A PROJECT REPORT ON

DOMESTIC AIRLINES

SUBMITTED TO
UNIVERSITY OF MUMBAI

BY
NIKUNJ DEENANATH KEDIA
T. Y. B.M.S.

YEAR 2005-2006

THROUGH
TOLANI COLLEGE OF COMMERCE
ANDHERI (EAST), MUMBAI – 400 093

-1-
 CERTIFICATE

I, Mrs. Vijaya Krishnan, hereby certify that Mr. Nikunj Kedia of

Tolani College of Commerce, T.Y. B.M.S. (Semester V) has completed

his project titled DOMESTIC AIRLINES in the academic year 2005-

2006. The information submitted herein is true and original to the best of

my knowledge.

Mrs. Vijaya Krishnan Dr. A. Rashid Dr. Sheela Purohit

(Project Guide) (BMS Co-ordinator) (Principal)

-2-
 DECLARATION

I, Nikunj Kedia, of Tolani College of Commerce, T.Y. B.M.S. (Semester

V) hereby declare that I have completed my project titled DOMESTIC

AIRLINES in the academic year 2005-2006. The information submitted

herein is true and original to the best of my knowledge.

Place: MUMBAI Nikunj Kedia

Date:

-3-
 Table of Contents
Topic TOPICS Page No.
No.
SECTION I
1. Executive Summary 7-8
2. Introduction to service marketing 9 - 10
3. Service marketing mix 11 – 12
SECTION II
1. Airline overview 14
2. What an airline does? 15
3. Unique service characteristics 16 – 19
4. Segmentation 20 – 23
5. Marketing mix of airlines 24 – 39

SECTION III
1. Development of airlines in India 41
2. Overview of an Indian civil aviation 42 – 43
3. Domestic airlines in India 44
4. Indian Airlines 45 – 46
5. Jet Airways 47 – 48
6. Sahara Airlines 49
7. Top 10 Flight Paths 50
SECTION IV
1. Case study: Air Sahara 52 – 67

SECTION V
1. Comparative analysis of Airlines 69 – 73
2. Suggestions and improvements 74
3. Conclusion 75
4. Bibliography 76

-4-
 Objective
1. The airline service was expensive and the industry did
not undertake marketing efforts, but today this is one of
the services, which requires innovative marketing efforts.
So, the objective of this project is to understand these
marketing efforts.

2. To know about the airline industry.

3. To know the use of marketing mix in airline industry.

4. To understand the marketing strategies of foreign

airlines which can be adopted by domestic airlines.

5. To make the reader aware of domestic airline industry by

giving comparative analysis.

6. To give suggestions for the improvement of airlines in

India.

-5-
Section I

-6-
 Executive summary
The principles of marketing apply to the airlines industry also as much as any
other product/service. Airlines marketers also have to cater to the needs of
customers. The following definition developed by the British institute of
management holds good for airlines: “Marketing is simply customer-orientation,
looking at your business from customer’s point of view.” An airlines executive put
it differently, “In airlines business we need three thing: - service, more service,
and even more services.”

While marketing principles undoubtedly apply to airlines, there is an important

difference. Airlines marketing can never brook any delay. It is a highly
perishable- if it is not used, it perishes. So, a quick and creative marketing
response is called for. Another difference is that, the product has to be “bought
unseen.” The customer has to come to the airlines to consume it. It is an
expensive product, and is bought on trust.

In a de-regulated competitive environment, the customer has many choices- he

can easily shift to another airline if the first airline does not measure up to his or
her standards of service. Keeping these parameters in view, we have to do the
normal marketing drill of locating our markets, segmenting them and identifying
the right target segments. The basic questions are- Where do customers live?
What kind of income they should have to afford the luxury of a holiday by air?
Where do they want to go? What do they want to see? We need answers to all
these queries. After identifying our markets, we communicate with potential
customers, through media advertising and other methods.

The new ingredients of extra 3 Ps- people, process & physical evidence is
enforced, without which, the dish of services marketing mix become tasteless.
People sell the invisible stuff, which passes on, to the consumer through a
process, and physical evidence also contributes a bit to the overall satisfaction of
the consumer.

-7-
This is exactly what this project contains. It gives an insight into 7 Ps, how they
differ for airline industry, major domestic airline players. Such players form
strategies in terms of marketing mix to give a purposeful impact and provide air
travelers with satisfies services.

These concepts are elaborated with the help of a case study. The first being Air
Sahara. The reason for selecting this company is that, it has a faster speed of
success to its credit because of different & innovative strategies helping it to gain
more market share within short period of time. It has shrunk the entire domestic
airline industry by providing full value for money forcing for the competitors to
provide services at discounted rates.

This project also gives a comparative analysis of various domestic players in

terms of strategies, promotional effort, old and new fares.

-8-
 Introduction to service marketing
“Ours is a service economy and it has been one for some time”
By, Karl Albrecht and Ron zemka

As consumers, we use services everyday. Business and other organisation also

use a wide array of services, usually purchasing on a much larger scale than do
individuals or households. Turning on a light, listening to a radio, talking on the
telephone, riding a bus, having pizza delivered, mailing a letter, getting a haircut,
refueling a car, writing a check, renting a video or sending clothes to the cleaners
are all examples of service consumption at the individual level.

Definition:

“A service is an act or performance offered by one party to another, although the

process may be tied to a physical product, the performance is essentially intangible
and does not normally result in ownership of the factor of product.”

The services are termed as human efforts provided to needy people. It may be a
food to a hungry person, water to thirsty person, medical services to an ailing
person, loan to a farmer, education to a student, transportation to a consumer
and consumer aid. In short in services, the well functioning of people is
important and cannot be ignored. Services can be personalized or consumer
services. Personalized services are doctors, lawyers etc and consumer services
are banking, insurance, railways, telephone etc.

Marketing service is marketing something intangible; it is a marketing of

promise. Selling a promise complicate the marketer’s task.

-9-
Unique characteristics: -

1. Intangibility
2. Inseperability
3. Variability
4. Perishability
5. Customer relationship

- 10 -
 Service marketing mix
Jerome McCarthy an American professor in marketing poularized the
marketing mix in terms of 4 Ps – product, price, place and promotion.
Assembling and managing the marketing variables is the major part of the
marketing task after considering the environmental variables. The marketing
manager consciously mixes the marketing variables to suit the environment
variables, develops a marketing programme that is appropriate to suit his target
consumers.

The crux of the marketing task is to blend the 4 elements in different

combination in order to have greater market impact and also be cost effective.
This blend must be continuously reviewed and monitored to the changing
requirements of the environment and consumer needs.

The marketing concept that we have discussed is valid for both products and
services. The marketing mix is one of the most important universal concepts,
which has been developed marketing. It is appropriate to consider that the
traditional marketing mix is needed for services, while some have expanded the
traditional 4Ps of the marketing mix to make it more appropriate recognizing
the diversity of service marketing.

The strategies for 4Ps require some modification when applied to services due to
the special features of the services. The challenges encountered by the service
marketer – like heterogeneity – the requirements of customers, interaction with
customers while delivering services and perishability or absence of inventory,
intangibility of offer and absence of patent protection etc., necessitate the people,
process and physical evidence.

- 11 -
The additional prescribed Ps by Bernard H. Booms and Mary J. Bitner refers to the
activities that are essential to meet the challenges posed by three unique
characteristics of services:

1) People: All people directly or indirectly involved in the consumption of a service are an
important part of the extended marketing mix. Knowledge Workers, Employees,
Management and other Consumers often add significant value to the total product or service
offering.

2) Process: Procedure, mechanisms and flow of activities by which services are consumed
(customer management processes) are an essential element of the marketing strategy.

3) Physical Evidence: The ability and environment in which the service is delivered, both
tangible goods that help to communicate and perform the service and intangible experience of
existing customers and the ability of the business to relay that customer satisfaction to potential
customers.

- 12 -
Section II

- 13 -
 Airline overview
An airline is an organisation that operates aircraft to carry passengers and cargo
through the air. We can buy an airline ticket for a flight or send mail, packages
or freight by airline to almost any place in the world.

