A TYBMS Project Report

Airlines – A Prominent
Service Sector

Submitted To Prof. Jalpa Parekh of BMS

Department

Group Members:

Danish Choudhari (40)

Jaffer Choudhari (41)
Khatija Daudi (06)
Mayuri Joshi (08)
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 ACKNOWLEDGEMENT

We are greatly honoured and privileged to

thank and acknowledge those people who have
contributed directly or indirectly in making this
project successfully.
Firstly with gratitude, we would thank Our
Principal Sir, Prof. A.E. Lakdawala for giving us
the opportunity for making this project and
extracting good knowledge from this project. We
also thank Our Joint-Principal, Prof. Kamala A.;
Vice-Principal Prof. Mallika and Our BMS Co-
ordinator, Prof. Arshi in this context. With
immense gratitude, we would like to thank Our
Subject Co-ordinator, Prof. Jalpa Parekh, for
guiding us throughout the project.
We would also thank all the sources from
whom we have collected the data and lastly our

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group members who have been supportive and co-
operative throughout.

Sr. Contents Pg.

No. No.
1. Executive 4
Summary
2. Introduction 5
3. Origin of Aviation 6
Sector in India
4. Past Performance 7
5. Present 7
Performance
6. Future Plans 9
7. Contribution to 10
the Indian
economy
8. Key Players 12
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 9. Market 14
segmentation
10. Marketing Mix 16
11. New innovations 23
12. Conclusion 25
13. Bibliography 26

EXECUTIVE SUMMARY
The Aviation industry in India encompasses a wide range of services related to air
transport such as passenger and cargo airlines, unscheduled service operators --- private jets
and helicopters, airport management, and support services like Maintenance, Repairs and
Overhaul (MRO), ground handling, in-flight catering, and training.
The Aviation sector has reaped massive benefit from the entry of private carriers,
especially from those of the low fare ones. The growth of the airlines sector has caused a
sharp upturn in demand for allied services including MRO, ground handling, and catering
services. The booming aviation industry, along with its tertiary services, has wreaked a
major talent crunch, boosting opportunities for training service providers. The ever-
expanding Indian economy and increased demand for trade has pushed the need for air
cargo services to a new high. Increasing number of entrants in the sector has forced airports
to expand their cargo handling capacities.
The aviation sector is still a small part of the travel and transportation services sector in
India. 2006-07 posted annual passenger traffic of about 96 million, as compared to nearly 6
billion passengers carried by the railways. The industry has already bumped into several
challenges; inadequate infrastructure being the most crucial. The airlines suffered losses of

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around USD 500 million in 2006-07. The high cost of operations, intense competition, and
unsustainably low fares have contributed to these losses. While initiatives have been taken
to remove bottlenecks to growth, a need for further investments in capacity is felt more than
ever. A recent spate of mergers, however, has come to some relief.
The decelerating profit margin does not entail a slump in revenue generation. It is the
increasing costs that have thrown the aviation industry into the present plight. India’s
aviation sector stands up to the crisis and races against its fastest growing global
competitors. Improved affordability and connectivity add to the expected improvement in
both passengers and cargo traffic. Large public and private investments in air travel
infrastructure, supported by government initiatives, are expected to pour in.

INTRODUCTION
The Indian aviation industry is one of the fastest-growing aviation industries in the
world. With the liberalization of the Indian aviation sector, aviation industry in India has
undergone a rapid transformation. From being primarily a government-owned industry, the
Indian aviation industry is now dominated by privately owned full service airlines and low
cost carriers. Private airlines account for around 75% share of the domestic aviation
market. Earlier air travel was a privilege only a few could afford, but today air travel has
become much cheaper and can be afforded by a large number of people. In addition to these
factors, the emphasis on modernization of non-metro airports, fleet expansion by airlines,
service expansion by state owned carriers, development of the maintenance, repair and
overhaul (MRO) industry in India, opening up of new international routes by the Indian
government, establishment of new airports and renovation and restructuring of the existing
airports have added to the growth of the industry.

