Fare Analysis of Air India

PROJECT REPORT

ON

FARE ANALYSIS OF AIR INDIA

SUBMITTED BY

MANISH YADAV

R120108025

In partial fulfilment for the award of the degree

Of

MBA

IN

AVIATION MANAGEMENT

UNIVERSITY OF PETROLEUM AND ENERGY STUDIES,

GURGAON

1

AIRINDIA FARE ANALYSIS U.P.E.S

BONAFIDE CERTIFICATE

This is to certify that Mr. Manish Yadav, a student of University Of Petroleum & Energy

Studies, pursuing MBA (Aviation Management), has successfully completed summer training

at Air India during June-July, 2009 as part of his curriculum, the project report entitled, ‘Fare

Analysis Of AIR INDIA’, submitted by the student to the undersigned is an authentic record

of his original work, which he/she has carried out under my supervision and guidance.

I wish him all the best.

Date………………

Rajeev k. Chaudhary

A.M (Passenger Sales)

NACIL-AIRINDIA

Jeeven Bharti Building

Cannought Place

New Delhi

2


CERTIFICATE OF APPROVAL

The following Summer Internship Report titled " Fare Analysis Of Air India“ is hereby

approved as a certified study in management carried out and presented in a manner

satisfactory to warrant its acceptance as a prerequisite for the award of Post-Graduate

Degree in Management for which it has been submitted. It is understood that by this

approval the undersigned do not necessarily endorse or approve any statement made, opinion

expressed or conclusion drawn therein but approve the Summer Internship Report only for the

purpose it is submitted.

Summer Internship Report Examination Committee for evaluation of Summer Internship

Report

Organizational Guide : Signature…………………………………….

: Name …………………………………………

: Designation…………………………………….

: Address………………………………………..

……………………………………………………

……………………………………………………

……………………………………………………

Tel No……………………………………………

Email:

ACKNOWLEDGEMENT

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I am thankful to Air India for giving me the opportunity to work on a real time project (Study

of Fares, Pricing and Promotional schemes) which helped me getting meaningful insights

about the sales arena.

I am grateful to Mr.Rajeev Chaudhary, Passenger Sales Manager, Northern Region, and Air

India for providing me an opportunity to work on this project and providing me with valuable

inputs through the phase of the project. And express my sincere gratitude for his constant

guidance and motivation without which this project would not have been completed.

I would also like to thank Wg.Cdr.P.K.Gupta for providing deep insights in this arena and for

constantly guiding throughout the project.

My project at Air India was a great learning experience and for that I shall always be indebted

to Air India.

Manish Yadav

University of Petroleum & Energy Studies

EXECUTIVE SUMMARY

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Indian aviation industry has gone through many phases. First being a monopoly of Air India,

then having private players with the liberalization of the economy, then seeing the rise of

Low Cost Carriers and then mergers and acquisitions among airlines to grab market share.

The compound annual growth rate of the industry volume in the period 2003-2007 was

27.4%.

Kingfisher has the largest market share of the industry with 26%. The low cost carriers have

increased their capacity as they are doing very well in the market having very high seat

factor. Air India has improved its performance in the last year on Ex-Delhi routes. It has been

clocking a positive Market Performance Index (MPI) when its competitor Full Service

Carriers has a negative MPI. Air India also has the largest fleet size with the maximum

variety of aircrafts in its fleet. Air India also has the maximum sectors covered through Delhi

but Jet Airways has the maximum daily flights operating in the country.

The Full Service Carriers are promotional schemes which offer discount and special

privileges in order to acquire and retain price sensitive customers. They also have Frequent

Flier Programmes which are loyalty programmes. The players combine with other airline and

non airline partners in order retain customers by providing special privileges. Airlines are also

offering Holiday Packages to exotic destinations in the country and abroad.

The airlines price their tickets in order to get the maximum revenue from their flights as their

product is very perishable. Different classes of seats are made available and each has their

own restrictions of bookings. Jet Airways and Kingfisher use automated systems in order to

price their seats and make seats available to the customer whereas Air India has a manual

system to open their seats for booking. There is generally high correlation between fares of

LCCs but there was no correlation between fares offered by Air India and other FSCs. There

was no significant difference between fares of weekends and weekdays.

TABLE OF CONTENTS

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Acknowledgement………………………………………………………………….………04

Executive Summary………………………………………………………………………...05

1. INTRDUCTION

A. Airlines industry ..................................................................................................07

B. Research objectives ……………………………………………………………..09

C. Terms and definitions ……………………………………………………..........09

D. Abbreviations ……………………………………………………………...........10

2. LITERATURE REVIEW

A. Market structure- differentiated oligopoly............................................................11

B. Factors affecting consumer perception..................................................................12

C. Pricing in airlines....................................................................................................12

D. Frequent flier programs.........................................................................................13

3. ORGANISATION

A. History of AIR INDIA……………......................................................................15

B. Global Network......................................................................................................18

4. COMPETITIVE ANALYSIS

4.1 Major players in aviation industry.........................................................................23

4.2 Comparison of Players...........................................................................................28

4.3 Connectivity...........................................................................................................31

5. DATABASE AND ANALYSIS.........................................................................................33

6. INTERPETATION OF FARE TREND..............................................................................60

7. NEW DESTINATION (DOMESTIC).................................................................................61

8. SWOT ANALYSIS OF AIR INDIA..................................................................................65

9. FUTURE PLANNING & PROMOTIONAL SCHEMES..................................................67

10. RECOMMENDATIONS & SUGGESTIONS..................................................................68

11. REFERENCES..................................................................................................................69

12. APPENDICES....................................................................................................................70

CHAPTER 1: INTRODUCTION

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A. AIRLINES INDUSTRY

The first commercial flight in India was made on February 18, 1911, when a French pilot

Monseigneur Piguet flew airmails from Allahabad to Naini, covering a distance of about 10

km in as many minutes.

Tata Services became Tata Airlines and then Air-India and spread its wings as Air-India

International. For many years in India air travel was perceived to be an elitist activity. This

view arose from the “Maharajah” syndrome where, due to the prohibitive cost of air travel,

the only people who could afford it were the rich and powerful.

Until less than a decade ago, all aspects of aviation were firmly controlled by the

Government. In the early fifties, all airlines operating in the country were merged into either

Indian Airlines or Air India and, by virtue of the Air Corporations Act, 1953; this monopoly

was perpetuated for the next forty years. The Directorate General of Civil Aviation controlled

every aspect of flying including granting flying licenses, pilots, certifying aircrafts for flight

and issuing all rules and procedures governing Indian airports and airspace. With the opening

up of the Indian economy in the early Nineties, aviation saw some important changes. Most

importantly, the Air Corporation Act was repealed to end the monopoly of the public sector

and private airlines were reintroduced.

Consolidation of the market

The Indian airline market has seen a consolidation in last 12 months through a Deccan-

Kingfisher merger in December 2007, the state-run Air India and Indian combine and the Jet

buyout of loss-making Air Sahara, which means new entrants, will be confronted with larger

incumbents. Entering the market as a new company requires considerable capital (for

example, to acquire a fleet of planes); and, even for an existing company to begin operating

in India, the market may impose significant costs in terms of overheads, wages, and so on.

Market analysis

The Indian airline industry generated total revenues of $8.3 billion in 2007, representing a

compound annual growth rate (CAGR) of 29.6% for the period spanning 2003-2007.

Industry volumes increased with a CAGR of 27.4% between 2003-2007, to reach a total of

7


47.2 million passengers in 2007.

Domestic flights dominated the Indian airline industry and accounted for 43.5 million

passengers in 2007, equivalent to 92.3% of the industry's overall volume. The performance of

the industry is forecast to decelerate, with an anticipated CAGR of 17.1% for the five-year

period 2007-2012, which is expected to drive the industry to a value of $18.3 billion by the

end of 2012.

Table 1.1: Indian airlines industry in $ billion 2003-07

Year $ billion INR billion % growth

2003 3 122.2

2004 3.6 150.4 23

2005 4.6 189.5 26

2006 6.6 272 43.6

2007 8.3 344 26.7

CAGR 2003-07 29.6

Source: Data monitor

Market volume

The Indian airlines industry grew by 17.6% in 2007 to reach a volume of 47.2 million

passengers. The compound annual growth rate of the industry volume in the period 2003-

2007 was 27.4%.

Table 1.2: Indian Airlines Industry Volume: Passenger Million, 2003-07

Year Passenger (Million) % growth

2003 17.9

2004 22 23

2005 28.4 28.6

2006 40.1 41.4

2007 47.2 17.6

SOURCE: DATA MONITOR

Passenger Traffic from March 08 to Mach 09

However 2008-09 was not a good year for the aviation industry with the growth in passenger

8


traffic taking hit and witnessing a sharp decline. The traffic which had grown above 4 million

by May 08 is now reduced to below 3.5 million in Mar 09. The total passenger traffic for Jan-

Mar 09 was 9.82 million which fell from 11.9 million in Jan-Mar 08.

Table 1.3: Passenger Traffic from March 08 to March 09

Source: Indiastat.com

B. RESEARCH OBJECTIVE:

The ultimate objective of the project is to find out the trend of fares in last

two years of air India at international routes and comparison of AIR INDIA

with domestic players in terms of market performance, capacity share and

fares.

C. TERMS AND DEFINITIONS

Aircraft: Any machine that can derive support in the atmosphere from the reactions of

the air other than the reactions of the air against the earth's surface;

Aircraft departures: The number of take-offs of aircraft. For statistical uses, departures

are equal to the number of landings made or flight stages flown;

Aircraft - type of: All aircraft of the same basic design including all modifications

thereto except those modifications, which result in a change in handling or flight

characteristics;

Commercial air carrier: A carrier performing scheduled or non-scheduled air transport

services or both, available to the public for the carriage of passengers, mail or cargo

Domestic Flight: A flight having exclusively domestic stages, See domestic flight stage;

Domestic Scheduled airline: An airline, which operates any scheduled service within

the boundaries of the State where the airline is registered but which does not operate,

9


scheduled international services;

International airport: Any airport designated by the Government of India an airport of

entry and departure for foreign airline for embarkation and disembarkation of scheduled

international air traffic, where the formalities incident to customs, immigration, public

health, agricultural quarantine and similar procedures are carried out;

Traffic: For air transport purposes, traffic means the carriage of passengers, freight and

mail.

Low cost carrier: An airline that offers generally low fares in exchange for eliminating

many traditional passenger services.

Full legacy carrier: An airline revolving around a hub & spoke network and a corporate

structure including First Class/Business Class, Lounges, Frequent Flyer Programs,

Alliances, Frills/Perks throughout the cabin (food, beverage, and better service).

D. ABBREVIATIONS

FFP- Frequent Flier Programme

FSC- Full Service Carrier

LCC- Low Cost Carrier

LTC- Leave Travel Concession

NACIL- National Aviation Company of India Ltd.

MPI- Market Performance Index

PAX- Passengers

S.F. - Seat Factor

CHAPTER 2: LITERATURE REVIEW

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http://en.wikipedia.org/wiki/Spoke-hub_distribution_paradigm

http://en.wikipedia.org/wiki/Airline


A. MARKET STRUCTURE- DIFFERENTIATED OLIGOPOLY

Westermann, (2005) describes the aviation industry, especially with regard to passenger

airlines, follows a strictly oligopoly-type structure with the characteristics. (1) An industry

dominated by a small number of large firms (see market shares, below)

(2) Firms sell either identical or differentiated products (the only differentiation here being in

service quality and frills offered), and

(3) The industry has significant barriers to entry (which holds true both with respect to

regulations and huge capital investment required).

