Project report On Understanding & Analyzing the Consumer Preference for Services in Aviation Industry

Submitted by:P.M.NandaNanjappa FW09-11

Chapter1: Introduction-Services

SERVICES
1.1 WHAT IS A SERVICE?
In economics and marketing, service is the non-material equivalent of a good. It is claimed to be a process that creates benefits by facilitating a change in customers, a change in their physical possessions, or a change in their intangible assets. Service provision has been defined as an economic activity that does not result in ownership, and this is what differentiates it from providing physical goods. Service has certain characteristics which differentiates it from products or goods. The features or characteristics of services are as follows: Intangibility - Services are intangible in nature and this is the basic feature or characteristic of a service that differentiates it from the products or physical goods. For example, a student renders educational services cannot see or feel the knowledge provided by the instructor or the teacher. Simultaneity - Services are simultaneously produced and consumed. The production of the service and the consumption of the service take place at the same time. Hence the services have a characteristic of simultaneity. Perishability - Services are also perishable in nature which means that if not sold then cannot be regained. Hence services cannot be stored. In case of an airplane seats not taken up would remain empty during the entire flight. The service capacity of this flight has perished and cannot be recouped. Services cannot be returned or resold.

Inseparability - The services cannot be separated from the people providing the services. The service can never be separated from the service provider. Hence services also have the characteristics of inseparability. Heterogeneity - Services are heterogeneous because a service is modified for each client or each situation. The service delivered can never be the same if delivered again. Hence mass production of services is difficult. Both inputs and outputs to the processes involved providing services are highly variable, as are the relationships between these processes, making it difficult to maintain consistent quality. Labour intensive - Services are labour intensive. Services usually involve considerable human activity, rather than a precisely determined process. Human resource management is important. The human factor is often the key success factor in service industries. Hence these are the characteristics of services. There are many types of services available. The services can be classified on a particular appropriate basis. Let us try to classify the service on the basis of industry and target effects.

1.2 TYPES OF SERVICES

There are many types of services and to understand them better, they need to be classified. The services are broadly classified on the following basis: CLASSIFICATION OF SERVICES BY TARGET EFFECTS Services aimed at physical care such as health care, beauty salons, gymnasiums and restaurants Services for intangible assets such as banking, legal consultation, accounting, brokering, insurance and securities services. Services aimed at the mind of the customer such as education, broadcasting, information, entertainment and amusement. Services aimed at physical possessions and tangible assets such as transport, repair and maintenance, cleaning and janitorial, laundry, gardening and veterinary services.

CLASSIFICATION OF SERVICES BY INDUSTRY

Services can be classified on the basis of the industry as shown in the table below:

1.3 TANGIBILITY SPECTRUM

The dichotomy between physical goods and intangible services should not be given too much credence. These are not discrete categories. Most business theorists see a continuum with pure service on one terminal point and pure commodity good on the other terminal point. This continuum is known as a tangibility spectrum. For example, a restaurant provides a physical good (the food), but also provides services in the form of ambience, the setting and clearing of the table, etc. And although some utilities actually deliver physical goods like water utilities which actually deliver water utilities are usually treated as services. Hence there is a pure service and there is a pure product on the other side of the tangibility spectrum. Figure 1.3 shows a tangibility spectrum. In the table we can see that salt is a pure product whereas teaching is a pure service. The fast food outlets can be considered as a combination of services and products as food provided is tangible and service provided in terms of hospitality and service delivery is intangible. The airline services are not pure services and not pure products. Airline services are somewhere in the middle of the tangibility spectrum as shown in the figure by fast food outlets. From this we can also conclude that services are different from the products and hence the marketing of services is also different from that of products. Let's try to understand the marketing mix for services which is different from the traditional marketing mix of products.

1.4 EXPANDED MARKETING MIX

All elements within the control of the firm that communicate the firm's capabilities and image to customers or that influence customer satisfaction with the firm's products are as follows: 1. Product 2. Price 3. Place 4. Promotion The above given marketing is given for products and is also known as 4 P's of marketing. In case of services the marketing mix is extended. Services have 7 P's of marketing as follows: 1. Product 2. Price 3. Place 4. Promotion 5. People 6. Physical evidence 7. Process The additional P's of marketing for services have an important role to play. Each of them has high level of significance in case of services. Lets us try to understand the expanded marketing mix of services one after the other in detail with suitable examples.

PEOPLE The frontline or service-provider employee plays a key role in the services delivery process since it is this category of employee that executes the service promise to the customer. The important points about people are as follows: People are the visible face of the service provider. They are the only ones who are seen and heard by the service recipient. For example, the receptionist at the tax office receives the returns at the counters. We are not allowed to go in any further or meet with the taxation officers. In many cases, they are the only link between the service provider and the customer. As frontline employees, who are in touch with the customers, they carry out the function of marketing of the service to the current and potential customers. Customer satisfaction can be brought about these employees. Therefore, their satisfaction and motivation are of crucial interest to the service provider. Only the employees promise enables the service provider to make the marketing promise to the customer. More importantly, the employees deliver this service promise to the customers. Thus, they are the crucial element around which the entire performance of the service provider revolves. Hence from this we can say that the service provider employee is the kingpin in the services delivery. They are also known as internal customers. If a service organization takes good care of internal customers then only they can ultimately satisfy the external customers. Hence we need to pay greater importance to their psychological and mental make up rather than mere qualifications.

PHYSICAL EVIDENCE the physical evidence of a service comes in different forms and guises. These include the physical aspects of the location of the service delivery such as the design, functionality, and aesthetics of the place. The air flow, dcor, temperature, etc. create the right atmosphere for the service delivery. The dress, uniform, appearance, and facial expressions of the frontline employees form a crucial part of this physical evidence. DIFFERENT PHYSICAL EVIDENCE IN DIFFERENT SERVICE SETTINGS There are essentially three types of encounters between the customer and the service provider. These are: The remote encounter: This type of encounter does not bring the two parties face to face but they may be in touch through letter, e-mail, mail order, delivery machines such as ATM, etc. Railway reservations through Internet, theatre booking, enquiries, etc. are some examples of this type of encounters. The indirect personal encounter: This type of encounter occurs on telephone, on Internet, etc. The two parties are not in face to face contact but have some means of instantaneous communication. The examples are after sales service phone numbers and helplines for credit cards and bank accounts. The direct personal encounter: This is the most common encounter for the services provision. The customer is in face to face contact with the service provider. The appearances of the employees, uniforms, settings, etc. all contribute to the perception of the service quality. Internal and external environment and tangible elements together constitute the physical evidence of a service.

PROCESS This means procedures, mechanism and flow of activities by which a service is acquired. Process decisions radically affect how a service is delivered to customers. For example, at a restaurant the process involves certain steps as following: 1. Providing information with the help of a menu 2. Consulting 3. Order taking 4. Delivering the service as per the order 5. Billing 6. Payment This is a basic and simple process at a restaurant. There can be many such processes for different services. A process if changed can change the service delivery and hence can also change the service quality perceived by the customers. Hence process is supposed to be designed properly. It is also a very important mix of marketing in services.

CHAPTER 2 :SERVICE QUALITY

SERVICE QUALITY
2.1 CONCEPT Quality is defined as "Degree to which a set of inherent characteristic fulfils requirements" by ISO 9000. Quality is also defined as Fitness for use by Joseph M. Juran. Fitness in this definition is defined by the customer. Quality can also be defined in simple words as Conformance to Requirements as defined by Philip B. Crosby. The difficulty with this is that the requirements may not fully represent what the customer wants; Crosby treats this as a separate problem. Quality has particular parameters or dimensions of measurement. The quality of a product can be measured on the basis of certain parameters or dimensions as follows: 1. Performance 2. Features 3. Reliability 4. Conformance 5. Durability 6. Serviceability 7. Aesthetics 8. Perceived Image, reputation, brand name, etc.

The dimensions of service quality are different from that of product quality. The determinants of service quality are as follows: 1. Reliability 2. Assurance 3. Tangibles 4. Empathy 5. Responsiveness Initially there were 10 dimensions of service quality which were then reduced to only 5 dimensions later. Assurance is a combination of competence, courtesy, credibility and security. Empathy is a replacement of access, communication and understanding the customer. Hence the previous model of 10 dimensions is reduced to model of 5 dimensions.

2.2 SERVICE QUALTIY DIMENSIONS The service quality dimensions are already listed earlier and now let us try to understand each and every dimension in detail. RELIABILITY DELIVERING ON PROMISES Reliability is the ability to perform the promised services dependably and accurately. Normally this may be turned as No excuses service delivery. In its broadest sense, reliability means that the company delivers on its promises promises about delivery, service provision, problem resolution and pricing. One company that effectively communicates and delivers on the reliability dimension is Federal Express (FedEx). Federal Express a courier service organization has positioned itself as a reliable organization in terms of handling and delivering the packages. All firms need to be aware of customer expectations of reliability. Firms that do not provide the core service that customers think they are buying fail their customers in the most direct way. ASSURANCE INSPIRING TRUST AND CONFIDENCE Assurance is defined as employees knowledge and courtesy and the ability of the firm and its employees to inspire or convey trust and confidence. This dimension is likely to be particularly important for services that the customer perceives as involving high risk and/or about which they feel uncertain about their ability to evaluate outcomes, for example, banking, insurance, and brokerage, medical and legal service. Airlines also need to provide an assurance to the customers as flying is considered as a high risk as compared to railways or road transport. Also ships and cruises have to provide an assurance to the customers.

