Domestic Airlines in India
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DOMESTIC AIRLINES IN INDIA:LEVERAGING PRICE
Presented By:SandeepNikitaAnkitaMonikaPriyankaVIPRARAHULNITISH
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INTRODUCTION
Case is about the Indian aviation sector.
Oligopoly Market
Oligopoly market depends on Market Share and Price.
In 2002 there were 3 major players in the Indian domestic market they were:
1.Jet airways 2.Indian Airlines 3.Sahara
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CONTD.
3 players were fighting for fares. The kink demand curve(that will
explain how they react when one player rise the price).
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CONTD.
kink demand curve
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JET AIRWAYS
• Jet airways introduced the ‘Every one can Fly’ scheme.
• In june 2002, After the indian airlines the jet airways reduced its prices by Rs. 635 for the economy class on the Mumbai-nagpur and the Mumbai-Goa route
• Jet airways reported an increase in the number of passengers flying after the introduction of APEX fares.
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CONTD.
Saroj dutta, executive director, JA, said, “ The average number of passengers flyingout on advance purchase tickets is around 1,500 per day.
They are selling most of the 1,850-2000 seats offered every day under the concessional window.
The response is very encouraging for a schemewhich has been recently introduced
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INDIAN AIRLINES SCHEMES:
• IA in 2002 have a 3-15% cut in fares for all classes on the western sector and on delhi-srinagar, delhi-jammu, and dehli-khajuraho routes.
• IA introduced the APEX (Advanced Purchase Excursion) fares under its ‘U Can Fly’ scheme. APEX fares, in which passengers who booked their tickets at least 3 weeks in advance, got a huge discount in fares.
• Under the APEX scheme passenger had to face 2 disadvantages :(a) planning air travel 3 weeks in advance was not very convenient.
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CONTD.
(b)cancelation charges were also too high. Passengers had to lose 50% of the ticket price if the ticket was canceled less than 21 days before the travel date. Despite these disadvantages, the scheme proved very successful for IA.
• IA launched the scheme ‘Wings of Freedom’, valid till limited period .this scheme offered unlimited travel on the domestic network for 7days for RS 15000(economy class) and RS 20000(business class).
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CONTD.
• IA launched the ‘Bharat Darshan’,(India tour) which allowed unlimited travel for passengers who bought tickets worth more than RS 80000.
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SAHARA AIRLINES SCHEMES
• Intelligent market strategy.• “Sixer” and “super sixer”.• Wings and Wheels.• Steal a Seat- online bid scheme.
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ADVANTAGES
Advanced purchase excursion fares scheme.
IA- ‘U Can Fly’ scheme.
JA- ‘Everyone Can Fly’ scheme.Apex Proved very successful for IA. JA also reported an increase in the
number of passengers.Air sahara went for different approach.
‘Sixer’ and ‘Super Sixer’ scheme.
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CONTD.
During july-august ,Sahara launched a ‘Sixer’
scheme that proved to be very successful.
Sahara’s ‘steal a seat’ offer online bid scheme in august 2002.
IA launched ‘Wings of Freedom’ that offer unlimited travel for the domestic network.
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DISADVANTAGES
Planning air travel in advance was not convenient.
Cancellation charges were also high.Air Sahara adopted a different
strategy. Not Flexible. Lower margins makes them difficult to
sustain.
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CONCLUSION
Employee shortage- there’s a clear shortage of skilled and trained employee as a consequence of which so aviation sector has to pay high wages to the current skilled employee.
Regional connectivity - lack of airports. Ever rising fuel prices - which leads to
increase in air fares.
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Contd…
Declining yields - Increase in growth attracts more players which increases competition thus declining yields of all operators.
Gaps in infrastructure - Inadequate air traffic control which hinders the growth of the aviation sector of India.
High input costs - Due to high input costsbecause of tax on interest repayment on foreigncurrency loan for aircraft acquisition.