OUTLINEAVIATION IN INDIATARGET MARKETSTRATEGY OF LOW COST AIRLINESINDIAN SCENARIOPOTENTIAL OF AIR TRAVEL IN INDIANEW ENTRANTSSWOT ANALYSISCONCLUSION
INTRODUCTIONIndia air travel was perceived to be an elitist activityIn 1953, all airlines merged into Indian Airlines orAir IndiaMonopoly perpetuated for next 40 yearsControlled by Directorate General of Civil AviationLater entrusted by Airport Authority of India
OPEN SKIESCurrent policy restricts the access of foreign AirlinesPotential tourists are not offered choice whentravelling to IndiaAdopt open skies policy, in order to promote Travel& TourismOn 1 March, 1994, Government open the gates forprivate entrantsSensing a huge opportunity, a large number of playersjumped into the frayProminent among them, Jet Airways, Sahara,Archana, East West, India International, Damania etc
LOW COST AVIATION (WIND OF CHANGE)Trade of low cost Aviation increased in recent pastOffers low fares eliminates all unnecessary servicesMost consumers opt for low pricesSerious threat to traditional „full service‟ airlinesForce to rethink the strategies and restructure theirfairs to Government owned and private Airlines
NEED FOR LOW COST AIRLINESDeregulation the demand for scheduled passengerwas driven by constraints and confines of its providersNetwork carriers were able to avoid cost sidepressure, by focusing on revenue-side strategiesPrice transparency-internet created, emergence ofnew breed of low cost carriersAt the end of 2000 demand for business class andother high end products fell dramaticallyLow cost carriers offer real, lasting competition tonetwork rivalsCustomers fall into segments with regard to demandfor products on offer
TARGET MARKETTo a large extent influenced the mass transportationand domestic tourism industryE.g., Country of Billion people, around12 Millionpeople travel by airLCCs also geared towards: holiday trips business tripsMiddle class people
Strategy of Low Cost Airlines Business Strategy Keeping operating costs to a minimum Aggressive marketing Utmost efficiency inUsing secondary operations andairports maintenanceOutsourcing someoperations Increasing the aircraft seat capacity Charging for all additional
Indian Scenario: Air Sahara and Jet AirwaysJet 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 ownerAir 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
Low cost AirlinesOn 25th August 2003 Air Deccan, India‟s first low cost carrier operated its first flightFares were half of those of the established airlinesOthers Alliance Air, GoAir, Air Arabia, Air One and foreign airlines amongst othersTarget customer whose basic need is to commute at a cheap fare
Indian Aviation: Market Players Kingfisher IndiGo Jet Airways JetLite Air India Spicejet GoAir
Air Deccan: First low cost Airline in IndiaUnit of Deccan Aviation Private LtdFormed in 1995India‟s largest private heli - charter companyGot reputation for providing speedy andreliable heli servicesVision to bridge divide with those who fly andthose who don‟t, by introducing low airfaresLeveraged the power of Internet to simplify theentire process
Strategies planned by Air DeccanMisson : Provide reliable, low cost and safe travel to thecommon menStrategies:High Aircraft UtilizationRoute planningAircraft fleetDynamic pricingAdditional revenuesCost reductionMarketing & promotion
Air Deccan: Fares and ReservationThe aim is to make air travel affordable to allIntroduced the concept of Dyna faresReservation systems:• Internet(www.airdeccan.net)• Call centre – through credit card• Travel agents• Airport counter
SWOT Analysis Strength Weakness “Lean and Mean” No frills such as „free” approach in staffing food/drinks Rising income levels and Lower safety standards demographic profile followed Airlines for price conscious Crippling “oil shock” so customers difficult to survive at low cost New Short-Haul air routes are serviced Absence of Institutionalized funding Smaller countries can rely on low cost airlines to service them Give more choices to fly
Opportunities Threats Attract middle class Rising cost people The threat of new entrants Extensive network to into (LCC) segment esp exploit the booming Air GoAir, Spice Jet, Indigo cargo business and Jagson Airlines Plenty of scope for High risk perception expansion of operations New strategies of Could start “Contractual traditional airlines Employment” Strengthen its position in the Chartered Flight segment
Why Low Cost Airlines are not so successful in India ???
Reasons: Why Low Cost Airlines not so successful in India?Failed in effective administrationPoor servicesUnable getting subsidiesLess interest of GovernmentFailed in building trust factor
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