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INTRODUCTION OF

AIRLINES INDUSTRY
BIRTH
The airline industry came into existence during the 17 th
centuries.
The airline was set up under the Air Corporations Act,
1953 with an initial capital of 32 million and started
operations on 1 August 1953.
The Airports Authority of India (AAI) under the
Ministry of Civil Aviation is responsible for creating,
upgrading, maintaining and managing civil aviation
infrastructure in India.
INDIAN AIRLINES
India has the private airlines as its key players.
75% of the market share is owned by the private sector.
The airlines industry of India served over 16 million
customers in 2013. According to reports, India is poised to
become one of the top 5 civil aviation markets by 2020.
The operation of air transport was entrusted to three
Public Undertakings, namely-
1.Air India for international services,
2.Indian Airlines for domestic services and services to
neighboring countries, and
3.Vayudoot.
AIRLINES AS SERVICE
MARKETING
Airlines industry refers to the industries and organizations, engaged in
the various aspects of aviation, such as airlines manufacturing,
airlines flying, operating, maintenance, ground-handling, training
centers, airports and regulatory bodies.
Air travel remains a large and growing industry. It facilitates
economic growth, world trade, international investment and tourism
and is therefore central to the globalization taking place in many other
countries.
It provides services like cabin service, catering service, ramp service.
AIRLINE SERVICE
MARKETING
INTRODUCTION
LOW COST CARRIERS (LCCS)
MODERN AIRPORTS
FOREIGN DIRECT INVESTMENT IN DOMESTIC
AIRLINES
ADVANCED INFORMATION AND TECHNOLOGY
INNOVATIONS
GROWING EMPHASIS ON REGIONAL CREATIVITY
MARKET SIZE
IN MAY 2016 ROSE 21.63 % TO 8.67 BILLION FROM
7.13 MILLION.
IN MARCH TOTAL AIRCRAFTS MOVEMENT AT ALL
INDIAN AIRPORTS STOOD AT 160830.
INDIAN DOMESTIC AIRCRAFT TRAFFIC IS EXPECTED
TO CROSS 100 MILLION PASSENGERS
INDIA IS AMONG THE FIVE LARGEST GROWING
MARKETS GLOBALLY.
ROAD AHEAD

HUGE GROWTH OPPORTUNITIES.


AIR TRANSPORTATION IS STILL EXPENSIVE FOR MOST
OF THE COUNTRYS POPULATION.
RIGHT POLICIES SHOULD BE FRAMED
RELENTLESS FOCUS ON QUALITY TO BE ENSURED.
COST AND PASSENGER INTEREST SHOULD BE TAKEN
CARE OF.
TO FULFILL ITS OBJECTIVE TO BE PLACED THIRD IN
2020.
TYPES
OF
AIRLINES
THE MAIN CATEGORY
CONTINENTAL AIRLINES
Was a major US based airline
Business first class Signature on board product.

INTERNATIONAL AIRLINES
Form of commercial flight
Technology and budget

DOMESTIC AIRLINES
Commercial flight within the country
Budget flight
OTHER CATEGORIES
PASSENGER:
Dedicated to thetransportofpassengers.
Are usually leased fromcommercial aircraft sales and leasing
companies.
CARGO:
Dedicated to thetransportofcargo by air.
Is a component of many internationallogisticsnetworks,
managing and controlling the flow of goods, energy, information
and other resources like products, services, and people, from
the source of production to the marketplace.
SCHEDULED AIRLINES
On time flights
Best marketer throughout the year
Best facilities
NON- SCHEDULED AIRLINES
Best for last moment passengers
CHALLENGES OF
AIRLINE
MARKETING
INTRODUCTION

