Airlines

M A RK E T IN G P RO J E C T AIRLINES INDUSTRY

G ro u p – 5 , S e c t i o n - C Abhishek Jha (08P119) Amit Maheshwari (08P125) M a n g e s h M o re (08P149) Mohit Nagpal (08P148) Pa r a g Ra h e j a ( 0 8 P 1 5 3 ) Tu s h a r M e h t a ( 0 8 P 1 7 2 )

Ta b l e o f C o n t e n t s Overview & Scope of the project and Methodologies used......................................... ..................4 Overview ........................................................................................................................... ........4 Scope and Methodology..................................................................................................... .......5 Overview of the industry....................................................................................................... .........6 Competitive analysis................................................................................................... ...................8 Product level analysis............................................................................................................... .8 Core product and supplementary services................................................................... ............8 Core Product................................................................................................... ....................8 Information ............................................................................................ ........................9 Consultation..................................................................................................... ...............9 Order taking.................................................................................................. ..................9 Hospitality & Caretaking....................................................................... .........................9 Billing & payment....................................................................................................... ....9 Product levels.................................................................................................................... ....10 The Core benefit.................................................................................... ...........................10 The basic product.............................................................................................. ...............10 The expected product......................................................................................... ...............10 The augmented product............................................................................................. ........10 The potential product................................................................................... .....................10 Brand related aspects...................................................................................................... ........11 Brand positioning....................................................................................................... ...........11 Positioning of a few airline brands operating in India....................................... ................11 Kingfisher Airlines - Full Frills - True Value Carrier............................................... ......11 Spicejet - McDonalds of the skies................................................................... ..............12 Jet Airways ........................................................................................................... .......12 Air Deccan - Simplifly Deccan - Kingfisher Red................................................ ..........12 Brand model for airlines........................................................................... ............................13 Pricing................................................................................................................................ ......14 Pricing Environment.......................................................................................... ...................15 Selecting the price objective ....................................................................... .........................15 Premium Pricing:......................................................................................... .....................15 Value for Money Pricing:................................................................................... ...............16 Determining Demand.................................................................................................. ..........16 Estimating costs.................................................................................................. ..................16 Analyzing competitor’s costs, prices and offers........................................................ ............17 Adapting Prices............................................................................................................. ........17

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Price discounts and allowances......................................................................... ................17 Differential pricing...................................................................................................... ......17 Initiating and Responding to Price Changes........................................................................ ..18 Supply chain / Inbound logistics........................................................................ ....................18 Primary activities – Inbound logistics................................................................... ................18 Marketing Communications....................................................................... ...........................19 Advertising................................................................................................ ...........................19 Sales Promotion.................................................................................................. ..................20 Public Relations.................................................................................................. ..................21 Telemarketing............................................................................................... ........................21 In-flight advertising................................................................................... ...........................21 Costumer segmentation and their distinctive characteristics..................................................... .22 On the basis of usage............................................................................................................. ..22 Passenger........................................................................................................ ......................22 Business Passengers............................................................................................... ...........22 Leisure Travelers.......................................................................................................... .....22 Freight............................................................................................................................... ....23 Air cargo service.............................................................................................. .................23 On the basis of geography................................................................................ ......................23 On the basis of behavior........................................................................................ .................23 Bargain Hunters................................................................................................ ....................23 Relationship Buyers............................................................................................... ...............24 Critical factors for success ................................................................................ .........................25 Steps that government should take.............................................................................. ..........25 Steps that Industry should take...................................................................... .......................26 Insights derived from study................................................................................... ......................26 Annexure # 01.................................................................................................. ...........................28 Annexure # 02.................................................................................................. ...........................32 Annexure # 03.................................................................................................. ...........................32 Annexure # 04.................................................................................................. ...........................35 Annexure # 05.................................................................................................. ...........................38 References................................................................................................................................. ...39

Table of figures Competitive advertising between airlines: GoAir vs Kingfisher vs Jet Airways.........................20 Month-wise domestic traffic (aircraft movements) at top 46 indian airports.............................28 Month-wise domestic traffic (Freight Movements) at top 46 indian airports....................... ......29 Month-wise domestic traffic (passenger movements) at top 46 indian airports.........................30 Airlines - Product level analysis..................................................................................... .............32

