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Airline Industry
A STUDY ON CONSUMER PREFERNCES AND AIRLINE BRANDING
BY
AKSHAYA ARUN-1313102
ANJALI SENTHIL KUMAR 1313103
BHAVNA KOCHAR- 1313109
GAYATRI MADHUSUDAN 1313118
MITALI CHORDIA 1313138
PRIYAL ROHRA 1313148
CHENNAI 600034
2015 - 2016
ACKNOWLEDGEMENT
AKSHAYA ARUN
ANJALI SENTHIL KUMAR
BHAVNA KOCHAR
GAYATRI MADHUSUDAN
MITALI CHORDIA
PRIYAL ROHRA
DECLARATION
FACULTY ADVISOR
HEAD OF DEPARTMENT
1 INTRODUCTION 2
2 REVIEW OF LITERATURE 22
3 RESEARCH METHODOLOGY 28
4 ANALYSIS 33
6 CONCLUSION 65
7 CASE STUDY 68
8 BIBLIOGRAPHY 76
9 ANNEXURE 79
\
LIST OF DIAGRAMS
17 VALUE OF PRICE 45
VALUE OF FREQUENCY OF FLIGHTS TO
18 46
DESTINATION
19 DURATION OF FLIGHTS 47
20 CHOICE OF SEATING 48
21 VALUE OF BAGGAGE ALLOWANCE 49
22 VALUE OF SERVICE 50
23 OVER THE TOP SERVICE 51
24 OVERALL REPUTATION 52
25 FREQUENT FLYER PROGRAM 53
26 TRAVEL BY DIFFERENT AIRLINE 54
27 CHOICE OFTRAVEL OPTION 55
29 AIRLINE ADVERTISING 57
30 FOCUS ON AIRLINE SERVICES 58
31 PREFERENCE OVER AIRLINE 59
LIST OF TABLES
18 CHOICE OF SEATING 48
In any service industry the key to customer retention is service quality and providing
value for money. These factors play an important role in influencing customer satisfaction
which in turn affects the profitability and long term success of an enterprise. Aviation is one
of the most rapidly growing industries in the service sector contributing approximately 330
billion rupees to the Indian GDP. The purpose of this study is to comprehend the brand
dynamics in the airline industry and to discern the degree of consumer responsiveness to the
various factors that influence a purchase decision. Apart from trying to understand the price
sensitivity of consumers and their perception towards the services offered by different airline
companies this study also seeks to infer the reasoning behind the consumers choice of a
particular airline brand.
For this purpose data was collected by means of an online survey from the residents
of Chennai. The survey was administered to 50 respondents chosen by means of random
sampling. Our study revealed that at present consumers do not perceive much distinction
among brands. With the influx in information, the focus has shifted to value received and
flexibility in the services offered by airlines. Companies should therefore focus on offering
premium services and put in place marketing and communication strategies that will attempt
to differentiate their brand.
1
CHAPTER 1
INTRODUCTION
2
Introduction
The Airline Industry comprises of Companies that provide air transport services for traveling
passengers and freight. Airlines lease or own their aircrafts to supply transit services for
passengers, goods, etc and may form partnerships or alliances with other airlines for mutual
benefit. An airline company is recognized with an Air Operating Certificate or license issued
by a governmental Aviation body.
There are various types of airlines from those with a single aircraft carrying mail or cargo, to
full-service International airlines carrying hundreds of passengers. Airline services can be
categorized as intercontinental, domestic, regional, or
DELAG, Deutsche Luftschiffahrts-
international, and may be operated as scheduled services
Aktiengesellschaft was the world's first
or charters. Many countries have national airlines that the
airline. It was founded on November 16,
government owns and operates. Fully private airlines are
1909 with government assistance.
subject to a great deal of government regulations for
economic, political, and safety concerns. For instance, governments often intervene to halt
airline labor actions to protect the free flow of people, communications, and goods between
different regions without compromising safety.
Business travel has also grown as companies become increasingly international in terms of
their investments, their supply and production chains and their customers. The rapid growth
of world trade in goods and services and international direct investment has also contributed
to growth in business travel.
In the past decade, air travel has grown by 7% per year. Travel for both business and leisure
purposes grew strongly worldwide. Scheduled airlines carried 1.5 billion passengers last year.
In the leisure market, the availability of large aircraft such as the Boeing 747 made it
convenient and affordable for people to travel further to new and exotic destinations.
Governments in developing countries realized the benefits of tourism to their national
economies and spurred the development of resorts and infrastructure to lure tourists from the
prosperous countries in Western Europe and North America. As the economies of developing
countries grow, their own citizens are already becoming the new international tourists of the
future.
3
Airlines' profitability is closely tied to economic growth and trade. During the first half of the
1990s, the industry suffered not only from world recession but travel was further depressed
by the Gulf War. In 1991 the number of international passengers dropped for the first time.
The financial difficulties were exacerbated by airlines over-ordering aircraft in the boom
years of the late 1980s, leading to significant excess capacity in the market. IATA's member
airlines suffered cumulative net losses of $20.4bn in the years from 1990 to 1994.
A number of factors are forcing airlines to become more efficient. In Europe, the European
Union (EU) has ruled that governments should not be allowed to subsidize their loss-making
airlines. Elsewhere too, governments' concerns over their own finances and a recognition of
the benefits of privatization have led to a gradual transfer of ownership of airlines from the
state to the private sector. In order to appeal to prospective shareholders, the airlines are
having to become more efficient and competitive. The airline industry has proceeded along
the path towards globalization and consolidation, characteristics associated with the normal
development of many other industries. It has done this through the establishment of alliances
and partnerships between airlines, linking their networks to expand access to their customers.
Hundreds of airlines have entered into alliances, ranging from marketing agreements and
code-shares to franchises and equity transfers.
Successful airlines will be those that continue to tackle their costs and improve their products,
thereby securing a strong presence in the key world aviation markets.
Few inventions have changed how people live and experience the world as much as the
invention of the airplane. Over time, air travel has become so commonplace that it would be
hard to imagine life without it. The airline industry, therefore, certainly has progressed. It has
also altered the way in which people live and conduct business by shortening travel time and
altering our concept of distance, making it possible for us to visit and conduct business in
places once considered remote. The airline industry exists in an intensely competitive market.
In recent years, there has been an industry-wide shakedown, which will have far-reaching
effects on the industry's trend towards expanding domestic and international services.
Airlines also earn revenue from transporting cargo, selling frequent flier miles to other
companies and up-selling in flight services. But the largest proportion of revenue is derived
from regular and business passengers. Business travelers are important to airlines because
they are more likely to travel several times throughout the year and they tend to purchase the
4
upgraded services that have higher margins for the airline. On the other hand, leisure travelers
are less likely to purchase these premium services and are typically very price sensitive. A
final key area to keep a close eye on is costs. The airline industry is extremely sensitive to
costs such as fuel, labor and borrowing costs.. It facilitates economic growth, world trade,
international investment and tourism and is therefore central to the globalization taking place
in many other industries.
The Indian civil aviation industry is on a high growth trajectory, albeit with minor hiccups. The
industry has ushered in a new wave of expansion driven by Low Cost Carriers (LCC), modern
airports, Foreign Direct Investments (FDI) in domestic airlines, cutting edge Information Technology
(IT) interventions and a growing emphasis on No-Frills Airports (NFA) and regional connectivity.
The Indian civil aviation industry is amongst the top 10 in the world with a size of around USD 16
billion.
The civil aviation market in India is all set to become the world's third largest by 2020. Total
passenger traffic stood at a 190.1 million in FY15, registering an increase of 12.47 per cent.
By 2020, passenger traffic at Indian airports is expected to increase to 421 million from 190.1
million in 2015. Domestic passenger traffic expanded at a compound annual growth rate
(CAGR) of 11.8 per cent over FY0615. It is expected to touch 209 million by FY17.
International passenger traffic posted a CAGR of 9.5 per cent over FY06-15 and is set to
touch 60 million by FY17.
