397231 Aviation Project

8/4/2019 397231 Aviation Project

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29/08/220729/08/2207 Ganesh Kumar Ganesh Kumar 11

DEPARTUREDEPARTURE

AVIATION

AVIATION

DEPARTURE-29AUGUST2006

ITM Business School

Global Leadership Centre

Masters In International Business

Navi Mumbai




Pilot CrewPilot Crew

Air one ³Empower Every Indian To Fly´Air one ³Empower Every Indian To Fly´

Mr. Ganesh Kumar (9)

Mr. Gyanesh Thakur (46)

Ms. Pushpinder Kaur Bhullar(38)

Mr. Shishir Paliwal(51)

Mr. Saurabh Sharma (28)




Table of contentsTable of contents

IntroductionIntroduction

Global overviewGlobal overview

Current/future statusCurrent/future status

India aviation industryIndia aviation industry

Company descriptionCompany description Strategy, Target, PositioningStrategy, Target, Positioning

ProductProduct

SWOTSWOT

Market analysisMarket analysis

CompetitorsCompetitors

Environment analysisEnvironment analysis Consumer behaviour Consumer behaviour

organizationorganization




AVIATION CONSISTS?AVIATION CONSISTS? The aviation industry can be broadly The aviation industry can be broadly

classified intoclassified into military aviation military aviation andandcivil aviation civil aviation ..

The term The term ' civil aviation ' civil aviation ' covers all' covers allaviation related activities except foraviation related activities except forthose undertaken by the military those undertaken by the military

and the government.and the government. The airlines segment can be broadly The airlines segment can be broadly

classified into international airlinesclassified into international airlines

and domestic airlines.and domestic airlines.




Cont.Cont.An airline with one or both terminalsAn airline with one or both terminals

in the territory of a country, otherin the territory of a country, other

than the country in which it isthan the country in which it is

registered, is classified as anregistered, is classified as anI nternational airline I nternational airline ..

D omestic airlines D omestic airlines refers to thoserefers to those

airlines whose flights fly only withinairlines whose flights fly only within

the domestic boundaries of athe domestic boundaries of a

particular country.particular country.







Mr Giovanni BisignaniMr Giovanni Bisignani

Director General & CEODirector General & CEO --

IATAIATA

IATA Global Press BriefingIATA Global Press Briefing

THERE ARE 36 BILLION REASONS FOR CHANGE IN THISTHERE ARE 36 BILLION REASONS FOR CHANGE IN THIS

INDUSTRY.INDUSTRY.

AIRLINES HAVE CHANGEDAIRLINES HAVE CHANGED RADICALLYRADICALLY..

WE ARE MAKING SOME PROGRESS WITHWE ARE MAKING SOME PROGRESS WITH

STAKEHOLDERS.STAKEHOLDERS.

CHANGE REMAINSCHANGE REMAINS CRITICALCRITICAL..

GREATER EFFICIENCY AND THE FREEDOM TO DOGREATER EFFICIENCY AND THE FREEDOM TO DO

BUSINESS ON A LEVEL PLAYING FIELD AREBUSINESS ON A LEVEL PLAYING FIELD ARE ESSENTIALESSENTIAL..

THERE ARE 36 BILLION REASONS FOR CHANGE IN THISTHERE ARE 36 BILLION REASONS FOR CHANGE IN THIS

INDUSTRY.INDUSTRY.

AIRLINES HAVE CHANGEDAIRLINES HAVE CHANGED RADICALLYRADICALLY..

WE ARE MAKING SOME PROGRESS WITHWE ARE MAKING SOME PROGRESS WITH

STAKEHOLDERS.STAKEHOLDERS.

CHANGE REMAINSCHANGE REMAINS CRITICALCRITICAL..

GREATER EFFICIENCY AND THE FREEDOM TO DOGREATER EFFICIENCY AND THE FREEDOM TO DO

BUSINESS ON A LEVEL PLAYING FIELD AREBUSINESS ON A LEVEL PLAYING FIELD ARE ESSENTIALESSENTIAL..




