Blackbook Project on Indian Airlines Industry

8/12/2019 Blackbook Project on Indian Airlines Industry

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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 acronym for the Political, Economic,

Social, and Technological factors of the external macro-environment. Such

external factors usually are beyond the firms control and sometimes !resent

themselves as threats. "or this reason, some say that #!est# is an a!!ro!riate

term for these factors. $et us loo% at the PEST analysis of the Indian

aviation sector:

Political Factors

In India, one can never over-loo% the !olitical factors &hich influence

each and every industry existing in the country. $i%e it or not, the !olitical

interference has to be !resent every&here. 'iven belo& are a fe& of the

!olitical factors &ith res!ect to the airline industry:

o The airline industry is very susce!tible to changes in the !olitical

environment as it has a great bearing on the travel habits of its customers.

An unstable !olitical environment causes uncertainty in the minds of the

air travellers, regarding travelling to a !articular country.

o (verall India)s recent !olitical environment has been largely unstable due

to international events * continued tension &ith Pa%istan.o The recent 'u+arat riots * the government)s inability to control the

situation have also led to an increase in the instability of the !olitical

arena.


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1usiness cycles have a &ide reaching im!act on the airline industry.

2uring recession, airline is considered a luxury * therefore s!ending on air

travel is cut &hich leads to reduce !rices. 2uring !ros!erity !hase !eo!le

indulge themselves in travel * !rices increase.

After the Se!tember incidents, the &orld economy !lunged into

global recession due to the de!ressed 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.The loss of income for airlines led to higher o!erational costs not

only due to lo& demand but also due to higher insurance costs, &hich

increased after the 3T4 bombing. This !rom!ted the industry to lay off

em!loyees, &hich further fuelled the recession as s!ending decreased due to

the rise in unem!loyment.

Even the SA5S outbrea% in the "ar East &as a ma+or cause for slum!

in the airline industry. Even the Indian carriers li%e Air India &as dee!ly

affected as many flights &ere cancelled due to internal em!loyee relations/

as &ell as external !roblems, &hich has been discussed later.

Social Factors

The changing travel habits of !eo!le have very &ide im!lications for

the airline industry. In a country li%e India, there are !eo!le from varied

income grou!s. The airlines have to recogni6e these individuals and should

serve them accordingly. Air India needs to focus on their clientele &hich are


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mostly lo& income clients * their habits in order to %ee! them satisfied.

The destination, %ind of food etc all has to be chosen carefully in

accordance &ith the tastes of their ma+or clientele.

Es!ecially, since India is a land of extremes there are !eo!le from

various religions and castes and every individual travelling by the airline

&ould ex!ect customi6ation to the greatest !ossible extent. "or e.g. A 7ain

&ould be satisfied &ith the service only if he is served +ain food and it

should be %e!t in mind that the customers next to him are also +ain or at

least vegetarian.

Another good exam!le &ould be the case of South West Airlines

&hich occu!ies a solid !osition in the minds of the S air travelers as a

reliable and convenient, fun, lo& fare, and no frills airline. The ma+or

element of its success &as the augmented mar%eting mix &hich it used very

effectively. 3hat South 3est did &as it made the environment inside the

!lane very consumer friendly. The cre& neither has any uniform nor does it

serve any lavish foods, &hich indirectly reduces the costs and ma%es the

consumers feel comfortable.

Technological Factors

The increasing use of the Internet has !rovided many o!!ortunities to

airlines. "or e.g. Air Sahara has introduced a service through the internet,

&herein the unoccu!ied seats are auctioned one &ee% !rior to the de!arture.

Air India also !rovides many internet based services to its customer

such as online tic%et boo%ing, u!dated flight information * handling of

customer com!laints.


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ST2A S trade * develo!ment association/ is funding a

feasibility study and &or%sho!s for the Air!orts Authority of India as !art

of a long-term effort to !romote Indian aviation infrastructure. The

Authority is develo!ing modern communication, navigation, surveillance,

and air traffic management systems for Indias aviation sector that &ill hel!

the country meet the ex!ected gro&th and demand for air !assenger and

cargo service over the next decade.

A !ro!osal for restructuring the existing air!orts at 2elhi, 8umbai,

4hennai and 9ol%ata through long-term lease to ma%e them &orld class is

under consideration. This &ill hel! in attracting investments in im!roving

the infrastructure and services at these air!orts. Setting u! of ne&

international air!orts at 1angalore, yderabad and 'oa &ith !rivate sector

!artici!ation is also envisaged.

A good exam!le of the im!act of technology &ould be that of AAI,

&herein &ith the hel! of technology it has converted its obsolete and

unused hangars into profit centers.AAI is no& leasing these hangars to

international airlines and is earning huge !rofits out of it. AAI has also tried

to utili6e s!ace that &as !reviously &asted installing a lamination machine

to laminate the luggage of travelers. This activity earns AAI a lot of

revenue.

These technological changes in the environment have an im!act onAir India as &ell. 1etter air!ort infrastructure, means better handling of

air!lanes, &hich can hel! reduce maintenance cost. It also facilitates more

flights to such destinations.


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Segmentation: The Airline Industry

8ost airlines use a very traditional segmentation strategy, dividing

!assengers into business travelers and economy travelers mostly leisure

travelers/. The common strategy is to s0uee6e as much !rofit as !ossible

from business class !assengers &ho are attracted by su!erior services and

corres!onding high !rices and, at the same time, to try and fill the rest of the

seats and ensure gro&th by attracting economy class !assengers &ith lo&er

fares.

Business passengers

They are crucial for airlines !rofitability. 3ith less s!are time and

more cash in their !oc%ets, they agree to !ay a !remium !rice for a

!remium service.

Today business !assengers account for a!!roximately ;= of airlines revenue. The

!remium !rices they !ay !rovide &ider and more comfortable seats, better

choice of meals and seats, luxurious lounges.


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Airlines can choose from a multitude of !remium services to offer to

business travelers. Some of these extras range from seats e0ui!!ed &ith

faxes and tele!hones, to gambling machines, sho&ers, massage services and

suit ironing services in the recently introduced arrival lounges.

1usiness !assengers believe it is &orth extra money if they can save

time and arrive loo%ing fresh for an im!ortant meeting. 1usiness !assengers

&ill avoid transit flights even if a longer flight could save them money. 1ut

amongst other !er%s, flexible reservation services are !robably the most

im!ortant to them. 5eservations for business tri!s are often made +ust a

cou!le of days in advance. A no !enalty cancellation !olicy is also veryim!ortant to business !assengers.

The best &ay to reach business travelers is through !rinted

advertising. 1usiness ne&s media, such as #The Economist# or #The 3all

Street 7ournal# are some of the best !ublications through &hich airlines can

reach business travelers. 8any airlines design s!ecial !romotional !rograms

that target cor!orate boo%ers and meeting !lanners, &ho are res!onsible for

business tri!s reservations. "re0uent flyer !rograms are an added bonus for

business !assengers.

