Airlines

Industry
 CREW MEMBERS
• Basker M
• Chetan NS
• Madhuri
• Manoranjan R
• Naveen
• Raju Pal
• Shivaraj
• Sudhir
Flow of presentation
AIRLINES AS A SERVICE INDUSTRY

• The Airline industry came into existence during the

17th centuries.

• Origin of Indian aviation industry can be

traced back to the year 1912.

• 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 industries
• India has the private airlines as its key
players

• 75% of the market share is owned by

the private sector.

• India is the 9th largest aviation market in the world.

Entry
Of
Private
Players
• Market Share. The market shares of the
Major Airlines (First quarter2010) are as given
in the pie chart below:
 THE SERVICE MARKETING
TRIANGLE
• One can better understand the workings
of airlines by looking at its marketing
triangle. COMPANY

ENABLING PROMISES MAKING PROMISES

PROVIDER CUSTOMER

KEEPING PROMISES
CUSTOMERS
Customers refer to the persons who have certain needs, wants and desires. The
company makes promises to its customers. In the Airline industry, the customers
refer to those persons who feel the need of travelling from one destination to another.
The customers are further classified as Individual and Institutional. Institutional
customers are those corporate who need their employees and executives to fly very
often. Hence they have block bookings (reserved bookings) with the airliners.

COMPANY
The company is the dreamer and the offeror. The company dreams up an idea of
service offering which will satisfy the customers’ expectation. The company is
established with the basic objective of providing the specific transport service. Thus
the airline industry with players like Indian airlines, jet airways, Sahara airways etc
came into being.

PROVIDERS
These are finally the persons (staff) who interact with the customer. They are the
ones who carry out the final transaction. This interface of the customer with the
company is through the customer’s interaction with the employees of the company. In
order to keep its promises, the company enables its employees to through setting up
facilities to deliver the promises that is by setting up ticket and enquiry counters.
Hence the company aims at offering its providers with the required infrastructure and
training to optimize the quality of the transaction. For eg: Yearly employee training
programs and performance appraisals done by Sahara airlines.
• Political – Govt. is not stable
• Economy – Disposable income is increasing , GDP grow is more than 9%.
• Social -- Status conscious
-- Awareness is increasing
-- Increase in Entrepreneurship
• Technology – Indigenous technology is coming for aircrafts & airports.
• Environment – Stiff competition for hiring pilots (poaching)
Easy FDI(49%) through secondary market
• Legal -- Flexibility in entry .
The five year stringent law towards flying abroad.
• SEGMENTATION(Basis of Service and Price)
1. Business Travel(highly Profitable)
2. Leisure Travel(Price elastic, cost leadership method)

• TARGET
1. VPs, CEOs
2. Bollywood Stars
3. Politicians
4. Foreign Tourists
5. Industrialists
6. leisure Travelers

• POSITIONING
1. Luxury product
2. Short time to travel
3. Branding
4. Advertising
 RAINBOW OF SERVICE MARKETING MIX

PRODUC PRICE PLACE PROMOTION PEOPL PROCES PHYSICA

T E S L
EVIDENC
E
 Product Mix

• Giving a Feel For The “Product” Inside a Service Wrapper .

• Consumers are demanding not products, or features of

products but the benefits they will be offered.

• The airline product includes of two types of services:

1. On the Ground Services.
2. In-Flight Services.
1. on-the-ground services :
– a convenient airport with car parking facilities,
– duty free' -shopping quick and efficient checking of
baggage,
– efficient service at reservation counter,
– transport to the airport.

1. In-flight services : The service provided inside is

intangible and is highly variable.
– polite, warm and courteous service of Airhostesses
– Crew members technical abilities with perfect training
lead to safe and happy journey of passengers.
• Airlines usually practice differential pricing.
• There are three classes:
– The First Class,
– The Executive or Business Class and
– The Economy Class.

• Premium pricing:- Use a high price where there is a uniqueness

about the product or service. Such high prices are charge for luxuries
• Cheap-value pricing:- This approach is used where external factors
such as recession or increased competition force companies to
provide 'value' products and services to retain sales
• APEX fares:- Apex or advance purchase fares are special fares valid
on economy class on specified sectors. They are much lower than the
normal fares.
I . The place mix of airlines consists of mainly the distribution channels
for marketing their services to their target audience.
• On the ground there are many ticket counters with computerized 24-hour
reservation systems. They have many specially designed check-in counters
for club and premiere passengers.
• There are two principal methods of booking seats on an airline.
1. Phone, fax, and email, or travel agents who book the tickets form the airline & take the
commission from them. Online booking method.
Distribution channels
A] Consolidation
B] Tour Operator/ Travel Agent. E.g. SOTC
C] Affiliated with companies
D] Direct through home leased system, e.g. phone, fax, email and online e-
booking.

II. The number of destinations that an airline flies to can also contribute
to its place mix. different distribution channels.
• The business magnets, executives, politicians,
actors, high spending tourists etc are some of
the users of the air services.