Current State of IndustryCurrent State of Industry

In 2005, the air transport industry marked its fourthIn 2005, the air transport industry marked its fourth

consecutive year of financial aggregate loss, bringingconsecutive year of financial aggregate loss, bringing

total posttotal post--9/11 industry losses to over US$36 billion9/11 industry losses to over US$36 billion

since 2001.since 2001.

The principal cause of the loss in 2005 was theThe principal cause of the loss in 2005 was the

industry's US$61 billion fuel bill, US$17 billion more thanindustry's US$61 billion fuel bill, US$17 billion more than

in 2004.in 2004.

And the situation is getting worse.And the situation is getting worse.

This overwhelmed the success of considerable costThis overwhelmed the success of considerable cost--

cutting initiatives in other areas.cutting initiatives in other areas.

CURRENT STATE OF INDUSTRY




Outlook 2005 +Outlook 2005 + ASIA AND CEN TRAL EUROPE ~ASIA AND CEN TRAL EUROPE ~

GREA TEST REVENUE POTEN TIAL GREA TEST REVENUE POTEN TIAL

International scheduled passenger trafficInternational scheduled passenger trafficin 2005 increased 15.3% over 2004in 2005 increased 15.3% over 2004levels, and cargo traffic rose 13.4%levels, and cargo traffic rose 13.4%

Traffic growth in 2004 was exceptional Traffic growth in 2004 was exceptional

for two reasons:for two reasons:oneone--off rebound from the adverseoff rebound from the adverse

affects in 2003 of the SARS epidemicaffects in 2003 of the SARS epidemicand the war in Iraq on air traffic levels.and the war in Iraq on air traffic levels.

OUTLOOK 2005+




Cont.Cont.2004 ~ strongest world economic2004 ~ strongest world economic

growth in 3 decades.growth in 3 decades.

Economic environment less favorable inEconomic environment less favorable in

next 2 years.next 2 years. Strongest potential lies whereStrongest potential lies where

liberalization is taking placeliberalization is taking place

Economic liberalization continue toEconomic liberalization continue toboost growth in Chinaboost growth in China

Increasing trade integration of centralIncreasing trade integration of centralEuropean countries within the EU willEuropean countries within the EU will

lead to expansion in central Europe.lead to expansion in central Europe.




NEED OF THE HOUR NEED OF THE HOUR-- CUT COSTSCUT COSTS

6% annually Industry growth for 20046% annually Industry growth for 2004--2008 period.2008 period.

Regulatory burdens + high price of oil to contendRegulatory burdens + high price of oil to contend

with.with.

Significant improvement their nonSignificant improvement their non--fuel unit costfuel unit cost

performances performances -- down 3% in 2004 and 2.5% in 2003.down 3% in 2004 and 2.5% in 2003.

It is therefore more critical than ever that air transportIt is therefore more critical than ever that air transport

becomes a low becomes a low--cost industry.cost industry.







Deregulating India·s Civil AviationDeregulating India·s Civil Aviation

Prior to 1991, aviation, much like other major sectors of thePrior to 1991, aviation, much like other major sectors of the

Indian economy, was nationalized and heavily regulatedIndian economy, was nationalized and heavily regulated

In 1953, theIn 1953, the Air Corporation Act, 1953 Air Corporation Act, 1953, changed the, changed thelandscape of the airline industry in India.landscape of the airline industry in India.

It was in 1994 that the Air Corporation Act was repealedIt was in 1994 that the Air Corporation Act was repealed

and thus this allowed privateand thus this allowed privateoperators to operate in theoperators to operate in the

domestic airline and aviation industrydomestic airline and aviation industry




ABOUT AIR ONE ABOUT AIR ONE

�� TheThe AIR AIR ONEONE airlineairline isis aa lowlow costcost airlineairline withwithfour four BoeingBoeing 737737 planes planes atat anan investmentinvestment of of $$300300millionmillion..

�� AIR AIR ONEONE believes believes inin dedicationdedication toto thethe highesthighestqualityquality of of Customer Customer ServiceService delivereddelivered withwith aa

sensesense of of warmth,warmth, friendliness,friendliness, individualindividual pride, pride,andand CompanyCompany SpiritSpirit withwith returnsreturns toto thetheshareholdersshareholders..




