Aviation in Service Marketing

8/3/2019 Aviation in Service Marketing

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AN ASSIGNMENT

On

AVIATION SECTOR

Submitted To

Dr. Renuka

Subject: Service Marketing

Submitted By:

A.H. Patel

Of

Department Of Business And Industrial Management

Semester-III, Section-B Marketing

2011-12


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EXECUTIVE SUMMARY:

The principles of marketing apply to the airlines industry also as much as

any other product/service. Airlines marketers also have to cater to the needs of

customers. The following definition developed by the British institute of

management holds good for airlines: Marketing is simply customer-orientation, looking at your business from customers point of view. An

airlines executive put it differently, In airlines business we need three thing: -

service, more service, and even more services.

This report focuses on passenger handling and flight operation did by

airlines. By this report you can get the overview of the services and functions ofthe airlines.

In this observation for passenger handling and flight operation, first take

on the job training and observed the passenger handling done by the airline staff

at the airport i.e. hospitality, information, function of airline and also flight

operation done by airline staff at the airport i.e. baggage container, boarding

check, break up. As one goes through detail of this report he/she can know theservices and functions of air lines.

Flight operation and Passenger handling are combined activity. If one of

the functions of FO and PH is lacking then it affect to the functions of the both

activities. Brief information about airport function which passenger have to pass

through it.

Passenger handling of departure passengers at airport.

Step 1. Announcement for Security checking and Check in.

Step 2. Issuing Boarding Pass and Baggage Tag to the passengers

Step 3. Immigration

Step 4. Security Hold and Boarding Check

Now For Passenger Handling of Arrival Passengers at Airport.

Step 5. Immigration Checking

Step 6. Collect their Baggage

Step 7. Custom Checking


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Many other services also included in passenger handling like

Greetings to arrive and Departing Passenger

First Priority to First class and Business class passengers

When passengers require some guidance or information than floor workers haveto provide accurate information to the passengers.

If flight is delayed than floor workers has to serve food and tea-coffee topassengers.

Wheel Chair Facilities for Aged people and physically handicap people.

If the passenger is infant or not mature Airline takes responsibility to handover

such passenger to their relatives at the Airport.


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INDUSTRY PROFILE:

Definition Of Aviation

Aviation refers to flying using aircraft, machines designed by humans for

atmospheric flight. More generally, the term also describes the activities, industries, and

regulatory bodies associated with aircraft.

History

Many cultures have built devices that travel through the air, from the earliest

projectiles such as stones and spears, to more sophisticated buoyant or aerodynamic

devices such as the boomerang in Australia, the hot air Kongming lantern, or kites. There are

early legends of human flight including a kite flight by Yuan Huangyou in chain, theparachute flight of Armen Fireman and the glider flight of Abbas Ibn firnas.

The modern age of aviation began with the first untethered human lighter-than-air

flight on November 21, 1783, in a hot air balloon designed by the Montgolfier brothers.

Balloon flight became increasingly common over longer and longer distances throughout

the 19th century, continuing to the present.

The practicality of balloons was limited by the fact that they could only travel

downwind. It was immediately recognized that a steerable, or dirigible, balloon was

required. Although several airships, as steerable balloons came to be called, were built

during the 1800s, the first aircraft to make routine flights were made by the Brazilianaviation pioneer Alberto Santos-Dumont. Santos-Dumont effectively combined an elongated

balloon with an internal combustion engine. On October 19, 1901 he became world famous

when he flew his airship "Number 6" over Paris to win the Deutsch de la Meurthe prize.

Santos-Dumont's success with airships proved that controlled and sustained flight was

possible.

On December 17, 1903, the Wright brothers flew the first successful powered,

heavier-than-air flight, though their aircraft was impractical to fly for more than a short

distance because of control problems. The widespread adoption of ailerons made aircraft

much easier to manage, and only a decade later, at the start of World War I, heavier-than-

air powered aircraft had become practical for reconnaissance, artillery spotting, and even

attacks against ground positions.

Aircraft began to transport people and cargo as designs grew larger and more reliable. In

contrast to small non-rigid blimps, giant rigid airships became the first aircraft to transport

passengers and cargo over great distances. The best known aircraft of this type were

manufactured by the German Zeppelin company.

The most successful Zeppelin was the Graf Zeppelin. It flew over one million miles,

including an around the world flight in August of 1929. However, the dominance of the

Zeppelins over the airplanes of that period, which had a range of only a few hundred miles,was diminishing as airplane design advanced. The "Golden Age" of the airships ended on


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June 6, 1937 when the Hindenburg caught fire killing 36 people. Although there have been

periodic initiatives to revive their use, airships have seen only niche application since that

time.

Great progress was made in the field of aviation during the 1920s and 1930s, such

as Charles Lindbergh's transatlantic flight in 1927. One of the most successful designs of thisperiod was the Douglas DC-3 which became the first airliner that was profitable carrying

passengers exclusively, starting the modern era of passenger airline service. By the

beginning of World War II, many towns and cities had built airports, and there were

numerous qualified pilots available. The war brought many innovations to aviation,

including the first jet aircraft and the first liquid-fueled rockets.

After WWII, especially in North America, there was a boom in general aviation, both

private and commercial, as thousands of pilots were released from military service and

many inexpensive war-surplus transport and training aircraft became available.

Manufacturers such as Cessna, Piper, and Beechcraft expanded production to provide light

aircraft for the new middle class market. By the 1950s, the development of civil jets grew,

beginning with the de Havilland Comet, though the first widely-used passenger jet was the

Boeing 707. At the same time, turboprop propulsion began to appear for smaller commuter

planes, making it possible to serve small-volume routes in a much wider range of weather

conditions.

Yuri Gagarin was the first human to travel to space on April 12, 1961, while Neil

Armstrong was the first to set foot on the moon on July 21, 1969

Since the 1960s, composite airframes and quieter, more efficient engines have

become available, but the most important innovations have taken place in instrumentation

and control. The arrival of solid-state electronics, the Global Positioning System, satellite

communications, and increasingly small and powerful computers and LED displays, have

dramatically changed the cockpits of airliners and, increasingly, of smaller aircraft as well.