Leisure Travelers

They re!resent a totally different mar%et. The most im!ortant

consideration for most of them is the !rice. The lo&er the airfare, the more

!eo!le &ill fly the res!ective airline.

1y and large, &ith the exce!tion of &ealthy travelers, this segment

&ill not !ay extra for !remium services and &ill agree to change several

!lanes during their tri! if this o!tion costs less than a direct flight.

2es!ite lo&er margins !rovided by this segment, leisure travelers are

very im!ortant to an airlines bottom line. Part of the reason is that


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technological !rogress in the area of tele-conferencing and increased use of

the internet for business communications is ex!ected to reduce the number

of business travelers. Thus, airlines are counting on the leisure segment to

!rovide further gro&th.

o& can airlines benefit from the gro&th o!!ortunities in the leisure

segment &ithout losing immediate !rofit o!!ortunities in the business

segment? This is a tough issue in airline mar%eting management. 1y

im!roving services and reducing !rices for economy class !assengers,

airlines ris% that some business !assengers &ill s&itch to economy class.

This has already ha!!ened &ith 7a!an Airlines, for exam!le, &hich&as forced to eliminate business class seats on some of its flights. (n the

other hand, if an airline focuses on business class !assengers, it ris%s losing

its economy class !assengers to another airline.

Since business class !assengers are not many, a com!any relying

mostly on business travelers &ill often end u! flying half-em!ty !lanes,

losing the !otential revenue generated by lo&er !riced economy seats.

(n the other hand, fe& airlines catering solely to economy class

!assengers can be successful because a lo& fare carrier must fill the entire

!lane if it is to generate revenue from its lo&-margin o!erations.

The allocation of business and economy class seats on a !lane is

determined through a !rocess called yield management. A good yield

manager %no&s the a!!roximate !ro!ortion of business and leisure travelers

for each flight in advance, based on so!histicated statistical models.

Thus he@she tries to sell early, the economy seats at a chea!er !rice,

&hile %ee!ing enough seats reserved for business travelers, &ho usually

boo% at the last minute. 9ee!ing +ust the right amount of business seats

reserved is im!ortant: selling too fe& economy seats in advance may result


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in a less-than-full !lane &hile selling too many economy seats may result in

a full !lane, but &ith insufficient revenue to gain a !rofit.

This %ind of segmentation serves airlines &ell enough &hen

im!lemented &ithin one com!any. It &ould be very difficult for any single

airline to target +ust one of these t&o segments - business or leisure -

successfully.

There are exce!tions - small regions that serve destinations &here the

ma+ors do not fly, for exam!le, are in a better !osition to im!lement a lo&

!rice !olicy. They can even get business travelers to fly them des!ite the

lac% of !remium services because no other airline &ould get them there.South&est is a classic exam!le, !roving that lo& cost carriers can thrive.

8a+or international carriers, ho&ever, need to target both the business

and the leisure segments they may also target different ethnic and

geogra!hical segments differently, de!ending on the mar%ets from &hich

they dra& the ma+ority of their customers.

"or exam!le, even though 7a!an Airlines advertise extensively to the

American !ublic, their message -#our needs. our Airline,# seems to &or%

best for the traditional 7a!anese audience.

Inside one country, t&o national carriers may also focus on different

destinations, &hich is the case &ith 4anadian Airlines and Air 4anada.

Passengers tastes determine airlines strategies. 3hile 1ritish Air&ays

focuses on comfort and luxury, valued by Euro!ean !assengers, Air 4anada

e0ui!s its business class seats &ith !lugs for la!to!s and tele!hones,

a!!reciated by Borth American business travelers.

verall! airlines seem to achieve "est results #hen they su"scri"e

to the segmentation theory! supported "y yield management techni$ues


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and a careful monitoring of the economic changes in their geographical

mar%ets.

Product &i'

'etting the !roduct right is the single most im!ortant activity of

mar%eting. If the !roduct isnt &hat the mar%et &ants, no amount of !rice


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ad+ustment or brilliant !romotion &ill encourage consumers to buy it. The

airline !roduct is 0uite a com!lex one since it com!rises of a service of

incor!orating the tem!orary user of airline seat and certain tangible

!roducts such as free flight bags or a free bottle of duty free s!irit to

encourage boo%ing.

The airline !roduct includes of t&o ty!es of services:

. on the ground services,

C. In-flight services.

The on-the-ground services include a convenient air!ort &ith car !ar%ingfacilities, duty free sho!!ing 0uic% and efficient chec%ing of baggage,

efficient service at reservation counter, trans!ort to the air!ort, etc.

The service !rovided inside is intangible and is highly variable. The

airhostesses are trained to !rovide !olite, &arm and courteous service. The

courteous service that the re!resentatives at the baggage counter,

reservation counter !rovide goes a long &ay in develo!ing customer

loyalty. The travel agents of the airlines also need to be efficient and !olite.

(ifferentiating the Product

It is im!ortant to recogni6e that &hat the consumers are demanding

are not !roducts, or features of !roducts but the benefits they offer.

Producing added benefits thus hel!s the mar%eter to distinguish one !roduct

from another. 'ood design or style of service can form the basis of

differentiation. This enables the com!any to create a !ersonality for its

service. The design and decor of the aircraft !rovides o!!ortunities to

!ersonali6e their !roduct as &ell as !eriodically to u!date them &hen


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differentiation under IATA regulations &as virtually excluded, nonetheless,

certain airlines &ere able to develo! distinct !ersonalities. Eagle Airlines

created an entirely ne& mar%et bet&een Be& I or% and 1ermuda, for e.g.

by develo!ing an image of a friendly airline distinctive from other airline

serving the route. A similar style &as evident in 5ichard 1ransons Dirgin

Air&ays.

)*E P*(+)T A,( S+PPLE&E,TA*- SE*I)ES

8any services !roducts consist of a bundle that includes a variety of

service elements and even some !hysical goods. It is im!ortant todistinguish bet&een the core !roduct that the customer buys and the

su!!lementary services that accom!any that !roduct.

T/E FL0E* F SE*I)E

4ore !roduct surrounded by clusters of su!!lementary services

Source: Christopher Lovelock pg. 2

The core service of an airline is the service of trans!ort. The

su!!lementary services are classified into eight clusters * each one is

analy6ed &ith res!ect to the airline industry:

Information

This as!ect of su!!lementary service is common for every !erson

that needs information about the organi6ation. In case of airline industry,

u!to date information regarding flight schedules, tic%et fares, information

about !romotion schemes etc available to customers.


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4ustomers can avail of this information literally at their fingerti!s

today &ith every airline starting its o&n &ebsite &hich gives com!lete

details to the customer * also entertains 0ueries.