AIR ONE PRINCIPLES AIR ONE PRINCIPLES

Simple product Simple product ² ² which means no free meals,which means no free meals,

economy seating, online reservations, noeconomy seating, online reservations, no

frequent flier programmesfrequent flier programmes

PPositioning ositioning ² ² targeting business and pricetargeting business and price--

conscious passengersconscious passengers

Low operating costs Low operating costs..




AIR ONE MISSIONAIR ONE MISSION

TheThe missionmission of of Air Air oneone isis dedicationdedication toto thethe highesthighest qualityquality of of Customer Customer ServiceService delivereddelivered withwith aa sensesense of of warmth,warmth, friendliness,friendliness,individualindividual pride, pride, andand CompanyCompany SpiritSpirit withwith returnsreturns toto thetheshareholdersshareholders..

To Our EmployeesTo Our Employees

WeWe areare committedcommitted toto provide provide our our EmployeesEmployees aa stablestable work work environmentenvironment withwith equalequal opportunityopportunity for for learninglearning andand personal personalgrowthgrowth.. CreativityCreativity andand innovationinnovation areare encouragedencouraged for for

improvingimproving thethe effectivenesseffectiveness of of Air Air oneone.. AboveAbove all,all, EmployeesEmployeeswillwill be be provided provided thethe samesame concern,concern, respect,respect, andand caringcaring attitudeattitudewithinwithin thethe organizationorganization thatthat theythey areare expectedexpected toto shareshareexternallyexternally withwith everyevery Air Air oneone Customer Customer..




AIR ONE GOALS AIR ONE GOALS

Financial goalsFinancial goals

To have a public stock offering by the year To have a public stock offering by the year 20102010

To obtain a return on equity at least betweenTo obtain a return on equity at least between

1515--20%20% To be among the top three aviation companiesTo be among the top three aviation companies

in market revenue in nearly four yearsin market revenue in nearly four years




AIR ONE GOALS AIR ONE GOALS

Non f inancial goalsNon f inancial goals

Customer satisfaction to the maximumCustomer satisfaction to the maximum To come up with new services from time toTo come up with new services from time to

timetime

To be among the top three domestic airlineTo be among the top three domestic airlinecompany in market share by 2011company in market share by 2011




AIR ONE PLANEAIR ONE PLANE

BoeingBoeing 737737.. ToTo flyfly onlyonly oneone airplaneairplane modelmodel.. Thus,Thus, pilots pilots andand

mechanicsmechanics needneed toto be be trainedtrained onon onlyonly oneone kindkind of of airplaneairplane..

HavingHaving aa singlesingle airplaneairplane modelmodel inin aa fleetfleet alsoalso lowerslowers

inventory,inventory, recordrecord keepingkeeping andand maintenancemaintenance costs,costs, andand itit

minimizesminimizes thethe number number of of technicaltechnical manuals,manuals, toolstools andand sparespare

parts parts.. Also,Also, fleetfleet managementmanagement isis greatlygreatly simplifiedsimplified..

WeighWeigh lessless thanthan thethe AA320320 andand thereforetherefore requirerequire lower lower engineengine

thrust,thrust, lessless fuel,fuel, havehave lower lower engineengine maintenancemaintenance costs,costs, lower lower

navigationnavigation andand landinglanding feesfees..





EaseEase of of maintenance,maintenance, thethe airplaneairplane sitssits lowlow toto thethe

ground,ground, allowingallowing maintenancemaintenance crewscrews toto easilyeasily

perform perform routineroutine maintenancemaintenance onon thethe enginesengines..





