A report on Why people prefer to travel by private airlines than government airlines

Presented by
Ankesh Kumar (B-43) Gurjot Singh Bhalla (B-52) Preeti Ghorawat (B-61) Vijay Batra (B-70)

Introduction
Airline Industry is one of the fastest growing industries in India. Earlier it was primarily a government owned industry but with the liberalization, it has changed a lot. Indian aviation industry is now dominated by private airlines. Private airlines capture 75% of domestic aviation market share. Travelling through an airline earlier was affordable only to a few people but now large number of people travel via air every day.

History
In 1912, Indian civil aviation industry originated with its first domestic flight between Karachi and Delhi by Indian State Air Services with collaboration with UK based Imperial Airways as an extension of it London-Karachi air flight. In 1932, JRD Tata founded Tata Airline, the first Indian airline and it was the first regular airmail service between Karachi and Madras. In 1946, Tata Airlines became a public limited company under the name of Air India. By the time of independence, there were 9 independent domestic air transport companies carrying cargo and passengers. These were Deccan Airways, Orient Airways, Airways India, Bharat Airways, Himalayan Aviation, Kalinga Air Lines, Indian National Airways, Air India and Air Services of India. Later after partition, Orient Airways shifted to Pakistan. In early 1948, to further strengthen the aviation sector in India, Government of India together with Air India set up a joint sector company, Air India international which started its international flight services from Bombay to London via Cairo and Geneva. By Air Corporations Act, 1953, the remaining eight domestic airlines were merged to form the domestic national carrier Indian Airlines. In 1960, India enters the jet age when Air India begins operating its first Boeing 707-437. In April 1990, the Government adopted open-sky policy and allowed air transport operators to operate flights from any airport, both on a charter and a non-charter basis and to decide their own flight schedules, cargo and passenger fares. In 1994, the Indian Government, as part of its open sky policy, ended the monopoly of IA and AI in the air transport services by repealing the Air Corporations Act of 1953 and replacing it with the Air Corporations (Transfer of Undertaking and Repeal) Act, 1994. Private operators were allowed to provide air transport services. Foreign direct investment (FDI) of up to 49 percent equity stake and NRI (Non Resident Indian) investment of up to 100 percent equity stake were permitted through the automatic FDI route in the domestic air transport services sector. However, no foreign airline could directly or indirectly hold equity in a domestic airline company. By 1995, several private airlines came into aviation business and captured more than 10% of domestic air-traffic. They were Jet Airways, Sahara, NEPC Airlines, East West Airlines, ModiLuft Airlines, Jagsons Airlines, Continental Aviation, and Damania Airways. But only Jet Airways and Sahara managed to survive the competition. Meanwhile, Indian Airlines, which had dominated the Indian air travel industry, began to lose market share to Jet Airways and Sahara. In 1995, Kingfisher airlines and Go Air entered in

domestic air travel industry. Later other players which joined are Indigo, Spicejet, Paramount and MDLR airlines.

Problem statement
Indian public airlines are making big losses. Is it because more and more people are now travelling by private domestic airlines rather than the public Indian airlines flights? Is it really true? If yes, what can be the reasons for such a shift? Is the service too bad? Or is it just its connection with the government? What does the Indian public think about the airlines? What are the deciding factors? What factor affects how much? These are a few questions that really need to be answered to understand the preference of travelers by flights.

Literature survey

Tools used
To find the factors which influence the problem statement, Factor Analysis technique have been used. It is a statistical method used to describe variability among observed, correlated variables in terms of a potentially lower number of unobserved, uncorrelated variables called factors. It is basically a data reduction technique and it assumes that all the rating data on different attributes can be reduced down to a few important dimensions. This reduction is possible because the attributes are related. The rating given to any one attribute is partially the result of the influence of other attributes. Using this method, the KMO index (Kaiser-Meyer-Olkin index) was found. The KMO measures the sampling adequacy which should be greater than 0.6 for a satisfactory factor analysis to proceed.

Bartlett's test of sphericity have been used to test that the correlation matrix is an identity matrix. An identity matrix is matrix in which all of the diagonal elements are 1 and all off diagonal elements are 0. This would indicate that the factor model is inappropriate and you want to reject this objective statement. Using this significance of correlation is also asserted. This is checked at 5% level of significance. Any value of Bartletts Sphericity which is less than or equal to 0.05 implies that correlations are significant.

Factor Analysis

Descriptive Statistics Mean always on time facility rescheduling mom safe Change in time food good service good Seats incentive freq flying attractive offers clean toilets baggage check-in time waitingtime dest space Status value for money 2.47 2.43 3.02 2.14 2.53 2.17 2.45 2.72 2.64 2.36 2.69 2.88 2.40 2.78 2.36 Std. Deviation .883 1.078 1.263 .981 1.063 1.157 1.187 1.167 1.165 1.055 .995 .993 1.025 1.312 .968 Analysis N 58 58 58 58 58 58 58 58 58 58 58 58 58 58 58

The number of variables used was 15 and the sample size was 58. The mean of the responses were in the range of 2.14 and 3.02 i.e. all the responses were in favor of the objective statement.

