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Domestic Airlines in India:Domestic Airlines in India:

Leveraging PriceLeveraging Price

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June

2002: The pricing war begins

June

2002: The pricing war begins

Indian Airlines:

3 15% cut in fares

All classes Western sector, Delhi Srinagar, Jammu, Khajuraho

Jet Airways: The very next day

Reduced prices by Rs. 635

Economy Classes

Mumbai Nagpur, Goa

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The APEX (Advanced Purchase Extension) SchemeThe APEX (Advanced Purchase Extension) Scheme Huge discount for tickets booked three weeks in advance

Indian Airlines U Can Fly Scheme

Jet Airways Everyone Can Fly Scheme

Disadvantages:

Planning three weeks in advance was difficult for passengers

Cancellation charges 50% for cancellations done 21 days beforetravel date

Passenger Response:

Indian Airlines 1600 passengers everyday under this scheme

Jet Airways 1500 passengers everyday under this scheme

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Air Sahara: Soaring HighAir Sahara: Soaring High Sixer and Super Sixer schemes-

A six flight coupon ticket to fly any six sectors on the

carriers network forRs. 25000.

Wings & Wheels complementary air-conditioned coaches Steal a Seat online bid scheme- Open for the passengers

flying 25 days after booking.

Steal Buys- For unsuccessful bidders Delhi Mumbai fare-

AS: Rs. 4000 IA: Rs. 5535 JA: Rs. 5405

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Indian Airlines Vs. Air SaharaIndian Airlines Vs. Air Sahara Wings of Freedom scheme unlimited

domestic travel for 7 days.

Economy Class: Rs. 15000

Business Class: Rs. 20000

Bharat Darshan unlimited travel for

passengers who bought tickets worth morethan Rs. 80000

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Corporate Viability?Corporate Viability? Players with the following features will survive.

Pan-India presence

Adequate fleet size

Low/Optimum cost coupled with consumer service

Connecting cities where growth potential exists

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Is the intense rivalry through priceIs the intense rivalry through price--cuttingcutting

undermining airlines viability in the long run?undermining airlines viability in the long run?

Yes.

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The Rise and Fall of Air DeccanThe Rise and Fall of Air Deccan

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The Rise and Fall of Air DeccanThe Rise and Fall of Air Deccan

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The Rise and Fall of Air DeccanThe Rise and Fall of Air Deccan

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The Rise and Fall of Air DeccanThe Rise and Fall of Air Deccan In 2006, Air Deccans IPO flopped, even after extending the

issue closing date.

In 2007, it posted a loss of 213 crores.

Consequence: The Kingfisher Air Deccan Merger.

Other mergers:

Air India India Airlines

Jet Airways Air Sahara

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Environmental factors influencing pricingEnvironmental factors influencing pricing

decisionsdecisions

Microenvironment:

Fares offered by competing airlines

Macroenvironment:

Inflation, particularly, rise in fuel prices

Cost of Labour

Incidents like the WTC attack Taxes levied by Government on airlines

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Strategies to enhance market share andStrategies to enhance market share and

increase customer baseincrease customer base

Optimum fares

Attractive incentives

Personalised ground and flight service to

customers

Sticking to flight schedules

Never canceling any scheduled flight

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WHAT

T

HEN? Fierce competition between all players

LCCs and FSCs price war impacted bottom- ine

of carriers , but consumers made merry! Even though fuel prices were rising, airlines kept

slashing prices

Faulty premise that ridiculously low prices could

win long term business

Could not even break-even and even operated at

losses

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WHAT

NOW? Eventually suffering airlines were taken over by

stronger players eg. Air Sahara by Jet and Air

Deccan by Kingfisher Prices since then slowly rose and are higher now

Increase in prices has a direct adverse impact on

demand

Today also Indian aviation sector is making big

losses

Cost-cutting and innovative strategies need of the

day

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nFLYING IS STILL A DREAM

FORA

lMIDDLE-CLASS INDIANm!o