Airline+Industry (1)

8/7/2019 Airline+Industry (1)

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LALA LAJPATRAI COLLEGE

AIRLINE INDUSTRYSERVICE SECTOR MANAGEMENT


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INDEXTable of Content Pg.No

Chapter 1

i. Introduction

ii. Importance

iii. Presence Scenario

iv. Classification & Types

v. Advantages

3

4

5

6

8Chapter 2

i. PEST Analysis: The Indian Airline Industry

ii. Five product levels

10

15Chapter 3

i. 4 Ps 17Chapter 4

i. Extended Marketing Mix 24Chapter 5

i. Segmentation 29Chapter 6

i. Role of Technology 31Chapter 7

i. 8 Quality Dimension 33Chapter 8

i. Conclusion

ii. Future

35

36

Reference 37

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CHAPTER ONE

INTRODUCTION

Airline Industry in India is one of the fastest growing aviation industries in the world.

With the liberalization of the Indian aviation sector, airline industry in India has

undergone a rapid transformation. From being primarily a government-owned industry,

the Indian airline industry is now dominated by privately owned full service airlines and

low cost carriers. Private airlines account for around 75% share of the domestic aviation

market. Earlier air travel was a privilege only a few could afford, but today air travel has

become much cheaper and can be afforded by a large number of people.

The origin of Indian civil aviation industry can be traced back to 1912, when the first air

flight between Karachi and Delhi was started by the Indian State Air Services in

collaboration with the UK based Imperial Airways. In 1932, JRD Tata founded Tata

Airline, the first Indian airline.

Airline organizations can be classified into a number of segments depending on thenature and degree of services they provide. Major Indian carriers are pressing their feet

on the accelerator to reach an acme of service level by the year 2010 when their fleet

strength will meet 500 to 550. In the previous two years more than 135 aircrafts have

been introduced to keep up with the increasing number of passenger traffic in Indian

aerospace. A number of domestic airline groups have emerged in a reasonably short span

of time to make the market furiously competitive.

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IMPORTANCE

Growing tourism:

Due to growth in tourism, there has been an increase in number of the international anddomestic passengers. The estimated growth of domestic passenger segment is at 50% per

annum and growth for international passenger segment is 25%. Airlines play an

important role in international tourism. Developing airline services helps the nation to

cash on tourism as more than 85% of the foreign tourist arrives by air.

Improving Infrastructure:

We all know that India's air transport infrastructure is out-of-date. In fact the overallsituation is critical. A recent report by McKinsey suggests that half of India's highly

qualified graduates are located in cities without international airports. Without massive

change, infrastructure will not be able to handle growth. We must move quickly now.

Benefit allthe government, the airport, shippers, passengers, local communities and

airlines

Result in greater efficiencylower costs

Result in better service levels

Globalization:

Globalization has improved the lives of many in developing nations. Globalization in of

its self is the trading of goods and services of a local economy into an integrated global

economy. Technological advances have made this practice more feasible within the last

50 years. The major milestones were the development of the internet and increased

transportation technology . These two advances made the world coined "flat" and set

the stage for higher living standards.

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PRESENCE SCENARIO

Revolutionized by privatization along with active participation of the foreign investors,

the Indian airline industry has experienced phenomenal transformation over the last

couple of years. From being a service catering to the needs of the privileged group only it

is now well within the reach of middle class population. This has been the result of

increased competition in the Indian aviation industry due to the presence of a wide

variety of private and public airlines with their low price tags. It was further helped by

the entry of Air Deccan, the first budget airline in India, offering unbelievable tariffs to

the customers.

In the financial year 2006-07 there has been a significant 22.3 percent growth in

passenger traffic in the domestic airports while the aircraft movement recorded a growth

by 14.2 percent.

In terms of the number of flights Jet Airways secures the top position with 8,168 flights

operating till June 2007. Indian Airlines is in second position with 7,562 flights. Sahara

(3,225 flights), Air Deccan (2,889 flights), Spice Jet (483 flights) and Kingfisher Airlines(367 flights) come thereafter in the list of domestic and national carrier operators.

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CLASSIFICATION & TYPES ON THE INDIAN AIRLINESSECTOR

The Indian airline sector can be broadly divided into the following main categories:

1. Scheduled air transport service, which includes domestic and international airlines.

2. Non-scheduled air transport service, which includes charter operators and air taxi

operators.