Correlation
always on time facility rescheduling mom safe Change in time food good service good Seats incentive freq flying attractive offers clean toilets baggage check-in time waiting time dest space Status value for money

always on time 1.000 .302 -.055 .289 .403 .538 .316 .093 .201 .230 .227 .085 .219 .016 .374

facility rescheduling .302 1.000 -.057 .556 .178 .460 .121 .152 .378 .154 .192 .066 -.046 .082 .117

mom safe -.055 -.057 1.000 .083 .372 .214 .428 .265 .040 .417 .395 .449 .469 .489 .267

Change in time .289 .556 .083 1.000 .231 .427 .217 .248 .136 .341 .422 .125 .154 -.057 .113

food good .403 .178 .372 .231 1.000 .452 .488 .489 .386 .200 .342 .478 .333 .201 .491

service good .538 .460 .214 .427 .452 1.000 .454 .205 .333 .293 .215 .141 .148 .176 .445

seats .316 .121 .428 .217 .488 .454 1.000 .281 .234 .555 .610 .478 .500 .415 .314

Correlation
always on time facility rescheduling mom safe Change in time food good service good seats incentive freq flying attractive offers clean toilets baggage check-in time waiting time dest space status value for money

incentiv e freq flying .093 .152 .265 .248 .489 .205 .281 1.000 .454 .154 .212 .304 .284 .085 .261

attractive offers .201 .378 .040 .136 .386 .333 .234 .454 1.000 .123 .174 .250 .181 .302 .398

clean toilets .230 .154 .417 .341 .200 .293 .555 .154 .123 1.000 .527 .378 .644 .326 .230

baggage check-in time .227 .192 .395 .422 .342 .215 .610 .212 .174 .527 1.000 .637 .605 .363 .246

Waiting time dest .085 .066 .449 .125 .478 .141 .478 .304 .250 .378 .637 1.000 .496 .316 .466

space

status

value for money .374 .117 .267 .113 .491 .445 .314 .261 .398 .230 .246 .466 .259 .176 1.000

.219 -.046 .469 .154 .333 .148 .500 .284 .181 .644 .605 .496 1.000 .380 .259

.016 .082 .489 -.057 .201 .176 .415 .085 .302 .326 .363 .316 .380 1.000 .176

The correlation matrix obtained reflects that it is not an identity matrix. Though the variables are correlated to each other but not highly related. Each variable has its own importance and are independent.
KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test of Sphericity Approx. Chi-Square df Sig. .759 372.804 105 .000

KMO index (Kaiser-Meyer-Olkin index) obtained is 0.759 and since it was greater than 0.6, it implied that it was a satisfactory factor analysis to proceed.

Also, value of Bartletts Sphericity came out to be 0 which is less than 0.05 and it implied that
correlations are significant.
Communalities Initial always on time facility rescheduling mom safe Change in time food good service good Seats incentive freq flying attractive offers clean toilets baggage check-in time waitingtime dest space Status value for money 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Extraction .764 .741 .566 .775 .668 .701 .648 .641 .666 .683 .719 .600 .664 .396 .658

Extraction Method: Principal Component Analysis.

Total Variance Explained Compone nt 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Total 5.257 2.129 1.421 1.083 .985 .773 .724 .597 .462 .358 .307 .283 .240 .224 .157 Initial Eigenvalues % of Variance 35.050 14.196 9.475 7.218 6.565 5.152 4.826 3.980 3.080 2.388 2.048 1.887 1.598 1.492 1.044 Cumulative % 35.050 49.246 58.722 65.940 72.505 77.656 82.483 86.463 89.543 91.931 93.979 95.866 97.464 98.956 100.000 Extraction Sums of Squared Loadings Total 5.257 2.129 1.421 1.083 % of Variance 35.050 14.196 9.475 7.218 Cumulative % 35.050 49.246 58.722 65.940

Extraction Method: Principal Component Analysis.

Component Matrix

Component 1 always on time facility rescheduling mom safe Change in time food good service good seats incentive freq flying attractive offers clean toilets baggage check-in time Waiting time dest space status value for money .456 .345 .575 .447 2 .500 3 -.110 -.259 .059 -.507 .382 -.054 -.112 .419 .464 -.441 -.330 .158 -.153 .077 .414 4 -.542 .355 .047 .313 -.112 -.265 -.157 .453 .323 -.037 .120 .069 -.035 .093 -.341

.655
-.479 .469 .163 .522 -.155 .124 .334 -.232 -.236 -.318 -.418 -.372 .162

.695
.596

.766
.495 .484

.659 .734 .684 .682

.494 .587

Extraction Method: Principal Component Analysis. a. 4 components extracted.

Now, the variables with maximum value in each row and which are very closer in magnitudes were clubbed together and booked under that particular factor. Factor1 => {food good, seats, clean toilets, baggage check-in time, waiting time dest, space} Factor2 => {facility rescheduling} Factor3 => {change in time} Factor4 => {always on time}

Conclusion
Thus, it can be concluded that the above found four factors are the major influencing factors which influence people to prefer travelling by private airlines than government airlines.