TANGIBILITY REPRESENTING THE SERVICE PHYSICALLY

Tangibles are defined as the appearance of physical facilities, equipment, personnel, and communication materials. All of these provide physical representations or images of the service that customers, particularly new customers, will use to evaluate quality. While tangibles are often used by service companies to enhance their image, provide continuity, and signal quality to customers, most companies combine tangibles with another dimension to create a service quality strategy for the firm. EMPATHY TREATING CUSTOMERS AS INDIVIDUALS Empathy is defined as the caring, individualized attention the firm provides its customers. Empathy means treating the customers as individuals. The essence of empathy is conveying, through personalized or customized services, that customers are unique and special. Customers want to feel understood by and important to firms that provide service to them. Building relationships is the key factor and helps in building the service quality. RESPONSIVENESS BEING WILLING TO HELP Responsiveness is the willingness to help customers and to provide prompt service. This dimension emphasizes attentiveness and promptness in dealing with customer requests, questions, complaints and problems. Responsiveness is communicated to customers by the length of time they have to wait for assistance, answers to questions, or attention to problems. Responsiveness also captures the notion of flexibility and ability to customize the service to customer needs.

2.3 MOMENTS OF TRUTH

Each and every point where a customer comes in contact with the service organization is known as a service encounter. These points of contact create an image or impression in the customers mind about the service provider. This service encounter is also known as moment of truth. Such points of contact thus form moments of truth for a service provider. This concept was used and formulated by Jan Carlzon who was the CEO of SAS (Scandinavian Airline Services) during the period 1981-1993. For example, among the service encounters a hotel customer experiences are checking in to the hotel, being taken to a room by a bell person, eating a restaurant meal, requesting a wake-up call, and checking out. In a hospital context, a study of patients revealed that encounters with nursing staff were more important in predicting satisfaction than were encounters with meal service or patient discharge personnel. Side from common key encounters, there are some momentous encounters that like the proverbial one bad apple simply ruin the rest and drive the customer away no matter how many or what type of encounters have occurred in the past. The Disney Corporation estimates that each of its amusement park customer experiences about 74 service encounters and that a negative experience in any one of them can lead to a negative overall evaluation. Mistakes or problems that occur in early levels of the service cascade are particularly critical, because a failure at one point results in greater risk for dissatisfaction at each ensuing level.

2.4 GAPS MODEL OF SERVICE QUALITY

The service quality has five dimensions as explained earlier. Also the service quality has a gaps model in which we can understand different types of gaps in the service quality which can be filled or closed so as to provide a zero defect service. Different people have developed different model for the gaps in service quality. The most extensively used and accepted gaps model of service quality is known as SERVQUAL. SERVQUAL model consists of five gaps in the service quality. One of the five gaps is customer gap and the other four gaps are service provider gaps. The central focus of the gaps model is the customer gap, the difference between customer expectations and perceptions. Hence this gap is also known as Expectations Gap. Firms need to close this gap between what customers expect and receive in order to satisfy the customers and build long term relationships with them. The four provider gaps are as follows: 1. Gap 1 Knowledge Gap 2. Gap 2 Standards or Design Gap 3. Gap 3 Delivery Gap 4. Gap 4 Communications Gap

CUSTOMER GAP OR EXPECTATIONS GAP

The difference between customer expectations and customer perceptions creates the customer gap. While customer perceptions are subjective assessments of actual service experiences, customer expectations are the standards of, or reference points for, performance against which service experiences are compared. Customers perceive that they get what they think they will and should. In practice, a customer gap typically exists. The Gap 5 shown in the following figure of service quality is customer gap or expectations gap

GAPS MODEL OF SERVICE QUALITY

KNOWLEDGE GAP NOT KNOWING WHAT CUSTOMERS EXPECT This gap is the difference between customer expectations of service and company understanding of those expectations. Management perceptions about the customer expectations can be different from the customer expectations. There can be many reasons behind this gap. Some of them are as follows: Provider may not interact directly with customers, be unwilling to ask about expectations, or be unprepared to address them. The key factors leading to this type of gap are as follows: Inadequate marketing research orientation o Insufficient marketing research o Research not focused on service quality o Inadequate use of market research Lack of upward communication o Lack of interaction between management and customers o Insufficient communication between contact employees and managers o Too many layers between contact personnel and top management Insufficient relationship focus o Lack of market segmentation o Focus on transactions rather than relationships o Focus on new customers rather than relationship customers Inadequate service recovery o Inevitable service failures o Not understanding the importance of service recovery

STANDARDS/DESIGN GAP NOT HAVING RIGHT STANDARDS/DESIGN

The difference between company understanding of customer expectations and development of customer driven service designs and standards is known as the standards gap or the design gap. Customer driven standards are different from the conventional performance standards that most services companies establish in that they are based on pivotal customer requirements that are visible to and measured by customers. The key factors leading to this type of a gap are as follows: Poor service design o Unsystematic new service development process o Vague, undefined service designs o Failure to connect service design to service positioning Absence of customer defined standards o Lack of customer defined standards o Absence of process for setting service quality goals o Absence of process management to focus on customer requirements Inappropriate physical evidence and servicescape o Inappropriate tangibles and physical setting

DELIVERY GAP NOT DELIVERING TO SERVICE STANDARDS This type of gap is the difference between the service standards or the service design and the service delivery. It is the discrepancy between development of customer driven service standards and actual service performance by company employees. Thus even when standards accurately reflect customers expectations, if the company fails to provide support for them if it does not facilitate, encourage and require their achievement standards do no good. The key factors leading to this type of gap are as follows: Deficiencies in human resource policies o Ineffective recruitment o Poor employee-technology job fit o Inappropriate evaluation and compensation systems Failure to match supply and demand o Inappropriate customer mix o Over reliance on price Customers not fulfilling roles o Customer lack knowledge of their responsibilities o Customers negatively affect each other

COMMUNICATIONS GAP PROMISES DONT MATCH PERFORMANCE The difference between service delivery and the service providers external communications is known as the communications gap. Promises made by a service company through its media advertising, sales force, and other communications may potentially raise customer expectations that serve as the standard against which customers assess service quality. The discrepancy between actual and promised service therefore has an adverse effect on the customer gap. The key factors leading to this type of gap are as follows: Lack of integrated services marketing communications o Not including interactive marketing in communications plan o Absence of strong internal marketing program Ineffective management of customer expectations o Not adequately educating customers Over promising o Over promising in advertising o Over promising in personal selling o Over promising through physical evidence cues Inadequate horizontal communications o Insufficient communication between sales and operations

CHAPTER 3: AIRLINE INDUSTRY IN INDIA

CHAPTER-3 AIRLINE INDUSTRY IN INDIA

3.1 INTRODUCTION Airlines vary from those with a single airplane carrying mail or cargo, through fullservice international airlines operating many hundreds of airplanes. Airline services can be categorized as being intercontinental, intracontinental, regional or domestic and may be operated as scheduled services or charters. DELAG, Deutsche Luftschiffahrts-Aktiengesellschaft (German: acronym for "German Airship Transport Corporation") was the world's first airline. It was founded on November 16, 1909 with government assistance, and operated airships manufactured by Zeppelin Corporation. Its headquarters were in Frankfurt. Air India was founded as Tata Airlines in 1932, a division of Tata Sons Ltd. (now Tata Group) by J. R. D. Tata. On October 15, 1932 the founder, J. R. D. Tata flew a single engined De Havilland Puss Moth registered VT-and carrying air mail (postal mail of Imperial Airways) from Karachi's Drigh Road Aerodrome to Bombay's Juhu Airstrip via Ahmedabad. The aircraft continued to Madras via Bellary piloted by Royal Air Force pilot Neville Vincent . Following the end of World War II, regular commercial service was restored in India and Tata Airlines became a public limited company on 29 July 1946 under the name Air India.

The airline was set up under Air Corporations Act, 1953 with an initial capital of Rs.32 million and started operations on 1 August 1953. It was established after legislation came into force to nationalize the entire airline industry in India.