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 Air transportation in India now comes under the direct control of the Department of
Civil Aviation, a part of the Ministry of Civil Aviation and Tourism of Government of
India. Aviation by its very nature constitutes the elitist part of our country's infrastructure.
This sector has substantial contribution towards the development of country's trade and
tourism, providing easier access to the areas full of natural beauty. It therefore acts as a
stimulus for country's growth and economic prosperity.
With a compound annual growth rate (CAGR) of 18 per cent and 454 airports and
airstrips in place in the country, of which 16 are designated as international airports, Union
Civil Aviation Minister, Mr. Praful Patel has stated that the aviation sector will witness
revival by 2011.

Origin of aviation sector in India

The origin of Indian civil aviation industry can be traced back to 1912, when the first
air flight between Karachi and Delhi was started by the Indian State Air Services in
collaboration with the UK based Imperial Airways. It was an extension of London-Karachi
flight of the Imperial Airways. In 1932, JRD Tata founded Tata Airline, the first Indian
airline. At the time of independence, nine air transport companies were carrying both air
cargo and passengers.

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 These were Tata Airlines, Indian National Airways, Air service of India, Deccan
Airways, Ambica Airways, Bharat Airways, Orient Airways and Mistry Airways. In early
1948, Government of India established a joint sector company, Air India International Ltd
in collaboration with Air India (earlier Tata Airline) with a capital of Rs 2 crore and a fleet
of three Lockheed constellation aircraft. The inaugural flight of Air India International Ltd.
took off on June 8, 1948 on the Mumbai-London air route. The Government nationalized
nine airline companies vide the Air Corporations Act, 1953. Accordingly it established the
Indian Airlines Corporation (IAC) to cater to domestic air travel passengers and Air India
International (AI) for international air travel passengers. A third government-owned airline,
Vayudoot, which provided feeder services between smaller cities, was merged with IAC in
1994.

Past performance
Around 2006-2007, the airlines began showing signs of financial distress. The
combined losses for Air India and Indian Airlines in 2006-07 were Rs 770 crores (Rs 7.7
billion). After the merger of the airlines, this went up to Rs 7,200 crores (Rs 72 billion) by
March 2009. This was followed by restructuring plans which are still in progress. In July
2009, SBI Capital Markets Ltd was appointed to prepare a road map for the recovery of the
airline. The carrier sold three Airbus A300 and one Boeing 747-300M in March 2009 for
$18.75 million to survive the financial crunch.

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 Analysts opined that a combination of factors such as high aviation turbine fuel
(ATF) prices, rising labor costs and shortage of skilled labor, rapid fleet expansion, and
intense price competition among the players were responsible for the losses in this sector.
The problem was also compounded by new players entering the industry even before the
existing players could stabilize their operations. It was estimated that the industry as a
whole could face losses of over Rs. 22 billion in 2006-07. Some experts expect the industry
to consolidate in the near future. The government also was keen to restrict the losses in this
sector by closer scrutiny of the business plans of new entrants, conducting quarterly
financial audits, etc.
Present performance
Revolutionized by privatization along with active participation of the foreign
investors, the Indian aviation industry has experienced phenomenal transformation over the
last couple of years. From being a service catering to the needs of the privileged group only
it is now well within the reach of middle class population. This has been the result of
increased competition in the Indian aviation industry due to the presence of a wide variety
of private and public airlines with their low price tags. It was further helped by the entry of
Air Deccan, the first budget airline in India, offering unbelievable tariffs to the customers.

It is a phase of rapid growth in the industry due to huge build-up of capacity in

the LCC (low cost carriers) space, with capacity growing at approximately 45%
annually. The growth in supply is overshadowed by the extremely strong demand
growth, led primarily by the conversion of train/bus passengers to air travel, as well
as by the fact that low fares have allowed passengers to fly more frequently.
In the financial year 2005-06 there has been a significant 22.3 percent growth in
passenger traffic in the domestic airports while the aircraft movement recorded a growth by
14.2 percent. In terms of the number of flights Jet Airways secures the top position with
8,168 flights operating till June 2005. Indian Airlines is in second position with 7,562

