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8/9/2019 An Indepth Market Analysis of International Aviation Industry
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AN INDEPTH MARKETAN INDEPTH MARKET
ANALYSIS OFANALYSIS OFINTERNATIONAL AVIATIONINTERNATIONAL AVIATION
INDUSTRYINDUSTRY
SINGAPORE AIRLINES, CATHAY PACIFICSINGAPORE AIRLINES, CATHAY PACIFIC
AND AIR INDIAAND AIR INDIA
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AIR INDIA
Air India - An Overview
One summer day in 1929, later Mr. Nevill Vincent, a
former RAF pilot came to India from Britain on a
brainstorming tour during which he surveyed a number
of possible air routes. He was of immense potential for
aviation in India. It came to pass that he met late Mr.
J.R.D. Tata a young Indian who was the first to get his A-
license in India and that of in the shortest number of
hours.
Mr. Vincent worked out a scheme, secured Mr. Tata's
approval and together they showed it to Mr. Peterson, a
Director of Tatas and Mr. J.R.D Tata's mentor. Sir Dorab
Tata, then Chairman of Tata Sons, pleasantly surprised
all by giving the scheme his okay. So they went ahead
and drew plans for the operation of an air service form
Karachi to Mumbai with one stop at Ahmedabad.
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All that they asked from the Government was a
guarantee for only a year for the sum of Rs. 100000.
This, however, was turned down. The Tata Vincent
combination was naturally disappointed but no
dismayed. A second scheme was prepared. This time
the guarantee asked for was only Rs. 50000 for the first
year, Rs. 25000 for the second year and after that no
guarantee at all. This scheme too was not accepted.
The team tried a third time. This time they offered to
donate an air service to the Government of India with no
strings attached. The Government agreed and thus was
born Tata Airlines which later became Air-India.
On October 15, 1932, a light single-engined Puss Moth
took off from Karachi on its flight to Mumbai (then
known as Bombay) via Ahamedabad. At the controls of
the tiny plane was Mr. Tata, operating the firs schedule
air service in the country. He landed with his precious
load of mail on a grass strip at Juhu. Life was simple
then. There were no runways, no radio facilities in the
aircraft or on the ground. There were no pretty
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hostesses, no aerodrome officers and no airport
buildings. At Mumbai, Mr. Vincent, took over from Mr.
Tata and few the Push Moth to Chennai (the known as
Madras) via Bellary.
In 1933 the first full year of its operations, Tata Airlines
flew 160,000 miles carried 155 passengers and 10.71
tonnes of mail. In the next few years, Tata Airlines
continued to rely for its revenue on the mail contract
with the Government of India for carriage of surcharged
mail, including a considerable quantity of overseas mail
brought to Karachi by the Imperial Airways for
destinations in India. On the Karachi-Chennai route,
frequency was stepped up to twice a week in 1934 and
a year later a weekly service was started between
Mumbai and Trivandrum with stops at Goa and
Cannanore. In 1937, a bi-weekly service was started
between Mumbai and Trivandrum with stops at Goa and
Cannanore and another between Mumbai-Delhi via
Indore, Bhopal and Gwalior. New planes began to
appear in the fleet. In addition to the original Puss Moth
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and Leopard Moth, there were Wacos, DH-86s and
Stinsons Trimotors.
The introduction of the Empire Airmail Scheme in
February 1938 brought the opportunity for further
expansion and renovation of fleet. Tata Airlines received
a ten-year contract under the Scheme with guaranteed
minimum payment for the
The Airline with a heart: With Indians travelling to
newer shores every year. The national carrier has done
its bit there too. In 1996, Air India airlifted 1,11,711
stranded Indians from Amman to Mumbai - by operation
488 flights (in association with Indian airlines) an
operation which lasted 59 days.
This feat has given air India a place in the Guiness Book
of World Records.
Extending the Net work : Further, the airline has
even tied up with various international carriers to give
its passengers the convenience of travelling to just
about anywhere in the world. These alliances include the
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Scandinavian airlines system for direct links between
Copenhagen and New Delhi, blocked seat arrangement
with United Airlines for Washington on its round - the
world services through Delhi. Plus there are agreements
with Kuwait airways for flights between Kuwait and
Thiruvananthapuram, with Air Mauritius for operations
between Mauritius and Mumbai and Austrian airlines for
flights between Vienna and Delhi. Air India has also
entered into a major global with Air France which
enables the airline to code share on Air France services
beyond Paris inter alia Amsterdam, Frankfurt and Zurich.