Large and growing industry

In the past decade, the air travel has grown


by 7% per year

Aviation industry facing major problems

Objective to increase their reach


CHALLENGES
Safety

Economic growth and trade cycle

The ageing population

Increasing consumer expectations

Sustainability

Growing pressure to reduce cost


and improve operational efficiency

Uncertainity
SOLUTIONS

Customer interactions

Reduce operating costs

Improvement of
infrastructural capacity

Analysis and
forecasting
CONCLUSION
The Airline industry is a vivid example of the dynamics of the
market that it serves
Shows that establishing strategies dictated by the market is
critical
Once the right strategies have been identified, it can play an
important role
MARKET TRENDS OF THE
AIRLINES INDUSTRY
The airline industry sometimes takes off for the high skies and at
times, it dips to ground levels. In between these highs and lows, lies
the story of the industry of its survival, of the new and emerging
trends that fuel its growth. There are 5 trends of the airlines industry
which are discussed as follows.
THE 5 TRENDS
Trend 2: The Customer's World is Online
Trend 1: It's a New Passenger Out There; and Offline.
Airlines will need to build 'Social' Pace to Create
Brand Equity
The online medium the Internet,
A number of leading global airlines have taken represented by online travel agencies and
off on their 'social' flight and some are indulging Websites in the airline business, is today a
in novel ways to engage with customers to build powerful revenue generator for airlines. As
lasting relationships with them. indicated by market research data, almost
75 percent of air tickets today are bought
It means engaging real-time with the
online.
customer.

It will thus, make strategic sense for airlines to No matter how strong the online channel
partner with providers that can provide them becomes, the offline channel or the airline
with a readymade resource pool of social media customer service contact center will still
experts and technology platforms that help
enhance brand equity on social media.
continue to be a critical touch point . For
many service-related complaints and
challenges, passengers still prefer to 'speak'
with a customer service agent.
Trend 3: Analytics An
'Altimeter' for the Airline Business

The data airlines keep contains very Trend 4: Changing the Course in Revenue Generation
crucial information on passenger
profiles, choices and preferences that increasing competition are biting into the revenue generating
can be leveraged by airlines to develop potential of the global airlines business today. Airline companies
are thus exploring newer ways of changing the course in
product offerings, monitor challenges revenue generation.
faced by customers and provide
customized solutions and effectively
Some of these strategies include tapping alternate revenue,
add additional products or services. generating streams such as selling ancillary products and
services.

All this can be achieved with the help of


analytics. Analytics equips the airlines The ancillary route is an important revenue generator for airlines
today.
business with crucial insights, in that
sense, analytics is emerging as an
'altimeter' that will help the airline
business stay aloft.
Trend 5: Increased Focus on the Regulatory and
Standardization Route

Regulations and directives on standardization will continue to


dominate the airline business environment now and in the future.
Most of these regulations are related to finance and accounting,
environment and consumer rights.
While regulation enhances increased safety of passengers and
improved sustainability of the business, compliance adds to the
total cost of operations.
Airlines take the plunge towards standardization of the interline
billing and settlement process, they will need to carefully look for
a partner and a program that will be cost-effective and help
process optimization.
Price mix

Cheap value pricing

Value for money pricing

Premium pricing
PLACE:
place is related to the location and management of offices of
airways, travel agent, tour operators, and transport operators
easy accessibility should be main criteria in selecting the place.

PEOPLE:
Many services require personal interactions between customers and
thefirm'semployeesandthese interactions strongly influence the customers
perception of service quality.
Being a service industry it has two types of customers: External Customers
(Passengers) Internal Customers (Employees).
Advertising
Publicity
Sales promotion
Physical
PROCESS evidence
Flight Good inner
Information
Facilities at the exteriors
airport Cleanliness
Baggage handling Uniforms
Meal service
Flight entertainment Ambience
Deliver quality Baggage
service
SEGMENTATION OF AIRLINE
INDUSTRY
I. WERE OFF AGAIN:
Non business consumers, retirees
they are experienced travelers.
They would seek some comforts of travel and probably would not choose an airline simply based on price.
they are an attractive and important market segment.

II. LOYAL TO LOYALTY:


Regular airline travelers like business travelers or personal travelers.
they provide a long-term customer base

III. URGENT TRAVELLERS:


infrequent users of airlines and generally represent a fairly small market segment in terms of size.
These consumers have an urgent need to travel that is usually unexpected.
they are more concerned flight availability and destination requirements, rather than any consideration of price or airline brand.

IV. BUSINESS TRAVELLERS


Large proportion of an airlines domestic customer base
employees expected travel frequently or for management and executive level staff.