Kinds of airline: -
1. Scheduled airlines
These types of airlines fly their airplanes to a timetable.
E.g. Scheduled airlines planes will fly from London to Paris daily at fixed
times.

2. Chartered airlines

These types of airlines operate nonscheduled services, such as services to

holiday resorts. The schedules for these flights are arranged by the
airlines and the company’s that hire them. This type of flight is not
commonly used in India.

3. Commuter’s airlines or feeder airlines

These types of airlines are smaller airlines that carry passenger and cargo
between small towns or from small town to large city airports within the
same countries. At city airports, the passenger and cargo are transferred
to larger airlines.

- 14 -
 What an airline does?
Carrying passenger provide airlines with about 85 % of their income. Regular
passenger service is provided along the airlines routes according to a published
timetable. The ticket price on regular service flights varies, depending on the
amount of space and service provided for each passenger. First class service
includes large seats, ample legroom, wide aisles and deluxe in – flight meals for
the passengers. Tourist or economy service costs less than first class service
because there is less room for each passenger and fewer deluxe in – flight
services.

In –flight entertainment in the form of films television and recorded music is

provided on many airlines as many as 14 flights attendants may be on board a
large jet airliner to serve meals, sell duty free goods, and look after the passenger
on long distance flights. In – flights services on charter flights are similar to those
on scheduled flights.

Carrying cargo: -
The remaining of an airlines income comes from carrying cargo air mail, air
parcel post, air expenses and air freight. The principle kinds of goods carried by
air include machine parts and equipments, cut flowers, fresh fruits and
vegetables, electronic equipments, aircraft parts, clothing, vehicle parts and
printed matter and medicine and many other things.

Many airlines operate cargo liners also called freighters that carry only freight
on regular schedules. The largest jet cargo liners can carry 115 metric tones.
Large passenger airlines can carry 67 metric tones of freight on addition to
passenger and baggage.

- 15 -
 Unique Service Characteristics
INTANGIBILITY
Services are intangible in nature. Unlike goods, which are tangible and can be
seen and touched, services can only be experienced. It means that services are
high in credence qualities whereas goods are high in search qualities. A company
can differentiate its service from its competitors by providing tangible clues.

A company can provide tangibility to its services by –

1. Association with physical goods or items
2. Association with the physical environment
3. Performance and involving customers

As we know that services are intangible, a service marketer has to face many
problems. In the airline industry transportation is the core product. Since it is
intangible in nature a service company can distinguish itself from its competitors
by providing several tangible clues like –

1. Food / Beverages
2. Newspapers
3. Movies
4. Music
5. Staff uniforms
6. Logos
7. Color and design
8. Seats and cushions
9. Assistance with work
10. Audio / Video facilities for work or pleasure
11. Fax, laptops, etc.
12. Baggage retrieval
13. Flight bookings

- 16 -
A service marketer can overcome the difficulties of intangibility of services
through:

1. Reducing service complexity

2. Stressing on tangible clues
3. Facilitating word – of - mouth recommendations
4. Focusing on service quality

Here are a few examples of leading airline companies that provide tangibility to
its services through various tangible elements –

1. Indian Airlines – The Maharaja – Logo, also they describe themselves as

‘The Peoples Carrier – The National Carrier’.

2. Jet Airways – the airline for businessmen, easy booking facilities, easy
custom clearances and baggage retrieval, good in-flight services.

3. Southwest – friendly, no frills, low fare airline.

4. Air Canada – provides laptop connections and helps in sending fax

messages – favorite with North American business travelers.

- 17 -
INSEPARABILITY

Another characteristic of services is customer involvement in production i.e.

inseparability. The inseparability of services leads to –

1. Customer being co-producer

2. Often customer being co-consumers with other customers and
3. Customer traveling to the point of service production

All the above three problems are face by the service marketer in the airline
industry. So the service marketer has to think of ways in which he can satisfy his
consumers in an efficient manner. Customers are separated on the basis of price
i.e. business and economy class.

Also airline are trying to overcome inseparability by providing facilities such as –

1. Games for kids – Air Canada
2. On-line Booking – Sahara, Jet Airways, Spice Jet, etc.

INCONSISTENCY
Inconsistency refers to the variability in the service. Service variability leads to
difficulty in projecting a consistent image and developing a strong brand. As it is
difficult to standardize to blueprint the service process there is inconsistency in
service quality. Also services rely on human inputs there is a high amount of
variability.

This can be overcome by providing personalized services and focusing on

employee training. Upto an extent, automation and mechanization also can help
to reduce inconsistency.

E.g.: most airlines include online booking resulting in a standardized procedure &
fewer mistakes due to human errors.

- 18 -
Another way of reducing inconsistency in airlines is the standardization of in-
flight procedures for example the security instructions given at the beginning of
the flight.

INVENTORY
It is not possible to store services. Also the service capacity cannot be increased,
as it can be limited. Services also face irregular demand patterns. Again the
service can be short-lived.

The inventory for airline industry is mainly the food and the aircrafts spares and
parts. Airlines face the problem of inventory mainly due to irregular demand
patterns.

E.g.: The Boeing Company and British Airways announced today that the airline
will be the first customer for the Global Airline Inventory Network(SM), an
innovative new service in which Boeing will manage British Airways' supply chain
for expendable airframe spare parts used in its fleet of Boeing airplanes. This
includes parts from Boeing as well as other suppliers.

An expendable part is one that is typically replaced rather than repaired after
use. This ranges from fasteners and brackets to floor panels and airplane skins.

The Global Airline Inventory Network(SM) is designed to attack costly inventory

inefficiencies in the airline industry, where both airlines and suppliers incur
extra costs because of duplicated distribution channels and unnecessary
inventory levels.

Congestion occurs during peak periods like vacations and festivals and at other
times there is unused capacity. Thus special discounts & offers are offered
during these periods to boost seat capacity (called the PLF -- passenger load
factor).

- 19 -
 Segmentation
Most airlines use a very traditional segmentation strategy, dividing passengers
into business travelers and economy travelers (mostly leisure travelers). The
common strategy is to squeeze as much profit as possible from business class
passengers who are attracted by superior services and corresponding high prices
and, at the same time, to try and fill the rest of the seats and ensure growth by
attracting economy class passengers with lower fares.

Business passengers

They are crucial for airlines' profitability. With less spare time and more cash in
their pockets, they agree to pay a premium price for a premium service.

Today business passenger’s account for approximately 48% of passengers and

these 48% contribute 66% of airlines' revenue. The premium prices they pay for
wider and more comfortable seats, better choice of meals and seats, luxurious
lounges.

Airlines can choose from a multitude of premium services to offer to business

travelers. Some of these extras range from seats equipped with faxes and
telephones; massage services and suit ironing services in the recently introduced
arrival lounges.

Business passengers believe it is worth extra money if they can save time and
arrive looking fresh for an important meeting. Business passengers will avoid
transit flights even if a longer flight could save them money. But amongst other
perks, flexible reservation services are probably the most important to them.
Reservations for business trips are often made just a couple of days in advance.
A no penalty cancellation policy is also very important to business passengers.

- 20 -
The best way to reach business travelers is through printed advertising. Business
news media, such as "The Economic Times" and “Business Today” are some of
the best publications through which airlines can reach business travelers. Many
airlines design special promotional programs that target corporate bookers and
meeting planners, who are responsible for business trips reservations. Frequent
flyer programs are an added bonus for business passengers.

Leisure Travellers

They represent a totally different market. The most important consideration for
most of them is the price. The lower the airfare, the more people will fly the
respective airline.

By and large, with the exception of wealthy travellers, this segment will not pay
extra for premium services and will agree to change several planes during their
trip if this option costs less than a direct flight.

Despite lower margins provided by this segment, leisure travellers are very
important to an airline's bottom line. Part of the reason is that technological
progress in the area of tele-conferencing and increased use of the internet for
business communications is expected to reduce the number of business travelers.
Thus, airlines are counting on the leisure segment to provide further growth.

How can airlines benefit from the growth opportunities in the leisure segment
without losing immediate profit opportunities in the business segment? This is a
tough issue in airline marketing management. By improving services and
reducing prices for economy class passengers, airlines risk that some business
passengers will switch to economy class.