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Airline sector advertising skewed towards news channel.................................... .......................32 Top 5 advertisers of airline sector in 2007................................................................................... 33 Rise in Average adevertising frequency of airline sector on tv................................. ..................34 Consumer choice parameters..................................................................................... .................35 Flight class................................................................................................................................ ...35 ......................................................................................................................... ............................36 Occasion of use..................................................................................................................... .......36 Circuits flown................................................................................................... ...........................36 Scheme preference.................................................................................................................... ...37 Customer Loyalty................................................................................................................. ........38 Factors considered while choosing indian airlines.................................................................. ...38 Factors considered while choosing JetAirways................................................. .........................39 Factors considered while choosing SpiceJet........................................................................ .......39

O V E RV I E W & S C O P E O F T H E P R O J E C T A N D M E T H O D O LO G I E S USED OV E R V I E W

What business does an airline industry participate in? This is a fundamental question which needs to be answered before a marketing analysis on the industry is presented. To a layman the airline industry means carrying the passengers and cargo from one place to another. However, for a marketer this perspective is Marketing Myopia. A better way to look at the business is from the point of view of the needs it is trying to satisfy. On this basis we can say that an airlines business participates in the following areas:  Transportation of passengers and cargo  Communication as travel allows opportunities for face to face meetings

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 Leisure as traveling becomes an important part of a holiday  Information as the cargo business is associated with movement of information Hence, from a business’ perspective airlines industry not just caters to the travel needs but a lot more and accordingly the competition becomes bigger. S C O P E A ND M E T H O D O LO GY

The scope of this report is to analyze various Marketing aspects of the airline industry which would include the product, brands, pricing, supply chain and logistics, marketing communications and advertising, customer segmentation and their characteristics and critical factors for success in this industry. The report includes examples from various airlines across the world, but to maintain specificity it retains an Indian perspective and compares competitors across the Indian domestic carriers.

The methodology adopted in preparing this report has been as follows: 1) Understanding of the theoretical concepts with regards to the aspects mentioned in scope. 2) Mapping the concepts to the airline industry. For example, the concept of product levels has been mapped to the difference in services offered in airline industry. 3) Comparison of competitors based on the mapped concepts.

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4) Preparation of diagrams/charts for the clarity of comparison across competitors. 5) Identification of factors which make this business a success and registering the insights gained during the study (mentioned in the last section). 6) The report is majorly based on secondary data which includes a number of surveys extremely relevant to the study. The references are duly mentioned in the ‘references’ section.

O V E RV I E W O F T H E I N D U S T RY Airlines Industry in India is one of the fastest growing airlines industries in the world. Post-liberalization, airlines industry in India has undergone

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a rapid transformation. From being primarily a government-owned industry, the Indian airlines industry is now dominated by privately owned airlines and low cost carriers. In 1990 government adopted open-sky policy. Indian Airlines, which had dominated the Indian air travel industry, began to lose market share to Jet Airways and Sahara. Today, Indian airlines industry is dominated by private airlines and these include low cost carriers such as Deccan Airlines (now a part of Kingfisher), GoAir, SpiceJet, etc, which have made air, travel affordable. The following chart shows the market share of various airlines:

Source: www.domain-b.com

A detailed analysis of the present Air traffic scenario is presented in the Annexure #01 attached. Airline industry in India is plagued with several problems like high airlines turbine fuel (ATF) prices, rising labor costs and shortage of skilled labor, rapid fleet expansion, and intense price competition among the players. But one of the major challenges facing Indian airlines industry is infrastructure constraint.

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C O M P E T I T I V E A N A LY S I S P R O D U C T L E V E L A N A LY S I S

The product offered by airlines is essentially a service, although it can be supplemented by a number of physical products too. The services offered are:  In-flight services  On ground services The services provided inside the flight include the core service of travel, crew, ambience and comfort, in-flight entertainment etc. This is highly variable across competitors as per brand and different classes of travel. The on-the-ground services include a convenient airport with car parking facilities, waiting lounges, duty free' shopping quick and efficient checking of baggage, efficient service at reservation counter, transport to the airplane, etc. Although the physical infrastructure part of the on ground services are usually maintained by the airports authority but airlines like Kingfisher have gone a step ahead to make separate lounges for their customers to make them feel special. CORE PRODUCT AND SUPPLEMENTARY SERVICES

CORE PRODUCT

The core product of the airlines industry is the service of transporting passengers and goods to different destinations. This is supplemented by various other services mentioned ahead. SUPPLEMENTARY SERVICES

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Information Upto date information regarding flight schedules, ticket fares, promotion schemes, new policies and systems, etc are available to customers.

