Airlines

MARKETING PROJECT

AIRLINES INDUSTRY

Group –5, Section - C

Abhishek Jha (08P119)

Amit Maheshwari

(08P125)

Mangesh More

(08P149)

Mohit Nagpal (08P148)

Parag Raheja (08P153)

Tushar Mehta

(08P172)

Table of Contents

Definition of the industry, Scope of the project and Methodologies used___________________4

Overview____________________________________________________________________4

Scope and Methodology________________________________________________________4

Overview of the industry__________________________________________________________6

Competitive analysis_____________________________________________________________7

Product level analysis_________________________________________________________7

Core product and supplementary services_________________________________________7

Core Product_____________________________________________________________7

Supplementary Services_____________________________________________________7

Information____________________________________________________________7

Consultation____________________________________________________________8

Order taking____________________________________________________________8

Hospitality & Caretaking__________________________________________________8

Billing & payment_______________________________________________________8

Product levels_______________________________________________________________8

The Core benefit__________________________________________________________8

The basic product__________________________________________________________8

The expected product_______________________________________________________9

The augmented product_____________________________________________________9

The potential product_______________________________________________________9

Brand related aspects________________________________________________________10

Brand positioning___________________________________________________________10

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Positioning of a few airline brands operating in India_____________________________10

Kingfisher Airlines - Full Frills - True Value Carrier___________________________10

Spicejet_______________________________________________________________10

Jet Airways___________________________________________________________10

Air Deccan - Simplifly Deccan - Kingfisher Red______________________________11

Brand model for airlines_____________________________________________________11

Pricing_____________________________________________________________________13

Pricing Environment________________________________________________________13

Selecting the price objective__________________________________________________13

Premium Pricing:_________________________________________________________13

Value for Money Pricing:__________________________________________________13

Determining Demand________________________________________________________14

Estimating costs____________________________________________________________14

Analyzing competitor’s costs, prices and offers___________________________________14

Adapting Prices____________________________________________________________15

Price discounts and allowances______________________________________________15

Differential pricing_______________________________________________________15

Initiating and Responding to Price Changes______________________________________15

Supply chain / Inbound logistics________________________________________________16

Primary activities – Inbound logistics___________________________________________16

Marketing Communications___________________________________________________17

Advertising________________________________________________________________17

Sales Promotion____________________________________________________________18

Public Relations____________________________________________________________18

Telemarketing_____________________________________________________________18

In-flight advertising_________________________________________________________18

Costumer segmentation and their distinctive characteristics____________________________19

On the basis of usage_________________________________________________________19

Passenger_________________________________________________________________19

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Business Passengers_______________________________________________________19

Leisure Travelers_________________________________________________________19

Freight___________________________________________________________________20

Air cargo service_________________________________________________________20

On the basis of geography_____________________________________________________20

On the basis of behavior______________________________________________________20

Bargain Hunters____________________________________________________________20

Relationship Buyers_________________________________________________________20

Critical factors for success_______________________________________________________22

Steps that government should take_____________________________________________22

Steps that Industry should take________________________________________________22

Insights derived from study______________________________________________________23

Annexure # 01_________________________________________________________________24

Annexure # 02_________________________________________________________________28

Annexure # 03_________________________________________________________________29

Annexure # 04_________________________________________________________________31

Annexure # 05_________________________________________________________________34

References____________________________________________________________________35

Table of figures

COMPETITIVE ADVERTISING BETWEEN AIRLINES: GOAIR VS KINGFISHER VS JET AIRWAYS........17MONTH-WISE DOMESTIC TRAFFIC (AIRCRAFT MOVEMENTS) AT TOP 46 INDIAN AIRPORTS............25MONTH-WISE DOMESTIC TRAFFIC (FREIGHT MOVEMENTS) AT TOP 46 INDIAN AIRPORTS..............26MONTH-WISE DOMESTIC TRAFFIC (PASSENGER MOVEMENTS) AT TOP 46 INDIAN AIRPORTS..........27AIRLINES - PRODUCT LEVEL ANALYSIS...........................................................................................28AIRLINE SECTOR ADVERTISING SKEWED TOWARDS NEWS CHANNEL..............................................29TOP 5 ADVERTISERS OF AIRLINE SECTOR IN 2007...........................................................................29RISE IN AVERAGE ADEVERTISING FREQUENCY OF AIRLINE SECTOR ON TV....................................30CONSUMER CHOICE PARAMETERS...................................................................................................31FLIGHT CLASS..................................................................................................................................31OCCASION OF USE...........................................................................................................................31

