AIR DECCAN –Revolutionizing the Indian Skies. Case Study.
AIR DECCAN –
PRESENTED BYThe Assam Kaziranga
University- School of Business.
Aviation Industry in India :
Under penetrated market
Total Passenger Traffic : 50 million
Passenger trips per annum :
India : 0.05
United states : 2.02
Untapped air cargo market
High Fuel Cost
Air Deccan creates
„REVOLUTION‟ in Indian
In 2003 Air Deccan came to Birth.
–Capt. G.R. Gopinath.
This was the first low cost carrier of India
Cheaper than Railway 2- tier AC
More advanced than railway system
Covered 65 destinations in India
365 destination per day
Flew 14 million passengers per year (maximum)
Market Share 21.2 %
Investment – USD 50 million
Empower every Indian to fly
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.
Air Deccan‟s Business
Air Deccan‟s first flight took off from Bangalore
to Hubli on August 25 , 2003
Positioning as „low cost carrier „
Offer no in-flight service
Single class aircraft configuration
Internet booking and cheap fares
Two air craft strategy – Airbus and ATR
Target market – Upper middle class for short
term and lower middle class aggressively in long
Air Deccan‟s Business (cont.)
Target to expand fleet-124 aircraft by 2013
The Indian aviation market expected to grow at
20% annually for the next ten years. Air Deccan
targeted 18% market share by 2013
Passenger load factors anticipated at 70%
Revenues per customer to increase at 5% in the
Targets to decease fuel expense as a
percentage of total revenues from 30% to 26%,
operating expense from 23% to 16% in 8 years
PEST Analysis of Air
Deregulations in different spheres.
Open Sky Policy
Low Entry Barriers
FDI limits- 49% on airlines and 100% on
power increasing rapidly
Growing middle class Income
Hike in Average Salary in the world at that period.
Consistent GDP growth and projected double digit
Tourism Industry Growth. 8.8% in 2005
symbol to travel by air.
Growing Middle class households.
Increase in leisure travel by tourists by 15 % in
Foreign tourists in 2006 : 3.2 mn
& Privatization of Airports
Modern Technology for efficient handling of
aircraft, passenger and cargo.
Example : ILS, CAT-3
Developing Greenfield Airports with Private
Example : Bangalore Airport Corporation Ltd.
Ticketing increasing becoming Web Based.
Common Man :
The Brand Ambassador for Air Deccan, the people‟s
airline is Mr. R.K Laxman‟s „Common Man‟
Free Tickets :
Images courtesy of Air Deccan
Advertisement through print, radio and
In flight magazine for revenue generating
In flight shopping scheme called “Brand for less”
– AVA Merchandising
Tie-up with Café Coffee Day
ICICI-Travel agent purchase card
Tie-ups with HPCL and Reliance Web World
How Air Deccan cuts
Quicker turnaround time
Lower distributions costs
All economy seating configuration
No free catering on board
Alternative revenue channels
100% web enabled bookings – e ticketing
Enhanced cash flow management
Leader in LCA segment :
First to target the middle class :
First mover advantage
Highest load efficiency
Flies to destinations in the hinterland
A „Lean-and-Mean‟ approach to staffing
Focuses mostly on South Indian
Image plagued by frequent
breakdowns and near misses
Very limited advertising
Reached at the threshold of cost
Extensive network to capitalize Air
Plenty of scope for expansion of
Strengthen its position in Chartered
Could start „Contractual Employment‟
High attrition rate
The threat of new entrants into Low
Price Segment. Especially IndiGo, Go
Air and SpiceJet
High Risk Perception
Generic Strategies Model.
1. Cost Leadership Strategy
Single Air Hostess per flight.
48 seater aircraft to lower maintenance and
Unique Online Reservation system.
No Frills airline but food / beverage can be
bought inside the aircraft.
Prices are almost 50% lower than the full
service airlines .
Generic Strategies Model (Cont.)
2. Differentiation Strategy
Single Passenger class system
Tie ups with Cafe Coffee Day, HPCL and
Reliance Web World
Provides flights even to the hinterland
Allocation of prices to various percentage
Generic Strategies Model (cont.)
3. Focus Strategy
Frequent business travelers
AC train travelers
Renaming from „Air Deccan‟ to „Deccan‟
New Tagline - „The Choice is Simple‟
Blue and yellow name replaced by Red and
Sold 26% stake to Kingfisher Airlines in May
No outsourcing of check- in staff
Replacement of Ailing Aircrafts
Cost incurred in rebranding process : Rs. 15