Pilots can navigate much more accurately and view terrain, obstructions, and other nearby

aircraft on a map or through synthetic vision, even at night or in low visibility. On June 21,

2004, Spaceship One became the first privately funded aircraft to make a spaceflight,

opening the possibility of an aviation market outside the earth's atmosphere.

India is the second largest aviation industry of the world

The Indian fleet, which comprised 170 aircraft in May 2005, is now almost twice

that now, with 312 units. With the scheduled 2007 additions of 54-55, this number will rise

to just under 370 by the end of the year. And growth is expected to continue apace: the

Centre estimates that Indias fleet will reach approximately 500-550 aircraft by the end of

2010.


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In the same period, the domestic market size will cross 60 million and

international traffic 20 million. Aircraft manufacturer Airbus pegs India's demand at 1100

aircraft, worth US$ 105 billion, over the next 20 years. According to Civil Aviation Minister

Praful Patel, the country will need 1,500 to 2,000 passenger planes in 10 years, up from 260

now.

India continues to show steady year on year growth, with a 7 per cent increase in

the number of flights into and out of India (an additional 835 flights and more than 200,000

seats a month). The number of flights has virtually doubled from 6,800 in May 2001 to

13,200 in May 2007. In fact, India is in third place in the Top 10 list of countries with the

highest number of additional flights in May this year, behind only China and the US.

MAJOR PLAYERS IN INDIA:

Air India

GoAir Airlines

IndiGo Airlines

Jagson Airline

Jet Airways

Jet Airways Konnect

Kingfisher Airline

Paramount Airways

SpiceJet Airlines

JetLite (Air Sahara) Kingfisher Red (Air Deccan)

MDLR Airlines


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GROTH RATE OF THE INDUSTRY:

Aviation Industry in India is a significant one among those industry segments that

have experienced a phenomenal growth across the globe over the past years. The open sky

policy of the Indian government is one of the key factors that have allured international

players into the aviation industry in India. Since long, the aviation industry in India has been

growing in terms of number of air travel firms and number of aircrafts. Today, private

airlines alone bear the burden of not less than 75% of the domestic aviation requirements.

As per the statistics released by the Ministry of Civil Aviation, in the year 2008 alone

not less than 29.8 million people travelled to and from India which was a 30% surge from

2007. Industry experts have predicted that not less than 50 million passengers will be served

by the India aviation industry by 2015. Widening opportunities in India will create room for

over 69 foreign airlines entering the Indian aviation sector from about 49 countries.

Growth of Indian Aviation industry

The Civil Aviation market in India witnessed a CAGR growth of about 18%, which was

valued at US$ 5.6 billion in the year 2008. This figure witnessed almost a doubling surge in

August 2009 with the domestic airliners transporting more than 3.67 million passengers

against only 2.92 million in the corresponding period of 2007, which was a increase up by

26%. The estimation made by the Centre for Asia Pacific Aviation (CAPA) states that the

domestic airline traffic in the country will go up by 30% to 35% till in 2011 and 2012, while

the international traffic is expected to increase by 15%. This would mean not less than 110

million passengers traveling by air by the year 2011. The Aviation Ministry in India hasallotted US$ 9 billion to modernize the existing airports by the year 2011.

With respect to the volume of domestic passengers, US have always been leading

the sector followed by China, Japan and India. Between 2005 and 2008, the number of

domestic flights in the nation rose up by 69%, while the domestic aviation sector grew by 9-

10%.

Future of Aviation industry in India

With a surging demand and with the entry of a large number of domestic and

international companies into the sector, India aviation Industry is sure to witness a

phenomenal growth in the near future demonstrating a CAGR growth rate of more than

15% in the forth coming years. It is also estimated that the Ministry of Civil Aviation in India

will alone handle about 280 million passengers by the year 2020. Industry experts envisage

about US$ 110 billion new investments in the Indian aviation sector with not less than US$

80 billion exclusively targeted for the purchase of new aircraft and US$ 30 billion for

developing the infrastructure at the airports.


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CLASSIFICATION & TYPES:

The Indian airline sector can be broadly divided into the following main categories:

1. Scheduled air transport service, which includes domestic and international airlines.

2. Non-scheduled air transport service, which includes charter operators and air taxi

operators.

3. Air cargo service, which includes air transportation of cargo and mail.

Scheduled air transport service: It is an air transport service undertaken between two or

more places and operated according to a published timetable. It includes:

1. Domestic airlines, which provide scheduled flights within India and to select international

destinations. Air Deccan, Spice Jet, Kingfisher Airline and IndiGo are some of the domestic

players in the industry.

2. International airlines, which operate scheduled international air services to and from

India.

Non-scheduled air transport service: It is an air transport service other than the scheduled

one and may be on charter basis and/or non-scheduled basis. The operator is not permitted

to publish time schedule and issue tickets to passengers.

Air cargo services: It is an air transportation of cargo and mail. It may be on scheduled or

non-scheduled basis. These operations are to destinations within India. For operation

outside India, the operator has to take specific permission of Directorate General of Civil

Aviation demonstrating his capacity for conducting such an operation.

At present, there are 2 scheduled private airlines (Jet Airways and Air Sahara), which provide

regular domestic air services along with Indian Airlines. In addition there are 47 non-

scheduled operators providing air-taxi/non-scheduled air transport services.


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Apart from this, the players in airline industry can be categorized in three groups:

Public players

Private players

Start up players.

There are three public players: Air India, Indian Airlines and Alliance Air. The private players

include Jet Airways, Air Sahara, Kingfisher Airlines, Spice Jet, Air Deccan and many more. The

startup players are those planning to enter the markets. Some of them are Omega Air,

Magic Air, Premier Star Air and MDLR Airlines


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THE SERVICE MARKETING TRIANGLE:

ENABLING PROMISES MAKING PROMISES

KEEPING PROMISES

There are three entities in the entire transaction:

Customer: He is the person who wishes to satisfy his need i.e. of transportationfrom one destination to another.

Company: This is both the dreamer and the offerer. It is the various airlines, whichoffer its aviation services to satisfy the customers demand for transportation from

one destination to another. For e.g.: The Indian airlines

Provider: these are finally the people who interact with the customers. They are theones who carry out the final transaction. The customers actually come in contact

with the service provider and not the company. For e.g.: The Airhostess and the

crew.