Over the next decades, India undoubtedly has the potential to become a significant part of the
global aerospace supply chain as India offers cost advantages of between 15 to 25 per cent in
manufacturing, together with its large procurement appetite. Robust technical and
engineering capabilities backed by top-notch scientific and technical institutes are other
positive offerings on the table.
India aviation industry promises huge growth potential due to large and growing middle class
population, rapid economic growth, higher disposable incomes, rising aspirations of the
middle class and overall low penetration levels.
5
INDIAN AVIATION INDUSTRY
Indian Aviation Industry is one of the fastest growing airline industry in the world. The
history of Indian Aviation industry started in December 1912 with its first domestic air route
between Karachi and Delhi. It was opened by the Indian Air Services in collaboration with
the UK based Imperial Airways as an extension of London-Karachi flight of the Imperial
Airways. Tata Sons Ltd., the first Indian airlines, started a regular airmail service between
Karachi and Madras three years later without any backing from the Indian government.
During the period of independence, nine air transport companies were carrying both air cargo
and passengers in the Indian Territory. In 1948, the Indian Government and Air India set up a
joint sector company Air India International to further strengthen the aviation industry of
India. As part of nationalization in 1953 of Indian Airlines (IA) brought the domestic civil
aviation sector under the purview of Indian Government. Later till the mid 1990s
government owned airlines dominated Indian aviation industry. When the government
adopted the Open-sky policy in 1990 and other liberalization polices the Indian Aviation
made underwent a rapid and dramatic transformation.
By the year 2000 several private airlines have entered into aviation business in succession
and many more were about to enter into the arena. Indian aviation industry today in
dominated by private airlines and low-cost carriers like Deccan Airlines, GoAir and SpiceJet,
etc. And Indian Airlines, the giant of Indian air travel industry, gradually lost its market share
to these private airlines.
6
Indian Aviation Industry has been one of the fastest growing aviation industries in the
world with private airlines accounting for more than 75% of the sector of the domestic
aviation market.
Today Hyderabad International Airports has been ranked amongst the worlds top five in the
annual Airport Service Quality(ASQ) passenger survey along with airports at Seoul,
Singapore, Hong Kong and Beijing.
The Indian aviation sector can be broadly divided into the following main categories:
Scheduled air transport service: It is an air transport service undertaken between two or
more places and operated according to a published timetable. It includes:
1 Domestic airline, which provide scheduled flights within India and to select international
destinations. Air Deccan, Spice Jet Kingfisher Airline and IndiGo are some of the domestic
players in the industry.
2 International airlines operate from scheduled international air services to and from India.
Non-scheduled air transport service: It is an air transport service other than the scheduled
one and may be on charter basis and/or non-scheduled basis. The operator is not permitted to
publish time schedule and issue tickets to passengers.
Air cargo services: it is an air transportation of cargo and mail. It may be on scheduled or
non-scheduled basis. These operations are to destinations within India. For operation outside
India, the operator has to take specific permission of Directorate General of Civil Aviation
demonstrating his capacity for conducting such an operation.
India is one of the fastest growing aviation markets in the world. A total of 127 airports in
the country, which includes 13 international airports, 7 custom airports, 80 domestic airports
7
and 28 civil enclaves are managed by the airport authority of India(AAI). There are about 450
airports and 1091 registration aircrafts in India today.
LEADING COMPANIES
The spurt of the aviation industry has ensured demand for employees. Today India Aviation
Industry requires approximately 7,500-8000 pilots and an equal number or more air cabin
crew by 2010. Heavy pay packages are awaiting pilots with a commercial pilot license (CPL).
8
LATEST DEVELOPMENTS
Indian Aviation Industry will allow 100% foreign direct investment (FDI) in the development
of airport infrastructure, the Government is fast moving towards finalizing a policy on
merchant airports. Under this new concept, merchant airports will be built by private parties
with their own resources, without any government funding.
Indian Aviation with the advent of low-cost airlines & ever-increasing passenger traffic there
is a fleet expansion. There is an Initiation of the whole new business avenue for global
aircraft companies in maintenance, repair and overhaul( MRO) . This MRO facility provides
major and minor maintenance, refurbishment and repairs of aircraft. The gaint players like
Boeing and Airbus have announced their plans for MRO facilities in India.
Recently the government in India has approved the Domestic Air Transport Policy which
provides for foreign equity participation up to 49% and also investment by Non-Resident
Indians(NRIs) up to 100% in the domestic air transport services. As the government plans to
fix higher foreign direct investment(FDI) ceiling for five sub-sectors of the industry in days
to come the flow of foreign investment into aviation is likely to get smoother.
9
AIRLINE BRAND DEVELOPMENT
A brand is a living entity and it is enriched or undermined cumulatively over time, the
product of a thousand small gestures.
The British Airways speedbird and easyJet's orange, Emirates and Singapore Airlines
offering the best in-flight service and Lufthansa being reliable. These are all images and
reputations from the airline industry familiar to millions of travellers. They are among the
most famous airline brands. And just like companies in other industries an airline needs a
winning brand whether it's launching onto the market, wanting to grow, consolidate or simply
survive. But what's involved?
The first point of branding for an airline is working out what its customers - and prospective
customers - actually require. And what they want differs with each market, meaning airline
brands differ. The low-cost airline brands are different to those of the long-haul premium
carriers, for example. Whatever the market and whoever the customers, though, an airline has
to stand for something and offer the experience its passengers demand. Each airline has a
brand to suit its needs, and what's important for an airline is to really know what its
customers want.
It's all about the right experience for the customer in question. Obviously excellent customer
service, well-trained staff and easy-to-use telephone and web booking systems are a given,
but there are differences between markets in what exactly constitutes the 'right experience'
and therefore what drives different brands. For airlines offering long-haul routes and
premium service branding is about high-quality in-flight service and facilities, and for low-
cost carriers branding is about the cheapest and most efficient way of transport.
At the premium end of the market the likes of Emirates, Etihad, Qatar Airways, Cathay
Pacific, Singapore Airlines and Virgin Atlantic are frequently cited as exemplars of the sort
of quality experience business-class passengers expect. For these airlines branding means
investment in lounges offering quality food and drink, massage and beauty treatments, mobile
boarding passes, onboard Wi-Fi connectivity, frequent flyer programmes and excellent
service from cabin crew.
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At the other end of the market, low-cost airlines are cited as equally excellent examples of
good airline brands. Although they're low-cost, they are still strong brands. We understand
that they're quick and efficient, that they help us by changing our flight bookings and that
they're working to get us from A to B as quickly as possible. Ryanair has a strong brand. It
stands for the lowest possible cost and you know you're going to get it. They don't need to
add frills to that.
This isn't to say the brand differences between premium and low-cost carriers are mutually
exclusive, as elements sometimes cross over to other markets. Most airlines now have
smartphone apps, which originally were the preserve of the premium carriers. Two low-fare
airlines, Flybe and US carrier JetBlue, both offer certain frills in the belief that many people
want comfort as well as good deals. Edelin notes that Flybe offers a business class-style fast
check-in at London City, while JetBlue has created what's been described as a "no-frills chic"
approach with Italian furniture and Wi-Fi in its lounges at New York JFK.
But why is there a need for a brand model specifically catered to the airline industry? This is
because the airline industry is like no other it is cyclical in nature, incurs high-fixed costs,
there are uncertainties due to heavy dependency on other fluctuating factors like oil prices
and has a length of engagement with the customer that is not common in other industries.
This makes is difficult to apply branding principles from other industries to airlines. Hence, a
distinctive approach is needed for airline branding, which takes into account all these factors
unique to the industry.
An ideal branding model for airlines would take into account both, the bleak realities of the
business as well as the unique nature of the industry. Airlinebrandindex.com has put forth the
6X model to help guide an airlines branding approach by focusing on six key levels:
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Fig 1.2: The 6X Model
Brand Xpectation, Brand Xperience, Brand Xpression, Brand Xternalities, Brand Xtensibility
and Brand X-factor.