- 21 -
This has already happened with Japan Airlines, for example, which was forced
to eliminate business class seats on some of its flights. On the other hand, if an
airline focuses on business class passengers, it risks losing its economy class
passengers to another airline.

Since business class passengers are not many, a company relying mostly on
business travelers will often end up flying half-empty planes, losing the potential
revenue generated by lower priced economy seats.

On the other hand, few airlines catering solely to economy class passengers can
be successful because a low fare carrier must fill the entire plane if it is to
generate revenue from its low-margin operations.

The allocation of business and economy class seats on a plane is determined

through a process called yield management. A good yield manager knows the
approximate proportion of business and leisure travelers for each flight in
advance, based on sophisticated statistical models.

Thus he/she tries to sell early, the economy seats at a cheaper price, while
keeping enough seats reserved for business travelers, who usually book at the
last minute. Keeping just the right amount of business seats reserved is
important: selling too few economy seats in advance may result in a less-than-full
plane while selling too many economy seats may result in a full plane, but with
insufficient revenue to gain a profit.

This kind of segmentation serves airlines well enough when implemented within
one company. It would be very difficult for any single airline to target just one of
these two segments - business or leisure - successfully.

There are exceptions - small regional that serve destinations where the majors do
not fly, for example, are in a better position to implement a low price policy.
They can even get business travelers to fly them despite the lack of premium
services because no other airline would get them there. Air Deccan is a classic
example, proving that low cost carriers can thrive.

- 22 -
Major international carriers, however, need to target both the business and the
leisure segments they may also target different ethnic and geographical segments
differently, depending on the markets from which they draw the majority of
their customers.

For example, even though Japan Airlines advertise extensively to the American
public, their message -"Your needs. Your Airline," seems to work best for the
traditional Japanese audience.

Inside one country, two national carriers may also focus on different
destinations, which is the case with Jet Airways and Air Sahara. Passengers'
tastes determine airlines' strategies. While Jet Airways focuses on comfort and
luxury, valued by Indian passengers, Air Sahara equips its business class seats
with plugs for laptops and telephones, appreciated by business travelers.

Overall, airlines seem to achieve best results when they subscribe to the
segmentation theory, supported by yield management techniques and a careful
monitoring of the economic changes in their geographical markets.

- 23 -
The 7’ PS of Airline marketing

- 24 -
 Marketing Mix of Airlines
PRODUCT MIX

The French researchers, Eiglier & Langeard suggested a core & peripheral
services model in which the core service is surrounded by a circle containing a
series of peripheral services that are specific to that particular product.
The core service of an airline is the service of transport. The supplementary
services are classified into seven clusters & each one is analyzed with respect to
the airline industry:

1. Information

Upto date information regarding flight schedules, ticket fares,

information about promotion schemes etc available to customers.
Customers can avail of this information literally at their fingertips
today with every airline starting its own website which gives complete
details to the customer & also entertains queries.

Providing information to employees regarding new policies affecting the

airline & equipping them with enough information, which the
customers might demand. For example keeping the e in-flight
stewardesses up to date about flight schedules, distance between routes,
type of cuisine, ingredients of a particular dish.

Extensive training is provided to in-flight attendants regarding handling

customer queries, knowledge about the airplane itself, knowledge about
cuisine etc.

- 25 -
2. Consultation

Airlines are moving more actively into the role of consultants

today. They are doing away with the travel agents & designing &
selling packaged tours to consumers directly. In this aspect they
often act as consultants to the customer, by giving him advice &
suggestions regarding the type of plan he can choose.

Another aspect to consultation at airlines is when the customer

approaches the airline regarding traveling to particular
destination, the airline gives him a variety of choices of routes that
he can take.

In some cases airline may also design special menus & benefits in
consultation with its frequent fliers by keeping in constant touch
with them & asking them for suggestion as to what they want in
their airline which will make their experience more comfortable.

3. Order Taking

The order taking procedure is essentially the booking procedure of

the airlines. The important aspect to be noted here is that the
procedure is smooth, easily understood & fast.

Most airlines use the telephone, fax, and email methods of booking.
The emphasis here is on fast booking & at the same time getting
the required information form the customer. This is done by
establishing a standard reservation procedure & format thus
reducing the risk of inconsistent service delivery.

The online booking system also facilitates better order taking &
processing.

- 26 -

The scheduling aspect assumes importance, as reservations on the
wrong flight to the wrong place are likely to be unpopular.

4. Hospitality & Caretaking

With the increased competition today in the airline industry & the
increasing similarity of services offered by each airline, hospitality
has emerged as a key-differentiating factor between one airline &
the other.

The hospitality aspect of an airline is tested right form the time of

the reservation (courtesy of the booking official) to the airline’s
desk at the airport to the actual in-flight travel (the attitude of the
flight attendants) to the post flight help extended.

At every point the customer evaluates the airline depending on the

friendliness, the trust that the airline manages to build in him.

Another aspect of primary importance in an airline today is the

security aspect. After 9/11 incidents security has been beefed up
considerably at all airlines. However some are considered more
secure than others due to the technological improvements made in
safety & security issues.

5. Safekeeping

In airlines the safekeeping issue is that of safeguarding the
customer’s baggage. The customers entrust his baggage to the
airline & it is the airline’s responsibility to keep it in a proper
condition.

- 27 -
6. Exceptions

Special requests – airline very often receive special requests form

customers with regards to meal preferences, special amenities for
elderly people or children, medical needs etc. these needs have to
considered & acceded to wherever possible.

Handling of customer suggestions / complaints – every airline

today has a customer service center which entertains customer
suggestions & complaints. On the flight, customers are often asked
for their opinion regarding service equality. Many corporate
frequent travelers are consulted when the airline decides to make
any new change.

Some airlines keep track of the preferences of customers who

frequently use their services and provide customized services to
them, such as providing them with the food, magazines and movies
that they usually prefer.

7. Billing & Payment

The billing procedure in airlines is simple. The options available to

the customer are plenty including credit card & travelers cheques.
Airlines use the open account system with their corporate clients.
Frequent fliers are also given special payment privileges.

- 28 -
PRICE MIX
Pricing decisions play a decisive role in managing the business of air transport
organizations. The increasing operational costs, the mounting competition, the
falling occupancy ratio, the imbalances in demand & supply, the increasing
pressure of inflation are some of the most important factors influencing the
strategic factors influencing the strategic decisions for setting fare rates in the
transport business.

For the domestic flights, the ministry of civil aviation plays a decisive role in
making the pricing decision. The operational expenses are found to be increasing
fast in order to improve the quality of services or follow the safety norms. These
factors make pricing difficult.

It is more judicious to adopt the Long Run marginal cost principle of pricing for
domestic air services. Subsidization of air services in regions other than the
northeast & inaccessible areas is not desirable. The main problem is to make the
pricing decisions competitive.

The recent recession after 9/11 has sparked off a whole host of competitive
pricing strategies in the domestic aviation sector.

- 29 -
Some of the prominent price strategies in the recent past have been

1. Air Sahara: -
It started an online auction of tickets scheme, which has been picking up.
As of July, bookings were seen ranging from 100 –175 a day when earlier
they were only 40 in a day.

Sixer & Super Sixer Schemes:

The sixer scheme allows economy class passengers to buy tickets for a
rock bottom 25000 to business class passengers at Rs 36000 under the
super sixer scheme for six passengers. As a result of this offer business
class travel will become cheaper by 30 to 60%.

Sahara India through these rock bottom fares is trying to create an

entirely new segment for the airline industry i.e. the train travelers.

2. Indian Airlines: -
Indian airlines have been like Jet airways forced to take heavy price cuts
due to the step up in the competition by Sahara India. The apex fare
scheme launched by jet airways was also adopted by Indian airlines. As
per this scheme, customers get heavy discounts if tickets are booked 21
days in advance.

3. Jet airways: -
In response to the stiff competition form both Indian airlines & Sahara,
jet slashed economy fares on 43 routes by between 12 % & a staggering
64 %. The motive here is the same: to attract the train segment.

All these developments have tipped the scales for the first time in favor of
the consumer. The low fare regime can be sustained by airlines as long as
they manage the capacity made available for the carriage of traffic at
these fares carefully these fares generate significant additional travel, so
that the marginal decline in yield us more than offset by volume increases.