V. BUDGET CONSCIOUS TRAVELLERS


Price sensitive, infrequent travelers and holiday makers
Low income earners
Use price decision to simplify their choice
TARGET MARKETS
Medium to high frequency business travelers.(1-3
round trips per month)
Male/Female professionals aged 24-55 years of
age.
Price/Cost conscious
Dissatisfied customers from full service airlines
Positioning of Airline industry
FACTORS INFLUENCING
PRICING DECISIONS
FACTORS INFLUENCING PRICING
DECISIONS
Fuel price
Seasonal and festive season
Safety regulations
Currency fluctuations
Terrorism
Government policies as
civil aviation policy
Change in technology
Competitors
PESTLE ANALYSIS
STRATEGIES TO ENHANCE
MARKET SHARE AND
COMPETITIVE ADVANTAGE
-PRIYANKA DAS
ROLL-156
STRATEGIES TO ENHANCE MARKET SHARE OF
AIRLINES INDUSTRY

Increased market share and greater production


go hand-in-hand, with the latter decreasing a company's
cost to produce an individual unit due to economies of
scale.

Innovation : When a firm brings to market a new


technology, consumers wishing to own the technology
buy it from that company. Many of those consumers
become loyal customers, which adds to the company's market share and decreases market
share for the company from which they switched.
STRATEGIES TO ENHANCE MARKET SHARE OF
AIRLINES INDUSTRY

Strengthening customer relationships: Gaining market share via word of mouth


increases a company's revenues without concomitant increases in marketing expenses.

Companies with the highest market share almost invariably have the most skilled and
dedicated employees. Bringing the best employees on board reduces expenses related
to turnover and training, and enables companies to devote more resources to focusing on
their core competencies.

Acquiring a competitor: By doing so, a company accomplishes two things. It taps into the
newly acquired firm's existing customer base, and it reduces the number of firms fighting
for a slice of the same pie by one.
LOW COST CARRIER STRATEGIES TO
MAINTAIN COMPETITIVE ADVANTAGE
Emphasize cost reduction and control to compete with legacy carriers.
Offer competitive pricing to customers.
The common cost-cutting strategies adopted by these carriers:

1) Fleet: LCCs own relatively newer aircraft of a single


type. For example, Southwest (LUV) operates the largest
Boeing fleet in the world, with a total of 680 aircraft
comprising 614 Boeing 737s and 66 Boeing 717sJet Blue
(JBLU), another low cost carrier, operated 194 aircraft
comprising Airbus 320s and 321s and Embraer 190 aircraft. .
Its legacy competitors, Delta (DAL), United (UAL), and
American (AAL) operate a diverse range of aircraft including
combination of Boeing, Embraer, and Airbus aircraft. With
aircraft from a single brand or manufacturer LCCs are able to
reduce training and maintenance costs. The cost savings is enhanced by the
use of younger fleets which are more fuel efficient.
LOW COST CARRIER STRATEGIES TO MAINTAIN
COMPETITIVE ADVANTAGE
3) In-flight services:LCCs dont offer all services provided
by a legacy carriers like free meals and drinks. However,
some of these services are available at an extra price.
They have high density seating arrangements with fewer
galleries and toilets because they cater to shorter distance
routes. Also,they dont provide seat reservations.

4) Marketing and human relations: Since LCCs offer


lower fares, it requires lesser marketing efforts to sell
tickets. Most of the tickets are sold directly through
websites whichsaves commission costs on sales through
travel agents. LCCs also have lower labour costs compared
to the legacy carriers.

5) Network: By using the point-to-point model, LCCs stay away from busy and expensive
hubs that legacy carriers use. LCCs manage to operate from smaller airports through
which ground times and delays are reduced. Smaller airports are usuallyless congested and
enable a higher number of trips and aircraft utilization which leadsto cost reduction.
Advantages and disadvantages of air
transport
Advantages
The speed is essential attribute of air transport. For passengers,
the aircraft development has brought the opportunity to travel
more quickly, but also in terms of comfort and superior service.
Services are another important attribute of air travel. The number
and quality grew and diversified impressive, reaching at present
to be the main area of competition between airlines. Services are
not limited to the flight, but includes those from the ground.
The economics refers to the
possibility that customers benefit
from these services on favorable
terms.
Operating costs were reduced
substantially in recent years,
allowing pricing more attractive,
accessible to an even broader public.
The comfort refers not only the
conditions of transport on board
aircraft but also facilities for ground
annexes spaces (airports) which
adds a motivation based on the
selection option as a means of
transport aircraft.
Disadvantages