GoodGood reliabilityreliability,, becausebecause thethe airplaneairplane cancan bebe turnedturned aroundaround atat thethegategate soso quickly,quickly, airlineairline cancan getget backback onon scheduleschedule if if itit fallsfalls behindbehind forforany any myriadmyriad of of reasonsreasons.. This This allowsallows ourour airlineairline toto deliverdeliver passengerpassengersatisfactionsatisfaction asas defineddefined byby thethe customerscustomers themselvesthemselves:: gettinggettingthemthem wherewhere theythey wantwant toto go,go, whenwhen theythey wantwant toto go,go, atat aa goodgoodvaluevalue.. GivingGiving passengerspassengers moremore departuredeparture timetime choiceschoices andand airlineairlinethethe opportunitiesopportunities forfor moremore revenuerevenue..

GoodGood flexibilityflexibility,, thethe 737737 comescomes inin fourfour differentdifferent sizessizes inin thethe 100100--toto 200200--seatseat marketmarket.. The The interiorsinteriors areare flexible,flexible, tootoo.. OptionalOptional flexflexseating,seating, capability capability of of changingchanging aa rowrow of of seatsseats fromfrom fivefive--abreastabreastbusinessbusiness--classclass seatingseating toto sixsix--abreastabreast touristtourist--classclass seatingseating inin lesslessthanthan oneone minuteminute.. AA moveablemoveable cabincabin dividerdivider alsoalso allowsallowsconfigurationconfiguration changeschanges betweenbetween flightsflights..

OnOn aa typicaltypical route,route, 737737 cashcash operatingoperating costscosts areare nearlynearly 44percentpercent lessless thanthan itsits closestclosest competitor,competitor, thethe AA320320 seriesseries,, ininpartpart duedue toto itsits superiorsuperior structuralstructural efficiency efficiency..




AIR ONE STRATEGIES AIR ONE STRATEGIES

A single passenger class.A single passenger class. TargetingTargeting business business

and priceand price--conscious passengers.conscious passengers.

ShorthaulShorthaul and pointand point--toto--point approach point approach

No assigned seats, pay the crews best in No assigned seats, pay the crews best in

industry, and use of less congested airportsindustry, and use of less congested airports





EmployeesEmployees workingworking inin multiplemultiple roles,roles, for for instanceinstance flightflight

attendantsattendants alsoalso cleaningcleaning thethe aircraftaircraft or or workingworking asas gategate agentsagents

(limiting(limiting personnel personnel costs)costs)

RemovingRemoving seatseat--back back pockets pockets toto reducereduce weightweight andand cleaningcleaningexpenseexpense

ChargingCharging passengers passengers for for practically practically everyevery amenityamenity theythey mightmight

consumeconsume.. ThereThere areare nono freefree peanuts peanuts or or beverages beverages

UsingUsing thatthat traffictraffic asas aa marketingmarketing tooltool for for relatedrelated servicesservices;; eacheach

timetime aa passenger passenger books books aa rentalrental car car or or aa hotelhotel room,room, our our airlineairline

willwill earnearn aa percentage percentage of of thethe salesale..




AIR ONE STRATEGIESAIR ONE STRATEGIES

PromotionPromotion StrategyStrategy

PromotionPromotion willwill be be throughthrough outdoor outdoor advertising,advertising, radioradio

andand print print mediamedia..

EmployingEmploying public public relationrelation firmfirm for for both both consumer consumer

andand financialfinancial purposes purposes..

CombinedCombined amountamount budgeted budgeted for for advertisingadvertising andand

public public relationsrelations willwill be be heldheld under under 1515%% of of salessales.. TieTie upup withwith CreamozaCreamoza CoffeeCoffee..





Distribution StrategyDistribution Strategy

Developing our own website containing theDeveloping our own website containing the

information about the company along with facilitiesinformation about the company along with facilities

of online reservation and payment.of online reservation and payment.

Hotels and Restaurants.Hotels and Restaurants.

Agencies giving cars on rent.Agencies giving cars on rent. Travel insurance agencies.Travel insurance agencies.

Tie up with Creamoza Coffee.Tie up with Creamoza Coffee.