1. Brand Xpectation
Making an authentic brand promise is the key to having satisfied customers. Brand promise
emphasizes the airlines core identity, and reflects its clear differentiation and positioning in
the marketplace. An accurate projection of what an airline is about and the experience it will
deliver to the customer is the essence of Brand Xpectation. After all, personality inspires
trust; and trust builds loyalty.
Clarity and focus should drive a brands promise, with the aim to create a lasting impression
in the potential customers mind. Ideally, the positioning should pull logical and emotional
cords and differentiate the airline from its competitors. Differentiation could come in terms of
key strengths like pricing, service or even destinations. When it comes to price
differentiation, budget airlines like Kulula.com and Southwest are some of the best. Legacy
carriers like Singapore Airlines and Qatar Airways rule the skies in terms of setting
expectations of exceptional service. Airlines like Condor and Bangkok Air brand themselves
distinctly by serving select holiday destinations.
2. Brand Xperience
Brand experience is all about keeping ones word. An airline brand must strive to achieve and
deliver on its promises by aligning all product, service and corporate operations in order to
meet expectations.
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This happens across various touch-points from the booking hotline and website, to the
check-in queue and onboard the plane. These points leave a lasting impression in the minds
of consumers and are, hence, important tools in airline branding.
The quality of experience is all the more tangible in air travel because of its sheer duration. A
customer notices the way he/she is teated right from the moment he books his tickets, checks
in to the flight, boards, while sitting on the aircraft etc., all the way up to his safe arrival.
Often, airlines pay more attention to their frequent flyers and business class patrons, but
almost none of the other customers. It would be in the best interest of the airline to convert
the first time flyer into a die-hard fan.
3. Brand Xpression
Brand expression is often the overlooked aspect of branding which allows airlines to extend
the engagement with their customers. It facilitates constant interaction- an element that is key
to nurturing brand familiarity.
For the external customer, the airline should formulate a strategy to keep aware of the
customers perceptions not just before a flight, but also after they have landed. JetBlue, as an
example, follows its most interactive customers on Twitter. Such interactions on informal
fora encourage frank feedback and insights that executive would not have been able to tap
through formal methods of communication.
4. Brand Xternalities
Airlines have to deal with many issues that are beyond their direct control- pilot unions,
government regulations, delay due to bad weather, new competitors etc. Most airlines face
such problems; it their response that sets one airline apart from another.
Externalities, if paid attention to, can be leveraged to the airlines maximum advantage.
Keeping updated and staying prepared can help the airline to convert an emerging threat into
a huge opportunity. For instance, Jet Airways has been upgrading to newer, more fuel
efficient planes so as to hedge fuel costs and counter the ring oil prices.
5. Brand Xtensibility
It is an art to deliver a great experience once, but delivering a consistently great experience
over time is a science. This is because it requires meticulous planning and persistence to stay
true to that plan in the face of external and internal pressures to change course. Brand
13
Xtensibility requires an airline to stay true to its core brand personality in good times or bad.
More than anything else, it is this consistency that builds trust among customers.
6. Brand X-factor.
Creating a Brand X-factor is something that puts an airline in a league of its own and creates
a halo around the brand. These are often the nuances that ensure that the airline stands apart
from the competition and often leads to a cult status among its customers. Examples from a
different industry would be Harley Davidson motorcycles or Apple products. Those who buy
them, swear by them. In the airline world, Virgin Atlantic, Singapore Airlines (SIA) and
Southwest Airlines are outstanding examples of having created an X-factor.
Following are some other factors that an airline company typically considers while forming
its own brand. These are both tangible as well as intangible factors and they greatly influence
how a customer perceives the brand.
DESIGN IMPLEMENTATION
STRATEGY
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As you can gauge, these factors may be of two types: above the line (ATL) or below the line
(BTL). While ATL communications use media that are broadcast and published to mass
audiences, BTL communication use media that are more niche focused. In the case of
airlines, the advertisements we see on the televisions (Lufthansa) and the ones we hear on the
radio (British Airways) are examples of ATL communication as they dont tailor themselves
to each flyer. On the other hand, tie ups with travel agents, hotels etc., are BTL promotions as
the airline adapts its message to the needs of the target. For instance, a promotion at a
business hotel would be suited to address the needs of corporates while a collaboration with a
travel agency will ensure that the agent uses the best possible message to appease the needs
of the individual/group.
Airline
branding
Further, while some elements of airline branding can be touched and seen (tangible), a vast
majority of them are intangible. Although the consumer doesnt perceive it distinctly, he does
notice its absence. Tangible facets of branding are: advertisements, loyalty programmes,
uniform design, theme, colour scheme, logo, mnemonics (eg: Air Indias Maharaja) etc. On
the other hand, intangible factors are widely present. They include: brand identity, values and
ethics, environment, expression and the x-factor that sets the airline apart from its
competitors.
15
The Emergence of Low-Cost Airlines
As airlines begin to become more and more aware of the need for better branding, their
marketing budgets have been growing. However, consumers continue to fly with the brand
that charges lowest price. This has led to the emergence of low-cost carriers. The response by
airlines to customers demands for lower and lower fares has been to do exactly that, lower
seat costs, but at the same time to strip more and more of what is included in the fare out of
the price.
Pay less, get less. Want more? Pay more. Low-cost pioneer Ryanair has even suggested,
somewhat controversially, that more could include access to the toilet. In fact, according to
one consultant quoted, there are up to 35 add-ons available when you fly, ranging from
baggage and food fees to flight-delay insurance and keeping the middle seat empty. You
literally get what you pay for.
This seems like an expedient answer to customers demands for cheaper goods. Lure them in
then trick them into paying more. Its not exactly customer-friendly but at least, some
would argue, its a way to compete.
True, but changing the competitive model this way is not without its consequences. One is
that as the product itself becomes less valuable and valued, service now comes not just at, but
with, a price. That in turn shifts the emphasis from what customers get to what do they not
get, and what shortfalls they are prepared to do without.
For the moment whats happening in the aviation sector amounts potentially to a complete
economic rebalance of the product at that end of the market. As an article in Time Magazine
points out, In the unbundled world, airfare is merely the price of admission to get on a jet. If
you crave comfort, convenience, less stress, decent food what was once called good
service expect to pay up.
In time, the service itself, not the seat, will become the real competition point, as customers
look to build their own flights made up of base product and services that they are prepared
to add to cart. Staff meantime will find themselves being judged on their ability to up-and
cross-sell services in order to make targets.
16
As the fight for seats gives way to loss leader seat strategy, and a squabble over a la carte
services and the quality and profitability of those services, medium-term well probably see
airlines respond by using a mix of lower fares, bundled services and loyalty incentives to
adjust and respond to value perceptions.
Fig:1.4 Conceptual framework for choice set forFig:1.4 Conceptual framework for
choice set formation of an individual traveller
The input of the framework consists of a traveler with his or her needs and preferences and a
physical environment, with its objective opportunities and fragments. At the right side, the
figure shows a series of route sets that follow from a variety of experimental and mental
processes, which are shown to the left. The network, represented by the transport system in
the figure, offers a large and complex set of route alternatives for a trip of which the traveler
has limited awareness. The travelers awareness is, amongst others, influenced by previous
experiences and his manner of information acquiring. The alternatives, of which the traveler
is aware, are the known alternatives. Not all known alternatives will be considered as genuine
travel alternatives; time sensitive travelers will consider other alternatives than cost sensitive
travelers or comfort seeking travelers. From the perspective of the traveler, the known
alternatives that satisfy cost, time and comfort constraints form the set of available
alternatives. From the set of available alternatives, a limited set of alternatives will be
considered feasible. The set of available alternatives is limited through elimination by aspects
17
and depends on the travelers choice factors, which may be not directly measurable
characteristics of the routes. The subjective values of these factors follow from his perception
of objective route attributes relevant for his trade-off and choice and the relative importance
of the these factors (factor importance hierarchy). Only a fairly limited set of feasible
alternatives remains (the consideration set). Between the alternatives in this set, a more
elaborate trade-off will be made.