3. Air cargo service, which includes air transportation of cargo and mail.

Scheduled air transport service : It is an air transport service undertaken between two or

more places and operated according to a published timetable. It includes:

Non-scheduled air transport service : It is an air transport service other than the

scheduled one and may be on charter basis and/or non-scheduled basis. The operator is

not permitted to publish time schedule and issue tickets to passengers.

Air cargo services : It is an air transportation of cargo and mail. It may be on scheduled

or non-scheduled basis. These operations are to destinations within India. For operation

outside India, the operator has to take specific permission of Directorate General of Civil

Aviation demonstrating his capacity for conducting such an operation.

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PEST Analysis: The Indian Airline Industry

A PEST analysis is an analysis of the external macro-environment that affects all firms.

P.E.S.T. is an comprises of the Political, Economic, Social, and Technological factors of

the external macro-environment. Such external factors usually are beyond the firm's

control and sometimes present themselves as threats. For this reason, some say that "pest"

is an appropriate term for these factors. Let us look at the PEST analysis of the Indian

aviation sector:

Political Factors

In India, one can never over-look the political factors which influence each and

every industry existing in the country. Like it or not, the political interference has to be

present everywhere. Given below is one of the political factors with respect to the airline

industry:

The airline industry is very susceptible to changes in the political environment as it has a

great bearing on the travel habits of its customers. An unstable political environment

causes uncertainty in the minds of the air travellers, regarding travelling to a particular

country.

The most significant political event however has been September 11. The events

occurring on September had special significance for the airline industry since airplanes

were involved. The immediate results were a huge drop in air traffic due to safety &

security concerns of the people.

International airlines are greatly affected by trade relations that their country has with

others. Unless governments of the two countries trade with each other, there could be

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restrictions of flying into particular area leading to a loss of potential air traffic (e.g.

Pakistan & India)

Economic Factors

Business cycles have a wide reaching impact on the airline industry. During

recession, airline is considered a luxury & therefore spending on air travel is cut which

leads to reduce prices. During prosperity phase people indulge themselves in travel &

prices increase.

After the September 11 incidents, the world economy plunged into global recession dueto the depressed sentiment of consumers. In India, even a company like Citibank was

forced to cut costs to increase profits for which even the top level managers were given

first class railway tickets instead of plane tickets.

Even the SARS outbreak in the Far East was a major cause for slump in the airline

industry. Even the Indian carriers like Air India was deeply affected as many flights were

cancelled due to internal (employee relations) as well as external problems, which has

been discussed later.

Social Factors

The changing travel habits of people have very wide implications for the airline

industry. In a country like India, there are people from varied income groups. The airlines

have to recognize these individuals and should serve them accordingly. Air India needs to

focus on their clientele which are mostly low income clients & their habits in order to

keep them satisfied. The destination, kind of food etc all has to be chosen carefully in

accordance with the tastes of their major customers.

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Especially, since India is a land of extremes there are people from various religions and

castes and every individual travelling by the airline would expect customization to the

greatest possible extent. For e.g . A Jain would be satisfied with the service only if he is

served jain food and it should be kept in mind that the customers next to him are also Jainor at least vegetarian.

Technological Factors

The increasing use of the Internet has provided many opportunities to airlines. For e.g.

Air Sahara has introduced a service, through the internet wherein the unoccupied seats

are auctioned one week prior to the departure.

Air India also provides many internet based services to its customer such as online ticket

booking, updated flight information & handling of customer complaints. USTDA (US

trade & development association) is funding a feasibility study and workshops for the

Airports Authority of India as part of a long-term effort to promote Indian aviation

infrastructure. The Authority is developing modern communication, navigation,

surveillance, and air traffic management systems for India's aviation sector that will help

the country meet the expected growth and demand for air passenger and cargo service

over the next decade.

FIVE PRODUCT LEVELS

The Core Service:

The core service of the airlines industry is to transport goods and services to various

destinations. As the needs of the people increased the entire system became more

organized and formal. After this stage comes the various supplementary services.

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The Supplementary Services:

The airline industry has many players they had a brand name like Air India, JetAirways, British Airways. All of them had some common services to offer like

connecting flights, through check-in, tele check in, food on board, and complementary

gifts etc.