It also includes !roviding information to em!loyees regarding ne&

!olicies affecting the airline * e0ui!!ing them &ith enough information,

&hich the customers might demand. Extensive training is !rovided to in-

flight attendants regarding handling customer 0ueries, %no&ledge about the

air!lane itself, %no&ledge aboutcuisine etc.

)onsultation

This as!ect of su!!lementary services can be customi6ed according

to the needs of the customer. It is more in the case of !eo!le !rocessing and

high !ersonnel-contact services.

Airlines are moving more actively into the role of consultant today.

They are doing a&ay &ith the travel agents * designing * selling !ac%aged

tours to consumers directly. In this as!ect they often act as consultants to

the customer, by giving him advice * suggestions regarding the ty!e of

!lan he can choose, the benefits he &ill get the mode of travel he should

choose etc.

Another as!ect to consultation at airlines is &hen the customer

a!!roaches the airline regarding traveling to !articular destination, the

airline gives him a variety of choices of routes that he can ta%e.


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In some cases airline may also design s!ecial menus * benefits in

consultation &ith its fre0uent fliers by %ee!ing in constant touch &ith them

* as%ing them for suggestion as to &hat they &ant in their airline &hich

&ill ma%e their ex!erience more comfortable.

rder ta%ing

The order ta%ing !rocedure is essentially the boo%ing !rocedure of

the airlines. The im!ortant as!ect to be noted here is that the !rocedure is

smooth, easily understood * fast. 5eservation of airline tic%ets is no& easyand reliable since it is fully com!uteri6ed. There are C; hours reservations.

Passengers can s!ecify their seat !references at the time of reservation.

8ost airlines use the tele!hone, fax, and email methods of boo%ing.

The em!hasis here is on fast boo%ing * at the same time getting the

re0uired information form the customer. This is done by establishing a

standard reservation !rocedure * format thus reducing the ris% of

inconsistent service delivery. The online boo%ing system also facilitates

better order ta%ing * !rocessing.

The scheduling as!ect assumes im!ortance as reservations on the

&rong flight to the &rong !lace are li%ely to be un!o!ular.

/ospitality 1 )areta%ing

3ith the increased com!etition today in the airline industry * the

increasing similarity of services offered by each airline, hos!itality has

emerged as a %ey-differentiating factor bet&een one airline * the other.


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The hos!itality as!ect of an airline is tested right form the time of the

reservation courtesy of the boo%ing official/ to the airline)s des% at the

air!ort to the actual in-flight travel the attitude of the flight attendants/ to

the !ost flight hel! extended.

Safe%eeping

In airlines the safe%ee!ing issue is that of safeguarding the

customer)s baggage.

1aggage allo&ances are offered about F %gs of chec%-in baggage is

allo&ed. Passengers carrying international tic%ets are given furtherallo&ance of around an added (%gs Priority baggage delivery is offered to

members. The customers entrust his baggage o the airline * it is the

airline)s res!onsibility to %ee! it in a !ro!er condition.

4hildren and infants usually travel along &ith their !arents and

guardian. In case of unaccom!anied minors, customer service staff renders

all assistance li%e chec%ing in and escorting u! to the aircraft and handing

over to the senior-most cabin attendant on board the flight. e is loo%ed

after on board the flight right u!to the !oint flight reaches the destination

and he is received by his guardian.

E'ceptions

S!ecial re0uests G airline very often receive s!ecial re0uests form

customers &ith regards to meal !references, s!ecial amenities for elderly

!eo!le or children., medical needs etc. these needs have to considered *

acceded to &herever !ossible


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andling of customer suggestions @ com!laints G every airline today

has a customer service center &hich entertains customer suggestions *

com!laints. (n the flight, customers are often as%ed for their o!inion

regarding service e0uality. 8any cor!orate fre0uent travelers are consulted

&hen the airline decides to ma%e any ne& change.

Billing 1 payment

The billing !rocedure in airlines is sim!le. The o!tions available to

the customer are !lenty including credit card * travelers che0ue. Airlines

use the o!en account system &ith their cor!orate clients. "re0uent fliers arealso given s!ecial !ayment !rivileges.


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LEELS F P*(+)T

FIE P*(+)T LEELS

The )ore Service

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

servicesto various destinations. As the needs of the !eo!le increased the

entire system became more organi6ed and formal. After this stage comes thevarious su!!lementary services.

The Supplementary Services

The airline industry has many !layers they had a brand name li%e

HAir India),) 7et Air&ays),) 1ritish Air&ays). All of them had some

common services to offer li%e connecting flights, through chec%-in, tele

chec% in, food on board, and com!lementary gifts etc.

2ifferent classes li%e economy class, business class &ere introduced.

Air concessions are given to school students, old !eo!le etc. Singa!ore

airlines &as the first to introduce small !"television screen for every

!assenger. The freebies are actually &in-&in deals bet&een airlines and

other services.Sahara, for exam!le, offers its !assengers a Hbusiness-!lan) on t&o-

&ay economy class tic%et, &hich includes a night)s stay &ith brea%fast,

ST2 facility for minutes and boardroom facility at the Par% otel, Be&

2elhi. To 2elhi based fliers to 8umbai, it offers a night)s stay &ith


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brea%fast, air!ort transfers and DIP amenities at The (rchid, 8umbai. "or

business class, the !lan includes a stay at The $eela, &ith buffet brea%fast

and late chec%out.

All these added service hel!s the customer to decide u!on &hich

airlines he &ants to travel. As com!etition increased and the customers

&anted more the next !hase evolved and that is the augmented service.

The Augmented Service

This !hase is &here the customer)s ex!ectations are met the service

!roviders %e!t &or%ing on ne& methods to meet the ever-changingcustomers) demands. The !layers introduced online "oo%ing, &hich &as

very convenient for the service users.

1ritish Air&ays business class has sho&ers it)s more s!acious and

comfortable. Sahara airlines offer its !assengers six different ty!es of

cuisine li%e vegetarian, fat free, diabetic etc. They also have auctiongoing

on board. Dirgin airlines have gambling on board, they also have body

massage to offer to their !assengers. Air Emirates has something called cab

service, they have customi6ed !ic% u! and dro! cab service.

This !hase is the most crucial one &ith increased com!etition service &ill

become the final differentiation.

Future Service

As mentioned above the customer needs %ee! changing, the future is

un%no&n. The customers may be loo%ing in for more fre0uent inex!ensive

air travel, something li%e air taxis, su!er sonic s!eed. This decreases the

time thus reducing the cost.


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The diagrammatical re!resentation of the core and su!!lementary

services in the airline industry is sho&n belo&:

Core

TRANSPORT

TI)2ETS

COMPLEMENTARY

GFITS

BRAND NAME

(Air India,

Jet

Airway!