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Challenges faced in the industry
In the middle of last decade, India experienced exponential growth in the aviation industry.
Burgeoning middle class and increasing consumerism led
to the belief that very soon, airports would be as common Indian aviation industry is in bad
phase. From Indian aviation
railway stations. The 2008 economic slowdown changed
industry is in bad phase. From
all this and today we find carriers struggling to book Kingfisher to deep discounts
profits. More often than not the growth witnessed is everything is happening right
negative. Indigo is the only carrier which is profitable, but now. New players are entering
the scene and old are leaving.
that is again due to a different set of reasons. All other Idiotocracy is at an all time high.
companies are financially bleeding . Then again the blind race to offer deeper discounts to
win more customers has left the entire industry in shatters. For example, earlier this year,
when Air India announced discounts in fare, everybody else followed. Nobody stopped to
think the impact it would have on their balance sheets. The same was repeated when Air Asia
started its operations. Spicejet, a company with huge debts, gave tickets at throwaway prices.
While the government and regulatory authorities are responsible for the current state of the
industry much of the blame can be laid at the feet of these carriers themselves. It can be said
that the aviation business is one of the biggest benefactors and victims of crony capitalism.
The sector has to change its outlook first before hoping for a more positive outcome.
The industry observed a growth of 1.74% in the passenger traffic carried by scheduled
domestic airlines for January-July 2012 over the same period in 2011 but still incurred heavy
losses. Some of the many reasons behind these losses are:
High Aviation Turbine Fuel (ATF) prices: ATF is the major cost component in the airlines
operations. The cost of fuel for Indian operators accounts for nearly 45% of the total
operating costs which is around 34% for most operators in other parts of the world. One of
the major reasons is the high sales tax levied on ATF by respective state governments. In
different states of the country, the sales tax on ATF ranges as high as 25-30%. Moreover,
direct import of ATF was not allowed until recently.
High airport charges: The airport charges are very high in India as compared to other
countries. The Airports Economic Regulatory Authority (AERA) recently approved a
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massive 346% rise in Delhis Indira Gandhi International Airport charges making it among
the worlds most expensive airports.
Service tax: There is 12.36% service tax on air tickets in India. The aviation industry players
frequently use third party services for ticketing, aircraft maintenance, ground handling and
catering etc. which come under the regime of service tax leaving Indian operators into trouble
in stiff competition. This service tax on air tickets and on the services purchased by Indian
airline operators further add to the operating costs.
Emergence of substitutes: Air travel in India is facing tough competition from railways.
The railways were facing competition with the introduction of low cost air carriers therefore
various steps were taken to improve the rail services in the country. Many new trains with
improved service quality have been introduced offering passengers a good substitute
comparing to air travel. Though there is an overall growth in air passenger traffic but this has
affected the traffic negatively.
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Stiff competition: There is stiff competition in aviation industry which leaves the operators
helpless. High operating costs along with highly price sensitive consumer profile compel
Indian operators to reduce passenger fares in order to compete for market share. This
tendency to lure passengers through attractive discounts and low fares has resulted in price
wars in the industry.
Flight delays: Flight delays are a common and everyday scene but they leave huge impact on
operators as well as the economy. The delays result into money costs, time costs and cost of
lost demand because it discourages many air passengers. A delay in flights not only
negatively affects the aviation industry but other industries as well because aviation largely
connects people with their businesses.
There is a need to make joint efforts towards the growth of aviation industry rather than
indulging in unhealthy competition and price wars. The Government should also implement
strong measures to reduce taxes and improve infrastructure.
21
CHAPTER 2
REVIEW OF LITERATURE
22
REVIEW OF LITERATURE
1. Kalligiannis, Iatrou & Mason (2006) provides research about airline branding affected
by alliances and other attributes of Airline. The three important brand promoter
element for airline discussed in their research paper is the quality of service, service
features and Airline image. Their study results shows that quality of service has
highest rated in airline, then Airline image and in the last service features. However,
the brand conflict existing maximum between Airline and its alliance based on the
Service features offered. Brand conflicts by the airline size is the maximum in the big
size airline and its alliance, while smallest conflict in the small size of airline. In Asia,
all airlines are satisfied with alliance brand equity and only 38% of them don't want
their brand equity to reinforce.
2. Chen and Tseng (2008) evaluate the brand equity model for Airline Company over
the dimensions of brand awareness, brand image, perceived quality and brand loyalty.
Airline is service industry and has significant important implications on the brand
equity and Chen proposed the customer-based brand equity in airline industry. The
proposed model is designed based on the research on Taiwanese airline and based on
the empirical data analysis of the research.
3. Nigam (2008) has introduced the 6X model: an ideal branding model for airlines,
taking into account both, the realities of business and the unique nature of the
industry. The 6X model helps guide an airlines branding approach by focusing on six
key levers: Brand Xpectation, Brand Xperience, Brand Xpression, Brand Xternalities,
Brand Xtensibility and Brand X-Factor.
23
undercut the ticket price of full cost carriers by nearly 50%. Therefore, it is necessary
to introduce several new concepts in the route management, maintenance, flight plan,
distribution and service management.
6. Sebastianelli and Tamimi (2002) explained in their research that the different service
quality levels have different impacts. Like the superior services is likely to encourage
the favorable behaviors of customers and reduce the probability of unfavorable
behavior of customers. The important point is that the organizations should determine
the different levels of service quality that the organizations should target in order to
have the desired impact on the customer behaviors. Service quality is an important
factor for airlines that widely influence passengers choosing decisions
7. Kivetz & Simonson (2002). Frequent flyer programs provide value to their members
in two stages. In the first stage, program points are issued to members after paying the
airline for an airplane ticket and receiving the service. In the second stage, members
redeemed their points for free travel. Points have no practical value until they are
redeemed, but do have an important psychological meaning to frequent flyer
members. Point accumulation creates an anticipation of positive future events, which
increases members likelihood of staying in the relationship. Therefore, frequent flyer
24
programs are often considered value-sharing instruments and the ability to provide
superior value is instrumental to customer relationship initiation and retention.
8. Liu (2007) Attaining rewards typically requires customers to invest effort. In frequent
flyer programs, such efforts are extended over time, and rewards are provided only
after completion of the required effort stream. Perceived effort is defined as an
inconvenience inherit in complying with the program requirements, such as when
customers make a special effort to buy at a particular store or purchase more than they
would have bought otherwise. Perceived effort also includes any substitution costs,
that is, the disutility consumers incur by purchasing a particular brand that they would
not have purchase otherwise.
9. William M. Swan (2005) Concentration in the airline industry has been talked about
a great deal, as have the rates of deregulation. The concentration at the end of the US
deregulation period is discussed. Hubs give airlines dominance both at the hub airport
and at the smaller airports depending exclusively on the hub for service. Regrettably,
the work here is limited to measuring concentration at the world, major traffic flow, or
average of airport-pair markets levels.
10. Truitt and Kaps (1995), using a specialized computer research criterion, and key
informant interviews identified a list of 2 1 aviation specific and related publication
outlets available for publishing. This research procedure and methodology received
additional validity when the University Aviation Association codified the findings
into a UAA publication entitled, Directory of Scholarly Journals Which Publish Non-
Engineering Aviation Research. Replication of that study and by expanding the field
of search mechanisms, the authors set out to determine the present field for aviation
publications, both scholarly and non-scholarly. The results validate the previous
study, and identify and define, through tabular exhibits, contact points, addresses and
email and/or web site locations of previously sited locations and those emerging
subsequent to the UAA listing. In addition, this current effort adds new perspectives
on the reasons for publishing and who might be encouraged to publish in what type of
journal.
25
11. Elif Degirmenci, Huseyin Basligil. This study focuses on service quality, CRM,
Loyalty, Airline Service Quality etc., which play an important factor for customer
satisfaction. To satisfy the customer the Airlines Company should maintain good
relationships and provide high quality service to the customer. The service provider
should improve in-flight services, Then the loyalty of customers will be retained.
