Low Cost Carriers BUZZ Section B Image courtesy of  Boeing
Airlines <ul><li>“ Once you get hooked on the airline business, it's worse than dope.” </li></ul><ul><li>“ This is a nasty...
Global Carriers <ul><li>US </li></ul><ul><li>Ireland </li></ul><ul><li>Ireland </li></ul><ul><li>Malaysia </li></ul><ul><l...
World Scenario - Low Cost Airlines <ul><li>The successful low cost airlines are more profitable than established carriers ...
Aviation Industry in India : Characteristics <ul><li>Huge Potential </li></ul><ul><li>Under penetrated market </li></ul><u...
Aviation Industry in India :  Characteristics India GDP : 9.6 % per annum Domestic air travel : 20 – 25 % WTTC Travel & To...
Aviation Industry in India :  Characteristics <ul><li>Constraints : </li></ul><ul><ul><li>Infrastructure constraints </li>...
Macro Environment Analysis <ul><li>Main Factors :  </li></ul><ul><li>P olitical  </li></ul><ul><li>E conomic </li></ul><ul...
Macro Environment Analysis : Political <ul><li>Open Sky Policy </li></ul><ul><li>Deregulations in different spheres </li><...
Macro Environment Analysis : Economic <ul><li>Growing middle class income </li></ul><ul><li>Consistent GDP growth of more ...
Macro Environment Analysis : Socio-cultural <ul><li>Growing middle class : </li></ul><ul><ul><li>1993-1999 : 39.5 m to 56....
Macro Environment Analysis : Technological <ul><li>Modernization & Privatization of Airports </li></ul><ul><li>Modern Tech...
Macro Environment Analysis : Demographic and Natural <ul><li>Changing pattern of consumers </li></ul><ul><li>Highest perce...
Low Cost Carriers in India <ul><li>Air Deccan </li></ul><ul><li>SpiceJet </li></ul><ul><li>IndiGo Airlines </li></ul><ul><...
Business Model of Low Cost Carriers <ul><li>A single Passenger class </li></ul><ul><li>A  single type of airplane reducing...
Aviation Industry in India :  Market Share
Market Share in LCC Segment
Airline Industry in India :  Service Vs Price Graph S E R V I C E P R I C E
Air Deccan Come SIMPLIFLY With Us… <ul><li>Market Share : 21.2 % </li></ul>Image courtesy of  Air Deccan
Vision and Mission <ul><li>Vision :  </li></ul><ul><li>Empower every Indian to fly </li></ul><ul><li>Mission :  </li></ul>...
Marketing Strategy <ul><li>Common Man : </li></ul><ul><li>The Brand Ambassador for Air Deccan, the people’s airline is Mr....
Marketing Strategy <ul><li>Advertisement through print, radio and billboards </li></ul><ul><li>In flight magazine for reve...
How Air Deccan cuts cost? <ul><li>Quicker turnaround time  </li></ul><ul><li>Lower distributions costs  </li></ul><ul><li>...
SWOT Analysis <ul><li>Strengths : </li></ul><ul><ul><li>Leader in LCC segment :  </li></ul></ul><ul><ul><li>First to targe...
SWOT Analysis <ul><li>Weaknesses : </li></ul><ul><ul><li>Focuses mostly on South Indian market </li></ul></ul><ul><ul><li>...
SWOT Analysis <ul><li>Opportunities :  </li></ul><ul><ul><li>Extensive network to capitalize Air Cargo </li></ul></ul><ul>...
SWOT Analysis <ul><li>Threats :  </li></ul><ul><ul><li>High attrition rate </li></ul></ul><ul><ul><li>The threat of new en...
SpiceJet flying for everyone <ul><li>Market Share : 6 % </li></ul>Image courtesy of  SpiceJet Source : http://www.airteami...
Vision and Mission  <ul><li>Vision :  </li></ul><ul><li>To ensure that flying is no longer only for CEOs and business trav...
Marketing Strategy <ul><li>Entered with Rs. 99 fares for first 99 days offering ‘low everyday spicey fares’ </li></ul><ul>...
Challenges <ul><li>Small fleet structure </li></ul><ul><li>Small load efficiency compared to Air Deccan </li></ul><ul><li>...