Large investments by the construction and operation of


modern airports.
Embarking and disembarking tourists is outside the
settlements, requiring transfer to basic accommodation with
other means of transport.
Economic and political crises.
It is, paradoxically, the
safest means of transport.
The problem is that when a
plane crashes about all
passengers die. Over 150
custom.
SWOT ANALYSIS.
STRENGTH WEAKNESS
A major strength of any airline is the Airlines have a high "spoilage" rate
product itself--air travel. Once a flight leaves the gate, an empty
Safety record, and the associated public seat is lost and non-revenue producing.
acceptance of air travel as both a fast and Aircraft is expensive and requires huge
safe way to travel. capital outlays.
Airline staff is highly trained and Large workforces spread over large
experienced geographic areas
The business depends on climate

OPPORTUNITY CHALLENGE
Airline market growth offers continual expansion A global economic downturn negatively affects
opportunities leisure, optional travel, as well as business travel
Technology advances can result in cost savings The price of fuel is now the greatest cost for
Link-ups with other carriers can greatly increase many airlines.
passenger volumes. A plague or terrorist attack anywhere in the
world can negatively affect air travel.
Government intervention
AIR DECCAN- THE FIRST LOW
COST AIRLINE IN INDIA
HISTORY
Gopinath the founder ofAir Deccan, is an Indian entrepreneur, a retired
Captain of the Indian Army, an author, and a politician.
In 1995, the Indian government started a regulatory reforms process to
encourage entrepreneurship. In the next year Gopinath started a private
sector commercial helicopter service,Deccan Aviation.
The company was one of the largest private air charter company in India and
Sri Lanka.In 2003 he launched India's first low-cost airline,Air Deccan; at the
time of its 2007 purchase by Kingfisher Airlines, Air Deccan connected sixty
nine cities around India.
Low cost business model
Air Deccan's business model was inspired by the
globally successful low cost model pioneered by the
US-based Southwest Airlines in the 1970s.
In the fiscal year 2003-04, the LCAs commanded a
global market share of 25% and their revenues had
grown by 40%.
LCAs were continuously offering lower flying rates
by inventing innovative ways to cut operational
costs. Analysts claimed that the overall costs for
THE TARGET MARKET AND POSITIONING
Analysts felt that there was huge growth potential for LCAs
in India due to the country's middle income group
population. Gopinath expected that at least one fourth of
this population would use LCAs in the near term.
He pointed out that India had 15 mn rail travellers every
day. Of these 1,70,000 travelled in the air conditioned class
and were potential customers for Air Deccan owing to the
comparable prices.
Gopinath felt that the US had 40,000 commercial flights
every day whereas India had only 400 flights a day. But
India had four times more population than the US, so it
could theoretically run 1,60,000 flights daily!
Therefore, India need a quadruple jump in the number of
commercial flights." Air Deccan defined its target segment
as upper middle class in the short term but planned to tap
the lower middle class aggressively in a couple of years.
Challenges
Even before Air Deccan started operating on long routes, leading newspapers
in India reported that all air tickets in the Rs 700 category were sold out for
2004. The response for the flights was reportedly such that Air Deccan's
website was jammed and the call centre flooded with calls requesting
booking.
Since the announcement of the Rs 700 category fares, the airline received
10,000 calls a day as against 5,000 a day earlier.
In response to Air Deccan's plans to offer services on major trunk routes, the
FSAs quickly announced a fare reduction on these routes . Sahara announced
its "Apex fare scheme" for metros and reduced its fares by 30% .JA followed
by cutting prices on major metro routes by as much as 69%. IA also launched
a super apex scheme and cut its prices to match that of JA. Air Deccan's
success encouraged many other companies to establish LCAs.
About the company
Vistara is an Indian airline based in New
Delhi
The full service carrier is a joint venture
between Tata Sons and Singapore Airlines
The carrier commenced operations on
9 January 2015 and operates 164 flights
per week with 5 Airbus A320 aircraft
First carrier to offer premium economy
seats on domestic flights in India apart
from the usual Economy & Business class
Current Destinations include New
Delhi, Mumbai, Ahmedabad, Panjim,
Hyderabad and Siliguri.
Type Of Service
Vistara, a full-service airline, is a joint venture between Tata Sons
Ltd. and Singapore Airlines (SIA).
Target Segments
A lot of business and high-end travellers who want personalized
experience and premium services
Mid-level managers who are prohibited by corporate policies to
travel in business class
Customers wanting end-to-end service experience i.e. from the
time one reaches the airport to post-flight engagement
Service market triangle