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CIRCUITS FLOWN.............................................................................................................................32SCHEME PREFERENCE......................................................................................................................33CUSTOMER LOYALTY......................................................................................................................33FACTORS CONSIDERED WHILE CHOOSING INDIAN AIRLINES...........................................................34FACTORS CONSIDERED WHILE CHOOSING JETAIRWAYS.................................................................34FACTORS CONSIDERED WHILE CHOOSING SPICEJET........................................................................34

OVERVIEW & SCOPE OF THE PROJECT AND

METHODOLOGIES USEDOVERVIEW

What business does an airline industry participate in? This is a

fundamental question which needs to be answered before a marketing

analysis on the industry is presented. To a layman the airline industry

means carrying the passengers and cargo from one place to another.

However, for a marketer this perspective is Marketing Myopia. A

better way to look at the business is from the point of view of the

needs it is trying to satisfy. On this basis we can say that an airlines

business participates in the following areas:

Transportation of passengers and cargo

Communication as travel allows opportunities for face to face

meetings

Leisure as traveling becomes an important part of a holiday

Information as the cargo business is associated with movement

of information

Hence, from a business’ perspective airlines industry not just caters to

the travel needs but a lot more and accordingly the competition

becomes bigger.

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SCOPE AND METHODOLOGY

The scope of this report is to analyze various Marketing aspects of the

airline industry which would include the product, brands, pricing,

supply chain and logistics, marketing communications and

advertising, customer segmentation and their characteristics and

critical factors for success in this industry.

The report includes examples from various airlines across the world,

but to maintain specificity it retains an Indian perspective and

compares competitors across the Indian domestic carriers.

The methodology adopted in preparing this report has been as

follows:

1) Understanding of the theoretical concepts with regards to the

aspects mentioned in scope.

2) Mapping the concepts to the airline industry. For example, the

concept of product levels has been mapped to the difference in

services offered in airline industry.

3) Comparison of competitors based on the mapped concepts.

4) Preparation of diagrams/charts for the clarity of comparison

across competitors.

5) Identification of factors which make this business a success and

registering the insights gained during the study (mentioned in

the last section).

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6) The report is majorly based on secondary data which includes a

number of surveys extremely relevant to the study. The

references are duly mentioned in the ‘references’ section.

OVERVIEW OF THE INDUSTRYAirlines Industry in India is one of the fastest growing airlines

industries in the world. Post-liberalization, airlines industry in India

has undergone a rapid transformation. From being primarily a

government-owned industry, the Indian airlines industry is now

dominated by privately owned airlines and low cost carriers.

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In 1990 government adopted open-sky policy. Indian Airlines, which

had dominated the Indian air travel industry, began to lose market

share to Jet Airways and Sahara. Today, Indian airlines industry is

dominated by private airlines and these include low cost carriers such

as Deccan Airlines (now a part of Kingfisher), GoAir, SpiceJet, etc,

which have made air, travel affordable. The following chart shows the

market share of various airlines:

Source: www.domain-b.com

A detailed analysis of the present Air traffic scenario is presented in

the Annexure #01 attached. Airline industry in India is plagued with

several problems like high airlines turbine fuel (ATF) prices, rising

labor costs and shortage of skilled labor, rapid fleet expansion, and

intense price competition among the players. But one of the major

challenges facing Indian airlines industry is infrastructure constraint.

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COMPETITIVE ANALYSISPRODUCT LEVEL ANALYSIS

The product offered by airlines is essentially a service, although it can

be supplemented by a number of physical products too. The services

offered are:

In-flight services

On ground services

The services provided inside the flight include the core service of

travel, crew, ambience and comfort, in-flight entertainment etc. This

is highly variable across competitors as per brand and different

classes of travel.

The on-the-ground services include a convenient airport with car

parking facilities, waiting lounges, duty free' shopping quick and

efficient checking of baggage, efficient service at reservation counter,

transport to the airplane, etc. Although the physical infrastructure

part of the on ground services are usually maintained by the airports

authority but airlines like Kingfisher have gone a step ahead to make

separate lounges for their customers to make them feel special.