The logo- The Centaur: A corporate identity is the
visual image a company projects to its various public. It
helps in achieving a cohesive and consistent image of
the company worldwide.
The reputation of the company is symbolised to a large
extent by us name and visual imagery. It gives its
customers a clear idea of what they can expect in terms
of product service price. Suppliers, competitors,
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journalists, members of government etc. are also
powerfully influenced by it. The power of the symbol to
influence people can never be under estimated for
symbols have power to play upon the emotions,
memories, sensitiveness. At Air India, they believe that
this visual image must be simple , lucid, and most
important, it most be an honest representation of ideas.
After the formation of Air India international in 1948, the
management immediately began casting about for a
symbol that would denote speed and also have universal
appeal therefore the Centaur was selected as Air -
Indias logo.
As of now, Air India is not in a good financial condition
therefore at present their mission states nothing except
that they want to be privatised and be a disinvested
company.
Their target audience as of now are mainly the
government officials and the 1st and business class
travellers.
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DISINVESTMENT OF AIR INDIA
Like every other Indian industry. AIR INDIA too is
suffering from losses audit the new economic policy
whole it could have played a much constructive role. It
is quite a story rate for the institution, which constantly
made in fit till 1993-94 has gone into marketing losses
for a prolonged period of last 7 years. That promot the
govt. of India to decontrol in its management. Though
the current government's policy as such "government is
not meant to business". In that way it is to be done
sooner or later.
But we have to look into the core reason behind this.
Like other seek India industry it has a whooping staff
strength. 76% of the gross income goes into paying its
staffs. While the foreign player like Cathay Pacific pays
only 14% to its employees as salary package. A few
statistics below will show the sagging story.
It has 78 offices outside India which are operated by
foreign nationals.
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Air-India actually flies to 32 out of those 78
destinations.
It has a total staff complement of 17.690 to fly and
manage only 24 aircraft. The help of almost 700
staffs. In case of other market player the number is
something around 200-250 staffs.
The only good news in the last seven years in that Air-
India has made a net profit for the 1st half of this
financial year. Through it has to go and disinvestment
will be made. Government has already asked for bidders
to take it. A few prominent names are roaming around
as bidder SIA (Singapore International Airlines). Tata,
Reliance group were interested to buy it. But the sorry
take of Indian Polities has made the turmoil again and
for the time being the disvinestment process holds up.
But the government is determined to complete the
process in this financial year and probably winter
session of parliament will enable it is doing so.
MARKETING STRATEGIES - AIR- INDIA
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Captive traffic : Travel by government officials,
PSUS and just about anybody funded by the
government e.g. universities is compulsory by Air
India . This is the basic income of Air India.
Buy Key Decision Makers : Air India provides a
jumbo 747 or Airbus A310 to the President, Prime
Minister and VPs and their entourage, specially
outfitted as a flying hotel for their overseas trips. An
identical standby aircraft is also provided. In the whole
planet, only the President of the US gets similar
luxury. This lavish perk is a major reason why Air -
India gets away with a lot of subsidies.
Officials lower in the hierarchy: Like ministers,
secretaries etc. get upgradations in class of travel and
various facilities like car and hotel stay. Full use is
made of the Centaur hotels which belong to Air -India.
Buy Opinion Makers : Similar perks are extended to
media persons. Many of them are given passes for
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domestic travel. Air Indias domestic network covers
all the major cities.
Frequent Flyer Programme : Air India and Indian
Airlines have a joint frequent flyer programme.
Recently, Air France has also been added. Essentially,
travel on domestic routes is worth a 5% discount and
international travel is worth 10%.
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Heavy Discounts: Since there are in built
disincentives to travel by Air India, they resort to
heavy discounts to keep the show going e.g. take a
free companion in first and business class. This is an
effective discount of 50% but given to the Traveller,
not the organization that pays for the travel. Similar
discounts are given in economy class.
The 4Ps are as follows:
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PRODUCT DEVELOPMENT
The Maharaja club and the executive club launched
during February 1993.
Frequent flyer programme was introduced, under
which frequent travellers on Air India and Indian
airlines can accumulate mileage points as per pre-
determined. The accrued mileage points can be
converted into free awards tickets.