FOOD

CONCESSIONS

CONNECTING

FLIG"TS

)&F*T3 SPA)E

)AB SE*I)E

M#LTI$

C#ISINEA#CTION


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Price &i'

Price !lays as much a tool of mar%eting as !romotion !lays a criticalrole in the mar%eting mix. The conce!t of fair !rice is !aramount. 1uyers

+udge &hether a !roduct is fairly !riced by seeing &hether it re!resentsvalue for money. Pricing can be classified in three &ays.

(IISI, F FA*ES:

The final fares charged to the !assengers include the follo&ing com!onents:

1asic fares

Insurance

Inland Aviation Travel Tax IATT/.

Passenger Service "ee PS"/

The basic fares include the o!erating cost incurred by the airlines and the

!rofit margin. The ma+or constituents of the o!erating cost in res!ect of

domestic airlines in India are the Aviation Turbine "uel AT"/ the basic ra&

material for this service industry, varies F-;F = de!ending on aircraft

utili6ation Bavigation, $anding * Par%ing costs J-F= 5e!air and

8aintenance =, 8an!o&er C= Ac0uisition@ 2e!reciation * Insurance

= and balance other ex!enses.

/o# are fares arrived at4

3hen Airlines !ut in ca!acity seats/ and fre0uency flights/ bet&een

any t&o !oints, they mar%et research the route in order to arrive at the total

!otential for that segment. In other &ords, the ca!acity and fre0uency is


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tailored to the si6e of the mar%et. Accordingly, the !ricing structure is also

arrived at. Pricing or fare levels are arrived at after ta%ing into

consideration various factors ty!e of aircraft, configuration of aircraft

number of seats/, density of route, com!etitor activity, and minimum

brea%even cost.

In order to achieve the brea%even seat factor and thereafter maximi6e

loads, the airline embar%s u!on a serious of mar%eting activities. These &ill

vary from a !ublicity cam!aign highlighting various facets of the Product,

to sales, service, !unctuality, ideal de!arture and arrival timings,

connections and so on. In short, the entire focus is to increase the yield and

load factor seat factor/. The yield or the bottom line is the income

generated from tic%et sales less costs incurred on the route.

0hy do fares fall4

3hen the yield dro!s or the seat factor falls, the airline is

immediately alerted to en0uire into the causes for this. This leads to a fare

&ar &herein the airline either tries to !rotect its mar%et share or res!onds to

another airline &hich tries to increase its o&n mar%et share. The reasons for

these can be multifarious.

. It could be that the route is not !rofitable due to intrinsic reasons such as

a very short haul route, or the !otential or total si6e of the mar%et for this

route is too small to sustain a !rofitable flight or there is too much

ca!acity de!loyed by various airlines on the route


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C. ields may also fall due to increase in costs. Then the airline has t&o

o!tions increase fares to com!ensate for the increased costs. The

second o!tion is, to dro! fares in order to increase the seat factor.

Increase in volume number &ith lo& fares can achieve brea%even cost/

. It could be that the ty!e of aircraft de!loyed on the route is not suitable

and hence is ma%ing cash loses.

;. Extraneous reasons also contribute to non-!rofitability of routes. The

event of Se!tember , CFF is an instant exam!le &herein !assengers

sim!ly sto!!ed flying and several airlines &ent into ban%ru!tcy. Also

!oor economic conditions lead to shrin%age of mar%et. Prices of fuel

also fluctuate and can result in sudden increase in basic costs. Insurance

!remiums have recently increased considerably, further adding to the

burden.

K. A!art from the above. 4om!etitor activities can also lead to a dro! in

mar%et share or dro! in yields. "or exam!le, the most common cause is

a reduction in fares by one airline forces the other to reduce fares. This

reduction in fares could be due to any of the above three reasons

enumerated above.

5eduction in fares, a!art from the above reasons is also due to introduction

of a more suitable aircraft, &hich is fuel efficient, modern, and &ith greater


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seating ca!acity at lo&er cost. In other &ords reduction in fares is not

al&ays due to negative factors but can be due to moderni6ation.

Pricing Strategies

Premium Pricing:

The airlines may set !rices above the mar%et !rice either to reflect

the image of 0uality or the uni0ue status of the !roduct. The !roduct

features are not shared by its com!etitors or the com!any itself may en+oy a

strong re!utation that the brand image alone is sufficient to merit a

!remium !rice.

alue for &oney Pricing:

The intention here is to charge the average !rice for the !roduct and

em!hasi6e that it re!resents excellent value for money at this !rice. This

enables the airline to achieve good levels of !rofit on the basis of

established re!utation.

)heap alue Pricing:

The ob+ective here is to undercut the com!etition and !rice is used to

trigger the !urchase immediately. nit !rofits are lo&, but overall !rofits

are achieved. Air India and Indian Airlines have slashed their !rices to meet

the com!etition of !rivate airlines so that they can consolidate their !osition

in the mar%et.

Airlines usually !ractice differential pricing. There are three classes:

The "irst 4lass, The Executive or 1usiness 4lass and The Economy 4lass.


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"ares for each class are different since the facilities !rovided and the

comfort and luxury level is different in each class. Seasonal fares are also

fixed, fares rise during the !ea% holiday times.

Lo#5cost Pricing:

3ith the advent of the lo&-cost airlines in the Indian aviation

industry, a different lo&-cost flying conce!t has come u!. Since these lo&-

cost airlines are trying to &oo the customers by !roviding air travel in

exce!tionally lo& !rices, a !rice-band %ind of !ricing has to be designed.

In lo&-!ricing strategies, the airlines !rovide very lo& !rices for the

flight tic%ets. Also, they !rices are made chea!er by boo%ing the tic%ets

long before the flight date.

APE6 Fares:

In this scheme, !eo!le are given very chea! rates only if tic%ets are

boo%ed atleast before the s!ecified time !eriod. 1ut the dra&-bac% here is

that if the boo%ing is cancelled, a substantial amount of money is not

returned.


25/45


26/45

contribute less than K !er cent of the overall cost of an airline/. The

&ithdra&al of exem!tion on !ayments made by an Indian com!any to

ac0uire an aircraft, or an aircraft engine, on lease from a foreign state, or a

foreign enter!rise, &ill negatively im!act airline com!anies, as most of the

aircraft and aircraft engines used by airlines are leased. These exem!tions

&ill cease !ros!ectively from Se!tember , CFF;.


27/45

)onclusion

8ar%eting of airlines may not be on the same lines of those of other

services, but it surely has borro&ed in a lot from them and refined itself

over the years and has become the !oint of study of many-a-mar%eters.

Today mar%eters of airlines in India have got a &a%e-u! call. They

need to be very !ro-active and act effectively * efficiently today if they

&ant to survive even till the near future. The Indian aviation industry is

totally sha%en-u! and is certainly in the lime-light. 3ith the advent of a ne&

%ind of airline structure in India, they existing !layers have ta%en notice and

are ta%ing utmost measures !ossible to cut-out the com!etition even before

it comes into being.