CORE PRODUCT AND SUPPLEMENTARY SERVICES

CORE PRODUCT

The core product of the airlines industry is the service of transporting

passengers and goods to different destinations. This is supplemented by

various other services mentioned ahead.

SUPPLEMENTARY SERVICES

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Information

Upto date information regarding flight schedules, ticket fares, promotion

schemes, new policies and systems, etc are available to customers.

Consultation

Airlines are suggesting and designing products like packaged tours to the

customer.

Also, providing the customer with various options regarding the route of

flight, in-flight cuisine & benefits asks them to play a role of consultant.

Order taking

The order taking procedure is essentially the booking procedure of the

airlines. The important aspect to be noted here is that the procedure

should be smooth, easily understood and fast. Also provision of instantly

updated information about availability of seats and fares is required.

Hospitality & Caretaking

With the increased competition today hospitality has emerged as a

key-differentiating factor. It is tested right from the time of booking

till the post flight help extended. It also includes safeguarding the

baggage.

Billing & payment

Billing options available to the customer are plenty including credit

card & travelers cheque. Airlines use the open account system with

their corporate clients. Frequent fliers are also given special

payment privileges.

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PRODUCT LEVELS

Various product levels at which the airlines compete are:

THE CORE BENEFIT

It is the benefit which the customer is actually buying. In our case it is

the service of traveling or transportation of goods.

THE BASIC PRODUCT

At this level the core benefit is converted into a basic service package.

This includes from buying the ticket to reaching the destination. The

low cost airlines like Indigo, GoAir, Spicejet offer the product at this

level and compete on the basis of price.

THE EXPECTED PRODUCT

This includes a set of services and products that the consumer

normally expects to receive along with the core benefit. For example:

In flight snacks, comfortable seats, on time departure and arrival etc.

The low cost model of airlines labels these addition services as ‘frills’

and tries either to eliminate or charge separately for these.

THE AUGMENTED PRODUCT

An augmented product exceeds customer’s expectations. For example:

Serving hot food, warm and friendly crew, provision of in flight

entertainment etc. Jet Airways, Kingfisher Class, Air India IC compete

in this segment.

THE POTENTIAL PRODUCT

At this level all possible augmentations are offered and the companies

try to encompass new and innovative ways to satisfy customers.

Where Emirates airline offers onboard shower spas for the first class

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customers, Thai Airways offers a limousine service at the airport and

Virgin Atlantic offers an onboard massage.

As the level moves from the core benefit to the potential product, the

competition moves from price to service and experience of the

customer. Various competitors operating at different product level in

India are shown in the diagram in Annexure # 02.

BRAND RELATED ASPECTS

BRAND POSITIONING

In a highly competitive scenario it is imperative for any airline to build

its brand and have a focused marketing strategy.

POSITIONING OF A FEW AIRLINE BRANDS OPERATING IN INDIA

Kingfisher Airlines - Full Frills - True Value Carrier

The Brand Kingfisher has been made synonymous with `Good

Times’ in India. Coherent and clear positioning has also enabled

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Kingfisher Airlines to differentiate itself in a market. Kingfisher has

implemented this positioning by making service and hospitality

their main focus.

Spicejet - McDonalds of the skies

SpiceJet seeks to position itself as an innovative, modern, safe and

customer friendly airline. The airline's philosophy is to make air

travel accessible to a growing market of time and cost conscious

consumers yet at the same time open newer markets.

Jet Airways

Jet Airways is positioned as a global airline with the highest

international standards but with a touch of India. They have

retained many of the familiar elements of our corporate identity,

but have contemporized them to make the brand more relevant to

global markets.

Air Deccan - Simplifly Deccan - Kingfisher Red

Air Deccan had substantial brand equity among the consumers and

had became synonymous with low-cost travel in India. The

rebranding followed an exhaustive market study which showed that

although the brand was closely associated with pioneering the low-

cost airline business, it was perceived as a carrier that was

consistently late and suffered serious service issues.

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The brand’s makeover by Kingfisher to first Simplify Deccan and

then to Kingfisher Red has also brought a change in its positioning.

It is now being positioned between a full service and low cost

carrier.

