Air Deccan
-
Upload
angita-kumari -
Category
Documents
-
view
55 -
download
4
Transcript of Air Deccan
A CASE STUDY ON AIR A CASE STUDY ON AIR DECCANDECCAN
Entrepreneurship Entrepreneurship ManagementManagement
22
AIRLINES
““Once you get hooked on the airline Once you get hooked on the airline business, it's worse than dope.”business, it's worse than dope.”
““This is a nasty, rotten business.”This is a nasty, rotten business.”
““Air transport is just a glorified bus Air transport is just a glorified bus operation.” operation.”
33
GLOBAL CARRIERS:LOW COST AIRLINESGLOBAL CARRIERS:LOW COST AIRLINES
USUSIrelandIrelandIrelandIrelandMalaysiaMalaysiaAustraliaAustraliaSaudi ArabiaSaudi ArabiaSingaporeSingaporeGermanyGermanyUKUKUSUS
Southwest AirlinesSouthwest AirlinesRyan airRyan airEasy jetEasy jetAir AsiaAir AsiaVirgin BlueVirgin BlueAir ArabiaAir ArabiaValue airValue airAir BerlinAir BerlinAir SouthwestAir SouthwestUS AirwaysUS Airways
44
WORLDWORLD SCENARIO - LOW COST AIRLINES SCENARIO - LOW COST AIRLINES
The successful low cost airlines are more profitable The successful low cost airlines are more profitable than established carriersthan established carriers
Ryanair has a market capitalisation of about £3 Ryanair has a market capitalisation of about £3 billionbillion
Globally, the largest and most successful low cost Globally, the largest and most successful low cost airline is Southwest in the USairline is Southwest in the US
Operating Margins of different international airlines:Operating Margins of different international airlines:RyanairSouthwestUnited AirlinesLufthansaAir FranceKLMBritish Airways
22.7%21.8%11.9%
5.7%3.5%1.5%0.9%
55
AVIATION INDUSTRY IN INDIA : AVIATION INDUSTRY IN INDIA : CHARACTERISTICSCHARACTERISTICS
Huge PotentialHuge PotentialUnder penetrated marketUnder penetrated market
o Total Passenger Traffic : 50 millionTotal Passenger Traffic : 50 milliono Passenger trips per annum : Passenger trips per annum :
India : 0.05 India : 0.05
United states : 2.02United states : 2.02
Untapped air cargo marketUntapped air cargo market
66
AVIATION INDUSTRY IN INDIA : AVIATION INDUSTRY IN INDIA : CHARACTERISTICSCHARACTERISTICS
India GDP : 7.3 % per annum
Domestic air travel : 20 – 25 %
WTTC Travel & Tourism : 8.8 %Over next 10 years
Medium Term Growth Forecast :
77
AVIATION INDUSTRY IN INDIA : AVIATION INDUSTRY IN INDIA : CHARACTERISTICSCHARACTERISTICS
Constraints :o Infrastructure constraintso Shortage of airport facilitieso Parking bayso Air traffic control facilitieso Takeoff and landing slots.o Less than 100 airports having more than one daily service.
88
MACRO ENVIRONMENT ANALYSISMACRO ENVIRONMENT ANALYSIS
Main Factors : Main Factors :
PPolitical olitical
EEconomicconomicSSocio-cultural ocio-cultural
TTechnologicalechnologicalOther Factors :Other Factors :
DemographicDemographic Natural EnvironmentNatural Environment
99
MACRO ENVIRONMENT ANALYSIS : MACRO ENVIRONMENT ANALYSIS : POLITICALPOLITICAL
Open Sky PolicyOpen Sky PolicyDeregulations in different spheresDeregulations in different spheresLow entry barriersLow entry barriersFDI limits :FDI limits :
o 49 % for airlines 49 % for airlines o 100% for airports100% for airports
1010
MACRO ENVIRONMENT ANALYSIS :MACRO ENVIRONMENT ANALYSIS :ECONOMICECONOMIC
Growing middle class incomeGrowing middle class income Consistent GDP growth of more than 8% and Consistent GDP growth of more than 8% and
projected rate in two digits projected rate in two digits Hike in average salary 14%(highest) in the Hike in average salary 14%(highest) in the
worldworld Tourism industry growth :8.8 %in 2005 Tourism industry growth :8.8 %in 2005
1111
MACRO ENVIRONMENT ANALYSIS :MACRO ENVIRONMENT ANALYSIS :SOCIO-CULTURALSOCIO-CULTURAL
Growing middle class :Growing middle class :o 1993-1999 : 39.5 m to 56.7 m households1993-1999 : 39.5 m to 56.7 m householdso 2005 : 300 m2005 : 300 mo 2010 : 400 m (Estimated)2010 : 400 m (Estimated)
Increase in leisure travel by tourists by 15 % in Increase in leisure travel by tourists by 15 % in 20052005
Foreign tourists in 2006 : 3.2 mnForeign tourists in 2006 : 3.2 mnStatus symbol to travel in plane.Status symbol to travel in plane.