The Maharaja Club and the executive club was
extended. Members were given certain privileges
including use of lounges, priority check-in additional
baggage allowance, upgradation on space available
basis, provision of Limousine car etc.
Treats on Me: This unique 24 hours on the
House scheme has been introduced in collaboration
with Centaur group of hotels for overseas passengers
travelling on Air India to India.
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Premium offer for premium passengers: To
strengthen carriage of high yield, passengers who
travelled on Air India in First /Executive class were
offered free transportation an Indian Air Lines
specified sectors in economy class.
In addition, they were also offered 24 hours
complementary stay at ITDC hotels, including
breakfast and special discounts on room rates for
extension to stay beyond 24 hours.
In 1998 - The company operated both passenger and
freighter services to 42 destinations. The following
new services were.
- 2 weekly service on Madras/Dhahran/ Madras sector.
- 1 weekly service on Madras/ Kuwait/ London/Kuwait/
Madras sector.
- 2 weekly service in Bombay /Trivandrum/ Singapore.
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In 1999 - The company had commenced service to
Manchester and Amsterdam. The company operates
passengers and freighter services to 44 destinations.
Direct services commenced between Bangalore/
Dubai/ Muscat and Madras/Hyderabad/Jeddah.
The new destinations introduced during the year were
Zurich ad Chicago.
2000 - At present the company operates to a total of
48 destinations.
1998 - More direct and non-step services, Multi and
Telecheck - in, Interactive computerised flight
information system.
Code share arrangements with United Airlines and
Scandinavian airlines systems.
Air India has achieved an all time high system wide on
time performance. In February 1998, by operating
75% flights on schedule and witness 75 minutes of the
scheduled departure time on a relaxed scale of 30
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minutes beyond scheduled departure time , 86% flight
left on time.
Air India also introduced twice weekly services from
India to Seoul - land of the morning calm.
Air India introduced a new flight to Singapore on
Thursday in addition to the 3 weekly flights which
operate every Wednesday , Friday, Sunday.
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Route network - as on July 2000.
UK - London, Manchester
Europe - Paris, Frankfurt, Rome, Moscow.
Asia Pacific - Tokyo, Osaka, Bangkok, Hong Kong,
Kualalaumpur, Singapore, Jakarta.
Gulf middle East - Doha , Abudhabi, Bahrain , Jeddah
Kuwait, Muscat, Riyadh, Dhahran and Dubai.
USA and Canada - New York Chicago.
Africa - Nairobi and Dar-es-Salaam
Air India also operates code share services to Geneva,
Zurich, Amsterdam, Copenhagen and Vienna in Europe,
Washington in the USA, Mauritius and Lagos in Africa
and services from Kozhikode in India.
Services on ground and board
In order to enhance passenger comfort on the ground,
Airport Lounges for the 1st and executive class
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passengers at selected airports are being upgraded with
new interior decor and other standard facilities.
New airport lounges were commissioned at Hong Kong
and London. Furnished in elegant contemporary Indian
style these lounges have features like business centre
with for and telephone services and upgradation of
lounges in departure/transit areas at Bombay airport
has commenced.
Facilities on board are being improved and a
programme for upgradation of the executive calls on
the A310 aircraft has commenced it is proposed to fit
new ergonomically designed seats with individual seat
TV Monitor with six channels of video programming.
Improvements made for providing wider seats on
A310 Executive Class.
South Indian food, language and music on board Gulf
flights.
Trolley service on board.
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Free beverages in economy class.
To give its passenger the very best the international
skies can offer, Air India has constantly upgrades its
inflates services - such as-
- The skypphone
- Air-shows
- State -of-the art inflight entertainment system.
- In - arm personal television monitors.
- Reconfigured interior for more space.
- Rollers massagers are now being provided on board
Air - India flight for the comfort of the 1st and executive
class passengers.
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PRICING STRATEGIES/PROMOTIONAL
STRATEGIES
As already known air travel is a fluctuating industry. The
prices are not stable, hence Air India follows the market
forces of supply and demand to fix it prices. Since the
past 4 years Air-India in suffering a large number of
losses but they still believe that they can grow and
survive and maintain its position as a national carrier in
the industry. For the purpose, Air India is doing the
following.
