Airlines

Airline Industry Javeed budhwani

Airline Industry in India 454 airports and airstrips (includes Operational, Non Operational, Abandoned and Disused Airports) 127 are owned & operated by AAI 16 - international, 7 custom airports, 28 civil enclaves Scheduled domestic air services - available from 82 airports May 2007- May 2008 25.5 million domestic & 22.4 million international passengers 20% growth – highest in the world Growth Rate Projections (for next 5 yrs) 15% p.a (Passenger Traffic) 11.4% p.a (Cargo Traffic)

History • 1911 first commercial flight airmails from allahabad to nani (10 km) • 1932 the aviation department of tata sons ltd . Established • 1938 tata airlines (successor to aviation sivision of tata son ) • 1946 Tata Air Lines converted into a public Company and renamed Air India Limited • 1948 Air India International incorporated • 1953 Nationalization of Aircraft Industry Air India (serving the international sectors) Indian Airlines (serving domestic sectors) Deccan Airways, Airways India, Bharat Airways, Himalayan Aviation, Kalinga Airlines, Indian National Airways and Air Services of India

History 1986 Private Sector Players permitted as Air taxi operators Players including Jet, Air Sahara, NEPC, East West, Modiluft, etc started service 1990 Open sky policy 1994 Private Carriers permitted to operate scheduled services 2003 Entry of low-cost carriers 2007 Merger of Indian Airlines into Air India Acquisition of Air Sahara by Jet Airways 2008 Kingfisher acquired 49% stake in Deccan Aviation

Regulatory Authorities • Ministry of Civil Aviation Responsible for the formulation of policy, development and regulation of Civil Aviation. Its functions also extend to overseeing airport facilities, air traffic services and carriage of passengers and goods by air • Other Attached/Autonomous Organizations: Directorate General of Civil Aviation (DGCA) Promote safe and efficient Air Transportation through regulation and proactive safety oversight system • Bureau of Civil Aviation Security (BCAS) Regulatory authority for civil aviation security in India • Airport Authority of India (AAI) Accelerate the integrated development, expansion and modernization of the operational, terminal and cargo facilities at the airports

Policies Open Sky Policy FDI Airports 100% for green field operations 74% for existing airports - 100% with special permissions 100% tax exemptions for 10 yrs. Airlines 49% in domestic airlines - 100% for NRI’s 74% in cargo & non-scheduled airlines

Competitive Pressure Service Low cost Carriers changing the game Indigo Price

MARKET SHARE Others Airlines Market Share Spice Jet 2% 6% Kingf isher 8% Jet Airwyas Indian Airlines Jet Lite Jet Airways Air Deccan 10% 35% Air Sahara Air Deccan Kingfisher 15% Spice Jet Others Indian Airlines 24%

The Kingfisher AIRLINES T h e ki n g o f go o d t i m e s

Kingfisher airlines • Dr Vijay Mallya is the Chairman and CEO of Kingfisher Airlines • Kingfisher Airlines Limited launched scheduled airline services on May 9, 2005 with 4 daily flights between BOM & BLR and one A-320 aircraft. • There are tools for mood lighting such as web chat, inseat plugins for music, liveTV with 16 channels on each seat • 100 percent E ticket airline

VISION • The Kingfisher Airlines family will consistently deliver a safe, value-based and enjoyable travel experience to all our guests

STP • Geographic Region • Density Segmentation • Social Classes • Income Level • Kingfisher First • company executives Targeting • Kingfisher Class • lower middle, upper middle, lower upper segment • Lifestyle Positioning • Benefits • Quality

SWOT Analysis • Strengths Opportunities First airline with full new fleet of Under penetrated domestic aircraft market Quality hospitality provided to International market customers Untapped air cargo market Route rationalization Expanding tourism industry Already have training academy • Weaknesses Threats Service delivery to metros and Existing Operators other big cities Infrastructure issue Yet not in profit Fuel price hike High ticket pricing Economic slowdown High attrition in top brass

PESTEL ANALYSIS POLITICAL FACTORS 1) Open sky policy 2) FDI limits: 100% for Greenfield airports 74% for the existing airports 100% through special permission 49% for airlines. ECONOMICAL FACTORS 1) Contribution to the Indian economy. 2) Rising cost of fuel. 3) Investment in the sector of aviation. 4) The growth of the middle income group family affects the aviation sector.

SOCIAL FACTORS 1) Development of cities leads to better services and airports. 2)Employment opportunities. 3)Safety regulations. 4) The status symbol attached to a plane travel TECHNOLOGICAL FACTORS 1) The growth of e-commerce and e-ticketing. 2) Satellite based navigation system. 3) Modernisation and privatisation of the airports. 4) Developing green field airports with private sector for example in Bangalore the airport corporation limited.

ENVIRONMENTAL FACTORS 1)The increase in the global warming. 2)The sudden and unexpected behavior of the atmosphere and the dependency on whether. 3)Shortage of the infrastructural capacity 4)Tourism saturation. LEGAL FACTORS 1) FDI limits 2) Bilateral treaties 3) Airlines acquisitions and the leasing cost.