One sees the following characteristics with respect to the passenger airlines market –

Few number of firms contributing to majority of the market share

Products are differentiated in terms of service quality and offerings

MR=MC

p>MC

Entry Barriers

Firm is a price-setter

Long run profit >= 0

Strategy dependent on individual rival firm’s behaviour

In a differentiated oligopoly, a few firms produce products different enough for each firm to

have its own downward sloping demand curve. As with a perfectly competitive firm or a

monopoly, the differentiated oligopoly firm produces at a profit maximizing level of output

where marginal cost equals marginal revenue. The firm finds the price it will charge

customers at the profit maximizing level of output (Qm) from the demand curve, and sets

price to Pm. As we can see, the firm is earning economic profits since price exceeds average

total cost at the profit maximizing level of output.

Figure 2.1: Oligopoly structure

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B. FACTORS AFFECTING CONSUMER PERCEPTION

The following factors have been identified that make the demand function of consumers.

a) Price

b) Service

c) Promotional Schemes

d) Loyalty programmes

e) Flight Schedules

f) Comfort with the brand

g) Corporate tie-ups

C. PRICING IN AIRLINES

(Malighetti, P., et al, 2000) studied the pricing strategies of Rainier’s European flights to

reach the following conclusions:

The price tends to resemble a hyperbola as the date of departure nears

A positive correlation between fares and route length, route frequency and the

percentage of fully booked flights was found

Length and route frequency have a negative correlation to the dynamic pricing

intensity

Fewer discounts were observed on long haul and high frequency routes

Presence of competitors was not found as the major factor impacting the average

price. But the presence of competition increases the intensity of dynamic pricing

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which implies higher discounts.

E. FREQUENT FLIER PROGRAMS

(Kim et.al, 2004) studied the adoption and design of reward programs in context of capacity

management. The research says that firms with perishable excess capacity have a strong

incentive to set a low price to sell more of its capacity. But the competitors also lower their

price with a fear of being unsold. This leads to price competitions in periods of low demand.

The paper says that reward programs are means to achieve lower available capacity in

periods of low demand by giving out capacity in form of rewards. Reward program provides

flexibility to the firms for adjusting capacity as per market demand and avoid price

competition. The flexibility allows firms to set higher initial capacity.

Frequent flier program (FFP) is the most widely used reward program in the airlines industry

across the globe. FFP is essentially a customer loyalty program using reward points. (Malloy,

1998) describes the objective of customer loyalty program as rewarding of repurchasing by

encouraging customers to repurchase to meet targets levels at which attractive rewards are

offered. The “Sweetheart Stamps” promotion run by Southwest airlines in the 1970s, allowed

business travelers to accumulate benefits with which they could take their spouse on a free

ticket and can be considered as an FFP. But the first formal FFP was launched in 1981 by

American Airlines. The program known as Advantage offered first class upgrades from

economy on 12000 miles and 20 percent off on roundtrip ticket for 20000 miles. The other

airlines soon launched their own FFP and as on today more than 70 airlines have an FFP

program of their own with a complex web of airline alliances and partnership.

FFP programs are structured into various tiers which segment members based on their

frequency of flying. Higher the tier more is the benefits which are offered to the member.

FFP also has air miles or points which is the currency which is used to redeem benefits. The

air miles are not only earned by flying but also by various other sources making purchases

through credit cards, or shopping at a chain.

CHAPTER-3

ORGANISATION

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3.01 INTRODUCTION: AIRINDIA

Air India is the national carrier of India. Air India (formerly Air-India) is the national flag

carrier of India with a worldwide network of passenger and cargo services. It is one of the

two state-owned airlines in the country, the other being Indian (formerly Indian air Airlines.

The merger of Air India and Indian (formerly Indian airline) is in process. Its main bases are

Chhatrapati Shivaji International Airport, Mumbai and Indira Gandhi International Airport,

New Delhi with hubs at Chennai International Airport. The airline connects 95 destinations

around the world, including 12 gateways in India with Air India Express, which is a fully

owned subsidiary of Air India. The IATA and ICAO code of Air India is AI and AIC

respectively. Other details are given below in table 1:

AIR INDIA

IATA AIICAO AICCall Sign AIRINDIAFounded 1932

HubsChhatrapati Shivaji International Airport, MumbaiIndira Gandhi International Airport, New DelhiChennai International Airport, Chennai

Frequent Flyer Program

Flying Return

Member Lounge

Maharajah Lounges

Fleet Size 56 (+61 orders)Destinations 95Parent Company

Air India

Company Slogan

"Your Place In Sky"

Headquarters Mumbai, IndiaKey Person Mr. Arvind Jhadav ( Chairman)Website: http://www.airindia.in

Table 1: Important Information about Air India

14

http://www.airindia.in/


Air India Mascot ‘Maharajah’

3.02 HISTORY OF AIR INDIA

Air India was founded as Tata Airlines in 1932, a division of Tata Sons Ltd. (now Tata

Group) by J. R. D. Tata.

On 29 July 1946 Following the end of World War II, regular commercial service was restored

in India and Tata Airlines became a public limited company under the name Air India.

In 1948 49% of the airline was acquired by the Government of India, with an option to

purchase an additional 2%. In return, the airline was granted status to operate international

services from India as the designated flag carrier under the name Air India International.

On 1 August 1953, the Government of India exercised its option to purchase a majority stake

in the carrier and Air India International Limited was born as one of the fruits of the Air

Corporations Act that nationalized the air transportation industry...

In 1954, the airline took Delivery of its first L-1049 Super Constellations and inaugurated

services to Singapore, Bangkok, Hong Kong and Tokyo.

IN 1960 Air India International entered the jet age when its first Boeing 707, named

Nandadevi and registered VT-DJJ, was delivered. Jet services to New York via London were

inaugurated that same year in May 1960. On June 11, 1962 Air India became the world's first

all-jet airline.

In 1993, Air India took Delivery of the flagship of its fleet when the first Boeing 747-400

named Konark and registered VT-ESM made history by operating the first non-stop flight

between New York and Delhi.

In 1994 the airline was registered as Air India Ltd. In 1996, the airline inaugurated service to

its second US gateway at Chicago O’Hare international airport.

In May 2004. AI started its low cost subsidiary named AI Express. AI Express has been

15

http://en.wikipedia.org/wiki/Image:Airindia.mascot.maharaja.gif


operating exclusively on Gulf routes and has proved to be a successful international low cost

airline, a rare phenomenon.

In March 2004 Air India started non-stop flights from Ahmadabad’s Sadder Vallabhbhai Patel

International Airport to London, Heathrow, making it the third station from India (after

Mumbai and Delhi).

15 JULY 2007Air India has also been granted permission from the Government of India to

merge with Indian Airlines, the two flag carriers of India. The name of the new airline will

remain Air India, since it is known worldwide. The two airlines will formally become one

when they receive the new Boeing 777-200, with the new livery of the merged airline. The

new airline's headquarters will remain in Mumbai, and will have a strong fleet of 130+. After

the merger, the 2 airlines will apply for membership with Star Alliance, to make their network

bigger; Lufthansa will back Air India's application. Alliance Air and Air India Express are

also to merge as the new airline's low-cost arm.

3.03 Passenger operations:

Air India has 67 (two of them only covered by Air India Express) world-wide destinations. It

also has code-sharing agreements with international airlines to expand coverage. The airline

carried 4.48 million passengers during the financial year ending March 2008 and achieved a

load factor of 71.6 per cent, substantially higher than the 66 per cent load factor recorded in

the preceding year. Air India offers three classes of service - First Class, Executive Class and

Economy Class. Flat bed seats are offered for first class passengers. The airline also offers a

frequent flyer programme alone and in collaboration with many of its alliances.

3.04 Maharajah Lounges:

Currently Air India offers 5 Lounges at five of its major destinations. These lounges are

called the "Maharajah Lounge" translated this means, King's Lounge. The five lounges Air

India offers to its First and Executive class passengers are:

Delhi, India

Mumbai, India

Chennai, India

New York, USA

London, United Kingdom

Air India will add more lounges worldwide, once the merger is complete, and it offers more

destinations worldwide.

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3.05 SUBSIDIARY AIRLINE:

Air India has also launched a new subsidiary airline - Air India Express, effective April 29,

2005. Air India Express, with thirteen aircraft in its fleet, presently operates 57 flights per

week from nine points in India * Amritsar, Chennai, Delhi, Kochi, Kozhikode, Mangalore,

Mumbai, Pune and Thiruvananthapuram to six destinations in the Gulf - Abu Dhabi, Dubai,

Al Ain, Muscat, Salalah and Sharjah and to Singapore. Air India Express, with its attractively

low fares, has helped make travel affordable, thus spurring growth in travel.

3.06 Merger of Air India and Indian:

The merger turn the new entity into a large airline, with a combined fleet of about 120

aircraft and a staff strength of 30,000, capable of taking global competition head-on. The

public sector character of the merged airline would continue.

By 2010-11, when all the new aircraft ordered by the two carriers are inducted into the fleet,

the merged entity's employee-aircraft ratio would come down to about 200:1, comparable

with any major global airline. While Air India has ordered 68 Boeing planes, Indian has

finalized the acquisition of 43 Airbus aircraft.

3.07 Cargo operations:

In 1954, Air India Cargo started its freighter operations with a Douglas DC-3 Dakota

aircraft, giving Air India the distinction of being the first Asian airline to operate freighters.

The airline operates cargo flights to many destinations. The airline also has ground truck-

transportation arrangements on select destinations.

Air India has also sent 6 of its Airbus a310-300aircraft for a complete cargo conversion in

Germany, this conversion is at the cost of $7 million each. With the arrival of first two

converted freighter aircraft, air India has introduced scheduled services to Frankfurt and

Paris. It has added two weekly cargo flight from Paris and five weekly flights from Frankfurt,

with a total of 14-destinons involved.

3.09 NETWORK:

In its ever-growing quest for providing direct services from various points in India, Air India

currently operates flights from Mumbai, and 13 other Indian cities, viz. Ahmadabad,

17


Amritsar, Bangalore, Chennai, Delhi, Goa, Hyderabad, Kochi, Kolkata, Kozhikode,

Lucknow, Pune and Thiruvananthapuram. Commencement of international operations from

these cities has obviated, to a very large extent, the need for passengers from these regions to

necessarily travel to Mumbai and Delhi, the traditional main gateways, for taking

international flights. Passengers boarding or deplaning in these cities can now complete their

immigration and custom formalities at their city airport, both at the time of departure and

arrival. The global network of air India is shown below

3.10 FUTURE STRATEGIES:

“After merger of air India and Indian, air India would throw open its engineering services for

other domestic players. Civil aviation minister Praful Patel said at Mumbai on June 16. Post

merger Air India would leverage engineering services to other. Air India has also tied up with

Boeing to set up maintenance, repair and overhaul (MRO) facility at Nagpur. Acc to Air

India’s CMD A.JHADAV MOU is ready to sign between the carrier and Boeing for this

18

CURRENT GLOBAL NETWORK, (REGON WISE)

UK London And Birmingham

Europe Paris And Frankfurt

Asia pacific Bangkok, Dhaka, Hong Kong, Jakarta,

Kualalumpur,Osaka,Shanghai,

Singapore And Tokyo

Gulf and Middle

East

Abu Dhabi, Bahrain, Dammam, Doha,

Dubai, Jeddah, Kuwait, Muscat and

Riyadh.

USA And Canada Chicago, Los Angeles, New Jersey, New

York and Toronto.

Africa Dar-es-Salaam and Nairobi.


purpose. Air India will increase its revenue by providing services to other carriers. At present

domestic players look to the gulf for carrying out repair and maintenance work for their

aircrafts.