BRAND MODEL FOR AIRLINES

Branding of airline industry has to be based on delivering on its

promises, long term customer engagement and continuous innovation

in its services. For the airlines to build a brand image consistent with

these, the following brand model proposed:

1) Brand Expectation - Making an authentic promise

This promise is a reflection of the brand’s identity and its

differentiation from other brands. Kingfisher airlines for

example clearly promise its guests an unparalleled experience

in the skies. Air deccan (when it existed) promised the lowest

fares.

2) Brand Experience - Keeping the word

The promise has to be kept as literally as possible. For example

Virgin Airlines in the US promises to “reinvent air travel” and

does a great job in not just meeting them but exceeding them

too.

3) Brand Expression - Engaging the customer

It refers to extending the engagement with the customer beyond

the flight hours. The engagement should ensure constant touch

with them. For example: few airlines give away their

headphones and in-flight magazines to passengers, which they

subsequently share with more people. Low cost carriers lose out

on this opportunity to invest in engagement with the customer.

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4) Brand Externalities - Dealing with industry uncertainty

The externalities could be as small as a flight being delayed to a

pilot union strike or a government regulation to a plane crash.

Nonetheless, all need to be handled effectively to maintain the

brand image. For example: Airlines like Jet Airways and

Singapore Airlines have been upgrading to newer, more fuel

efficient planes in good times to hedge fuel costs to counter the

rising oil prices.

5) Brand Extensibility - Staying consistent over time

Delivering an experience requires meticulous planning and

persistence. An opinion blog about Kingfisher Airlines said “The

amazing observation on Kingfisher is that all the employees

(cabin crew, ground staff and others) project a consistent and

common kingfisher brand image and lifestyle which is 'live king

style and fly good times'. This is proved by very pleasant

approach and attitude of its employees towards all customers.

Consumer satisfaction Index about a particular airline as perceived

by consumers is given below :

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PRICING

Pricing is the value perceived by the customer. Pricing decisions

cannot be made in isolation of product. Product and pricing decisions

are made together. Deregulation in airline pricing has given the

companies an edge to charge fares.

PRICING ENVIRONMENT

With the advent of sophisticated systems for managing the sale of

seats it is easier to develop sound pricing policies. Seats are sold on

first-come first-serve basis, so passengers get cheaper fares by

booking earlier. Airlines adjust prices as per demand and there is no

difference in conditions.

SELECTING THE PRICE OBJECTIVE

When Airlines put in capacity (seats) and frequency (flights) between

any two points, they market research the route in order to arrive at

the total potential for that segment. Size of the market is determined

to decide the price. Pricing or fare levels are arrived at after taking

into consideration various factors like type of aircraft, configuration of

aircraft (number of seats), density of route, competitor activity and

minimum breakeven cost.

PREMIUM PRICING:

The airlines may set prices above the market price benefited by its

‘brand-image’ to reflect the quality of their service. Example: Jet

Airways, Kingfisher, Indian Airlines, etc charge a premium price for

providing frills and extra comfort to the customer. They provide

options like first class, executive and economy. A trip from Mumbai to

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New Delhi will cost anywhere between Rs 6000 to Rs 23000

depending on the class and time of flight.

VALUE FOR MONEY PRICING:

Low Cost Airlines like Air Deccan, Spicejet, Indigo, Goair, etc go for

value for money to charge lower by operating cost cuts. Low cost

carrier model go for dynamic pricing strategy. They follow low and

simple fare structure .They point-to-point links between primary and

secondary airports with high frequency. The airlines provide basic

services and just one class. 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 by volume. Prices

are as low as Rs 4000 which includes mostly the tax component.

DETERMINING DEMAND

This industry is highly price sensitive. With the development of

Global Distribution Systems the customer can assess all the tariffs;

they shop on internet where it is easy to compare ticket price, flight

time and number of stops in route. In case of recessionary periods

when supply exceeds demand, airlines find it difficult to fill seats and

pricing becomes extremely important to gather market share. For

example, for a flight leaving to a business destination on a Monday

morning, very few seats will be sold at low prices. Almost all the

tickets will be sold at high fares and bookings sold at relatively

shorter time.

ESTIMATING COSTS

The aviation turbine fuel (ATF) and staff( flight, ground, reservation

and ticketing staff) form the major part of the operating cost. Other

part includes navigation, landing and parking costs, repair and

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maintenance. Apart from operating costs there is insurance, Inland

Aviation travel Tax(IATT) and Passenger Service Fee (PSF).