Customer loyalty also depends on the educational levels of the customer
13. Ejaz Wasay and Saif Ullah Malik. Employee motivation is an important factor, which
may be directly or indirectly related to customer satisfaction. If the employees are
well motivated then they perform a better job. Efficient employees who have a
cheerful outlook to work will directly translate into satisfied customers. If the
employees are nicely behaved the customer will feel valued. Employee motivation is
affected by both personal characteristics as well as workplace environment. And the
employee behavior will be positive when they are motivated and there is a healthy pay
system and work environment.
14. Schneider and White (2004) identified the importance of relationship between the
service quality of airline, behavioral intention and the customer satisfaction. The
researchers have explored the relationship and suggested that the customers
behavioral responses usually play an interceding role in service quality of airline,
behavioral intention and the customer satisfaction. In simpler words the behavioral
intention is anticipated as behavioral consequences of the service quality and it also
26
affects the customers actual behave or which in turn affects the organizations
financial outcomes.
15. Sebastianelli and Tamimi (2002) explained in their research that the different service
quality levels have different impacts. Like the superior services is likely to encourage
the favorable behaviors of customers and reduce the probability of unfavorable
behavior of customers. The important point is that the organizations should determine
the different levels of service quality that the organizations should target in order to
have the desired impact on the customer behaviors.
16. R.ARCHANA and DR.M.V.SUBHA They have studied the factors which influences
on passenger satisfaction. They have identified that Cuisines provided, seat comfort,
safety these factors have an important role in customer satisfaction. They have also
found that customer satisfaction depends on personal entertainment, which is an
important factor in flying decisions of passenger. According to their study online seat
booking, call centre facilities and reservation/cancellation is highest influencing factor
in flying decisions of the passengers.
17. Fen, & Meillian, 2005By going through several studies this has been concluded that
the dependency between the behavior consequences and the service quality exists and
the increase in one variable is likely to encourage the increase in the other variable
(Schneider & White, 2004). Several studies also pointed out that the service quality is
more conceptual than the behavior consequences of customers. The reason is the
behavior consequences of customers reflects the feelings of customers about various
experiences and encounters with the service organizations and at the same time the
service quality might be affected by the customers perception of the benefit that is
relative to cost
27
CHAPTER 3
RESEARCH METHODOLOGY
28
RESEARCH METHODOLOGY
SCOPE OF STUDY
The scope of the study was restricted to Chennai region. Data was collected from 50
respondents at random.
RESEARCH METHODOLOGY
Research is a diligent and systematic inquiry or investigation into a subject in order to
discover or revise facts, theories, applications, etc. methodology is the system of methods
followed by particular discipline. Thus, research methodology is the way how a research is
being conducted or the system of collecting data for research projects is known as Research
Methodology.
RESEARCH DESIGN
A research design is a framework or blueprint for conducting the research project. It details
the procedures necessary for obtaining the information needed to structure and/or solve
research problems.
DESCRIPTIVE DESIGN
Descriptive research design is a scientific method which involves observing and describing
the behaviour of a subject without influencing it in any way. The researchers used descriptive
design for the research study. The descriptive research helped the researchers to describe the
study with the collected data and present them with tables and charts. The methodology
29
involved in such design is mostly qualitative in nature producing descriptive data collected
from peoples own spoken words and observable behaviour.
In this study efforts were taken to describe the factors determining airline preferences among
flyers in Chennai.
SAMPLING METHOD
The sampling method refers to the collection of data from a few elements of the universe.
The average consumers who are buying quality products are the main respondents. Simple
random sampling method was used by the researchers for the collection of data.
SAMPLE SIZE
The sample size of the study is 60 respondents. The respondents were asked to answer a total
of 27 questions. Consumers from various demographic strata were selected at random for the
survey.
SAMPLE TYPE
Primary data
Primary data is known as the data collected for the first time through field survey. In this
study, the primary source of data was from the respondents themselves. We have used direct
questionnaire method.
30
Secondary data
Secondary data refers to the information or facts already collected. The researchers referred
the related literature from books, research theses, newspaper and websites which constituted
the secondary source of data.
The researchers used the tool of questionnaire to collect the data from the respondents mainly
because the sample size was very large and it would not be possible for the researchers to
personally interview 50 respondents. Further, the questions in the questionnaire were of a
general kind and the respondents would be able to answer them all without any doubts.
The researchers used mathematical and diagrammatical tools like line graphs, bar graphs, pie
charts and simple tables on percentage basis to represent the data collected from the
respondents pictorially and this form of representation was used to interpret and analyse the
data gathered and to draw conclusions based on it. The spreadsheet software MS Excel was
used for this purpose.
The researchers collected the data from 15th July 2015 to 15th August 2015.
This study has been done in Chennai where consumers have similar lifestyles. Hence, the
result of the study only apply to Chennai and may not be accurate for other cities.
1. Since it was a random sample survey, the whole population could not be analysed.
4. The respondents all belonged to the same city and had similar lifestyles. Thus the results
may be biased.
31
5. Changing environments has made the study a dynamic rather than an evergreen one.
DIFFICULTIES ENCOUNTERED
Though the researchers chose this topic for the research study out of interest, it was initially
very difficult for the researchers to get even minimum number of respondents for the study.
Though the respondents were very co-operative and were transparent in revealing the
answers, the researchers had to wait for each respondent to spare their busy time. At last, with
the motivation and help from the institution and the coordinator, the researchers were able to
complete the data collection within the stipulated time.
32
CHAPTER 4
ANALYSIS
33
1. Gender
Male 18
Female 42
30%
Male
Female
70%
Around 30% of the respondents were Male who are professionals and travel
mostly for business related purposes whereas 70% of the respondents were
female who are of the age group 18 - 21 and travel for leisure.
34
2. Age
18 - 21 21
21 35 21
Over 35 18
30%
35%
18-21
21-35
Over 35
35%
It is clear from the above pie chart that the majority of respondents that took
this survey were from the age group 21 - 35 year and the second highest being 18
- 21 year olds which shows that most of them travel for professional or business
related purposes.
35
3. Occupation
Business 13
Student 21
Professional 12
Employed 9
Unemployed 0
Others 5
0%
8%
22%
15%
Business
Student
Professional
20%
Employed
35%
Unemployed
Others
From the above pie chart it is clear that, students were the highest survey takers
who travelled for leisure and then entrepreneurs who run businesses who mostly
travel for business purposes and leisure sometimes and professionals who travel
for reasons similar to entrepreneurs
36
4. Annual income
25
21
20
17
15
13
Series1
10 9
0
Under INR 3,00,000 INR 3,00,000- INR INR 5,00,000-INR Above INR 7,00,000
5,00,000 7,00,000
It is clear from the above bar diagram that most of the respondents were from the
category of income below Rs. 3,00,000 since most were students, the second highest
being above Rs. 7,00,000, then between Rs. 5,00,000 to Rs. 7,00,000 and finally Rs.
3,00,000 to 5,00,000.
37
5. What are your main reasons for travel?
Particular Frequency
Leisure 33
Business 17
Medical 0
Other 10
17%
0% Leisure
Business
55% Medical
28% Others
It is clear from the above pie chart that most of the respondents travel to places by air
for leisure to spend some quality time with their families and experience new culture, a
quite a few of the professionals/entrepreneurs travel for business related purposes and
none for medical purposes.
38
6. What are your preferred means of long distance travel?
Rail 9
Road 5
Water 0
Air 46
15%
8% 0%
Rail
Road
Water
77%
Air
From the above pie chart it is clear that, majority of the respondents prefer
travelling by air as they feel that it is the most convenient and less time
consuming mode of transport, a very few takers for rail and road where most of
them earn below Rs. 3,00,000 and no takers for travelling by waiter (ships, boats,
etc.).
39
7. Do you enjoy air travel?
Criteria frequency
Yes 17
No 5
Neutral 34
30%
Yes
61%
No
9%
Neutral
The pie chart shows us that when asked the respondents if they like to travel,
most of them were on the neutral side and werent really able to decide if they
found it boring or fun, while 17 of them said they love to travel and a very few
said they don't as they find it boring.
