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Airline Industry

Javeed budhwani

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Airline Industry in India454 airports and airstrips

(includes Operational, Non Operational, Abandoned and DisusedAirports)

127 are owned & operated by AAI

16 - international, 7 custom airports, 28 civil enclaves

Scheduled domestic air services - available from 82 airportsMay 2007- May 2008

25.5 million domestic & 22.4 million international passengers

20% growthhighest in the world

Growth Rate Projections (for next 5 yrs)

15% p.a (Passenger Traffic)

11.4% p.a (Cargo Traffic)

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History 1911 first commercial flight airmails from allahabad to nani (10 km)

1932 the aviation department of tata sons ltd . Established 1938 tata airlines (successor to aviation sivision of tata son )

1946 Tata Air Lines converted into a public Company and

renamed Air India Limited

1948 Air India International incorporated

1953 Nationalization of Aircraft Industry

Air India (serving the international sectors)

Indian Airlines (serving domestic sectors)

Deccan Airways, Airways India, Bharat Airways,

Himalayan Aviation, Kalinga Airlines, Indian National

Airways and Air Services of India

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History1986 Private Sector Players permitted as Air taxi operators

Players including Jet, Air Sahara, NEPC, East West,

Modiluft, etc started service

1990 Open sky policy

1994 Private Carriers permitted to operate scheduled services

2003 Entry of low-cost carriers2007 Merger of Indian Airlines into Air India

Acquisition of Air Sahara by Jet Airways

2008 Kingfisher acquired 49% stake in Deccan Aviation

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Regulatory Authorities Ministry of Civil Aviation

Responsible for the formulation of policy, development and regulation ofCivil Aviation. Its functions also extend to overseeing airport facilities, airtraffic services and carriage of passengers and goods by air

Other Attached/Autonomous Organizations:

Directorate General of Civil Aviation (DGCA)

Promote safe and efficient Air Transportation through regulation andproactive safety oversight system

Bureau of Civil Aviation Security (BCAS)

Regulatory authority for civil aviation security in India

Airport Authority of India (AAI)

Accelerate the integrated development, expansion and modernizationof the operational, terminal and cargo facilities at the airports

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PoliciesOpen Sky Policy

FDIAirports

100% for green field operations

74% for existing airports - 100% with special permissions

100% tax exemptions for 10 yrs.Airlines

49% in domestic airlines - 100% for NRIs

74% in cargo & non-scheduled airlines

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Competitive Pressure

Service

Price

Low cost Carrierschanging the game

Indigo

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MARKET SHARE

Jet Airways35%

Indian Airlines24%

Air Deccan

15%

Jet Lite10%

Kingfisher8%

Spice Jet6%

Others2%

Airlines Market Share

Jet AirwyasIndian Airlines

Air Deccan

Air Sahara

Kingfisher

Spice JetOthers

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The Kingfisher AIRLINESThe king of good t imes

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Kingfisher airlines Dr Vijay Mallya is the Chairman and CEO of Kingfisher

Airlines Kingfisher Airlines Limited launched scheduled airline

services on May 9, 2005 with 4 daily flights between BOM

& BLR and one A-320 aircraft.

There are tools for mood lighting such as web chat, inseatplugins for music, liveTV with 16 channels on each seat

100 percent E ticket airline

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The Kingfisher Airlines family will consistentlydeliver a safe, value-based and enjoyable travel

experience to all our guests

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STP Geographic Region Density

Social Classes

Income Level

Segmentation

Kingfisher First

company executives

Kingfisher Class

lower middle, upper middle, lower upper segment

Targeting

Lifestyle

Benefits

QualityPositioning

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SWOT Analysis Strengths

First airline with full new fleet of

aircraft

Quality hospitality provided to

customers

Route rationalization

Already have training academy

Weaknesses

Service delivery to metros and

other big cities

Yet not in profit

High ticket pricing

High attrition in top brass

Opportunities

Under penetrated domestic

market

International market

Untapped air cargo market

Expanding tourism industry

Threats

Existing Operators

Infrastructure issue

Fuel price hike

Economic slowdown

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PESTEL ANALYSIS

POLITICAL FACTORS

1) Open sky policy

2) FDI limits: 100% for Greenfield airports

74% for the existing airports

100% through special permission49% for airlines.

ECONOMICAL FACTORS

1) Contribution to the Indian economy.

2) Rising cost of fuel.3) Investment in the sector of aviation.

4) The growth of the middle income group family affects the aviation

sector.

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SOCIAL FACTORS

1) Development of cities leads to better services and airports.

2)Employment opportunities.

3)Safety regulations.

4) The status symbol attached to a plane travel

TECHNOLOGICAL FACTORS

1) The growth of e-commerce and e-ticketing.2) Satellite based navigation system.

3) Modernisation and privatisation of the airports.

4) Developing green field airports with private sector for example in

Bangalore the airport corporation limited.

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ENVIRONMENTAL FACTORS

1)The increase in the global warming.

2)The sudden and unexpected behavior of the atmosphere and the

dependency on whether.

3)Shortage of the infrastructural capacity

4)Tourism saturation.

LEGAL FACTORS

1) FDI limits

2) Bilateral treaties

3) Airlines acquisitions and the leasing cost.

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s

Product

Fleet Size

Aircrafts

International Foray

Promotions

Advertisements

Magazine and Newspaper ads

Exposure at non-corporate event

Participation in International Airshows

Endorsing celebrities like Katrina Kaif and Yana Gupta

Process

Booking the ticket - online booking or tele-booking or from any of the kingfisher outlet

PhysicalEvidence

Personal valets

Exclusive lounge space

Hi! Blitz

Gourmet cuisine

world class cabin crew

5 trendy video- Fun TV; 10 music stations -Kingfisher Radio

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Price

Dynamic pricing model - Multiple fare levels

Uniform rules

No hidden restrictions.