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flights. Sahara (3,225 flights), Air Deccan (2,889 flights), Spice Jet (483 flights) and
Kingfisher Airlines (267 flights) come thereafter in the list of domestic and national carrier
operators. With an increase in traffic movement during December 2009 and increase in
revenues by almost US$ 21.4 million, the Airports Authority of India seems set to accrue
better margins in 2009-10, as per the latest estimates released by the Ministry of Civil
Aviation. This is being primarily attributed to increase in the share of revenue from Delhi
International Airport Limited (DIAL) and Mumbai International Airport Limited (MIAL).
Passengers carried by domestic airlines from January-February 2010 stood at 8,056,000 as
against 6,761,000 in the corresponding period of 2009—a growth of 19.2 per cent,
according to a report released by the Ministry of Civil Aviation.
According to the reports of PTI on Thursday, May 13, 2010, between January and
April, domestic airlines carried around 1.62 crore passengers as against the 1.33 crore
during the same period last year. This came against the backdrop of continued downward
trends witnessed in the global aviation sector since it was hit by recession and experienced
negative growth since 2008. In contrast, the scheduled Indian airlines flew a total of 41.88
lakh domestic passengers in April against 39.03 lakhs in March this year. Of these, Jet
Airways and JetLite combined carried 10.84 lakh, Kingfisher 8.98 lakh, while Air India
(domestic) remained at the third spot with 7.62 lakh passengers. Among the low cost
carriers, 6.58 lakh passenger preferred to fly with IndiGo, SpiceJet carried 5.27 lakh and
GoAir 2.46 lakh while all-business airline Paramount Airways carried just 13,000
passengers during April, official figures showed.
Barring Kingfisher and Paramount Airways, all other airlines witnessed a growth in
their market share in April in comparison to their shares in the month of March. Kingfisher
witnessed the biggest fall in its market share from 22.6% in March to 21.4% in April,
while Paramount's share dipped from 1.6% to a mere 0.3%. Market share of Jet Airways
and JetLite combine remained almost same. Its share was 25.8% in March which increased
to 25.9%. Among the gainers, market share of troubled national carrier Air India
(domestic) went up from 17.6% in March to 18.2% in April, while that of IndiGo went
up from 15% to 15.7%. Similarly, SpiceJet cornered a share of 12.6% in April against
12% in March and GoAir 5.9% against 5.4%, figures showed.

FUTURE PLANS
 The boom in the aviation sector is likely to generate nearly 2.5 lakh jobs by the year
2010. The study says that the civil aviation sector is also set to become Rs 35,000-
crore industry by the same time.

 Scheduled Aircraft - The total aircraft fleet is likely to reach 1000 by 2020, including
replacement of the current fleet of 312 aircraft, with an estimated value of US$80bn

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  The growth of India’s aviation sector has the potential to absorb up to US$120
billion of investment by 2020.

 Air Traffic - CAPA research projects that domestic passenger traffic will reach 150-
180 million by 2020, with international traffic in excess of 50 million.

 General Aviation - Market for 500 + aircraft in the Non-Scheduled Category by 2020
and 300 aircraft in the private category use. Estimated Investment of US$ 4 billion.

Airports – US$ 30 billion plus investment requirement by 2020(Included 9 billion

already committed).
 Indian aerospace companies are growing too. Hindustan Aeronautics Limited (HAL)
was ranked 40th in Flight International's list of the top 100 aerospace companies last
year.

The AAI has drawn ambitious long term plans to meet challenges posed by ever
increasing air traffic and advancement in aircraft technology. Some of the major plans for
implementation of ICAO CNS/ATM programme are:

• Replacement of ground based Communication, Navigation and Surveillance (CNS)

with Satellite based CNS system.
• Establishment of Differential Global Positioning System (DGPS).
• Automation in the Air Traffic Control Services.
• Establishment of Automatic Dependent Surveillance (ADS).
• Coverage of the Indian land mass through Satellite Communication, VHF Data Links
and Monopulse Secondary Surveillance Radar with Mode 'S' Capability.

CONTRIBUTION OF AVIATION SECTOR TO

THE INDIAN ECONOMY

The Role of Aviation Industry in India GDP in the past few years has been
phenomenal in all respects. The Aviation Industry in India is the most rapidly growing
aviation sector of the world. With the rise in the economy of the country and followed by
the liberalization in the aviation sector, the Aviation Industry in India went through a
complete transformation in the recent period.

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 The growth in the Indian economy has increased the Gross Domestic Product above
8% and this high growth rate will be sustained for a good number of years.