Different classes like economy class, business class were introduced. Air concessions are

given to school students, old people etc. Singapore airlines were the first to introduce

small 8 television screen for every passenger. The freebies are actually win-win deals between airlines and other services.

All these added service helps the customer to decide upon which airlines he wants to

travel. As competition increased and the customers wanted more the next phase evolved

and that is the augmented service.

The Augmented Service:

This phase is where the customers expectations are met; the service providers kept

working on new methods to meet the ever-changing customers demands. The players

introduced online booking, which was very convenient for the service users.

British Airways business class has showers; its more spacious and comfortable. Sahara

airlines offer its passengers six different types of cuisine like vegetarian, fat free, diabetic

etc. They also have auction going on board. Virgin airlines have gambling on board, they

also have body massage to offer to their passengers. Air Emirates has something called

cab service, they have customized pick up and drop cab service.

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This phase is the most crucial one; with increased competition service will become the

final differentiation.

Future Service:

As mentioned above the customer needs keep changing, the future is unknown. The

customers may be looking in for more frequent inexpensive air travel, something like air

taxis, supersonic speed. This decreases the time thus reducing the cost.

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CHAPTER THREE

4 PsProduct

The airline industry is a service that satisfies customer needs for travelling. In the airline

industry the customers can be divided into two segments, business and leisure. While the

airline industry started out as a luxury item, business travel has changed this industry to a

necessity. As we further become a global economy and communication between

international companies intensifies, travel needs continue to increase. The leisure

traveller has always had the need for the airline industry. Satisfying the customer needs

today involves competitive rates, convenient booking of flights and benefits with those

flights.

Some of the problems with this industry are personally experienced by the customers.

The airlines have a difficult time being punctual and this has become the norm in the

industry, although some companies try to avoid it. The industry is highly susceptible to

situations that result in declines in air travel, such as political instability, regional

hostilities, recession, fuel price escalation, inflation, adverse weather conditions,

consumer preferences, labour instability or regulatory oversight.

Airlines are now in the commodity business as the public demands low-priced

transportation. It has moved from elite to a common form of transportation. Today's

travellers know how to surf the web for bargains through a myriad of sites such as Orbitz,

Expedia, Travelocity, Hotwire, and Cheaptickets. As a commodity, airlines cannot

increase prices to increase profits, so their only choice is to cut operating costs such as

labour costs.

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Amid the competition, airlines have refocused their attention on the customers. The

industry still heavily targets frequent flyers, as members can earn miles through

travelling, car rentals, hotels, and credit card use. On overseas flights, business class

seats convert to real flat beds. Soon passengers will have internet access during flights.Airlines are also catering to the consumer by offering mostly organic menus, while others

are offering meals-to-go before boarding. For travellers pressed for time, many airlines

offer fast check-in, online at home before leaving for the airport; or self-service check-in

kiosks where passengers identify themselves with a credit card, print their own boarding

pass, change their seat, and purchase meal coupons.

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Price

The following are the pricing strategies:

Premium Pricing:

The airlines may set prices above the market price either to reflect the image of quality

or the unique status of the product. The product features are not shared by its competitors

or the company itself may enjoy a strong reputation that the 'brand image' alone is

sufficient to merit a premium price.

Value for Money Pricing:

The intention here is to charge the average price for the product and emphasize that it

represents excellent value for money at this price. This enables the airline to achieve

good levels of profit on the basis of established reputation.

Cheap Value Pricing:

The objective here is to undercut the competition and price is used to trigger the

purchase immediately. Unit profits are low, but overall profits are achieved. Air India and

Indian Airlines have slashed their prices to meet the competition of private airlines so that

they can consolidate their position in the market.

Airlines usually practice differential pricing. There are three classes: The First Class, The

Executive or Business Class and The Economy Class. Fares for each class are different

since the facilities provided and the comfort and luxury level is different in each class.

Seasonal fares are also fixed, fares rise during the peak holiday times.

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Low-cost Pricing:

With the advent of the low-cost airlines in the Indian aviation industry, a different low-

cost flying concept has come up. Since these low-cost airlines are trying to woo the

customers by providing air travel in exceptionally low prices, a price-band kind of pricinghas to be designed.

In low-pricing strategies, the airlines provide very low prices for the flight tickets. Also,

they prices are made cheaper by booking the tickets long before the flight date.