Consultation Airlines are suggesting and designing products like packaged tours to the customer. Also, providing the customer with various options regarding the route of flight, in-flight cuisine & benefits asks them to play a role of consultant.

Order taking The order taking procedure is essentially the booking procedure of the airlines. The important aspect to be noted here is that the procedure should be smooth, easily understood and fast. Also provision of instantly updated information about availability of seats and fares is required.

Hospitality & Caretaking With the increased competition today hospitality has emerged as a key-differentiating factor. It is tested right from the time of booking till the post flight help extended. It also includes safeguarding the baggage.

Billing & payment Billing options available to the customer are plenty including credit card & travelers cheque. Airlines use the open account system with their corporate clients. Frequent fliers are also given special payment privileges.

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PRODUCT LEVELS

Various product levels at which the airlines compete are: THE CORE BENEFIT

It is the benefit which the customer is actually buying. In our case it is the service of traveling or transportation of goods. THE BASIC PRODUCT

At this level the core benefit is converted into a basic service package. This includes from buying the ticket to reaching the destination. The low cost airlines like Indigo, GoAir, Spicejet offer the product at this level and compete on the basis of price. THE EXPECTED PRODUCT

This includes a set of services and products that the consumer normally expects to receive along with the core benefit. For example: In flight snacks, comfortable seats, on time departure and arrival etc. The low cost model of airlines labels these addition services as ‘frills’ and tries either to eliminate or charge separately for these.

THE AUGMENTED PRODUCT

An augmented product exceeds customer’s expectations. For example: Serving hot food, warm and friendly crew, provision of in flight entertainment etc. Jet Airways, Kingfisher Class, Air India IC compete in this segment.

THE POTENTIAL PRODUCT

At this level all possible augmentations are offered and the companies try to encompass new and innovative ways to satisfy customers. Where Emirates airline offers onboard shower spas for the first class

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customers, Thai Airways offers a limousine service at the airport and Virgin Atlantic offers an onboard massage. As the level moves from the core benefit to the potential product, the competition moves from price to service and experience of the customer. Various competitors operating at different product level in India are shown in the diagram in Annexure # 02.

B RA N D R E L AT E D A S P E C T S

BRAND POSITIONING

In a highly competitive scenario it is imperative for any airline to build its brand and have a focused marketing strategy.

POSITIONING OF A FEW AIRLINE BRANDS OPERATING IN INDIA

Kingfisher Airlines - Full Frills - True Value Carrier The Brand Kingfisher has been made synonymous with `Good Times’ in India. Coherent and clear positioning has also enabled Kingfisher Airlines to differentiate itself in a market. Kingfisher has

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implemented this positioning by making service and hospitality their main focus.

Spicejet - McDonalds of the skies SpiceJet seeks to position itself as an innovative, modern, safe and customer friendly airline. The airline's philosophy is to make air travel accessible to a growing market of time and cost conscious consumers yet at the same time open newer markets.

Jet Airways Jet Airways is positioned as a global airline with the highest international standards but with a touch of India. They have retained many of the familiar elements of our corporate identity, but have contemporized them to make the brand more relevant to global markets.

Air Deccan - Simplifly Deccan - Kingfisher Red Air Deccan had substantial brand equity among the consumers and had became synonymous with low-cost travel in India. The rebranding followed an exhaustive market study which showed that although the brand was closely associated with pioneering the lowcost airline business, it was perceived as a carrier that was consistently late and suffered serious service issues. The brand’s makeover by Kingfisher to first Simplify Deccan and then to Kingfisher Red has also brought a change in its positioning.

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It is now being positioned between a full service and low cost carrier. BRAND MODEL FOR AIRLINES

Branding of airline industry has to be based on delivering on its promises, long term customer engagement and continuous innovation in its services. For the airlines to build a brand image consistent with these, the following brand model proposed: 1) Brand Expectation - Making an authentic promise This promise is a reflection of the brand’s identity and its differentiation from other brands. Kingfisher airlines for example clearly promise its guests an unparalleled experience in the skies. Air deccan (when it existed) promised the lowest fares. 2) Brand Experience - Keeping the word The promise has to be kept as literally as possible. For example Virgin Airlines in the US promises to “reinvent air travel” and does a great job in not just meeting them but exceeding them too. 3) Brand Expression - Engaging the customer It refers to extending the engagement with the customer beyond the flight hours. The engagement should ensure constant touch with them. For example: few airlines give away their headphones and in-flight magazines to passengers, which they subsequently share with more people. Low cost carriers lose out on this opportunity to invest in engagement with the customer. 4) Brand Externalities - Dealing with industry uncertainty The externalities could be as small as a flight being delayed to a pilot union strike or a government regulation to a plane crash.