GoAir The People’s Airlines – to FLY SMART <ul><li>Market Share : 2 % </li></ul>Image courtesy of  GoAir
Strengths and Weaknesses <ul><li>Strengths : </li></ul><ul><ul><li>Promoted by Wadia group </li></ul></ul><ul><ul><li>GoAi...
IndiGo Always affordable, no gimmicks, hassle free <ul><li>Market Share : 0-1% </li></ul>Image courtesy of  IndiGo
Marketing Strategy <ul><li>Focuses on One thing : </li></ul><ul><li>One type of airplane, fare, customer service,  route e...
An Example Images courtesy of www.chillnite.com
Current Trends : Consolidations All Around <ul><li>Kingfisher-Air Deccan Deal </li></ul><ul><ul><li>Kingfisher buys out 26...
Future Trends <ul><ul><li>The projection for Indian Aviation for 2020 is estimated at: </li></ul></ul><ul><ul><ul><li>400 ...
Future Trends : Passenger Forecast Source : www.civilaviationweek.com
Future Trends : Proposed Addition Source : www.civilaviationweek.com
Thank You <ul><li>Jai Prakash Mundhra -071221 </li></ul><ul><li>Kamal Agarwal  -071222 </li></ul><ul><li>Kartik Rawal  -07...
References <ul><li>http://www.wikipedia.org </li></ul><ul><li>http://www.flyairdeccan.net </li></ul><ul><li>http://www.goa...
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Low Price Carriers in India

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comprehensivr study of indian aviation with special focus on Air Deccan

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  • hi i m vikas n i m stuyding MA TOURISM MANAGEMENT from uk. i have to make a presentaion on spicejet airlines. i went through ur sles they were very good n gave me vital information. But if u can mail me the sources from where u have taken the information of the pest analysis. basically i have to give info abiut the sources in the prsentation. plz mail asap at vikasrajput19@gmail.com. i have to give presentaion on 11 th dec so plz be qiuck.<br /><br/>
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  • hi i m vikas n i m stuyding MA TOURISM MANAGEMENT from uk. i have to make a presentaion on spicejet airlines. i went through ur sles they were very good n gave me vital information. But if u can mail me the sources from where u have taken the information of the pest analysis. basically i have to give info abiut the sources in the prsentation. plz mail asap at vikasrajput19@gmail.com. i have to give presentaion on 11 th dec so plz be qiuck.<br /><br/>
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  • hey guys..gr8 job...would it be possible for youl to mail me a copy of the original document , now that i have seen the presentation and was absolutely amazed by it, would really help me out in my research on it...mail it on prinksmehra@yahoo.co.in.....5 gr8 mind doing such a fab job..would love to c ul some day..keep in touch ..thanks...and plz share the knowledge guys asap...thanks georgeous
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Low Price Carriers in India

  1. 1. Low Cost Carriers BUZZ Section B Image courtesy of Boeing
  2. 2. Airlines <ul><li>“ Once you get hooked on the airline business, it's worse than dope.” </li></ul><ul><li>“ This is a nasty, rotten business.” </li></ul><ul><li>“ Air transport is just a glorified bus operation.” </li></ul>
  3. 3. Global Carriers <ul><li>US </li></ul><ul><li>Ireland </li></ul><ul><li>Ireland </li></ul><ul><li>Malaysia </li></ul><ul><li>Australia </li></ul><ul><li>Saudi Arabia </li></ul><ul><li>Singapore </li></ul><ul><li>Germany </li></ul><ul><li>UK </li></ul><ul><li>US </li></ul><ul><li>Southwest Airlines </li></ul><ul><li>Ryanair </li></ul><ul><li>Easy jet </li></ul><ul><li>AirAsia </li></ul><ul><li>Virgin Blue </li></ul><ul><li>Air Arabia </li></ul><ul><li>Valueair </li></ul><ul><li>Air Berlin </li></ul><ul><li>Air Southwest </li></ul><ul><li>US Airways </li></ul>