COMPANY

CUSTOMERPROVIDER


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SEGMENTATION:Most airlines use a very traditional segmentation strategy, dividing passengers into

business travellers and economy travellers (mostly leisure travellers). The common strategy

is to squeeze as much profit as possible from business class passengers who are attracted by

superior services and corresponding high prices and, at the same time, to try and fill the rest

of the seats and ensure growth by attracting economy class passengers with lower fares.

Business passengers

They are crucial for airlines' profitability. With less spare time and more cash in their

pockets, they agree to pay a premium price for a premium service. Today business

passengers account for approximately 48% of passengers and these 48% contribute 66% of

airlines' revenue. The premium prices they pay for wider and more comfortable seats,

better choice of meals and seats, luxurious lounges.

Airlines can choose from a multitude of premium services to offer to business

travellers. Some of these extras range from seats equipped with faxes and telephones;

massage services and suit ironing services in the recently introduced arrival lounges.

Business passengers believe it is worth extra money if they can save time and arrive

looking fresh for an important meeting. Business passengers will avoid transit flights even if

a longer flight could save them money. But amongst other perks, flexible reservation

services are probably the most important to them. Reservations for business trips are often

made just a couple of days in advance. A no penalty cancellation policy is also very

important to business passengers.

The best way to reach business travellers is through printed advertising. Business

news media, such as "The Economic Times" and Business Today are some of the best

publications through which airlines can reach business travellers. Many airlines design

special promotional programs that target corporate bookers and meeting planners, who are

responsible for business trips reservations. Frequent flyer programs are an added bonus for

business passengers.

Leisure Travellers

They represent a totally different market. The most important consideration for

most of them is the price. The lower the airfare, the more people will fly the respective

airline.

By and large, with the exception of wealthy travellers, this segment will not pay extra

for premium services and will agree to change several planes during their trip if this option

costs less than a direct flight.


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Despite lower margins provided by this segment, leisure travellers are very

important to an airline's bottom line. Part of the reason is that technological progress in the

area of tele-conferencing and increased use of the internet for business communications is

expected to reduce the number of business travellers. Thus, airlines are counting on the

leisure segment to provide further growth.

How can airlines benefit from the growth opportunities in the leisure segment

without losing immediate profit opportunities in the business segment? This is a tough issue

in airline marketing management. By improving services and reducing prices for economy

class passengers, airlines risk that some business passengers will switch to economy class.

This has already happened with Japan Airlines, for example, which was forced to

eliminate business class seats on some of its flights. On the other hand, if an airline focuses

on business class passengers, it risks losing its economy class passengers to another airline.

Since business class passengers are not many, a company relying mostly on businesstravellers will often end up flying half-empty planes, losing the potential revenue generated

by lower priced economy seats.

On the other hand, few airlines catering solely to economy class passengers can be

successful because a low fare carrier must fill the entire plane if it is to generate revenue

from its low-margin operations.

The allocation of business and economy class seats on a plane is determined through

a process called yield management. A good yield manager knows the approximate

proportion of business and leisure travellers for each flight in advance, based onsophisticated statistical models.

Thus he/she tries to sell early, the economy seats at a cheaper price, while keeping

enough seats reserved for business travellers, who usually book at the last minute. Keeping

just the right amount of business seats reserved is important: selling too few economy seats

in advance may result in a less-than-full plane while selling too many economy seats may

result in a full plane, but with insufficient revenue to gain a profit.

This kind of segmentation serves airlines well enough when implemented within one

company. It would be very difficult for any single airline to target just one of these twosegments - business or leisure - successfully.

There are exceptions - small regional that serve destinations where the majors do

not fly, for example, are in a better position to implement a low price policy. They can even

get business travellers to fly them despite the lack of premium services because no other

airline would get them there. Air Deccan is a classic example, proving that low cost carriers

can thrive.

Major international carriers, however, need to target both the business and the

leisure segments they may also target different ethnic and geographical segments


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differently, depending on the markets from which they draw the majority of their

customers.

For example, even though Japan Airlines advertise extensively to the American

public, their message -"Your needs. Your Airline," seems to work best for the traditional

Japanese audience.

Inside one country, two national carriers may also focus on different destinations,

which is the case with Jet Airways and Air Sahara. Passengers' tastes determine airlines'

strategies. While Jet Airways focuses on comfort and luxury, valued by Indian passengers,

Air Sahara equips its business class seats with plugs for laptops and telephones, appreciated

by business travellers.

Overall, airlines seem to achieve best results when they subscribe to the

segmentation theory, supported by yield management techniques and a careful monitoring

of the economic changes in their geographical markets.


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TOTAL PRODUCT CONCEPT:

The Core Service:

The core service of the airlines industry is to transport goods and services to various

destinations. As the needs of the people increased the entire system became more

organized and formal. After this stage comes the various supplementary services.

The Supplementary Services:

The airline industry has many players they had a brand name like Air India, Jet

Airways, British Airways. All of them had some common services to offer like connecting

flights, through check-in, tele check in, food on board, and complementary gifts etc.

Different classes like economy class, business class were introduced. Air concessions

are given to school students, old people etc. Singapore airlines were the first to introduce

small 8 television screen for every passenger. The freebies are actually win -win deals

between airlines and other services.

Sahara, for example, offers its passengers a business-plan on two-way economy

class ticket, which includes a nights stay with breakfast, STD facility for 3 minutes and

boardroom facility at the Park Hotel, New Delhi. To Delhi based fliers to Mumbai, it offers a

nights stay with breakfast, airport transfers and VIP amenities at The Orchid, Mumbai. Forbusiness class, the plan includes a stay at The Leela, with buffet breakfast and late checkout.

All these added service helps the customer to decide upon which airlines he wants to

travel. As competition increased and the customers wanted more the next phase evolved

and that is the augmented service.

The Augmented Service:

This phase is where the customers expectations are met; the service providers kept

working on new methods to meet the ever-changing customers demands. The players

introduced online booking, which was very convenient for the service users.

British Airways business class has showers; its more spacious and comfortable.