7 P’s • Fleet Size • Aircrafts • International Foray Product • Advertisements • Magazine and Newspaper ads • Exposure at non-corporate event • Participation in International Airshows Promotions • Endorsing celebrities like Katrina Kaif and Yana Gupta • Booking the ticket - online booking or tele-booking or from any of the kingfisher outlet Process • Personal valets • Exclusive lounge space • Hi! Blitz • Gourmet cuisine • world class cabin crew Physical • 5 trendy video- Fun TV; 10 music stations -Kingfisher Radio Evidence

•Dynamic pricing model - Multiple fare levels •Uniform rules •No hidden restrictions. •Pricing model - 8 different levels Price •Discounts provided from time to time •Backbone of the brand •Extensive trainings •Hospitality industry and consider their customer as guests •Interpersonal skills, aptitude, and service knowledge People •Online Booking - www.flykingfisher.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 Place

PORTERS FIVE FORCE MODLE Virgin Atlantic Quantas Airways Economic & demographic changes Jet Airways Indian airlines Increasing Fuel supplier awareness LCC Exposer to globle brand Other models of transport

KINGFISHER AIRLINES Performance • Kingfisher Airlines has posted a net loss of Rs 577 crore in the financial year ended March 2007, the balance sheet of UB Holdings, which owns the airline, shows.

Jet Airways Founded in 1993, Chairman - Mr.Naresh Goyal HQ in Mumbai Country’s second largest international airline Largest domestic airline - 31% Primary base - Mumbai's Chaatrapathi ShivajiAirport Secondary hubs - Bangalore, Brussels, Chennai, Delhi, Hyderabad, Kolkata and Pune. April,2007 - Acquired Air Sahara - JetLite Now JetLite integrated into Jet Airways

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. Jet Airways will achieve this pre-eminent position by offering a high quality of service and reliable, comfortable and efficient operations. Jet Airways will be an airline which is going to upgrade the concept of domestic airline travel - be a world class domestic airline. Jet Airways will achieve these objectives whilst simultaneously ensuring consistent profitability, achieving healthy, long-term returns for the investors and providing its employees with an environment for excellence and growth

STP Primary Segments (Geographic) - Domestic & International Customer Segments First class, Premiere(Business) class & Economy class Target Segments Premiere(Business) class Business travelers, contribute 48% of passengers & 66% of revenues, ready to pay higher prices, last time booking, don’t like transit Economy class Leisure travelers, prefer low cost airlines, ready for transit if there is cost advantage, large % of passengers Seat Allocation – Yield Management Technique Positioning – High value for High price Unique Selling Price – Customer relationship and Punctuality

Strengths SWOT Analysis Market driver Experience exceeding 14 year Only private airline with international operation Market leader Largest fleet size Weaknesses Loosing domestic market share Old fleet with average age around 4.79 years Scope for improvement in in-flight service Weak brand promotion

Opportunities Untapped air cargo market Scope in international service and tourism Threats Strong competitors Fuel price hike Overseas market competition

PEST Analysis Political Issue License issue for international operation Infrastructural constraint ATF price policy Economic Effects Rising income level Reduced fare but yet not enough

Social Effects Sound Pollution Plane hijacking 9/11 Incident Technology Effects Modernization of aircrafts Modern technology like CAT3 and ILS

7P’s Price Economy & Club Premiere Fare Discounted fare for senior citizens & defense personnel Advance Passenger Excursion/ APEX Fares One Fare Night Saver Fares Check Fares US Dollar Fares & Visit India Fares Place Place of Service - Aircraft Various Destinations

Promotion Offers Companion Free Offer, One Fare, Concessional fares, JetPrivilege Offers, Jet Airways Citibank Credit Cards, Corporate Deal Offers, International Specials, Camp Rock contest, Festival specials, Student specials, Surprises etc. Advertising and Branding Hoardings Brand Ambassadors Sponsorships Event Organization

Process People Processing People physically enter the service system to receive the service. Aircraft is the service factory where service is delivered. Possession Processing Cargo Luggage & Courier Physical Evidence Servicescape Servicescape usage - Interpersonal Complexity of Servicescape - Elaborate Flight Offices - Org. & Ticket Booking Agents Virtual Servicescape

Jet Airways - Performance Annual Revenues - Rs.9481.5 crores (2007-08) Rs.7401 crores (2006-07) Profit(Loss) After Tax - Rs.253 crores loss (2007- 08) Rs.27 crores profit (2006-07) - All Other Domestic Players showed loss(2006- 07)

Kingfisher Jet Airways • Kingfisher is one of the • Jet Airways is the latest Airlines in experienced airline in INDIA. INDIA. • Overall growth in year • Overall growth in 2006-07 is 37%. year 2006-07 is 16%. • Kingfisher acquired • Jet airways acquired 46% share in Air Air Sahara in 2006. Deccan. • Jet Airways already • Domestic airlines has domestic as well poised to go as international international flights flights.

Kingfisher Jet Airwayss • In a short span of 2 • Jet Airways has its years its market share market share 31% has become 28% including Air Sahara. including Air Deccan. • Average • Personal in-flight entertainment entertainment in every services. seat. • Jet Airways won • It was awarded the Double Honour Travel ‘Best New Airline Of Trade Gazette Travel the Year’ award. award. • Already have training • They are plan to start academy training academy.

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Airlines

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