Pricing model - 8 different levels

Discounts provided from time to time

People

Backbone of the brand

Extensive trainings

Hospitality industry and consider their customer as guestsInterpersonal skills, aptitude, and service knowledge

Place

Online Booking - www.flykingfisher.comOnline Booking - Yatra.com, MakeMyTrip.com, ezeego1.com

Credit Cards & Debit Cards Payment

SMS / Call

Outlets in every major city and at every airport across the country

MODLE

http://www.flykingfisher.com/http://www.flykingfisher.com/

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MODLE

Jet Airways

Indian airlines

LCC

Virgin Atlantic

Quantas Airways

Economic &demographic changes

Increasing awareness

Exposer to globlebrand

Other models oftransport

Fuel supplier

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Performance

Kingfisher Airlines has posted a net loss of Rs 577crore in the financial year ended March 2007, the

balance sheet of UB Holdings, which owns the

airline, shows.

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Jet AirwaysFounded in 1993, Chairman - Mr.Naresh Goyal

HQ in Mumbai

Countrys second largest international airline

Largest domestic airline - 31%

Primary base - Mumbai's Chaatrapathi ShivajiAirport

Secondary hubs - Bangalore, Brussels, Chennai, Delhi,

Hyderabad, Kolkata and Pune.

April,2007 - Acquired Air Sahara - JetLite

Now JetLite integrated into Jet Airways

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Mission Statement

Jet Airways will be the most preferred domestic airline in India. It

will be the automatic first choice carrier for the travelling public and

set standards, which other competing airlines will seek to match.

Jet Airways will achieve this pre-eminent position by offering a high

quality of service and reliable, comfortable and efficient operations.

Jet Airways will be an airline which is going to upgrade the concept

of domestic airline travel - be a world class domestic airline.

Jet Airways will achieve these objectives whilst simultaneously

ensuring consistent profitability, achieving healthy, long-term returnsfor the investors and providing its employees with an environment for

excellence and growth

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STPPrimary Segments (Geographic) - Domestic & International

Customer SegmentsFirst class, Premiere(Business) class & Economy class

Target Segments

Premiere(Business) class

Business travelers, contribute 48% of passengers & 66% of revenues,

ready to pay higher prices, last time booking, dont like transit

Economy class

Leisure travelers, prefer low cost airlines, ready for transit if there is cost

advantage, large % of passengers

Seat AllocationYield Management TechniquePositioningHigh value for High price

Unique Selling PriceCustomer relationship and Punctuality

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SWOT AnalysisStrengths

Market driverExperience exceeding 14 year

Only private airline with international operation

Market leader

Largest fleet size

Weaknesses

Loosing domestic market share

Old fleet with average age around 4.79 years

Scope for improvement in in-flight service

Weak brand promotion

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Opportunities

Untapped air cargo market

Scope in international service and tourism

ThreatsStrong competitors

Fuel price hike

Overseas market competition

na ys s

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na ys sPolitical Issue

License issue for international

operation

Infrastructural constraint

ATF price policy

Economic EffectsRising income level

Reduced fare but yet not enough

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Social Effects

Sound Pollution

Plane hijacking

9/11 Incident

Technology Effects

Modernization of aircraftsModern technology like CAT3

and ILS

s

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sPrice

Economy & Club Premiere Fare

Discounted fare for senior citizens & defense personnel

Advance Passenger Excursion/ APEX Fares

One Fare

Night Saver Fares

Check Fares

US Dollar Fares & Visit India Fares

Place

Place of Service - Aircraft

Various Destinations

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Promotion

Offers

Companion Free Offer, One Fare, Concessional fares, JetPrivilege

Offers,Jet Airways Citibank Credit Cards, Corporate Deal Offers, International

Specials, Camp Rock contest, Festival specials, Student specials,

Surprises etc.

Advertising and Branding

Hoardings

Brand Ambassadors

Sponsorships

Event Organization

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Process

People Processing

People physically enter the service system to receive the service.

Aircraft is theservice factory where service is delivered.

Possession Processing

Cargo

Luggage & Courier

Physical EvidenceServicescape

Servicescape usage - Interpersonal

Complexity of Servicescape - Elaborate

Flight

Offices - Org. & Ticket Booking AgentsVirtual Servicescape

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Jet Airways - Performance

Annual Revenues - Rs.9481.5 crores (2007-08)

Rs.7401 crores (2006-07)

Profit(Loss) After Tax - Rs.253 crores loss (2007-

08)

Rs.27 crores profit (2006-07)

- All Other Domestic Players showed loss(2006-07)

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Kingfisher

Kingfisher is one ofthe latest Airlines inINDIA.

Overall growth inyear 2006-07 is 37%.

Kingfisher acquired46% share in AirDeccan.

Domestic airlines

poised to gointernational flights

Jet Airways

Jet Airways is theexperienced airlinein INDIA.

Overall growth inyear 2006-07 is

16%. Jet airways acquired

Air Sahara in 2006.

Jet Airways already

has domestic as wellas internationalflights.

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Kingfisher

In a short span of 2years its market sharehas become 28%including Air Deccan.

Personal in-flightentertainment inevery seat.

It was awarded theBest New Airline Of

the Year award.

Already have trainingacademy

Jet Airwayss

Jet Airways has itsmarket share 31%including Air Sahara.

Averageentertainmentservices.

Jet Airways wonDouble Honour TravelTrade Gazette Travelaward.

They are plan to starttraining academy.

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THANK YOU