Sahara airlines offer its passengers six different types of cuisine like vegetarian, fat free,

diabetic etc. They also have auction going on board. Virgin airlines have gambling on board,

they also have body massage to offer to their passengers. Air Emirates has something called

cab service, they have customized pick up and drop cab service.

This phase is the most crucial one; with increased competition service will become

the final differentiation.


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Future Service:

As mentioned above the customer needs keep changing, the future is unknown. The

customers may be looking in for more frequent inexpensive air travel, something like air

taxis, supersonic speed. This decreases the time thus reducing the cost.

7 Ps:

PRODUCT

The airline industry is a service that satisfies customer needs for travelling. In the

airline industry the customers can be divided into two segments, business and leisure.

While the airline industry started out as a luxury item, business travel has changed this

industry to a necessity. As we further become a global economy and communication

between international companies intensifies, travel needs continue to increase. The leisure

traveller has always had the need for the airline industry. Satisfying the customer needs

today involves competitive rates, convenient booking of flights and benefits with those

flights.

Some of the problems with this industry are personally experienced by the

customers. The airlines have a difficult time being punctual and this has become the norm in

the industry, although some companies try to avoid it. The industry is highly susceptible to

situations that result in declines in air travel, such as political instability, regional hostilities,

recession, fuel price escalation, inflation, adverse weather conditions, consumer

preferences, labor instability or regulatory oversight.

Airlines are now in the commodity business as the public demands low-priced

transportation. It has moved from elite to a common form of transportation. Today's

travellers know how to surf the web for bargains through a myriad of sites such as Orbitz,

Expedia, Travelocity, Hotwire, and Cheap tickets. As a commodity, airlines cannot increase

prices to increase profits, so their only choice is to cut operating costs such as labor costs.


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Amid the competition, airlines have refocused their attention on the customers. The

industry still heavily targets frequent flyers, as members can earn miles through travelling,

car rentals, hotels, and credit card use. On overseas flights, business class seats convert to

real flat beds. Soon passengers will have internet access during flights. Airlines are alsocatering to the consumer by offering mostly organic menus, while others are offering meals-

to-go before boarding. For travellers pressed for time, many airlines offer fast check-in,

online at home before leaving for the airport; or self-service check-in kiosks where

passengers identify themselves with a credit card, print their own boarding pass, change

their seat, and purchase meal coupons.

PRICE

The following are the pricing strategies:

Premium Pricing:

The airlines may set prices above the market price either to reflect the image of

quality or the unique status of the product. The product features are not shared by its

competitors or the company itself may enjoy a strong reputation that the 'brand image'

alone is sufficient to merit a premium price.

Value for Money Pricing:

The intention here is to charge the average price for the product and emphasize

that it represents excellent value for money at this price. This enables the airline to achieve

good levels of profit on the basis of established reputation.

Cheap Value Pricing:

The objective here is to undercut the competition and price is used to trigger the

purchase immediately. Unit profits are low, but overall profits are achieved. Air India and

Indian Airlines have slashed their prices to meet the competition of private airlines so that

they can consolidate their position in the market.


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Airlines usually practice differential pricing. There are three classes: The First Class,

The Executive or Business Class and The Economy Class. Fares for each class are different

since the facilities provided and the comfort and luxury level is different in each class.

Seasonal fares are also fixed, fares rise during the peak holiday times.

Low-cost Pricing:

With the advent of the low-cost airlines in the Indian aviation industry, a different

low-cost flying concept has come up. Since these low-cost airlines are trying to woo the

customers by providing air travel in exceptionally low prices, a price-band kind of pricing has

to be designed.

In low-pricing strategies, the airlines provide very low prices for the flight tickets.

Also, they prices are made cheaper by booking the tickets long before the flight date.

APEX Fares:

In this scheme, people are given very cheap rates only if tickets are booked at least

before the specified time period. But the draw-back here is that if the booking is cancelled, a

substantial amount of money is not returned.

PROMOTION

Integrated Marketing Communication

A successful product or service means nothing unless the benefit of such a service

can be communicated clearly to the target market. An organisations promotional mix can

consist of:

Advertising

Public Relations

Sales Promotion

Personal Selling

Direct Mail

Internet / E-commerce

In airline industry all the above methods are used for promotion purpose.


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The aims of promotion fall into three main categories: to inform, to remind, & to

persuade. It will always be necessary to inform prospective consumers about new products

& services, but other issue may also need this type of communication to consumers; new

uses, price changes, information to build consumer confidence & to reduce fears, fulldescription of service offering, image building. Similarly consumers may need to get

reminded about all these types of issues, especially in the off-peak season.

It is vitally important to recognize that promotion, or marketing communications

generally, may not always be aimed at potential consumer or end user of service. In many

business areas, it is to design promotions aimed at channel customers to complement end

user promotion.

PLACE

In Airlines, they utilise more than one method of distribution. For e.g. they sell

tickets through travel agents & sell seats on flights to tour operators, whilst also operating

direct marketing. Whichever distribution strategy is selected, channel management plays a

key role. For channels to be effective they need reliable updated information. For these

reason, I.T has been widely adopted such as on-line booking system.

Channel structures vary somewhat by the nature of the service

Internet booking system

Telephone reservation system.

PEOPLE

The people section of the Marketing Mix is the most important section of the

extended Marketing Mix. It is broken up into three sections: Employees, Consumers and the

Company.

Do we have enough employees to provide a good service? ; Do they have the

necessary personal and professional skills? , Do they understand the brand-values? , Arethey enough motivated or too tired?


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Those are questions that airlines companies have to ask themselves, and which

answers are going to have important consequences in the type of service provided.

The analysis of the buyer behavior is really interesting in this sector. Every individualhave different needs and expectations in this market, so segmentation and positioning will

be also fundamental. Furthermore, its normally an industry where, the user follows all the

steps of the buyer behavior in the selection and purchase of the service. Special importance

have the Information Search by the customer (which is normally more complete than in

other purchases) and beliefs and attitudes, which are the most important challenges of this

analysis because normally have an important weight in the final decision of the customer. In

a market as competitive as this one, a personal bad experience or just a non favourable

belief or attitude can determine the user's choice forever. That's why the Brand Image is

also fundamental for this kind of Companies.

