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SPICEJET INDUSTRY ANALYSIS

SPICEJET Parent company : spice jet

Category : Indian domestic sector

Sector : airlines

Tagline/slogan: flying for everyone

Usp: lowest price

Segment: cost conscious passengers

Target: lower middle class/ middle class

Positioning : low cost no frills

INTRODUCTION Spice jet is a low-cost airline based in New Delhi. It began service in 23 May 2005. Spice Jet was earlier known as Royal AirwayThe director of this airlines is Mr. Ajay Singh. This airline has more than 2500 employees working with them currently. SpiceJet names all its aircraft after various spices and herbs like Cinnamon, Thyme, Oregano.

3Swot analysis STRENGTHEntered with RS 99 fares for the first 99 days Strong backing by the promotersHaving more than 35 destinations in IndiaGood presence in the market due to its branding and advertising

SWOTWEAKNESSLow market share due to presence of significant competition no international destinations Dependency on leased assets Small load deficiency compared with competitors

OPPORTUNITIESGrowing population fordemographicsgrowing interest on tourism Growing aviation marketInternational tie ups would boost brand imageTax holiday on aircraft leasing The Union Budget Government of India announced 5year tax holiday on aircraft leasing.

THREATS :RISING FUEL COSTSTRONG COMPETITIONCHANGING GOVERNMENT POLICIES

SWOTANALYSIS STRENGTHOne of the largest low cost carrierOnly LCC to make consistent profitHas entered international markets and boosted its brand valueIncreased brand recall due to goodmarketing and advertisingWEAKNESS Not on too many routes compared to competitors Still has to establish itself on international destinations Concentrate only on middle class societyCustomers are not happy with Inflight services

OPPORTUNITITESAttracted loyal customers and converted them into indigo flyers Opportunity to go abroad markets Rapid expansion by buying new airbusesInternational tie-ups would boost the image of indigoTHREATS Strong competition in the LCC segmentRising fuel cost Changing government policies Companies are cutting air travels due to economic crises

STRENGTH1. Has created a good image among Indian fliers2. Strong backing from promoters3. Awarded as one of the most premium domestic airlines in India4. More than 1 million passengers catered in a year5. Exclusive and premium advertising and sponsorship give it a high brand recall6. It has flights to 25 Indian destinations and international flights as well

WEAKNESS1. Financial issues due to Heavy Debt2. Laying off employees caused a bad image

OPPORTUNITIES 1. Reputation of providing the best amenities in Indian skies2. Financial stability can improve operations3. More domestic and international destinations

THREATS 1. LCCs eating up the market share2. Rising Fuel Costs3. Pressure from aviation committees and govt policies

strengthStrong backing by the promotersNearly 1000 flights per weekCovers almost all major citiesGood branding and marketing in Indiaweaknessmarket share is very lessIt entered Indian market very lateNot too many destinations compared with its competitor

OPPORTUNITIESMore destinations yet to be coveredGlobal operations can also be a value additionTHREATSPlenty of new LCCs to compete with who already have taken the leadRising labour costsRising fuel costs

Airline Industry market analysis

EXTERNAL ANALYSIS OF SPICEJETCUSTOMER ANALYSISSEGMENTATION Geographic : tier I and tier II cities Target : premium class of train travellers business people corporate employees Psychographic Segmentation : aiming for higher life style

UNMET NEEDSMore international destinationsNeed for technological advancementNeed for trained cabin crews

COMPETITOR ANALYSIS

COMPETITOR ANALYSISQualityReputationCustomer securityProduct performanceProduct featuresPriceGeo coverageAdd effects ENVIRONMENTAL ANALYSISPEST

POLITICAL FACTORS : BureaucracyNo clear policies for state carriers

ECONOMIC FACTORS: increasing tax and tariff Price depends upon individual firms behaviourInternational fuel price

PEST .. (CONT)

SOCIAL FACTORS :Lack of skilled manpower ( in flight staffs)Customers servicesSafety concerns (9/11)

TECHNOLOGICAL FACTORS : Night landing facilitiesOperation during winterCapital intensive technologyMARKET AND SUBMARKET ANALYSIS

MARKET : aviation industrySUB MARKET : low cost carriers ( LCCS)SIZE AND GROWTH : 14 % of market shareMARKET ATTRACTIVENESS : fast transportation

MARKET TRENDS ( EMERGING MARKET) Indias fastest growing tourism destination (majordemand driver) economic growth growth in business travels Low cost carriers ( Lccs)Resulted in middle income people people and self employed shifting from premium class travel in trains to air travelDomestic air passengers grew at a 38.5% from 25 %CAPA predicts that domestic traffic would increase from 25% to 30%

CUSTOMER PROFITABILITY

Focusing towards enhancing the customer experience Complimentary supervision of unaccompanied minors Hot beverage and combo meals available for saleWaiver on additional charges on sport kits Reaching out to business travellers : 1. business travellers can collect their boarding passes on the same day return flight. 2. introduction of corporate travel programs 3. free two piece baggage Key success factors

Low cost carrier Point to point services Cheaper product design Sales via internetWord of mouth marketing CUSTOMER SERVICES

personal wallet at airportPersonal and exclusive baggiesRefreshment and musicThree course mealBaggage assistance

Promotional tools

Word of mouth marketingPrint ads in newspapers TV commercialsInternet media initiatives Hoardings in railways, platforms, airports and shopping malls

COST AND VALUE DRIVERS (COMPETATIVE ADVANTAGE)

HIGH SEAT DENSITY :Single class 189 seats per flightFocus on maximum space utilization for generating more revenue per flightDIRECT DISTRIBUTION OF TICKETS : Sells its ticket via internet or call centresHIGH CRAFT UTILIZATION: consistently reporting high aircraft utilization

Strategic uncertaintyUncertainty in forecasting the futureMarket fluctuations Rapidly changing clients How to over come ?Government should develop and promote policies

SCENARIO ANALYSIS

control of emission levelRisk of high-jacks Increasing fuel price Decreasing rupee value How to overcome ?Increase security levelFuel hedging

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