At the time of independence, the number of air transport companies, which were operating within and beyond the frontiers of the company, carrying both air cargo and passengers, was nine. It was reduced to eight, with Orient Airways shifting to Pakistan. These airlines were: Tata Airlines, Indian National Airways, Air service of India, Deccan Airways, Ambica Airways, Bharat Airways and Mistry Airways. The Open-sky policy came in April 1990. The policy allowed air taxi- operators to operate flights from any airport, both on a charter and a non charter basis and to decide their own flight schedules, cargo and passenger fares. The operators were, however, required to use aircraft with a minimum of 15 seats and conform to the prescribed rules. In 1990, the private air taxi-operators carried 15,000 passengers. This number increased to 4.1 lakh in 1992, 29.2 lakh in 1993, 36 lakh in 1994 and 48.9 lakh in 1995. There has been a revolution in air travel in India in the last decade. Ever since the government launched its open sky policy and allowed private players to enter the arena there has been a sea change in the airline industry in India. Air travel has become cheaper and more affordable and the number of people traveling by air has gone up drastically. Consequently, Indian Airports too have changed for the better. Airports in India have become more swanky and passenger friendly. In the recent past Indian civil aviation sector has grown manifold. The rapid growth of Indian economy has resulted in a spillover effect on the airline industry in India. Several new players have entered the industry and many more are about to enter the arena. The arrival of cheap airline carriers in India has spiced up the whole affair. Suddenly the air travel is no more the monopoly of the rich and the mighty. Now it has become a common mans vehicle and revolutionized the way a common Indian traveler used to travel. Here is

a brief preview of domestic airlines in India. This includes private airlines as well as low cost airlines in India. A low-cost carrier or low-cost airline (also known as a no-frills or discount carrier / airline) is an airline that offers generally low fares in exchange for eliminating many traditional passenger services. The first successful low-cost carrier was Pacific Southwest Airlines in the United States, which pioneered the concept when their first flight took place on May 6, 1949. Often, this credit has been incorrectly given to Southwest Airlines which began service in 1971 and has been profitable every year since 1973. Air Deccan, SpiceJet, GoAir, IndiGo airlines and paramount airways are some of the low cost carriers in India. Jet airways, Kingfisher airlines and Air Sahara, Air India, and Indian are not considered as the low cost carriers. 3.2 AIRLINE INDUSTRY IN INDIAPLAYERS The airline industry in India has a lot of private players as open-sky policy was given by government in 1990. After this policy many foreign players entered the airline industry of India. Also government companies like Air India and Indian airlines were a part of the airline industry of India. The list of existing players in airline industry is as follows: 1. Air India 2. Indian 3. Jet airways 4. SpiceJet 5. Air Deccan 6. Kingfisher airlines 7. Air Sahara 8. GoAir 9. IndiGo 10. Paramount airways

11. Jagson Airlines There are many low cost airlines which are going to enter the industry within a year or so. The list of those players which are waiting to take a wing in 2009/2010 is as follows: 1. Dev airlines 2. Omega Air 3. Mega airways 4. Magic Air 5. Indus 6. East West 7. Premier Star Air 8. MDLR airlines 3.3 AIRLINE INDUSTRY(INDIA)-CURRENT SCENARIO The airline industry in India today is facing a huge loss. According to an article in Businessworld Jan06, for every passenger flying today in India, airlines are losing on an average roughly $15 i.e. the gap between the revenue and costs; some airlines are losing than others. At 32 million passengers expected to fly in 2008-09, that works out to $480 million or Rs 2,200 crore. In September 2009, a total of 100,000 seats were available per day. By December that went to 120,000. Since April 2008, the industry has added 120 aircraft. Airlines are buying planes like they were peanuts and adding capacity at a frenetic pace. Industry leader Jet Airways has clocked a loss of over Rs 100 crore in the first half. That Indian industry suffers from the herd mentality is quite evident by the trends in telecommunications, information technology, BPOthe list is long. Airline has been no different. Everyone worth his salt has jumped into it at the same time, so there is too much capacity. Traffic is growing but capacity is growing faster. So to break even, airlines have to achieve higher load factors than before. That means severe competition and very low

fares. Making matters a lot worse is the obsession with one or two routes. For example, Delhi-Mumbai has close to 44 flights operating one way

3.4 MARKET SHARE OF MAJOR PLAYERS(DOMESTIC)

Source www.wikipedia.com

3.5 OVERVIEW OF MAJOR PLAYERS

3.5.1 INDIAN AIRLINES Indian Airline is an airline based in Mumbai, India, and focuses primarily on domestic routes, along with several international services to neighbouring countries in Asia. Indian Airlines is state-owned, and is administered by the Ministry of Civil Aviation. It is one of the two flag carriers of India, the other being Air India. Though the company that owns and operates the airline continues to be named Indian Airlines Limited, on 7 December 2005, the airline was rebranded as Indian for advertising purposes as a part of a program to revamp its image in preparation for an initial public offering (IPO). The airline operates closely with Air India, India's national carrier. Alliance Air, a fully-owned subsidiary of Indian Airlines, was renamed Air India Regional. In 2007, the Government of India announced that Indian Airlines would be merged into Air India. As part of the merger process, a new company called the National Aviation Company of India Limited (NACIL) was established, into which both Air India (along with Air India Express) and Indian Airlines] (along with Alliance Air) will be merged. Once the merger is complete, the airline - which will be called Air India - will continue to be headquartered in Mumbai and will have a fleet of over 130 aircraft. History The airline is set up under the Air Corporations Act, 1953 with an initial capital of Rs. 32 million and started operations on 1 August 1953. It was established after legislation came into force to nationalise the entire airline industry in India. Two new national airlines were to be formed along the same lines as happened in the United Kingdom with British

Overseas Airways Corporation (BOAC) and British European Airways (BEA). Air India took over international routes and Indian Airlines Corporation (IAC) took over the domestic and regional routes. Seven former freedom domestic airlines, Deccan Airways, Airways India, Bharat Airways, Himalayan Aviation, Kalinga Airlines, Indian National Airways and Air Services of India, were merged to form the new domestic national carrier. Indian Airlines Corporation inherited a fleet of 99 aircraft including 74 Douglas DC-3 Dakotas, 12 Vickers Vikings, 3 Douglas DC-4s and various smaller types from the seven airlines that made it up. Vickers Viscounts were introduced in 1957 with Fokker F27 Friendships being delivered from 1961. The 1960s also saw Hawker Siddeley HS 748s, manufactured in India by Hindustan Aeronautics Limited, join the fleet. The jet age began for IAC with the introduction of the pure-jet Sud Aviation Caravelle airliner in 1964, followed by Boeing 737-200s in the early 1970s. April 1976 saw the first three Airbus A300 wide-body jets being introduced. The regional airline, Vayudoot, which had been established in 1981, was later reintegrated.

Old orange logo of Indian Airlines until the mid-2000s By 1990, Airbus A320-200s were introduced. The economic liberalisation process initiated by the Government of India in the early 1990s ended Indian Airlines' dominance of India's domestic air transport industry. Indian Airlines faced tough competition from Jet Airways, Air Sahara (now Jet Lite), East-West Airlines, Skyline NEPC, and ModiLuft. As of 2005, Indian Airlines was the second largest airline in India after Jet Airways while Air Sahara controlled 17% of the Indian aviation industry. East-West Airlines, Skyline NEPC and ModiLuft discontinued flight operations but the entry of several low-cost airlines in India, such as Air Deccan, SpiceJet, IndiGo (Interglobe Enterprise) and others like Kingfisher Airlines continue to give competition in its market, forcing Indian to cut down air-fares. However, as of 2006, Indian Airlines was still a profit making airline. Indian Airlines Limited is wholly owned by the Government of India through a holding company and has 19,300 employees as of March 2007 Its annual turn-over, together with that of its subsidiary Alliance Air, is well over Rs.4000 crores (around US$ 1 billion). Together with its subsidiary, Alliance Air, Indian Airlines carries a total of over 7.5 million passengers annually. In December 2007, Air India was invited to join the Star Alliance. Since Indian Airlines is in the midst of merging with Air India, it too will effectively be a member.

3.5.2 INDIGO INTRODUCTION IndiGo is a private domestic low-cost airline based in Gurgaon, Haryana, India. It operates domestic services linking 20 destinations. Its main base is Delhi's Indira Gandhi International Airport. It was awarded the title of Best Domestic Low Cost Carrier in India for 2008. 5.3.2History IndiGo Air is owned by an Indian named Mr Rahul Bhatia. The airline commenced operations on 4 August 2006 with a service from Delhi to Imphal via Guwahati. The airline is owned by InterGlobe Enterprises. It took delivery of its first Airbus A320 aircraft on 28 July 2006 and received six aircraft during 2006. Nine more aircraft were delivered in 2007 taking the total to 15. Former US Airways Executive Vice-President, Marketing and Planning Bruce Ashby joined IndiGo as their Chief Executive Officer. The airline has also acquired 3 parking spots in Indira Gandhi International Airport and Chhatrapati Shivaji International Airport. IndiGo placed an order for 100 Airbus A320 family aircraft during the 2005 Paris Air Show. The total order was worth US $6 billion, one of the highest by any domestic carrier during the show. The carrier has set a target of serving approximately 30 Indian cities by 2010 with a fleet size of 40 A320 aircraft. The airline will receive all 100 A320 family aircraft by 2016. The Indian Government has approved the airline's aircraft import plan "in principle".