- 30 -
PLACE MIX
The place mix of airlines consists of mainly the distribution channels. The
number of destinations that an airline flies to can also contribute to its place mix.

Distribution channels:
There are two principal methods of booking seats on an airline.

The first is the group of traditional method such as the phone, fax, and
email. Corporates or vacationers generally approach travel agents who
book the tickets form the airline & take the commission from them.

Tickets can also be booked directly at the airport from the airlines desk.

The second & increasingly popular method of reservation is the online

booking method. Here the customer fills in his details online & he receives
an instant booking of his ticket. His payment is generally through credit
card. Although not as popular in India, this booking system has achieved
much success in the developed countries that travel agents are losing their
jobs.

A case in point:

United Airlines (UAL) of the ‘friendly skies’, the world’s largest airline, signed
an agreement in February 2001 that is not so friendly and creates a major
‘conflict’ in the traditional distribution channel for air travel. It could cloud the
skies for middlemen like the IATA-accredited travel agents (TAs) who have sold
airline products for years.

It is a strategic alliance with DESPAGAR.COM, the travel industry’s first online

trilingual B2B corporate travel management tool that will provide direct booking
service to UAL’s Business Travel (BT) clients in Latin America and US Hispanic
markets with value-added and cost-effective solutions.

- 31 -
Through this new partnership, BT client companies will be able to get the most
of UAL’s corporate ‘volume’ agreements by researching itineraries, checking
flight availability, comparing prices and booking airline, hotel and car rental
reservations: online, 24 hours a day, in English, Spanish and Portuguese.

The airlines have no intention of sparing the TAs in their drive towards the end
mission of direct customer reach and to be their top choice. This is a culmination
of the process, which began, post-deregulation, in the early 1980s, when the BT
was identified as a high-yield business segment so vital to the profitability of the
airlines. It brought about a major shift in their distribution strategy, relegating
the role of the TA to handling the incremental, high volume leisure and VFR
traffic and the airlines directly dealed with the corporate houses to sew up the
BT segments of the air travel market. E-travel has just hastened and intensified
this quest.

- 32 -
PROMOTION
The formulation of an ideal promotion mix is essential to inform sense and
persuade the users. In the Indian perspective, we need more creative efforts
because the potential users in a majority of the cases don’t prefer to use air
services. The business magnets, executives, politicians, actors, high spending
tourists etc are some of the users of the air services. The users appear to be more
conscious, aware of their rights and in a majority of the cases are found to be
sophisticated and therefore the promotional efforts have to be creative. Many
airlines are facing financial crunch, it is pertinent that they make optimum use of
different components of promotions.

1. Advertising:
Airlines need creative advertisements to promote their business. In the
view of rising cost of inputs and the increasing impact of worldwide
economic depression on the airlines, advertisements should be budget
optimistic vis-à-vis optimal. The telecast media and print media are
important for promoting the air business.

The airlines have to make sure that whatever strategic decision they make
to promote the businesses are in a position to establish an edge over
competitors’ promotional measures. Also the airlines should keep in mind
the quality and the nature of the target markets and the level of
expectations.

This is essential to make advertisements proactive for the expansion of

business. They are also required to assign due weightage to the efforts
made for projection of positive image. We can’t deny the fact that both
Indian airlines and Air India have been facing image problems. The ads
may be efficacious in transmitting the facts and removing the image
problem. It is also essential that while advertising airlines it should also
keep in mind the image of our country, the scenic beauty, tourist
attractions, rich cultural heritages or which would attract number of

- 33 -
 tourists. While advertising it is impact generating that one should select
an opportune moment of flight are attractive scenes of take off, and so on.
Airlines can also use broadcast media. The domestic flights should use
radios because due to increasing access to FM.

2. Publicity:
Publicity is an important component of promotion mix. It is a process of
persuasive communication. It is very instrumental in sensitizing the
persuasion process provided the media people, public relations officers
provide their help. Strengthening the PR activities is essential to promote
airlines business. The PRO, Receptionist, Travel agents, Media people are
very important people in publicizing the business. The marketing
professionals can seek the cooperation of media people by organizing
dinners, meetings, get together, press conference etc, also giving them
small gifts and motivating them to publish news items which are in favour
of airlines.

3. Sales promotion:

The sales promotion measures are meant for both the related sources
channelising and using the business, such as the travel agents, tour
operators and all of them who process the services and the passengers and
business houses who use the services.

The incentives to the personnel instrumental in processing the services

need due attention of the professionals so that the positive contributions
of providers is used as a base for determining the incentives to be offered.

The travel agents contribute a lot to the promotion of airlines business

and therefore the need to think of them in their favour on their priority
basis. In addition the tour operators, the frontline staff also must be given
priority. Hence they should be offer some incentives this will motivate
them to promote the product. The user also deserves incentives.

- 34 -
 Some of the users are habitual who frequently use the services of airlines
whereas some users are occasional users. It is judicious to take
promotional decisions on the basis of the frequency the user travels. The
incentives may be in the form of concessional services, a small gift etc.

 Recently Indian airlines decide to do away with the bank guarantee against
issuance of tickets, which will give travel agents full liberty to sell to the
maximum of their potential without restrictions. The domestic carrier took out
instead an insurance policy against possible defaulters.

 The move is expected to boost sales of Indian airlines as it removes the

restriction of maximum number of tickets & over trading levels above the
bank guarantee.

4. Word of mouth
This happens to be an important constituent of the promotion mix in
which the promoters act as a hidden sales force. The satisfied group of
users, opinion leaders narrates outstanding merits or salient features of
services used by them.

We find narration to relatives, friends, and therefore the rate of

sensitivity is found high. The constituent focuses on the quality of services
offered by the service generating organizations. The airlines also depend
on this component of promotion if they feel that the quality of services
offered by them is world class.

If you travel by Indian Airlines and are satisfied with the services offered
by them then it is natural that you will share your experiences with your
friends’ relatives, they trust in you and therefore the stimulation process
is on. The moment your friends and relatives get an opportunity to travel
they find Indian Airlines their first choice. Ads may be ineffective,
publicity may also be ineffective but word of mouth can never be
ineffective.

- 35 -
 PEOPLE MIX
The people aspect is one of the most crucial aspects of the airline industry. The
people relate to employees & intermediaries like travel agents. Ultimately it is
the quality of people that helps airline professionals in shaping the perception of
quality & bridging the gap between services promised & services offered.

It is obvious that professionally sound, personally committed, value based

employees can be proved to be high performers. This calls for innovating
recruitment methods, developing an intensive training program, assigning due
weightage to the behavioral studies while designing the syllabi & making the
employees aware of the recent developments in the aviation field by promoting
individual exposure. There must be correlation built between performance
orientation & employee orientation. Incentives need to be linked with efficiency.

Case in Point:-

PEOPLE IN JET AIRWAYS

Jet airways focus first and foremost on the employees, the communication
processes within the airline and satisfying the factors that consumer have rated
as important. Some of the most important factors that Jet airways pay special
attention to be are:

 Fares
 Baggage handling
 Customer service
 Airplane age
 Accident rate
 Frequent Flier plan

• What is unique about Jet airways and how does it relate to Customer service?
The answer is simple. It provides reliable transportation without frills.
Delivery, however, is based on the concept of Happy Employees, which is very

- 36 -
 revolutionary. It is revolutionary because many companies preach it, but very
few, if any, practice it.

The foundation of customer service for Jet airways is based on the following
areas:

Job descriptions are written very loosely to allow workers to move easily
from task to task. Empowerment to work in all levels.

Flight delays are analysed with a very simplified coding system. If there is
a problem, Jet airways do not spend a lot of time finding someone to
blame. It is entire teams fault and the entire team's responsibilities to
make sure it does not happen again.

Workers from different departments, like baggage handlers and the ticket
agents, are encouraged to talk about and solve problems. Team building
meetings are called, often without supervisors or union representatives,
when things get out of hands.

The airline encourages teamwork by the way it selects and trains the workers.
Jet airways do not place high priority like hiring people with prior airlines
experience. It likes young people just completed their graduation.