CHAPTER 4: COMPETITIVE ANALYSIS

A. MAJOR PLAYERS IN THE AVIATION INDUSTRY

FULL LEGACY CARRIERS LOW COST CARRIERS (LCCs)

NACIL AI & IC Jet Konnect 9W

19


Jet Airways 9W JetLite S2

Kingfisher IT Kingfisher Red DN

Spice Jet SG

IndiGo 6E

Go Air G8

B. COMPARISON OF PLAYERS

Different airlines players have been compared and analysed on three different parameters:

market performance, fleet strength and reach.

4.1 ANALYSIS OF MARKET PERFORMANCE

Market performance is analyzed by taking all the domestic sectors and also comparing only

ex-Delhi sectors separately.

MARKET PERFORMANCE (DOMESTIC)

The market performance of the airlines is based on 3 parameters:

a) Market Share

b) Seat Factor

c) Capacity Share

Figure: 4.1 Number of passengers flown from different airlines in April 09.

air india jet air-ways

jetlite kingfisher spicejet goair indigo para-mount

volume 5.83 5.52 2.44 8.61 3.87 1.45 4.54 0.7500000000000

12

0.51.52.53.54.55.56.57.58.59.5

Volume for domestic airlines in Apr 09

pa

sse

ng

ers

in

lacs

Source: indiastat.com

In terms of number of passengers in the month of April 09, Kingfisher (including Kingfisher

Red) is the leader in market share with 8.61 lakh passengers. Air India has the second highest

market share with 5.83 lakh passengers. Jet Airways has 5.52 lakh passengers but including

JetLite, it becomes the second highest market shareholder with 7.96 lakh passengers. Among

20


the LCC’s Indigo has the best market share with 4.54 passengers followed by SpiceJet with

3.87 lakh passengers.

a) Market Share: Market share is the number of passenger bookings by one airline as a

percentage of total passenger bookings among all the airlines.

Figure: 4.2 Market Shares of Domestic Airlines in April 08 and April 09

NACIL15.1%

Jet Airways &Jetlite29.6%

Kingfisher &K-ingfisher Red

27.9%

Indigo11.5%

GoAir4.6%

Spicejet10.1%

Others 1.2%

Apr-08

NACIL17.6%

Jet Airways &Jetlite24.1%

Kingfisher &Kingfisher Red26%

Indigo13.7%

GoAir4.4%

Spicejet11.7%

Others 2.5%

Apr-09

Source: livemint.com

With respect to previous year for the month of April, market share for Jet Airways including

JetLite has substantially fallen from 29.6% last year to 24.1% in this year. Market share for

Kingfisher has declined from 27.9% in April 08 to 26% in Apr 09. Market share for NACIL

has increased from 15.1% in April 08 to 17.6% in April 09. Share for all the LCC’s increased

except for GoAir which had a fall of a marginal 0.2%. Indigo had the highest market share

among LCC’s with an increase from 11.5% to 13.7%.

b) Seat Factor: - The seat factor is the percentage of the number of seats occupied by the

passengers in the flights. For e.g.:- if the seat factor of an airline is said to be 75% it

implies that of all the seats available in airlines, 75% were booked by the passengers.

Figure 4.3: seat factor for domestic airlines in April 09

21


air india jet air-ways

jetlite kingfisher spicejet goair indigo para-mount

seat factor 59.9 65 68.7 64.2 68 72 72.1 88.5

5152535455565758595

Seat factor for dometic airlines in Apr 09Se

at f

acto

r in

%


Paramount had the highest seat factor in April 09 followed by Indigo and GoAir. In fact all

the LCC’s had a market share of above 65%. Among full service carriers Jet Airways had the

highest seat factor with 65%.

c) Capacity Share: Capacity share is the percentage of seats available with the airline w.r.t.

the total seats available in the market.

Figure 4.4: capacity for airlines in April 09

19%

17%

7%27%

11%

4%13% 2%

Capacity for domestic airlines in Apr 09air india jet airways jetlite kingfisherspicejet goair indigo paramount


Kingfisher had the maximum capacity share of 27% for April 09. Jet Airways including

JetLite had a capacity share of 24%. Air India has a capacity share of 19%. SpiceJet has a

capacity share of 11% and Indigo has a capacity share of 13%. GoAir has a capacity share of

4%.

4.2 MARKET PERFORMANCE (EX- DELHI)

22


Following is the analysis of market performance of different players on sectors only through

Delhi on the basis of capacity share, market share and seat factor.

Table 4.1: Different players are compared on capacity share, market share and seat

factor and MPI in April 07-March 08

APR’ 07 – MAR’ 08

Airline Capacity Passengers

Seat

Utilisation

Factor

Capacity

Share

Market

Share MPI

IC 1994810 1440986 72% 20% 21% 1

Jet

Airways 2306024 1510381 65% 23% 22% -1

Kingfisher 1210244 759274 63% 12% 11% -1

JetLite 946918 675205 71% 10% 10% 0

Air

Deccan 1048260 741115 71% 11% 10% -1

Spice Jet 1179927 903309 77% 12% 13% 1

Go Air 606780 448249 74% 6% 6% 0

IndiGo 643140 49335 77% 6% 7% 1

Total 9936103 6971854 70%

Table 4.2: Different players are compared on capacity share, market share and seat

factor and MPI in April 08-March 09

APR’ 08 – MAR’ 09

23


Airline Capacity Passenger

Seat

Utilization

Factor

Capacity

Share

Market

Share MPI

Air India (IC) 1988726 1233216 62% 18% 18% 0

Jet Airways 2161557 1232107 57% 19% 18% -1

Kingfisher 2093723 1156581 55% 19% 17% -2

JetLite 1023462 621363 61% 9% 9% 0

Kingfisher Red 587250 409651 70% 6% 6% 0

Spice Jet 1560331 1046541 67% 14% 16% 2

Go Air 446220 260238 58% 4% 4% 0

IndiGo 1197900 823219 69% 11% 12% 1

Total 11059169 6782916 61%

The average seat factor has declined from the last fiscal year clearly showing signs of effects

of recession in the economy. LCCs such as SpiceJet & Indigo have increased their capacity

because they are doing very well and giving a stiff competition to the Full Service Carriers

increasing their combined market share from 20% to 28%.

Air India has been performing well having a better seat factor than the average seat factor for

the entire industry in both the years. It has reduced its capacity which has also led to a

decrease in the market share. Jet Airways with its subsidiary JetLite has an MPI of -1 and

Kingfisher with low cost carrier Kingfisher Red has an MPI of -2 for the year 2008-09.

Market Performance Index (MPI) is market share minus capacity share. This indicates how

well the airline has been able use its capacity vis-à-vis other airlines. A positive MPI is

always desirable for any airline.

According to the above table, it is visible that Jet Airways (including JetLite) is doing very

well in Northern Region having the maximum market share and capacity share though it has

a negative MPI. It is followed by Kingfisher and third comes Air India. Among LCCs, Indigo

has seen the greatest improvement, increasing its capacity share from 6% to 11% and market

share from 7% to 12% maintaining a positive MPI.

a) Comparison of seat factor for major players month wise (Ex-Delhi)

Figure 3.5: Comparison of seat factor for major players from April 08- March 09

24

50%

55%

60%

65%

70%

75%

NACIL (I)

Jet Airw ays

Kingfisher

LCCs


It can be seen that seat factor for NACIL has been the maximum since June 08 among the

Full Service Carriers bettering even the LCCs in few months. Kingfisher had the lowest seat

factor after June 08.

b) Comparison of market performance in most voluminous routes in April ‘09

Table 4.3: Market performance of different players on Delhi Bombay route

DELHI-BOMBAY

AIRLINES FLTS CAP PAX S.F. CAP MKT MPI

IC 292 46824 27245 58.2 19.4 19.9 0.5

JET 257 44975 27429 61.0 18.6 20.0 1.4

JETLITE 93 16800 8506 50.6 6.9 6.2 -0.7

KINGFISHER

RED 30 5400 2899 53.7 2.2 2.1 -0.1

KINGFISHER 284 50444 26004 51.6 20.8 19.0 -1.9

SPICE JET 122 23702 12911 54.5 9.8 9.4 -0.4

GO AIR 170 30600 17642 57.7 12.6 12.9 0.2

INDIGO 129 23220 14310 61.6 9.6 10.4 0.9

1377 241965 136946 56.6

Delhi-Mumbai (DEL-BOM): Air India had the largest number of flights in this

sector followed by Kingfisher in turn followed by Jet Airways for April 09. Jet

Airways and Indigo has the best seat factor in this sector. Kingfisher has the

maximum capacity share though Jet Airways is the leader in market share in this

sector. Jet Airways has the maximum MPI. Jet Airways has the best performance for

25

50%

55%

60%

65%

70%

75%

NACIL (I)

Jet Airw ays

Kingfisher

LCCs


this sector.

Table 4.4: Market performance of different players on Delhi-Kolkata route

DELHI-KOLKATA


IC 60 9183 5767 62.8 13.1 13.8 0.7

JET 81 12555 7492 59.7 17.9 17.9 0.0

JETLITE 30 6000 3389 56.5 8.6 8.1 -0.5

SPICE JET 60 11340 6720 59.3 16.2 16.0 -0.1

KINGFISHER 89 15664 7836 50.0 22.4 18.7 -3.7

INDIGO 85 15300 10677 69.8 21.8 25.5 3.6

405 70042 41881 59.8

Delhi-Kolkata (DEL-CCU): Kingfisher has the maximum number of flights to

Kolkata which accounts for its largest capacity share in this region. But it has a huge

negative MPI which means it has not been able to utilize its capacity well vis-à-vis

its counterpart airlines. Indigo has the best performance in this sector clocking the

second highest capacity share and the highest market share and good positive MPI.

Table 4.5: Market performance of different players on Delhi-Chennai route

DEL-MAA


IC 119 18875 12333 65.3 26.0 27.0 1.0

JET 115 17825 9860 55.3 24.5 21.5 -3.0

JETLITE 30 6000 3465 57.8 8.3 7.6 -0.7

SPICE JET 58 10962 8112 74.0 15.1 17.7 2.7

KINGFISHER 52 9152 4690 51.2 12.6 10.2 -2.3

INDIGO 55 9900 7298 73.7 13.6 15.9 2.3

429 72714 45758 62.9

Delhi-Chennai (DEL-MAA): Air India has the maximum number of flights

operating in this sector which accounts for its highest capacity share and also has the

highest market share. It has a positive MPI which explains that it has been able to

manage its capacity very well. SpiceJet is another top performer in this sector.

Table 4.6: Market performance of different players on Delhi-Bangalore route

26


DEL-BLR


IC 120 15957 9358 58.6 14.8 13.9 -0.9

JET 89 13795 7238 52.5 12.8 10.8 -2.0

JETLITE 74 14800 8235 55.6 13.7 12.3 -1.5

SPICE JET 89 16821 10979 65.3 15.6 16.3 0.7

KINGFISHER 178 31328 20357 65.0 29.1 30.3 1.2

INDIGO 84 15120 11031 73.0 14.0 16.4 2.4

634 107821 67198 62.3

Delhi-Bangalore (DEL-BLR): Kingfisher has the maximum number of flights

operating in this sector which accounts for its greatest capacity share in this sector. It

also has the largest market share and a positive MPI indicates it has been using its

capacity well making it the best performer in this sector. The next best performer is the

LCC Indigo having the second best market share and a positive MPI.

Table 4.7: Market performance of different players on Delhi-Hyderabad route

DEL-HYD


IC 80 11117 6748 60.7 14.9 14.8 -0.1

JET 59 9145 4532 49.6 12.3 9.9 -2.3

JETLITE 37 6845 4194 61.3 9.2 9.2 0.0

KINGFISHER

RED 29 5220 3790 72.6 7.0 8.3 1.3

KINGFISHER 59 10384 4913 47.3 13.9 10.8 -3.2

SPICE JET 86 16254 10465 64.4 21.8 23.0 1.1

INDIGO 86 15480 10907 70.5 20.8 23.9 3.2

436 74445 45549 61.2

Delhi-Hyderabad (DEL-HYD):- SpiceJet and Indigo have the maximum number of

flights flying in this sector. Though SpiceJet has the highest capacity share but Indigo

has the highest market share making it a better performer than SpiceJet in this sector.