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Nonetheless, all need to be handled effectively to maintain the brand image. For example: Airlines like Jet Airways and Singapore Airlines have been upgrading to newer, more fuel efficient planes in good times to hedge fuel costs to counter the rising oil prices. 5) Brand Extensibility - Staying consistent over time Delivering an experience requires meticulous planning and persistence. An opinion blog about Kingfisher Airlines said “The amazing observation on Kingfisher is that all the employees (cabin crew, ground staff and others) project a consistent and common kingfisher brand image and lifestyle which is 'live king style and fly good times'. This is proved by very pleasant approach and attitude of its employees towards all customers. Consumer satisfaction Index about a particular airline as perceived by consumers is given below :

PRICING

Pricing is the value perceived by the customer. Pricing decisions cannot be made in isolation of product. Product and pricing decisions are

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made together. Deregulation in airline pricing has given the companies an edge to charge fares. PRICING ENVIRONMENT

With the advent of sophisticated systems for managing the sale of seats it is easier to develop sound pricing policies. Seats are sold on first-come first-serve basis, so passengers get cheaper fares by booking earlier. Airlines adjust prices as per demand and there is no difference in conditions. SELECTING THE PRICE OBJECTIVE

When Airlines put in capacity (seats) and frequency (flights) between any two points, they market research the route in order to arrive at the total potential for that segment. Size of the market is determined to decide the price. Pricing or fare levels are arrived at after taking into consideration various factors like type of aircraft, configuration of aircraft (number of seats), density of route, competitor activity and minimum breakeven cost.

PREMIUM PRICING:

The airlines may set prices above the market price benefited by its ‘brand-image’ to reflect the quality of their service. Example: Jet Airways, Kingfisher, Indian Airlines, etc charge a premium price for providing frills and extra comfort to the customer. They provide options like first class, executive and economy. A trip from Mumbai to New Delhi will cost anywhere between Rs 6000 to Rs 23000 depending on the class and time of flight.

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VALUE FOR MONEY PRICING:

Low Cost Airlines like Air Deccan, Spicejet, Indigo, Goair, etc go for value for money to charge lower by operating cost cuts. Low cost carrier model go for dynamic pricing strategy. They follow low and simple fare structure .They point-to-point links between primary and secondary airports with high frequency. The airlines provide basic services and just one class. The objective here is to undercut the competition and price is used to trigger the purchase immediately. Unit profits are low, but overall profits are achieved by volume. Prices are as low as Rs 4000 which includes mostly the tax component.

DETERMINING DEMAND

This industry is highly price sensitive. With the development of Global Distribution Systems the customer can assess all the tariffs; they shop on internet where it is easy to compare ticket price, flight time and number of stops in route. In case of recessionary periods when supply exceeds demand, airlines find it difficult to fill seats and pricing becomes extremely important to gather market share. For example, for a flight leaving to a business destination on a Monday morning, very few seats will be sold at low prices. Almost all the tickets will be sold at high fares and bookings sold at relatively shorter time. ESTIMATING COSTS

The aviation turbine fuel (ATF) and staff( flight, ground, reservation and ticketing staff) form the major part of the operating cost. Other part includes

navigation,

landing

and

parking

costs,

repair

and

maintenance. Apart from operating costs there is insurance, Inland Aviation travel Tax(IATT) and Passenger Service Fee (PSF).

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ANALYZING COMPETITOR’S COSTS, PRICES AND OFFERS

LCC reduces their prices by having high seat density, reducing costs by providing no frill. They also go for uniform aircrafts to share parts; they go for high airtime and generate revenue through alternate resources. Full Service Providers charge extra premium for extra services like inflight cuisines, magazines, entertainment, the flexibility and comfort provided to the customers.

ADAPTING PRICES

PRICE DISCOUNTS AND ALLOWANCES

Price discounts need to be carefully done otherwise it may result in diluting the revenue of airlines and affecting their brand-image. Discounts are given on off-peak flights which might go empty if not filled. Discounts can also be given by provided fewer services to the customer.