- 37 -
PROCESS
The process of airline service lays emphasis on the involvement of channels, front
line staff, travel agency offices, offices of the tour operators or so form where the
services flow & reach to the ultimate users.

The process begins at the time of reservation goes on to the confirmation of seats.
It also includes cancellation if any. Then the experience or the actual service
process continues when the customer arrives at the airport & checks in at the
airline’s desk. Then he goes through his security check, & waits in the waiting
area before he boards the plane. He boards the plane & has a variety of
experiences during his journey. Then comes the destination. The plane lands &
he follows a similar process as he did while boarding. The customer collects his
baggage & leaves.

At every point of this cycle, the service provider airline is producing its service &
selling it to the customers. At every point in the process the airline must be
conscious of the impact it has on the customer & the evaluation that the
customer is making of it.

For example at the point of the passenger sitting in the plane, in the middle if the
journey, the attitude & courtesy & helpfulness of the flight attendants plays a
major role in improving service quality. If the passenger is planning to change
aircrafts & the duration of the stay is long, he would be happy if the airline
makes available the hotel accommodation to him.

What this means is that passengers expect the airlines to make a number of
services available to them & airlines have to make sure these services reach them
without any distortion. This requires professional excellence.

- 38 -
PHYSICAL EVIDENCE
Airlines being a service do not find it feasible to build brand images on the basis
of intangible service parameters itself. They find that tangible aspects like the
interior look of the airline, the food, the lighting, the ambience, the seating
arrangement all play an important role in creating a separate brand identity in
the minds of the consumer.

The Jet logo prominently displayed on each of its aircrafts, is used a cue to
trigger of a reminder of the customer’s experience at Jet & also of all the values
that Jet Airways stands for.

The physical evidence would also include the other facilities in the aircraft. Some
of the bigger aircrafts have more than the usual facilities on board. These sort of
tangible clues act as identification marks for the airline & help the customer to
evaluate on airline from another.

- 39 -
Section III

- 40 -
 Development of airlines in India
Neville Vincent, a former RAF (Royal Air Force) pilot came to India from
Britain in 1929, on a brainstorming tour to survey a number of possible routes. It
was through providence that he met JRD Tata, the first Indian to secure an A-
license within the shortest number of hours. Vincent worked out a scheme,
secures JRD’s approval and together they presented it to Mr. Peterson, the
director of Tata sons and also corporations, viz. Indian Airlines Corporation and
Air India.

Internationally it was established and the assets of all then existing airline
companies were transferred to the two new corporations. The operation of
scheduled air transport services was under the monopoly of these two
corporations and the act prohibited any person other than the corporations or
their associates to operate any scheduled air transport services from, to, or
across India.

However, after 40 years, the wheel had turned a full circle as the air corporation
act, 1953 was repealed with effect from 1st march 1994. That ended the monopoly
of the corporations on scheduled air transport services. Air transport in India is
now open to any carrier who fulfills the statutory requirements for operations of
scheduled services.

- 41 -
 Overview of an Indian Civil
Aviation
After the Second World War, there was an airline boom and as many 21 airlines
started operations in India with America war surplus Dakotas brought as scrap.
In 1945 after Tata airline was renamed as Air India, the airlines started non-stop
services from Mumbai to Delhi, Delhi to Calcutta and Mumbai to Chennai.

In 1953, the government of India passed the Air India corporation act and
decided to nationalize all existing airlines. They were merged to form two
national carriers, Air India for international routes and Indian Airlines for
domestic air services. The two national airlines started operation in 1953 and it
had earned itself an excellent name and even graded as one of the world’s top
airlines.

Indian airlines and Air India have contributed to the national economy in terms
of financial performances. They earned a considerable amount of foreign
exchange every year by the flying foreign tourists.

The airline industry in general is into a low phase. Due to the problems related to
the revenues and expenditure and due to the negative growth, disinvestments
have been taking place with privatization of the airline industry it has become
imperative for the national carriers to be more efficient and competitive. Air
India is now getting bids from various companies like Tata. The government is
yet to go through the bidding prospect to get the highest price from the sale of
equity. Foreign airlines can stake up to 26 % and 14 % have to be held by
domestic institutional investors. Alliances have been formed between various
airlines to improve their services and strengthen their fleet for.
E.g.
Delta airlines have formed an alliance with Air France to improve its service to
serve a larger segment of the market.

- 42 -
The Indian civil aviation industry can be broadly classified into two main
segments – civil and cargo. Infact, the birth of civil aviation is attributed to air
cargo and mail. In the beginning, mail and air cargo were the important
elements of air carrier services than passengers. The major players in the Indian
context are Air India in the international segment and Indian Airlines, Jet
Airways and Sahara in the domestic segment.

The Indian aviation sector till recently was highly regulated by the government.
As recently as the eighties saw the introduction of some new initiatives like the
air taxi scheme, whose main objective was to boost tourism?

Domestic and international passenger traffic in India is projected to grow

annually at 12.5 % and 7 % per year respectively over the next decade. At the
same time, domestic and international cargo traffic is expected to grow at 4.5 %
and 12 % per year respectively. By the year 2008, Indian airports are likely to
handle 90mn international passengers and 3,00,000 tons of domestic and 1.6mn
tons of international cargo.

Till recently, Indian airlines had a monopoly in the sector. However, in 1993 the
skies were opened for private participation and 8 airlines got the nod to
commence operation. Of these, only two have survived – Jet Airways and Sahara
Airlines.

The market share if Indian airlines Vis – a – Vis private players is given below:

Airlines market share Aircraft owned

Indian airlines 47 % 55 %

Private airlines * 53 % 35 %

* Represent all private airlines operating in the country, like Jet, Sahara, and
Kingfisher Airlines etc.

- 43 -
 Domestic airlines in India
Private players: -
1. Jet airlines

2. Air Sahara

3. Kingfisher airlines

4. Spice Jet

5. Air Deccan

Public players
1. India airlines

2. Alliance air

- 44 -
 INDIAN AIRLINES

“Fly Smart Fly Indian Airlines”

Indian skies are mainly served by three domestic airline services namely, Indian
airlines, Jet airways and Sahara Airlines. Together they make all the major cities
and tourist places accessible.

Indian Airlines
In 1953, a new dream took shape – to air link the vast south Asian subcontinent
by a single, modern and efficient airline. The airline was Indian Airlines. Today
Indian Airlines, together with its fully owned subsidiary Alliance Air, is one of
the largest regional airline systems in Asia with a fleet of 56 aircraft, 11 wide
bodied Airbus A300s, 30 fly – by- wire A320s, 11 Boeing 737s and 3 Dornier D –
228 aircrafts.
An Indian Airline is presently fully owned by the government of India and has
total staff strength of around 22000 employees. Its annual turn over, together
with that of its subsidiary Alliance Air, is well over Rs. 4000 crores.

Indian airlines have been setting the standards for civil aviation in India since its
inception in 1953. It has many firsts to its credit, including introduction of the
wide - bodied A300 aircraft on the domestic network, the fly – by – wire A320,
domestic shuttle service and walks- in flights. Its unique orange and white logo
emblazoned on the tails of all its aircrafts is perhaps the most widely recognized
Indian brands symbol that has over the years become synonymous with service,
efficiency and reliability.

Not just connecting India, the airlines network spans from Kuwait in the west to
Singapore in the east and covers 75 destinations – 59 within India and 16 abroad.
The Indian Airlines international network covers Kuwait, Oman, UAE, Qatar
and Bahrain in the west, Thailand, Singapore, Yangon and Malaysia in south

- 45 -
east and Pakistan, Nepal, Bangladesh, Myanmar, Sri Lanka and Maldives in the
south Asian sub – continent infrastructure.

The airlines aircraft maintenance facilities are of the highest international

standards. It has developed state – of – art facilities for all aspects of
maintenance, including engine overhaul. These facilities are used not only by
Indian airlines but also by other airlines from time to time. Their training
facilities for pilots are integrated at Hyderabad where commanders and captains
are trained in all types of aircraft in the Indian Airlines fleet. States – of - art full
flight stimulators are available for A300, A320, and B737. Several airlines
continuous technology upgradation also extends to other areas such as
reservations, passenger handling systems and customer service.