For e.g. A Jain would be satisfied with the service only if he is served Jain food and it should

be kept in mind that the customers next to him are also Jain or at least vegetarian.

Therefore, management faces a tremendous challenge in selecting and training all of

these people to do their jobs well, and, perhaps even more important, in motivating them

to care about doing their jobs well, and to make an extra effort to serve their customers.

After all, these employees must believe in what they are doing and enjoy their work before

they can, in turn, provide good service to customers.

The "people" component of the service marketing mix also includes the

management of the firm's customer mix. Because services are often experienced at the

provider's facilities, other customers who are being served there can also influence ones

satisfaction with a service. For e.g. crying children in a nearby seat on an airplane or ill-

mannered customer are all examples of unpleasant service conditions caused by a firm's

other patrons.


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PHYSICAL EVIDENCE

The service is intangible because unlike a product it can't be experienced before it isdelivered. It is the ability and environment in which a service is delivered. Because it is

intangible customers are at greater risk when deciding whether to use a service, so to

reduce this risk, and improve success, potential customer are offered the chance to see

what the service would be like with the use of testimonials, demonstrations etc. Physical

layout is not only relevant to its promotional materials, but also to the layout and structure

of the organization, and websites. Customers have far higher expectations and therefore

they select the particular service which they know will satisfy their want.

Promotional materials and written correspondence provide tangible reassurance;

they can be incorporated into the firm's marketing communications to help reduce

customer anxiety about committing to the purchase. Service firms should design these items

with extreme care, since they will play a major role in influencing a customer's impression of

the firm. In particular, all physical evidence must be designed to be consistent with the

"personality" that the firm wishes to project in the marketplace.

They can offer to the consumer more than a fly: additional services, and so they

focus their promotional efforts in communicating that to the potential user.

PROCESS

The customer service department of any airline company deal with a number of

processes involved in making marketing effective in an organisation e.g. processes for

handling customer complaints, processes for identifying customer needs and requirements,

processes for handling requirement etc.


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Example of Jet (Entire Process)

Purchasing process

According to epinions.com, travelers' overall purchasing experiences with Jet have

been very positive. People like how easy it is to choose from the different one-way fares

online to make up a round-trip reservation. Some travelers prefer to use Jettelephone

reservation agents for purchasing their tickets. Overall, these reservation agents have been

described as very courteous and helpful.

Destination Choices

We found many negative reviews on epinions.com when it came to Jet destination

offerings. Several people complained that Jet doesn't offer service (either non-stop or

connecting) to enough destinations. Some complained about Jet operating out of smaller,

less convenient airports (like Poona and Nasik). People also complained that Jet only offers

limited flights per day to some destinations, making travel less convenient for some.

Overall Customer Service

Based on our findings at epinions.com, Jet customer service is very highly regarded.

Although some people have had unpleasant experiences, almost everyone who gave an

opinion raved about the service from Jet flight attendants, gate agents,

ticketing/reservation agents, and even the pilots.

The 7 Ps - price, product, place, promotion, people, process and physical evidence

comprise the modern marketing mix that is particularly relevant in service industry, but is

also relevant to any form of business where meeting the needs of customers is given

priority.


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PEST Analysis:

A PEST analysis is an analysis of the external macro-environment that affects all

firms. P.E.S.T. is an acronym for the Political, Economic, Social, and Technological factors ofthe external macro-environment. Such external factors usually are beyond the firm's control

and sometimes present themselves as threats. For this reason, some say that "pest" is an

appropriate term for these factors. Let us look at the PEST analysis of the Indian aviation

sector:

Political Factors

In India, one can never over-look the political factors which influence each and every

industry existing in the country. Like it or not, the political interference has to be present

everywhere. Given below are a few of the political factors with respect to the airline

industry:

The airline industry is very susceptible to changes in the political environment as it

has a great bearing on the travel habits of its customers. An unstable political environment

causes uncertainty in the minds of the air travellers, regarding travelling to a particular

country.

Overall Indias recent political environment has been largely unstable due to

international events & continued tension with Pakistan. The Gujarat riots & the

governments inability to control the situation have also led to an increase in the instability

of the political arena.

The most significant political event however has been September 11. The events

occurring on September had special significance for the airline industry since airplanes were

involved. The immediate results were a huge drop in air traffic due to safety & security

concerns of the people.

International airlines are greatly affected by trade relations that their country has

with others. Unless governments of the two countries trade with each other, there could be

restrictions of flying into particular area leading to a loss of potential air traffic (e.g. Pakistan

& India)

Another aspect is that in countries with high corruption levels like India, bribes haveto be paid for every permit & license required. Therefore constant liasoning with the

minister & other government official is necessary. The state owned airlines suffer the

maximum from this problem. These airlines have to make several special considerations

with respect to selection of routes, free seats to ministers, etc which a privately owned

airline need not do. The state owned airlines also suffers from archaic laws applying only to

them such as the retirement age of the pursers & hostesses, the labour regulations which

make the management less flexible in taking decision due to the presence of a strong union,

& the heavy control &interference of the government. This affects the quality of the service

delivery & therefore these airlines have to think of innovative service marketing ideas to

circumvent their problems & compete with the private operators.


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Economic Factors

Business cycles have a wide reaching impact on the airline industry. During

recession, airline is considered a luxury & therefore spending on air travel is cut which leads

to reduce prices. During prosperity phase people indulge themselves in travel & prices

increase.

After the September 11 incidents, the world economy plunged into global recession

due to the depressed sentiment of consumers. In India, even a company like Citibank was

forced to cut costs to increase profits for which even the top level managers were given first

class railway tickets instead of plane tickets.

The loss of income for airlines led to higher operational costs not only due to low

demand but also due to higher insurance costs, which increased after the WTC bombing.

This prompted the industry to lay off employees, which further fuelled the recession as

spending decreased due to the rise in unemployment.

Even the SARS outbreak in the Far East was a major cause for slump in the airline

industry. Even the Indian carriers like Air India was deeply affected as many flights were

cancelled due to internal (employee relations) as well as external problems, which has been

discussed later.

