding Strategy:Spice Jet was conceptualized as an airline that provides safe, value-for-money, comfortableand hassle-free air travel. The brands rapid progress over its first four years was built on

excellent customer experiences and positive word of mouth. We realize that as we grow,we need to expand our brands reach and appeal to an audience who will want to travelmore than before and for reasons other than price; with a wider range of expectations fromthe airline. The challenge will always be to connect with this audience and position SpiceJet has a brand that offers more than others in its competitive set.In keeping with spice jet objective of establishing top of mind recall, Spice Jet has launcheda campaign moving away from pure market driven price point announcement to

communicating unique brand offerings, crystallized into clear brand message Get morewhen you fly Spice Jet. The unique value propositions that Spice Jet brings to eachconsumer, forms the essence of this national campaign.The communication highlights the unique value offerings including complementary

supervision of unaccompanied minors; free of charge web check-in; introduction of hot teaand coffee service; waiver for sports kits etc. The brand emerges as a product of customersvoice - as one that listens, understands and acts to deliver a superior service experience.This campaign positions the brand as one beyond price as one that offers experiences thatconsumers value. This positioning cuts through the clutter in a market driven by pricebased competition and distribution channels which commoditize our services.


28/33

2. Competitive Analysiso Consolidation to result in increase in fares and yields

Consolidation in the domestic aviation sector. From a fragmented sectorwith more than 10 players, today there are 3 major players, and a coupleof other smaller players in the LCC space.

o The top three players together have a combined market share of around 80%Government plans to invest Rs 40,000 crore during the 11 th five-year plan toimprove airport infrastructure in India

3. Cost Comparison : Domestic Peers Cost leadership gives Spicejet an edge over peersAvailable Seat Kilometres (ASKM) : Represents the aircraft seating capacity multipliedby the number of kilometres the seats are flown

4. Cost and Value Driverso High seat densityo Single economy class having 189 seats.o Focuses on maximum space utilization for generating more revenue per aircraft.

5. Cost and Value Driverso Direct Distribution of Ticketso Sells its tickets via the Internet or call centre route.o Bypasses travel agents commissions, and expensive GDS (global distribution

system).o High aircraft utilizationo Consistently reporting high aircraft utilization (around 12 hours a day), in line

with international benchmarks.o Because of its high on-time performance (82% within 15 minutes) and a low

turnaround time of 20-25 minutes No loading of meals or complex cargo andfaster check-in system helps in reducing turn around time.


29/33

BLUE PRINT

Moment of TruthGift bags for kids on board.Roving check-in facility at the airport.A parking person offering to park the car for the customer in a crowded parking area.Spicejet staff wishing a warm and unexpected Good Morning while passing by a customer

in the corridor.A person reached an hour early and he went CCD with his friend. He forgot his flight & he

got a reminder call from Spicejet.During the checks, cargo fire alarm module (unit) failed and it went off. As a matter of

caution the plane was declared unserviceable and passengers were shifted to another

aircraft.Delay in take-off.Well-mannered and enthusiastic, the flight attendants of Spicejet.The warmth and friendliness of in-flight services.Employee ask to customer for ticket.

Flour manager instruct to customers.


30/33

Wishing of airhostess.Use of sheet belt.

Boarding pass is given after an avoidable delay, it is a dull moment of truth.

The ground staff person goes out if its way to help a passenger load his bags on the trolly, it

is a bright moment.

Wheelchair assistance at the airport.

Cause and Effect Chart for Airline Departure Delays :


31/33

SERVQUAL ANALYSIS

Analysis and conclusion of servqualRating :

1.very poor 2.poor 3.good 4.very good 5.excellent

S.No VARIABLE RATING(1 to 5)

1 Up-to-date aircraft and in-flight facility 3 Good

2 Meal service (items, tastes, freshness, quantity, appearance, etc) 3 Good3 Seating comfort 3 Good

4 Seat space and Legroom 3 Good

5 In-flight entertainment services (books, newspapers, movies, magazines,etc.)

2 Poor

6 In-flight entertainment services (books, newspapers, movies, magazines,etc.)

2 Poor

7 Promptness and accuracy of reservation and ticketing 3 Good8 Frequent flyer program 3 Good

9 On-time performance 3 Good

10 Sincere interest in solving problems (flight cancellation, baggage loss,etc.) 3 Good

11 Safety record 4 Very go

12 Check-in service (waiting time, efficiency, etc) 3 Good13 Promptness and accuracy of baggage delivery 3 Good

14 The amount imposed for overweight baggage 2 Poor

15 Providing seat that passengers prefer 2 Poor16 Neat appearance of employee 3 Good17 Employees who are willing to help passengers 4 Very go

18 Courtesy of employees 3 Good

19 Employees who have the knowledge to answer passengers questions 4 Very go

20 Give passengers personal attention 3 Good21 Convenient flight schedule 2 Poor

22 Non-stop flight 2 Poor


32/33

Airline image

Question Yes (%) No(%)

I have always had a good impression of this airline? 100 0

I believe that this airline has a better image than its competitors? 64.9 35.07

In my opinion, this airline has a good image in the minds ofpassengers?

78.57 21.42

Would you consider flying on this airline again in the future? 78.57 21.42

Would you recommend this airline to other people? 92.85 7.14

ConclusionThe awareness strategy are very good as all customers have a good impression ofthe airline.

It is better positioned as low cost airline than its competitors.Its able to create product loyalty.

Factor analysis

Factor Variable Variablerating

Factorrating

Reliability andCustomer services Courtesy of employeesEmployees who are

willing to help passengers

Employees who haveknowledge to answerspassengers questions

Give passenger personalattention

Neat appearance ofemployees

Safety of flying

Sincere interest inproblem solving

On-time performance

34

4

4

34

43

3.62

Convenienceand

Convenience ofreservation and ticketing

3


33/33

accessibility Promptness and accuracyof reservation andticketing

Check-in service

Frequent flyer program

Promptness and accuracyof baggage delivery

Non stop flight

Convenient flightschedule

Providing seat thatpassenger prefer.

The amount imposed foroverweight baggage

3

334

3

22

2

3.12

In-flightServices

Seating comfort

Seat space and legroom

Meal service

In-flight entertainmentservices

Up-to- date aircraft andin-flight facility

334

2

3

3

The reliability and customer service is in between good and very good.

Te convenience and accessibility is good.

The In-flight services are also good.

ConclusionIn Aviation industry in India there are very high competition and less profit opportunity.Spicejet is

a low-cost airline. Their marketing theme offering low everyday spicyey fares and great guest

services to prices conscious travelers. Their aim to compete with the Railways passengers

travelling in AC coaches. They are running in losses for last 2 years so they expand their business

by entering in the cargo services in 2009 which are running profitably. Spicejet also planning to

expand their business by increasing theit fleet size by 2012.

------------

spice jet lcc

Documents