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SERVICE SECTOR: AIRLINES INDUSTRY
GROUP 4 - AJU, ESWARAN, LEKHA, MEGHA , SRIKANTH, SWETA
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History The birth of flight in 1903. Early 20th Century
In 1938, the Civil Aeronautics Board. Deregulation, mid-1970s, Alfred Kahn.
Congress passed the Airline Deregulation Act of1978.
Late 20th Century. 21st Century.
The effects of another economic downturn Losses continued for years; the industry as a
whole didn't return to profitability until 2006
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Under penetrated Market
- Total Passenger Traffic only 50 mn as on 31st Dec 2005 amounting to only 0.05
trips per annum as compared to
developed Nations like United States have 2.02 trips per annum
- High Level of potential demand with growth in Indian economy
Untapped Air Cargo Market
- Air Cargo has not yet been fully taped in the Indian markets and is expected that
in the coming years
large no of players would have dedicated fleets
What this means
- Build up of capacity by existing players and entry of new players
Industry characteristics: Huge potential
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Freight carriage in India currently around 4200 tons perday
CAGR of 15% over the past 2 years
Fuelled by a fast growing economy, supported by a strong
industrial base
Forecast to grow at 11.4% p.a. till 2011-12
Air Cargo
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Ground handling business in India estimated at Rs. 1074 crores
Expected to grow at 15% CAGR till 2011-12
Opportunity lies in 3rd party handling as well as entering into service
contracts with private airports / AAI to offer comprehensive ground
handling solutions, e.g. AI CIAL at Cochin
Ground Handling
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Increasing numbers are booking directly from the airlines websites
Traditional sales channels with paper tickets cost airlines ~10% of
ticket price
Comparatively, e-ticket sales from own website cost an airline only
~3% of ticket price For every direct booking from their website, airlines save an
estimated US$ 4 plus 5% agency commission
Airlines can also turn their websites into one stop shops for all
travel related services, generating additional revenue
Leveraging the internet
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The Indian aviation industry is one of the fastest growing aviation
industries in the world.
India has 454 airports and airstrips; of these, 16 are designated
international airports. With the liberalization of the Indian aviation sector, aviation industry
in India has undergone a rapid transformation.
From being primarily a government-owned industry, the Indian
aviation industry is now dominated by privately owned full-serviceairlines and low-cost carriers.
Private airlines account for around 75 per cent share of the domestic
aviation market.
Current Scenario: Indian AviationIndustry
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There has been phenomenal growth in the Indian aviation sector in
2007-08.
India has jumped to 9th position in world's aviation market from 12th
in 2006.
As per the Ministry of Civil Aviation, the airline business is growing at
27 per cent per annum in India.
During 2007, the domestic airline passenger traffic has shown agrowth of 32.51 per cent.
Further, the scheduled domestic air services are now available from
82 airports as against 75 in 2006.
..Cont.
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35 other city airports are proposed to be upgraded.
The city side development will be undertaken through PPP modewhere an investment of US$ 357 million is being considered over
the next 3 years. Over the next five years, AAI has planned a massive investment of
US$ 3.07 billion - 43 per cent of which will be for the three metroairports in Kolkata, Chennai and Trivandrum, and the rest will gointo upgrading other non-metro airports and modernizing the
existing aeronautical facilities.
..Cont.
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Marketing mix
Core
Transportation
Supplementary
Check in
Food on board
Connecting flight
Complementarygifts
In-flightentertainment
Frequent flierprograms
Augmented
Online booking
Variety of mealoptions
Pick up and dropservice
Mobile ticketing
Product
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Marketing Mix
Price: Premium, Cheap value & Apex fares.
It depend on Class, Date & day of travel and profit margin &
competitor pricing also.
Place: Tour Operator, Travel agent & Online reservation.
Promotion: Advertising, Publicity, Sales promotion &
Personal selling.
People: Reliability, Caring attitude & Goodwill.
Physical Evidence: On the ground & Inflight.
Process: Reservation, Flight Information, Facilities at TheAirport, Baggage Handling, Meal Service & Flight
Entertainment.
Productivity & quality: To Deliver Quality Service by
meeting demand with supply.
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Marketing Mix Process
Flight Entertainment
Deliver Quality Service
Baggage Handling
Meal Service
Reservation
Flight Information Facilities at The Airport.
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An example of Ambush Marketing
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Major Brands
Kingfisher
Indian Airlines
Lufthansa
Jet Airways
Qatar
Fly Emirates Singapore Airlines
British Airways
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Despite a growing market, airlines in India are fighting for survival in a highlycompetitive environment
A host of initiatives are required to be taken by all concerned, to tide over the
current situation
Control Costs
Improve quality of service
Develop a large pool of skilled / technical manpower
Attract more professionals to manage the aviation industry
Develop infrastructure to match growth plans
Liberalize rules & regulations governing civil aviation, without compromising on
safety & security
Reduction in ATF prices and taxation on ATF and lease rentals
In sum
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