 Air traffic has grown enormously and expected to have a growth which would be
above 25% in the travel segment.

 In the present scenario around 12 domestic airlines and above 60 international

airlines are operating in India.

 With the growth in the economy and stability of the country India has become one of
the preferred locations for the trade and commerce activities.

 Aviation Industry in India has placed the biggest order for aircrafts globally. Aviation
Industry in India holds around 69% of the total share of the airlines traffic in the region of
South Asia

Future challenges:

 Initializing privatization in the airport activities

 Modernization of the airlines fleet to handle the pressure of competition in the

aviation industry

 Rapid expansion plans for the major airports for the increased flow of air traffic

 Immense development for the growing Regional Airports

FDI Policy:

The Reserve Bank of India (RBI) announced that foreign institutional investors might
have shareholdings more than the limited 49% in the domestic sector.

In Airports:

 Foreign equity up to 100% is allowed by the means of automatic approvals

pertaining to establishment of Greenfield airports.

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  Foreign equity up to 74% is allowed by the means of automatic approvals
pertaining to the existing airports.

 Foreign equity up to 100% is allowed by the means of special permission from

Foreign Investment Promotion Board, Ministry of Finance, pertaining to the
existing airports

In Air Transport Services:

 Up to 49% of foreign equity is allowed by the means of automatic approvals

pertaining to the domestic air transport services.

 Up to 100% of NRI investment is allowed by the means of automatic approvals

pertaining to the domestic air transport services.

Key PLAYERS
1) Kingfisher launched its services in May 2005. Dr. Vijay Mallya is the chairman and
the CEO of Kingfisher airlines.

2) Air India was founded by J. R. D. Tata in July 1932 as Tata Airlines, a division of
Tata Sons Ltd. It is India's oldest and largest airline. Its corporate office is located at
the Air India Building at Nariman Point in South Mumbai. It is the 16th largest
airline in Asia.Air India is facing financial crunch. Air India has 44 worldwide

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 destinations. In the financial year ending March 31, 2006, Air India has made a
net profit of Rs.97 million; earned a revenue of Rs.87,480 million -
representing a growth of almost 15 per cent over the previous year.

3) Air Sahara is a privately owned airline operating scheduled services connecting

all metropolitan centers in India. The airline was established on 20th
September, 1991 and began its operations on December 1993 with two
Boeing 737-200 aircraft as Sahara Airlines. Sahara Airlines was rebranded as
Air Sahara on 2 October 2000.

4) Jet Airways started Indian commercial airline operations in May 1993. Naresh Goyal
is the founder & chairman. Jet Airways, along with Air Sahara, is the
only airline which survived the dismal period of 1990s when many
private airlines in India were forced to close down. Jet Airways operates over
300 flights to 43 destinations. It currently controls about 32% of India's
aviation market. In April 2007, they acquired Air Sahara.

5) SpiceJet is a low-cost airline. Their marketing theme "offering low 'everyday

spicey fares' and great guest services to price conscious travelers". Their aim is
to compete with the Indian Railways passengers travelling in AC coaches.

6) Indigo Airlines is a new and private domestic airline. It ordered 100 Airbus A320
aircraft during the 2005 Paris Air Show. The new low-fare carrier has started
operations from August 4, 2006.

Name of the players Market

share
Kingfisher Airlines and Kingfisher Red 28%
(previously Air Deccan)
Jet Airways and Jet Lite (previously Air 25%

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Sahara)
Air India and Indian (previously Indian 16%
Airlines)
Indigo 14%
SpiceJet 12%
GoAir 3%
Paramount airways 2%
MDLR airways 0.004%

MARKET SEGMENTATION

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 To segment a market is to identify the fact that certain parts of the market are
different from others. Market segmentation is a notion associated with target marketing
because in target marketing, products or services are tailored for the needs of different
clientele. This approach is quite different from the mass marketing concept because in mass
marketing, all commodities are produced in bulk and they are assumed to meet similar
consumer needs. While this approach has its advantages, one cannot ignore the fact that it
disregards one of the most important rules in marketing; that consumer needs and
preferences rarely collude. In general there are three approaches to market segmentation:
In undifferentiated strategy, all the customers are treated as same and no particular
efforts are made by the firm to satisfy particular groups. This works in case of commodities.
In case of concentrated strategy, one firm chooses to focus on one of the several
segments that exist leaving others to the competitors. For e.g. Deccan airlines focuses on
price sensitive customers.
But many airlines go in for differentiated strategy wherein they offer high prices
tickets to those who are inflexible in that they cannot tell in advance when they need to
fly. Mostly, this category is for business travelers filling up the plane partially. And the
remaining seats are given to price sensitive consumers ordering tickets in advance.
There are three types of segmentation variables:

Demographic segmentation:
Demographic segments depend on a series of attributes. This is one of the most common
marketing segments. Under this, products are segmented on the basis of age, sex, income
levels, location, ethnicity, etc. for e.g. Jet Airways have segmented East and west India on
the basis of their food preferences like west prefer vegetarian whereas east prefer non-
vegetarian. Jet airways has two economy class subsidiaries, namely Jet Lite and Jet Airways
Konnect.

Psychographic segmentation:

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Psychographic segmentation refers to the use of consumer lifestyles as a basis for
classifying ones' customers. Since different people have different interests and activities,
then such an approach would be plausible in marketing. In this approach, companies may
classify their consumer on the basis of their values. Jet airways provide Golden Jet Escapes
and Jetkids which is a special program for children aged 2 to 12, Jet mall in partnership with
ELVY-premier and domestic.

Behavioural segmentation:
In this category, consumers are classified according to consumer reception of company
products. Some consumers may use products frequently, while others may be first timers. In
other instances, other consumers may be occasional purchasers. Jet airways offer Jet
Privilege for frequent flyers and Jet Mobile and Air India is still preferred airline for the
government staff and old clientele.

MARKETING MIX

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 The marketing mix refers to the blend of ideas, concepts & features which marketing
management put together to best appeal to their target market segments. Each target
segment will have a separate marketing mix, tailored to meet the specific needs of
consumer in the individual segment.
Service marketing managers have found that the traditional four P's of marketing are
inadequate to describe the key aspects of the service marketer's job. The traditional
marketing mix is said to consist of the following elements of the total offering to
consumers: the product (the basic service or good, including packaging, attendant services
etc.); its price; the place where the product is made available (or distribution channels - not
generally a real issue for most services, except perhaps for repair and maintenance); and
promotion (marketing communication: advertising, public relations and personal selling).

A. Product Mix

The airline industry is a service that satisfies customer needs for travelling. In the
airline the customer can be divided into two segments: Business and Leisure. As we further
became a global economy and communication between international companies intensifies,
business travel continues to increase. Some of the problems like punctuality, political
instability, fuel prices, regional problem, weather conditions, etc. are the major concerns of
an airline industry which should be avoided in order to provide better products.
The services provided inside the flight include the core service of travel, crew,
ambience and comfort, in-flight entertainment etc. This is highly variable across competitors
as per brand and different classes of travel. The on-the-ground services include a convenient
airport with car parking facilities, waiting lounges, duty free' shopping quick and efficient
checking of baggage, efficient service at reservation counter, transport to the airplane, etc.

Levels of Product:

1. Core Product: At this level the core benefit is converted into a basic service package.
Core benefit is the benefit which the customer is actually buying. In our case it is the
service of traveling or transportation of goods. The basic or the core product includes
from buying the ticket to reaching the destination. The low cost airlines like Indigo,
GoAir and SpiceJet offer the product at this level and compete on the basis of price.

2. Formal/Actual/Expected Product: This includes a set of services and products that

the consumer normally expects to receive along with the core benefit. For example: In
flight snacks, comfortable seats, on time departure and arrival etc. The low cost model
of airlines labels these addition services as ‘frills’ and tries either to eliminate or
charge separately for these.

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 3. Augmented Product: An augmented product exceeds customer’s expectations. For
example, serving hot food, warm and friendly crew, provision of in flight
entertainment etc. At this level all possible augmentations are offered and the
companies try to encompass new and innovative ways to satisfy customers. Where
Emirates airline offers onboard shower spas for the first class customers, Thai
Airways offers a limousine service at the airport and Virgin Atlantic offers an onboard
massage. Jet Airways, Kingfisher Class, Air India IC compete in this segment. Sahara
airlines offer six types of cuisines like vegetarian, fat free, diabetic, etc.