The 'overnment in India has to ta%e many !ositive ste!s to ma%e the

industry much stronger than it is today. There are many issues &ith need to

be studied and corrected. "oremost, the existing air!orts need to be

moderni6ed. The non-used air!orts need to have an increase in air traffic.

8ore money needs to be !um!ed into the air!ort infrastructure. There has

to be massive reduction in the air turbine fuel charges. The air!ort charges

too are among the highest in the &orld and have to be normali6ed. A!art

from all this, the government should allo& the industry to be as de-regulated

as !ossible, so that the industry becomes strong on its o&n and has the

com!etitive global advantage &hich is re0uired today.


28/45

Air Sahara launches family fare scheme

#ur Corporate $ureau

%arch 2&&'

,e# (elhi:As a !art of its strategy to attract more air travellers, Air Saharayesterday launched a ne& scheme lin%ed &ith its bul% tic%eting !rogrammesli%e the Sixer and S0uare 2rive to encourage families to travel &ithfre0uent flyers.

As a !art of this scheme, along &ith the Sixer and S0uare 2rive schemes,!assengers can buy additional tic%ets for family members for as little as5sC,KFF.

#Almost all the schemes so far have focused on the individual flier. Thistime &e have come out &ith the fly-your-family scheme to attract familymembers,# 5ono 2utta, chief executive, Air Sahara, said here.

3ith the ne& !rogramme, Air Sahara ex!ects to target both individual andbusiness travellers. nder the Sixer scheme, a !assenger has to buy sixtic%ets for 5s>,FFF or four tic%ets under S0uare 2rive for 5s C>,KFF.

As !er the ne& scheme, one can avail of tic%ets for family members by!aying an additional 5sK,FFF for six cou!ons or 5sF,FFF for fourcou!ons, along &ith the t&o schemes.

#So a tic%et for a family member costs only 5sC,KFF for a domesticdestination. The only condition is that they &ill have to travel together,#2utta said.

A maximum of three family members !lus the original traveller under thet&o schemes &ill be allo&ed to fly under the ne& scheme, named Sixer-in-

the-Air.


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$o& cost, frills chic

%ohini $hatnagar

( )ebruary 2&&'

2ingfisher Airlines promises a ne# high ; economy fares on

frills5filled flights.

9ingfisher Airlines 9A$/, !romoted by maveric% li0uor baron,Di+ay 8allya, chairman, nited 1re&eries, is taxiing on therun&ay. Scheduled to ta%e off on 8ay J, CFFK, the birthday of

8allyas


30/45

Airbus ACF family is the ac%no&ledged technological leader in the single-aisle class, &ith advanced features such as fuel-saving &ingti! fences,&eight-saving com!osites, and the reliability that comes from its moderndesign and ease of maintenance. It also consistently leads in inde!endent

!assenger and o!erator surveys.

Says 8allya, #3e are offering our !assengers more than +ust value-basedfares, &e &ill offer a com!lete lifestyle ex!erience.#

According to him, 9ingfishers lo& cost translates into a cost efficientairline &ith the lo&est seat mile cost in the industry, ex!ected to to beachieved through online reservations and outsourcing of services &ithoutcom!romising 0uality and safety.

"or 9A$, lo& costs mean no elaborate meals on board and no !a!er tic%ets,though the interiors &ill be aesthetic and classy and, if 8allya is to be

believed, the airline &ould have fashion models as in-flight attendants toma%e flying 9ingfisher a more memorable ex!erience.

In the !ast fe& years, stiff com!etition in the mar%et!lace has led to anumber of com!anies in the S and Euro!e offering u!mar%et !roducts andservices at no frill !rices also called masstige or no frills chic !roducts.S airlines li%e 7et1lue and Song are cases in !oint as they !rovide &ide,all-leather seats, free TD &ith C; channels, FF audio channels and !ay-!er-vie& movies.

According to 8allya, 7et1lue and Song are the ins!irations behind 9A$more than the lo& cost, no frills 5yan Air and 9s Dirgin Air.

Though 8allya is reasonably u!beat about the future of 9ingfisher Airlinesand !lans to offer flights to Singa!ore and 8alaysia, the government hasallo&ed only airlines &ith five years flying ex!erience to fly abroad, &hichmay be detrimental to the airline in the long run.

Also, the fact that 9ingfisher Airlines &ill not be significantly chea!er thanIndian Airlines or 7et Air&ays may not exactly &or% in its favour,not&ithstanding fashion models and individual videos.

o&ever, &hat &ill &or% for it is the fact that air travel in India is gro&ingat CK !er cent !er annum and there is !lace in the domestic mar%et for at


31/45

least t&o more carriers. 8oreover, since the airline is going in for only ne&aircraft, 9ingfisher &ill have the youngest fleet in the &orld till mid-CFFJ,&hich could &or% in its favour later.

Airlines get fancy-free

%ohini $hatnagar

' *ugust 2&&+

Than%s to Air (eccan! other airlines find that it pays to drop fares

At the rate at &hich airlines are slashing fares, a timemay soon come &hen $alu adavs rail&ay ministry

&ont matter much.

The credit for triggering this !rice offensive goes toAir 2eccan, &hich commenced o!erations less than a year ago &ith t&o ;


32/45

3hat is ma%ing things easier for Air 2eccan is that states li%e AndhraPradesh and 9arnata%a have announced a reduction in sales tax for no frills

regional airlines to im!rove air connectivity in those

states. 3hile Andhra has com!letely abolished sales tax,9arnata%a has reduced it from CK !er cent to +ust ; !ercent.

"ollo&ing the enthusiastic res!onse to Air 2eccansannouncement from the traveling !ublic a number ofother lo& cost airlines have a!!lied for licences. These

include amuna Air&ays, Indus Air, 1 grou!s 9ingfisher Airline, Busli3adias of 1ombay 2yeing/ no frills airline, and Arab Ex!ress. The last&ill o!erate bet&een India and the 'ulf region only.

1 for instance has signed a deal &ith the Euro!ean aircraft ma%er AirbusIndustrie to !urchase four !lanes and an o!tion to buy eight more to boostthe 9ingfisher Airline fleet.

All this seems to have sent the leading domestic carriers N Indian Airlines,7et Air&ays and Air Sahara into a ti66y and each airline is no& going all outto ensure they it doesnt lose out to the ne& lo&-cost airlines N or to eachother. Bo& it seems a lot de!ends on &ho gets there first.

Indian Airlines has announced that !assengers flying bet&een t&o metrosneed !ay only an extra 5s,FFF to ta%e a connecting flight to a smaller city.Indian Airlines officials say the scheme is aimed at ta!!ing air traveldemand among those living in smaller to&ns and cities, &ho usually o!t forroad or rail&ay travel.