ANALYZING COMPETITOR’S COSTS, PRICES AND OFFERS

LCC reduces their prices by having high seat density, reducing costs

by providing no frill. They also go for uniform aircrafts to share parts;

they go for high airtime and generate revenue through alternate

resources. Full Service Providers charge extra premium for extra

services like in-flight cuisines, magazines, entertainment, the

flexibility and comfort provided to the customers.

ADAPTING PRICES

PRICE DISCOUNTS AND ALLOWANCES

Price discounts need to be carefully done otherwise it may result in

diluting the revenue of airlines and affecting their brand-image.

Discounts are given on off-peak flights which might go empty if not

filled. Discounts can also be given by provided fewer services to the

customer.

DIFFERENTIAL PRICING

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.

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Though all the passengers get the same tangible product features but

the intangible features like flexibility is different. This justifies

differential pricing.

INITIATING AND RESPONDING TO PRICE CHANGES

Airlines went for a price cut with the entry of Air Deccan in 2003. It

was done to retain their market share. In a price sensitive market like

airlines increasing the price might lead to considerable drop in

market share so any major price increases are done in coordination

with competitor airlines. Price increase leads to higher profits.

SUPPLY CHAIN / INBOUND LOGISTICS

PRIMARY ACTIVITIES – INBOUND LOGISTICS

Aircraft acquisition

o Airlines must negotiate deals with aircraft manufacturers to

acquire planes.

Route selection

o Flight routes are selected as per desire, and deals negotiated

with the airports. Airports are selected for their prime location

to allow consumers to get to their desired location. This entails

the scheduling of flights and crew.

Passenger services system

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o Software which allows the airlines to function "comprehensive

passenger reservations, inventory control, fares, ticketing, and

departure control functions". This allows airlines to reduce

their costs of wages, paper transactions and maximize

utilization.

Stock control

o Airlines must store and handle fuel, food, and drinks. Stock is

managed to ensure reductions in stock turnover, thus reducing

costs and wastage.

Crew scheduling

o Crew scheduling problems at the planning level are typically

solved in two steps: first by creating working patterns, and then

assigning these to individual crew and second by a set-

partitioning model.

MARKETING COMMUNICATIONS

The users of air services typically include business executives, cine

artists, politicians and domestic and international tourists. Hence,

creativity becomes an important criterion. With the looming

worldwide financial crisis, airlines are facing financial crunch and it

has become imperative to use different components of marketing

communication optimally:

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ADVERTISING

Advertising should be done keeping in my mind the quality and nature

of the target audience as well as level of expectations. Advertisement

slogans, message and campaigns need to be proactive. Air India has

been facing the image problem but advertising may be efficacious in

transmitting the facts and removing the image problem.

COMPETITIVE ADVERTISING BETWEEN AIRLINES: GOAIR VS KINGFISHER VS JET AIRWAYS

** Annexure # 03 provides in-depth analysis of data of various airlines

in India who advertised through television.

SALES PROMOTION

Many domestic low cost carriers (LCC) like Indigo, Go-Air mainly

advertise the low base ticket prices and promote advance bookings to

avoid poor occupancy. Also to improve the brand recall, promotional

incentives are given out e.g. Indigo has a crazy assortment of gifts

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being handed out which includes LCD TVs, Refrigerators, laptops,

mobile handsets, etc.

PUBLIC RELATIONS

Strengthening public relations activities is essential to promote the

business airlines or airways. The Public Relations Officer,

Receptionists, Travel Agents, Travel Guides, Media people are some of

the important people who publicize the business. But, the most crucial

point in this is the co-operation of media as it directly affects the

brand image manifold.

TELEMARKETING

Booking counters, enquiries, reception counters, users’ complaints

cell, announcers are found playing an incremental role in promoting

the air business because most of the travelers make an impression

about the airlines depending upon the tele-support that they get while

using the airlines service.

IN-FLIGHT ADVERTISING

This concept which is originated overseas has recently been identified

as an effective promotion medium in which audience is hundred

percent captive. This is achieved through airing advertisements

during entertainment programs on television sets installed on the

aircraft. Other than advertising via television screens, advertisers hop

on board and communicate through latest ad films inside and outside

the aircraft. Kingfisher Red, formerly Air Deccan had partnered with

Cutting Age Media to effectively communicate through this non-

traditional niche media.