Air India has performed the best among the full service carriers in this sector.

27


4.2. COMPARISION OF PASSENGER FLEET

As of May,2009 NACIL has a fleet of 154 Aircraft with 66 orders which is distributed

amongst Air India , Air India Express , Air India Cargo and Indian Airlines , Air India

Regional.

NACIL will expand its Fleet to around 160 by the end of the next fiscal, inducting as many

as 30 new aircraft manufactured by the US-based Boeing Commercial Airplanes and France-

based Airbus S.A.S. over the next 12months.

NACIL will induct 4 737-800s, 3 777-200LRs and 4 777-300ERs from Boeing Commercial

Airplanes & 8 A319-100s, 4 A320-200s and 7 A321-200s from Airbus S.A.S.. By March

2011 all 111 new aircraft would have joined into fleet to bring down the average age of

aircraft to 18 months. These are part of 111 (68 Boeing and 43 Airbus) aircraft order placed

in January 2006.

Figure 4.6: Comparison of Total No. of aircrafts with Domestic Airlines

air india jet airways kingfisher indigo spicejet0

20

40

60

80

100

120

140

160

180

154

109

79

20 19

Total aircrafts

Source: DGCA

The above graph shows the total number of aircraft fleet with every domestic airline. Air

India has the largest number of aircrafts with 155 followed by Jet Airways with 109 aircrafts

and third is Kingfisher with 79 aircrafts.

28

http://en.wikipedia.org/wiki/Airbus

http://en.wikipedia.org/wiki/Boeing_Commercial_Airplanes

http://en.wikipedia.org/wiki/Boeing_Commercial_Airplanes

http://en.wikipedia.org/wiki/Air_India_Regional


http://en.wikipedia.org/wiki/Indian_Airlines

http://en.wikipedia.org/wiki/Air_India_Cargo

http://en.wikipedia.org/wiki/Air_India_Express

http://en.wikipedia.org/wiki/Air_India


Figure 4.7: Variety of fleet with Air India

5%3%

10%

30%

8%1%

5%4%

5%

14%

4%1%

2%3% 3%3%

variety of fleet with Air IndiaAirbus A310-300Airbus A310 FrieghterAirbus A319-100Airbus A320-200Airbus A321-200Airbus A330-200ATR 42-320Boeing 737-200/AdvBoeing 737-200Boeing 737-800Boeing 747-400Boeing 777-200Boeing 777-200ERBoeing 777-200LRBoeing 777-300ERBoeing 787-8Bombardier CRJ700

Figure 4.8: Variety of fleet with Jet Airways

7%6%

11%

1%2%

18%38%

2%9%

6%

variety of fleet with Jet Airways

ATR 72-500

ATR 72-212A

Airbus A330-200

Boeing 737-300

Boeing 737-400

Boeing 737-700

Boeing 737-800

Boeing 737-900

Boeing 777-300ER

Boeing 787-8

CL-600-2B19

Figure 4.9: Variety of fleet with Kingfisher

29


10%

34%

4%

35%

10%

6%

Variety of fleet with Kingfisher

ATR 42-500ATR 72-500Airbus A319-100Airbus A320-200Airbus A321-200Airbus A330-200

Air India has the largest variety with 16 types of aircrafts out of which 30% fleet consists of

A320-200. Jet Airways has 11 types of aircrafts and 38% of its fleet consists of 737-800.

Kingfisher has 6 types of aircrafts and has 36% of its fleet as A320-200.

Table 4.8: comparison of players according to seat capacity ranges of fleet

Airlines 0-50 50-100 100-150 150-200 200-250 250+

Air India 7 4 75 34 13 17

Jet Airways 7 14 64 2 12 10

Kingfisher 8 27 3 36 5

SpiceJet 14 5

Indigo 20

GoAir 10

Source: DGCA

The above table shows the various capacities of the entire fleet range. Full service carriers

have a fleet in almost all capacity ranges except for Kingfisher who does not have fleet in

capacity range of 250+. LCCs generally have fleet in seat capacity of 150-200 except for

SpiceJet which has few fleets in the range of 200-250.

All the players have a young fleet except for Air India but even Air India has ordered for new

Aircrafts which will reduce the average age of its fleet.

4.3 CONNECTIVITY

30


Reach is defined by the number of destinations covered by the players in the domestic and

international sector.

Table 4.9: No. of daily flights flown by different players to different destinations

Players No of daily

fights

Destinations Destinations

from Delhi

Daily flights

from Delhi

NACIL (IC

Only)

306 94 50 56

Jet Airways 748 98 29 96

Kingfisher 492 69 28 65

Indigo 162 14 13 30

SpiceJet 166 18 16 30

According to the table Jet Airways has the maximum flights operating daily in the domestic

region. Both Jet Airways and Air India cover the more than 90 destinations though Air India

covers the maximum destinations ex-Delhi. Though Air India covers maximum destinations

through Delhi, Jet Airways has the maximum flights operating from Delhi.

31


FARE STRUCTURE OF AIR INDIA

Fares might be Published or Unpublished:

# Published Fares: These are those fares that are published to the world at large through

industry standard channels ,notably the airline Tariff publishing company (ATPCO) and

SITA’s AIRFARE SYSTEM. If applicable to international markets and arrived at by

resolution at an IATA traffic conference, they might be referred to IATA Fares. They can

usually be broken down into full or normal fares & special and discounted fares.

# Normal or Full Fare: This is unrestricted, on-demand fare charged for travel in a particular

cabin (First, Business or economy class) in a market at any given time. The normal or full

fare can be looked upon as the pricing platform for a carrier’s service price offers in a

particular cabin in any given market.

#Special or Discounted Fares: These are discounted off the price platform in each cabin and

are available in most markets subjects to restrictions; they are associated with alphanumeric

code that varies widely from market to market. Airline commonly break them down into

promotional fares available to any body willing to meet restrictions on booking and

preferential fares available by reference to factors such as age or employment status.

# unpublished fares: These are also known as DGCA fares and offered through specific

distribution channels which involve prices that are unavailable through general channels.

# Net Fares: These are a feature of several international markets in particular and are notably

important in Asia. It is the gross fare for a block of seats sold to an agency less standard

commission and any other fare adjustment typically applied in the market concerned, the net

fare is the net fare less any volume or other incentive including travel agency commission

offered by the airline to a particular agency with which it has targeted a special relationship.

The lower the net fare available to an agency, the lower the price it is able to charge retail

consumers.

32


CHAPTER-5

DATABASE REGARDING FARES

DOMESTIC INTERNATIONAL

MUMBAI (BOM) DUBAI (DXB)

KOLKATA (CCU) SHANGHAI (SHA)

CHENNAI (MAA) HONG KONG (HKG)

BANGLORE (BLR) TOKYO (TYO)

HYDRABAD (HYD) LONDON (LON)

33


ANALYSIS OF PRICING

DOMESTIC (MAY-JUN)

Figure 5.1: Fares for DEL-BOM route on different days for different players

d day d+1 day d+10 days d+20 days d+30 days d+45 days0

1000

2000

3000

4000

5000

6000

7000

8000

Air India(IC)KingfisherKingfisher RedJet AirwaysJetLiteSpicejetIndigoGoAir

Table 5.1: Fares for DEL-BOM route on different days for different players

Airline d day d+1

day

d+10

days

d+20

days

d+30

days

d+45

days

Air India(IC) 5810 5810 5357 5131 5519 2979

Kingfisher 6536 6392 6450 5853 4643 3754

Kingfisher Red 4748 4656 4548 3798 2935 2951

Jet Airways 6773 6658 6040 5788 3478 3478

JetLite 4582 4438 4079 3727 3727 2782

SpiceJet 4286 4286 3984 3683 3438 2577

Indigo 4286 4329 3984 3683 3440 2581

GoAir 4312 4226 3928 3675 3257 2574

34


The following observations were made from the data.

There is variation in the fares regarding the proximity of date of departure. It is

generally going up when the departure date arrives except Air India for 30 day fare,

Kingfisher for 10 day fare and Indigo for 1 day fare.

Air India generally offers lower fare than its competitor FSCs except for a 30 day fare

which was significantly higher than its competitors.

45 day fare for Air India is very competitive with even the LCCs.

LCCs charged about 30% lower fare than FSCs.

There was no significant difference of fares charged on the weekdays to the

weekends.

There was high correlation among the fares of LCCs. The correlation coefficient is

above 0.9.

35


Figure 5.2: Fares for DEL-CCU route on different days for different players


2000

4000

6000

8000

10000

12000

14000

Average Fares for Del-Ccu Route

Air India (IC) Kingfisher Kingfisher Red Jet AirwaysJetLite Spicejet Indigo

Table 5.2: Fares for DEL-CCU route on different days for different players

Airline d day

d+1

day

d+10

days

d+20

days

d+30

days

d+45

days

Air India (IC) 6595 6595 5357 5131 4810 2979

Kingfisher 6549 6543 6040 5788 3482 3482

Kingfisher Red 12252 13288 10644 8420 8285 5775

Jet Airways 6543 6543 6040 5788 3478 3478

JetLite 5179 5179 3687 3630 3085 2624

SpiceJet 5293 5293 3366 3222 3007 2577

Indigo 5365 5293 3972 3339 2910 2581

The following observations were made from the data:-


generally going up when the departure date arrives except Kingfisher Red for 1 day

fare and Indigo for 1 day fare.

Air India offers the best prices for 10 days, 20 days and 45 days fare among FSCs.

Kingfisher Red had such a high fare because it does not have a direct flight to

Kolkata. It takes a route via Guwahati.

Fares for SpiceJet and Indigo were almost the same.

There was high correlation between fares of LCCs other than Kingfisher Red.

There was no significant difference in the prices of weekends and weekdays.

36


Figure 5.3: Fares for DEL-MAA route on different days for different players


1000

2000

3000

4000

5000

6000

7000

8000

Average Fares for Del-Maa Route


Table 5.3: Fares for DEL-MAA route on different days for different players

Airline d day

d+1

day

d+10

days d+20 days

d+30

days

d+45

days

Air India (IC) 6266 6611 5879 5622 5490 3949

Kingfisher 6983 6945 6126 6610 5408 4388

Kingfisher

Red 6530 6254 5422 4986 5884 3390

Jet Airways 7084 6707 6523 5868 4878 4383

JetLite 6366 5780 5422 4783 4993 4783

SpiceJet 6558 6070 5297 5020 4332 3888

Indigo 6631 6394 5778 5481 5164 4130

The following observation was made from the data:


generally going up when the departure date arrives except for Kingfisher for 20 day

fare except Air India for 1 day fare, Kingfisher for 20 day fare, Jet Airways and

JetLite for 30day fare & no significant difference between fares of weekend

&weekdays. There is high correlation between fares of LCCs.

Air India had the best fare among the FSCs except for 30 days fare. In fact its 45 day

fare is competitive with the LCCs and even lower than a few LCCs.

37


Figure 5.4: Fares for DEL-BLR route on different days for different players


1000

2000

3000

4000

5000

6000

7000

8000

Average Fares for Del-Blr Route

Air India Kingfisher Jet Airways JetLiteSpicejet Indigo GoAir

Table 5.4: Fares for DEL-BLR route on different days for different players

Airlines d day

d+1

day

d+10

days d+20 days

d+30

days d+45 days

Air India 6451 6227 5881 5816 5430 3708

Kingfisher 7029 6749 6661 6162 4953 3633

Jet Airways 7252 7011 6923 6084 5125 4383

JetLite 6082 5807 5607 4848 4252 3721

SpiceJet 6470 6092 5918 4966 4200 3726

Indigo 5994 5897 5567 5180 4868 3377

GoAir 6546 6297 6093 5509 4805 3758

The following observations were made from the data:-


generally going up when the departure date arrives for all the airlines unlike other

routes which have a few exceptions.