4. Potential/Future product: As mentioned above, the customer’s needs keep on

changing, the future is unknown. The customers might look for inexpensive traveling
like air taxis, supersonic speed, etc.
As the level moves from the core benefit to the potential product, the competition moves
from price to service and experience of the customer.

Kingfisher airlines’ success can be related to the differentiated features provided by it

like:
• Roving agents: A roving agent is a check-in counter on the move. Passengers with
hand baggage are required to stand in queues at the check-in counters. The roving
agents come to the customer and assist them.

• Different check-in options: The airlines allow its customers to do a web check-in
from its website apart from the airport check-in.

• Special care for unaccompanied minors, senior citizens, etc: The airline takes the
responsibility of escorting the children safely to the arrival terminal and after
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 verifying the credentials of the assigned person, the child is released. Disabled
passengers are assigned a wheel chair.

• In-flight treatment: Every seat is treated to an individual T.V with Live T.V as well
as pre-recorded entertainment channels and radio.

B. Promotional Mix

The aims of promotion fall into three main categories: to inform, to remind, & to
persuade. It will always be necessary to inform prospective consumers about new products
& services, but other issue may also need this type of communication to consumers; new
uses, price changes, information to build consumer confidence & to reduce fears, full
description of service offering, image building, etc. Similarly consumers may need to get
reminded about all these types of issues, especially in the off-peak season.
Kingfisher has adopted a well rounded approach to reach out its customers. Kingfisher
has 360 degree promotion strategy. They promote through all possible media like T.V.,
radio, print, outdoor, malls multiplexes, clubs and their in-flight magazine. They have tied
up with various brands like Tata Tetley, Pepsi, Microsoft, Inox, ICICI bank, etc. It has also
issued a co-branded credit card in association with ICICI Bank. The card owner earns 100
point on every spend which can be converted into King Miles. King Club is a airline’s
loyalty program. As a member of the club, customers enjoy a wide range of exclusive
discounts and privileges. The more a customer flies with Kingfisher, the more he is
rewarded. On the promotional front, Kingfisher Airlines has signed up the latest diva of
Bollywood Ms. Deepika Padukone as the Brand Ambassador.

C. Price Mix

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 Pricing in airlines is a fairly complex issue, since there are price variations due to
variations in the level of demand, particularly because of seasonality, when every airline
gives price discounts & competition is tough. An airline is always faced by high levels of
fixed costs, leading to variants of cost-plus pricing or ROI as key determinants of pricing
levels.
It is important to include pricing tactics which exploit price sensitivities fully. It
differentiates service levels & offer higher price ‘value added services’, as in business class
air travel. We have different authorities to manage and control domestic as well as
international air transport business. The Ministry of Civil Aviation, the Indian Airline
Corporation, the National Airport Authority, the International Airport Authority of India
and the Air India Corporation are the bodies directly or indirectly influencing the process of
pricing decision. The concept of fair price is very important. Pricing can be classified in 3
ways:

• Cheap value pricing: This method of pricing is used to undercut the competition and
trigger immediate purchase. Though the unit profits are low, the overall profits are
achieved. In order to meet the competition and consolidate their position in the
market, Air India and Indian Airlines have their price.

• Value for money pricing: In this method, average price is charged for the product
and it is emphasized that it represents excellent value for money at this price. This
enables the airline to achieve the good level of profit.

• Premium pricing: In this method, the prices are set above the market price either to
reflect the image of quality or the unique status of the product. Premium pricing
succeeds if the company enjoys a strong reputation that the brand image alone is
sufficient or the product features are not shared by its competitors.

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 Kingfisher Airlines has been termed as the “first full frills – true value carrier”. The
airline has a well defined target audience which is the Sec A and Sec B+ of the Indian
economy which falls under the age group of 25 – 45 years with high disposable income.
This section is modern and trendy looking for high flying experience even though they have
to shell out more. Gourmet cuisine and in-flight entertainment is offered on board.