Air Sahara no& !lans to increase the fre0uency of its flights to the interiorsof the country by KF to >F !er cent this year. The airline &ill also introducethe hub-and-s!o%e system, &ith metros as hubs. Passengers traveling from

one metro to another and then on to a small to&n could !ay the standard fareon the metro leg of the +ourney, but a lo&er fare to the small to&n.

The airlines are also &or%ing on u!grading their fre0uent fliers !rogrammes""P/. 7et Air&ays has u!graded its ""P and is focusing on its yield-management strategy. The airline is see%ing to lure !assengers &ho fly lessfre0uently. nder this scheme, seats that are not occu!ied on a flight, &ill be


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offered at lo&er rates.

Indian Airlines has revised its fre0uent flier !rogramme to enable those &ith

even a single boarding !ass &ith a single boarding !ass. Indian Airlinesfre0uent flyer club earlier had a 5s,FFF enrollment fee &hich gave &ay tothe three boarding !ass norm and no& +ust a single boarding !ass 0ualifiestravelers to enter the fre0uent flyer club.

The Indian Airlines ""P has been merged &ith Air-Indias !rogramme,&hich &ill allo& international !assengers to earn mileage !oints. If you flyIndian Airlines, youll get Air-India mileage !oints, though the offer is validonly till Se!tember, this year.

Air Sahara is also !lanning to launch a dynamic fare model. nder thismodel, fares &ill be based on the daily mar%et demand. In short, Air Sahara,too, &ill sell vacant seats at lo&er fares.The established airlines %no&ing they cant fight the lo&-cost carriers interms of !rice are em!hasising the coverage and service !art of flying.

The price #ar

o&ever, Air Sahara, &hich has al&ays been 0uic% to react on the fare front,last &ee%, announced its sur!rise fare !ac%age. The airline announced a

reduction in fares by KL to >L !er cent on the busy revenue-earning metroroutes lin%ing 8umbai, Be& 2elhi, 9ol%ata and 1angalore &ith the returnair fare bet&een 2elhi and 8umbai being brought do&n >L !er cent to 5s;,;;; N com!ared to 5s ;,;CF for air-conditioned rail travel along the sameroute.

o&ever, the !rices are sub+ect to the tic%ets being !urchased at least Fdays in advance. #This initiative &ould give an o!!ortunity to the traintraveller to o!t for air travel,# said Air Sahara !resident 5ono 7 2utta.

The airline is also !lanning to launch a dynamic fare model that &ould fixfares bet&een various domestic destinations based on daily mar%et demand.

Indian Airlines has announced a ne& a!ex fare slab for !urchase of tic%ets ineight sectors, C< days in advance N t&o days less than those offered by AirSahara and 7et Air&ays.


34/45

The ne& 2-C< segment &ould be valid for travel onthe 2elhi-8umbai, 2elhi-9ol%ata, 2elhi-yderabad,2elhi-1angalore, 2elhi-4hennai, 9ol%ata-8umbai,

9ol%ata-1angalore and 4hennai- 9ol%ata sectors.

IA earlier had only t&o segments, 2-J one &ee% advance/ and 2-C three&ee%s advance/, under the smart a!ex scheme. The 2-C< fares &ould beavailable for sale on one &ay or round tri!s as against round tri! faresoffered by Air Sahara. o&ever, the F-day advance fare offered by AirSahara is valid throughout the year, &hile IAs 2-C< fare is valid till (ctoberK.

Bot to be left behind, 7et Air&ays has announced the su!er a!ex monsoon

fares and s!ecial monsoon !oint-to-!oint economy class fares and returnexcursion fares &hich are available on K> and C> sectors res!ectively.

A !assenger availing himself of the 7et Air&ays !oint-to-!oint economyclass fares can travel on the yderabad-2elhi-4handigarh route or in thereturn direction/ for 5sL,LFF or bet&een the 4hennai-2elhi-Patna sector orin the return direction/ for 5s,L;F. Similarly, a !assenger travelling underthe s!ecial monsoon economy class return excursion fare of 7et Air&ays onthe 4hennai-2elhi-Daranasi can fly for 5sCC,FF. nder this scheme, theyderabad-2elhi-7ammu sector or return/ can be covered for 5s


35/45

&hich it !lans to start o!erations on metros.

Air 2eccans, '5 'o!inath has said he !lans to %ee! cutting fares as the

number of !assengers for his airline rises.

It seems certain that IA 7et and Air Sahara &ould have to come u! &ith theiro&n lo&-cost tic%ets and not +ust seasonal schemes to remain com!etitive.At !resent the three airlines together command the largest share of thedomestic aviation mar%et but Air 2eccan !romises to start sni!!ing a&ay attheir long held bastion.

"or Indian travellers, no frills airlines are a bonan6a as flights to destinationsabroad are often chea!er on foreign carriers than those &ithin the country on

domestic airlines.

industryO aviation

Economics of lo&-cost air travelShubha %adhukar

( -uly 2&&+

perating on lo#5cost flying models! airlines can provide air

travel at 98 to 9< per cent of the e'isting economy airfare

Travelling by air is no longer a dream for many.Bot after Air 2eccans bloc%busterannouncement to offer 5s KFF air tic%et for theone hour KK minutes flight bet&een 2elhi and8umbai. Sounds incredible? Pinch yourself.

$o& cost, no frills air travel has arrived in India.

In !ractical terms, this too good to be true offer may not last in!er!etuity, but air tic%ets at ;F to ;K !er cent of the existing economyairfare is not +ust feasible but realistic too as !roved by Air 2eccan. Itsattractive !ricing has succeeded in broadening the air travellers
http://www.domain-b.com/industry/index.htmlhttp://www.domain-b.com/industry/aviation/index.htmlhttp://www.domain-b.com/industry/aviation/index.htmlhttp://www.domain-b.com/industry/index.html


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segment also.

$o& cost, no-frills air travel emerged in the S in the LJFs ands!read to Euro!e in LLFs. In Asia, it made inroads some three years

ago led by 8alaysias AirAsia. In India, the lo&-cost business modelha!!ened &ith Air 2eccan o!ening o!erations in south India.

Already half a do6en business houses encouraged by Air 2eccansa!!arent success and the governments !olicies to liberalise itsaviation !olicy are all geared u! to set the Indian airs!ace bu66ing&ith activity. Among the lo& cost carriers &aiting to ta%e off areDi+ay 8allyas 9ingfisher Airlines, 8odilufts 5oyal airlines and AirIndias AirIndia Ex!ress. Air(ne and Disa to be run by grou!s offormer Indian airlines !ilots are also in the offing. The latest entrant tothe gro&ing number of !rivate investors is the 5s CKFF crore '85'rou!.

$o& cost carriers have been !ossible &ith a different set ofeconomics. narguably, the ma+or cost of flying is attributed to fuel,maintenance and salaries. In addition there are !ar%ing and landingcharges as &ell, &hich are 0uite high. So ho& does Air 2eccan inIndia, 5yanAir in Euro!e and South&est Airlines in S manage tosustain lo& cost carriers? o& does a lo& cost model &or%?