Social Factors

The changing travel habits of people have very wide implications for the airline

industry. In a country like India, there are people from varied income groups. The airlineshave to recognize these individuals and should serve them accordingly. Air India needs to

focus on their clientele which are mostly low income clients & their habits in order to keep

them satisfied. The destination, kind of food etc all has to be chosen carefully in accordance

with the tastes of their major clientele.

Especially, since India is a land of extremes there are people from various religions

and castes and every individual travelling by the airline would expect customization to the

greatest possible extent. For e.g. A Jain would be satisfied with the service only if he is

served Jain food and it should be kept in mind that the customers next to him are also Jain

or at least vegetarian.

Another good example would be the case of South West Airlines which occupies a

solid position in the minds of the US air travelers as a reliable and convenient, fun, low fare,

and no frills airline. The major element of its success was the augmented marketing mix

which it used very effectively. What South West did was it made the environment inside the

plane very consumer friendly. The crew neither has any uniform nor does it serve any lavish

foods, which indirectly reduces the costs and makes the consumers feel comfortable.


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Technological Factors

The increasing use of the Internet has provided many opportunities to airlines. For

e.g. Air Sahara has introduced a service, through the internet wherein the unoccupied seats

are auctioned one week prior to the departure.

Air India also provides many internet based services to its customer such as online

ticket booking, updated flight information & handling of customer complaints. USTDA (US

trade & development association) is funding a feasibility study and workshops for the

Airports Authority of India as part of a long-term effort to promote Indian aviation

infrastructure. The Authority is developing modern communication, navigation, surveillance,

and air traffic management systems for India's aviation sector that will help the country

meet the expected growth and demand for air passenger and cargo service over the next

decade.

A proposal for restructuring the existing airports at Delhi, Mumbai, Chennai and

Kolkata through long-term lease to make them world class is under consideration. This willhelp in attracting investments in improving the infrastructure and services at these airports.

Setting up of new international airports at Bangalore, Hyderabad and Goa with private

sector participation is also envisaged.

A good example of the impact of technology would be that of AAI, wherein with the

help of technology it has converted its obsolete and unused hangars into profit centers. AAI

is now leasing these hangars to international airlines and is earning huge profits out of it.

AAI has also tried to utilize space that was previously wasted installing a lamination machine

to laminate the luggage of travelers. This activity earns AAI a lot of revenue.

These technological changes in the environment have an impact on Air India as well.

Better airport infrastructure, means better handling of airplanes, which can help reduce

maintenance cost. It also facilitates more flights to such destinations.


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SWOT Analysis:

STRENGTHS

Liberal Environment:

India's airlines operate in a liberal environment in both the domestic and

international spheres. With three major airline groups and four smaller carriers all operating

domestic routes, there is no shortage of competition, although this factor combined with

excess capacity has tended to depress yields. Nevertheless, carriers are free to operate any

domestic routes without seeking permission from the government, and without restriction

on pricing. One condition that airlines find onerous however, is the requirement to operate

a proportion of ASKs to remote and underdeveloped regions of the country.

On the international front, the Indian government has pursued an increasingly liberal

approach to bilateral air services agreements with key overseas markets, resulting in greater

access for foreign carriers. Emirates for example, the largest foreign carrier by capacity into

India, will operate 185 weekly frequencies to ten cities across the country by the end of

2009. India's carriers have a combined international capacity share of just over 36% but face

strong competition from foreign carriers, both full service and low cost.

Modern Fleet:

In light of the fact that much of the growth in Indian aviation has occurred in the last

five years, the country's airlines operate a relatively young and modern fleet, ensuring a

high quality passenger experience, improved safety and good operational reliability.

High Quality:

India's airlines offer a good quality product in each of the operating models in

existence. Jet Airways and Kingfisher Airlines are competitive in terms of their inflight

service against the leading carriers in the world. Kingfisher for example is one just half a

dozen global carriers such as Singapore Airlines and Cathay Pacific, with a Skytrax 5 star

rating. In fact it could be argued that the full service product on domestic routes is excessivefor the sector lengths involved and results in a higher cost structure, which the passenger

does not necessarily see value in paying for. The LCCs too, by and large, offer a comfortable,

efficient and reliable service. Until a couple of years ago, Air Deccan was one carrier that

had developed a reputation for poor on-time performance, flight cancellations and

overbooking, however since being acquired by Kingfisher, most of these operational issues

appear to have been resolved.

Economic Growth:

Economic growth has historically been the primary driver of air traffic, and therelationship has generally been even stronger in developing countries. Between 2004 and
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2007, India enjoyed four years averaging 9% per annum GDP growth. This slowed to 6.5% in

2008, however against the background of a global economic recession, this was a creditable

performance. The increased business confidence following the general election result in

May 2009 has eased concerns that growth may slow further. The stock market has soared

25% in the last month and the outlook for growth and consumption has improved, which is

a positive for the aviation industry.

Political Stability:

The re-election of the Congress Party, with a stronger majority is expected to allow

the new administration to push ahead with further economic reforms, which had to date

been blocked by coalition partners. The prospect of a government which has the ability to

last its full term and pursue its agenda is extremely encouraging. In addition, Minister Praful

Patel, who was the architect of the dramatic transformation of the aviation sector, has

retained the portfolio, which brings experience and stability to the aviation industry.

WEAKNESSES

Airport Infrastructure:

The rapid growth in air traffic over the last few years exposed the deficiencies of

airport infrastructure across the country. After decades of neglect, many of India's airports

were forced to operate well above design capacity. The resulting congestion in the terminalsand on the runways delivered a poor experience for the passenger and a costly, inefficient

operating environment for the airlines. However, although a weakness today, it is also fair

to say that it is becoming less so, as the airport modernization program starts to deliver

results, with new airports in Bangalore and Hyderabad, and improving facilities at Delhi and

Mumbai. The upgrade of non-metro airports remains behind schedule so it may be another

3-4 years before we see good quality facilities across the country, but there are tangible

signs of improvement.

Airways Infrastructure:

Although congestion on the ground is relatively visible, another current area of

weakness is the limited investment that has taken place in improving infrastructure for air

traffic management. This too results in expensive aircraft holding patterns, indirect flight

paths and sub-optimal use of runways.