Air India announced a Companion Free scheme from
India to Japan. On purchasing a 1st class or executive
calls international ticket a passenger is entitled to a free
to all destinations concept New York , London, Chicago-
15% charge.
Air India offered special domestic fares for the holidays.
The concession was available to Indian nationals
employed with government,. PSUs and nationalised
Banks
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Frequent flyer programme - Flying returns - jointly
by Air India - and Indian airlines.
Fly on business - fly free for pleasure. The business trips
abroad as within India . Air India gives the customers
many opportunities to earn mileage points, which can
be redeemed for free tickets on domestics and
international sectors. Adding up the points. The
customer can fly with his whole family free on a holiday.
The free tickets can be transferred to any person of
customers choice - friend family or business partners.
French Connection - with the air India - Indian airlines -
Air France frequent flyer programme tie up the
customer can earn and redeem mileage points for
his/her travel on Air France sectors too.
(AOMPs) Add on mileage points : Air India has a tie
up with welcome group hotels. Through the tie up
customers earns AOMPs each time he/she stay or dine
at participating welcome group hotels.
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As an American express card members customer earn
AOMPs. With the AOMPs - customer earn free takes
faster.
The Maharaja Club: It was launched and members
were giving personal and special services through out
the network.
On the occasion of the 50th anniversary of Indias
independence. Air India decided to honour - Paramvir
Chakra and Mahavir Chakra awardings, Freedom
fighters, Children awarded for Bravery - to economy
class free tickets for travel on Air India sectors.
Passengers in transit as Singapore with a minimum of 5
hours car avail of the free Singapore tours. There are 2
hours of 2 hours duration each. Tour A - 15 minutes stop
at a temple and 15 minutes stop at a housing estate.
Tour B - 20 minutes Bump Boat ride subject to weather.
Passengers traveling to Singapore can also take
advantage of the Singapore shopping and food festival.
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Advertising - There is separate ad agency named
Publicity in Bombay handling Air Indias account.
It uses all kinds of media, print and electronic, mailers to
promote its product.
There is a separate public relation agency both in
Bombay and in Delhi named public relation cell and
tourism for the purpose of maintaining good relation
with its customers.
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PLACE
Accessibility of tickets
Almost all travell agents provide the customers with as
Air India ticket.
Air India and Indian airlines have jointly introduced the
computerised reservation system for travel agents
which enables customers to make bookings on airlines,.
hotels etc. as well as offer travell related facilities to the
agent of the customers. This service enhances
passengers convenience. Air India on the internet
consists of actual on time information relation to
reservation.
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AIR INDIA PERFORMANCE
Like other international airlines operating out of India.
Air India had made to huge rupee - profits, in the after -
math of devaluation. Such projects had enabled it to
claim that it was successful and well run airline.
But the truth is considerably more complex. According
to the civil aviation ministry - concentration on the short
term benefits had kept the airline profitable but with a
shrinking market shares. The figures tell their own story.
in 1981 - Air India controlled a capacity of 29% of all
airline seats out of India - a market share of 33%. By
1994- capacity reduced to 26% - But air Indias market
shared shrunk to a mere 22%.
One of air Indias problem is that not only does it have
too many bosses but that they dont stay for very long.
It was not only that passengers preferred to travel by
other airlines it was also that air India chose to operate
to fewer places.
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Air Indias Declining network - places where it has
stopped flying.
Damaacua, Dusseldorf, Karachi, Brussels, Hague, Zurich,
Entebbe, Nadl, Belrut, Melbourne, Accra, Addis Ababa,
Birmingham, Lusaka, Aden, Montreal, Cairo, Mauritius,
Perth, Sanas, Harare, Lagos, Seychelles, Amsterdam,
Baghdad, Sydney, Tashkent, Teheran,. Dhaka.
Air India had what was probably the oldest , smallest
fleet in the world of any airline owned by a major
country 26 aircrafts -average age of 17 years.
Rates of growth of Indias tourism was twice the rate
of growth of air Indias capacity. The reference to
bilateral-airlines can only fly between countries with
the approval of their respective government.
Therefore India only allows foreign airlines to fly into
our airports if Air India is allowed to fly to theirs.
The travel trade claims that air India restricts bilateral
because of its own lack of ambition - air India only
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wart to restrict capacity so that they can show a high
load factor.