Breakdown of cost savingBreakdown of cost saving

0 5 10 15 20 25

Other operating costsFlight crew

Cabin crew

Aircraft fuel and oil

Airport and ANS charges

Sales and reservations costs

Advertising and promotions costs

Station costs

Commission

Aircraft related costs

Passenger services costs

Cost (Rs)

Full cost shorthaul airline

Low cost airline

Turning our planes into media and entertainmentTurning our planes into media and entertainment

plays, offering advertisers the opportunity to repaint the exteriors plays, offering advertisers the opportunity to repaint the exteriors

of our planes, effectively turning them into giant billboards.of our planes, effectively turning them into giant billboards.




SWOT ANALYSISSWOT ANALYSIS

FactorsFactors StrenghtsStrenghts WeaknessWeakness

ManagementManagement ExperienceExperience Small sizeSmall size

MarketingMarketing Operating in MetroOperating in Metro No national distribution No national distribution

OfferingOffering Unique, high quality, low priceUnique, high quality, low price Cost coveringCost covering

HR HR Small, good workforceSmall, good workforce AttritionAttrition

R&DR&D Continuing effort to ensureContinuing effort to ensure

qualityquality

Fund scarcityFund scarcity

EconomicEconomic Consumer income is growingConsumer income is growing Brand imageBrand image

CompetitvenesCompetitvenes

ss

Distinctive service and featuresDistinctive service and features New to the industry New to the industry





OpportunitiesOpportunities

Huge potential to capture marketHuge potential to capture market

Growth rate of the industry is the highestGrowth rate of the industry is the highest FDI which will in turn can help us in growing rapidlyFDI which will in turn can help us in growing rapidly

Changing Consumer PreferencesChanging Consumer Preferences

Mergers and acquisitionsMergers and acquisitions





ThreatsThreats

Existing competitorsExisting competitors

Unstable Government PoliciesUnstable Government Policies Changing dynamics of the industryChanging dynamics of the industry

Upcoming new airlinesUpcoming new airlines

Further rise in oil prices in the international mark etFurther rise in oil prices in the international mark et

International terroristInternational terrorist




MARKET ANALYSISMARKET ANALYSIS

Market share of passenger traffic in major citiesMarket share of passenger traffic in major cities

1. Mumbai 26%1. Mumbai 26%

2. Delhi 17%2. Delhi 17%3. Chennai 7.5%3. Chennai 7.5%

4. Kolkata 8%4. Kolkata 8%

5. Bangalore 8%5. Bangalore 8%««««««.««««««.

66.5%66.5%




DIRECT COMPETITORSDIRECT COMPETITORS

Air DeccanAir Deccan

Go air Go air

Spice jetSpice jet

Alliance air Alliance air

(add some more name)(add some more name)




INDIRECT COMPETITORSINDIRECT COMPETITORS

RailwaysRailways

Road transportRoad transport

Ship transportShip transport




ENVIORNMENTAL ANALYSISENVIORNMENTAL ANALYSIS

Government policiesGovernment policies

Technological EnvironmentTechnological Environment

Economic factorsEconomic factors Competitive EnvironmentCompetitive Environment

Social culturalSocial cultural




CONSUMER BEHAVIOUR CONSUMER BEHAVIOUR

ReactionReaction-- WillWill needneed sometimesometime for for winningwinning

thethe trusttrust of of thethe potentialpotential costumerscostumers

ExpectationsExpectations-- Deliver Deliver whatwhat wewe havehave

promisedpromised for for




ORGANIZATIONORGANIZATION

Board of DirectorsBoard of Directors

President and CEOPresident and CEO

Dire. Operator, V.C (Marketing.),Dire. Operator, V.C (Marketing.),Dire. Finance & admin.,Dire. Finance & admin.,

Director saleDirector sale




DifferentiationDifferentiation Maintaining costumer data base.Maintaining costumer data base.

Tie up with Creamoza Coffee.Tie up with Creamoza Coffee.

Boeing specialized engineers for Boeing specialized engineers for

maintenance so that security is upgraded.maintenance so that security is upgraded.

Direct plight at NonDirect plight at Non--Metro airport.Metro airport.




³As deregulation and privatization of the Indian Civil

Aviation and Airline Industry occurs, Air One is

prepared to meet the demands of the consumer and

deliver their expectations

while sustaining growth? ´




THANK YOUTHANK YOU

Documents

397231 Aviation Project