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Analysis of Airline Industry In India

1998 words (8 pages) Essay in Tourism

10/05/17 Tourism Reference this

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In India 454 airports and airstrips which includes Operational, Non Operational, Abandoned and Disused Airports.from which 127 are owned & operated by AAI. In India also have 16 – international, 7 custom airports and 28 civil enclaves.

Scheduled domestic air services are available only from 82 airports.

In May 2007 to May 2008 there was remarkale growth of nearly 20% and the figure increased upto 25.5 million is domestic & 22.4 million is international passengers.which was highest in the world.

The Growth Rate Projections for next 5 yrs will 15% p.a of Passenger Traffic and 11.4% p.a of Cargo Traffic

History

In 1911 first commercial flight was airmails from Allahabad to nani (10 km) and in 1932 the aviation department of Tata sons ltd was established.

In 1938 Tata airlines was established and after 8 years in 1946 Tata Air Lines converted into a public Company and renamed Air India Limited

In 1948 Air India International was incorporated and in 1953 Nationalization of Aircraft Industry was established.

At that time Air India was serving the international sectors and Indian Airlines was serving domestic sectors

Other domestic airlines are Deccan Airways, Airways India, Bharat Airways, Himalayan Aviation, Kalinga Airlines, Indian National.

In 1986 Private Sector Players permitted as Air taxi operators.These players including Jet, Air Sahara, NEPC, East West,

In1990 Open sky policy was made came into existence.

In 1995 Private Carriers permitted to operate scheduled services.

2005 was the phase of competition and low-cost carriers was entered into the market.

In 2007 Indian Airlines was merged into Air India.and Jet Airways acquired Air sahara.

In 2008 Kingfisher was acquired 49% stake in Deccan Aviation. Regulatory Authorities

Ministry of Civil Aviation was 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.

Directorate General of Civil Aviation (DGCA) was promote safe and efficient Air Transportation through regulation and proactive safety oversight system.

Bureau of Civil Aviation Security (BCAS) was the regulatory authority for civil aviation security in India

Airport Authority of India (AAI) who accelerate the integrated development, expansion and modernization of the operational, terminal and cargo facilities at the airports.

Policies

Open Sky Policy means to liberalize the rules for international aviation markets and minimizes government intervention.

It is 100% for green field operations and 74% for existing airports and 100% with special permissions.

In this policy 100% tax exemptions for 10 yrs.Airlines

In domestic airlines was 49% and 100% for NRI’s and 74% in cargo & non-scheduled airlines.

Kingfisher airlines

The Chairman of Kingfisher airlines is Dr Vijay Mallya and also CEO of Kingfisher

Airlines.

The Kingfisher Airlines Limited launched scheduled airline services on May 9, 2005 with 4 daily flights between BOM & BLR and one A-320 aircraft.

In Kingfisher airlines there are tools for mood lighting such as web chat, inseat

plugins for music, liveTV with 16 channels on each seat

Kingfisher airline provide 100 percent online ticket and many companies are following this.

The Kingfisher Airlines family will consistently deliver a safe, value-based and enjoyable travel experience to all passengers.

SWOT Analysis

Strengths

It is the first airline with full new fleet of aircraft.

It provide Quality hospitality to customers

It have already training academy.

Kingfisher have UB group backing for raising financing.

It is well capitalised airline, prepared to take losses.

It have experience to better handling of employees and staff; less centralised style of functioning.

Weaknesses

Chairman’s people skills are better but employees have to work very erratic hours.

It provide service delivery only in metros and other big cities.

It is yet not in profit position.

Kingfisher’s ticket pricing is also very high.

Kingfisher is yet to build itself into an organisation; structures yet to fall in place.

Opportunities

The non penetrated domestic market.Kingfisher entre into the market at that time when the less competitors are taken place.

International market

Untapped air cargo market

Expanding tourism industry

It is the expanding tourism industry mostely foreigners travel through aeroplanes this is the company opportunity which the company take profit as much as possible.

Threats

Due to increase in the number of Competitors the company threat increase day by day.

Infrastructure issue.

