Pertaining to Strategic Management course, here is a case analysis of Air Deccan- India's first low cost carrier.

1. AIR DECCAN –
REVOLUTIONIZING THE
INDIAN SKIES.
PRESENTED BYThe Assam Kaziranga
University- School of Business.

2. Aviation Industry in India :
Characteristics
Huge Potential
 Under penetrated market
 Total Passenger Traffic : 50 million
 Passenger trips per annum :
India : 0.05
United states : 2.02
 Untapped air cargo market
 Infrastructure Constraint
 High Fuel Cost
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3. Air Deccan creates
„REVOLUTION‟ in Indian
Transportation
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In 2003 Air Deccan came to Birth.
 Founder
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–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

4. 4
Vision and
Mission
Vision :
Empower every Indian to fly
Mission :
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.

5. Air Deccan‟s Business
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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
term

6. Air Deccan‟s Business (cont.)
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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
long run
Targets to decease fuel expense as a
percentage of total revenues from 30% to 26%,
operating expense from 23% to 16% in 8 years

7. PEST Analysis of Air
Deccan‟s Business
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Political Factors:
 Deregulations in different spheres.
 Open Sky Policy
 Low Entry Barriers
 FDI limits- 49% on airlines and 100% on
airports.

8. 
Economic Factor:
 Purchasing
power increasing rapidly
 Growing middle class Income
 Hike in Average Salary in the world at that period.
(14%- highest).
 Consistent GDP growth and projected double digit
growth.
 Tourism Industry Growth. 8.8% in 2005
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Socio-cultural Factor:
 Status
symbol to travel by air.
 Growing Middle class households.
 Increase in leisure travel by tourists by 15 % in
2005
 Foreign tourists in 2006 : 3.2 mn

9. 
Technological Factors:
 Modernization
& Privatization of Airports
Modern Technology for efficient handling of
aircraft, passenger and cargo.
Example : ILS, CAT-3
Developing Greenfield Airports with Private
Sector
Example : Bangalore Airport Corporation Ltd.
 Ticketing increasing becoming Web Based.
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10. Marketing Strategy
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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

11. Marketing Strategy
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Advertisement through print, radio and
billboards
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

12. How Air Deccan cuts
cost?
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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

13. SWOT Analysis
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Strengths :
 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

14. SWOT Analysis
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Weaknesses :
 Focuses mostly on South Indian
market
 Image plagued by frequent
breakdowns and near misses
 Very limited advertising
 Reached at the threshold of cost
efficiency

15. SWOT Analysis
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Opportunities :
 Extensive network to capitalize Air
Cargo business
 Plenty of scope for expansion of
operations
 Strengthen its position in Chartered
flight segment
 Could start „Contractual Employment‟

16. SWOT Analysis
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Threats :
 High attrition rate
 The threat of new entrants into Low
Price Segment. Especially IndiGo, Go
Air and SpiceJet
 High Risk Perception

17. Generic Strategies Model.
1. Cost Leadership Strategy
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Single Air Hostess per flight.
48 seater aircraft to lower maintenance and
service fee.
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 .

18. 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
of seats
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19. Generic Strategies Model (cont.)
3. Focus Strategy
Frequent business travelers
 AC train travelers
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20. Rebranding
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Renaming from „Air Deccan‟ to „Deccan‟
New Tagline - „The Choice is Simple‟
Blue and yellow name replaced by Red and
White
Sold 26% stake to Kingfisher Airlines in May
2007.
No outsourcing of check- in staff
Replacement of Ailing Aircrafts
Cost incurred in rebranding process : Rs. 15
crore.