3.5.3 JET AIRWAYS INTRODUCTION Jet Airways is an airline based in Mumbai, India. It is India's second largest airline after Air India and the market leader in domestic sector. It operates over 400 daily flights to 80 destinations worldwide. In July 2008, Which? magazine ranked Jet Airways as the world's best long-haul airline after Singapore Airlines.In a poll conducted by SmartTravelAsia.com in September 2008, it was voted as the world's seventh best airline overall. Jet Airways has also won a survey award for the quality of its catering from Which? magazine. Jet Airways also operates two low-cost airlines, namely JetLite (formerly Air Sahara) and Jet Airways Konnect. History Jet Airways was incorporated as an air taxi operator on 1 April 1992. It started Indian commercial airline operations on 5 May 1993 with a fleet of four leased Boeing 737-300 aircraft. In January 1994, a change in the law enabled Jet Airways to apply for scheduled airline status, which was granted on 4 January 1995. It began international operations to Sri Lanka in March 2004. While the company is listed on the Bombay Stock Exchange, 80% of its stock is controlled by Naresh Goyal (through his ownership of Jets parent company, Tailwinds, and has 10,017 employees (at March 2007) Jet Airways Airbus A340-300E at London Heathrow Airport in 2005 with the 1993-2007 liveryNaresh Goyal, who already owned Jetair (Private) Limited, which provided sales and marketing for foreign airlines in India, set up Jet Airways as a full-service scheduled airline to compete against state-owned Indian Airlines. Indian Airlines had enjoyed a monopoly in the domestic market between 1953, when all major Indian air transport providers were nationalised under the Air Corporations Act (1953), and January 1994, when the Air

Corporations Act was repealed, following which Jet Airways received scheduled airline status. Jet Airways Boeing 777-300ER at San Francisco International Airport in the airline's new livery introduced in 2007Jet Airways and Air Sahara were the only private airlines to survive the Indian business downturn of the early 1990s. In January 2006, Jet Airways announced that it would buy Air Sahara for US$500 million in an all-cash deal, making it the biggest takeover in Indian aviation history. The resulting airline would have been the country's largest] but the deal fell through in June 2006. On 12 April 2007, Jet Airways agreed to buy out Air Sahara for 14.5 billion rupees (US$340 million). Air Sahara was renamed JetLite, and was marketed between a low-cost carrier and a full service airline. In August 2008, Jet Airways announced its plans to completely integrate JetLite into Jet Airways. In October 2008, Jet Airways laid off 1900 of its employees, resulting in the largest lay-off in the history of Indian aviation. However, later, the employees have been asked to return to work. Civil Aviation Minister Praful Patel said that the management reviewed its decision after he analyzed the decision with them.[9][10] In October 2008, Jet Airways and rival Kingfisher Airlines announced an alliance which primarily includes an agreement on code-sharing on both domestic and international flights, joint fuel management to reduce expenses, common ground handling, joint utilization of crew and sharing of similar frequent flier programs.[11] On 8 May 2009, Jet Airways launched another low-cost airline, Jet Airways Konnect. The new airline uses spare aircraft from Jet Airways' routes that were discontinued due to low passenger load factors. It also uses the same operator code as Jet Airways. The decision to launch a new brand instead of expanding the JetLite network was taken considering the regulatory delays involved in transferring aircraft from Jet Airways to JetLite, as the two have different operator codes.[12] Starting 8 September 2009, several Jet Airways pilots went on a simulated strike by reporting sick and failing to turn up for duty. The stated reason for the pilots' action is that

the pilots "are protesting against the dismissal of two senior pilots last month by the airline." [13] On 9 September 2009, the airline had to cancel over 160 domestic flights due to this reason.[14]. The five-day strike by pilots ended on 13 September 2009. It led to a cancellation of 800 flights where more than 400 of the company's pilots called in sick. According to Indian media reports, the strike cost the airline some $8m (4.79m) a day.[15]

Services Cabin classes With the arrival of its new Boeing 777-300ER and Airbus A330-200 aircraft, Jet Airways has introduced a new cabin with upgraded seats in all classes. The Boeing 777-300ER aircraft has three classes of service: First, Premire (Business), and Economy. The Airbus A330-200 aircraft have two classes: Premire and Economy. All Airbus A330-200 and Boeing 777-300ER aircraft have this feature. Boeing 737 aircraft are configured differently. Jet Airways has a three-star rated Business and First Class, and is in the top twenty-five business classes reviewed by Skytrax. Economy class has been reviewed as a three-star product by Skytrax.Jet Airways First Class Suite on board a Boeing 777-300ER. First Class First class is available on all Boeing 777-300ER aircraft. All seats convert to a fully-flat bed, similar to Singapore Airlines first class seat but much smaller. It was the twentysecond airline in the world to have private suites All seats in First have a 21-inch widescreen LCD monitor with audio-video on-demand systems (AVOD), in seat power supply, and USB ports etc. Jet Airways is the first Indian airline to offer fully-enclosed suites on its aircraft; each suite has a closable door, making for a private compartment. Skytrax consumer airline reviewers recently rated Jet Airways First Class as being 14th best in the world.

Premire Premire (Business Class) on the Airbus A330-200 and Boeing 777-300ER international fleet has a fully-flat bed with AVOD entertainment. Seats are configured in a herringbone pattern (1-2-1 on the Boeing 777-300ER, and 1-1-1 on the Airbus A330-200), with each seat offering direct access to the aisle. Premire seats on the A330-200s leased from ILFC are configured differently in a 2-2-2 non-herringbone pattern. Each Premire Seat has a 15.4-inch flat screen LCD TV with AVOD. USB ports and in-seat laptop power are provided. On the short-haul/domestic Boeing 737-700/800, all new aircraft are equipped with AVOD. All seats are standard recliner business-class seats with a few newer aircraft with electronic recline and massager. Economy Class Economy class on Jet's Airbus A330-200, Boeing 737-700/800 and Boeing 777-300ER aircraft has 32-inch seat pitch. Seats on the Boeing 777-300ER/Airbus A330-200 have a "hammock-style" net footrest. The cabin is configured in 3-3-3 abreast on the Boeing 777300ER, 2-4-2 on the Airbus A330-200, and 3-3 in the Boeing 737. Each Economy seat on the 777-300ER/A330-200 has a personal 10.6-inch touch screen LCD TV with AVOD. Some recently acquired Boeing 737-700/800 aircraft also feature Personal LCD screens with AVOD.

All three classes feature Mood lighting on the Airbus A330-200 and Boeing 777-300ER, with light schemes corresponding to the time of day and flight position.

3.5.4 SPICE JET

INTRODUCTION SpiceJet is a low-cost airline based in Delhi, India. It began service in May 2005 and by 2008, it was India's second-largest low-cost airline in terms of market share. SpiceJet was voted as the best low-cost airline in South Asia and Central Asia region by Skytrax in 2007. Rising fuel costs and increasing competition resulted in SpiceJet posting a loss in the first quarter of 2008-09. In August 2008, SpiceJet announced plans to raise US$100 million through foreign investment. History SpiceJet was earlier known as jadoo airlines , a reincarnation of ModiLuft. It is promoted by Ajay Singh and the Kansagra family. SpiceJet marked its entry in service with Rs. 99 fares for the first 99 days, with 9,000 seats available at this rate. This deal was followed it up with a Rs. 999 promotional scheme on select routes. Their marketing theme "offering low 'everyday spicy fares' and great guest services to price conscious travelers. Their aim is to compete with the Indian Railways passengers travelling in air conditioned coaches. On 15 July 2008 Billionaire Wilbur Ross suggested he would invest $80 million (about Rs 345 crore) in the low cost airline. The board of directors of SpiceJet accepted an offer inprinciple from the US-based PE firm that would make available about Rs 345 crore to SpiceJet, a joint statement issued by SpiceJet and WL Ross & Co. Spicejet names their airlines as the Modi family owns the group which is called the Spice Group and also have GSM mobile services in India called Spice Telecom

3.6 Fiscal Issues in Aviation Industry

Airlines are an important part of the Indian economy. Apart from contributing considerably to the national exchequer and providing significant employment opportunities, a whole host of industry sectors from tourism to hospitality.

The high operating-cost environment in India, coupled with the competitive nature of the Airline business, has resulted in a continued strain on the health of the airlines in India.

Fiscal Issues:
Rationalizing

ATF

Prices

to

International

Benchmarks
Withholding tax on leased aircraft Fringe Benefit Tax Service Tax Sales Tax Cenvat

Credit on ATF Aviation Turbine Fuel (ATF)

Hedging of

ATF

Fuel currently accounts for close to 40% of the total operating costs for airlines in India. The estimated annual fuel bill for the industry is around USD 1.7 billion, based on September 2006 rates. There is also a tremendous wastage of fuel in the air & at the tarmac, due to traffic congestion in Delhi and Mumbai that the airlines have to bear. Current ATF prices in India (Dec 2009) Domestic Flights Rs. 39,000 / kilolitre Following the dismantling of the Administered Price Mechanism (APM) effective April 1, 2001, the prices of ATF in India are based on the International Import Parity Prices, and directly linked to the benchmark of Platts publication of FOB Arabian Gulf ATF prices (AG); and do not relate to the actual cost of producing ATF in India. ATF prices for domestic operations also include Freight charges from Gulf to India, Customs Duty of 10%, domestic transportation and other charges, Excise Duty of 8.16% (including cess).

Even though the ATF supplied at Indian airports (both for domestic and international operations) is not imported into India but is the product of crude refined in Indian refineries from imported crude, the 10% Customs Duty is taken into account in fixing .

Withholding tax on leased aircraft

Section 10(15A) of IT Act of 1961 provides exemption from payment of withholding tax on lease rental incomes on aircraft and engines earned by a non-resident Lessor from an Indian company, subject to respective agreements being approved by the Indian Government. This exemption is currently valid only for lease agreements which have been signed prior to 31 March, 2007. The non-availability of this exemption subsequent to March 2007 will significantly increase fleet acquisition costs of Indian carriers, particularly in a market where demand for aircraft is greater than supply.