40
8. How many times do you travel by flight each month?
Criteria Frequency
0 17
2(round trip) 25
4 13
More than 4 5
25
20
15
Series1
10
0
0 2(round trip) 4 More than 4
From the above bar diagram it is clear that when asked how often the
respondents travel every month, most of them said 2 round trips who mostly
constituted the professionals while the next highest said none as most of them
were students and they hardly travel once a year.
41
9. What is your preferred means of booking?
Airline Website 21
Travel Portal 29
Travel Agent 5
Other 5
8%
Airline Website
35%
Travel Agent
Travel Portals
49% Other
8%
From the above pie chart it is clear that when asked about the preferred means
of booking for the respondents, most of them preferred booking through travel
portals and airline websites rather than going to travel agencies, while the rest
preferred going to travel agents and others..
42
10. Do you regularly make use of online portals for the purpose of ticketing?
Yes 42
No 18
30%
Yes
No
70%
From the above pie chart it is clear that when asked if the respondents regularly
make use of online portals for the purpose of ticketing, majority of them, i.e.,
70% of them told us yes indicating that they were very well accustomed to use
online portals with ease while the other 30% said no as they preferred going to
agents to do the job for them.
43
11. If so, do you make use of their combo offers for booking hotels along with the tickets
Criteria Frequency
Yes 40
No 20
33%
YES
NO
67%
From the above graph it is inferred that more than 50% of the respondents use
the combo offers offered by the online portals to book their hotels along with the
flight tickets. Combo offers help the user to save time and to also is a convenient
way to book the entire trip. On the other hand, a few people feel that it turns
about to be costly when combo offers are used and membership cards cannot be
utilized.
44
To what extent do you value the following factors when booking an air ticket?
12. Price
Never Important 4
Rarely Important 16
Important 24
Slightly Important 8
Very Important 8
45
13. Frequency of flights to the destination
Never Important 0
Rarely Important 16
Important 16
Slightly Important 20
Very Important 8
The frequency of travel for an airline's flights are also seen as a slightly
important factor by our respondents. There is no respondent who feel that the
frequency is unimportant. Respondents who travel on an emergency and when
the trip is not pre panned look out for the frequency of the flights for last minute
bookings. On the other hand, for pre booked and pre planned travel this factor
does not turn out to be a problem.
46
14. Duration of travel
Never Important 4
Rarely Important 4
Important 20
Slightly Important 20
Very Important 12
7%
7% NEVER IMPORTANT
20% RARELY IMPORTANT
IMPORTANT
33% of our respondents feel that the duration of travel is slightly important and
33% feel that it is important. However, 7-10% of the respondents feel that it is
not very important. Again, this factor becomes important for emergency travels
and for travelers travelling on a long trip to many places.
47
15. Choice of seating
Criteria Frequency
Never Important 20
Rarely Important 24
Important 8
Slightly Important 4
Very Important 4
7% NEVER IMPORTANT
13%
40%
RARELY IMPORTANT
14% IMPORTANT
SLIGHTLY IMPORTANT
7% VERY IMPORTANT
33%
Choice of seating- Most of our respondents (40%) feel that its rarely important and
33% answered that it is never important. Hence, according to more than 75% of the
respondents the choice of seating is not important. Choice of seating becomes very
important for long distance travelers and regular travelers. Emergency travel and
short distance travelers usually do not find this factor important.
48
16. Baggage allowance
Never Important 4
Rarely Important 0
Important 16
Slightly Important 16
Very Important 24
6%0%
NEVER IMPORTANT
49
17. Quality of service
Never Important 0
Rarely Important 20
Important 16
Slightly Important 20
Very Important 4
7%0%
NEVER IMPORTANT
33%
RARELY IMPORTANT
33% IMPORTANT
SLIGHTLY IMPORTANT
VERY IMPORTANT
27%
33% of the respondents felt that the quality of service is important and 33% felt
that it is not important. This is majorly a mixed response. Quality of service
becomes very important when the travel is a long distance travel. But it should
also be noted that quality of service is at least slightly important at all points of
times. We have had respondents telling us that this factor is rarely only
important because one travels on an emergency or on short distance this factor
does not come to light at all.
50
18. Over the top services
Never Important 8
Rarely Important 8
Important 24
Slightly Important 8
Very Important 12
14%
20%
NEVER IMPORTANT
13% RARELY IMPORTANT
IMPORTANT
13%
SLIGHTLY IMPORTANT
VERY IMPORTANT
40%
When asked about the Over the top services, 40% of the respondents answered
saying it is important. A few felt it is very important due to long distance travel
and all. However, a few felt it is not all important. Thus the survey has given us a
mixed response. It majorly depends on the distance and purpose of travel.
51
19. Overall reputation
Never Important 4
Rarely Important 12
Important 24
Slightly Important 8
Very Important 12
20% 7%
20%
NEVER IMPORTANT
13%
RARELY IMPORTANT
40% IMPORTANT
SLIGHTLY IMPORTANT
VERY IMPORTANT
Almost every 4 out of ten respondents felt that the overall reputation of the
airline brand is an important factor which they look forward while booking their
flight tickets. No one would want to travel in an airline with a bad reputation.
However, in the case of utmost importance this factor is ignored and thus is the
response from 7% of the respondents.
52
20. Are you the member of frequent flyer program ?
Criteria Frequency
Yes 55
No 5
8%
YES
92% NO
More than 90% of the respondents are not a part of the frequent flyer program.
The distance travelled and the frequency of usage of the airline would entitle the
customer to redeem points to purchase other goods and enjoy other services and
also for further airline travel. More than 90% of the respondents are not a part
of the frequent flyer program. This is because most of them are not aware of
these benefits.
53
21. If so, when do you travel by airlines that you are not a member of?
Criteria Frequency
From the above pie chart 41% people choose for different prices flights because
of inconvenient prices, 25% people where flights are not available for the
preferred destination, and 17% when flights have long transit period in between
to avoid their inconvenience while travelling.
54
22. How often do you travel by premiere class or business class?
Criteria Frequency
Always 4
Sometimes 12
Never 28
7%
27%
20%
Always
Sometimes
Never
46% Only for long haul flights
From the above chart, 46% people never travels with both classes due to heavy
prices which many cannot afford whereas 27% people chose for long haul flights for
the convenient while travelling, 20% people chose sometimes for their leisure or for
business and 7% where people always travel by premium and business class for the
convenient.
55
23. Which would you prefer for international travel?
Criteria Frequency
From the above chart, 32% package with shortest route and least expensive
package are being preferred by people in order to avoid long duration and
avoiding higher prices whereas 20% people go with package with lesser stop and
while rest 16% preferred better in flight quality rather going with lesser stops or
short routes
56
24. Where do you most notice advertisements for airlines?
Criteria Frequency
Radio 4
Newspaper 14
Social Media 12
Magazines 14
Airports 12
Other 4
7% 7%
20% 23% Radio
Newspaper
Social Media
Magzines
23% 20%
Airports
Others
From the above chart, 23% people get aware through newspapers and
magazines which is more often read by the people whereas 20% people come to
know by airports and social media which is effective way of advertising and rest
7% which is done through radio and others ways of advertising.
57
25. Which of the following services do you think airlines should focus most on
improving?
Criteria Frequency
Quality of food 8
Quality of staff 16
Over booking 10
0%
27% Over-booking
From the above chart, 43% people thinks to improve more on frequent delays
and cancellations whereas, 27% should improve more on quality of staff and
their services, 17% should try avoiding over-booking and 13% should improve
more on food and provide nutritious food which is healthy these are the services
which people think to improve in the airline.
58
26. Which of the following is most likely to make you fly with the same airline again?
Criteria Frequency
Least price 10
On time arrival 20
Courteous staff 8
Loyalty programmes 12
Creative advertisements 0
0%
20% 17%
Least price
From the above chart, 33% people will travel again with same airline due to on
time arrival while rest 20% of loyalty programmes and then 17% of least price
and in flight services which make people to travel with same airline and whereas
courteous staff are been chosen less and creative advertisement doesnt make
any effort.
