DETERMINANTS OF PRICING ATF ATF refers to air turbine fuel which is used by airlines in its operations. ATF contributes to the 40 % of operation cost It includes freight charges from gulf to India , Customs Duty, Domestic Transportation and various taxes. India usually Pay higher ATF charges as compared to other countries.
Lease Rental Private operators except Air India have leased aircraft from USA and Europe. They pay on average $375000 to $500000 per month depending on the aircraft They contribute almost 33 % of operational cost. They generally have to pay their rents in dollar terms.
Airport Charges It is the basic fees that is charged by airports from airlines This include parking fees, landing fees , stop paging fees and aero bridge expenses New airport charges more than established one to cover up all the cost incurred.
Other factors Advertising and Promotional Expenses Technology employed by the airlines Current Financial position Prices set by other airlines competing in the present environment. Pilot fees Government regulation.
The trend then followed by….. May 2005 May 2005 Oct 2005 Oct 2005 Aug 2006
Key characteristics of low cost airlines High seating density and load factors Uniform aircraft types (usually the 737-300) Direct booking (internet/call centre - no sales commissions) No frills such as “free” food/drinks, lounges or ‘air miles’ Simple systems of yield management (pricing) Use of secondary airports to cut charges and turnaround times
Phase 4: Merger & Acqusition On 20 th April , 2007 Jet acquired 100% stake in Air Sahara for INR 14.5 billion Re brand Sahara as “Jetlite” which would operate as a value carrier
KINGFISHER AIRLINES AND AIR DECCAN On 31st May 2007 Kingfisher Airlines bought a 26% stake for Rs.550 crores in Air Deccan Post merger Combined Market Share : 30%
AIR INDIA AND INDIAN AIRLINES The two state run carriers entered into a merger in April, 2007 in a bid to consolidate and optimize the use of the assets of the two public sector airlines. The will help the two airlines to synergize their operations.