1212
MACRO ENVIRONMENT ANALYSIS :MACRO ENVIRONMENT ANALYSIS :TECHNOLOGICALTECHNOLOGICAL
Modernization & Privatization of AirportsModernization & Privatization of Airports
Modern Technology for efficient handling of aircraft, Modern Technology for efficient handling of aircraft, passenger and cargo.passenger and cargo.
Example : ILS, CAT-3Example : ILS, CAT-3
Developing Greenfield Airports with Private Developing Greenfield Airports with Private SectorSector
Example : Bangalore Airport Corporation Ltd.Example : Bangalore Airport Corporation Ltd.
1313
MACRO ENVIRONMENT ANALYSIS :MACRO ENVIRONMENT ANALYSIS :DEMOGRAPHIC AND NATURALDEMOGRAPHIC AND NATURAL
Changing pattern of consumersChanging pattern of consumersHighest percentage people of age group 20-25Highest percentage people of age group 20-25Educational environmentEducational environmentShift towards family conceptShift towards family conceptHigh energy costHigh energy cost
1414
LOW COST CARRIERS IN INDIALOW COST CARRIERS IN INDIA
Air DeccanAir DeccanSpice JetSpice JetIndigo AirlinesIndigo AirlinesGo AirGo AirJetlite (Formerly known as Air Sahara)Jetlite (Formerly known as Air Sahara)
1515
BUSINESS MODEL OF LOW COST BUSINESS MODEL OF LOW COST CARRIERSCARRIERS
A single Passenger classA single Passenger class A single type of airplane reducing training A single type of airplane reducing training
and service cost and service cost No frills No frills such as free food/drinks, lounges etc.such as free food/drinks, lounges etc.Emphasis on direct sale of ticket through Internet Emphasis on direct sale of ticket through Internet
avoiding fee and commission paid to travel agents.avoiding fee and commission paid to travel agents.Employees working in multiple rolesEmployees working in multiple rolesUnbundling of ancillary charges to make the Unbundling of ancillary charges to make the
Headline fare lowerHeadline fare lower
1616
AVIATION INDUSTRY IN INDIA : AVIATION INDUSTRY IN INDIA : MARKET SHAREMARKET SHARE
The Domestic Aviation Market Share
34%
20%21%
8%
8%6%
2%
1%
Jet airways
Indian
Air Deccan
Air Sahara
Kingfisher
Spicejet
Goair
Others
1717
MARKET SHARE IN LCC MARKET SHARE IN LCC SEGMENTSEGMENT
1818
AIRLINE INDUSTRY IN INDIA : AIRLINE INDUSTRY IN INDIA : SERVICE VS PRICE GRAPHSERVICE VS PRICE GRAPH
S
E
R
V
I
C
E
P R I C E
AIR DECCANAIR DECCANCOME SIMPLIFLY WITH US…COME SIMPLIFLY WITH US…
Market Share : 21.2 %Market Share : 21.2 %
2020
VISION AND MISSIONVISION AND MISSION
Vision : Vision :
Empower every Indian to flyEmpower every Indian to fly
Mission : Mission :
To demystify air travel in India by providing reliable, low cost To demystify air travel in India by providing reliable, low cost and safe travel to the common man by constantly driving and safe travel to the common man by constantly driving down the air fares as an ongoing missiondown the air fares as an ongoing mission
2121
MARKETING MARKETING STRATEGYSTRATEGY
Common Man :Common Man :The Brand Ambassador for Air Deccan, the people’s airline is The Brand Ambassador for Air Deccan, the people’s airline is Mr. R.K Laxman’s ‘Mr. R.K Laxman’s ‘Common ManCommon Man’’
Free Tickets :Free Tickets :
Images courtesy of Air Deccan
2222
MARKETING MARKETING STRATEGYSTRATEGY
Advertisement through print, radio and billboardsAdvertisement through print, radio and billboardsIn flight magazine for revenue generatingIn flight magazine for revenue generatingIn flight shopping scheme called “Brand for less” – In flight shopping scheme called “Brand for less” –
AVA MerchandisingAVA MerchandisingTie-up with Café Coffee DayTie-up with Café Coffee DayICICI-Travel agent purchase cardICICI-Travel agent purchase cardTie-ups with HPCL and Reliance Web WorldTie-ups with HPCL and Reliance Web World
2323
HOW AIR DECCAN CUTSHOW AIR DECCAN CUTS
COSTCOST??