The aircraft leasing finance companies have a gross up clause in their agreements whereby the WHT is paid not by the lessor (lease company), but by the lessee (Indian Airline). The vast majority of countries too, impose no withholding tax on lease rentals. The few countries that do impose a WHT, have allowed planning and structural alternatives to minimize the taxes, such as leasing the aircraft through our existing foreign subsidiaries. Previously, Australia and Japan had withholding tax laws, but those.

The leasing route is an established industry practice for airlines globally. Major international leasing companies indicate that the vast majority of countries do not impose withholding taxes on lease rentals payable. In all cases, the lessors require the leasing companies to assume the liabilities for any withholding taxes imposed as also of all indirect taxes applicable such as value added and property taxes. All aircraft and engine lease agreements thus inevitably contain clauses that require the lessee to gross-up the payments. The non-availability of this exemption will significantly increase the fleet acquisition costs of Indian carriers, particularly in a market where demand for aircrafts is greater than the supply.

Fringe Benefit Tax

This tax has also been made applicable on

free

/ concessional passages granted to airline

executives and family

expenses for crew hotel

accommodation provided to passengers due to

delays & cancellations; and

expenses on catering and inflight entertainment.

None of these items can be considered as fringe benefits. There is thus a need to remove these from the coverage of FBT. Service Tax

F& J Class tickets: This tax is not global practice, and therefore puts Indian carriers potential as International network carriers in jeopardy as it increases the total amount a passenger connecting through India must pay as compared to connections via any other point. Service tax on landing, airport & air navigation fees: India has imposed a 10.2% service tax fee on landing, airport and air navigation fees. This greatly reduces the competitiveness of India's air transport sector.

Sales Tax

There is a disparity in the fuel sales tax between Turbo Props and Regional Jets (less than 100 seaters). While Turbo Props enjoy substantially lower sales tax concessions, Regional Jets which are also deployed on the same routes are charged higher sales tax for their fuel needs. This is not helpful for the promotion and good health of Indias Regional Carriers. Sales Tax / VAT are payable on all supplies meant for international voyages irrespective of the jurisdiction of its consumption. There is a need for extending the same benefit to the airlines as in the case of exporters where they are exempt from payment of any Excise Duty / Sales Tax on their inputs on all its procurements dedicated for its international operations. Cenvat Credit on ATF

Non-allowance of credit to the airlines on ATF is against the fundamental principle of the CENVAT provisions resulting in the cascading effect of taxes.

Hedging of Aviation Turbine Fuel (ATF)

De-regulation of Commodity Hedging is proceeding on a slow path. Domestic airlines have to procure ATF only through domestic refineries at International Prices. Since they are not physically importing the commodity, the airlines are not permitted to hedge the commodity.

In a upward moving oil regime, the airlines have no option but to see their input costs explode and whenever possible, pass on the same to passengers. A similar situation was faced by local refiners on hedging their refinery margins where the Government and RBI came out with a notification permitting national oil companies to hedge their refinery margins without having physical import/exports. At a time when there are concerns of crude continuing to be floored at USD 50-55 with no apparent ceiling in sight. An urgent re-look at the present oil/petro products hedging regulations is needed. Domestic airlines should be permitted to hedge their ATF price risk. Many global airlines have used fuel hedging for effective risk management for themselves.

CHAPTER 4

CHAPTER-4 KINGFISHER AIRLINES

Kingfisher Airlines Limited is a major Indian airline. Kingfisher operates more than 400 flights a day and has a network of 80 destinations, with regional and long-haul international services.[1]. Kingfisher Airlines, through one of its holding companies United Breweries Group, has a 50 percent stake in low-cost carrier Kingfisher Red. Kingfisher Airlines is one of six airlines in the world to have a five-star rating from Skytrax, along with Asiana Airlines, Malaysia Airlines, Qatar Airways, Singapore Airlines and Cathay Pacific Airways. In May 2009, Kingfisher Airlines carried more than a million passengers, giving it the highest market share among airlines in India. Kingfisher has its registered office in the UB Tower in Bangalore and its head office in the Kingfisher House in Mumbai.

4.1History:
Kingfisher Airlines registered office at the UB Group Towers in Bangalore, India The airline started operations on 9 May 2005, following the dry lease of four new Airbus A320-200 aircraft.[7] Its first flight was from Mumbai to Delhi. At the launch of the airline, Dr. Mallya said that he is "committed to achieving our ambition of making Kingfisher Airlines India's largest private airline both in capacity and market share by 2010." Kingfisher was the first Indian airline to have in-flight entertainment (IFE) systems on every seat even on domestic flights. All passengers were given a "welcome kit" consisting goodies such as a pen, facial tissue and headphones to use with the IFE system.

On 14 July 2008, Kingfisher unveiled its first ever Wide-body aircraft, a Airbus A330-200 (registered VT-VJL) at the 46th Farnborough Airshow held in July 2008. On 3 September 2008, Kingfisher started its international operations by connecting Bangalore with London. On 15 September 2009 the London service was withdrawn. On 23 February 2010 Kingfisher announced that it would be joining the Oneworld airline alliance by 2011 subject to regulatory approval

4.2 Cabin classes:

Domestic Kingfisher First The domestic Kingfisher First seats have a 48 inch seat pitch and a 125 degree seat recline. There are laptop and mobile phone chargers on every seat. Passengers can avail of the latest international newspapers and magazines. There is also a steam ironing service on board Kingfisher First cabins. Every seat is equipped with a personalized IFE system with AVOD which offers a wide range of Hollywood and Bollywood movies, English and Hindi TV programmes, 16 live TV channels and 10 channels of Kingfisher Radio. Passengers also get BOSE noise cancellation headphones. Domestic Kingfisher First is only available on selected Airbus A320 family aircraft.

Kingfisher Class The domestic Kingfisher Class has 32-34 inch seat pitch with footrests. Every seat is equipped with personal IFE systems with AVOD on-board the Airbus A320 family aircraft. As in Kingfisher First, passengers can access the latest movies, English and Hindi TV programmes, live TV and Kingfisher Radio. On-board the ATR 72-500s there are 17 colour LCD drop-down screens mounted along with loudspeakers for audio in the cabin overhead, a head-end unit to handle CDs and DVDs, and a crew control panel. The screens measure 12.7 cm by 9.3 cm, weigh 0.2 kg each and are spaced every two or three seat rows along both sides of the cabin.Economy class meal on-board a Kingfisher Airlines domestic flight Kingfisher Red

After Kingfisher Airlines acquired Air Deccan, its name was changed to Simplifly Deccan and subsequently to Kingfisher Red. Kingfisher Red is Kingfisher Airline's low-cost class on domestic routes. Passengers are given complimentary in-flight meals and bottled water. A special edition of Cini Blitz magazine is the only reading material provided. Kingfisher Airlines is the first airline in India to extend its King Club frequent flyer program to its low-cost carrier as well. Passengers can earn King Miles even when they fly Kingfisher Red, which they can redeem for free tickets to travel on Kingfisher Airlines or partner airlines.

International Kingfisher First The international Kingfisher First has full flat-bed seats with a 180 degree recline, with a seat pitch of 78 inches, and a seat width of 20-24.54 inches.[15] Passengers are given Merino wool blankets, a Salvatore Ferragamo toiletry kit, a pyjama to change into, five-course meals and alcoholic beverages. Also available are in-seat massagers, chargers and USB connectors. Every Kingfisher First seat has a 17 inch widescreen personal television with AVOD touchscreen controls and offers 357 hours of programming content spread over 36 channels, including Hollywood and Bollywood movies along with 16 channels of live TV, so passengers can watch their favorite TV programmes live. There is also a collection of interactive games, a jukebox with customisable playlists and Kingfisher Radio. Passengers are given BOSE noise cancellation headphones. The service on board the Kingfisher First cabins includes a social area comprising a fullfledged bar staffed with a bartender, a break-out seating area just nearby fitted with two couches and bar stools, a full-fledged chef on board the aircraft and any-time dining. A turn-down service includes the conversion of the seat into a fully-flat bed and an air-hostess making the bed when the passenger is ready to sleep. Both Kingfisher First and Kingfisher classes feature mood lighting on the Airbus A330-200 with light schemes corresponding to the time of day and flight position.

Kingfisher Class The international Kingfisher Class seats offer a seat pitch of 34 inches, a seat width of 18 inches and a seat recline of 25 degrees (6 inches). Passengers get full length modacrylic blankets, full size pillows and business class meals. There are in-seat chargers and USB connectors. Each Kingfisher Class seat has a 10.6 inch widescreen personal television with AVOD touchscreen controls. The IFE is similar to that of the international Kingfisher First class. In-flight entertainment Kingfisher's IFE system is the Thales TopSeries i3000/i4000 on-board the Airbus A320 family aircraft, and Thales TopSeries i5000 on-board the Airbus A330 family aircraft provided by the France-based Thales Group.[16]

Kingfisher Lounge Kingfisher Lounges are offered to Kingfisher First passengers, along with King Club Silver and King Club Gold members. Lounges are located in: India

Bangalore Chennai Delhi Hyderabad Mumbai

King Club

The Frequent-flyer program of Kingfisher Airlines is called the King Club in which members earn King Miles everytime they fly with Kingfisher or its partner airlines, hotels, car rental, finance and lifestyle businesses. There are four levels in the scheme: King Club Base, Red, Silver and Gold levels. Members can redeem points for over a number of schemes. Gold and Silver members enjoy access to the Kingfisher Lounge, priority checkin, excess baggage allowance, bonus miles, and 2 Kingfisher First upgrade vouchers for Gold membership.