Indian airlines flight operations center on its four main hubs – the main Metro
cities of Delhi, Mumbai, Chennai, and Kolkata. Together with its subsidiary
Alliance Air, Indian Airlines carry a total of over 7.5 million passengers
annually.

- 46 -
 JET AIRWAYS

“We don’t fly aircraft, we fly people”

This is the motto of this private owned airline. They have chosen the yellow rose
as their motto as it symbolizes friendship, warmth and caring, Jet Airways was
set up with the objective of providing high quality and reliable air travel in
India. Since a very high percentages of the Indian domestic air traffic comprised
of business travelers, their focus from the very beginning was to emerge as the
“businessman’s preferred airline.” This led to a product and service design that
aimed at world-class norms in professional service and efficiency, beginning with
the choice of aircraft itself.

Their operations commenced with a fleet of flour modern generation Boeing 737
– 300 aircraft. These aircraft were the first to fly the Indian skies. For training
and conversion of their pilots and engineers, they utilized the training facilities of
Ansett (Australia). For world-class norms in service, they were aided by speed
wing (a British airways subsidiary) to conduct a programme on customer service
excellence for staff across functions at all levels.

To ensure accurate and efficient reservation system, they tied up with and are co
– hosted with SABRE – one of the world’s best reservation systems. Within three
months of operation, they also become an associate member of IATA; a party to
the IATA multilateral interlines agreement and a member of the IATA
clearinghouse. Since their commencement, they also have achieved the status of
the largest private domestic airline in India. The figures speak themselves as
below:

- 47 -
 1. From 4 aircrafts in 1993 – 94 to 34 aircraft in 2005
2. From 12 destinations in 1993 – 94 to 40 destinations in 2005
3. From 24 daily flights in 1993 – 94 to over 195 daily flights in
2005

In the process they have market share of 36 %. Their emphasis on technology is

one of the key factors of their success. They fly only modern and next generation
aircraft and maintain a young aircraft fleet, making them one of the youngest
fleet in the world.

- 48 -
 AIR SAHARA

“Emotionally Yours”
The people at Sahara believe in delivering the best to all their customers. It is
this belief that is reflected in all their services.

They have a fleet of

1. 1 Boeing 737
2. 5 Boeing 737 – 200
3. 4 Boeing 737 – 400

They are among first to offer tele check – in facility to all their passengers. To
ensure smooth baggage handling. Exclusive valet service is provided at all
Sahara airlines airport counters. There in – flight services are built around total
customer care and customer satisfaction. Increased leg space to ensure grater
legroom on both Sahara Royal and Sahara Special classes provide total seating
comfort on board. Sahara Royal passengers can also avail the pleasures of their
entire in flight reading library. Sahara special passengers are also provided with
a personalized reading kit, which include at least three major dailies. It is their
firm belief to uphold the highest standards of traditional Indian hospitality,
culture and courtesy. Their highly trained personnel ensure that your trip is not
only comfortable but also a memorable one right from the time of check in.

- 49 -
 Top 10 flight paths
Sector Seats / week
Delhi to Kolkata 18,410
Delhi to Bangalore 17,934
Mumbai to Delhi 50,386
Mumbai to Bangalore 25,480
Mumbai to Hyderabad 18,228
Mumbai to Chennai 17,724
Mumbai to Kolkata 17,318
Mumbai to Goa 17,036
Mumbai to Ahmedabad 14,014
Chennai to Bangalore 11,284
* On IA, JET, ALLIANCE & SAHARA

- 50 -
Section IV

- 51 -
 Air Sahara

“Emotionally Yours”
One of India’s fastest growing airlines. Air Sahara is a part of the Sahara Indian
group which has business interest in Para banking, mass communication,
housing & infrastructure, international trading domestic marketing of consumer
products and television.

The first flight …. Air Sahara was born and gained freedom of the Indian skies
with the launch of the open sky policy by the government of India in 1990s. The
first flight took off from Delhi to Mumbai on 3rd December 1993 in a Boeing 737
aircraft. Now, it has a fleet of two 737 – 400s, two 737 – 200s, one 737 – 7—and
four twin engine euro copters.

Now, Air Sahara with 12th successful year in commercial operations has become
India’s premier domestic airline, covering 13 destinations with 28 flights daily
offering seat capacity of 1.2 million per annum with a current fleet strength of 9
latest generations Boeing aircraft.

The airlines have two main hubs at Delhi and Mumbai. It employs 1,700 highly
qualified, experienced and dedicated staff including 91 pilots, 105 flight crew
who has received intensive training at British Caledonian.

- 52 -
Major routes:

Mumbai to Delhi – Bangalore – Lucknow – Patna – Calcutta – Dibrugarh
– Guwahati – Goa

Bangalore to Mumbai – Lucknow – Goa - Patna

Chennai to Delhi

Delhi to Chennai – Dibrugarh – Guwahati – Goa – Lucknow – Patna –

Kolkata - Mumbai

Goa to Delhi – Mumbai – Bangalore

Kolkata to Patna – Lucknow – Mumbai

Marketing mix of Air Sahara

1. On ground services.

Tele check in service

Sahara is the first domestic airline to offer Tele-check in facility

for both Economy & business class passengers. We now have
dedicated lines on which you can access information on flights,
timings, Frequent Flyer Programme and even ask for a seat of
your choice. All this is to ensure that you can access us at Sahara
anytime, everytime and at your convenience.

Fastest Baggage Retrieval

Baggage retrieval is the fastest among domestic airlines at Sahara.

First baggage trolley reaches the conveyor belt before the first
passenger reaches the arrival hall. We believe that the baggage
should wait for the passenger not the other way around.

- 53 -

Automated Flight Arrival/ Departure Information

Sahara provides this facility round the clock. The passengers can
avail this facility and get the flight update immediately.

Advanced Seat Reservations

This facility is provided to both business and economy class

passengers. The passenger can select and book his seat before he
reaches the check in counter at the airport.

SAL is also the first domestic airline to have a 24-hours toll-free service at Delhi
and Mumbai.

2. In-flight service
In-flight services are built around total customer delight. Air Sahara has
firm belief to uphold the highest standards of traditional Indian
hospitality, culture and courtesy. They have highly trained personnel
ensure that trip is not only comfortable but also a memorable one. Sahara
believes in delivering the best to all our customers. It is this belief that is
reflected in all our services. Value additions in flight services are:

In-flight personalized reading kit

Passengers are provided with a personalized reading

kit, which includes at least 3 dailies and 2 magazines
of general interest.

- 54 -
Increased leg space

Increased leg space to ensure greater legroom on both

Sahara Royal and Sahara Special classes provide total
seating comfort on board.

Trolley Services

Sahara provides trolley services to business class

passengers. Entire food is laid on the table as Buffet
and rolled in front of the passenger. This allows the
passenger to choose from a wide variety of quality
food.

- 55 -
 SAHARA'S BUSINESS CLASS WINS INTERNATIONAL
AWARD

Sahara Airlines, India's premier domestic airline,

has won the 'Presentation IFSA President's Award
for Innovation in the First and Business Class'
service. The award was presented during the 34th
Annual international Food Service Association
Conference in San Antonio, USA.

This award recognises outstanding achievement in airline food service. The

judges of this award programme include Kurt Lackner, director, dining & cabin
service for US Air and Bon Arnold, executive director of CA Services Inc.

All the members of IFSA were invited by the president of the association in the
President Award Programme'. All the major international airlines, including
British Airways, Delta Airlines, United Airlines and Continental Airlines,
participated to receive this honour.

Sahara Airlines launched 'Cuisine on Demand' service for the Business Class
passengers in October 1998. Passengers can choose their dining preference by
booking over the telephone. A choice of Italian, Continental, Thai, Mexican and
Chinese is provided this service.

Business Class passengers have a choice of over a 100 menus including an option
of health and salad meals on board.

Sahara Royale is India's premier Business Class product; Sahara's constant

innovations have helped it to achieve the preferred airline status in the domestic
network.

Sahara's other services include tele check in advanced seat reservation, city
check-in, the unique valet service and on-board executives to make flying Sahara
an experience.

- 56 -
Sahara Airline's induction of B737-700 series aircraft will help the airline to
further upgrade its Business Class Service.