National Carrier:

The state-owned carrier, Air India, is in a dire situation. The carrier is estimated to

have posted losses of close to USD1 billion in 2008/09, and morale within the bloated

workforce is at a low. With no clear direction, management instability at the top and

continuing issues with the integration of Air India and Indian Airlines, the carrier is in need
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of radical restructuring. It is imperative that the government develops a turnaround strategy

for Air India as an urgent priority.

Deep Pockets:

Over the last three years, India's carriers have accumulated billions of dollars inlosses and debt. Ironically, a characteristic that would normally be considered a strength -

namely deep pockets - has resulted in carriers remaining afloat that would perhaps in other

circumstances have failed. With the backing of either the government or large corporations,

several carriers have been able to access funding that they might have been denied on a

strictly commercial basis as standalone airlines. As a result of the intense competition which

has been perpetuated, airlines have struggled to raise fares to break even levels.

High Cost Structure:

India's airlines operate in a relatively high cost environment, primarily due to thepunitive taxation structure. The greatest impact is felt in the area of sales taxation on fuel,

which can increase the cost to 60% above the international benchmark. The limitations of

airport infrastructure also increase costs due to the fact that carriers are unable to schedule

fast turnarounds, resulting in reduced aircraft utilization. In addition, the fact that high

quality ancillary services such as MRO and training are not currently available in India,

means that aircraft and personnel have to be sent overseas.

Skilled Resources:

Domestic air traffic in India tripled in the five years to 2008, while internationalpassengers doubled. This rate of growth far outstripped the capacity to develop skilled

technical and management personnel. The gap was partly addressed by employing

expatriates, particularly as pilots, and by learning on the fly. This means there is a lack of in-

depth experience and knowledge at all levels. Furthermore, there is an absence of high

quality training infrastructure in-country to deliver the resources to support future growth.

This lack of personnel affects the government as well and the FAA has expressed its concern

at the shortage of qualified safety inspectors within the Directorate General of Civil Aviation

(DGCA). India has been put on notice that unless this issue is addressed, it may be relegated

to a Category II nation, which would mean that Indian carriers would not be permitted to

increase services to the US.

OPPORTUNITIES

Market Growth:

Despite the rapid expansion of recent years, India has only just scratched the

surface of the potential for the aviation sector. Trips per capita remain low even by the

standards of other developing countries. China's domestic market is more than four times
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the size of India's 40 million passengers. Even, Australia, a country with a population of just

21 million, compared with India's 1.1 billion, has a market 25% larger. Similarly on the

international front, less than 1% of Indians travel overseas each year. Inbound visitor

numbers at 5.4 million in 2008 for the entire country, were less than for Dubai or Singapore.

It is not difficult to see the expansion potential from such a low base as economic growth

continues apace.

Geographic Location:

India is ideally positioned as a major aviation hub at the crossroads between Europe,

the Middle East and Asia Pacific. The fact that aviation was a neglected sector for so long

has allowed airports such as Dubai and Singapore to effectively establish themselves as

offshore hubs for Indian passengers, and they now have a significant head start. However,

as India's airports improve, and its airlines receive international awards for their service,

there may be an opportunity to leverage its huge home market to compete with these

longer established hubs.

Lower Costs, Higher Quality:

India has already managed to develop a dynamic aviation sector despite, and not

because of, its environment. The improvements in airport and airspace infrastructure, the

development of indigenous training and maintenance facilities and the potential for fiscal

reform, all point to the potential for Indian aviation to increasingly operate in a lower cost,

higher quality and more efficient manner. This could in due course lead to an opportunity

for India to develop as a global outsourcing hub in areas such as aerospace manufacturing,

MRO and training.

THREATS

Middle East Aviation:

The carriers of the Gulf are aggressively expanding in India, with high frequencies

from multiple destinations to their hubs, from where passengers can access extensive global

networks. The ability for a passenger for example to travel one-stop from Ahmedabad to

Hamburg, or multiple daily frequencies from Mumbai to London, connecting at an attractivehub, is a strength which Indian carriers simply cannot match at present. It will take time and

the question is how far ahead will the Middle East carriers be by that stage.

Terrorism:

India has seen frequent terrorist activity in recent years. The country has shown

great resilience in bouncing back after each attack, however inbound international traffic in

particular is sensitive to such events. Similarly the potential for India to develop as a global

traffic and services hub is contingent upon it being seen as a safe and attractive destination.
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ROLE OF TECHNOLOGY:

Intense competition in Indian Aviation Industry has made the role of technology very

important for domestic airline companies. Technology can help in making travel

comfortable, allow easy access to tickets and reduce time to check-in. A considerable

amount of money is also saved by automation. Following points highlight the increasing use

of Technology by different Airlines:

Vijay Mallya-promoted Kingfisher Airlines is planning to install a landscape camera at

the bottom of the aircraft that will enable passengers get a view of the take-off and landing

of their airplane when flying on domestic routes. They are also going to allow GSM phones

to be used on board for the first time. They are already providing live TV as part of our high-

end In-Flight Entertainment (IFE) initiatives. Kingfisher Airlines has announced the launch of

two world-class technological innovations to enhance guest convenience. The first cutting-edge innovation is the introduction of the Roving Agent at the airport. Now guests with

hand baggage need not have to wait at the check-in counter to collect their boarding pass,

instead they can directly approach the Kingfisher Airlines Roving Agents deployed outside

the security check-in area who will book them on their choice of seats.

Also launched is the facility of Web Check-in. Now Kingfisher Airlines' guests can sit

in the comfort of their homes or offices and print their boarding passes. All a guest has to do

is log on to the official website of Kingfisher Airlines, www.flykingfisher.com, and click on

the link - web check-in. Fill-in your reservation details and the screen will display the choice

of seats available onboard that particular flight. Once booked, the guest can conveniently

print out the boarding pass and carry it along with him/her on the day of the flight and

proceed straight to the security check counter at the airport.

The Airbus A380, the world`s largest and most advanced passenger airplane, which is

widely regarded as the future of aviation, marks a momentous milestone in the history of

civil aviation in India.