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COSTUMER SEGMENTATION AND THEIR DISTINCTIVE

CHARACTERISTICS

ON THE BASIS OF USAGE

PASSENGER

BUSINESS PASSENGERS

They are very important for the profitability of the airline. They are

willing to pay a premium price. Business passengers believe that it is

worth extra money if they can save time and arrive looking fresh for

an important meeting. A flexible reservation services is very critical to

them as most of their tickets are not booked in advance and also have

a chance of cancellation. The best way to reach Business passengers

is through Business media such as The Economic Times or CNBC.

Also since they are frequent fliers they would certainly look for certain

extra facilities.

LEISURE TRAVELERS

They are a totally different market and the most important

consideration for them is price. They won’t pay premium prices and

would agree to change several planes during their trip. Despite

providing low margins they are very crucial for every airline. Since

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business customers are small in size and therefore to fill the flight

Economy passengers are essential.

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 travelers for each flight in advance, based on sophisticated

statistical models.

FREIGHT

AIR CARGO SERVICE

With exports and imports increasing this has become a major source

of revenues for airlines. In the domestic segment with the need for an

increase in the turnaround time airline has been used as a source of

carrier.

Most airlines therefore need to target both these segments.

ON THE BASIS OF GEOGRAPHY

Major travelers in India are located in some of the major cities and a

small customer base in other cities. Therefore Flight schedules should

be made such that the needs of these smaller cities could also be

catered. Example flights can be made on routes such as Delhi-

Bagdogra- Kolkata. This not only enhances the seat utilization but also

generates extra revenues.

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ON THE BASIS OF BEHAVIOR

BARGAIN HUNTERS

They are the ones who are the most sensitive to price. They have nil

loyalty and would travel by any carrier. They are the least profitable

consumer segment in the market. Therefore a company should not

spend amount on bargain buyers. Rather they would be automatically

attracted if you have the most competitive prices in the market.

RELATIONSHIP BUYERS

They are the ones who look for long term relationship with the airline.

They are one of the most profitable segment as they are relationship

builders and not much likely to jump from one airline to another. But

for retaining them a certain level of expected and augmented service

should be provided to them. They don’t mind paying a premium.

Therefore on the basis of segmentation the above desirability of

services should be offered.

Further insights can be derived from Annexure # 04.

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CRITICAL FACTORS FOR SUCCESS

STEPS THAT GOVERNMENT SHOULD TAKE

Implement codesharing i.e. selling seats on a flight operated by

another carrier. This saves direct costs and increase market

presence

Allow foreign carriers cabotage rights( carriage for passengers

and freight simulateneously) to increase competition

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Eliminate regulatory structure completely to boost new entrants

and allow more profit for existing

Eliminate the fuel tax

Eliminate category III restrictions i.e. operator needs to deploy

on less popular routes as well

Improve quality of and access to airports and hangars

STEPS THAT INDUSTRY SHOULD TAKE

Reduce labour costs

Simplify flight operations

Offer more transparent pricing

Get smart on fuel

Stop chasing market share

INSIGHTS DERIVED FROM STUDY

Following are the insights that we derived from this project:-

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The Airlines industry is cyclical in nature due to uncertainties

which are beyond its control. Due to this the brands have to be

built in such a manner that they survive the lean periods on

their strength of being able to differentiate themselves with

others. This must be done by being clear as to what one’s brand

represents and sticking to its core values and not by raging a

price war all the time.

Through the study we have found out that the Low cost Airlines

have positioned themselves in competition to railways by

making travel affordable. They are compared to railways and

road transports on the pricing front. But the reality is that it's

not possible for them to compete with railways on price front.

Rather they should try to highlight features such as lesser travel

time and better in-flight facilities.

Price discounts need to be carefully done to attract customers

and simultaneously ensure that it does not affect the brand

image or result in considerable reduction in revenue.

In-flight advertising is an effective promotion medium as the

audience is hundred percent captive. They can help airlines

promote the brand image, promote new schemes, improve the

brand recall and generate extra revenue if done without the

passengers perceiving it as a forceful.

Pricing is the most sensitive issue in airline industry and is done

depending on the demand of the market. Switching is more

frequent in case of low fare airlines whereas business segments

are more brands loyal.

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From the market research we could infer that while deciding

among low cost airlines fare acts as the deciding factor while in

case of choosing among full service providers the determine

factors are flight schedule, reliability, quality and connections

with not much emphasis on fare.