APEX Fares:

In this scheme, people are given very cheap rates only if tickets are booked at least beforethe specified time period. But the draw-back here is that if the booking is cancelled, a

substantial amount of money is not returned.

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Promotion

Integrated Marketing Communication

A successful product or service means nothing unless the benefit of such a service can be

communicated clearly to the target market. An organisations promotional mix can consist

of:

Advertising

Public Relations

Sales Promotion

Personal Selling

Direct Mail

Internet / E-commerce

In airline industry all the above methods are use for promotion purpose.

The aims of promotion fall into three main categories: to inform, to remind, & to

persuade. It will always be necessary to inform prospective consumers about new

products & services, but other issue may also need this type of communication to

consumers; new uses, price changes, information to build consumer confidence & to

reduce fears, full description of service offering, image building. Similarly consumers

may need to get reminded about all these types of issues, especially in the off-peak

season.

It is vitally important to recognize that promotion, or marketing communications

generally, may not always be aimed at potential consumer or end user of service. In many

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business areas, it is to design promotions aimed at channel customers to complement end

user promotion. For e.g. Airlines will need to promote their services to tour operators as

well as end user.

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Distribution (Also known as the place variable in the marketing mix, or the 4 Ps)

In Airlines, they utilise more than one method of distribution. For e.g. they sell tickets

through travel agents & sell seats on flights to tour operators, whilst also operating

direct marketing. Whichever distribution strategy is selected, channel management

plays a key role. For channels to be effective they need reliable updated information.

For these reason, I.T has been widely adopted such as on-line booking system.

Channel structures vary somewhat by the nature of the service

Internet booking system

Telephone reservation system.

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CHAPTER FOUR

Extended Marketing Mix

Marketers suggest that the unique requirements of selling services require the

organization attend to three additional P's. These are people, physical evidence and

process.

People

The people section of the Marketing Mix is the most important section of the extended

Marketing Mix. It is broken up into three sections: Employees, Consumers and the

Company.

Do we have enough employees to provide a good service? ; Do they have the necessary

personal and professional skills? , Do they understand the brand-values? , Are they

enough motivated or too tired?

Those are questions that airlines companies have to ask themselves, and which answers

are going to have important consequences in the type of service provided.

The analysis of the buyer behaviour is really interesting in this sector. Every individual

have different needs and expectations in this market, so segmentation and positioning

will be also fundamental. Furthermore, its normally an industry where, the user follows

all the steps of the buyer behaviour in the selection and purchase of the service. Special

importance have the Information Search by the customer (which is normally morecomplete than in other purchases) and beliefs and attitudes, which are the most important

challenges of this analysis because normally have an important weight in the final

decision of the customer. In a market as competitive as this one, a personal bad

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experience or just a non favourable belief or attitude can determine the user's choice

forever. That's why the Brand Image is also fundamental for this kind of Companies.

For e.g. A Jain would be satisfied with the service only if he is served Jain food and it

should be kept in mind that the customers next to him are also Jain or at least vegetarian.

Therefore, management faces a tremendous challenge in selecting and training all of

these people to do their jobs well, and, perhaps even more important, in motivating them

to care about doing their jobs well, and to make an extra effort to serve their customers.

After all, these employees must believe in what they are doing and enjoy their work

before they can, in turn, provide good service to customers.

The "people" component of the service marketing mix also includes the management of

the firm's customer mix. Because services are often experienced at the provider's

facilities, other customers who are being served there can also influence ones

satisfaction with a service. For e.g. crying children in a nearby seat on an airplane or ill

mannered customer are all examples of unpleasant service conditions caused by a firm's

other patrons.

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Physical Evidence

The service is intangible because unlike a product it can't be experienced before it is

delivered. It is the ability and environment in which a service is delivered. Because it isintangible customers are at greater risk when deciding whether to use a service, so to

reduce this risk, and improve success, potential customer are offered the chance to see

what the service would be like with the use of testimonials, demonstrations etc. Physical

layout is not only relevant to its promotional materials, but also to the layout and

structure of the organization, and websites. Customers have far higher expectations and

therefore they select the particular service which they know will satisfy their want.

