Airline Industry Grp 4

8/2/2019 Airline Industry Grp 4

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SERVICE SECTOR: AIRLINES INDUSTRY

GROUP 4 - AJU, ESWARAN, LEKHA, MEGHA , SRIKANTH, SWETA


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History The birth of flight in 1903. Early 20th Century

In 1938, the Civil Aeronautics Board. Deregulation, mid-1970s, Alfred Kahn.

Congress passed the Airline Deregulation Act of1978.

Late 20th Century. 21st Century.

The effects of another economic downturn Losses continued for years; the industry as a

whole didn't return to profitability until 2006


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Under penetrated Market

- Total Passenger Traffic only 50 mn as on 31st Dec 2005 amounting to only 0.05

trips per annum as compared to

developed Nations like United States have 2.02 trips per annum

- High Level of potential demand with growth in Indian economy

Untapped Air Cargo Market

- Air Cargo has not yet been fully taped in the Indian markets and is expected that

in the coming years

large no of players would have dedicated fleets

What this means

- Build up of capacity by existing players and entry of new players

Industry characteristics: Huge potential


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Freight carriage in India currently around 4200 tons perday

CAGR of 15% over the past 2 years

Fuelled by a fast growing economy, supported by a strong

industrial base

Forecast to grow at 11.4% p.a. till 2011-12

Air Cargo


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Ground handling business in India estimated at Rs. 1074 crores

Expected to grow at 15% CAGR till 2011-12

Opportunity lies in 3rd party handling as well as entering into service

contracts with private airports / AAI to offer comprehensive ground

handling solutions, e.g. AI CIAL at Cochin

Ground Handling


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Increasing numbers are booking directly from the airlines websites

Traditional sales channels with paper tickets cost airlines ~10% of

ticket price

Comparatively, e-ticket sales from own website cost an airline only

~3% of ticket price For every direct booking from their website, airlines save an

estimated US$ 4 plus 5% agency commission

Airlines can also turn their websites into one stop shops for all

travel related services, generating additional revenue

Leveraging the internet


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The Indian aviation industry is one of the fastest growing aviation

industries in the world.

India has 454 airports and airstrips; of these, 16 are designated

international airports. With the liberalization of the Indian aviation sector, aviation industry

in India has undergone a rapid transformation.

From being primarily a government-owned industry, the Indian

aviation industry is now dominated by privately owned full-serviceairlines and low-cost carriers.

Private airlines account for around 75 per cent share of the domestic

aviation market.

Current Scenario: Indian AviationIndustry


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There has been phenomenal growth in the Indian aviation sector in

2007-08.

India has jumped to 9th position in world's aviation market from 12th

in 2006.

As per the Ministry of Civil Aviation, the airline business is growing at

27 per cent per annum in India.

During 2007, the domestic airline passenger traffic has shown agrowth of 32.51 per cent.

Further, the scheduled domestic air services are now available from

82 airports as against 75 in 2006.

..Cont.


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35 other city airports are proposed to be upgraded.

The city side development will be undertaken through PPP modewhere an investment of US$ 357 million is being considered over

the next 3 years. Over the next five years, AAI has planned a massive investment of

US$ 3.07 billion - 43 per cent of which will be for the three metroairports in Kolkata, Chennai and Trivandrum, and the rest will gointo upgrading other non-metro airports and modernizing the

existing aeronautical facilities.

..Cont.


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Marketing mix

Core

Transportation

Supplementary

Check in

Food on board

Connecting flight

Complementarygifts

In-flightentertainment

Frequent flierprograms

Augmented

Online booking

Variety of mealoptions

Pick up and dropservice

Mobile ticketing

Product


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Marketing Mix

Price: Premium, Cheap value & Apex fares.

It depend on Class, Date & day of travel and profit margin &

competitor pricing also.

Place: Tour Operator, Travel agent & Online reservation.

Promotion: Advertising, Publicity, Sales promotion &

Personal selling.

People: Reliability, Caring attitude & Goodwill.

Physical Evidence: On the ground & Inflight.

Process: Reservation, Flight Information, Facilities at TheAirport, Baggage Handling, Meal Service & Flight

Entertainment.

Productivity & quality: To Deliver Quality Service by

meeting demand with supply.


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Marketing Mix Process

Flight Entertainment

Deliver Quality Service

Baggage Handling

Meal Service

Reservation

Flight Information Facilities at The Airport.


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An example of Ambush Marketing


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Major Brands

Kingfisher

Indian Airlines

Lufthansa

Jet Airways

Qatar

Fly Emirates Singapore Airlines

British Airways


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Despite a growing market, airlines in India are fighting for survival in a highlycompetitive environment

A host of initiatives are required to be taken by all concerned, to tide over the

current situation

Control Costs

Improve quality of service

Develop a large pool of skilled / technical manpower

Attract more professionals to manage the aviation industry

Develop infrastructure to match growth plans

Liberalize rules & regulations governing civil aviation, without compromising on

safety & security

Reduction in ATF prices and taxation on ATF and lease rentals

In sum


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Documents

Airline Industry Grp 4