  4. 4. World Scenario - Low Cost Airlines <ul><li>The successful low cost airlines are more profitable than established carriers </li></ul><ul><li>Ryanair has a market capitalisation of about £3 billion </li></ul><ul><li>Globally, the largest and most successful low cost airline is Southwest in the US </li></ul><ul><li>Operating Margins of different international airlines: </li></ul>Ryanair Southwest United Airlines Lufthansa Air France KLM British Airways 22.7% 21.8% 11.9% 5.7% 3.5% 1.5% 0.9%
  5. 5. Aviation Industry in India : Characteristics <ul><li>Huge Potential </li></ul><ul><li>Under penetrated market </li></ul><ul><ul><li>Total Passenger Traffic : 50 million </li></ul></ul><ul><ul><li>Passenger trips per annum : </li></ul></ul><ul><ul><ul><li>India : 0.05 </li></ul></ul></ul><ul><ul><ul><li>United states : 2.02 </li></ul></ul></ul><ul><li>Untapped air cargo market </li></ul>
  6. 6. Aviation Industry in India : Characteristics India GDP : 9.6 % per annum Domestic air travel : 20 – 25 % WTTC Travel & Tourism : 8.8 % Over next 10 years Medium Term Growth Forecast :
  7. 7. Aviation Industry in India : Characteristics <ul><li>Constraints : </li></ul><ul><ul><li>Infrastructure constraints </li></ul></ul><ul><ul><li>Shortage of airport facilities </li></ul></ul><ul><ul><li>Parking bays </li></ul></ul><ul><ul><li>Air traffic control facilities </li></ul></ul><ul><ul><li>Takeoff and landing slots. </li></ul></ul><ul><ul><li>Less than 100 airports having more than </li></ul></ul><ul><ul><li>one daily service. </li></ul></ul>
  8. 8. Macro Environment Analysis <ul><li>Main Factors : </li></ul><ul><li>P olitical </li></ul><ul><li>E conomic </li></ul><ul><li>S ocio-cultural </li></ul><ul><li>T echnological </li></ul><ul><li>Other Factors : </li></ul><ul><li>Demographic </li></ul><ul><li>Natural Environment </li></ul>
  9. 9. Macro Environment Analysis : Political <ul><li>Open Sky Policy </li></ul><ul><li>Deregulations in different spheres </li></ul><ul><li>Low entry barriers </li></ul><ul><li>FDI limits : </li></ul><ul><ul><li>49 % for airlines </li></ul></ul><ul><ul><li>100% for airports </li></ul></ul>
  10. 10. Macro Environment Analysis : Economic <ul><li>Growing middle class income </li></ul><ul><li>Consistent GDP growth of more than 8% and projected rate in two digits </li></ul><ul><li>Hike in average salary 14%(highest) in the world </li></ul><ul><li>Tourism industry growth :8.8 %in 2005 </li></ul>
  11. 11. Macro Environment Analysis : Socio-cultural <ul><li>Growing middle class : </li></ul><ul><ul><li>1993-1999 : 39.5 m to 56.7 m households </li></ul></ul><ul><ul><li> 2005 : 300 m </li></ul></ul><ul><ul><li> 2010 : 400 m (Estimated) </li></ul></ul><ul><li>Increase in leisure travel by tourists by 15 % in 2005 </li></ul><ul><li>Foreign tourists in 2006 : 3.2 mn </li></ul><ul><li>Status symbol to travel in plane. </li></ul>
  12. 12. Macro Environment Analysis : Technological <ul><li>Modernization & Privatization of Airports </li></ul><ul><li>Modern Technology for efficient handling of aircraft, passenger and cargo. </li></ul><ul><li>Example : ILS, CAT-3 </li></ul><ul><li>Developing Greenfield Airports with Private Sector </li></ul><ul><li>Example : Bangalore Airport Corporation Ltd. </li></ul>
  13. 13. Macro Environment Analysis : Demographic and Natural <ul><li>Changing pattern of consumers </li></ul><ul><li>Highest percentage people of age group 20-25 </li></ul><ul><li>Educational environment </li></ul><ul><li>Shift towards family concept </li></ul><ul><li>High energy cost </li></ul>
  14. 14. Low Cost Carriers in India <ul><li>Air Deccan </li></ul><ul><li>SpiceJet </li></ul><ul><li>IndiGo Airlines </li></ul><ul><li>Go Air </li></ul><ul><li>Jetlite (Formerly known as Air Sahara) </li></ul>