Air India had the best fares for the route among the FSCs except for 30 day fare and

45 day fare.

Kingfisher had the best 45 day fare even better than the LCCs except Indigo.

There was no significant difference between fares for weekends and weekdays.

38


Figure 5.5: Fares for DEL-HYD route on different days for different players


1000

2000

3000

4000

5000

6000

7000

Average Fares for Del-Hyd Route


Table 5.5: Fares for DEL-HYD route on different days for different players

Airlines d day

d+1

day

d+10

days

d+20

days

d+30

days

d+45

days

Air India (IC) 5908 5810 5357 5131 5422 2979

Kingfisher 6530 6543 6169 5788 5461 3482

Kingfisher Red 6553 6057 4842 4591 3927 3862

Jet Airways 6543 6543 6040 5788 3478 3478

JetLite 6070 5883 6192 4532 4992 3987

SpiceJet 5451 5293 4689 4574 4229 3151

Indigo 5408 5522 4775 4488 3912 2753

The following observation was made from the data:-


generally going up when the departure date arrives except Air India for 30 day fare,

JetLite for 10 day fare and 30 day fare and Indigo for 1 day fare.

Air India has the best fare for this sector except for 30 day fare.

39


INTERNATIONAL (JUL07-JUN09)

DELHI TO DUBAI (DEL-DXB)One Way Fare

Period Pub. Fare

YQ + YR

Gross Fare

Commission Net Fare

Other Taxes TTL PLB/INC NN After PLB

jul07 6320 2130 8450 3% 8130 225 8355 0% 8355augs07 8500 2138 10638 3% 10213 225 1043

80% 10438

sep07 6500 2145 8645 3% 8320 225 8545 0% 8545oct07 6500 2360 8860 3% 8535 225 8760 0% 8760nov07 6500 2360 8860 3% 8535 225 8760 0% 8760dec07 6500 2360 8860 3% 8535 225 8760 0% 8760jan08 6500 2360 8860 3% 8535 225 8760 0% 8760feb08 6500 2360 8860 3% 8535 225 8760 0% 8760mar08 6500 2360 8860 3% 8535 225 8760 0% 8760apr08 6500 2760 9260 3% 8935 225 9160 0% 9160may08 6500 2760 9260 3% 8935 225 9160 0% 9160jun08 6500 3160 9660 3% 9335 225 9560 0% 9560jul08 6500 3160 9660 3% 9335 225 9560 0% 9560

aug08 6315 3160 9475 3% 9160 225 9385 0% 9385sep08 6315 3160 9475 3% 9160 225 9385 0% 9385oct08 4600 3160 7760 0% 7760 225 7985 0% 7985nov08 4600 3160 7760 0% 7760 225 7985 0% 7985dec08 4000 3160 7160 0% 7160 225 7385 0% 7385jan09 4000 3160 7160 0% 7160 225 7385 0% 7385feb09 3800 3360 7160 3% 6945 1529 7178 0% 7178mar09 3800 3360 7160 3% 6945 1529 7178 0% 7178apr09 3800 3160 6960 3% 6760 1529 8289 0% 8289may09 3800 3160 6960 3% 6760 1529 8289 0% 8289jun09 3800 3160 6960 3% 6760 1529 8289 0% 8289

JUL07-JUN09

40


FARE TREND DEL-DXB ONE WAY FARE

aug0

7oct0

7dec0

7feb

08ap

r08

jun08au

g08

oct08

dec08

feb09

apr0

9jun09

0

2000

4000

6000

8000

10000

12000

Pub. FareYQ + YRNN After PLB

Axis Title

Axis Title

OBSERVATIONS & INTERPETATION OF FARE TREND:

Fuel component (YQ + YR) jump up from 2130 in jul07 to 3160 in jun09.

Published Fare decline from 6320 in jul07 to 3800 in jun 09 with dump in oct08 i.e. 4600.

Net fare achieved the same level after many variations & major decline from sep08

(9385) to mar09 (7178).

The dominating foreign airline on this route is Emirates airline which operates with 60%-

70% load factor. AIRINDIA has to give competitive fare w.r.t Emirates airline.

The graph is in correlation.

In the month of aug07 there was peak period and demand was more which leads to high

published fare as well as net fare.

The change in net fare was more as compared to Published fare in apr08-sep08 because

the commission given to the agents was more than usual.

Fuel surcharge increased due to ATF hike.

Being a public sector unit, AIR INDIA can’t play with fares in that manner in which other

airlines can do.

Almost 60%-70% of Europe business is grasped by Emirates Airline.

41


DELHI TO DUBAI (DEL-DXB)Return Fare

Period Pub. Fare

YQ + YR Gross Fare

Commission Net Fare Other Taxes TTL PLB/INC NN After PLB

jul07 7950 6020 13970 3% 13560 2528 16088 0% 16088aug07 7950 6020 13970 3% 13560 2528 16088 0% 16088sep07 7950 6020 13790 3% 13560 1958 15509 0% 15509oct07 7950 6570 14520 3% 14084 1958 14727 0% 14727nov07 7950 6570 14520 3% 14084 1958 14727 0% 14727dec07 8500 6020 14520 0% 14520 624 15144 3% 14708jan08 9000 6020 15020 5% 14520 636 15156 0% 15156feb08 15265 6020 21285 0% 21285 636 21921 0% 21921mar08 15265 6020 21285 0% 21285 636 21921 0% 21921apr08 15262 6020 21282 3% 20522 585 21107 0% 21107may08 15262 6020 21282 3% 20522 585 21107 0% 21107jun08 15262 6020 21282 3% 20522 585 21107 0% 21107jul08 15262 6020 21282 3% 20522 585 21107 0% 21107

aug08 15265 6020 21285 3% 20522 583 21105 0% 21105sep08 15265 5220 20485 3% 19722 561 20283 0% 20283oct08 15265 4420 19685 3% 18922 5567 24489 0% 24489nov08 15265 4420 19685 3% 18922 558 19480 0% 19480dec08 15265 4420 19685 3% 18922 555 19477 0% 19477jan09 15265 4420 19685 3% 18922 556 19478 0% 19478feb09 15265 4420 19685 3% 18922 556 19478 0% 19478mar09 15265 4420 19685 3% 18522 556 19078 0% 19078apr09 15265 3990 19255 3% 18492 567 19059 0% 19059may09 17800 3976 21776 3% 20886 566 21452 0% 19026jun09 15265 3960 19225 3% 18460 566 19026 0% 19026

JUL07-JUN09

DEL-DXB RETURN FARE

42


aug07oct0

7dec0

7feb

08apr08

jun08aug08

oct08

dec08

feb09

apr09jun09

0

5000

10000

15000

20000

25000

30000


Axis Title

Axis Title


Fuel coefficient (YQ + YR) decline from 6020 in jul07 to 3960 in jun09.

Published fare shows a drastic hike from 7950 in jul07 to 17800 in may09.

Net fare also shows an increment from 16088 in jul07 to 19026 in jun09 & highest in

month of oct08 i.e. 24489.

The dominating foreign airline on this route is Emirates airline which operates with

60%-70% load factor. AIRINDIA has to give competitive fare w.r.t Emirates airline.


In the month of aug07 there was peak period and demand was more which leads to

high published fare as well as net fare.

The change in net fare was more as compared to Published fare in apr08-sep08

because the commission given to the agents was more than usual.

Fuel surcharge increased due to ATF hike.

Being a public sector unit, AIR INDIA can’t play with fares in that manner.

Almost 60%-70% of Europe business is grasped by Emirates Airline.

DELHI TO SHANGHAI (DEL-SHA)ONE WAY FARE

43


Period Pub. Fare

YQ + YR

Gross Fare

Commission

Net Fare



aug08 16200 4299 20499 3% 19689 225 19914 3% 19452sep08 16200 4299 20499 3% 19689 225 19914 3% 19452oct08 16200 4829 23029 0% 23029 225 21254 0% 21254nov08 16200 4829 23029 0% 23029 225 21254 0% 21254dec08 16200 4898 21098 0% 21098 225 21323 10 19703jan09 16200 4898 21098 3% 19041 225 19266 10% 19119feb09 10200 5180 15380 3% 14707 1529 14932 10% 13943mar09 10200 5229 15429 3% 14966 1529 16495 10% 15506apr09 10200 5229 15429 3% 14966 1529 16495 10% 15506may09 10200 5082 15282 3% 14824 1529 16353 10% 15363jun09 10200 4883 15083 3% 14640 1529 16169 3% 15872

JUL07-JUN09

44


DEL-SHA ONE WAY FARE

aug0

7oct0

7

dec07

feb08

apr0

8ju

n08

aug0

8oct0

8

dec08

feb09

apr0

9ju

n090

5000

10000

15000

20000

25000


Axis Title

Axis Title


Fuel component (YQ + YR) remains almost constant from jul07 to jan09 then shows

downfall in feb09 i.e. 5180.

Published fare also shows a constant trend from jul07 to mar08 then down trend from

apr08 to jun09 with dump in feb09 i.e. 10200.

Net fare shows major fall from 20877 in jul07 to 15872 in jun09.The major downfall

period is from jun08 to feb09.

The dominating airline on this route is Singapore airline which operates with 70%

load factor and covers long distance which helps in reducing per unit operation cost.


There is major decline in net fare w.r.t publish fare in period May08-jul08 because of

the fuel surcharge component.

The fuel surcharge increase because of the ATF prices.

The decline in fares in period may08-jul08 was due to competitive pricing w.r.t

Singapore Airline.

Singapore airline have big pockets and financially strong thus bear losses unlike AIR

INDIA

45


DELHI TO SHANGHAI (DEL-SHA)RETURN FARE

Period Pub. Fare

YQ + YR

Gross Fare

Commission Net Fare


jul07 30000 3954 33954 3% 32454 707 33161

0% 33161

aug07 30000 3954 33954 3% 32454 707 33161

0% 33161

sep07 30000 3990 33990 3% 32490 712 33202

0% 33202

oct07 30000 3900 33900 3% 32400 702 33102

0% 33102

nov07 30000 4270 34270 3% 32770 700 33470

0% 33470

dec07 30000 4662 34662 3% 33162 703 33865

0% 33865

jan08 30000 4662 34662 3% 33162 703 33865

0% 33865

feb08 30000 4694 34694 3% 33194 715 33909

0% 33909

mar08 30000 4810 34810 3% 33310 728 34038

0% 34038

apr08 28000 6342 34342 3% 32942 737 33679

0% 33679

may08 28000 8274 36274 3% 34874 740 35614

0% 35614

jun08 23000 8502 31502 3% 30352 777 31129

0% 31129

jul08 19500 8482 27982 3% 27007 787 27794

0% 27794

aug08 19500 8298 27798 3% 26823 727 27610

3% 27054

sep08 19500 8298 27798 3% 26823 727 27610

3% 27054

oct08 19500 9358 28858 0% 28858 875 29733

0% 29733

nov08 19500 9358 28858 0% 28858 875 29733

0% 29733

dec08 19500 9496 28996 0% 28996 883 29879

10% 27929

jan09 17000 9616 26616 3% 24457 850 25307

10% 25019

feb09 17000 9524 26524 3% 25728 869 26597

10% 24948

mar09 17000 10158 27158 3% 26343 2182 28525

10% 26876

apr09 17000 10158 27158 3% 26343 2182 28525

10% 26876

may09 17000 9864 26864 0 26058 2196 28254

15% 25781

jun09 12000 9466 21466 3% 20831 2154 22985

3% 22636

46


JUL07-JUN09

DEL – SHA RETURN FARE

aug0

7oct0

7

dec07

feb08

apr0

8ju

n08

aug0

8oct0

8

dec08

feb09

apr0

9ju

n090

5000

10000

15000

20000

25000

30000

35000

40000


Axis Title

Axis Title


Fuel component (YQ + YR) shows downfall from 3954 in jul07 to 9466 in jun09 with

major dump in may08-jul08.