DIFFERENTIAL PRICING

Airlines usually practice differential pricing. There are three classes: The First Class, The Executive or Business Class and The Economy Class. Fares for each class are different since the facilities provided and the comfort and luxury level is different in each class. Though all the passengers get the same tangible product features but the intangible features like flexibility is different. This justifies differential pricing.

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INITIATING AND RESPONDING TO PRICE CHANGES

Airlines went for a price cut with the entry of Air Deccan in 2003. It was done to retain their market share. In a price sensitive market like airlines increasing the price might lead to considerable drop in market share so any major price increases are done in coordination with competitor airlines. Price increase leads to higher profits.

S U P P LY C H A I N / I N B O U N D LO G I S T I C S

PRIMARY ACTIVITIES – INBOUND LOGISTICS •

Aircraft acquisition o

Airlines must negotiate deals with aircraft manufacturers to acquire planes.

•

Route selection o

Flight routes are selected as per desire, and deals negotiated with the airports. Airports are selected for their prime location to allow consumers to get to their desired location. This entails the scheduling of flights and crew.

•

Passenger services system o

Software which allows the airlines to function "comprehensive passenger reservations, inventory control, fares, ticketing, and

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departure control functions". This allows airlines to reduce their costs of wages, paper transactions and maximize utilization. •

Stock control o

Airlines must store and handle fuel, food, and drinks. Stock is managed to ensure reductions in stock turnover, thus reducing costs and wastage.

•

Crew scheduling o

Crew scheduling problems at the planning level are typically solved in two steps: first by creating working patterns, and then assigning these to individual crew and second by a setpartitioning model.

M A R K E T I N G C O M M U N I C AT I O N S

The users of air services typically include business executives, cine artists, politicians and domestic and international tourists. Hence, creativity becomes an important criterion. With the looming worldwide financial crisis, airlines are facing financial crunch and it has become imperative to use different components of marketing communication optimally: ADVERTISING

Advertising should be done keeping in my mind the quality and nature of the target audience as well as level of expectations. Advertisement

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slogans, message and campaigns need to be proactive. Air India has been facing the image problem but advertising may be efficacious in transmitting the facts and removing the image problem. COMPETITIVE ADVERTISING BETWEEN AIRLINES: GOAIR VS KINGFISHER VS JET AIRWAYS

** Annexure # 03 provides in-depth analysis of data of various airlines in India who advertised through television. SALES PROMOTION

Many domestic low cost carriers (LCC) like Indigo, Go-Air mainly advertise the low base ticket prices and promote advance bookings to avoid poor occupancy. Also to improve the brand recall, promotional incentives are given out e.g. Indigo has a crazy assortment of gifts being handed out which includes LCD TVs, Refrigerators, laptops, mobile handsets, etc.

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PUBLIC RELATIONS

Strengthening public relations activities is essential to promote the business airlines or airways. The Public Relations Officer, Receptionists, Travel Agents, Travel Guides, Media people are some of the important people who publicize the business. But, the most crucial point in this is the co-operation of media as it directly affects the brand image manifold. TELEMARKETING

Booking counters, enquiries, reception counters, users’ complaints cell, announcers are found playing an incremental role in promoting the air business because most of the travelers make an impression about the airlines depending upon the tele-support that they get while using the airlines service. IN-FLIGHT ADVERTISING

This concept which is originated overseas has recently been identified as an effective promotion medium in which audience is hundred percent captive. This is achieved through airing advertisements during entertainment programs on television sets installed on the aircraft. Other than advertising via television screens, advertisers hop on board and communicate through latest ad films inside and outside the aircraft. Kingfisher Red, formerly Air Deccan had partnered with Cutting Age Media to effectively communicate through this non-traditional niche media.

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C O S T U M E R S E G M E N TAT I O N A N D THEIR DISTINCTIVE C H A RA C T E R I S T I C S ON THE BASIS OF USAGE

PASSENGER

BUSINESS PASSENGERS

They are very important for the profitability of the airline. They are willing to pay a premium price. Business passengers believe that it is worth extra money if they can save time and arrive looking fresh for an important meeting. A flexible reservation services is very critical to them as most of their tickets are not booked in advance and also have a chance of cancellation. The best way to reach Business passengers is through Business media such as The Economic Times or CNBC. Also since they are frequent fliers they would certainly look for certain extra facilities.