Chapter 5

Findings and analysis

Q. How Often Do You Fly? This question gave an idea about the frequency of traveling through airlines for a particular respondent. This question gives an idea whether the respondents have a past experience or are new to the services or are frequent users of airline services. 20% of the respondents used the airline service once a year which is the lowest in the category. 12.5% of the respondents used the airlines for traveling once in every 6 months. 15% of the respondents used the airlines for traveling once in a month. 52.5% of the respondents used the airline services frequently.

FREQUENCY OF TRAVELING THROUGH AIRLINES

DEMOGRAPHICS OF THE RESPONDENTS The questions related to the demographics of the respondents are explained in this section. The questions were related to the age, gender, occupation and income. All the important factors of demographics are covered in these characteristics. The demographics of the respondents are shown in the following charts which give us an idea about the customer profile or the respondents profile.

Age group of Respondents: 14% of respondents fall between the age group of 0-18 years, 26% of respondents falls between the age of 18-23 years, 30% of respondents falls between the age group of 31-45 years, 20% of respondents falls between the age group of 45-60 years, 10% of respondents falls between the age group above 60 years.

GENDER:

INCOME

Income level of people varies from 0-2 lakhs to 10 lakhs and above where maximum respondents falls between the income level of 2-5 lakhs where as there are almost equal number of respondents from 0-2 lakhs , 5-10 lakhs and 10 lakhs and above. The remaining questions in the questionnaire were related to the service quality dimensions which are taken together for a single service provider. Then the total service quality of all the Service providers is compared. Also the service quality dimensions are found for individual service providers.

As there were certain constraints in carrying out the project only 4 service providers were taken into consideration for calculating the service quality. The service providers taken into consideration during the project are as follows: 1. SpiceJet 2. Jet Airways 3. Indian Airlines 4. Kingfisher Airlines

For all the service providers mentioned above every service dimension was calculated and a total score for service quality is measured. This total score of all the service providers is compared and then the service provider with the best service quality is found. Now the data for the service providers for the service quality dimensions are analyzed and the results are given in the next section. The section gives the details about the service quality dimensions in individual service provider. Then a comparison of the total score of service quality is carried out for all the service providers which are explained in the later portion of the analysis. Let us first try to measure the knowledge gap of all the service providers and then we can measure the dimensions of service quality and compare the overall service quality of all the service providers.

KNOWLEDGE GAP This was the only gap which could have been calculated in the project as far as the gaps in service quality are concerned. The knowledge gap is the gap between the managements perceptions about the customers expectations and the customers expectations. Given below is a chart which gives an idea about the knowledge gap existing in all the service providers taken into consideration.

KNOWLEDGE GAP FOR ALL SERVICE PROVIDERS

From this chart we can conclude the following: Kingfisher has the least gap and hence it understands the customers expectations very well. It is the best service provider in terms of understanding the customers expectations. Indian Airlines has the highest gap and hence it does not understand the customers expectations as compared to other service providers. Jet airways are the next best to Spice Jet in terms of knowledge gap.

Service Quality Dimensions

To measure the Service Quality dimensions we have kept several parameters in the Questionnaire in which the respondents have to tick on likert scale ranging from excellent to bad. Then by measuring the mean of all parameters we found out the score of the Service Quality Dimension. For Tangibility the parameters are Seat comfort, Cleanliness of cabin, Cleanliness of toilets, Newspapers/magazines, pillows/blankets, Quality of entertainment, Quality of beverages, handling of luggage, appearance and clothing of cabin crew. For Responsiveness the parameters are punctuality of timing, politeness/courtesy, friendliness and language skills of cabin crew For Reliability parameters are Staff provides service without making fumbles, responds quickly to problems, response happens at promised time. For Assurance parameters are Cabin crews safety drill, courtesy of staff, efficiency of check-in staff, and service efficiency of cabin crew. For Empathy parameters are individual attention to customers, flight timings convenient to customers, long term relationship with customers.

Service Quality Dimensions

1) Tangibility

Tangiblity
3.5 3 2.5 2 1.5 1 0.5 0 Spicejet J et Indian Ailines Kingfisher

Analyzing the tangibility factor of each of the airlines it is very clear from the above graph that tangibility of kingfisher airlines compared to rest of the airlines is definitely high.

Kingfisher airlines is having such a significant increase in response towards tangibility compared with the other flights is due to many factors that are playing important role for such a shift in the above graph.

Comparing Tangibles such as seat comfort, Cleanliness of cabin, Cleanliness of toilets and many other factors such as availability of newspapers and magazines, Pillows and blankets etc. plays an most important role in shifting peoples response more towards kingfisher compared with other airlines.

Though Indian airlines is public sector undertaking airlines but then also as far as the question of tangibility is concern it was rated as second most preferable after kingfisher. Only the difference in response of kingfisher and Indian airlines was that there was comparatively less seat comfort in Indian airlines compared to kingfisher airlines.

Now talking about jet and spice jet they both were rated at lowest level by the respondents and comparing these two airlines there was almost equal grading to both of the airlines as far as tangibility is concern.

So from above graph it is clear that kingfisher has got more preference and positive response of people on tangibility criteria.

2) Responsiveness

Responsiveness
3 2.5 2 1.5 1 0.5 0 Spicejet J et Indian Ailines Kingfisher

Now comparing Responsiveness of the above airlines, it was remarkable that kingfisher has majority of people rating it highest also in the factor of responsiveness followed by Indian airlines.

As kingfisher is five star rated airlines it is obvious thing that staff of kingfisher will be more responsive towards the facilities to be provided on time and also problems to be solve at time. But position of Indian airlines in minds of people holds second place in responsiveness criteria is remarkable.

Factors included in Responsiveness, such as friendliness, language skills, waiting time to check in and courtesy of check in staff played very important role for shifting the above graph in favor of kingfisher.

Now talking about jet and spice jet they both were rated at lowest level by the respondents and comparing these two airlines there was almost equal grading to both of the airlines as far as responsiveness is concern.

3) Assurance

Assurance
3 2.5 2 1.5 1 0.5 0 Spicejet J et Indian Ailines Kingfisher

Analyzing the assurance factor, of each of the airlines it is very clear from the above graph that assurance of kingfisher airlines compared to rest of the airlines is definitely high.

Kingfisher airlines is having such a significant increase in response towards assurance compared with the other flights is due to many factors that are playing important role for such a shift in the above graph.

Comparing assurance factors such as seat politeness/courteous, service efficiency, efficiency of check in staff and safety of cabin crew drill plays an most important role in shifting peoples response more towards kingfisher compared with other airlines.

In case of assurance Indian airlines was rated as second most preferable after kingfisher. Only the difference in response of kingfisher and Indian airlines was that there was comparatively less service efficiency and efficiency of check in staff in Indian airlines compared to kingfisher airlines.

Now talking about jet and spice jet they both were rated at lowest level by the respondents and comparing these two airlines there was almost equal grading to both of the airlines as far as assurance is concern.

So from above graph it is clear that kingfisher has got more preference and positive response of people on assurance criteria.

4) Reliability

Reliablity
3 2.5 2 1.5 1 0.5 0 Spicejet J et Indian Ailines Kingfisher

While comparing reliability of all the above mentioned airlines the result was same as it was in the case of tangibility, assurance and responsiveness. It was kingfisher which was as most reliable airlines by most of the people from the sample.

Reliability of kingfisher compared with other three airlines is very high and comparing the other three airlines that is Spice jet, Jet airways and Indian Airlines its almost same in all the three airlines.

Reliability factors such as Service without fumbles, Quick response towards problem and Response towards problem in promised time plays very important role in gauging reliability factor of any of the airlines and kingfisher is able to provide the above mention services to the expectation of people this the reason of highest Reliability level of kingfisher by the respondents.

From the above graph it can be clearly interpreted that kingfisher compared with other three airlines is more reliable.

5) Empathy

Empathy
3 2.5 2 1.5 1 0.5 0 Spicejet J et Indian Ailines Kingfisher

Empathy also seems to be in the favor of kingfisher, from the above graph it can be clearly interpreted that Empathy of kingfisher airlines compared to other airlines is defiantly very high followed by spice jet.

Empathy factors such as Individual attention, Convenience of flight timings and Long term relations affects response of the people up to an extent. Kingfisher is having highest level of empathy level in the minds of the people.

This time instead of Indian Airlines, Spice jet is following Kingfisher in this criteria so it can be interpreted that Empathy of spice jet is more then tangibility, reliability, assurance and responsiveness of itself.