Sahara has designated 2-cabin crew for 16 business class passengers. This
ensures that every passenger is served with great speed and warmth.

- 57 -
 3. Cargo and chartered services

A new high in the domestic cargo arena. Air Sahara meet all needs for
transportation of cargo. They take care of all transport requirements from
normal cargo to perishable and even pet animals.

Air Sahara will be introducing BAR-CODED stickers for all its consignments to
ensure the smooth handling and tracking of cargo. It is the first private airline in
India to install X-ray Machine in Delhi & Mumbai to screen the consignments to
avoid opening the consignments physically, thus ensuring the shipments are
delivered intact. Customer satisfaction of our Agent/Clients is the key to their
success.

Many new systems and swift movement of cargo was introduced by Air Sahara
thus making a revolutionary change in the Cargo Industry and thus became the
Trend Setter in many fields. Each and every consignment thoroughly travels
through professional hands and maximum precautions are taken to deliver
the consignment safely to their clients.

- 58 -
INTERNATIONAL RECOGNITION

Sahara Airlines won the World Travel Market 1997 Global Award for its quality
of service. The award was presented to Mr. UK Bose, CEO of SAL, at the
opening ceremony of the World Travel Market at Earl's Court on 17 November,
1997 by Christos Poputsis, senior member of the European Commission. This
recognition reinforces the high quality of the airline's services.

The Pacific Area Travel Writer's Award for the 'Best Domestic Airline for
Business Travel in 1997' was also presented to Sahara Airlines on 10 March,
1998 at the International Tourisms Bourse (ITB) at Berlin.

ACHIEVEMENT

Sahara Airlines has achieved very high percentage reliability in our schedule.
The performance since 15 February, 1999 is as follows:

• Dispatch reliability 99.80%

• On-time performance 97.60%
• Customer satisfaction 94.02%

- 59 -
 Promotion mix

It is an innovative concept by Sahara airlines. The following are it features:

1. Bid and Win attractive products on board.

2. Wide range of branded products in the range of Rs. 500/- to Rs. 3000/-
which are changed periodically

3. Bid begins at Rs. 50/- with one bid per passenger.

4. Proceeds from bids collection go to charity. All products available

instantly on arrival.

- 60 -
 Price mix
Smart deal: -

Air Sahara in association with ICICI Bank provides an offer called smart deal
through which you can purchase Air tickets on ICICI Bank Credit Cards. You
can pay for your tickets over 12 equated monthly installments and that too at no
interest. All you need to do is to make your payments using your ICICI Bank
Credit Card.

The ICICI Bank - Air Sahara 'Smart Deal'

1. Total applicable fare is divided into 12 EMIs (equated monthly

installments).
2. Down Payment equivalent to 4 EMIs will be charged to your current
billing cycle.
3. The balance 8 EMIs will be charged to you in 8 monthly billing cycles,
starting with your current cycle.
4. Tickets can be booked either at Air Sahara website or at any Air Sahara
counter at the Airport or City office.

- 61 -
 This is how 'Smart Deal' works:

Sector Mumbai - Delhi - Mumbai

Current Ticket Cost 13450/-
Class Y
Down Payment Rs. 4483/- (04 EMIs @ Rs. 1121/-)
Monthly EMI Rs. 1121 per month (for 08 months

Easy pay: -

Fly now. Pay later. * At 0% Interest.

- 62 -
The flyers now have the option to pay for their tickets over Equated monthly
installments and that too at no interest. All they need to do is to make payments
using Citibank Credit Card.

1. The scheme is available to all Citibank Credit Card holders.

2. The total cost of the tickets is spread over interest free EMIs. (Equated
Monthly Installments).

3. The customers gets to choose from two lucrative plans:

12 EMI option – pay 5 EMIs as down payment in your current

billing cycle and the remaining over your next 7 billing cycles.

6 EMI option - pay 1 EMI as down payment in your current billing

cycle and the remaining over your next 5 billing cycles.

- 63 -
 Place mix
1. Lounge Facilities

This facility is provided to business class passengers. Air Sahara takes

immense pride in our tradition of care and service. The lounge comfort
and convenience at the airport while on wait. Air Sahara is offering
business lounge facility to its passengers at Delhi, Mumbai, Kolkata,
Lucknow and Goa.

2. Passengers with Restricted mobility

Passengers with restricted mobility are given extra assistance. In case of a

senior citizen customer service staff escorts him. If a passenger requires a
wheel chair he/she is provided with that facility as well.

3. 24 hour Reservation

Air Sahara has 24-hour reservation offices at Mumbai/ Delhi.

4. Airport Transfers

Sahara offers free airport transfers from domestic to international

airport and vice-a-versa for interline passengers at Delhi and Mumbai.

- 64 -
 People mix
Civil Aviation Industry in India has made a significant progress during the last
two decades. The passenger traffic growth in the Asia Pacific region and
particularly the countries in South East Asia are expected to be the fastest
followed closely by the South Asian region, especially India.

With the implementation of liberalization policies of the Government of India in

the recent years, there has been a tremendous growth in the economy on all
fronts including aviation. There has been a general shortage of trained and
qualified personnel for the airlines and to meet this growing need Sahara India
Aviation Academy has been set up at Mahipalpur on National Highway No.8,
near Palam Airport, New Delhi.

A certain number of trainees from each batch will be considered for induction
into Air Sahara and also to other airlines depending upon the requirement.

Sahara India Aviation Academy was inaugurated by Hon'ble Managing Worker

and Chairman on 22nd Jan '97. Main objective of the Academy is to provide
high quality training facilities for the Aviators.

The Academy was duly approved by the Directorate General of Civil Aviation
(DGCA) on 13th Mar '97 for providing training to Pilots, Engineers, In-flight
Services Crew, Flight Dispatchers, Commercial Staff (Load & Trim) and
Technicians.

- 65 -
Current Activities

Category Induction Refresher

Pilots - Yes
Engineers Yes Yes
Cabin Crews Yes Yes
Flight Despatch - Yes
Technicians Yes Yes
Ground Staff Yes Yes
Load & Trim Yes Yes

- 66 -
 Process mix

Air Sahara had always made a constant effort to provide fast and convenient
services to their passengers. At Air Sahara, they believe in delivering the best to
all the customers, which can be seen from the following reasons.

1. 5 more ways to check in: -

In addition to airport check in air Sahara offers 5 more convenient and
time saving check in options.

SMS check in

Online check in

Cities check in

Tele check in

Return check in

2. Air mobile: -
The convenience of SMS on screen menu display of flight information.
Extremely affordable with a maximum cost of Rs. 2 per message. Check
in option available through SMS. Automatic flight status updates. One
global number to access the airline.
This is available at select metros location. This service introduced by Air
Sahara to reduce the tie gap between the services provided and service
received.

- 67 -
Section V

- 68 -
 Comparative analysis of Jet, Sahara and Indian
Airlines

Airline No of aircraft No of seats daily

offered
SAHARA 10 7500
Indian airlines 56 34000
Jet Airways 38 29500

How’s this is for a marketing stunt? Air Sahara wants to fill its planes and is
considering sending marketing teams to places like New Delhi railway stations.
Newspaper sold at the station will be filled with flyers listening Sahara’s super –
cheap fares and passengers will be able to read the fares and ponder whether
their next journey would be by air.

Sahara’s stopping at nothing and its relentless drive to take new passengers on
board has thrown the Indian aviation industry into turmoil. Pushed into a corner
by Sahara’s new fare scheme and the dwindling numbers of air travelers, Indian
Airlines and Jet Airways have been forced to respond with fare cuts of their own.

The results have brought a revolution. For the first time ever it’s cheaper to fly
from Delhi to Chennai than to travel by 2nd class Ac in railways.

For almost a decade since it started flying, jet airways has studiously resisted
getting into price war with Indian Airlines. But now it has plunged into the battle
with gusto. Making it plain it wasn’t about to be upstaged by tiny Sahara, Jet has
slashed economy fares on 43 routes.

When Jet Airways swooped out of the sun, its attack triggered an instant fight
back from Indian Airlines, which slashed fares on over 50 routes to nearly the
same levels as jet.

