Spicejet industry analysis

SPICEJET INDUSTRY ANALYSIS

SPICEJET • Parent company : spice jet

• Category : Indian domestic sector

• Sector : airlines

• Tagline/slogan: flying for everyone

• Usp: lowest price

• Segment: cost conscious passengers

• Target: lower middle class/ middle class

• Positioning : low cost no frills

INTRODUCTION

• Spice jet is a low-cost airline based in New Delhi.

• It began service in 23 May 2005.

• Spice Jet was earlier known as Royal Airway

• The director of this airlines is Mr. Ajay Singh.

• This airline has more than 2500 employees working with them

currently.

• SpiceJet names all its aircraft after various spices and herbs like

Cinnamon, Thyme, Oregano.

Swot analysis

STRENGTH

• Entered with RS 99 fares for the

first 99 days

• Strong backing by the promoters

• Having more than 35

destinations in India

• Good presence in the market due

to its branding and advertising

SWOT

WEAKNESS• Low market share due to

presence of significant competition

• no international destinations

• Dependency on leased assets

• Small load deficiency compared with competitors

OPPORTUNITIES• Growing population for• demographics• growing interest on tourism • Growing aviation market• International tie ups would

boost brand image• Tax holiday on aircraft

leasing– The Union Budget Government of India announced 5year tax holiday on aircraft leasing.

THREATS :

• RISING FUEL COST

• STRONG COMPETITION

• CHANGING GOVERNMENT POLICIES

SWOTANALYSIS

STRENGTH

• One of the largest low cost carrier

• Only LCC to make consistent profit

• Has entered international markets and boosted its brand value

• Increased brand recall due to goodmarketing and advertising

WEAKNESS• Not on too many routes

compared to competitors • Still has to establish itself

on international destinations

• Concentrate only on middle class society

• Customers are not happy with Inflight services

OPPORTUNITITES• Attracted loyal customers

and converted them into indigo flyers

• Opportunity to go abroad markets

• Rapid expansion by buying new airbuses

• International tie-ups would boost the image of indigo

THREATS • Strong competition in the

LCC segment• Rising fuel cost • Changing government

policies • Companies are cutting air

travels due to economic crises

STRENGTH

• 1. Has created a good image among Indian fliers2. Strong backing from promoters

• 3. Awarded as one of the most premium domestic airlines in India

• 4. More than 1 million passengers catered in a year

• 5. Exclusive and premium advertising and sponsorship give it a high brand recall

• 6. It has flights to 25 Indian destinations and international flights as well

WEAKNESS

• 1. Financial issues due to Heavy Debt

• 2. Laying off employees caused a bad image

OPPORTUNITIES

• 1. Reputation of providing the best amenities in Indian skies

• 2. Financial stability can improve operations

• 3. More domestic and international destinations

THREATS 1. LCCs eating up the market

share2. Rising Fuel Costs3. Pressure from aviation

committees and govt policies

strength• Strong backing by the

promoters• Nearly 1000 flights per

week• Covers almost all major

cities• Good branding and

marketing in India

weakness

• market share is very less• It entered Indian market

very late• Not too many destinations

compared with its competitor

OPPORTUNITIES• More destinations yet to be

covered• Global operations can also

be a value addition

THREATS

• Plenty of new LCC’s to compete with who already have taken the lead

• Rising labour costs• Rising fuel costs

Airline Industry market analysis

EXTERNAL ANALYSIS OF SPICEJET

CUSTOMER ANALYSIS• SEGMENTATION Geographic : tier I and tier II cities Target : premium class of train travellers business people corporate employees Psychographic Segmentation : aiming for higher life style

• UNMET NEEDSMore international destinationsNeed for technological advancementNeed for trained cabin crews

COMPETITOR ANALYSIS

COMPETITOR ANALYSIS

• Quality• Reputation• Customer security• Product performance• Product features• Price• Geo coverage• Add effects

ENVIRONMENTAL ANALYSISPEST

POLITICAL FACTORS : • Bureaucracy• No clear policies for state carriers

ECONOMIC FACTORS:• increasing tax and tariff • Price depends upon individual firm’s behaviour• International fuel price

PEST .. (CONT)

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

TECHNOLOGICAL FACTORS : • Night landing facilities• Operation during winter• Capital intensive technology

MARKET AND SUBMARKET ANALYSIS

• MARKET : aviation industry• SUB MARKET : low cost carriers ( LCC’S)• SIZE AND GROWTH : 14 % of market share• MARKET ATTRACTIVENESS : fast

transportation

MARKET TRENDS ( EMERGING MARKET)

India’s fastest growing tourism destination (majordemand driver)

• economic growth• growth in business travels Low cost carriers ( Lcc’s)• Resulted in middle income people people and self employed

shifting from premium class travel in trains to air travel• Domestic air passengers grew at a 38.5% from 25 %• CAPA predicts that domestic traffic would increase from 25%

to 30%

CUSTOMER PROFITABILITY

• Focusing towards enhancing the customer experience • Complimentary supervision of unaccompanied minors • Hot beverage and combo meals available for sale• Waiver on additional charges on sport kits Reaching out to business travellers : 1. business travellers can collect their boarding passes on

the same day return flight. 2. introduction of corporate travel programs 3. free two piece baggage

Key success factors

• Low cost carrier • Point to point services • Cheaper product design • Sales via internet• Word of mouth marketing

CUSTOMER SERVICES

• personal wallet at airport• Personal and exclusive baggies• Refreshment and music• Three course meal• Baggage assistance

Promotional tools

• Word of mouth marketing• Print ads in newspapers • TV commercials• Internet media initiatives • Hoardings in railways, platforms, airports

and shopping malls

COST AND VALUE DRIVERS (COMPETATIVE ADVANTAGE)

HIGH SEAT DENSITY :• Single class 189 seats per flight• Focus on maximum space utilization for generating

more revenue per flight

DIRECT DISTRIBUTION OF TICKETS : • Sells its ticket via internet or call centres

HIGH CRAFT UTILIZATION:• consistently reporting high aircraft utilization

Strategic uncertainty

• Uncertainty in forecasting the future• Market fluctuations • Rapidly changing clients How to over come ?• Government should develop and promote

policies

SCENARIO ANALYSIS

• control of emission level• Risk of high-jacks • Increasing fuel price • Decreasing rupee value

How to overcome ?• Increase security level• Fuel hedging

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