• Many airlines are facing financial crunch, it is

pertinent that they make optimum use of
different components of promotions
• Advertising
• Publicity
• Sales promotion
• Word of mouth ’Customer Loyalty Ladder’
• People provide most services
– the selection, training, and motivation of employees can
make a huge difference in attaining customer
satisfaction.
– employees should exhibit competence, caring attitude,
responsiveness, initiative, problem solving ability, and
goodwill.
1. The airhostess in any airline come in contact with the
customers in the process of providing the service.
2. The cock-pit crew are employees who contribute to
the service product but do not come in direct contact
with the customers.
3. The ancillary service personnel, the travel agent who
helps to create the service exchange but is not a part
of the service.
 Process mix
Reservation.

Flight Information.

Facilities at The Airport.

Baggage Handling.

Meal Service.

Flight Entertainment.

Deliver Quality Service

• The aircraft by itself, the seating configuration
meant to be comfortable and spacious, booking
offices, ticket counters, in-flight food is another,
important aspect, a wide selection of meals is
offered to the passengers.
• Reliability – Flights to promised destinations depart and Arrive on
schedule
• Assurance –Trusted name, good safety record, Competent
employees
• Tangibles – Aircraft, ticketing counters, baggage area, uniforms
• Empathy – Understanding of special individual needs, anticipates
customer needs
• Responsiveness - Prompt and speedy system for ticketing, in-
flight, baggage handling
o Enquiry of the services, flight timings, routes
etc.;
o Purchasing tickets, either from the airlines or
from the travel agencies;
o Checking in;
o During boarding;
o On board crew;
o During disembarkation.
Top 10 Airline Companies Of India
S.No

Site
1. Indian Airways
2. Kingfisher
3. Air India
4. Air Deccan
5. Lufthansa India
Airlines
6. Air Sahara
7. IndiGo
8. Alliance Air
9. Paramount Airways
Private Limited

10. Jet Airways

• Declining yields

• Building on cost efficiencies

• High input costs

• Gaps in infrastructure or the services

• Un Predictable Weather
Gaps in Infrastructure
 Service Gaps
GAP BETWEEN CONSUMER EXPECTATION AND MANAGEMENT PERCEPTION

GAP BETWEEN MANAGEMENT PERCEPTION AND SERVICE QUALITY

SPECIFICATION

GAP BETWEEN SERVICE-QUALITY SPECIFICATIONS AND SERVICE DELIVERY

GAP BETWEEN SERVICE DELIVERY AND EXTERNAL COMMUNICATIONS

GAP BETWEEN PERCEIVED SERVICE AND EXPECTED SERVICE

 Opportunities

• A large & growing potential market

• Developing alternative revenue streams

– Airframe, engine & component overhaul

– Ground handling

– Training

– Leveraging the internet

• Access to new markets

 Ground Handling
• Ground handling business in India estimated at Rs. 1074 crores
• Expected to grow at 15% CAGR till 2011-12
• Opportunity lies in 3rd party handling as well as entering into service contracts with
private airports / AAI to offer comprehensive ground handling solutions, e.g. AI –
CIAL at Cochin
 Training

– Airlines in India will need training for pilots, engineers, cabin crew,
load & trim, etc.
• Projected requirement for 3600 additional pilots in the short to medium
term
• Cabin crew, engineers, technicians will also be required to support aircraft
being inducted

– Opportunity for simulator training establishments

– IA already has a Central Training Establishment at Hyderabad, with
facilities for most categories / types of trainings on A320
 Leveraging the internet
– Increasing numbers are booking directly from the airlines’ websites
• Traditional sales channels with paper tickets cost airlines ~10% of ticket price
• Comparatively, e-ticket sales from own website cost an airline only ~3% of ticket
price
• For every direct booking from their website, airlines save an estimated US$ 4
plus 5% agency commission

– Airlines can also turn their websites into one stop shops for all travel related
services, generating additional revenue
 Access to new markets
• As airlines complete 5 years of domestic operations, those with 20+ aircraft will get
international access
– Access to new revenue streams
– Help even out the seasonality factor of domestic operations
– Spread the risk of downturn in a single market

• The opportunity for some will be a challenge for the existing international players
• The risk – cycle of increased competition, low yields, and growth transferred to the
international arena
• India has 454 airports and airstrips; of these,16 are designated international
airports.
• Over 135 aircraft have been added in the past two year alone.
• Center for Asia pacific aviation (CAPA) estimates domestic traffic to grow
25-30 % annually and international traffic 15%untill 2010.
• Indian Aviation has seen high growth on account of sustained Indian socio economic growth and liberalized
Government initiatives

• Airport Infrastructure needs to improve significantly to meet the current and future demand of the Indian Aviation
Sector

• Authorities have initiated various steps to implement modernization, reconstruction and development of airport
infrastructure to implement infrastructure development plan

• Provides a huge opportunity for private players operating in Aerospace and allied industries

• Significant opportunity for foreign companies as Indian companies not technologically equipped to cater to
requirements
 In sum……
• Despite a growing market, airlines in India are fighting for survival in a
highly competitive environment
• A host of initiatives are required to be taken by all concerned, to tide over
the current situation
– Control Costs
– Improve quality of service
– Develop a large pool of skilled / technical manpower
– Attract more professionals to manage the aviation industry
– Develop infrastructure to match growth plans
– Liberalize rules & regulations governing civil aviation, without compromising on
safety & security
– Reduction in ATF prices and taxation on ATF and lease rentals