Annexure # 05 illustrates the same fact.

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ANNEXURE # 01

MONTH-WISE DOMESTIC TRAFFIC (AIRCRAFT MOVEMENTS) AT TOP 46 INDIAN AIRPORTS

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MONTH-WISE DOMESTIC TRAFFIC (FREIGHT MOVEMENTS) AT TOP 46 INDIAN AIRPORTS

30

MONTH-WISE DOMESTIC TRAFFIC (PASSENGER MOVEMENTS) AT TOP 46 INDIAN AIRPORTS

31

32

ANNEXURE # 02

AIRLINES - PRODUCT LEVEL ANALYSIS

ANNEXURE # 03

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AIRLINE SECTOR ADVERTISING SKEWED TOWARDS NEWS CHANNEL

TOP 5 ADVERTISERS OF AIRLINE SECTOR IN 2007Top five Domestic Airline advertisers together contributed 98 per cent

share of overall Domestic Airline advertising on TV during 2007.

(Merger of Deccan Aviation and Kingfisher Airlines took place in Dec

07. Hence, the two entities are separate above)

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RISE IN AVERAGE ADEVERTISING FREQUENCY OF AIRLINE SECTOR ON TV

Average advertising frequency of International Airlines aired per day

on TV increased by 2 per cent and that of Domestic Airlines saw a rise

of 11 per cent during 2006 over 2007.

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ANNEXURE # 04

CONSUMER CHOICE PARAMETERS

The following chart provides us with information which are decisive in

making the choice of the Airline.

FLIGHT CLASS

The flight class graph indicates that the proportion traveled by

business class is very small in comparison to that traveled by economy

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class. This indicates that most business travelers are flying Economy

class as well.

OCCASION OF USE

The most important occasion of use is business followed by

emergency situations.

CIRCUITS FLOWN

The most frequently flown circuit is that between major metros,

followed by other state capitals and Delhi-Mumbai. Delhi and Mumbai

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airports accounts for roughly half of passengers flown, and metro

airports account for 66% of the passengers flown.

SCHEME PREFERENCE

With the entry of new players in the market, airlines are competing

for passengers on non-price parameters. This increases the product

differentiation in order to decrease elasticity of demand in the market.

Given the key differentiators that substitute for price, consumers have

rated Apex fares as their most preferred scheme. Indian Airlines, Jet

and Air Sahara offer apex fares. Next most preferred to Apex fares is

the frequent flyer program, a trend noticed predictably in the high

frequency repeat users and those traveling on business.

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CUSTOMER LOYALTY

The following graph shows the loyalty of the customer towards a

particular brand. This helps us in identifying the Bargain Hunters and

the Relationship Buyers.

ANNEXURE # 05

FACTORS CONSIDERED WHILE CHOOSING INDIAN AIRLINES

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FACTORS CONSIDERED WHILE CHOOSING JETAIRWAYS

FACTORS CONSIDERED WHILE CHOOSING SPICEJET

REFERENCES

        The Civil Aviation Act, 2000 (Draft)

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        AVIATION Week & Space Technology

        Low-fare Airlines, (2004, July 8) - www.economist.com.

        Crisis at 50, Business World, Sept. 15, 2004

        Businessline, Sept. 15, 2004

        The Sky’s The Limit, Indian Express

        Oil Prices drown out Airlines profit, Star Tribune, Sept. 1, 2004

        A Feel for Airline Security. Time Canada, Sept. 13, 2004

        To Cope With Travel Slump, Airlines Turn to Smaller Jets. (cover

story) Wall Street Journal - Eastern Edition, Sept. 2004

        Wikipedia, the free content encyclopedia

        India Transportation Infrastructure Blueprint

        Discounted IA fares to take on no-frills Deccan Times of India

http://www.foolonahill.com/mbaaviation.html#_Toc83227621

http://books.google.co.in/books?

id=cVu4E4eB5lAC&dq=airline+marketing+and+management&pri

ntsec=frontcover&source=bl&ots=4vMNQ6lUGu&sig=UdUBqpKp

dwctx53BT8u0GCY9EYU&hl=en&sa=X&oi=book_result&resnum=

3&ct=result

Reference: http://www.iloveindia.com/economy-of-india/aviation-

industry.html

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