AIR DECCAN –REVOLUTIONIZING THE INDIAN SKIES.

PRESENTED BY-

The Assam Kaziranga University- School of

Business.

Aviation Industry in India : Characteristics

Huge Potential Under penetrated market Total Passenger Traffic : 50 million Passenger trips per annum : India : 0.05

United states : 2.02 Untapped air cargo market Infrastructure Constraint High Fuel Cost

Air Deccan creates ‘REVOLUTION’ in Indian

Transportation In 2003 Air Deccan came to Birth.

Founder –Capt. G.R. Gopinath. This was the first low cost carrier of India Cheaper than Railway 2- tier AC More advanced than railway system Covered 65 destinations in India 365 destination per day Flew 14 million passengers per year

(maximum) Market Share 21.2 % Investment – USD 50 million

Vision and Mission4

Vision : Empower every Indian to fly

Mission : To demystify air travel in India by providing reliable, low cost and safe travel to the common man by constantly driving down the air fares as an ongoing mission.

Air Deccan’s Business

Air Deccan’s first flight took off from Bangalore to Hubli on August 25 , 2003

Positioning as ‘low cost carrier ‘ Offer no in-flight service Single class aircraft configuration Internet booking and cheap fares Two air craft strategy – Airbus and ATR Target market – Upper middle class for

short term and lower middle class aggressively in long term

Air Deccan’s Business (cont.)

Target to expand fleet-124 aircraft by 2013

The Indian aviation market expected to grow at 20% annually for the next ten years. Air Deccan targeted 18% market share by 2013

Passenger load factors anticipated at 70% Revenues per customer to increase at 5%

in the long run Targets to decease fuel expense as a

percentage of total revenues from 30% to 26%, operating expense from 23% to 16% in 8 years

PEST Analysis of Air Deccan’s Business

Political Factors: Deregulations in different spheres. Open Sky Policy Low Entry Barriers FDI limits- 49% on airlines and 100%

on airports.

Economic Factor: Purchasing power increasing rapidly Growing middle class Income Hike in Average Salary in the world at that

period. (14%- highest). Consistent GDP growth and projected

double digit growth. Tourism Industry Growth. 8.8% in 2005

Socio-cultural Factor: Status symbol to travel by air. Growing Middle class households. Increase in leisure travel by tourists by 15 %

in 2005 Foreign tourists in 2006 : 3.2 mn

Technological Factors:

Modernization & Privatization of Airports

Modern Technology for efficient handling of aircraft, passenger and cargo.

Example : ILS, CAT-3 Developing Greenfield Airports with

Private SectorExample : Bangalore Airport Corporation Ltd. Ticketing increasing becoming Web Based.

Marketing Strategy10

Common Man :The Brand Ambassador for Air Deccan, the people’s airline is Mr. R.K Laxman’s ‘Common Man’

Free Tickets :

Images courtesy of Air Deccan

Marketing Strategy11

Advertisement through print, radio and billboards

In flight magazine for revenue generating In flight shopping scheme called “Brand

for less” – AVA Merchandising Tie-up with Café Coffee Day ICICI-Travel agent purchase card Tie-ups with HPCL and Reliance Web World

How Air Deccan cutscost?

12

Quicker turnaround time Lower distributions costs All economy seating configuration No free catering on board Alternative revenue channels 100% web enabled bookings – e ticketing Enhanced cash flow management

SWOT Analysis13

Strengths : Leader in LCA segment :

First to target the middle class : First mover advantage

Highest load efficiency Flies to destinations in the

hinterland A ‘Lean-and-Mean’ approach to

staffing

SWOT Analysis14

Weaknesses : Focuses mostly on South Indian

market Image plagued by frequent

breakdowns and near misses Very limited advertising Reached at the threshold of

cost efficiency

SWOT Analysis15

Opportunities : Extensive network to capitalize Air

Cargo business Plenty of scope for expansion of

operations Strengthen its position in Chartered

flight segment Could start ‘Contractual

Employment’

SWOT Analysis16

Threats : High attrition rate The threat of new entrants into

Low Price Segment. Especially IndiGo, Go Air and SpiceJet

High Risk Perception

Generic Strategies Model.1. Cost Leadership Strategy

Single Air Hostess per flight. 48 seater aircraft to lower maintenance

and service fee. Unique Online Reservation system. No Frills airline but food / beverage can

be bought inside the aircraft. Prices are almost 50% lower than the

full service airlines .

Generic Strategies Model (Cont.)

2. Differentiation Strategy Single Passenger class system Tie ups with Cafe Coffee Day, HPCL

and Reliance Web World Provides flights even to the

hinterland Allocation of prices to various

percentage of seats

Generic Strategies Model (cont.)

3. Focus Strategy Frequent business travelers AC train travelers

Rebranding

Renaming from ‘Air Deccan’ to ‘Deccan’ New Tagline - ‘The Choice is Simple’ Blue and yellow name replaced by Red

and White Sold 26% stake to Kingfisher Airlines in

May 2007. No outsourcing of check- in staff Replacement of Ailing Aircrafts Cost incurred in rebranding process :

Rs. 15 crore.

Thank you.