59
CHAPTER 5
61
Findings and Suggestions
1. The most frequent fliers are middle aged men who travel by planes for
business/work related purposes. Teenagers are mostly leisure travellers and
constitute the second largest group of fliers. On an average flying frequency is
limited to two flights a month.
3. Amongst the upper-middle class, air travel is the preferred means. These are
people who live the high-life. They are prepared to pamper themselves and are
open to experiencing new cultures. Business men on the other hand see airlines as
a convenience. They dont have time to spare and are in a rush to reach their
destinations.
4. Very few passengers claim to have enjoyed the journey. Air travel is still seen as a
means to an end. Airlines would do well to elevate the journey into an experience
by itself. Customers should look forward to travelling by air.
62
7. Combo offers that allow customers to book hotel rooms in advance are a popular.
At least fifty per-cent of the consumer book tickets this way as they believe it is
more economical. This is also the primary reason for the growing popularity of
online portals as a medium of booking tickets.
8. Frequency flyer program on the other hand hasnt been as successful as the above
mentioned online portals. This is because the consumer is more focused on rates
and time of journey at the time of booking. Brand itself is not factored.
Companies should take more initiative in promoting their brand and should offer
higher discounts to the members of such programs in order to make it more
worthwhile for consumers.
9. The consumer today is very impatient and does not take kindly to delays or
rescheduling. Special care must be taken while charting flight routes and in
ensuring that flights arent late. Airlines should also try to reduce the number of
transits in a journey. While the company cannot control air traffic, it should do its
utmost to avoid unnecessary halts.
10. Baggage is a sore spot for most travellers and business travellers are the only
exception. Airlines must adopt a consumer friendly baggage policy. This will help
them attract more customers and retain an edge over competitors.
11. While consumers arent particular about seating in short distance flights, it
becomes a grave concern for longer distances. Providing flexibility in the choice
of sitting will not add value to the consumer. However consumers are likely to
enjoy the freedom they receive in regard to this.
12. Quality of service is key to winning over consumers. It is important that the
customer feels valued. Customers enjoy feeling respected and it helps build a
positive brand image in the minds of the consumer. Customers are more likely to
choose the particular airline again if they are happy with the kind of service
provided. Companies therefore had to closely monitor the quality of service and
ensure that adequate controls are in place.
63
13. Almost every 4 out of ten respondents felt that the overall reputation of the airline
brand is an important factor which they look at while booking their flight tickets.
No one wants to travel in an airline with a bad reputation. However consumers are
willing to overlook the brand if they believe they are getting a better deal. This is
a clear indicator that airline companies have failed in brand management.
Customers dont distinguish between two different brands.
14. For airlines the most effective ads are those placed in print media, particularly
magazines and journals. Radio and television are the least powerful channels. Ad
makers should try to capitalize on their success in print ads and more intensive
campaigns have to be launched so that the customer is able to view the brand as an
entity by itself.
15. Repeat sales will most likely happen due to timely arrival of flights, low prices
and better inflight services in that order. Airlines too should practice caution and
avoid overbooking. Frequent delays and cancellations are two factor that irk the
consumer the most.
64
CHAPTER 6
CONCLUSION
65
CONCLUSION
This study aimed to explore the different airline brands preferred by consumers, the impact of
price on air travel, to understand the factors which influence a customers preference and to
identify the most effective media for airline branding.
There was a part for a theoretical overview regarding the factors of affecting customer loyalty
and determinants of consumer analysis. We also sought to understand the working model of
low cost carriers and highlight their reasons for success in recent times.
This report further emphasized the even more factors, in addition to those mentioned above,
(attitude, habit, satisfaction and loyalty) that may affect the consumers black box. All the
above were studied.
There were various opinions, concepts, definitions, descriptions, and explanations and all
these were discussed in the literature review. This gave us an insight to the multi-
dimensionality of the topic. It furthered our understanding of the limitations within the
aviation industry- both from the perspective of the brand, as well as the consumer. Moreover,
the study was of a conclusive type and realized a positivist, structured and formal approach.
The survey was exposed to about 60 respondents using Google Forms. Technology helped us
a great deal in completing the primary research as required by our project. It also simplified
our work while consolidating the quantitative analysis and presenting the same.
66
In the methodology part, research philosophy is explained and the data collection method has
been described. In addition to this, questionnaire design had been mailed to the respondents
to get their views on the study. A detailed analysis was done on the study.
The important conclusion is that, it is in the best interest of companies to start building brand
loyalty and work on enhancing the key factors (attitude, habit, satisfaction and loyalty) in
addition to the other factors (service, safety, comfort, luggage allowance and bonus).
Adoption of such focal points in the airlines short term or long term objectives can ensure
mediocre success in an industry plagued by constant losses.
67
CHAPTER 7
CASE STUDIES
68
CASE STUDY
In a wildly popular commercial for Turkish Airlines, two of sports' greatest stars-Kobe
Bryant and Lionel Messi-vie for the attention of one starstruck kid. Following on its success,
the company created a new YouTube ad called "Kobe vs. Messi: The Selfie Shootout" to
continue increasing brand awareness in Europe, North America, the Middle East and the Far
East. The spot was another huge success: It became one of the fastest spreading commercials
on YouTube, with 77 million views in just one week, and was one of the most popular ads of
2013.
Goals
Increase Turkish Airlines brand awareness around the world
Reach a new target audience: spirited, adventurous people with wanderlust
Test the campaigns effectiveness by measuring brand recall for Turkish Airlines ads
Approach
Craft a playful marketing campaign around one of 2013's most searched words: Selfie
Create a custom channel to introduce the campaign and demonstrate the company's spirit in
an interactive way
Leverage YouTubes advertising tools to reach a wider global audience
Results
Reached 77 million views in one week, making it YouTubes fastest spreading commercial
69
Multiplied the YouTube brand searches 3x and achieved a 16% increase in Google global
brand searches
Achieved a 9% increase in global brand recall
70
Low cost airlines: creating travel revolution in India
January 2011, www.strategicbriefings.com/2011/india/low-cost-airlines-creating-travel-
revolution-in-india/
The aviation sector in India is one of the fastest growing in the world with around 18.9%
growth in domestic passenger traffic in 2010 compared to 2009. By 2020 the domestic
passengers in India is set to increase up to 180 million. The boom in the aviation sector
started during the last ten years with the entry of various private players in the domestic
market leading to a significant reduction in air fares. Till then, domestic flying in India was as
costly as international flights. This was because of the limited options travellers had, to
choose from. The main airlines back then were Air India and Indian Airlines. But today, there
are at least ten different airlines operating in the domestic routes, thereby giving Indian
travellers competitive prices. This has actually led to a revolution in the way Indians travel
today. Till the early years of the 21st century, trains were the best means (price wise) for the
lower and middle income groups in India had for travelling inside the country. But now,
someone from Kerala does not have to spend 52 hours in trains to reach New Delhi.
At a time when the developed economies are complaining about slow growth rate, high
unemployment and jobs going to developing countries, such new investments, buying and
consumer trends from emerging markets like India is indeed a boon. They are creating jobs
and helping these companies to sustain at a time of global crisis and reduced profits.
According to Airbus, by 2028 the country would need 1032 aircrafts worth 138$ billion,
71
while, as per Boeing, the sector would require 1150 aircrafts worth 135$ billion in the next 20
years.
72
Building Brand Expectation: Case Study on Kulula.com
The Red Paper Series, 2008 AirlineBrandIndex.com
Simple and sincere expectation setting can go a long way in inspiring new customers to try a
new airline. Kulula.com was the first low cost carrier in South Africa, starting operations in
2001. Since the beginning, it has captured the hearts and minds of South African travelers by
bringing out the authenticity of the brand and then living up to their word. Kulula means
"easily" in the Zulu language and its advertisements are known for their quirky, almost
slapstick type humor, which never show an aircraft or air hostess. They focus on local flavor
and humor, showcasing real people, with whom their customers can relate to.