Fuel price are increasing constantly this is the main threat for the company because the company cost increases and profitability decreases due to this.

Economic slow down

Promotion and sponsorship declining

PESTEL ANALYSIS

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-since the industry is operating in Indian economy,the revenue generated by the company adds to economy

2) Rising cost of fuel-the fuel price is rising because the subsidies govt is providing are being taken off.

3) Investment in the sector of aviation

4) The growth of the middle income group family affects the aviation

Sector-in todays world with increasing income of middle class,people prefer to go by air because it saves time at is all new a different experience.

SOCIAL FACTORS

1) Development of cities leads to better services and airports-metro cities first had airports but with development of the country new airports are being built up.

2) Employment opportunities-the aviation sector provided a lot of employement opportunities because the industry is so vast that a lot of people can be employed

3) Safety regulations.

4) The status symbol attached to a plane travel

TECHNOLOGICAL FACTORS

1) The growth of e-commerce and e-ticketing is now adopt the airline companies for the facilities and services to the customers.

2) Satellite based navigation system is the most advanced technological factor.

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

The increase in the global warming due to increase in the number of aeroplanes flying in the air.this makes bad effect on our atmosphere.

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.

Jet Airways

Jet Airways founded in 1993 and the Chairman of jet airways is Mr.Naresh Goyal.The Headquarter of Jet Airways is situated in Mumbai.

It is the Country’s second largest international airline and the largest domestic airline.

Its Primary hub is Mumbai’s Chaatrapathi ShivajiAirport and Secondary hubs are Bangalore, Brussels, Chennai, Delhi,Hyderabad, Kolkata and Pune.

In April,2007 Air Sahara acquired the JetLite.but now JetLite integrated into Jet Airways.

Is primary Segments are Domestic & International and Customer Segments are First class, Premiere(Business) class & Economy class.

Its Target Segments are Business class.The Business travelers contribute 48% of passengers & 66% of revenues and they ready to pay higher prices, last time booking and don’t like transit.

The Economy class leisure travelers, prefer low cost airlines, ready for transit if there is cost advantage and have large % of passengers.

The Yield Management Technique was adopted in which Positioning take place(High value for High price)

Unique Selling Price which make Customer relationship and Punctuality.

SWOT Analysis

Strengths

Market driver-jet airways is known as a renowned company in airline industry, including airline domestically and internationally

Experience exceeding 14 year-the company has now established its steps in the airline industry and has achieved a big experience.

Only private airline with international operation-now adays new international entrants are entering into market,but jet airways were once upon a time to be the most reputed international airline industry.

Market leader-leader of the airline industry,with kingfisher bieing the most big rivaler.

Largest fleet size-at airport the largest fleet which we can observe is of jet airways.

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-jet airways has now till not focused on cargo industry which is developing day by day as more nad more exports and imports are increasing with every passing day.

Scope in international service and tourism-the jet airways focuses maximum on domestic market and there is large opportunity for the jet airways to step at a boost level in international market.

Threats

Strong competitors-now adays new entrants like kingfisher,Lufthansa airlines are expandind there fleet into the industry both domestically and internationally.

Fuel price hike-day by day there is a price hike in fuel but the major effected are customers since with increase in price of fuel,the price of air fare automaticaaly grows up.the loss is also faced by the airline because the ratio at which the fuel price rises comparitevely the price of tickets do not rise

Overseas market competition-at an international level more and more companies are entering the airline industry due to high margin profit.

PEST Analysis

Political Issue

License issue for international

operation

Infrastructural constraint

ATF price policy

Economic Effects

Rising income level

Reduced fare but yet not enough

Social Effects

Sound Pollution

Plane hijacking

9/11 Incident

Technology Effects

Modernization of aircrafts

Modern technology like CAT3 and ILS

4P’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

PromotionOffers

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

Jet Airways annual Revenues is Rs.9481.5 crores in 2007 to 2008 and Rs.7401 crores in 2006 to 2007.

Profit (Loss) After Tax – Rs.253 crores loss in 2007 to 2008 and Rs.27 crores profit in 2006 to 2007.

All Other Domestic Players showed loss in 2006-07.

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