The document discusses the history and development of the airline industry in India. It describes how Indian Airlines was initially the sole player, but competition increased in the 1990s with the entry of Jet Airways and Air Sahara. All three airlines engaged in price wars in 2002 by cutting fares and introducing various promotional schemes to attract customers. This led to unprecedented growth in air travel accessibility for the Indian population.

1. AKSHIMA AGARWAL
ANSHUL GUPTA
BHANUSHREE GOYAL
CHINAY KHANDELWAL
SHIVANI SRIVASTAVA
SUKRITI NAMA
VISHAL SINGH

2. • Travellers rarely travelled by air as the fare were much
higher than those for road and rail travel.
• Indian Airlines was the only player in the market before
2002.
• For the first time in history of airline industry ,efforts
were made to make air travel affordable to large section
of population, leading to unprecedented development in
the commercial aviation industry in the country.
•

3. Indian Scenario:
Air Sahara and Jet Airways
Jet Airways
• Took off with four Boeing 737-300’s in April 1992 at Mumbai
• 100% Subsidiary of Tailwinds Ltd, situated in Cayman island
• Indian promoter, Naresh Goyal bought the entire stake,
became sole owner
Air Sahara
• Started operation in 1993, between new Delhi and Mumbai
sectors
• By 2001, it expanded its flying routes to 12 sectors
• Won many excellence award
• Turnover of Rs. 3.5 billion in 2001

4. Indian Airlines
• (Indian airlines limited from 1993 and Indian
airlines corporations from 1953 to 1993) It
was a major based in Delhi and focussed
primarily on domestic routes along with
several international services to neighbouring
countries in Asia.
• State owned and administered by Ministry of
Civil Aviation

5. • June 2002: announced 3-15% cut
in fares for all classes on the
western sector.
• Next day JA reduces its prices by Rs.
635 for economy class on Mum-
Nagpur & Mum-Goa route.
Both Introduces APEX (Advance Purchase Excursion – book ticket in advance
and get huge discount). IA- “U Can Fly”, JA- “Everyone Can Fly”.
2 Disadvantages of APEX were:
• Planning advance travel was not very convenient.
• Cancellation charges were high (50% ticket price deducted if ticket
cancelled less than 21 days).
But still both Airlines were in profit.

6. March 2002: Launched ‘Wings & Wheels’ scheme in 4 metros:
Scheme offered complementary A/C coach services for picking up passengers
at designated points in the cities and dropping them at airport. They also
offered add-ons like magazine, newspaper, soft drinks etc.
July/August: Sahara went for a different approach – ‘Sixer’ Scheme (Limited
Offer):
Buy a six flight coupon ticket and fly any six sectors on the carrier’s network
for Rs. 25,000
August 2002: Most attracted scheme, ‘Steal a Seat’ – Online bid scheme.
Base price was Re 1 (prior 25 days of flight).
For unsuccessful bidders: Scheme ‘Steal Buys’, in which they could bid 24-15
days in advance. Which worked out much cheaper than APEX fares.
They also offered Delhi – Mumbai ticket @ Rs. 4000, bought between 15-19
days in advance (prices of IA: 5,535 & JA: 5,404)

7. August 15th, 2002: IA launched ‘Wings of Freedom’ (valid from
August 15 to March 31st, 2003) –
Offered unlimited travel on the domestic network for 7 days, Rs.
15,000 (economy class) & 20,000 (business class).
IA increased the commission of its agent & offer incentives for most
productive agents.
They launched ‘Bharat Darshan’ from the passengers who bought
tickets worth more than Rs. 80,000.

8. Price War
• Price war is commercial competition characterized by the
repeated cutting the prices below those of the competitors.
One competitor will lower its price then other will lower their
prices to match.
• In short term price wars are good for buyers but not good for
companies because the lower price is reduce the profit
margin and threaten their survival.
• In long term price wars can be good for the dominant form in
the industry.
• IA announced 3-15%cut in fares in June 2002
• JA reduced prices by Rs.635 for economy class.
• Sahara the smallest of the Big three was the most aggressive.
Paid highest commission to its agents.

10. • The airline industry is very susceptible to changes in the political
environment as it has a great bearing on the travel habits of its
customers.
• India’s recent political environment has been largely unstable
due to international events & continued tension with Pakistan.
• Another aspect is that in countries with high corruption levels
like India, bribes have to be paid for every permit & license
required.

11. Legal Factors affecting Aviation
Industry in India
• FDI Limits
• Bilateral Treaties
• Airlines acquisition and the leasing costs.

12. Economical factors affecting Aviation
Industry in India
• Contribution to the Indian Economy.
• Rising cost of Fuel.
• Investment in the sector of Aviation.
• The growth of the middle income group family affects the
Aviation sector.

13. Strategies to enhance
market share and increase
customer base in INDIAN
AVIATION INDUSTRY

14. Strategy of Low Cost Airlines
Business Strategy
Aggressive
marketing
Efficiency in
operations and
maintenance
Increasing the aircraft
seat capacity
Charging for all
additional
Keeping operating
costs to a minimum
Using secondary
airports
Outsourcing some
operations

15. Business Design for Low Cost Airlines

16. Conclusion
16
• Remarkable growth in recent years in Indian aviation
industry.
• Bright future of Aviation industry in India.
• Infrastructure Constraint.
• Liberalise rules & regulations governing civil aviation.
• Reduction in prices and lease rentals.