Promotional materials and written correspondence provide tangible reassurance; they can

be incorporated into the firm's marketing communications to help reduce customer

anxiety about committing to the purchase. Service firms should design these items with

extreme care, since they will play a major role in influencing a customer's impression of

the firm. In particular, all physical evidence must be designed to be consistent with the

"personality" that the firm wishes to project in the marketplace.

They can offer to the consumer more than a fly: additional services, and so they focus

their promotional efforts in communicating that to the potential user.

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Process

The customer service department of any airline company deal with a number of processes

involved in making marketing effective in an organisation e.g. processes for handling

customer complaints, processes for identifying customer needs and requirements,

processes for handling requirement etc.

Example of Jet (Entire Process)

Purchasing process

According to epinions.com, travelers' overall purchasing experiences with Jet have been

very positive. People like how easy it is to choose from the different one-way fares

online to make up a round-trip reservation. Some travelers prefer to use Jettelephone

reservation agents for purchasing their tickets. Overall, these reservation agents have

been described as very courteous and helpful.

Destination Choices

We found many negative reviews on epinions.com when it came to Jet destination

offerings. Several people complained that Jet doesn't offer service (either non-stop or

connecting) to enough destinations. Some complained about Jet operating out of smaller,

less convenient airports (like Poona and Nasik). People also complained that Jet only

offers limited flights per day to some destinations, making travel less convenient for

some.

Overall Customer Service

Based on our findings at epinions.com, Jet customer service is very highly regarded.

Although some people have had unpleasant experiences, almost everyone who gave an

opinion raved about the service from Jet flight attendants, gate agents,

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The 7 Ps - price, product, place, promotion, people, process and physical evidence

comprise the modern marketing mix that is particularly relevant in service industry, but is

also relevant to any form of business where meeting the needs of customers is given

priority.

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CHAPTER FIVE

SEGMENTATION

Segmentation involves finding out what kinds of consumers with different needs exist. In

the airline industry, for example, some consumers look for only price, while others are

much more concerned about other features and services provided. In general, it holds true

that "You can't be all things to all people," and experience has demonstrated that firms

that specialize in meeting the needs of one group of consumers over another tend to be

more profitable.

Generically, there are three approaches to marketing:

In the undifferentiated strategy, all consumers are treated as the same, with firms not

making any specific efforts to satisfy particular groups. This may work when the product

is a standard one where one competitor really can't offer much that another one can't.

Usually, this is the case only for commodities.

In the concentrated strategy, one firm chooses to focus on one of several segments that

exist while leaving other segments to competitors. For example, Deccan Airlines focuses

on price sensitive consumers who will forego meals and assigned seating for low prices.

In contrast, most airlines follow the differentiated strategy: They offer high priced tickets

to those who are inflexible in that they cannot tell in advance when they need to fly and

find it impractical to stay over a Saturday. These travellers usually business travellers pay

high fares but can only fill the planes up partially. The same airlines then sell some of theremaining seats to more price sensitive customers who can buy two weeks in advance and

stay over.

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Note that segmentation calls for some tough choices. There may be a large number of

variables that can be used to differentiate consumers of a given product category; yet, in

practice, it becomes impossibly cumbersome to work with more than a few at a time.

Thus, we need to determine which variables will be most useful in distinguishingdifferent groups of consumers.

We might thus decide, for example, that the variables that are most relevant in separating

different kinds of airlines consumers are:

(1) Preference for price,

(2) Preference for combination of price and other features,(3) Consumers not worried at all about price: Looking for privacy or luxury

(4) Willingness to pay for brand names

We now put these variables together to arrive at various combinations. Several different

kinds of variables can be used for segmentation.

Demographic variables essentially refer to personal statistics such as income, gender,

education, location (rural vs. urban, East vs. West), ethnicity, and family size. Jet

Airways; for instance, has found that people from western region (India) on the average

prefer vegetarian meal whereas people from east prefer non-vegetarian meal.

Taking this a step farther, it is also possible to segment on lifestyle and values. Some

consumers want to be seen as similar to others, while a different segment wants to stand

apart from the crowd. Another basis for segmentation is behaviour. Some consumers are

"brand loyal" i.e., they tend to stick with their preferred brands even when a competing

one is on sale.