LEISURE TRAVELERS

They

are

a

totally

different

market

and

the

most

important

consideration for them is price. They won’t pay premium prices and would agree to change several planes during their trip. Despite providing low margins they are very crucial for every airline. Since business customers are small in size and therefore to fill the flight Economy passengers are essential.

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The allocation of business and economy class seats on a plane is determined through a process called yield management. A good yield manager knows the approximate proportion of business and leisure travelers for each flight in advance, based on sophisticated statistical models. FREIGHT

AIR CARGO SERVICE

With exports and imports increasing this has become a major source of revenues for airlines. In the domestic segment with the need for an increase in the turnaround time airline has been used as a source of carrier. Most airlines therefore need to target both these segments. ON THE BASIS OF GEOGRAPHY

Major travelers in India are located in some of the major cities and a small customer base in other cities. Therefore Flight schedules should be made such that the needs of these smaller cities could also be catered. Example flights can be made on routes such as DelhiBagdogra- Kolkata. This not only enhances the seat utilization but also generates extra revenues. O N T H E B A S I S O F B E H AV I O R

BARGAIN HUNTERS

They are the ones who are the most sensitive to price. They have nil loyalty and would travel by any carrier. They are the least profitable consumer segment in the market. Therefore a company should not

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spend amount on bargain buyers. Rather they would be automatically attracted if you have the most competitive prices in the market.

RELATIONSHIP BUYERS

They are the ones who look for long term relationship with the airline. They are one of the most profitable segment as they are relationship builders and not much likely to jump from one airline to another. But for retaining them a certain level of expected and augmented service should be provided to them. They don’t mind paying a premium.

Therefore on the basis of segmentation the above desirability of services

should

be

Further insights can be derived from Annexure # 04.

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offered.

C R I T I C A L FA C T O R S F O R SUCCESS S T E P S T H AT G OV E R N M E N T S HO U L D TA K E

 Implement codesharing i.e. selling seats on a flight operated by another carrier. This saves direct costs and increase market presence  Allow foreign carriers cabotage rights( carriage for passengers and freight simulateneously) to increase competition  Eliminate regulatory structure completely to boost new entrants and allow more profit for existing  Eliminate the fuel tax  Eliminate category III restrictions i.e. operator needs to deploy on less popular routes as well  Improve quality of and access to airports and hangars

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S T E P S T H AT I N D U S T RY S H O U L D TA K E

 Reduce labour costs  Simplify flight operations  Offer more transparent pricing  Get smart on fuel  Stop chasing market share

INSIGHTS DERIVED FROM S T U DY Following are the insights that we derived from this project: The Airlines industry is cyclical in nature due to uncertainties which are beyond its control. Due to this the brands have to be built in such a manner that they survive the lean periods on their strength of being able to differentiate themselves with others. This must be done by being clear as to what one’s brand represents and sticking to its core values and not by raging a price war all the time.

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 Through the study we have found out that the Low cost Airlines have positioned themselves in competition to railways by making travel affordable. They are compared to railways and road transports on the pricing front. But the reality is that it's not possible for them to compete with railways on price front. Rather they should try to highlight features such as lesser travel time and better in-flight facilities.  Price discounts need to be carefully done to attract customers and simultaneously ensure that it does not affect the brand image or result in considerable reduction in revenue.  In-flight advertising is an effective promotion medium as the audience is hundred percent captive. They can help airlines promote the brand image, promote new schemes, improve the brand recall and generate extra revenue if done without the passengers perceiving it as a forceful.  Pricing is the most sensitive issue in airline industry and is done depending on the demand of the market. Switching is more frequent in case of low fare airlines whereas business segments are more brands loyal.  From the market research we could infer that while deciding among low cost airlines fare acts as the deciding factor while in case of choosing among full service providers the determine factors are flight schedule, reliability, quality and connections with not much emphasis on fare. Annexure # 05 illustrates the same fact.

