DOMESTIC AIRLINES IN INDIA:LEVERAGING PRICE

Presented By:SandeepNikitaAnkitaMonikaPriyankaVIPRARAHULNITISH

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INTRODUCTION

 Case is about the Indian aviation sector.

Oligopoly Market

Oligopoly market depends on Market Share and Price.

In 2002 there were 3 major players in the Indian domestic market they were:

1.Jet airways 2.Indian Airlines 3.Sahara

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CONTD.

3 players were fighting for fares. The kink demand curve(that will

explain how they react when one player rise the price).

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 kink demand curve

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JET AIRWAYS

• Jet airways introduced the ‘Every one can Fly’ scheme.

• In june 2002, After the indian airlines the jet airways reduced its prices by Rs. 635 for the economy class on the Mumbai-nagpur and the Mumbai-Goa route

• Jet airways reported an increase in the number of passengers flying after the introduction of APEX fares.

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Saroj dutta, executive director, JA, said, “ The average number of passengers flyingout on advance purchase tickets is around 1,500 per day.

They are selling most of the 1,850-2000 seats offered every day under the concessional window.

The response is very encouraging for a schemewhich has been recently introduced

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INDIAN AIRLINES SCHEMES:

• IA in 2002 have a 3-15% cut in fares for all classes on the western sector and on delhi-srinagar, delhi-jammu, and dehli-khajuraho routes.

• IA introduced the APEX (Advanced Purchase Excursion) fares under its ‘U Can Fly’ scheme. APEX fares, in which passengers who booked their tickets at least 3 weeks in advance, got a huge discount in fares.

• Under the APEX scheme passenger had to face 2 disadvantages :(a) planning air travel 3 weeks in advance was not very convenient.

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(b)cancelation charges were also too high. Passengers had to lose 50% of the ticket price if the ticket was canceled less than 21 days before the travel date. Despite these disadvantages, the scheme proved very successful for IA.

• IA launched the scheme ‘Wings of Freedom’, valid till limited period .this scheme offered unlimited travel on the domestic network for 7days for RS 15000(economy class) and RS 20000(business class).

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• IA launched the ‘Bharat Darshan’,(India tour) which allowed unlimited travel for passengers who bought tickets worth more than RS 80000.

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SAHARA AIRLINES SCHEMES

• Intelligent market strategy.• “Sixer” and “super sixer”.• Wings and Wheels.• Steal a Seat- online bid scheme.

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ADVANTAGES

Advanced purchase excursion fares scheme.

IA- ‘U Can Fly’ scheme.

JA- ‘Everyone Can Fly’ scheme.Apex Proved very successful for IA. JA also reported an increase in the

number of passengers.Air sahara went for different approach.

‘Sixer’ and ‘Super Sixer’ scheme.

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CONTD.

During july-august ,Sahara launched a ‘Sixer’

scheme that proved to be very successful.

Sahara’s ‘steal a seat’ offer online bid scheme in august 2002.

IA launched ‘Wings of Freedom’ that offer unlimited travel for the domestic network.

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DISADVANTAGES

Planning air travel in advance was not convenient.

Cancellation charges were also high.Air Sahara adopted a different

strategy. Not Flexible. Lower margins makes them difficult to

sustain.

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CONCLUSION

Employee shortage- there’s a clear shortage of skilled and trained employee as a consequence of which so aviation sector has to pay high wages to the current skilled employee.

Regional connectivity - lack of airports.  Ever rising fuel prices - which leads to

increase in air fares.

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Contd…

 Declining yields - Increase in growth attracts more players which increases competition thus declining yields of all operators.

Gaps in infrastructure - Inadequate air traffic control which hinders the growth of the aviation sector of India.

 High input costs - Due to high input costsbecause of tax on interest repayment on foreigncurrency loan for aircraft acquisition.