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CHAPTER SIX

ROLE OF TECHNOLOGY

Intense competition in Indian Aviation Industry has made the role of technology very

important for domestic airline companies. Technology can help in making travel

comfortable, allow easy access to tickets and reduce time to check-in. A considerable

amount of money is also saved by automation. Following points highlight the increasing

use of Technology by different Airlines:

Vijay Mallya-promoted Kingfisher Airlines is planning to install a landscape camera at

the bottom of the aircraft that will enable passengers get a view of the take-off and

landing of their airplane when flying on domestic routes. They are also going to allow

GSM phones to be used on board for the first time. They are already providing live TV as

part of our high-end In-Flight Entertainment (IFE) initiatives. Kingfisher Airlines has

announced the launch of two world-class technological innovations to enhance guest

convenience. The first cutting-edge innovation is the introduction of the Roving Agent

at the airport. Now guests with hand baggage need not have to wait at the check-in

counter to collect their boarding pass, instead they can directly approach the Kingfisher

Airlines Roving Agents deployed outside the security check-in area who will book them

on their choice of seats.

Also launched is the facility of Web Check-in. Now Kingfisher Airlines' guests can sit

in the comfort of their homes or offices and print their boarding passes. All a guest has to

do is log on to the official website of Kingfisher Airlines, www.flykingfisher.com, and

click on the link - web check-in. Fill-in your reservation details and the screen will

display the choice of seats available onboard that particular flight. Once booked, the

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guest can conveniently print out the boarding pass and carry it along with him/her on the

day of the flight and proceed straight to the security check counter at the airport.

The Airbus A380, the world`s largest and most advanced passenger airplane, which iswidely regarded as the future of aviation, marks a momentous milestone in the history of

civil aviation in India.

Kingfisher Airlines, Indias fastest-growing airline, has engaged Sabre Airline Solutions,

the global leader of software and services for the airline industry from planning to

execution, to provide a full suite of more than 20 enterprise applications to enhance its

guest processing functions, as the airline continues its rapid expansion of its operations.Kingfisher Airlines is also leveraging other technology from Sabre Airline Solutions to

help analyze the market and determine the best approaches to maximize revenue.

Kingfisher Airlines Ltd and Dish TV have joined hands to provide live in-flight

entertainment on Kingfisher aircraft. The in-flight entertainment system is one of the best

in the world.

The increasing use of the Internet has provided many opportunities to airlines. For e.g.Kingfisher has introduced a service through the internet, wherein the unoccupied seats

are auctioned one week prior to the departure.

Public sector airline Air-India is exploring the possibility of launching an information

technology (IT) subsidiary to handle its automation activities.

Jet Airways has launched an Interactive Voice Response (IVR)-based payment and

ticketing services. The service will allow passengers to complete their reservation with

credit cards through a secure gateway and instantly receive their e-tickets via email.

Low-cost carriers such as Air Deccan, SpiceJet, GoAir and IndiGo are currently allowing

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CHAPTER SEVEN

QUALITY DIMENSION

IN CONTEXT WITH AIRLINE INDUSTRY

Reliability is most important to customers. Reliability is performing promised service

dependably and accurately. If you don't deliver on your promise you can lose customers

and your credibility will be damaged. It takes a long time for a company to build up a

reputation for reliability, and only a short time to be branded as "unreliable".

Security in airline industry is a very important issue. Terrorist threats and narcotics are

the main threats in Indian airports. The airlines and the security screening people they

contract with have a simple choice employ more staff so as to process their passengers

more efficiently, or lay off staff and cause their passengers to spend more time waiting to

check in than they actually spend on the flight itself.

Tangible - Tangibles refers to physical facilities and facilitating goods. Examples of

tangibles would be distinctive materials such as brochures and the cleanliness of thefacilities. Tangible is what makes you different than competitors. Customer can see for

themselves and then decide whether to go for the service or not.

Responsiveness - Responsiveness is the willingness to help customers promptly. Avoid

having customers waiting for no apparent reason. Responsiveness is very important

because if you provide customers with what they need in a timely fashion they will be

satisfied. Nobody likes to wait. Replying to a customer request promptly is a goodexample of responsiveness. If customers see that the company is willing to help, this will

cause loyalty and it will let them know that you are concerned about them.

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Assurance is the ability to convey trust and confidence. Being polite and showing respect

for customers will create trust. Also having professional and knowledgeable staff will

create trust and confidence in customers. People enjoy meeting pleasant, knowledgeable

people. By being pleasant and knowledgeable to everyone a business will present thekind of business image that draws new business.

