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Airlines Company

Catering to 33% Market share

POD: Customer Service

Losses: 5k Crores Major Cost Contributor

1. Fuel

2. Labor

Target: Achieving Annual Surplus by 20

13

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Social Increased Foreign & Domestic Travel

Legal Tight Regulations: Foreign Travel, Safety, Pilot Hiring

Economic High Interest Rates, High Inflation, Slump

Political Various Authorities : AAI, DGCA, IATA

Technological Cost Reduction Developments, Safety Improvements Better & Fuel Efficient Aircrafts

Environmental Weather

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Culture

Lively Culture

Company Values

Customer First

Policy / Commitments

Developed over 8 years

Stable and follows the environment

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Competition withinIndustry:

High

Competition withinIndustry:

High

New Entrants

High Borrowing Costs

Capital Intensive

Various Regulations

New Entrants

High Borrowing Costs

Capital Intensive

Various Regulations

Customers

High Options Available ineach segment right fromlow cost to premium

Customers

High Options Available ineach segment right fromlow cost to premium

Suppliers

Aircraft: Two MajorProducer

Fuel: World Demanddecides prices, butcartelization can empower

supplierFood: Not High-ManyOptions

Suppliers

Aircraft: Two MajorProducer

Fuel: World Demanddecides prices, butcartelization can empower

supplierFood: Not High-ManyOptions

Substitute

Available for Domestic:Road and Rail

International: Nosubstitute for BusinessTravelers

Substitute

Available for Domestic:Road and Rail

International: Nosubstitute for BusinessTravelers

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FIRM INFRASTRUCTURE : CRM for better service to customers. Loyalty

Programs, New Flights

HR MANAGEMENT: Hiring trained Air Hostess & Pilot, Providing regular training

TECHNOLOGY : Develop analytical tools to forecast demand and do capacity planning. 

Dynamic Pricing based on Forecasting, In-flight entertainment services

PROCUREMENT: High Quality food-Partnered with 5 * Hotel

PRIMARY ACTIVITIES

SUPPORT ACTIVITIES

Price

Cost

Consistent

Customer Service

Trained Staff to

Handle theOperations

Regular

Maintenance &

Repair

TQM

The Value ChainThe Value Chain

INBOUND

LOGISTICSOPERATIONS SERVICEOUTBOUND

LOGISTICSMARKETING

& SALES

Aviation Fuel

Modern

Aircrafts withNew

Technology

Food and

Other

Services

Online Portal for

Ticket Booking

Partnership withOnline Ticketing

Agents to

Promote this

airline

Dynamic Pricing

Excellent In-

flight and on

ground

service

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Differentiation Services

Better CRM : Loyalty Programme (Based on Miles)

Increase food options and hence charge premium

Reduce Turnaround time (On time flight schedule)

Resources Management Cut Flab : Excess Employees

Restructure Compensation Policy (Fixed + Variable (As afunction of flying hours))

Better Capacity Utilization

Increasing no.

of flights in high traffic routes Increasing no. of routes (Point to Point)

Cut down loss making routes (Rerouting customer to HoppingFlight)

Fuel Hedging

Regional(as is) -> Full Service Network Carriers(to be)

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Internal Factors

High Fixed CostHigh Variable Costs

Well Trained Crew

External FactorsIncreasing Fuel costsIncreasing Air Traffic

Oligopolistic Market in

Regional ² Full Service

Carriers

Business Strategy ²

Differentiation Increase Revenues with

Increased Prices & Traffic

Reduce Operational Costs

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Business Strategy ² Differentiation

Best in-flight & on ground Services

Marketing Brand Equity

Less time to

market : Changes

in

product/pricing

Operations On-Time Flights

Partnership with

Best in Business

Suppliers

HumanResources

Well Trained

Personnel : On

Ground + Cabin

Crew

FinanceHedge against Fuelprices

Reduce operationalexpenses

Increase pricingjustified by improved

services & tech.

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Imitation : Low

Capital intensive

TQM

Substitutes : Low Low travel time cannot be substituted

Low Cost Carriers : won·t provide premium

services

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Financial Perspective 30%

Revenues 0.3Cash Inflows the airlines enjoys in a

particular year. 

Expenses 0.2

Cash Outflows the organization has to

bear for various direct and indirect

spending.

Profits 0.3 Net Margin & ROIC

Fuel Costs 0.2 % of Cost, % growth in Fuel Cost

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Customer Perspective 30%

On time Flights 0.2 % of Ontime Flights

Types of cuisineoffered 0.2

The no. of types of meal offered to cater

to a large and broad range ofpassengers. 

Baggage rates 0.1

Charges customers would have to pay for

the standard Quantity of baggage

allowed and the amount to be paid if it

surpasses the stated quantity.

Response Time

for queries0.2 No. of Hours to respond

Cancelled

Flights0.3 % of total flights

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Flight Operations 20%

Flights 0.2 Number of flights in a particular year

Passengers 0.2 Number of passengers carried in all theflights in a year

Available Flying

Time0.2

Weight avg. of Total Working Hours (Peak

/ Non-Peak)

No. of accidents 0.1

Aircraft

utilisation0.3

Used (Flight Miles * Seats) / Available

(Flight Miles * Seats)

Learning & Development 20%

Cabin Crew

Training0.5 No. of Hours

Ground Staff

Training0.5 No. of Hours

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