Airline Industry in India
454 airports and airstrips (includes Operational, Non Operational, Abandoned and Disused Airports) 127 are owned & operated by AAI 16 - international, 7 custom airports, 28 civil enclaves Scheduled domestic air services - available from 82 airports May 2007- May 2008 25.5 million domestic & 22.4 million international passengers 20% growth – highest in the world Growth Rate Projections (for next 5 yrs) 15% p.a (Passenger Traffic) 11.4% p.a (Cargo Traffic)
• • • • first commercial flight airmails from Allahabad to nani (10 km) the aviation department of Tata sons ltd . Established Tata airlines Tata Air Lines converted into a public Company and renamed Air India Limited • 1948 Air India International incorporated • 1953 Nationalization of Aircraft Industry Air India (serving the international sectors) Indian Airlines (serving domestic sectors) Deccan Airways, Airways India, Bharat Airways, Himalayan Aviation, Kalinga Airlines, Indian National Airways and Air Services of India 1911 1932 1938 1946
1986 Private Sector Players permitted as Air taxi operators Players including Jet, Air Sahara, NEPC, East West, Modiluft, etc started service 1990 Open sky policy 1995 Private Carriers permitted to operate scheduled services 2005 Entry of low-cost carriers 2007 Merger of Indian Airlines into Air India Acquisition of Air Sahara by Jet Airways 2008 Kingfisher acquired 49% stake in Deccan Aviation
• Ministry of Civil Aviation Responsible for the formulation of policy, development and regulation of Civil Aviation. Its functions also extend to overseeing airport facilities, air traffic services and carriage of passengers and goods by air • Other Attached/Autonomous Organizations: Directorate General of Civil Aviation (DGCA) Promote safe and efficient Air Transportation through regulation and proactive safety oversight system • Bureau of Civil Aviation Security (BCAS) Regulatory authority for civil aviation security in India • Airport Authority of India (AAI) Accelerate the integrated development, expansion and modernization of the operational, terminal and cargo facilities at the airports
Open Sky Policy FDI Airports 100% for green field operations 74% for existing airports - 100% with special permissions 100% tax exemptions for 10 yrs. Airlines 49% in domestic airlines - 100% for NRI’s 74% in cargo & non-scheduled airlines
Competitive Pressure Service Low cost Carriers changing the game Indigo Price
The Kingfisher AIRLINESo f g o o d t i m e s The king
• Dr Vijay Mallya is the Chairman and CEO of Kingfisher Airlines • Kingfisher Airlines Limited launched scheduled airline services on May 9, 2005 with 4 daily flights between BOM & BLR and one A-320 aircraft. • There are tools for mood lighting such as web chat, inseat plugins for music, liveTV with 16 channels on each seat • 100 percent E ticket airline •
The Kingfisher Airlines family will consistently deliver a safe, value-based and enjoyable travel experience to all our guests
SWOT An a lysis
Strengths First airline with full new fleet of aircraft Quality hospitality provided to customers Route rationalization Already have training academy Weaknesses Service delivery to metros and other big cities Yet not in profit High ticket pricing High attrition in top brass
Opportunities Under penetrated domestic market International market Untapped air cargo market Expanding tourism industry
POLITICAL FACTORS 1) Open sky policy 2) FDI limits: 100% for Greenfield airports 74% for the existing airports 100% through special permission 49% for airlines. ECONOMICAL FACTORS 1) Contribution to the Indian economy. 2) Rising cost of fuel. 3) Investment in the sector of aviation. 4) The growth of the middle income group family affects the aviation sector.
SOCIAL FACTORS 1) Development of cities leads to better services and airports. 2)Employment opportunities. 3)Safety regulations. 4) The status symbol attached to a plane travel TECHNOLOGICAL FACTORS 1) The growth of e-commerce and e-ticketing. 2) Satellite based navigation system. 3) Modernisation and privatisation of the airports. 4) Developing green field airports with private sector for example in Bangalore the airport corporation limited.
ENVIRONMENTAL FACTORS 1)The increase in the global warming. 2)The sudden and unexpected behavior of the atmosphere and the dependency on whether. 3)Shortage of the infrastructural capacity 4)Tourism saturation. LEGAL FACTORS 1) FDI limits 2) Bilateral treaties 3) Airlines acquisitions and the leasing cost.
KINGFISHER AIRLINES Performance
Kingfisher has post ed a net loss of Rs 577 crore in t he financial year ended March 2007, t he balance sheet of UB Holdings, which owns t he airline, shows.
Founded in 1993, Chairman - Mr.Naresh Goyal HQ in Mumbai Country’s second largest international airline Largest domestic airline - 31% Primary base - Mumbai's Chaatrapathi ShivajiAirport Secondary hubs - Bangalore, Brussels, Chennai, Delhi, Hyderabad, Kolkata and Pune.
April,2007 - Acquired Air Sahara - JetLite Now JetLite integrated into Jet Airways
Jet Airways will be the most preferred domestic airline in India. It will be the automatic first choice carrier for the travelling public and set standards, which other competing airlines will seek to match. Jet Airways will achieve this pre-eminent position by offering a high quality of service and reliable, comfortable and efficient operations. Jet Airways will be an airline which is going to upgrade the concept of domestic airline travel - be a world class domestic airline. Jet Airways will achieve these objectives whilst simultaneously ensuring consistent profitability, achieving healthy, long-term returns for the investors and providing its employees with an environment for excellence and growth •
Primary Segments (Geographic) - Domestic & International Customer Segments First class, Premiere(Business) class & Economy class Target Segments Premiere(Business) class Business travelers, contribute 48% of passengers & 66% of revenues, ready to pay higher prices, last time booking, don’t like transit Economy class Leisure travelers, prefer low cost airlines, ready for transit if there is cost advantage, large % of passengers Seat Allocation – Yield Management Technique Positioning – High value for High price Unique Selling Price – Customer relationship and Punctuality
Strengths Market driver Experience exceeding 14 year Only private airline with international operation Market leader Largest fleet size
SW OT An a lysis
Weaknesses Loosing domestic market share Old fleet with average age around 4.79 years Scope for improvement in in-flight service Weak brand promotion
Opportunities Untapped air cargo market Scope in international service and tourism
Technology Effects Modernization of aircrafts Modern technology like CAT3 and ILS •
7 P’ s
Price Economy & Club Premiere Fare Discounted fare for senior citizens & defense personnel Advance Passenger Excursion/ APEX Fares One Fare Night Saver Fares Check Fares US Dollar Fares & Visit India Fares Place Place of Service - Aircraft Various Destinations
Promotion Offers Companion Free Offer, One Fare, Concessional fares, JetPrivilege Offers, Jet Airways Citibank Credit Cards, Corporate Deal Offers, International Specials, Camp Rock contest, Festival specials, Student specials, Surprises etc. Advertising and Branding Hoardings Brand Ambassadors Sponsorships Event Organization •
Process People Processing People physically enter the service system to receive the service. Aircraft is the service factory where service is delivered. Possession Processing Cargo Luggage & Courier Physical Evidence Services cape Services cape usage - Interpersonal Complexity of Services cape - Elaborate Flight Offices - Org. & Ticket Booking Agents Virtual Services cape
Jet Airways - Performance
Annual Revenues - Rs.9481.5 crores (200708) Rs.7401 crores (200607) Profit (Loss) Aft er Tax - Rs.253 croresloss (2007-08) Rs.27 crores profit (2006-07) - All Ot her Dom est ic Players showed loss(2006-07)