Airline Price in India

KusumKhushbu

SafaatAshish

Contents

• Objective• History• Literature review• Data• Findings• conclusion

Objective

• To discuss airline pricing in India between the top players of the industry and evaluate its strategies.

• Analysis and evaluation of present scenario as well as the future development.

History

• There have been major changes in aviation industry in the past few years.

• Until 1986• 1986-2003• 2003-2006• 2006 onwards

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Literature Review

• Indian aviation, spreading its wings : Evolution of the industry, its classification, challenges and tax and regulatory framework

• Fair is Fair in deregulation: Market Segmentation & comparison between the customer who pay higher or less for the same product and Types of restrictions

• Airline Pricing - By thomas bertram: Three pricing concepts - Dilution , Customer segmentation , Elasticity

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Continued...

• History of aviation industry in India: major changes in the industry in the past few years

• Indian aviation industry has been going a turbulent phase over the past years high oil prices and limited pricing power

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Commercial aviation

• Related to GDP• Global business and tourism• Liberalisation• Expansion• Challenges

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General Aviation

• GA Market• Industry downtown• Opportunities• Challenges • Current project pipeline• Investment gap

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Data

Source: Company Filings,Bloomberg, ICRA Research

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State-wise representation of % of total flights vs. % of the total population

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Findings :-Key Pricing Concepts

• Dilution – Difference between how much customers are willing to pay and what they actually pay

• Customer Segmentation – People travelling for business for vacation and visiting friends and relatives

• Elasticity – Measure the sensitivity between change in price and quantity of demand

Evaluate Competitive Pricing actions

• Know your Markets• Know your Products • Know your Competitors

Know your Markets

• High Market Share/ High yield – Maintain market strength

• High Market Share / Low yield – Leverage market presence to improve yield

• Low Market share / High yield – Segment fare products to avoid dilution from higher fares

• Low Market share / Low yield – Opportunistic pricing develops more demand

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Know your Products

• Schedule• Load factor• Loyalty• Airport/ in flight service

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Know your Competitors

• Price Behaviour• Low Price Strategy • New Services

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Pricing Strategies

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Price Discrimination vs. Product differentiation

• Price Discrimination – The practice of charging different prices for same product with same cost of production

• Product Differentiation – Charging different prices for products with different

Challenges

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Policy recommendations

• New business models in regional airports• Alternate development models• Incentive to airline operators• Review of route dispersal guidelines

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Types of Fare Restriction

• Advance Purchase requirements • Round Trip Travel• Minimum Stay requirements• Non stop travel / One stop Travel • Day of week / time of day

Conclusion

• Tremendous opportunities• Remodeling required• Huge investment needed• Changes in policies required• Future outlook

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Thank you....

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