I E
N X
T T
E E
R R
N N
A A
L L

INTERACTIVE
External Marketing
Setting the promise
On-time performance
First to introduce in-flight wireless streaming
First to one to offer 3 cabin services
16 business,36 premium & 96 economy
Mobile phone boarding pass.
1.5 million unique visitors on their website
Introduced 5 meal cycles with weekly menu change.
Promotions- newspapers,ads on tv, hoardings
Interactive Marketing
Service Encounter
Best service among other classes of airlines.
Comfortable seats (20% more less space)
98% on time performance record
Best quality meal provided Taj Catering.
Online Gaming Zone
Movie screening
Point to point scheduling
Airbus A320 neo fleet
Internal Marketing
Well Trained employees and are trained
to provide the best in-class facilities
The front line staff are trained to ensure
that all the services are delivered to the
customers as promised.
Proper dress code for all the crew
members
Vistara works towards learning
changing trends in customer needs and
will implement those changes
immediately. Eg. changes in the menu
SWOT Analysis
Strengths Weaknesses
Point-to-point Scheduling Growth into congested markets
Airbus A320 neo fleet No International Flight
Pre-eminent Customer Service Trifling Fleet
Successful Marketing Low Revenue Projections
In-Flight Services
Free Meals on Flight
Online Gaming Zone
Movie screenings
Opportunities Threats
Expansion in International destinations Fading Advantage as Low
In-flight Wi-Fi Cost Carrier
Live sports Fuel Price Volatility
Provision of Charging Points Government Regulations
Massage-booths in Flight Indias Economic Condition
Integration with Boeing 737s Terrorism
Conclusion
Air travel remains a large and growing
industry

Central to the globalization taking place in


many other industries.

In the past decade, air travel has grown by


7% per year

Scheduled airlines carried 1.5 billion


passengers last year
Slideshare.net
Types of airlines
Major airlines- These are the heavyweights of the airline
industry, and you will often hear about them in the news.
These generate more than $1-billion in revenue annually

National airlines- Just one step down from the major


airlines, these are scheduled airlines with annual
operating revenues between $100-million and $1-
billion.

Regional airlinesThis is the fastest growing segment


of the airline industry, according to theAir Transport
Association of America(ATA). Regionals are divided into
three subgroups:
Large regional
Medium regional
Small regional
Challenges For The Airline Industry
Competitiveness
Any change in the GDP is often reflected in airline usage and the fuel also costs almost 50%
more in just 5 years

The Fuel Factor


Fuel price remains to be the biggest concern faced by the airline industry in the modern world

Overcapacity

A number of airlines like the TWA have already gone out of business because of issues like overcapacity

Labor Unrest

A number of airlines in Europe have suffered because of issues like pilot walkouts
Segmentation, Targeting, and Positioning
Under stp,we follow 3 steps:
(1) Determine which kinds of customers exist, then
(2) Select which ones we are best off trying to serve and, finally,
(3) Implement our segmentation by optimizing our products/services for that
segment and communicating that we have made the choice to distinguish
ourselves that way.
Airline industry profits expected to
increase by 12% in 2016
There is going to be an appropriate budget treatment
which links revenue and spending together, a cost-based
revenue system, better FAA performance, control of the
FAA's operating costs, and increased capital investment

There is going to be a tremendous industry growth, new


industry practices and rapid technological change will
dramatically change the aviation system over the next ten
years