  15. 15. Business Model of Low Cost Carriers <ul><li>A single Passenger class </li></ul><ul><li>A single type of airplane reducing training and service cost </li></ul><ul><li>No frills such as free food/drinks, lounges etc. </li></ul><ul><li>Emphasis on direct sale of ticket through Internet avoiding fee and commission paid to travel agents. </li></ul><ul><li>Employees working in multiple roles </li></ul><ul><li>Unbundling of ancillary charges to make the Headline fare lower </li></ul>
  16. 16. Aviation Industry in India : Market Share
  17. 17. Market Share in LCC Segment
  18. 18. Airline Industry in India : Service Vs Price Graph S E R V I C E P R I C E
  19. 19. Air Deccan Come SIMPLIFLY With Us… <ul><li>Market Share : 21.2 % </li></ul>Image courtesy of Air Deccan
  20. 20. Vision and Mission <ul><li>Vision : </li></ul><ul><li>Empower every Indian to fly </li></ul><ul><li>Mission : </li></ul><ul><li>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 </li></ul>
  21. 21. Marketing Strategy <ul><li>Common Man : </li></ul><ul><li>The Brand Ambassador for Air Deccan, the people’s airline is Mr. R.K Laxman’s ‘ Common Man ’ </li></ul><ul><li>Free Tickets : </li></ul>Images courtesy of Air Deccan
  22. 22. Marketing Strategy <ul><li>Advertisement through print, radio and billboards </li></ul><ul><li>In flight magazine for revenue generating </li></ul><ul><li>In flight shopping scheme called “Brand for less” – AVA Merchandising </li></ul><ul><li>Tie-up with Café Coffee Day </li></ul><ul><li>ICICI-Travel agent purchase card </li></ul><ul><li>Tie-ups with HPCL and Reliance Web World </li></ul>
  23. 23. How Air Deccan cuts cost? <ul><li>Quicker turnaround time </li></ul><ul><li>Lower distributions costs </li></ul><ul><li>All economy seating configuration </li></ul><ul><li>No free catering on board </li></ul><ul><li>Alternative revenue channels </li></ul><ul><li>100% web enabled bookings – e ticketing </li></ul><ul><li>Enhanced cash flow management </li></ul>
  24. 24. SWOT Analysis <ul><li>Strengths : </li></ul><ul><ul><li>Leader in LCC segment : </li></ul></ul><ul><ul><li>First to target the middle class : First mover advantage </li></ul></ul><ul><ul><li>Highest load efficiency </li></ul></ul><ul><ul><li>Flies to destinations in the hinterland </li></ul></ul><ul><ul><li>A ‘Lean-and-Mean’ approach to staffing </li></ul></ul>
  25. 25. SWOT Analysis <ul><li>Weaknesses : </li></ul><ul><ul><li>Focuses mostly on South Indian market </li></ul></ul><ul><ul><li>Image plagued by frequent breakdowns and near </li></ul></ul><ul><ul><li>misses </li></ul></ul><ul><ul><li>Very limited advertising </li></ul></ul><ul><ul><li>Reached at the threshold of cost efficiency </li></ul></ul>
  26. 26. SWOT Analysis <ul><li>Opportunities : </li></ul><ul><ul><li>Extensive network to capitalize Air Cargo </li></ul></ul><ul><ul><li>business </li></ul></ul><ul><ul><li>Plenty of scope for expansion of operations </li></ul></ul><ul><ul><li>Strengthen its position in Chartered flight </li></ul></ul><ul><ul><li>segment </li></ul></ul><ul><ul><li>Could start ‘Contractual Employment’ </li></ul></ul>
  27. 27. SWOT Analysis <ul><li>Threats : </li></ul><ul><ul><li>High attrition rate </li></ul></ul><ul><ul><li>The threat of new entrants into Low Price Segment </li></ul></ul><ul><ul><li>especially IndiGo, Go Air and SpiceJet </li></ul></ul><ul><ul><li>High Risk Perception </li></ul></ul>
  28. 28. SpiceJet flying for everyone <ul><li>Market Share : 6 % </li></ul>Image courtesy of SpiceJet Source : http://www.airteamimages.com