Empathy is the ability to be approachable. Empathy involves treating customers as

individuals. When a customer has a problem they should not be afraid to ask questions.

A company should adapt to the specials needs of a customer. Listening to customers

concerns and proving them with a positive solution is how you show empathy.

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CHAPTER EIGHT

CONCLUSION

Airline industry in India is plagued with several problems. These include high aviation

turbine fuel (ATF) prices, rising labour costs and shortage of skilled labour, rapid fleet

expansion, and intense price competition among the players. But one of the major

challenges facing Indian aviation industry is infrastructure constraint. Airport

infrastructure needs to be upgraded rapidly if Indian aviation industry has to continue its

success story. Some steps have been taken in this direction. Two of India's largest

airports-Mumbai and New Delhi-were privatized recently. Two Greenfield airports are

coming up at Bangalore and Hyderabad in southern India. Investments are pouring into

almost all aspects of the industry, including aircraft maintenance, pilot training and air

cargo services. The future prospects of Indian aviation sector look bright.

The Indian aviation industry has witnessed remarkable growth in recent years, with key

drivers being positive economic factors, including high GDP growth, good industrial

performance, and corporate profitability and expansion. Other factors include higher

disposable incomes, growth in consumer spending, and availability of low fares.

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FUTURE PROSPECTS OF INDIAN AIRLINE SECTOR

Consolidation in the aviation industry: Consolidation will ease competition and give pricing power to the dominant players and as a result of higher fares even smaller players

like SpiceJet stand to benefit. The air fares for SpiceJet are expected to increase by 7.4%

and 3.6% during FY08E and FY09E respectively.

Due to booming economy, it is believed that the growth in the aviation industry will

continue in the scenario of increased airfares. Generally it is believed that the aviation

sector in any country grows at twice the growth rate of its GDP. In India, the GDP is

growing at more than 7-8% per annum, which makes the growth rate in the aviation

sector to be in excess of 15%. Aviation industry in India is expected to grow at a much

better rate than this because the industry is at a nascent stage with lower base and low

penetration.

Strong passenger growth to boost top-line and profit: Strong passenger growth would

lead to 86% CAGR (Compound Annual Growth Rate) growth in revenues for the next two

years. Increased passenger volume would also help in spreading fixed cost over larger

passenger base there by bringing down per unit cost.

Domestic Passengers: In the last three years, the number of passengers travelling by air

has more than doubled with industry carrying 34mn passenger during FY07. On back of

conversion of upper class rail passengers to air travel and the surging tourism industry we

expect the number of people travelling by air to increase at a CAGR of 25% to 67mn by

FY10E. We expect the revenue passengers for SpiceJet to increase from 2.8mn in FY07

(12 months) to 6.8mn in FY09E, a CAGR of 58%. The expected growth in revenue

passenger is on account of aggressive increase in fleet size from 11 aircrafts in FY07 to

23 aircrafts by FY09E.

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REFRENCE

Books and Journals:

Adrian Palmer (2001), Principles of Services Marketing, third edition, McGraw Hill, London.

Kotler (1998) Marketing Management Ninth Edition

The Economist, 4th January 2002 A new way to fly

Websites Referred:

www.4ds.com

www.epinions.com

www.business.headlinesindia.com

www.oppapers.com

www.icmrindia.org

www.airindia.com

www.flyairdeccan.net

www.spicejet.com (www.spicejet.com/pdf/BSE_Q2FY08 )www.jetairways.com

www.flykingfisher.com
http://www.4ds.com/http://www.epinions.com/http://www.business.headlinesindia.com/http://www.oppapers.com/http://www.icmrindia.org/http://www.airindia.com/http://www.flyairdeccan.net/http://www.spicejet.com/http://www.spicejet.com/pdf/BSE_Q2FY08http://www.jetairways.com/http://www.flykingfisher.com/http://www.4ds.com/http://www.epinions.com/http://www.business.headlinesindia.com/http://www.oppapers.com/http://www.icmrindia.org/http://www.airindia.com/http://www.flyairdeccan.net/http://www.spicejet.com/http://www.spicejet.com/pdf/BSE_Q2FY08http://www.jetairways.com/http://www.flykingfisher.com/

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