$o& cost carriers generally o!erate &ith only one %ind of aircraft intheir fleet, such as Airbus CFs or 1oeing JJs, to lo&er themaintenance costs. There is no business class +ust economy class thisincreases the number of seats !er flight.

Ty!ically, they have 0uic% turn around time, &hich means higheraircraft utilisation, online tic%et reservation to save costs oncommission to agents, reduction in flight services N no free meals, none&s!a!ers and no fre0uent flier !rogrammes either. There are no

aerobridges or bus services to !ly !assengers to the aircraft. 3hatsmore, many of them do not even !romise seat allocation. sually thecre& si6e is also small: Air 2eccan o!erates &ith +ust one air hostesson board.

$o& cost carriers manage to &ring more by lo&ering their fixed costs.Shorter hauls &ith smaller cre& means not +ust each aircraft being


37/45

airborne longer but also s!ending less on hangerage along &ithsavings on hotel and layover allo&ances for the cre&. Trimming do&nthe frills li%e no hot meals means no extra storage s!ace for food

trolleys, &hich again is utilised to add more seats to the aircraft.Another source to manage lo& airfares is to sell advertising s!ace&ithin. Air 2eccan for instance, has the head rest s!ace o!en foradvertising.

'lobally, lo&-cost airlines o!erate from secondary air!orts &herelanding and !ar%ing charges are much lo&er. So in $ondon, a lo& costcarrier uses $uton air!ort instead of the eathro&. In India ho&ever,there are no secondary air!orts and no cost advantage thereof.

Bonetheless, to be on board a no-frills aircraftyou need to brace yourself &ith minimalex!ectation and a high degree of !atience. Aboveall, one needs to come out of the conce!t ofmahara+a style luxury associated &ith air travel.

Bo-frills for the traveller translates to lesser legs!ace, no free meals and no smiling air hostesses.

1ut the value for money air traveller is not com!laining. In addition,it is also attracting to its fold many of the A4 II rail travellers &hosave hugely on time and dont mind !aying the !remium for the timethus saved.

"or full service airlines though, it is a time to &orry as the no frillsairlines are certainly ma%ing a dent into their mar%ets and !rofits. Tota%e u! the im!ending challenge, the full service airlines are alsoharnessing themselves. Air-India is set to launch a ne& subsidiaryairline &ith CK !er cent lo&er fares to gulf and south east Asiancountries in A!ril CFFK. Air Sahara also !lans to restructure and cut

do&n on its o!erational costs so as to offer full service at chea!ertic%ets to domestic destinations and SAA54 and ASEAB countries.8edia re!orts also say Air Arabia, a middle east based internationalcarrier is %een to begin lo&-cost flights to India.

The abundance of !rivate investors %een to set u! lo&-cost airlines is a!ositive signal. o!efully, the government &ould relax the bundle of


38/45

taxes and liberalise the air s!ace to actually ma%e flying inex!ensivein India as it is in the S and Euro!e.

'lobally, no-frills airlines hold CK !er cent of the mar%et share. 3hat!er cent &ill it hold &ithin India is still arguable and !remature to!redict but it certainly &ill &in the hearts of travellers &ith morechoice and better !rices

The L)) Invasion5Part II

1hisham 8ansu%hani - 8umbai

*fter the first phase of theLow Cost Invasionby *ir eccan, /ingfisher,

*ir0India 1press, *ir *rabia and Spice-et, the second phase is 3ust about

to take off. 4he line up of new entrants includes Indi5o *irlines, 5o

*irlines, 4iger *irways, %agic *ir, 6aramount *irways, 1ast 7est *irlines

and many more.Express Travel & Tourismbrings you an exclusive tete-a-

tetewithRahul Bhatia8Indi5o9,Jeh Waia85o *irlines9 and Ton! "avis

84iger *irways9 who share their vision for this segment in India...

0e #ill adopt a travel agent first approach! follo#ed "y a #e"5"ased

distri"ution model


39/45

/o# #ould you position Indi=o against other ne# L))s

in the Indian mar%et4

Indi'o aims at becoming the next South&est. It is distinguished by the factthat its !arentage has a very strong aviation and services bac%ground.

Is the order of a >88 aircraft a confirmed deal #ith Air"us4 0hat is the

structure of the aircraft delivery4

3e have committed a firm order of FF aircraft to Airbus. 3e are ex!ectingbet&een K and L aircraft in the first t&o years, and thereafter, an averageof one aircraft every month.

/o# does Indi=o plan to fund its +S? si' "illion order for aircraft4

The start-u! ca!ital investment for this !ro+ect &ill be in the range of 5sKF-;FF crore. The !urchase &ill be through the debt-financing route.

0hat is the rationale "ehind setting up Indi=o4

"irstly, the Indian mar%et dynamics are strong. As a country, &e are doingextremely &ell economically and the !olitical &ill to o!en u! the aviationsector and u!grade infrastructure ma%es a great business climate to o!erate&ithin. Secondly, India has one of the least ex!lored aviation mar%ets in the&orld. 3e ma%e F.F tri!s !er ca!ita as against F.C tri!s made in 4hina,C.CF tri!s made in SA and .CF tri!s made in Singa!ore. 'iven thegeogra!hic si6e of the country, our !o!ulation, economic gro&th

!ro+ections, increased consumer s!ending and traffic !ro+ections on all

modes of trans!ort, it ma%es !erfect sense for a successful lo& cost modelto emerge. 'iven our bac%ground in aviation services, &e have &hat it ta%esto succeed.

)ould you ela"orate on the proposed distri"ution net#or% for Indi=o4

*ahul

Bhatia, 82,Inter'lobeEnter!rises,

!romoter ofIndi'oAirlines


40/45

3e are currently studying various o!tions for distribution. 3e &ill ado!t atravel agent first, follo&ed by a &eb-based distribution model.

0hat #ould the "usiness model "e #ith regards to "oth the trade and

the consumer4

Indi'o is being !ositioned to fill the fast emerging need for reliable,efficient and economical air travel. All elements of our strategy- be it

!roduct, mar%eting, distribution, o!erations or customer service - &ill be tocater to this !ositioning.

3e recognise the im!ortance of the trade and travel agents that &ill be anintegral com!onent of our distribution strategy.

0hy did you choose *a%esh =ang#al to promote Indi=o4 Is heinvesting a significant amount into the airline4

5a%esh 'ang&al is an aviation ex!ert, having s!ent over CF years at seniormanagement !ositions at nited Airlines, Air "rance and S Air&ays. 3efeel that his endorsement of the !ro+ect, cou!led &ith a &orld-classmanagement team, &ill lead to a distinct differentiation in our !roductoffering and business model. 3hile Indi'o is +ointly !romoted byInter'lobe Enter!rises and 'ang&al, Inter'lobe &ill have the ma+oritysta%e.