An Indian airline is having lowest Empathy after Jet airway which is having second lowest Empathy level

Service providers
1) Spice Jet
The scores of the service quality dimensions of spice jet are given in the chart below. Here we have kept 1 as excellent and 5 as poor , Service quality dimension which shows lower rating in graph means its better than one showing higher rating in graph.

GRAPH FOR SERVQUAL DIMENSIONS FOR INDIAN AIRLINES

The scores in the above chart conclude the following. Empathy has the lowest score in all the service quality dimensions so its better than rest of service quality dimensions. This shows that employees i.e. people are contributing more in the service quality. Tangibility and responsiveness are having the high scores and hence the physical evidence is not good. Moreover they are not much reliable in services and lack assurance as well. This shows that the service provider is not able to provide reliable services or not able to inspire trust and confidence for the service.

2) JET AIRWAYS
The scores of the service quality dimensions for Jet Airways are given below in the form of a chart. Here we have kept 1 as excellent and 5 as poor , Service quality dimension which shows lower rating in graph means its better than one showing higher rating in graph. The chart can easily give idea about the conclusions.

GRAPH FOR SERVQUAL DIMENSIONS FOR JET AIRWAYS

The scores in the above chart conclude the following: The service quality dimension of Tangibility has the highest contribution in the overall service quality. Reliability and Empathy dimensions are close to each other in terms of the score. Hence these 2 service quality dimensions are contributing equally in the overall service quality in case of Jet Airways. This shows that physical evidence and other tangibles and intangibles are all contributing in an equal manner to achieve the overall service quality.

Responsiveness of the people is not up to the mark which staff must be given more training to serve to customers efficiently.

3) Indian Airlines
The scores of the service quality dimensions for Indian Airlines are given below in the form of a chart. Here we have kept 1 as excellent and 5 as poor , Service quality dimension which shows lower rating in graph means its better than one showing higher rating in graph. The chart can easily give idea about the conclusions.

GRAPH FOR SERVQUAL DIMENSIONS FOR KINGFISHER AIRLINES

The scores in the above chart conclude the following: Empathy as a service quality dimension is the Poor. Hence it means that the staff does not provide individual attention to customers. Also the dimensions assurance and reliability are good are almost equal and they contribute equally to the overall service quality. As the tangibility is poor so the physical evidence of the service provider is not upto mark.

4) Kingfisher Airlines

The scores of the service quality dimensions for Kingfisher Airlines are given below in the form of a chart. . Here we have kept 1 as excellent and 5 as poor , Service quality dimension which shows lower rating in graph means its better than one showing higher rating in graph. The chart can easily give idea about the conclusions.

GRAPH FOR SERVQUAL DIMENSIONS FOR SPICEJET The scores in the chart above conclude the following: Responsibility scores the poor in all the other dimensions of service quality. The tangibility is excellent which means the physical evidence of the service provider is also good. Quality of entertainment provided by kingfisher is the best. Empathy score is also not too good as compared to other service quality dimensions. Assurance and Reliability are good which means staff assures customers about their safety and service provider is very reliable

Punctuality of Flights

Now talking about punctuality of flight timings it can be clearly interpreted from graph that Kingfisher is highest number of rating from the respondents towards excellent side, it is Indian airlines and the Spice jet who are having minimum number of responses in their favor.

Considering the fair side of performance is concern it is Jet airways which tops the chart from its responses being maximum on fair side.

Considering poor and bad performance then it is very clear from the graph that punctuality of Indian Airlines and Spice Jet is not up to the mark as expected of the travelers so they both have strong point to be think up on regarding its punctuality

Seat comfort

As far as seat comfort is concern it can be clearly interpreted from graph that Kingfisher is highest number of rating from the respondents towards excellent side, it is Indian airlines and the Spice jet who are having minimum number of responses in their favor.

Considering the fair side of performance is concern it is Jet airways which tops the chart from its responses being maximum on fair side.

Considering poor and bad performance then it is very clear from the graph that seat comfort of Indian Airlines is not up to the mark as expected of the travelers so Indian Airlines have strong point to be think up on regarding its seat comfort.

Quality of beverages

Quality of beverages plays most important role in deciding satisfaction level of travelers and beverages is only important factor that indicates strong tangibility of any of air line service provider.

It can be clearly interpreted from the above graph that kingfisher is having highest responses as excellent followed by Spice Jet.

Indian Airline and Jet Airways is having most of the responses as poor and bad so there is strong point to be think upon for these both airlines.

Quality of Entertainment

As far as quality of entertainment is concern it can be clearly interpreted from graph that Kingfisher is highest number of rating from the respondents towards excellent side, it is Indian airlines and the Spice jet who are having minimum number of responses in their favor.

Considering the fair side of performance is concern it is Jet airways which tops the chart from its responses being maximum on fair side.

Considering poor and bad performance then it is very clear from the graph that quality of entertainment of Indian Airlines and Spice Jet is not up to the mark as expected of the travelers so Indian Airlines have strong point to be think up on regarding its quality of entertainment.

Cross Tabulations:
By which airlines do you travel the most Vs If price reduced then ready to switchover Cross tabulation By which airlines do you travel the most * If price reduced then ready to switch over Cross tabulation Count If price reduced then ready to switchover Yes By which airlines do Spice jet you travel the most Jet airways Indian Airlines Total 20 15 18 53 Probably Yes 15 21 14 50 Maybe 8 8 11 27 Probably No 5 2 5 12 No 2 4 2 8 Total 50 50 50 150

From the above graph it can be clearly interpreted that people are having strong preference towards kingfisher but not able to travel in kingfisher due to its high ticket prices compared to other airlines in domestic as well as in international.

In the above graph it is shown that around 80% of Spice Jet user are ready to switch themselves to Kingfisher, If Kingfisher reduces its prices in comparison with rest of the players in the industry.

Now considering Jet Airways it also has most of the responses towards yes and probably yes options so it can be interpreted that Jet also has its target audience loyal to kingfisher but attracted to price factor of Jet Airways.

Now Indian Airlines has around 76% of people who are ready to shift themselves to Kingfisher if Kingfisher reduces its price up to an extent so its is remarkable thing that even public sector Airlines is not able to give stiff fight to Kingfisher as far as preferences of people are concern.

The respondents who are not ready to shift from there Airline service providers are minimum and can be counted on figures. So it is clear that Kingfisher has strong preference and loyalty of people.

How often do you fly Vs Service provider maintains long term relationship Cross tabulation Count Service provider maintains long term relationship Strongly Agree How often do Once in a year 2 you fly Once in 6 months 0 Once in a month 4 Frequently Total 39 45 Agree 10 9 16 44 79 Neutral 11 4 0 6 21 Strongly Dis Agree Disagree 8 7 1 7 23 9 5 9 9 32 Total 40 25 30 105 200

When asked respondents about maintenance of relationships from the side of Airline service provider it was expected and obvious that most of the respondents

who were the frequent traveler of particular Airline service provider responded positively.

Respondents who travel once in a month also had positive view point towards maintenance of relationship by the service providers as they can be also counted under the head of frequent traveler.

Respondents who were not the frequent flyers that is they travel once in six months or once in a year they responded negatively towards the question asked to them, from them around 85% of people responded as disagree and strongly disagree.

So it can be clearly interpreted that frequent flayers enjoys more privilege on side of service provider compared no flayer who is not a frequent flayer.

HYPOTHESIS
H0: There is no association between Age and people ready to shift to Kingfisher airlines if Kingfisher reduces its rates. H1: There is association between Age and people ready shift to Kingfisher airlines if Kingfisher reduces its rates. If price reduced then ready to switchover * age group Cross tabulation Count Age group 0-18 If price reduced then Yes 12 ready to switchover Probably Yes 0 Maybe No Total 6 0 18 Probably No 0 18-30 27 15 0 0 0 42 31-45 10 25 10 0 0 45 45-60 0 5 5 15 5 30 60 and above Total 5 0 0 0 10 15 54 45 21 15 15 150

Chi-Square Tests Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 184.281 59.309 150
a

df 16 16 1

Asymp. Sig. (2-sided) .000 .000 .000

178.571

From above output of SPSS window we can see that Significance value of pearson chi-Square is 0.000 which is less than 0.05 ,this means that H0 is rejected and H1 is accepted because pearsons Chi-square significance value is less than 0.05. It means shift to kingfisher is dependent on age group

From the above graph we can see that people from age group between 0-18 and 1830 have replied yes or probably yes when asked that are they ready to shift to kingfisher airlines if it reduces its rates.They said they are ready to shift to kingfisher airlines.

People between age group 31-45 said probably yes or may which means they may or may not shift to kingfisher airlines.

People between age group 45-60 and 60 & above said NO which means they are not ready to shift to kingfisher , they are loyal to their respectiver airlines.

HYPOTHESIS H0: There is no association between Gender and people ready shift to Kingfisher airlines if Kingfisher reduces its rates. H1: There is association between Gender and people ready shift to Kingfisher airlines if Kingfisher reduces its rates. If price reduced then ready to switchover * Gender Cross tabulation Count Chi-Square Tests Gender Female Total Asymp. Sig. 6 54 (2-sided) 45 .00011 .0009 .00015 9 50 21 15 15 150 Male Value df If price reduced then Yes 48 ready to switchover Probably Yes 34 Pearson Chi-Square 49.257a 4 Maybe Likelihood Ratio 54.354 4 12 Linear-by-Linear Association N of Valid Cases Total Probably No 0 36.627 1 No 6 150 100

From above output of SPSS window we can see that Significance value of pearson chi-Square is 0.000 which is less than 0.05 ,this means that H0 is rejected and H1 is accepted because pearsons Chi-square significance value is less than 0.05. It means shift to kingfisher is dependant on Gender.