  29. 29. Vision and Mission <ul><li>Vision : </li></ul><ul><li>To ensure that flying is no longer only for CEOs and business travelers, but for everyone </li></ul><ul><li>Mission : </li></ul><ul><li>To become India’s preferred low-cost airline, delivering the lowest air fares with the highest consumer value, to price sensitive consumers </li></ul>
  30. 30. Marketing Strategy <ul><li>Entered with Rs. 99 fares for first 99 days offering ‘low everyday spicey fares’ </li></ul><ul><li>Aims to compete with Indian Railway’s AC segment </li></ul><ul><li>Aims at future fleet expansion to increase market share </li></ul>
  31. 31. Challenges <ul><li>Small fleet structure </li></ul><ul><li>Small load efficiency compared to Air Deccan </li></ul><ul><li>Competition with new entrants </li></ul><ul><li>Market share of East-central India </li></ul><ul><li>High attrition rate </li></ul>
  32. 32. GoAir The People’s Airlines – to FLY SMART <ul><li>Market Share : 2 % </li></ul>Image courtesy of GoAir
  33. 33. Strengths and Weaknesses <ul><li>Strengths : </li></ul><ul><ul><li>Promoted by Wadia group </li></ul></ul><ul><ul><li>GoAir FreeFares </li></ul></ul><ul><li>Weaknesses : </li></ul><ul><ul><li>Small network : Only in Southern and Western India </li></ul></ul><ul><ul><li>Small fleet structure </li></ul></ul><ul><ul><li>Load efficiency </li></ul></ul>
  34. 34. IndiGo Always affordable, no gimmicks, hassle free <ul><li>Market Share : 0-1% </li></ul>Image courtesy of IndiGo
  35. 35. Marketing Strategy <ul><li>Focuses on One thing : </li></ul><ul><li>One type of airplane, fare, customer service, route etc. </li></ul><ul><li>Uses new Airbus A320-200 aircraft </li></ul><ul><li>Efficient processes </li></ul>
  36. 36. An Example Images courtesy of www.chillnite.com
  37. 37. Current Trends : Consolidations All Around <ul><li>Kingfisher-Air Deccan Deal </li></ul><ul><ul><li>Kingfisher buys out 26 % stake for Rs.550 crore. </li></ul></ul><ul><ul><li>They have combined Market share of 33% </li></ul></ul><ul><ul><li>They are second biggest player after Jet Sahara deal </li></ul></ul><ul><li>Jet airways and Air Sahara merger </li></ul><ul><ul><li>Air Sahara name changed to JetLite </li></ul></ul><ul><li> </li></ul>
  38. 38. Future Trends <ul><ul><li>The projection for Indian Aviation for 2020 is estimated at: </li></ul></ul><ul><ul><ul><li>400 million passengers </li></ul></ul></ul><ul><ul><ul><li>Including 180 million domestic passengers </li></ul></ul></ul><ul><ul><ul><li>1,000 aircraft in the civil aviation sector </li></ul></ul></ul><ul><ul><li>Likely to follow the footholds of International Low Price Carriers e.g. Air Arabia, Southwest Airlines etc. </li></ul></ul><ul><ul><li>More emphasis will be on Arabian and South-East Asian circuits. </li></ul></ul>
  39. 39. Future Trends : Passenger Forecast Source : www.civilaviationweek.com
  40. 40. Future Trends : Proposed Addition Source : www.civilaviationweek.com
  41. 41. Thank You <ul><li>Jai Prakash Mundhra -071221 </li></ul><ul><li>Kamal Agarwal -071222 </li></ul><ul><li>Kartik Rawal -071223 </li></ul><ul><li>Kaushal Dixit -071224 </li></ul><ul><li>Ketan Mardikar -071225 </li></ul>Image courtesy of Boeing
  42. 42. References <ul><li>http://www.wikipedia.org </li></ul><ul><li>http://www.flyairdeccan.net </li></ul><ul><li>http://www.goair.in </li></ul><ul><li>http://www.spicejet.com </li></ul><ul><li>http://www.hinduonline.com </li></ul><ul><li>http://www.civilaviationweek.com </li></ul><ul><li>http://www.businesstravelindia.com </li></ul><ul><li>http://www.yahoo.com </li></ul><ul><li>http://civilaviation.nic.in </li></ul><ul><li>http://www.skygod.com /quotes/ </li></ul><ul><li>http://www.flykingfisher.com </li></ul><ul><li>http://www.goindigo.in </li></ul><ul><li>http://indiaaviation.aero </li></ul>

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