Being an e'5+S Air#ays employee! #hich is a full service carrier! #hat

synergies could "e formed "et#een his prior e'perience and your ne#

"usiness model4

The synergies are by &ay of his diverse ex!erience in the airline industry ina mature mar%et, &hich &ill clearly hel! us achieve our ob+ective of

!roviding economical, efficient and reliable air travel. This is of course overand above the excellent relationshi! that &e have shared for the !ast t&odecades.

0e Are 2een To Tap Southern And Eastern Indian )ities: (avis

4harmaine "ern6 - 8umbai


41/45

0ith a host of carriers loo%ing at the potential of Indian

s%ies! is Tiger Air#ays loo%ing at venturing into India4 If

so! #hen and #hich destination #ould you "e loo%ing at4

3e &ill consider flying &ithin a four-hour radius from our base so as toensure o!timum utilisation of both - our aircraft and service cre&. 3ithinthis radius are a number of Indian cities !articularly the southern and theeastern cities. 3e have underta%en feasibility studies that sho& &hich city&ill best serve our !otential Indian customers from the F cities &ecurrently service.

0hat is your strategy for success4

Tiger Air&ays is a lo&-cost carrier $44/ and &e follo& the basic $44business model. 3e %ee! fares lo& by maintaining our costs. 3e &illmaximise aircraft utilisation across our net&or% of F cities in six countries,and &ill maintain stringent cost controls throughout our o!erations &hile

!roviding a reliable and on-time service &ithout com!romising on safetyand security. Increased air travel brings about mutual socio-economic

benefits to Singa!ore and the Asia-Pacific region by develo!ing its tourism

and hos!itality industry.

0hat are your plans for the coming year4

Tiger Air&ays &ill strive to maintain its to! slot in the lo&-fares segmentand &ill announce ne& destinations in the coming months. 3e have also

!urchased eight ne& Airbus CFs bringing our fleet si6e to a total of Caircraft. This &ill hel! us gro& into a regional lo&-fare airline in the Asia-Pacific region. 3e believe in stic%ing to our true lo&-cost model.4om!etition is about delivering the best !ossible !roduct at the lo&est

!ossible !rice and &e are confident to be able to deliver efficient service fora long time.

In addition, &e &ould li%e to see o!en-s%ies !olicies among all countries inthe future.

0hat according to you differentiates the L)) from the other airlines4

Tony 2avis,

4E(, TigerAir&ays


42/45

Tiger Air&ays has the largest net&or% of lo& fare destinations served from4hangi Air!ort, Singa!ore. 3e &ill %ee! our fares consistently lo& ourlead-in fares are as much as


43/45

5eminiscing about the !ast, 3adia says that he had actually &or%ed on anairline executive summary in CFFF, &hich for some reason did not &or%out. #It &as only in CFF; that I re-o!ened this summary and decided to !utmy thought into action,# he adds.

Elaborating on the strategy of his airline, 3adia says, #(ne only has to loo%at the travelling !ublic !yramid and realise the vast o!!ortunity that itoffers. The customer base that &e !lan to target lies at the bottom of this

!yramid that has a huge unta!!ed base.# The !rimary focus for 'o Air&ays&ould therefore add u! to rail&ay !assengers travelling in I@II@III-tier A4and Dolvo bus !assengers.

1ut they are still &or%ing out the cost structure and su!!ly strategy for theairline. #Since lo& cost aviation is a high volume but lo& margin business,

it is tric%y to sustain a !rofitable business module,# 3adia informs.Although it !lans to begin o!erations by Se!tember-(ctober this year, it isstill in tal%s &ith aircraft leasing com!anies. #3e have a t&o-!rongedstrategy. Initially, &e &ill lease about CF used ACF aircraft but go on to

!lace CF firm orders for ne& aircraft by CFF


44/45

S!ice7et Airlines, for the uninitiated, is an about-to-be-launched lo&-fare,no-frills airline brand from the erst&hile airline com!any 8odiluft.

As !art of the airlines launch cam!aign, large re!licas of aero!lanes

bearing the S!ice7et logo &ill be hung from the ceilings of selectmalls@multi!lexes across S!ice7ets %ey destinations. Interactive &ill be alsoarranging for various !romotions centered around the dis!lays.

Bures Sayeed, vice !resident - cor!orate communications, S!ice7et, says,#3ith this !romotion, &e ho!e to occu!y a C;J.to!-of-mind of ourconsumers. 3e selected sho!!ing malls because our T' is based here. (urob+ective is to ta%e flying to the masses and the masses are ta%ing to mallsand multi!lexes. Therefore, malls for us are a great meeting !lace.#

"or the record, S!ice7et is being launched by 5oyal Air&ays, &hich is thereincarnation of 8odiluft. 8odiluft &as among the first !rivate com!aniesthat ste!!ed into the Indian aviation sector before itceased its o!erations in LL>.

As for 4astrol, the lubricants ma+or has tied u! &ith1roadmind Entertainment, a 'rou! 8 com!any, andInteractive to conduct rural film festivals in Pun+ab,aryana and ttar Pradesh for the !romotion of 451

Plus, a lubricant for tractors. The festival begins in thefirst &ee% of 8ay.

The movie list includes 5adar, $andhan, *wara 6agal eewanaand fourother titles. The festival is being organised &ith the !rimary !ur!ose ofgaining visibility and reaching out to 4astrols T' G the farmers. This

!romotion &ould cover CK-K villages in each of the states.

A+ay 8ehta, 4E(, Interactive Television, says, #8ovies are a !assion forus, Indians. It is Interactives constant endeavour to use movies and create

clutter-brea%ing media !ro!erties for our clients to reach out to and connectto their target audience.#

Interactive is an im!ortant !layer in the fast gro&ing mar%et of movies andcinema-based activation. 3ith offices across the country, Interactive has the&idth to execute mar%eting !rogrammes for cor!orates in cities as &ell as invillages &ith a !o!ulation of as little as C,FFF.
http://www.agencyfaqs.com/banners/cnn/2005/july/cnn_25.html


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Interactive has been res!onsible for immense value-adds to !romotions forcor!orates such as Samsung, $$, 8aruti, ero onda, 5ec%itt 1enc%iser,Seagram, utch, 8otorola, 4oca-4ola, Bestle, IT4 "oods, 2abur, 1P$,

Perfetti Dan 8elle, e&lett Pac%ard, 1acardi, 1, Eveready, 5eebo%, andI4I4I.

The services offered to clients range from s!onsorshi! of films, filmfestivals urban * rural/, tic%eted film !romotions, in-film branding, in-theatre branding, s!ecial screenings and !remieres. Q CFFK agencyfa0sR

Blackbook Project on Indian Airlines Industry

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