Kingfisher Airlines, Indias fastest-growing airline, has engaged Sabre Airline

Solutions, the global leader of software and services for the airline industry from planning to

execution, to provide a full suite of more than 20 enterprise applications to enhance its

guest processing functions, as the airline continues its rapid expansion of its operations.

Kingfisher Airlines is also leveraging other technology from Sabre Airline Solutions to

help analyze the market and determine the best approaches to maximize revenue.

Kingfisher Airlines Ltd and Dish TV have joined hands to provide live in-flight entertainment

on Kingfisher aircraft. The in-flight entertainment system is one of the best in the world.

The increasing use of the Internet has provided many opportunities to airlines.

For e.g. Kingfisher has introduced a service through the internet, wherein the unoccupied

seats are auctioned one week prior to the departure.


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Public sector airline Air-India is exploring the possibility of launching an information

technology (IT) subsidiary to handle its automation activities.

Jet Airways has launched an Interactive Voice Response (IVR)-based payment and

ticketing services. The service will allow passengers to complete their reservation with credit

cards through a secure gateway and instantly receive their e-tickets via email.

Low-cost carriers such as Air Deccan, SpiceJet, GoAir and IndiGo are currently

allowing a web-check apart from online booking.


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MAJOR PLAYERS AND THEIR STRATEGIES:

INDIAN AIRLINES

Fly Smart Fly Indian Airlines

Indian skies are mainly served by three domestic airline services namely, Indian

airlines, Jet airways and Sahara Airlines. Together they make all the major cities and tourist

places accessible.

Indian Airlines

In 1953, a new dream took shape to air link the vast south Asian subcontinent by a

single, modern and efficient airline. The airline was Indian Airlines. Today Indian Airlines,together with its fully owned subsidiary Alliance Air, is one of the largest regional airline

systems in Asia with a fleet of 56 aircraft, 11 wide bodied Airbus A300s, 30 fly by- wire

A320s, 11 Boeing 737s and 3 Dornier D 228 aircrafts.

An Indian Airline is presently fully owned by the government of India and has total

staff strength of around 22000 employees. Its annual turn over, together with that of its

subsidiary Alliance Air, is well over Rs. 4000 crores. Not just connecting India, the airlines

network spans from Kuwait in the west to Singapore in the east and covers 75 destinations

59 within India and 16 abroad. The Indian Airlines international network covers Kuwait,

Oman, UAE, Qatar and Bahrain in the west, Thailand, Singapore, Yangon and Malaysia in

south - 46 -east and Pakistan, Nepal, Bangladesh, Myanmar, Sri Lanka and Maldives in the

south Asian sub continent infrastructure. The airlines aircraft maintenance facilities are of

the highest international standards. It has developed state of art facilities for all aspects

of maintenance, including engine overhaul. These facilities are used not only by Indian

airlines but also by other airlines from time to time. Their training facilities for pilots are

integrated at Hyderabad where commanders and captains are trained in all types of aircraft

in the Indian Airlines fleet. States of - art full flight stimulators are available for A300,

A320, and B737. Several airlines continuous technology up gradation also extends to other

areas such as reservations, passenger handling systems and customer service. Indian airlines

flight operations center on its four main hubs the main Metro cities of Delhi, Mumbai,

Chennai, and Kolkata. Together with its subsidiary Alliance Air, Indian Airlines carry a total of

over 7.5 million passengers annually.


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JET AIRWAYS

We dont fly aircraft, we fly people

This is the motto of this private owned airline. They have chosen the yellow rose as

their motto as it symbolizes friendship, warmth and caring, Jet Airways was set up with the

objective of providing high quality and reliable air travel in India. Since a very high

percentages of the Indian domestic air traffic comprised of business travelers, their focus

from the very beginning was to emerge as the businessmans preferred airline. This led to

a product and service design that aimed at world-class norms in professional service and

efficiency, beginning with the choice of aircraft itself. Their operations commenced with a

fleet of flour modern generation Boeing 737 300 aircraft. These aircraft were the first to

fly the Indian skies. For training and conversion of their pilots and engineers, they utilized

the training facilities of Ansett (Australia). For world-class norms in service, they were aided

by speed wing (a British airways subsidiary) to conduct a programme on customer service

excellence for staff across functions at all levels.

To ensure accurate and efficient reservation system, they tied up with and are co

hosted with SABRE one of the worlds best reservation systems. Within three months of

operation, they also become an associate member of IATA; a party to the IATA multilateral

interlines agreement and a member of the IATA clearinghouse. Since their commencement,they also have achieved the status of the largest private domestic airline in India. The figures

speak themselves as below:

1. From 4 aircrafts in 1993 94 to 34 aircraft in 2005

2. From 12 destinations in 1993 94 to 40 destinations in 2005

3. From 24 daily flights in 1993 94 to over 195 daily flights in 2005

In the process they have market share of 36 %. Their emphasis on technology is one

of the key factors of their success. They fly only modern and next generation aircraft andmaintain a young aircraft fleet, making them one of the youngest fleet in the world.


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AIR SAHARA

Emotionally Yours

The people at Sahara believe in delivering the best to all their customers. It is this

belief that is reflected in all their services.

They have a fleet of

1. 1 Boeing 737

2. 5 Boeing 737 200

3. 4 Boeing 737 400

They are among first to offer tele check in facility to all their passengers. To ensure

smooth baggage handling. Exclusive valet service is provided at all Sahara airlines airport

counters. There in flight services are built around total customer care and customer

satisfaction. Increased leg space to ensure grater legroom on both Sahara Royal and Sahara

Special classes provide total seating comfort on board. Sahara Royal passengers can also

avail the pleasures of their entire in flight reading library. Sahara special passengers are also

provided with a personalized reading kit, which include at least three major dailies. It is their

firm belief to uphold the highest standards of traditional Indian hospitality, culture and

courtesy. Their highly trained personnel ensure that your trip is not only comfortable butalso a memorable one right from the time of check in.


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Bibliography

Books:

Marketing Service

Websites:

indianinfoline.com

airsahara.net

indian-airlines.nic.in

jetairways.com

google.com (search engine)

civilaviation.nic.in

indiatravelite.com

Documents

Aviation in Service Marketing