Quicker turnaround time Quicker turnaround time Lower distributions costs Lower distributions costs All economy seating configuration All economy seating configuration No free catering on boardNo free catering on boardAlternative revenue channels Alternative revenue channels 100% web enabled bookings – e ticketing 100% web enabled bookings – e ticketing Enhanced cash flow management Enhanced cash flow management
2424
SWOT ANALYSISSWOT ANALYSIS
Strengths :Strengths : Leader in LCC segment : Leader in LCC segment :
First to target the middle class : First mover advantageFirst to target the middle class : First mover advantage Highest load efficiencyHighest load efficiency Flies to destinations in the hinterlandFlies to destinations in the hinterland A ‘Lean-and-Mean’ approach to staffingA ‘Lean-and-Mean’ approach to staffing
2525
SWOT SWOT ANALYSISANALYSIS
Weaknesses :Weaknesses : Focuses mostly on South Indian marketFocuses mostly on South Indian market Image plagued by frequent breakdowns and nearImage plagued by frequent breakdowns and near
misses misses Very limited advertisingVery limited advertising Reached at the threshold of cost efficiencyReached at the threshold of cost efficiency
2626
SWOT SWOT ANALYSISANALYSIS
Opportunities : Opportunities : Extensive network to capitalize Air CargoExtensive network to capitalize Air Cargo
businessbusiness Plenty of scope for expansion of operationsPlenty of scope for expansion of operations Strengthen its position in Chartered flightStrengthen its position in Chartered flight
segmentsegment Could start ‘Contractual Employment’Could start ‘Contractual Employment’
2727
SWOT SWOT ANALYSISANALYSIS
Threats : Threats :
High attrition rateHigh attrition rate The threat of new entrants into Low Price Segment The threat of new entrants into Low Price Segment
especially Indigo, Go Air and Spice Jetespecially Indigo, Go Air and Spice Jet High Risk PerceptionHigh Risk Perception
PORTER FIVE FORCE ANALYSISPORTER FIVE FORCE ANALYSIS
• Threat of new entrantsThreat of new entrants
• Power of buyers.Power of buyers.
• Power of Suppliers.Power of Suppliers.
• Availability of substitutes.Availability of substitutes.
• Competitive rivalry.Competitive rivalry.
OPEN SKY POLICYOPEN SKY POLICY
• Liberalization of the Aviation Industry (Open Sky Policy):Liberalization of the Aviation Industry (Open Sky Policy):– Ended monopolies of state carriersEnded monopolies of state carriers– Increased number of players in the market:Increased number of players in the market:
Pre 1991 – Two Pre 1991 – Two Currently – More than TenCurrently – More than Ten
• Increased FDI limit in Air Transport ServicesIncreased FDI limit in Air Transport Services 74% in Airports74% in Airports 49% in Airline Carriers49% in Airline Carriers
• Restructuring and development of AirportsRestructuring and development of Airports• Privatization of AirportsPrivatization of Airports
………………..Continued..Continued
Airport Status Operator Investment (USD million)
Hyderabad Under Construction - to be commissoned in 2008
GMR-Malaysia Airports 300
Bangalore Under Construction - to be commissoned in 2008
Siemens, L&T, Unique Zurich
300
Delhi Concession awarded - modernisation and upgradation
GMR-Fraport 1,750
Mumbai Concession awarded - modernisation and upgradation
GVK-Bidwest 1,750
Kolkata To be privatised
Chennai To be privatised
Total 4,100
•India & the United States signed a landmark agreement, permitting any number of airlines to operate any number of flights to any point in each other's territory. •The agreement will enhance passenger & cargo services between the countries, decrease airfares & accompany innovations & new partnerships in the aviation industry.