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ANNEXURE # 01 MONTH-WISE DOMESTIC TRAFFIC (AIRCRAFT MOVEMENTS) AT TOP 46 INDIAN AIRPORTS

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MONTH-WISE DOMESTIC TRAFFIC (FREIGHT MOVEMENTS) AT TOP 46 INDIAN AIRPORTS

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MONTH-WISE DOMESTIC TRAFFIC (PASSENGER MOVEMENTS) AT TOP 46 INDIAN AIRPORTS

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ANNEXURE # 02 AIRLINES - PRODUCT LEVEL ANALYSIS

ANNEXURE # 03 AIRLINE SECTOR ADVERTISING SKEWED TOWARDS NEWS CHANNEL

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TOP 5 ADVERTISERS OF AIRLINE SECTOR IN 2007

Top five Domestic Airline advertisers together contributed 98 per cent share of overall Domestic Airline advertising on TV during 2007. (Merger of Deccan Aviation and Kingfisher Airlines took place in Dec 07. Hence, the two entities are separate above)

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RISE IN AVERAGE ADEVERTISING FREQUENCY OF AIRLINE SECTOR ON TV

Average advertising frequency of International Airlines aired per day on TV increased by 2 per cent and that of Domestic Airlines saw a rise of 11 per cent during 2006 over 2007.

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ANNEXURE # 04 CONSUMER CHOICE PARAMETERS

The following chart provides us with information which are decisive in making the choice of the Airline.

FLIGHT CLASS

The flight class graph indicates that the proportion traveled by business class is very small in comparison to that traveled by economy class. This indicates that most business travelers are flying Economy class as well.

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OCCASION OF USE

The most important occasion of use is business followed by emergency situations.

CIRCUITS FLOWN

The most frequently flown circuit is that between major metros, followed by other state capitals and Delhi-Mumbai. Delhi and Mumbai airports accounts for roughly half of passengers flown, and metro airports account for 66% of the passengers flown.

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SCHEME PREFERENCE

With the entry of new players in the market, airlines are competing for passengers on non-price parameters. This increases the product differentiation in order to decrease elasticity of demand in the market. Given the key differentiators that substitute for price, consumers have rated Apex fares as their most preferred scheme. Indian Airlines, Jet and Air Sahara offer apex fares. Next most preferred to Apex fares is the frequent flyer program, a trend noticed predictably in the high frequency repeat users and those traveling on business.

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CUSTOMER LOYALTY

The following graph shows the loyalty of the customer towards a particular brand. This helps us in identifying the Bargain Hunters and the Relationship Buyers.

ANNEXURE # 05 FACTORS CONSIDERED WHILE CHOOSING INDIAN AIRLINES

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Flight Schedule

3.2 2.41.7

7.3

18.5

Reliability

10.7

Quality Connections 15.2

11.2

Frequent Flier Programs Company Policy

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14.8

Fare

Safety

FACTORS CONSIDERED WHILE CHOOSING JETAIRWAYS

6.2

2.63.2 2.1

Service Flight Schedule Comfort Reliability

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8.1

Quality

18.1

13.2 10.8

Connections Fare Frequent Flier Programs Company Policy

18.7

Safety

FACTORS CONSIDERED WHILE CHOOSING SPICEJET

10.1

2.4

Service Flight Schedule Comfort Reliability Quality Connections Fare

87.5

Frequent Flier Programs Company Policy Safety Service

REFERENCE S Comfort •

The Civil Aviation Act, 2000 (Draft)

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•

AVIATION

•

Low-fare Airlines, (2004, July 8) - www.economist.com.

•

Crisis at 50, Business World, Sept. 15, 2004

•

Businessline, Sept. 15, 2004

•

The Sky’s The Limit, Indian Express

•

Oil Prices drown out Airlines profit, Star Tribune, Sept. 1, 2004

•

A Feel for Airline Security. Time Canada, Sept. 13, 2004

•

To Cope With Travel Slump, Airlines Turn to Smaller Jets. (cover

Week & Space Technology

story) Wall Street Journal - Eastern Edition, Sept. 2004 •

Wikipedia, the free content encyclopedia

•

India Transportation Infrastructure Blueprint

•

Discounted IA fares to take on no-frills Deccan Times of India

•

http://www.foolonahill.com/mbaaviation.html#_Toc83227621

•

http://books.google.co.in/books?id=cVu4E4eB5lAC&dq=airline+mar keting+and+management&printsec=frontcover&source=bl&ots=4v MNQ6lUGu&sig=UdUBqpKpdwctx53BT8u0GCY9EYU&hl=en&sa=X& oi=book_result&resnum=3&ct=result

•

Reference: industry.html

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http://www.iloveindia.com/economy-of-india/aviation-