It is not as if the signs were not there :-
Depleting funds, Falling traffic, Ageing fleet, Sagging
image - with each passing day it seem Air India is flying
closer towards bankruptcy. It needs to get privatised -
disinvestment appears the only option and that is their
mission as for now.
One of the reason of its down fall is the excess staff - it
has 3500 additional employees.
Another major factor - Wishy-washy manner of deciding
on Routes and schedules . Air India offer begins a
service on lye to withdraw it after some time. e.g.
Amsterdam was added to its schedule last year but was
terminated without notice soon after.
Of all the routes Air India flights - only India - Gulf, India
- US, India - Japan, are profitable. Flights to UK,.
Germany, France, East Africa and Canada air the regular
loser makers are reason for this has been Air Indias
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inability to attract passengers in the high yield business
class.
In fact the cutting prices and frequency flyer programme
have only compounded Air Indias losses. When Air India
slashed its fair prices from 28,000 to 18, 000 Mumbai -
London - Mumbai last year it sparked a discount war
among the international airlines. The end result -
Passengers deserted the air line in favour of Singapore
Airlines which came up with the more innovative offer.
In addition - most of Air Indias destination are not
serviced due to the lack of aircraft. Air India simply does
not have the fleet capacity nor all they functionally up to
the mark.
Air India is the only airline in which the 1st and business
class gets full before the economy class - still Air India is
suffering losses. But they still believe that they can grow
and survive by having products stability, product
upgradations, maintaining Industrial peace, high level
on time performance, upward revision of fares, route
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4.4 SWOT ANALYSIS
SINGAPORE AIRLINES
Strengths
Major network
Vast Variety of services provided
First rank in the world international airlines-Passenger
carried.
A dedicated workforce/employees ownership in the
company.
Promotional strategies frequent flier program
airlines.
Safety and security
Internet facilities for booking of tickets
Innovative
World cargo
Weaknesses
Not much of advertising done.
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Its fleet - average age is 10.2 years where as Cathay
Pacific is 6 years (Youngest fleet).
Opportunities
It has the ability to become one of the worlds largest
airlines is passenger carried.
If it becomes a littlle more cost complete it can be the
best airlines.
To come up with more offers schemes discounts
motivate the customers to fly frequently.
Threats
The largest threat to SIA is Cathay Pacific there is
absolutely a neck to neck competition, between the 2
airlines.
Economy plays a Vital role in the growth of the air
travel industry. This point is beyond the centre of the
airline company but islet it is sugared as a threat to its
success.
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Last but not the least consumer preferences. It
once the consumer preferences is charged
disfavoring Singapore Airlines it is not easily to
reaching thus her preference.
Following terrorist attacks in US, SIA's traffic has
declined or services to the United States.
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CATHAY PACIFIC
AIR INDIA
Strength
Whatever its financial position is Air India is still
regarded as the National carrier.
Productivity linked service scheme to motivate
employees.
Promotional strategies companion free schemes.
Joint operation with Indian airlines so that clients can
earn and burn miles on each other.
Business and the 1st class gets filled up first before the
Economy class.
Weakness
Extra staff
Fewer destinations covered
Fleet size 28
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Average age of fleet over 12 years
Not included in the list of the worlds leading 10
international airlines.
Financial crises
Cash crunch no money for advertising.
Lack of publicity.
Delay and Disruption of flights.
Opportunities
Air India has the potential to grow and survive, if it
becomes a private company. It will be able to secure its
position which it had in the market at one time . Air
India market share was dropped down to 22% from
49% over the last 20 30 years and the reason for this
downfall is mainly Air Indias own fault If it corrects
the faults made, It can secure the same position it had
but at first, there is no other option left but to become a
disinvested company.
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Threats
The main threat to Air India is Indian Airlines it is taking
all Air Indias traffic to its newly introduced Gulf routes
which was Air Indias milch cow.
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4.5 COMPARATIVE ANALYSIS
The comparative analysis of the 3 international airlines
is done under the following heads.
Birth
Singapore Airlines : October 1972
Cathay Pacific : 24th September 1946
Air India : 29th July 1946
Destination
Singapore Airlines As on 31st march 2001 covers 40
countries.
Cathay Pacific As on 31st March 2001 covers 48
countries.
Air India As on 31st March 2001 - covers 48
destinations.