FUTURE TRENDS IN AVIATIONS FUTURE TRENDS IN AVIATIONS SECTORSECTOR
• 25.5 million Domestic Travelers by next 25.5 million Domestic Travelers by next 12 months12 months
• Airline Industry to be worth Rs. 35000 Airline Industry to be worth Rs. 35000 crores by 2010crores by 2010
• Growth to exceed that of China, France Growth to exceed that of China, France and Australiaand Australia
UB Group makes significant UB Group makes significant investment in Air Deccaninvestment in Air Deccan
• An initial investment of Rs.150 crores into An initial investment of Rs.150 crores into Deccan Aviation Ltd. had been made against Deccan Aviation Ltd. had been made against which shares were allotted and further which shares were allotted and further investments of Rs.396 crores were made investments of Rs.396 crores were made before the end of June.before the end of June.
• Captain G.R. Gopinath will continue as Captain G.R. Gopinath will continue as Executive Chairman, a new CEO will be Executive Chairman, a new CEO will be appointed reporting directly to the Board of appointed reporting directly to the Board of Directors. Directors.
• Kingfisher Airlines and Air Deccan will, Kingfisher Airlines and Air Deccan will, henceforth, work very closely together henceforth, work very closely together to exploit the significant synergies that to exploit the significant synergies that exist in the areas of operations and exist in the areas of operations and maintenance, ground handling, vastly maintenance, ground handling, vastly increased connectivity, feeder increased connectivity, feeder services, distribution penetration etc. services, distribution penetration etc.
• The Kingfisher-Air Deccan group will be the The Kingfisher-Air Deccan group will be the largest domestic airline with a fleet of largest domestic airline with a fleet of 7171 aircraft including aircraft including 4141 Airbus aircraft and Airbus aircraft and 3030 ATR ATR aircraft. This combined airline powerhouse will aircraft. This combined airline powerhouse will cover all segments of air travel from low fares cover all segments of air travel from low fares to premium fares and offer the maximum to premium fares and offer the maximum number of number of 537537 daily flights covering the single daily flights covering the single largest network in India connecting largest network in India connecting 6969 cities cities whilst taking advantage of unparalled synergy whilst taking advantage of unparalled synergy benefits arising from a common fleet of aircraft. benefits arising from a common fleet of aircraft.
ENTREPRENEURAL TRAITS OFENTREPRENEURAL TRAITS OF CAPT. G.R. GOPINATH CAPT. G.R. GOPINATH
• RISK TAKING:RISK TAKING: Most risk taking entrepreneurs to Most risk taking entrepreneurs to start a new concept of low cost airline in India. start a new concept of low cost airline in India.
• INNOVATIVE:INNOVATIVE: His concept was completely new to His concept was completely new to the Indian aviation industry. He applied many new the Indian aviation industry. He applied many new strategies in pricing, Marketing and distribution policy of strategies in pricing, Marketing and distribution policy of company.company.
• VISIONARY:VISIONARY: He had a vision of changing the He had a vision of changing the mode of transport of burgeoning Indian middle class.mode of transport of burgeoning Indian middle class.
• PERSUASIVE:PERSUASIVE: Managed to collect the required fund Managed to collect the required fund and people.and people.
• LEADERSHIP:LEADERSHIP: He influenced his staff to be He influenced his staff to be competive and punctual.competive and punctual.