Published fare shows constant trend from july07 –mar08 then major fall in mar08-

jun08 and continue falling to 12000 in jun09.

Net fare shows overall decline from 33161 in jul07 to 22636 in jun09 with the major

downfall in may08-sep08 and again in apr09-jun09.

The dominating airline on this route is Singapore airline which operates with 70%

load factor and covers long distance which helps in reducing per unit operation cost.

47



There is major decline in net fare w.r.t publish fare in period May08-jul08 because of

the fuel surcharge component.

The fuel surcharge increase because of the ATF prices.

The decline in fares in period may08-jul08 was due to competitive pricing w.r.t

Singapore Airline.

Singapore airline have big pockets and financially strong thus bear losses unlike AIR

INDIA

DELHI TO HONGKONG (DEL-HKG)ONE WAY FARE

Period Pub. Fare

YQ + YR

Gross Fare

Commission Net Fare


jul07 15600 2130 17730 3% 16950 225 17175

0% 17175

aug07 15600 2138 17738 3% 16958 225 17183

0% 17183

sep07 15600 2145 17745 3% 16965 225 17190

0% 17190

oct07 15600 2086 17686 3% 16906 225 17131

0% 17131

nov07 15600 2285 17885 3% 17105 225 17330

0% 17330

dec07 15600 2481 18081 3% 17301 225 17526

0% 17526

jan08 15600 2481 18081 3% 17301 225 17526

0% 17526

feb08 15600 2481 18081 3% 17301 225 17526

0% 17526

mar08 15600 2555 18155 3% 17375 225 17600

0% 17600

apr08 14950 3321 18271 3% 17524 225 17749

0% 17749

may08 14950 4287 19237 3% 18490 225 18715

0% 18715

jun08 14950 4401 19351 3% 18604 225 18829

0% 18829

jul08 14950 4403 19353 3% 18606 225 18831

3% 18404

aug08 13500 4355 17855 3% 17180 225 17405

3% 17020

sep08 13500 4355 17855 3% 17180 225 17405

3% 17020

oct08 14950 5417 20367 0% 20367 225 20592

10% 18532

nov08 14950 5417 20367 0% 20367 225 2059 10% 18532

48


2dec08 13500 3419 16919 0% 16919 225 1714

410% 15794

jan09 13500 3487 16987 3% 15273 225 15498

3 + 10% 15393

feb09 12500 3513 16013 3% 15533 225 15758

10% 14545

mar09 12500 3676 16176 3% 15691 1529 17220

10% 16007

apr09 12500 3643 16143 3% 15659 1529 17188

0% 17188

may09 12500 3643 16143 3% 15659 1529 17188

3% 16824

jun09 12500 3436 15936 3% 15467 1529 16996

0% 16996

JUL07-JUN09

DEL-HKG ONE WAY FARE

49


jul07se

p07nov0

7jan

08

mar08

may08

jul08se

p08nov0

8jan

09

mar09

may09

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

NN After PLBYQ + YRPub. Fare

Axis Title

Axis Title


Fuel component (YQ + YR) remains smooth from jul07 to jun09 with some variation

from may08 to jan09.

Published fare shows a downfall from 15600 in jul07 to 12500 in jun09.

Net fare remains smooth from July 07 to apr 08 then show rise trend & highest in

nov08.Then after major dump i.e. lowest in feb09 i.e14545


From apr08-jul08, the rise in net fare was due to the additive effect of fuel surcharge.

Fuel surcharge increased due to the ATF hike.

From mar09-jun09, the net fare increase because of the more commission given to the

agents.

The major foreign airlines which dominate on this route are Singapore and Cathay

Pacific airline. Cathay Pacific use Jumbo 747-ER and 747-LR aircrafts which covers

the destinations beyond Delhi. The operating cost per kilometre reduces because of

the long run distance, resulting into less operating cost and thus less fare.

AIRINDIA is unable to operate Jumbo because of the less load factor and seat

utilization.

DELHI TO HONGKONG (DEL-HKG)

50


RETURN FARE

Period Pub. Fare

YQ + YR

Gross Fare

Commission

Net Fare



aug08 20175 8410 28585 3% 27576 882 28458 3% 27883sep08 20175 8410 28585 3% 27576 882 28458 3% 27883oct08 23205 10534 33739 0% 33739 963 34702 0% 34702nov08 23205 10534 33739 0% 33739 963 34702 0% 34702dec08 15205 6538 21743 0% 21743 975 22718 10% 21198jan09 13915 6674 20589 3% 18822 984 19806 3 + 10% 19606feb09 11520 6726 18246 3% 17699 990 18689 10% 17571mar09 11730 7052 18782 3% 18219 2337 20556 10% 19418apr09 11740 6986 18726 3% 18164 2326 20490 0% 20490may09 11740 6986 18726 3% 18164 2326 20490 3% 20149jun09 11740 6572 18312 3% 17772 2277 20049 3% 19707

JUL07-JUN09

DEL- HKG RETURN FARE

51


jul07se

p07nov0

7jan

08

mar08

may08

jul08se

p08nov0

8jan

09

mar09

may09

0

5000

10000

15000

20000

25000

30000

35000

40000

45000


Axis Title

Axis Title


Fuel component (YQ + YR) shows overall decline from3960 in jul07 to 6572 in jun09

but highest in nov08 i.e. 10534

Published fare also follow the same trend i.e. decline from24000 in jul07 to 11740 in

jun09

Net fare shows smooth trend from july07 to mar08 & then shows major up down

variations i.e. highest in nov08 i.e. 34702 and lowest in feb09 i.e17571


From apr08-jul08, the rise in net fare was due to the additive effect of fuel surcharge.

Fuel surcharge increased due to the ATF hike.

From mar09-jun09, the net fare increase because of the more commission given to the

agents.

The major foreign airlines which dominate on this route are Singapore and Cathay

Pacific airline. Cathay Pacific use Jumbo 747-ER and 747-LR aircrafts which covers

the destinations beyond Delhi. The operating cost per kilometer reduces because of

the long run distance, resulting into less operating cost and thus less fare.

AIRINDIA is unable to operate Jumbo because of the less load factor and seat utilizati

DELHI TO TOKYO (DEL-TYO)ONE WAY FARE

Period Pub. YQ + Gross Commission Net Other Taxes TTL PLB/INC NN After PLB

52


Fare YR Fare Fare

jul07 20150 2537 22687 3% 21680 225 21905

0% 21905

aug07 20150 2554 22704 3% 21697 225 21922

0% 21922

sep07 20150 2554 22704 3% 21697 225 21922

0% 21922

oct07 20150 3271 23421 3% 22414 225 22639

0% 22639

nov07 20150 3277 23427 3% 22420 225 22645

0% 22645

dec07 20150 3277 23427 3% 22420 225 22645

0% 22645

jan08 20150 3660 23810 3% 22803 225 23028

0% 23028

feb08 20150 3695 23845 3% 22838 225 23063

0% 23063

mar08 20150 3785 23935 3% 22928 225 23153

0% 23153

apr08 20150 4530 24680 3% 23673 225 23898

0% 23898

may08 20150 5667 25817 3% 24810 225 25035

0% 25035

jun08 20150 5695 25845 3% 24838 225 25063

0% 25063

jul08 20150 5723 25873 3% 24866 225 25091

0% 25091

aug08 20150 5562 25712 3% 24705 225 24930

3% 24355

sep08 20150 5859 26009 3% 25002 225 25227

3% 24652

oct08 20150 6390 26540 3% 25533 225 25758

3% 25183

nov08 20150 6259 26409 0% 26409 225 26634

0% 26634

dec08 20150 6350 26500 0% 26500 225 26725

10% 24710

jan09 20150 6429 26579 3% 24020 225 24245

3% 24052

feb09 20150 6478 26628 3% 25829 225 26054

10% 24100

mar09 10480 6478 16958 3% 16764 1529 18293

0% 18293

apr09 10480 2871 13351 3% 13265 1529 14794

0% 14794

may09 11295 2822 14117 3% 14032 1529 15561

0% 15561

jun09 12000 2712 14712 3% 14280 1529 15809

3% 15459

JUL07-JUN09

53


DEL-TYO ONE WAY FARE

jul07se

p07

nov07

jan08

mar08

may08

jul08se

p08

nov08

jan09

mar09

may09

0

10000

20000

30000

40000

50000

60000


Axis Title

Axis Title

OBSERVATIONS & FINDINGS: Fuel component (YQ + YR) show rising trend from 2537in jul07 to 6478 in feb09

then major dump & lowest in apr09 i.e. 2871

Published fare also follows the same trend as that of fuel component from 20150 in

jul07 to 12000 in jun09.

Net fare show drastic dump from 21905 in jul07 to 14794 in apr09 but shows upward

trend jul07-nov08.


The dominating airline on this route is JAAL airline of Japan with the load factor of

60%-65%.

From may08-nov08, the bounce in net fare is due to the additive effect of fuel

surcharge.

Fuel surcharge increase due to the ATF hike.

From feb09-apr09, JAAL airline drop their fares drastically and due to the

competitive pricing, AIRINDIA has to do the same.

JAAL airline covers the destinations, across the globe, from TYO to DEL and then

FRA. The long distance coverage thus reducing per unit operational cost.

54


DELHI TO TOKYO (DEL-TYO)RETURN FARE

Period Pub. Fare

YQ + YR

Gross Fare

Commission

Net Fare

Other Taxes

TTL PLB/INC

NN After PLB

jul07 31000 4774 35774 3% 34224 225 34449

0% 34449

aug07 31000 4808 35808 3% 34258 225 34483

0% 34483

sep07 31000 4808 35808 3% 34258 225 34483

0% 34483

oct07 31000 6242 37242 3% 35692 225 35917

0% 35917

nov07 31000 6454 37454 3% 35904 225 36129

0% 36129

dec07 31000 6248 37248 3% 35698 225 35923

0% 35923

jan08 31000 7020 38020 3% 36470 225 36695

0% 36695

feb08 31000 7090 38090 3% 36540 225 36765

0% 36765

mar08 31000 7270 38270 3% 36720 225 36945

0% 36945

apr08 31000 8760 39760 3% 38210 225 38435

0% 38435

may08 31000 11034 42034 3% 40484 225 40709

0% 40709

jun08 31000 11090 42090 3% 40540 225 40765

0% 40765

jul08 31000 11146 42146 3% 40596 1054 41650

0% 41650

aug08 31000 11146 42146 3% 40596 1054 41650

0% 41650

sep08 31000 12218 43218 0% 43218 1214 44432

0% 44432

oct08 31000 12218 43218 0% 43218 1214 44432

0% 44432

nov08 28000 12400 40400 0% 40400 1316 41716

10% 38916

dec08 28000 12400 40400 0% 40400 1316 41716

10% 38916

jan09 28000 12558 40558 3% 37002 1330 38332

3% 37955

feb09 28000 12656 40656 3% 39436 1356 40792

10% 38076

mar09 17460 12656 30116 3% 29736 2656 32392

0% 32392

apr09 17460 5442 29902 3% 22739 2607 25346

0% 25346

may09 18820 5344 24164 3% 24004 2574 26578

0% 26578

jun09 20000 5124 25124 3% 24379 2535 26914

3% 26332

55


JUL 07- JUN 09

56


DEL-TYO RETURN FARE

jul0

7

sep07

nov07

jan08

mar

08

may

08ju

l08

sep08

nov08

jan09

mar

09

may

090

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000


Axis Title

Axis Title


Fuel component(YQ + YR) shows rising trend from 4774 in jul07 to 12400 in nov08

then show downward trend from 12400 in nov08 to 5124 in jun09 with lowest in

apr09.

