low price carriers in india2948

8/3/2019 Low Price Carriers in India2948

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Low Cost CarriersLow Cost Carriers

BUZZBUZZ

Section BSection B

Image courtesy ofBoeing


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AirlinesAirlines

Once you get hooked on the airline business,

it's worse than dope.

This is a nasty, rotten business.

Air transport is just a glorified bus operation.


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Global CarriersGlobal Carriers

US

Ireland

Ireland

Malaysia

Australia

Saudi Arabia

Singapore

Germany

UK

US

Southwest Airlines

Ryanair

Easy jet

AirAsia

Virgin Blue

AirArabia

Valueair

Air Berlin

Air Southwest

US Airways


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World ScenarioWorld Scenario -- Low Cost AirlinesLow Cost Airlines

The successful low cost airlines are more profitable thanestablished carriers

Ryanair has a market capitalisation of about 3 billion

Globally, the largest and most successful low cost airline is

Southwest in the US

Operating Margins of different international airlines:

Ryanair

Southwest

United Airlines

Lufthansa

Air France

KLM

British Airways

22.7%

21.8%

11.9%

5.7%

3.5%

1.5%

0.9%


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Aviation Industry in India :Aviation Industry in India :

CharacteristicsCharacteristics Huge Potential

Under penetrated market

o Total Passenger Traffic : 50 milliono Passenger trips per annum :

India : 0.05

United states : 2.02

Untapped air cargo market


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CharacteristicsCharacteristics

India GDP : 9.6 % per annum

Domestic air travel : 20 25 %

WTTC Travel & Tourism : 8.8 %

Over next 10 years

Medium Term Growth Forecast :


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CharacteristicsCharacteristicsConstraints :

o Infrastructure constraints

o Shortage of airport facilities

o Parking bays

o Air traffic control facilities

o Takeoff and landing slots.

o Less than 100 airports having more than

one daily service.


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Macro Environment AnalysisMacro Environment Analysis

Main Factors :

Political

Economic

Socio-cultural

Technological

Other Factors :

Demographic

Natural Environment


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Macro Environment Analysis :Macro Environment Analysis :

PoliticalPolitical Open Sky Policy

Deregulations in different spheres

Low entry barriers

FDI limits :

o 49 % for airlines

o 100% for airports


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EconomicEconomic Growing middle class income

Consistent GDP growth of more than 8%

and projected rate in two digits Hike in average salary 14%(highest) in the

world

Tourism industry growth :8.8 %in 2005


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SocioSocio--culturalcultural Growing middle class :

o 1993-1999 : 39.5 m to 56.7 m households

o 2005 : 300 mo 2010 : 400 m (Estimated)

Increase in leisure travel by tourists by 15 %

in2005

Foreign tourists in 2006 : 3.2 mn

Status symbol to travel in plane.


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TechnologicalTechnological Modernization & Privatization ofAirports

Modern Technology for efficient handling of

aircraft, passenger and cargo.Example : ILS, CAT-3

Developing Greenfield Airports with Private

SectorExample : Bangalore Airport Corporation Ltd.


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Demographic and Natural

Demographic and Natural

Changing pattern of consumers

Highest percentage people of age group 20-

25 Educational environment

Shift towards family concept

High energy cost


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Low Cost Carriers in IndiaLow Cost Carriers in India

AirDeccan

SpiceJet

IndiGo Airlines Go Air

Jetlite (Formerly known as Air Sahara)


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Business Model of Low CostBusiness Model of Low Cost

CarriersCarriers A single Passenger class

A single type of airplane reducing trainingand service cost

No frills such as free food/drinks, lounges etc. Emphasis on direct sale of ticket through Internet

avoiding fee and commission paid to travel agents.