From the above graph we can see that most males have replied yes or probably yes when asked that are they ready to shift to kingfisher airlines if it reduces its rates.They said they are ready to shift to kingfisher airlines.

There were only few male swho said NO, which means only few are not ready to shift.

Females have given uniform answers, the graph for females is almost equal for all categories, which means females may shift or may not shift.

HYPOTHESIS H0: There is no association between Income and people ready to shift to Kingfisher airlines if Kingfisher reduces its rates. H1: There is association between Income and people ready to shifting to Kingfisher airlines if Kingfisher reduces its rates. If price reduced then ready to switchover * Income Cross tabulation Count Income 10 Lakhs and 0-2 Lakhs 2-5 Lakhs 5-10 Lakhs Above Total If price reduced then Yes 18 ready to switchover Probably Yes 31 Maybe No Total 1 0 50 Probably No 0 36 14 11 2 1 64 0 0 6 5 4 15 0 0 3 8 10 21 54 45 21 15 15 150

Chi-Square Tests Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 138.586a 145.771 77.199 150 df 12 12 1 Asymp. Sig. (2-sided) .000 .000 .000

From above output of SPSS window we can see that Significance value of pearson chi-Square is 0.000 which is less than 0.05 ,this means that H0 is rejected and H1 is accepted because pearsons Chi-square significance value is less than 0.05. It means shift to kingfisher is dependant on Income.

From the above graph we can see that people with income level between 0-2lakhs and 2-5lalkhs have replied yes or probably yes when asked that are they ready to shift to kingfisher airlines if it reduces its rates.They said they are ready to shift to kingfisher airlines.This maybe because they have low salary so they are price concious.

People with Income level between 5-10lakhs and 10lakhs & above said NO which means they are not ready to shift to kingfisher , they are loyal to their respectiver airlines.The salary of these people is high so they are not price concious ,they need luxury and comfort.Price doesnot matter much to the affluent class.

CHAPTER 6

CONCLUSIONS
The conclusions of the project are listed below on the basis of the graphs and charts explained earlier. Following are the conclusions of the research: The service quality of Kingfisher Airlines is the best, followed by Indian Airlines and Spicejet. Kingfisher Airlines has a higher rank on empathy and tangibility. Hence the politeness and friendliness of the employees which form the people of the service organization is high in case of Kingfisher Airlines. Also its physical evidence is higher as it scores high on tangibility. Jet Airways has the lowest service quality in all the service providers. Though Jet Airways has a poor score in empathy and tangibility it scores well in assurance and responsiveness. Indian Airlines is the second best in terms of the service quality. Spice jet is in the middle of all the service providers. It neither has high quality nor a low quality in services. It is rated average.

If Kingfisher reduces its price than people between age group 0-45 and income level 0-5 lakhs are ready to shift from their preferred airlines o Kingfisher Airlines.

The knowledge gap which shows how better the service provider knows the customers expectations is the best in Kingfisher. Hence Kingfisher is able to understand customers expectations very well as compared to other service providers.

CHAPTER 7

SUGGESTIONS
From the project under taken it can be recommended to Kingfisher to reduce its price up to an extent to attract passengers of other airlines in domestic destinations.

In many of the responses it is marked by researchers that kingfisher, though leading in all parameters of service quality but then also respondents are some what not comparatively satisfied in Empathy factors so kingfisher has to work on this factor to convert responses into positive one.

Spice jet should increase its punctuality of flight timings as around 75% of response was negative towards its punctuality and responses showed very negative attitude of respondents.

Indian Airlines should work on its seat comforts as most of the travelers who are also frequent flyers of Indian Airlines were having complain about seat comfort and it is also its drawback for not attracting travelers.

Jet airways service efficiency is low compared to other airlines and also its punctuality of flight timings is poor comparatively so they have question to be think up on to attract customers.

As far as Jet airways is concern they are falling in least satisfied criteria in almost all of the parameters of service quality, so there is ample of work

required to be done by Jet airways to shift responses from not satisfied to satisfied.

BIBLIOGRAPHY Books

N.K. Malhotra(2007). Marketing research-5th edition An applied orientation.delhi Dorling Kindersley (India) pvt. Ltd, licenses of pearson education in south asia .

Cooper & sehindler (2007). Business research methods 9th- edition , new delhi: Tata McGraw-hill publishing company ltd.

Levin & Rubin (2008). Statistics for management- 7th edition New Delhi, Prentice Hall of India Pvt. ltd

Services Marketing: The India Context - Page 1 by R. Srinivasan 2004 Journal of services marketing - Page 183 by Michael La Roche Tsaur, SH, Chang, TY and Yen, CH (2002), "The evaluation of airline service quality by fuzzy MCDM", Tourism Management, Vol. 23 No. 2, pp. 107-15

Foster, S. Thomas, Managing Quality: An Integrative Approach. Prentice Hall, 2001: pg. 132-134, 231-234.

SERVQUAL, an instrument for measuring quality service developed by Zeithaml, Parasuraman & Berry and described in their book, Delivering Quality Service; Balancing Customer Perceptions and Expectations, Free Press, 1990.

Websites
Aviation Industry of India,(2008) global market for Airlines:star ratings: New Delhi,2008.

www.airlinequality.com/StarRanking/ranking.htm
Indian Airlines.(2009) History:Services: New Delhi,2009.

www.indianairlines.com
Spicejet Airlines.(2009) History: Quality, New Delhi,2009.

www.spicejet.com

Jet airway,(2009) History:Services: New Delhi,2009.

www.jetairways.com

Skytrax ratings,(2007) 5-Star rating of Airlines

www.skytrax.com

Service Quality Dimesnsions.(2009) SERVQUAL of Airlines ,Mumbai,2009.

www.service-quality.com

Kingfisher Airlines.(2009) Cabin Classes:Quality:Banglore,2009. www.kingfisherairlines.com

ANNEXURE
QUESTIONNAIRE
Dear sir/madam I am a student of Indian Institute of Planning and Management, Bangalore presently working on a project on SERVQUAL Analysis of Aviation Industry. We request you to kindly fill the questionnaire. We assure you that your data will be confidential.

1. How often do you fly? Once in a year Once in 6 months Once in a month Frequently

2. By which airlines do you travel the most? _____________________________________________ 3. In which class do you normally fly? Economy class Business class 4. What type of flight do you normally take? One hour flights/short haul Medium haul Long haul 5. How much do you think the service provider understands your expectations? Rate on a scale of 1-5 (1: Meets expectation and 5 does not meet expectations) _______

6. Rate your onboard experience for the service provider on following parameters Excellent Good Fair Poor Bad Punctuality of flight Timings Seat comfort Cleanliness of cabin Cleanliness of toilets Newspapers /Magazines Pillows, blankets Quality of entertainment Quality of beverages
7. Rate the cabin crew of the service provider on following parameters

Excellent Good Fair Poor Bad Politeness/Courteous Friendliness Language skills Appearance Clothing Service efficiency
8. Rate the airport services for the service provider on following parameters

Excellent
Waiting time at check in Courtesy of check in staff Efficiency of check in staff Handling of luggage

Good

Fair

Poor

Bad

9. The staff provides the service without making fumbles or without any defects. 1. Strongly agree 2. Agree 3. Sometimes 4. Disagree 5.Strongly disagree

10. When there is a problem the service provider (employees/staff) responds quickly to solve it. 1. Strongly agree 2. Agree 3. Sometimes 4. Disagree 5. Strongly disagree

11. If a response is promised in certain time, it does happen by the promised time. 1. Strongly agree 2. Agree 3. Sometimes 4. Disagree 5.Strongly disagree

12. You feel safe about your travel by performance of cabin crew safety drill. 1. Strongly agree 2. Agree 3. Sometimes 4. Disagree 5.Strongly disagree

13. You get individual attention by the cabin crew. 1. Strongly agree 2. Agree 3. Sometimes 4. Disagree 5.Strongly disagree

14. The airline has flight timings convenient to you. 1. Strongly agree 2. Agree 3. Sometimes 4. Disagree 5.Strongly disagree

15. Service provider maintains long term relations with the customers. 1. Strongly agree 2. Agree 3. Sometimes 4. Disagree 5.Strongly disagree

16. If Kingfisher reduces its rates as compared to rest of the players then are you ready to switchover from your preferred airlines to Kingfisher airlines. (Not applicable for Kingfisher airlines customers) 1. Yes 2. Probably Yes 3. May be 4. Probably No 5. No

Name: ______________________________________________________ Age group: 0-18yrs Gender: 18-30yrs Male 31-45yrs Female Govt. Service 5-10 lakhs Student Others________ 45-60yrs 60 & above

Occupation: Business Private Service Annual Income (in Rs.): <2 lakh 2-5 lakhs

10 lakhs & above