Published fare shows smooth trend from 31000 in jul07 to 28000 in nov08 then shows

downward trend from nov08-jun09 with lowest in month of mar09i.e 17460

Net fare shows drastic change from 34449 in jul07 to 26332 in jun09 with rise trend

from jul07 –nov08 then major dump from feb09-jun09 with lowest in apr09 i.e. 32392


The dominating airline on this route is JAAL airline of Japan with the load factor of

60%-65%.

From may08-nov08, the bounce in net fare is due to the additive effect of fuel

surcharge.

Fuel surcharge increase due to the ATF hike.

From feb09-apr09, JAAL airline drop their fares drastically and due to the

competitive pricing, AIRINDIA has to do the same.

JAAL airline covers the destinations, across the globe, from TYO to DEL and then

FRA. The long distance coverage thus reducing per unit operational cost.

57


DELHI TO LONDON (DEL-LON) ONE WAY FARE

Period Pub. Fare

YQ + YR

Gross Fare

Commission Net Fare


jul07 13500 3553 17053 3% 16378 225 16603

0% 16603

aug07 17000 3568 20568 3% 19718 225 19943

0% 19943

sep07 13500 3469 16969 3% 16294 225 16519

0% 16519

oct07 13500 3469 16969 3% 16294 225 16519

0% 16519

nov07 13500 3869 17369 3% 16694 225 16919

0% 16919

dec07 13500 3869 17369 3% 16694 225 16919

0% 16919

jan08 17000 3857 20857 3% 200007 225 20232

0% 20232

feb08 13570 4095 17665 3% 16987 225 17212

0% 17212

mar08 18000 4144 22144 3% 21244 225 21469

0% 21469

apr08 17000 4923 21923 3% 21073 225 21298

0% 21298

may08 17000 5965 22965 3% 22115 225 22340

0% 22340

jun08 12990 6127 19117 3% 18468 225 18693

0% 18693

jul08 15000 6131 21131 3% 20381 225 20606

3% 20179

aug08 15000 5983 20983 3% 20233 225 20458

0% 20458

sep08 15000 5983 20983 3% 20233 225 20458

0% 20458

oct08 15000 6304 21304 0% 21304 225 21529

10% 20029

nov08 15000 6304 21304 0% 21304 225 21529

10% 20029

dec08 6930 6834 13764 0% 13764 225 13989

5% 12643

jan09 6930 6919 13849 3% 13305 225 13530

5% 13322

feb09 4830 7242 12072 3% 11711 1529 13240

5% 13006

mar09 4830 6933 11763 3% 11410 1529 12939

5% 12705

apr09 4830 7242 12072 3% 11710 1529 13239

5% 13005

may09 4830 7108 11938 3% 11580 1529 13109

5% 12875

jun09 6230 6813 13043 3% 12661 1529 14190

5% 13888

58


JUL 07-JUN

59


aug0

7oct0

7dec0

7feb

08ap

r08

jun08au

g08

oct08

dec08

feb09

apr0

9jun09

0

5000

10000

15000

20000

25000

Pub. Fare

YQ + YR

NN After PLB

Axis Title

Axis Title

DEL-LON ONE WAY FARE


Fuel component (YQ + YR) shows overall rise from 3553 in jul07 to 6813 in jun09.

Published fare shows zig zag trend during period jul07-jun08 then shows major dump

in the month of dec08.

Net fare also shows the zig zag trend with overall rise from jul07 to nov08 then

sudden fall in dec08 then smooth rise trend follows.

The dominating airlines on this route are Virgin airline, Lufthansa airline, British

Airways, Ethihad Airways with AIRINDIA.


The rise in net fare was due to the more demand in jul07. The net fare increase w.r.t

the published fare because of the commission given to the agents and fuel surcharge

also increase.

The fuel surcharge increase due to the ATF hike.

The zigzag motion is due to the comparative fares w.r.t the other foreign airlines.

60


DELHI TO LONDON (DEL-LON) RETURN FARE

Period Pub. Fare

YQ + YR

Gross Fare

Commission Net Fare


jul07 23900 6806 30706 3% 29511 3499 33010

0% 33010

aug07 26900 6836 33736 3% 32391 3537 35928

0% 35928

sep07 23900 6858 30758 3% 29563 3557 33120

0% 33120

oct07 23900 6636 30536 3% 29341 3454 32795

0% 32795

nov07 23900 7446 31346 3% 30151 3531 33682

0% 33682

dec07 19990 7414 27404 3% 26405 3328 29733

0% 29733

jan08 19990 7414 27404 3% 26405 3328 29733

0% 29733

feb08 24240 7890 32130 3% 30918 3326 34244

0% 34244

mar08 24500 8088 32588 3% 31363 3541 34904

0% 34904

apr08 23900 9546 33446 3% 32251 4151 36402

0% 36402

may08 21800 11630 33430 3% 32340 3498 35838

0% 35838

jun08 21800 11954 33754 3% 32664 3627 36291

0% 36291

jul08 22900 11962 34862 3% 33717 5324 39041

3% 38389

aug08 22900 11824 34724 3% 33579 5264 38782

0% 38782

sep08 22900 11824 34724 3% 33579 5264 38782

0% 38782

oct08 22900 9900 32800 3% 31697 4744 36441

10% 32800

nov08 22900 9900 32800 3% 31697 4744 36441

10% 32800

dec08 9900 13368 23268 0% 23268 4582 27850

5% 25355

jan09 6900 13538 20438 3% 19896 4595 24491

3% 24085

feb09 6900 13566 20466 3% 19852 6021 24264

5% 23929

mar09 6900 13566 20466 3% 19852 5712 25564

5% 25229

apr09 6900 14184 21084 3% 20451 6020 26471

5% 26137

may09 6900 13919 20819 3% 20194 6087 26281

5% 25947

jun09 8900 16026 22226 3% 21568 6379 27947

5% 27516

61


JUL 07-JUN 09

62


DEL-LON RETURN FARE

aug0

7oct0

7dec

07feb

08ap

r08

jun08

aug0

8oct0

8dec

08feb

09ap

r09

jun090

5000

10000

15000

20000

25000

30000

35000

40000

45000


Axis Title

Axis Title


Fuel component (YQ + YR) shows overall rise trend from 6806 in jul07 to16026 in

jun09.

Published fare shows drastic dump from 23900 in jul07 to 8900 in jun09 with major

downfall nov08- may09.

Net fare shows upward trend from 33010 in jul07 to 38782 in sep08 then major

decline in sep08-feb09.It shows overall decline trend.

The dominating airlines on this route are Virgin airline, Lufthansa airline, British

Airways, Ethihad Airways with AIRINDIA.


The rise in net fare was due to the more demand in jul07. The net fare increase w.r.t

the published fare because of the commission given to the agents and fuel surcharge

also increase.

The fuel surcharge increase due to the ATF hike.

The zigzag motion is due to the comparative fares w.r.t the other foreign airlines.

63


CHAPTER-6

INTERPETATION OF FARES TREND (INTERNATIONAL)

Fares are fluctuating because of following reasons:

The fluctuations in fares at these international routes are due to cyclic variation in

aviation industry. Aviation industry is in trap of recession from last two year and the

overall growth is also declining.

As far as fuel component (YQ+YR) is concerned, the ATF hike is one of the

dominating factors in fluctuation of the fares.

The fares of other international airlines also affect the fares of AIRINDIA because of

the market characteristics and competition.

AIRINDIA is losing its market share because of the declining capacity utilisation and

load factor. The other airlines thus fetching up the passengers.

Published fare decline due to recession that is still affecting the aviation industry. So

to maintain the loyal passenger AIRINDIA lower down its fares.

Most of the airlines have big pockets i.e. they can afford losses but the same story is

opposite in case of AIRINDIA.

Most foreign Airlines use Jambo747-ER and 747-LR aircraft on the particular route

that covers the long journey resulting into lowering down per unit cost.

The fare trends fluctuate because of the financial condition of the AIRLINE itself.

The Foreign Airlines i.e. Emirates, Cathay Pacific, Gulf Air, Singapore Airlines are

dominating at their particular routes and much potential in terms of finance.

64


CHAPTER-7

NEW DESTINATIONS

A. DOMESTIC

There are a few destinations which have not been exploited to the maximum. This is because

of the proximity of these places via road and rail transport. Two of these places are Agra and

Uttarakhand. Both of the places have a substantial number of tourists coming to these places

every year.

Agra gets a good number of international tourists as it has the Taj Mahal which is one of the

seven wonders of the world. Agra also has a few other sites which are of historical

importance. A flight can be started from Delhi to Agra by an ATR so that it can be

commercially viable. The seats offered should be in only economy class as the time of flight

will be very less.

Uttarakhand is a destination which attracts mostly domestic tourist as it has a lot of places

having religious significance. It has an airport 25 kms away from capital city, Dehradun,

which has been recently upgraded to handle A 320 fleet as well. Dehradun is the centre from

where pilgrims can go to Badrinath, Kedarnath, Haridwar, Rishikesh etc. and holiday tourist

can go to places like Mussoorie. Kingfisher Red is the only big operator on this route offering

a ticket at Rs. 8500. As the flight duration is only for 45 minutes the seats should be offered

only in the economy class.

Both the places can fetch good business for LCCs segment with both the places attracting

many domestic and international tourists. It should be kept in mind that airlines would not be

competing on these routes not only with competitor airlines but also with road and rail

transport. Therefore, the airlines should make the marketing mix accordingly.

Destinations not covered by Air India

Out of all destinations where Air India doesn’t fly in the domestic sector, there are six

destinations where Jet Airways flies and thirteen destinations where Kingfisher flies. There

are three destinations to which both Kingfisher and Jet Airways fly. The table 6.1 shows the

destinations to which Kingfisher flies and Air India doesn’t fly and their frequency. The table

6.2 shows the destinations where Jet Airways flies and Air India doesn’t.

65


Table 6.2: Destinations where Kingfisher flies and Air India doesn’t

Destination City connected Flights/week

Belgaum Bangalore 4

Bhavnagar Mumbai 7

Bhuj

Mumbai 7

Nagpur (via Mumbai) 7

Dharamsala Delhi 7

Hubli Bangalore 7

Mumbai 7

Hyderabad (via Bangalore) 7

Kandla Mumbai 7

Kolhapur Mumbai 7

Nasik Mumbai 14

Rajahmundry

Hyderabad 7

Vishakhapatnam (via Hyderabad) 7

Sholapur Mumbai 4

Shimla Delhi 14

Tuticorin Chennai 7

Vijayawada

Hyderabad 7

Bangalore 7

Table 6.2: Destinations where Jet Airways flies and Air India doesn’t

Destination Connecting city Flights/week

Bhavnagar Mumbai 7

Bhuj Mumbai 14

Diu Mumbai 6

Gorakhpur Delhi 5

Porbandar Mumbai 6

Rajahmundry Hyderabad 6

The fig 6.1 shows the number of flights originating from the destinations where Air India

doesn’t fly and Kingfisher or Jet flies.