COMPETITOR ANALYSISCOMPETITOR ANALYSIS
• Competition within current business designCompetition within current business design
• Competition in low cost formatCompetition in low cost format
• Withdrawal from the marketWithdrawal from the market
• Competition between low cost carriersCompetition between low cost carriers
SOME MAJOR PLAYERS…SOME MAJOR PLAYERS…
SPICE JETSPICE JETFLYING FOR EVERYONEFLYING FOR EVERYONE
Market Share : 6 %Market Share : 6 %
VISION AND VISION AND
MISSIONMISSION
Vision : Vision :
To ensure that flying is no longer only for CEOs and business To ensure that flying is no longer only for CEOs and business travelers, but for everyone travelers, but for everyone
Mission : Mission : To become India’s preferred low-cost airline, delivering the To become India’s preferred low-cost airline, delivering the lowest air fares with the highest consumer value, to price lowest air fares with the highest consumer value, to price sensitive consumers sensitive consumers
4040
MARKETING MARKETING STRATEGYSTRATEGY
Entered with Rs. 99 fares for first 99 Entered with Rs. 99 fares for first 99 days offering ‘low everyday spicey days offering ‘low everyday spicey fares’fares’
Aims to compete with Indian Aims to compete with Indian Railway’s AC segmentRailway’s AC segment
Aims at future fleet expansion to Aims at future fleet expansion to increase market share increase market share
4141
CHALLENGESCHALLENGES
Small fleet structureSmall fleet structureSmall load efficiency compared to Small load efficiency compared to
Air DeccanAir DeccanCompetition with new entrantsCompetition with new entrantsMarket share of East-central IndiaMarket share of East-central IndiaHigh attrition rateHigh attrition rate
4242
GOAIRGOAIRTHE PEOPLE’S AIRLINES – TO FLY THE PEOPLE’S AIRLINES – TO FLY
SMARTSMART
Market Share : 2 %Market Share : 2 %
4343
STRENGTHS AND STRENGTHS AND WEAKNESSESWEAKNESSES
Strengths :Strengths :Promoted by Wadia groupPromoted by Wadia groupGoAir Free FaresGoAir Free Fares
Weaknesses : Weaknesses : Small network : Only in Southern and Western IndiaSmall network : Only in Southern and Western IndiaSmall fleet structureSmall fleet structureLoad efficiencyLoad efficiency
4444
INDIGOINDIGOALWAYS AFFORDABLE, NO GIMMICKS, ALWAYS AFFORDABLE, NO GIMMICKS,
HASSLE FREEHASSLE FREE
Market Share : 0-1%Market Share : 0-1%
4545
MARKETING MARKETING STRATEGYSTRATEGY
Focuses on One thing :Focuses on One thing :
One type of airplane, fare, customer service, route One type of airplane, fare, customer service, route etc.etc.
Uses new Airbus A320-200 aircraftUses new Airbus A320-200 aircraftEfficient processesEfficient processes
4646
CURRENT TRENDS :CURRENT TRENDS :CONSOLIDATIONS ALL AROUNDCONSOLIDATIONS ALL AROUND
Kingfisher-Air Deccan DealKingfisher-Air Deccan Dealo Kingfisher buys out 26 % stake for Rs.550 crore.Kingfisher buys out 26 % stake for Rs.550 crore.o They have combined Market share of 33%They have combined Market share of 33%o They are second biggest player after Jet Sahara dealThey are second biggest player after Jet Sahara deal
Jet airways and Air Sahara mergerJet airways and Air Sahara mergero Air Sahara name changed to JetliteAir Sahara name changed to Jetlite
4747
FUTURE TRENDSFUTURE TRENDS The projection for Indian Aviation for 2020 is The projection for Indian Aviation for 2020 is
estimated at:estimated at:o 400 million passengers 400 million passengers
o Including 180 million domestic passengers Including 180 million domestic passengers
o 1,000 aircraft in the civil aviation sector1,000 aircraft in the civil aviation sector
Likely to follow the footholds of International Low Price Likely to follow the footholds of International Low Price Carriers e.g. Air Arabia, Southwest Airlines etc. Carriers e.g. Air Arabia, Southwest Airlines etc.
More emphasis will be on Arabian and South-East Asian More emphasis will be on Arabian and South-East Asian circuits.circuits.
4848
FUTURE TRENDS : PASSENGER FORECASTFUTURE TRENDS : PASSENGER FORECAST
Source : www.civilaviationweek.com
4949
FUTURE TRENDS : PROPOSED ADDITIONFUTURE TRENDS : PROPOSED ADDITION
Source : www.civilaviationweek.com
5050
THANK YOUTHANK YOU