D. Place Mix

The air transport organisation has to make sure that the prospects don’t face any
difficulty while buying the tickets and make necessary arrangements for the confirmation of
the booking. It is also confirmed that the users booking their luggage do not face any
inconveniences. Another dimension of place is related to the location and management of
offices of airways, travel agent, tour operators, transport operators etc. Easy accessibility
should be the main criteria in selecting the place. The place should be safe, well connected
with all weather proof roads, where all the required infrastructure facilities are available.
The water and sanitation facilities for the users and comfortable seating arrangements must
be made available. Lighting and ventilation facilities should also be taken care of. The
interior decoration furnishing, plantation needs aesthetic sense so that the user forms a
positive opinion regarding the airway services. In airlines, they utilize more than one
method of distribution: they sell tickets through travel agents and sell seats to tour
operators.
In Place Mix, Kingfisher includes following:

• Connectivity: Kingfisher flies to 38 destinations across India which covers a wide

geography and connects all metros and major cities. It also has connectivity among
the two tier cities of the country.

• Frequency of flights: Kingfisher operates 218 flights everyday across its 38

destinations. The frequency between the four metros and other major cities accounts
for maximum number of take-offs every day.

• Booking of tickets: The customers have the option to book ticket at the airport or
through travel agent or by logging on the website.

E.People Mix

Many services require personal interactions between customers and the firm's
employees and these interactions strongly influence the customer's perception of service
quality. For example, travel through airlines can be greatly affected by the way of serving,
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knowledge ability, helpfulness of the staff - both crew members as well as ground staff.
One's impression about the airline and willingness to return are determined to a large extent
by the brief encounters with the front-desk staffs, crew members, helpers, airhostess and so
on.
After all, these employees must believe in what they are doing and enjoy their work
before they can, in turn, provide good service to customers. Management policies are
considered to be of particular strategic importance for delivering high-quality services.
Establishing a customer-oriented culture throughout the firm and empowering employees to
provide quality service cannot be established merely by putting up inspiring posters.
Management leadership, job redesign and systems to reward and recognize outstanding
achievement are among the issues that a successful service manager must address. The term
"internal marketing" has been coined to characterize the sets of activities a firm must
undertake to win over the hearts and minds of its employees to achieve service excellence.
The real winning factor for Kingfisher is the quality of the staff service and it is of
course critical that the airline is able to sustain quality levels as they experience continued
and rapid expansion. The crew undergoes rigorous training programmes. It has also
instituted Kingfisher Training Academy to cater to the growing demand of trained service
oriented professionals. This institute provides intensive training on Airlines Orientation
covering Airline Rules and Regulations, Cabin Familiarization, Gallery Management and
Announcement Delivery.

F. Physical Evidence Mix

This element of the expanded marketing mix addresses the "tangible" components of
the service experience and firm's image referred earlier. Physical surroundings and other

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visible clues can have a profound effect on the impressions customers form about the
quality of the service they receive. The "services cope" - that is, the ambience, the
background music, comfort of seating and the physical layout of a service facility - can
greatly affect a customer's satisfaction with a service experience. In particular, all physical
evidence must be designed to be consistent with the "personality" that the firm wishes to
project in the marketplace.
Kingfisher airline’s physical evidence includes:

• Fleet: Kingfisher airline has a brand new fleet of aircraft comprising of 18 ATR 72, 4
A 319s, etc.

• Interiors: All aircrafts have design interiors, what influences customers is the bold
red colour.

• Cleanliness: all aircrafts are well maintained for cleanliness and a pleasant
experience.

G. Process Mix

Because customers are often involved in the production of services, the flow and
progress of the production process is more important for services than it is for goods. A
customer who buys a television set is not particularly concerned about the manufacturing
process that made it. But the customer at the airport is not merely interested in the end result
i.e. the travel but the entire experience of arriving at the restaurant - of being seated,
enjoying the ambience, check in, security checks, being seated in the airplane - is important.
The customer service department deals with a number of processes involved in
making marketing effective in an organisation, for e.g. processes for handling customer
complaints, identifying customer needs and requirements, etc. Kingfisher has following
processes:
• Easy booking of tickets - 24/7 customer service, web booking and travel
agents.
• There is a personalized valet service provided at all airports. The valet service
staff assists the passengers’ right from the time they reach airport till the check-in and
also upon the arrival at the destination where the staff guides the passengers to the
right baggage belt and assists them with it.
• The airline tries to ensure that the passengers can retrieve their baggage after
they disembark from the aircraft within the shortest possible time.