66


Figure 6.1: Existing flights from where only Kingfisher or Jet Airways fly

Belgau

m

Bhavnaga

rBhuj

Dharamsal

aHubli

Kandla

Kolhapur

Nasik

Rajahmundry

Sholap

urSim

la

Tuticorin

Vijayaw

ada Diu

Gorakhpur

Porbandar

12

34

56

78

910

1112

1314

1516

4

14

21

7

14

7 7

1413

4

14

7

14

65

6

According to the number of flights originating from a destination following are the top six

potential destinations:

Bhuj

Bhavnagar

Hubli

Nasik

Shimla

Vijayawada

Jet Airways and Kingfisher both fly to Bhuj and Bhavnagar. The airlines fly only economy

class on the route. The ticket to Mumbai from Bhavnagar is around Rs. 3000 and from Bhuj

is around Rs. 3500. The duration of flights to Mumbai is around an hour from both the

destinations. The destinations are attractive for operating smaller planes in the LCC business

model.

Hubli is a city in Northern Karnataka and is situated 20 KM from Dharwad which is the

commercial and business centre for Northern Karnataka. It is connected to Mumbai,

67


Bangalore and Hyderabad (via Bangalore) with 14 flights per week departing from Hubli.

Kingfisher’s LCC Kingfisher Red is the only carrier flying from Hubli.

Nasik is located in Maharashtra around 180 Km from Mumbai and is referred as the “Wine

capital of India”. Nasik is the third most industrialized city after Mumbai and Pune in

Maharashtra. Nasik is also connected by Kingfisher Red to Mumbai and has very low fares

of around 1500 and duration of flight to Mumbai to around an hour.

Vijayawada is the third largest city of Andhra Pradesh and has gained the name of Business

capital of Andhra Pradesh over the years. It is 275 Km from Hyderabad and is connected to

Hyderabad and Bengaluru Kingfisher Red with prices around 4500 for Hyderabad and 3000

for Bengaluru.

Shimla is the capital of Himachal Pradesh and is a popular tourist destination. It is 365 Km

from New Delhi by Kingfisher Red. The fare on the route is high with prices around Rs 9500.

All the six destinations have varying level of fares but are operated primarily by Kingfisher

Red using the ATR aircraft (except for Bhuj where Kingfisher operates 320). The destinations

have short duration flights with capacity in each flight varying around 50. These destinations

can be attractive if operated in the LCC mode.

68


CHAPTER-8

SWOT ANALYSIS OF AIR INDIA

Strengths:

It has the best Reach among the players.

It has the largest and the most diverse fleet strength.

Air India has a wide range of promotional schemes among the players. It offers the

best coupon schemes amongst the airlines and provides the covers a broader market

in terms of discounted fares provided compared to Jet and Kingfisher.

It has the best holiday packages in terms of number of destinations covered and

combinations offered. Prices of the holiday packages are also competitive.

It has strong Brand name and oldest Airline.

It has strong Govt.backup & monopoly in various international routes.

It has established infrastructure and prime parking slots & space

Weaknesses:

Manual inventory management compared to automated inventory management used

by Jet and Kingfisher

Despite best fleet and reach Air India is only third in terms of market share. The

seat factor was lowest among the players for the first quarter of 2009.

Poor HR Strategies and management.

Poor cost control and loss of market.

Highest manpower ratio to aircraft.

Air India lags behind Jet Airways and Kingfisher in terms of airline and non airline

partners. This is significant for the FFP especially when the three FSCs offer similar

benefits to the passengers.

69


Opportunities:

As per “Airports Authority of India, Foundation for Aviation & Sustainable Tourism”,

the domestic traffic will witness a six to seven percent growth till 2017. The growth

presents an opportunity to improve capacity utilization.

It can tap the various international routes where other airline is not operating as it

has wide code sharing.

Airlines can charter into routes where there are very less players operating and can

gain a competitive advantage.

Threats:

LCCs have become strong players and eating the market share of FSCs. The market

share of Indigo and Spice jet increased to 14 percent and 12 percent from 10 percent

each last year.

There has been an alliance between Jet and Kingfisher who together own more than

50 percent of capacity and the market share.

Only FSC without a well famed LCC in the domestic market.

Challenges:

Shedding the negative image of Air India.

Excess capacity leading to frequent fare drops/ dilution of yields.

Prolific Expansion of low cost carriers.

Retaining customers who have experienced deficiency in services.

Resource and Strategic Management

Regaining the faith and reliability on MAHARAJA i.e. AIR INDIA

Problems:

Lack of selling efforts in interior cities.

Tracking of productivity data for various incentive or PLB schemes.

Agents not authorized to re-issue or revalidate tickets on international ticketing.

Interface problem between GDS system.

Inadequate staff in customer interface areas such as Reservations, Sales, etc. which

hampers effective customer services.

Poor attention towards the Passenger and service quality.

70


FUTURE PLANNING AND PROMOTIONAL SCHEMES

AIR INDIA is going to create F&J cell to promote High Yield Business in Mid

August09.

Dedicated sales officer for customized servicing of F&J passengers.

Compilation of Exhaustive data bank of High net worth passengers, corporate, CEO’s

etc.

Development of newsletter to high yield passengers with updates of products,

schemes etc.

Personalized letter to potential and actual F&J passengers for post flight feedback.

Enhancing reach to Trade Bodies such as ASSOCHAM, FICCI, CII etc.

Special deals with corporate and GOI.

Participation through sponsorship in high profile events.

Conducting road show/Presentation to Agents and Corporate highlighting the New

AIR INDIA.

Integration of NACIL and Sales team.

Companion free scheme for West-USA/EUROPE up to Nov09.

AIR INDIA will launch bonus free travel for spouse in first and executive class (F&J)

for Paris, London and New York.

AIR INDIA will offer 30KGS free Baggage allowance for travel to London, Paris and

FRA.

Complimentary pick-up and drop for F&J class passengers till 31st march 2010.

AIR INDIA is going to Introduce New One India D.G.C.A commissionable fares in

August09.

AIR INDIA is offering 3% IATA commission on basic fare plus fuel surcharge till

March 2010 and no Fuel surcharge will be charged on infant fares from India to

USA/CAN/UK/EUR.

Introduction of Corporate Super Saver Scheme to strengthen the high yield

passengers.

Special discounted Domestic and International night fare (25%) between 2300 to

0500 hrs. from Sep09 onwards.

71


RECOMMENDATIONS & SUGGESTIONS

Air India is a strong player in the market with the potential to become the leader once again.

It covers widest range of destinations, has the best fleet and offers competitive fares. Based

on the study following areas can be targeted in the quest to become the leading Indian player.

Evaluating new destinations to Agra, Uttarakhand, Bhuj, Bhavnagar, Hubli, Nasik,

Shimla, and Vijayawada to better utilize capacity and increase overall seat factor.

Implement dynamic pricing. Currently the pricing is not correlated to other players

and can lead to a high response time to change in market.

Evaluating possibility of launching or acquiring an LCC to compete with the rapidly

growing Indigo and SpiceJet and to get to a level field with Kingfisher and Jet

Airways.

Publicity blitzes focused on Products/Fares/Special Offers.

Good PR with media to avoid negative publicity.

Using the Sports personalities on our rolls, for publicity and sales promotion.

Participation in Mega events such as World class sports events, Cultural shows etc.

Using customer data base for direct publicity using SMS blast.

Updating passengers through in –flight announcements and magazines.

Develop software for effective tracking of productivity for successful implementation.

Built up Preferred agent Scheme which will give major boost to sales efforts.

Adequate number of trained staff at Customer contact points viz. call center, sales,

reservation, airport and in-flight.

Sales kit for sales officer including Laptops and internet facility.

Allow agents to re-issue tickets on international ticketing.

Valet services for F & J passengers and use of premium cars for limo services.

Creation of informative and interactive web portal for agents /passengers.

Adopting flexible nature in corporate deals with the aim of getting F&J passengers.

Once business is retained, yield can be increased.

Have to have a popular Brand Ambassador.

72


REFERENCES

Dieter Westermann (2005), (Real time) dynamic pricing in an integrated revenue

management and pricing environment: An approach to handling undifferentiated fare

structures in low-fare markets, Journal of Revenue and Pricing Management Vol. 4.

Paolo Malighetti, Stefano Paleari, Renato Redondi (2000), prices strategies of l

airlines: The Ryan air case study, Journal of Air Transport Management,

doi:10.1016/j.jairtraman.2008.09.017.

Barry C. Smith, John F. Leimkuhler, Ross M. Darrow, Yield Management at American

Airlines, Franz Edelman Award Papers (Jan. - Feb., 1992), Vol. 22.

http://www.indianairlines.in/index.aspx

http://www.airindiaholidays.in

http://www.indiastat.com

www.iata.org

www.dgca.nic.in

www.airindia.com

Air India Data Base

73

http://www.indianairlines.in/index.aspx


APPENDICES

Appendix A: Fleet

Appendix A.1

NACIL Passenger Fleet

Aircraft Owned Leased OrdersCapacit

yNotes

Airbus A310-

3004 4 0

202

4 owned, 3 dry leased, 2 wet leased;

operated by Air India; will be replaced by

the Boeing 787-8.

4 owned will be converted to freighters

for Air India Cargo.

Airbus A310

Freighter4 - - Operated by Air India

Airbus A319-

10011 5 9

144

120

122

Operated by Indian Airlines

Airbus A320-

20030 16 4

146

124

Operated by Indian Airlines, All old

A320-200s will be replaced by 2014.

Airbus A321-

20012 0 8

172Operated by Indian Airlines.

Airbus A330-

2000 2 0

279 Operated by Air India; will be replaced

by the Boeing 787-8.

ATR 42-320 0 7 0 48 Operated by Indian Airlines

Boeing 737-

200/Adv6 0 0

119

Stored since 2000s; previously operated

by Air India Regional (Alliance Air);

converted to freighters for Air India

Cargo.

Boeing 737-

2007 - -

119Operated by Indian Airlines

Boeing 737- 15 7 4 189 Operated by Air India Express.

74

http://en.wikipedia.org/wiki/Air_India_Express

http://en.wikipedia.org/wiki/Boeing_737-800

http://en.wikipedia.org/wiki/Alliance_Air




http://en.wikipedia.org/wiki/ATR_42


http://en.wikipedia.org/wiki/Airbus_A330-200






http://en.wikipedia.org/wiki/Indian_Airlines




http://en.wikipedia.org/wiki/Air_India




800 186

Boeing 747-

4006 0 0

293 Operated by Air India; to be retired by

2016.

Boeing 777-

2000 1 0

272ex-United Airlines; operated by Air India.

Boeing 777-

200ER0 3 0

292 Ex-United Airlines; operated by Air

India.

Boeing 777-

200LR5 0 3

238

241

Operated by Air India, exclusively for

non-stop flights to the United States.

Boeing 777-

300ER5 0 10

300Operated by Air India.

Boeing 787-8 0 0 27Will be operated by Air India; to replace

all dry leased A310-300s and A330-200s.

Bombardier

CRJ7000 4 0

74Operated by Indian Airlines.

Total 105 49 65

Source: - DGCA

75

http://en.wikipedia.org/wiki/Bombardier_CRJ700

http://en.wikipedia.org/wiki/Bombardier_CRJ700

http://en.wikipedia.org/wiki/A330-200

http://en.wikipedia.org/wiki/A310-300


http://en.wikipedia.org/wiki/Boeing_777-300ER


http://en.wikipedia.org/wiki/United_States

http://en.wikipedia.org/wiki/Non-stop_flight

http://en.wikipedia.org/wiki/Boeing_777-200LR

http://en.wikipedia.org/wiki/Boeing_777-200LR



http://en.wikipedia.org/wiki/United_Airlines







Airline Partners

19 partners

Code- sharing

8 code share partners.

76


Conversion Partners

10 conversion partners

Hotel Partners

20 hotel partners

Other Partners

77


8 other partners

78

Fare Analysis of Air India

Documents

project report

monopoly of air india

airindia u

summer training

mba aviation management

student of university

sales arena

manish yadav r120108025