TV viewers and billboard gazers have been treated to images of South Africans from all
walks of life dressed up like kulula.com "fans," complete with capes and propeller beanies,
ready to take to the skies. Most of these ads feature the kinds of people who are the absolute
antithesis of the jet set: the mishmash of sorts one might see waiting for a bus or shopping at
Walmart. Through these, most South Africans saw an honest representation of themselves,
and logged on to book tickets that were substantially cheaper than those offered by the
incumbent South African Airways. Within a year, kulula.com had become the country's
biggest online retailer, and still holds the position.
Kulula.com set expectations showcasing their brand personality in the earnest. Those who
could relate to it felt that they were buying something that says something about them. They
were being a "rebel" and anti-establishment" by flying with Kulula.com.
73
Brand Engagement: Azul Airlines
The Red Paper Series, 2008 AirlineBrandIndex.com
Azul, the new Brazilian airline by former JetBlue CEO David Neelman, created a lot of buzz
even as it was just starting up.
The name, Azul, which means blue in Portuguese, was one of 157,000 submitted and voted
on by Brazilians in an online competition. With the name chosen, people will now have the
chance to vote on Azuls uniforms. Next will be a blog that Neeleman will author.
How is that for listening to the customer? A perfect example of giving customers a stake in
the outcome, and ensuring their preferences are prioritized.
74
Brand X Factor: Air Asia as a Low Cost Carrier
The Red Paper Series, 2008 AirlineBrandIndex.com
AirAsia, a Malaysia based budget carrier, one of the fastest growing airlines in Asia, is one of
the few airlines that have gone above and beyond traditional means to establish a strong
brand in the marketplace.
For starters, AirAsias CEO, Tony Fernandes has acquired such a celebrity status that he is
considered the Richard Branson of South East Asia. An exVirgin Records employee, he
turned the loss-making airline into Asias largest low cost airline in a very short time.
Fernandes also embodies AirAsia as a company. He melds so completely with the AirAsia
brand that its difficult to differentiate the man from his flying machines. That kind of
coalescence makes him an apt, accessible figurehead.
AirAsia has also created strong emotional bonds with its customers over time with its original
branding efforts. Malaysians are some of the most avid English Premier League soccer fans
in Asia. Capitalizing on this, Air Asia sponsored Manchester United, and has become their
Official Low Cost Airline.
Something that tugs the emotional chords even more is that AirAsia offered to facilitate the
transportation of aid to cyclone-ravaged Myanmar, including sponsoring flights for aid
workers and freeing up cargo space for aid materials recently. This was especially noticeable
when none of the other major regional airlines stepped up to the task.
75
CHAPTER 8
BIBLIOGRAPHY
76
Bibliography
1. http://aerobrand.net/services/airlines
2. http://www.aca-
assoc.com/resources/6_steps_to_building_a_swashbuckling_airline_brand.pdf
3. http://www.globalaviationresource.com/reports/2011/airlinebranding.php
4. http://www.brandingstrategyinsider.com/2014/09/transaction-mode-danger-for-
brands.html#.Vdd9lJOqqko
5. Dhoot, V. (June 4, 2012). Aviation Ministry proposes abolition of service tax on air
tickets & sales tax reduction on ATF. The Economic Times.
6. http://dgca.nic.in/reports/rep-ind.htm
7. PTI (June 12, 2012). IATA attacks India for rise in airport charges. Business
Standard.
8. PTI (September 9, 2012). Ask State Governments to Cut Sales Tax on ATF:
Commerce Ministry advises Finance Ministry. The Economic Times.
9. Indian Aviation Scaling New Heights. (2009). Deloitte Touche Tohmatsu India
Private Limited.
10. http://slugpost.com/2014/07/02/5-problem-areas-indian-aviation-
industry/#sthash.mwOipAAw.dpuf
11. https://www.academia.edu/1957640/FACTORS_EFFECTING_CONSUMER_PREF
ERENCES_IN_AIRLINE_INDUSTRY
12. http://scholarworks.umass.edu/cgi/viewcontent.cgi?article=1316&context=gradconf_
hospitality
13. http://www.academia.edu/8458499/Case_study_1_SAS_and_the_airline_industry_Int
roduction
14. http://www.academia.edu/7989321/Singapore_Airlines_Case_Study
15. http://adage.com/article/news/marketing-consumers-pick-airlines-fly/147276/
16. http://tejas.iimb.ac.in/articles/34.php
77
17. www.academia.edu/8458499/Case_study_1_SAS_and_the_airline_industry_Introduct
ion
18. Commons.erau.edu/cgi/viewcontent.cgi?article=1539&content=jaaer
19. https://hbr.org/product/scandinavian-airlines-sysytem/487041-PDF-ENG
20. ww.sauder.ubc.ca
78
CHAPTER 9
ANNEXURES
79
ASTUDYONCUSTOMERPREFERENCESINTHE
AIRLINEINDUSTRY
1. 1.Gender
Markonlyoneoval.
Male
Female
2. 2.Age
Markonlyoneoval.
1821
2135
Over35
3. 3.Occupation
Markonlyoneoval.
Business
Student
Professional
Employed
Unemployed
Others
4. 4.AnnualIncome
Markonlyoneoval.
UnderINR3,00,000
INR3,00,000INR5,00,000
INR5,00,000INR7,00,000
AboveINR7,00,000
5. 5.Whatareyourmainreasonsfortravel?
(tickmostappropriate)
Markonlyoneoval.
Leisure
Business
Medical
Others
6. 6.Whatareyourpreferredmeansoflongdistancetravel?
Markonlyoneoval.
Rail
Road
Water
Air
7. 7.Doyouenjoyairtravel?
Markonlyoneoval.
Yes
No
Neutral
8. 8.Howmanytimesdoyoutravelbyflighteachmonth?
Markonlyoneoval.
0
2(roundtrip)
4
Morethan4
9. 9.Whatisyourpreferredmeansofbooking?
Markonlyoneoval.
AirlineWebsite
TravelAgent
TravelPortals
Other
10. 10..Doyouregularlymakeuseofonlineportalsforthepurposeofticketing?
Markonlyoneoval.
Yes
No
11. 11.Ifso,doyoumakeuseoftheircombooffersforbookinghotelsalongwiththe
tickets?
Markonlyoneoval.
Always
Sometimes
Never
12. 12.19.Towhatextentdoyouvaluethefollowingfactorswhenbookinganairticket?
Markonlyoneovalperrow.
13. 20.Areyouthememberoffrequentflyerprogram?
Markonlyoneoval.
Yes
No
14. 21.Ifso,whendoyoutravelbyairlinesthatyouarenotamemberof?
Markonlyoneoval.
Whenpricesaresubstantiallydifferent
Whenflightsarenotavailableforthepreferreddestination
Whenflightshavelongtransitperiodinbetween
Others
15. 22.Howoftendoyoutravelbypremiereclassorbusinessclass?
Markonlyoneoval.
Always
Sometimes
Never
Onlyforlonghaulflights
16. 23.Whichwouldyoupreferforinternationaltravel?
Markonlyoneoval.
Thepackagewithlesserstopovers
Thepackagewithshortestroute
Theleastexpensivepackage
Thepackagewithbetterinflightquality
17. 24.Wheredoyoumostnoticeadvertisementsforairlines?
(tickallthatapply)
Tickallthatapply.
Radio
Newspaper
SocialMedia
Magazines
Airports
Others
18. 25.Whichofthefollowingservicesdoyouthinkairlinesshouldfocusmoston
improving?
(tickallthatapply)
Tickallthatapply.
Qualityoffood
Qualityofstaff
Overbooking
Frequentdelaysandcancellations
Others
19. 26.Whichofthefollowingismostlikelytomakeyouflywiththesameairlineagain?
(tickallthatapply)
Tickallthatapply.
Leastprice
Inflightservice(dinning,entertainment)
Ontimearrival
Courteousstaff
Loyaltyprogrammes
Creativeadvertisements
20. 27.Anyothercomments/suggestions.
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