- 69 -
 Sectors IA Jet Sahara
Delhi – Mumbai 3920 3920 5405
Delhi – Kolkata 2860 2860 6400
Delhi – Chennai 3295 3292 NA
Delhi - Bangalore 5055 5053 7750
Delhi – Lucknow 2445 2443 3210
Delhi – Guwahiti 4110 4110 6980
Delhi – Indore 2560 2558 NA

Is this the new era of cheap tickets in Indian aviation? Or is it a spot of

temporary turbulence that will end instantly when the lean season between
august and October ends? This is always a period when the market is at its
lowest ebb and this year it’s worse than ever because foreign tourists are staying
away from India.

For the first time in half century, the scales may have triggered in favour of the
passengers. The cozy duopoly in the air has become triangular contest. Also,
Sahara has shown that it is going to make its rival’s life even tougher by
announcing that it is also slashing business class fares. The airline has extended
its sixer scheme – allowing economy class passengers to buy six tickets for a rock
bottom Rs. 25,000 that first triggered the air wars – to business class passengers.

As a result of the new offer, business class travel will become cheaper 30 to 60
percent. Earlier, it also took the market by surprise when it introduced an
auction scheme on various routes under which passengers could bid for tickets at
rock bottom prices. And this offer is valid throughout the year.

Uttam Kumar, CEO; “Air Sahara is unrepentant about his aggressive, quick fire
cut price, “when we started the auction scheme every one blamed us for starting a
fare war. Now everyone is following suit.”

- 70 -
But it isn’t only base’s marketing moves that have brought dark clouds on the
horizon for the bigger airlines. The numbers in the aviation game, for the fist
time, have been turning against the airlines and the culprit is capacity. A year
ago, Sahara had some 5000 seats to sell daily. Today Sahara has brought four
new planes and now offers 7500 seats daily.

It’s the same story at Jet Airways that have been expanding furiously over the
last few years. The airline now has 38 planes and offers 29500 seats daily.

The new planes couldn’t have come at a worse time for the both airlines. The
number of air passengers has fallen due to a variety of reasons during the past
year. As a result, the passengers load factor (PLF) the most critical number for
any airline – has been falling to below breakeven levels. The PLF is the
percentage of paid seats that are filled on every fight. According to preliminary
statistics for June, for instance, the industry’s average PLF fell to 53 % in May.
And the number of passengers fell by over 1.4 lakh during the same period. Most
airline executive reckons a PLF of around 58 % to 60 % is needed to break even.

Even Indian Airlines is working on a PLF of around 50 % to 54 %, which means

that out of the 34000 seats it offers every day; only 17,000 to 18000 are sold.
Worse even when during peak season the PLF on Indian airlines has been
around 3 % to 5 % lower than its peak range of 70 %.

How much difference can the cheap tickets make? Can volumes make up for
price cuts? Have the airlines done their homework carefully before introducing
the new fares? Indian airlines believe it will be able to boost the numbers of
flyers by around 5 % in the lean season. The optimism is based on the fact that
there are 14 million passengers who travel by AC 2 tier and AC first class
annually. Even if a fraction moves into skies, it could make all the difference for
the airline industry.

- 71 -
Travel agents, who keep their finger firmly on the industry’s pulse, however, are
skeptical and believe the situation is more dire than the airlines would like to
admit. Avinash Anand, MD, trade wins says, “air travel has fallen by over 20 %
that because foreign travelers aren’t coming to India and also because fewer
Indians are traveling.”

Jet Airways have been especially hard hit by the events of the last few months.
Jet depends substantially on foreign travelers and the number of foreigners
traveling to India has fallen by about 6 % to 7. Dollar fares usually account for
about 28 % of jet’s revenues and that has fallen to about 22 %.

Some industry experts say, “The airlines have been at this fork in the skies before.
In 2000, both Indian airlines and Jet cut fares temporarily in a bid to win more
passengers. “It did not attract one extra passenger,” says an airline executive. The
arrival of Air Sahara has also taken a new toll. One year it was a new kid on the
block with an insignificant market share. Now its savvy pricing schemes have
succeeded in wresting market share in a stagnant and decline market. The
airline claims it already has around 10 %. But Sahara has certainly queers the
pitch for the other airlines. Both its auction scheme and the astonishing Rs.
25000 offer in the economy class without any strings, like advanced booking,
attached can’t be matched by the bigger airlines without asking their financial
health.

Analyst says that it has already wooed a chunk of corporate travelers by offering
a 5 % discount on bulk deals for companies that spend around Rs. 75 lakh
annually. Competitors have s similar offer but it ranges from Rs. 2 crores to 3
crores says B Mayal. President, new airways travel: “both the sixer and the bulk
deals are getting a lot of queries because they do not have any conditions attached.”

It should of course, be said that by international standards there is nothing

earthshaking or innovative about what Jet and Indian Airlines are doing. Indian
Airlines fares are amongst the most expensive in the world. That’s because
Indian Airlines has always refused to sell its seats at a discount and Jet also
followed the same practice. As a result, until the new fares came into existence, it

- 72 -
was a cheaper to fly fro Delhi to Singapore or Malaysia than to fly to a
destination in Kerala.

Bose believes that country’s two giants have been operating on wrong principles,
“seats are perishable commodity. So when seats are going empty it makes sense to
fill then even at lower fares. If you don’t you lose that revenue for ever.” European
and American airlines have been discounting for decades and they have angled
tickets to ensure that business flyers pay full price but leisure tourists pay far
less. A two way ticket from London to Cologne, for instance cost around 280 on a
weekend but can be pound 80 if the traveler stays over on a Saturday night.

But the travel agents aren’t impressed by the new schemes or offers. They say
that the steep cancellation charges and the rule by which cheap tickets must be
bought 21 days in advance are a major disincentive.

Have the airlines made a wrong move? They have certainly managed to make
everyone sit up and take notice. And if cheap prices are here to stay it could be a
new mid – air dawn for Indian Airlines.

- 73 -
 Suggestions for improvements
1. First and foremost remove fear of traveling by air from the minds of the
people by increasing the security in the lounge, at the checking counter
and inside the aircraft.

2. Create an atmosphere of homeliness in the aircraft by better and friendly

service.

3. Encourage passengers to fill up data sheets on what they like most on the
aircraft, etc.

4. Provide laptops connections to be used by the business class people.

5. See to it group packages and discounts are offered as well as competitively

priced so as to attract large number of the joint families in India to travel.

6. Have maximum amount of promotions and discounts during the time of

holidays.

7. Enter into an alliance with an institution which takes groups to perform

in different places for e.g. dance groups, singing groups, etc.

8. Enter into an alliance with corporate that send their executives frequently
on official tours.

- 74 -
 Conclusion
Not only today but there has been a vast difference between the services offered
by domestic airline in India and those offered by international airline for a long
time. The difference is due to the lack of promotional effort and innovative ideas
in domestic airlines. As a result the fares of the Indian airlines are costlier in the
world. At the same time, the Easy jet airline in Europe has the cheapest fares in
the world.

The case study of air Sahara shows that domestic airlines can provide satisfying
and competitive services at a lowest price, if they perform their marketing
function effectively. Air Sahara is small compared to Jet and Indian Airlines, but
it always comes up with innovative ideas along with professional management.

The 9/11 attack, had also affected the domestic airline industry. As a result there
was a fall of 15 % in demand. Now slowly it is improving through cost cutting
and various promotion schemes by Sahara, Jet and others.

At last, Air travel in India has always been terribly expensive. But as competition
heats up between domestic airlines, the travelers is suddenly become the king.
Today there are more offers in the Indian skies than ever before.

- 75 -
 Bibliography
Service Marketing – S. M. Jha
Service Marketing – Christopher Lovelock
Service marketing – Ravi Shankar
Service marketing – Andrian Payne

Articles
Economic times – 2nd, 7th, 18th July and 28th August

Business standard - 14th July

Asian commercial aviation – July and august 2005 issues

Websites
indianinfoline.com
airsahara.net
indian-airlines.nic.in
jetairways.com
37.com (search engine)
google.com (search engine)
tourindia.com
civilaviation.nic.in
indiatravelite.com

- 76 -