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 New innovations
1. PMO pushes for higher FDI in airlines

The Prime Minister’s Office (PMO) has pushed for allowing foreign airlines to pick up
stakes in Indian carriers along with a significant say in their management. It has asked the
civil aviation ministry to support Indian airline companies’ plans for rapid fleet and route
expansion with such a policy action. The PMO has specifically told the ministry in a recent
letter to promptly include the proposal on the agenda of the group of ministers (GoM) on
aviation, official sources told FE. The move is expected to lead domestic airlines to adopt
global best practices, besides opening new funding vistas at a time when air traffic growth
has peaked. The PMO initiative also coincides with the improved liquidity position of many
foreign airlines which went through a bad patch during the economic downturn of the last
two years. Currently, FDI up to 49% is allowed in domestic aviation, but foreign airlines
are barred from investing on the grounds of national pride and security. The proposal is to
allow at least 26% FDI by foreign airlines, which would entail their presence on the
airlines’ boards. Sections of the government including the department of industrial policy
and promotion, the nodal agency for FDI policy, have pitched for an even higher stake of
49%. While India’s No.1 private airline Jet Airways has opposed the move to allow foreign
airlines to invest in domestic carriers, others like Vijay Mallya-controlled Kingfisher
Airlines have lobbied hard for such equity infusion. Civil aviation minister Praful Patel had
earlier this year said that government was considering divestment in Air India as one of the
options to help the national carrier tide over the financial crisis.

Nirbhay Kumar/Indian Express

Wednesday, June 23, 2010

2. Modernisation of non-metro airports

The Airports Authority of India (AAI) is undertaking the development and modernization
of all 35 non-metro airports in the country simultaneously and work is due to be completed
by March 2010. Wholly owned subsidiaries of AAI are being created for the development
and operation of these airports. According to the AAI, it has already awarded work orders
for terminal buildings at 13 airports, and for airside development, including runway,
taxiway, apron, fire station, control tower and isolation bay, at 19 airports. Two Greenfield
airports at Bangalore and Hyderabad are being developed. The other two metro airports -
Chennai, Kolkata -- may soon be on the modernization path. At least 10 non-metro airports
are being developed as strategic airports serving the region or respective states, and at least
a few more non-metro airports are being positioned strategically as regional hub airports or
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nodes providing better connectivity to overall airport network and feeding international
network through hub/metro airports.

With these developments in aviation infrastructure, we may also see some airports
making money not purely on passenger traffic, but also by means of cargo, logistics, SEZs
and real estate projects being developed adjacent to airports.

CONCLUSION
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 The Indian aviation industry has shown continued growth in recent years with key
drivers being positive economic factors (including high GDP growth), industrial
performance, corporate profitability/expansion, higher disposable incomes and growth in
consumer spending as well as wider availability of low fares. The current growth rate in
domestic and international travel exceeds 25%, the highest in the world. In the period April-
September 2009, the total aircraft movements witnessed an increase of 29.6% year-on-year
to 494.92 thousand aircraft movements, as compared to 318.89 thousand during April-
September 2007. The Indian domestic market grew at almost 50% in the first half of 2007.
On average, full service carriers are shedding a remarkable 1.5% of market share every
month to low cost carriers.

With the increasing LCCs, airline travel can be afforded easily. Thus, with an intense
competition prevailing in the aviation segment, airline players are trying their level best in
attaining competitive edge. They use all possible tools to make an impact on the minds of
their customers.
This sector has a vast scope in employment, market, customer service, etc. Customer
service is the major component in any service sector. Since services are judged on the basis
of credential and experience qualities, it is immensely important that an airline industry
makes itself competitive enough to stand the market. They should lure the customers with
all the privileges and thereby, achieve customer acquisition as well as customer retention.

26
Reference Books:

Services Marketing: S.M.Jha -- Himalya Publishing House

Websites:

http://www.decisionanalyst.com/publ_art/marketsegmen
tation.dai
www.ibef.org/industry/aviation.aspx
http://business.mapsofindia.com/india-
gdp/industries/aviation.html
www.learnmarketing.net/servicemarketingmix.htm
www.encyclopedia.com/doc/1G1-173876196.html

Articles:

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