Fleet
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The average age of Singapore Airlines fleet is 10 years
while that of Cathay pacific is only 6 years and Air India
to the oldest. It around 17-20 years. The Cathay Pacific
fleet is the youngest out of the 3 airlines.
Target audience
The main largess audience for Singapore Airlines is
business class, and the first class, its basically the high
frequent traveller.
Cathay Pacific it is the high income group traffic
passengers i.e. government officials, Diplomats United
nations corporations MNC's etc.
And for Air India is just the government officials and the
1st and business class travellers.
Service: as for Singapore Airlines there is a whole
range of services provided to the customer from ground
to air. It includes extra ordinary services from at the air
its board from the lunge desk to the hotshower on the
board according.
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Cathay Pacific is not behind, it stands equal to
Singapore Airlines when it comes to services provided to
customers both on ground and an board. With a
difference of Indianising their product and making the
Indian passengers comfortable by having Indian
attendants serving and taking care of them and as well
as providing a wide variety of Indian meals. Air India is
not lagging behind. Its doing its best by improving their
product. They have come up by providing personnel
Television to their customer which was there in
Singapore Airlines and Cathay Pacific.
Pricing Strategies
All airlines work on the market forces of supply and
demand. During high season the cost increases and
during off session it reduces. Its prices. Their main
pricing strategy is to be high competitive. They follow a
policy of follow the other for e.g., when Air India
slashed its prices from Rs. 28,000 to Rs. 18,000 on the
Mumbai London Mumbai sector in July 1998. The end
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result Cathay Pacific came up with a more innovative
office. Price is a very sensitive issue and airline being a
very fluctuating industry it is very difficult to quite the
airlines prices to its various destination because they
keep on changing depending on the season, on the
demand, on consumer preferences and what the
competitors are offering. There are frequent changes in
prices which lasts for a very short period.
Distribution
Singapore Airlines: All flight bookings can be done by
the airlines own reservation system.
All travel agents
Through sophisticated inter time computerized
reservation system.
E-Ticketing
Internet.
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Cathay Pacific
Own reservation system
Internet
All travel agents
AIR INDIA
All travel agents
Air India and Indian airlines joint copmputrised
reservation system. In air India booking of ticket
cannot be done on the net. It just consist of actual on
time information to reservation.
Both SIA and Cathay Pacific have a modernised system
of getting the bookings done. Air India is on its way to
modernisation.
PROMOTION
All the 3 airlines is heavily into promoting their product.
They have come up with new offers. Discount offer,
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package holidays, Hotels car facilities provided etc. to
seasonal offer satisfy their customers .
All the 3 airlines have a frequent flyer programme for
giving customers, benefits from travelling through the
particular airline. It has joined with other airlines to give
maximum satisfaction to its frequent clients.
Cathay Pacific's - The Marco Polo Club is an executive
club for recognising retaining and communication its
frequent travell members. They are awarded with extra
ordinary services, enchanted travel, discounts on
tickets.
Singapore Airlines does not have a club but as a
frequent flyer programme. As a KrisFlyer Member, you'll
earn miles each time you fly with SIA. Air India has a
Maharaja club which provides its members with more
personalized and special services. Air India has come up
with the comparison free scheme.
Advertising all the 3 companies are not much into
advertising. Earlier Air India was heavily into advertising
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but now due to as financial conclusion it has stopped
advertising. We hardly see any advertisements of
Singapore Airlines, Cathay Pacific or Air India in TV or in
Newspaper magazines.
This doesnt mean that the 3 companies are not into
advertising they do but on irregular intervals.
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LIMITATIONS
The study that has been undertaken faced some
hurdles. Those were limitations towards the effective
completion of the project. Some of the problems faced
are mentioned below:
The responses of the officials were not always free
from bias because of some compulsions and busy
schedules did not help the matters.
The availability of the officials were always a cause of
concern for getting relevant information.
As regards the time factor, it was quite sufficient for
completion of the project report but not quite so when
the question of seeking interviews came
Cost factor is always a cause of limitations creeping
into the project
Had to combine pricing strategies with promotional
strategies, since the exact prices of the airlines at one
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CONCLUSION AND RECOMMENDATION
CONCLUSION
The conclusions that can be drawn from the above study
are:
The healthy competition among the airlines has set
new trends in the quality of service.