Employees working in multiple roles

Unbundling of ancillary charges to make theHeadline fare lower


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Market ShareMarket ShareThe Domestic Aviation Market Share

34%

20%21%

8%

8%6%

2%

1%

Jet airwaysIndian

AirDeccan

Air Sahara

Kingfisher

Spicejet

Goair

Others


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Market Share in LCC SegmentMarket Share in LCC Segment


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Airline Industry in India :Airline Industry in India :

Service Vs Price

GraphSer

vice Vs Price

Graph

S

E

R

V

I

C

E

P R I C E


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Air DeccanAir Deccan

Come SIMPLIFLYW

ith UsCome SIMPLIFLYW

ith Us

Market Share : 21.2 %

Image courtesy ofAir Deccan


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Vision and MissionVision 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


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Marketing StrategyMarketing Strategy

Common Man :The Brand Ambassador forAirDeccan, the peoples airline

is Mr. R.K Laxmans Common Man

Free Tickets :

Images courtesy of Air Deccan


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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 Caf Coffee Day

ICICI-Travel agent purchase card

Tie-ups with HPCL and Reliance

WebW

orld


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How AirDeccan cutsHow AirDeccan cuts

cost?cost? 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


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SWOT AnalysisSWOT Analysis

Strengths : Leader in LCC 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


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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


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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


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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


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SpiceJet

flying for everyone

Market Share : 6 %

Image courtesy ofSpiceJet

Source : http://www.airteamimages.com


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Vision and MissionVision and Mission

Vision :

To ensure that flying is no longer only for CEOs and

business trav

elers, but for ev

eryoneMission :

To become Indias preferred low-cost airline, delivering the

lowest air fares with the highest consumervalue, to price

sensitive consumers


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Entered with Rs. 99 fares for first 99 days

offering low everyday spicey fares

Aims to compete with Indian Railways ACsegment

Aims at future fleet expansion to increase

market share


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ChallengesChallenges

Small fleet structure

Small load efficiency compared to Air

Deccan Competition with new entrants

Market share of East-central India

High attrition rate


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GoAir

The Peoples Airlines to FLY SMART

Market Share : 2 %Image courtesy ofGoAir


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Strengths and WeaknessesStrengths and Weaknesses

Strengths : Promoted by Wadia group

GoAir FreeFares

Weaknesses : Small network : Only in Southern and Western India

Small fleet structure

Load efficiency


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IndiGo

Always affordable, no gimmicks, hassle free

Market Share : 0-1%

Image courtesy ofIndi

Go


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Focuses on One thing :

One type of airplane, fare, customer service,route etc.

Uses new Airbus A320-200 aircraft

Efficient processes


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An ExampleAn Example Images courtesy of www.chillnite.com


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Current Trends :Current Trends :

ConsolidationsA

llA

roundConsolidationsA

llA

round Kingfisher-AirDeccan Deal

o Kingfisher buys out 26 % stake for Rs.550 crore.

o They have combined Market share of33%

o They are second biggest player after Jet Sahara deal

Jet airways and Air Sahara mergero Air Sahara name changed to JetLite


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Future TrendsFuture Trends

The projection for Indian Aviation for2020 is estimated

at:

o 400 million passengers

o Including 180 million domestic passengers

o 1,000 aircraft in the civil aviation sector

Likely to follow the footholds of International Low Price

Carriers e.g. AirArabia, Southwest Airlines etc.

More emphasis will be on Arabian and South-East Asian

circuits.


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Future Trends : Passenger ForecastFuture Trends : Passenger Forecast

Source : www.civilaviationweek.com


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Future Trends : Proposed AdditionFuture Trends : Proposed Addition

0

20

40

60

80

100

PROPOSED ADDITION

PROPOSEDADDITION

Source : www.civilaviationweek.com


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Thank YouThank You

Jai Prakash Mundhra -071221

Kamal Agarwal -071222

Kartik Rawal -071223

Kaushal Dixit -071224

Ketan Mardikar -071225Image courtesy ofBoeing


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ReferencesReferences

http://www.wikipedia.org

http://www.flyairdeccan.net

http://www.goair.in

http://www.spicejet.com

http://www.hinduonline.com

http://www.civilaviationweek.com

http://www.businesstravelindia.com

http://www.yahoo.com

http://civilaviation.nic.in

http://www.skygod.com /quotes/

http://www.flykingfisher.com

http://www.goindigo.in

http://indiaaviation.aero

low price carriers in india2948

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