1. PRESENTED BY :
Harshit Saboo.
Pooja Shakaala.
Pankhuri Singhal.
Mayuri Munot.
Krati Saluja.
Krupal Khatri.
Ishita Saxena.
Lavendra Dadhich.
DOMESTIC AIRLINES IN INDIA
LEVERAGING PRICE
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2. INTRODUCTION
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The case let examines the pricing wars resorted to by Indian
airline companies to counter the competition and sustain in the
marketplace. It discusses the APEX fare schemes launched by
various domestic airlines. The case let talks about some of the
innovative promotional schemes that were launched by these
companies.
ISSUES:
• Pricing strategies in Indian airlines industry
• Sales promotion in airlines
• Competition as a key consideration for designing marketing
strategy
3. ABOUT THE CASE STUDY
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PRICING WARS
• IA announced 3-15% cut in fares in June 2002.
• Next day JA reduced prices by Rs 635 for economy class
• APEX fares scheme
• Sahara‟s Strategy
INDIAN AIRLINES Schemes
• „Wings Of Freedom‟
• „Bharat Darshan‟
4. ABOUT THE CASE STUDY
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SAHARAS Various Schemes
Wings & Wheels scheme in March 2002.
„Sixer‟ Offer scheme during July –August.
„Steal a Seat‟ online bid scheme in August 2002.
Steal Buys scheme
5. MONOPOLY
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Up to 1990 Indian Airlines.
Single service provider and many users of service.
Service provider had low elasticity with no close
substitute.
6. OLIGOPOLY
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• The period after 1990, Monopoly ended
• An industry dominated by a small number of large
firms
• Firms provide either identical or differentiated
services
• The industry has significant barriers to entry with
respect to capital and regulations
7. CHARACTERISTIC OF
OLIGOPOLY
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Few firms each large enough to influence market price.
Products may be differentiated or homogeneous.
The behavior of each firm depends on the behavior of
the others.
Entry barriers exit.
8. 8
Kinked Demand Curve in Oligopoly:
A kinked demand curve is said to occur when there is a
sudden change in the slope of the demand curve; this
gives rise to a kink, that is, sharp corner in the demand
curve.
We would get such a curve in an Oligopoly, when it is
assumed that the rivals will lower their prices when the
oligopolist lowers his own price but that rivals will not
raise their prices when the oligopolist raises his price.
9. Kinked Demand Curve and Price Rigidity
D
Price change
unmatched
Price change
matched
d
d’
D’
K
Quantity
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10. Examples of Oligopoly
Tennis Balls: Wilson, Penn, Dunlop and Spalding.
Cars: GM, Ford, Daimler Chrysler
Cereal: Quaker, Ralston Food, Kellogg, Post and
General Mills.
Grocery stores
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11. ADVANTAGES OF OLIGOPOLY
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Large firms having strong hold over the market are able to
make huge profits as there are few players in the market.
In oligopoly, many times, products of two different
competitive companies are derived out of one large firm.
Therefore, whichever company makes the profit, it finally
ends up as a profit of the parent firm.
Since companies in an oligopolistic market have full control
over it, they are capable of deciding prices as per their
choice. Though this practice is illegal, it works in favor of
these businesses.
12. 12
For customers, oligopoly is advantageous because they
can easily make price comparisons among the few
players existing in the market.
Easy price comparison forces companies to set their
prices competitively which is a positive point for
customers.
High profits generated by the companies can be used for
innovation and development of new products and
processes.
13. DISADVANTAGES OF OLIGOPOLY
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Setting of prices may be advantageous for the firms, but if done
unrealistically, it may prove to be a great disadvantage for
consumers.
Firms cannot take independent decisions and always have to
consider the views of other dominant players in the market.
Small businesses in an oligopolistic market fail to establish
themselves as a brand because most of the market is captured by
larger firms.
With the presence of little competition, dominant companies may
not think of improving their products.
14. Apex is ADVANCE PURCHASE EXCURSION FARE. It is a non-
cancellable return fare offered at a heavy discount on the conditions:
• Tickets are purchased at least 21 days in advance
• Minimum gap between departures range from one to six weeks.
• Maximum gap between departures is 12 to 24 weeks.
• There are no stop overseavy discount on the conditions:
• Tickets are purchased at least 21 days in advance
• Minimum gap between departures range from one to six weeks.
• Maximum gap between departures is 12 to 24 weeks.
• There are no stopovers
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APEX
15. EFFECTS OF APEX
Lead to increase in number of customers.
Loss of airline companies minimized as with the increase
of passengers the aircraft ran to their full capacity.
It brought a veritable boom in tourism sector.
It was able to lure the middle class people who preferred
to travel by trains
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16. DIFFERENT SCHEMES UNDER APEX
YOU CAN FLY(INDIAN AIRLINES)
WINGS OF FREEDOM(INDIAN AIRLINES)
BHARAT DARSHAN(JET AIRWAYS)
EVERYONE CAN FLY(JET AIRWAYS)
WINGS &WHEELS(AIR SAHARA)
SIXER AND SUPER SIXER(SAHARA)
STEAL A SEAT &STEAL BUYS(SAHARA)
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17. AIR SAHARA
First airlines to start up with innovative price models than
APEX Model.
Sixer and Super Sixer Schemes in 2002 – Six refers to the
six zones for 25k.These schemes offered more to the
customers than their competitors.
Square Drive Scheme – ( Family Pack) 4k-2.5k
“Steal a Seat” - Bidding process started from Base price –
Re 1/-
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19. INNOVATION SCHEMES
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Till 2002 people rarely traveled by air.
2002 many schemes introduced.
1st time in history, company efforts to made Indian airline
affordable.
Helps to larger population to travel.
Rapid rewards enrollment.
Frequent earnings
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• Discount to regular customers
• Charging less for busy routes
• Reduce charges for cancellation of tickets
• Having flexible airlines timings
• Concession for senior citizens
STRATERGIES TO ENHANCE
MARKET SHARE AND INCREASE
USER
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• Pick up and drop up facilities.
• Making mission as well as setting the vision.
• Comparing with the competitors and planning accordingly.
• Make a survey and then frame the policies.
• Increase flight connectivity .
25. INFRASTRUCTURE CONSTRAINTS
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Shortage of airport facilities, parking bays,
air traffic control facilities and take-offs and landing
slots
Continued growth may be hampered
Liberalize rules and regulations by the government for
the new entrants.
Reduction in prices and Lease Rentals.