Passengers travelling in internal and airlines generally
go for the onboard and inflight services provided by
the airlines through price being a very sensitive issue
The slowdown in the economy for the past 12 months
affected traffic flows and freight traffic system wide.
Non-essential expenditure will be deferred, slowed
down or cancelled. Retrenchment cannot be ruled
out, but other cost - reducing measures will be
pursued first, before retrenchments are considered.
Staff recruitment will be frozen until there is a
improve in the worldwide economy.
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Like other seek India industry, it has a whooping staff
strength. 76% of the gross income goes into paying
its staffs. While the foreign players like Cathay Pacific
pays only 14% to its employees as salary package.
The only good news in the last seven years is that Air-
India has made a net profit for the 1st half of this
financial year. Though it has to go and disinvestment
will be made. Government had already asked for
bidders to take it. A few prominent names are
roaming around as bidder SIA (Singapore
International Airlines). Tata, Reliance group were
interested to buy it. Probably winter session of
parliament will enable it in doing so.
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RECOMMENDATION
As far as SIA and Cathay Pacific are concerned there
are certain things that I recommend.
Firstly - as both of them are amongst the 10 worlds
largest airlines - indicates that they are successful
airlines but their are few points that I think that they
should do to become the first amongst leading airlines
of the world.
Be a little more innovative in providing services on
board -let say
Video games - both adults and children find them
interesting.
A separate kid centre - where there are nursery rhymes
played, there are different types of toys etc.
A more young crew - young people are liked by almost
all generations.
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If license given - may be a casino where there are slot
mechanical, roulette etc.
A gift package for every traveler especially for children.
Little more of publicity.
Be a little more lenient on miles earned - eligible for a
free or discounted ticket
In this way creats all more motivated to travel by the
airline
For Air India the recommendation are as follows -
Air traffic of India is estimated at 9 percent increase per
annum in the coming years. Either the National carrier
would have to provide additional seat capacity to
existing and new destinations. Therefore the National
carrier should draw an action plan to tap the countrys
rightful market share by adopting perspective plan for
the next 5 years and another perspective plan up to the
year 2010 AD.
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Air India Ltd., presently has probably the oldest and
smallest fleet in the world owned by a major country, 26
aircrafts with an average age of 17 years. During the
period 1981 to 1994 Air India has discontinued its flights
to several destinations. At the same time government
has allowed Indian Airlines Ltd., to fly 25 of its aircrafts
on the short and medium haul international routes. The
international air seat capacity according to the action
plan on Tourism, 1996 (minus outbout traffic increase) is
projected to increase from 5.3 million to at least 10
million and the domestic air seat capacity is estimated
to increase from 10 million to 18 million by the year
1998-99 and this is definitely indicative on the market
demand. it is therefore necessary that the central
objective of AI Ltd., should be aimed at matching the
efficiency of private airlines in the immediate future to
become the Maharaja of Preference in the future:
As international traffic rights are determined by
bilateral agreements, the national carrier should
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utilise its traffic rights and tap the high demand
routes;
Strategy be adopted to identify appropriate aircraft for
purchase or lease in the short run;
An action plan be adopted for attracting at least ethnic
traffic by ensuring timely landing / departure of flights
and improving inflight passenger services;
A fleet expansion plan should be implemented for
meeting the demands of growing traffic and increase
the market share as India is one of the major countries
in the world.
The marketing and customer friendly strategies
adopted by the other major airlines such as Singapore,
British Airways, KLM, Royal Dutch Airlines etc., should
be studies closely to market AI as a distinct Airline.
Airlines are adopting strategic alliances of Hub and
Spoke, frequent flier programmes common ticketing
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arrangements, advertising etc. to influence the
customers.
The experience reported by passengers is of delay and
disruption of the flights besides unhelpful behaviour of
the staff which call for intensive training and public
relation orientation programmes for the staff.
Streaming of systems and procedures is required to
promote efficiency. The experience of travel agencies
in relation to reservation and response need
improvement also.
In the immediate future the pressure by international
airlines to promote additional flights to and for India
indicates the traffic potential of the market. the
emerging business opportunities between India and
Japan, South Korea, Hong Kong and Taiwan calls for
introduction of direct flights to these destinations to
save the time and inconvenience to travellers. The
traffic is also increasing to Europe an the US besides
the increase in the number of air charters from 225 in
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