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Esha Grover (80) Ashish Periwal (81) Ila Agarwal (82) Rupesh Jain (83) Ayush Bhandari (84) Mandeep Gill (85)
AVIATION INDUSTRY
INTRODUCTION
Aviation
plays an essential role in economic progress of a nation. Provides connectivity nationally and internationally. Provides stimulus to business activity and economic growth.
HISTORY
In
December 1912, the first domestic air route was unwrapped between Delhi and Karachi by the Indian State Air Services (in collaboration with Imperial Airways of the UK). Countrys first air mail service was started by the Tata Airlines in 1912. Later it endeavored in carrying scheduled passenger traffic. Tata Airlines was renamed as Air India in 1946.
in Consumerism Increasing Tourists and Business Travel Entry of Low Cost Carriers Untapped Market Rising Disposable incomes Rising Middle Class Population Increasing Competition
Service
Promotional
contributes Rs 33,000 crores or 0.5 per cent of India's GDP. Supports 1.7 million jobs in the country. Contributes Rs 87,500 crores as taxes and social security. The sector also contributes Rs 14,700 crores through its direct output and Rs 10,700 crores indirectly through the supply chain.
Current Scenario
Closed,
poorly
managed
and
over-regulated
industry. The number of airlines including low cost carriers has increased. This led to subsequent increase in competition and fare reduction which further fuelled the air traffic growth.
Current Scenario
Higher
fuel costs, structure of high taxes and higher user charges are leading to huge margin pressures on airlines, led to a trend of consolidation through mergers and acquisitions of airlines, eg. failures like kingfisher. Stringent government policies & norms.
Spicejet 14%
Income Age Profession Price Marital status Gender Preferences etc. Statistical tools were applied using SPSS.
Regression Model
Findings are as per followed: Age & Price -> are the significant determinants of demand. Income & profession are ignored as they are not significant. Regression model shows 56.4% of demand can be explained by price & 63.2% can be explained by age. Demand= -4.595+1.625(Price)+0.204(Age)
important correlation are : Price & Frequency is 0.751 Age & Frequency is 0.684 Income & Frequency is 0.401
Means of ranks.
Factors: 1) cost 2) Timing
3) Hospitality
4) Flight Hopping 5) Ambience
considered by customers before booking an air ticket are : Cost : Most preferred. Timing Hospitality Flight hopping Ambience: Least Preferred
Marital Status.
Marital Status
Marital
Status has an significant bearing on frequency of travelling by air. Married People fly more as their mean value is higher.
Male Vs Female
Male vs Female
The
Profession
Student Service 4% 20% 27% Business others
49%
Reason of travel
Personal others Business/ Proffesional Emergencies
5%
12% 41%
42%
Cost of tickets
70
60
50
Frequency
40
30
20
10
Less than 5k 17
5k -10k 60
20k 25k 6
25k - 30k 6
30k 35k 3
35k 40k 12
Cost of tickets
Preferred class
140
120
100
Frequency
80
60
40
20
0 Preferred class
Business class 31
Preferred Airlines
Frequency
Go Air 9%
Spice 20%
Air India 8%
Others 5%
Frequency
Go Air 9%
Yes
Spice 20%
52.66%
Frequency
Strongly Agree Travel Packages Influencing The Ticket Booking Decision Indigo Preferred Airlines 36% 15.31% Go Air 9%
Indigo Reimbursement Affecting The Air Preferred Airlines 36% Ticket Booking
SUPPLIER SIDE
A qualitative survey of suppliers (ticket booking agencies) was conducted & the following data was obtained There is good mix of corporate & individual customers. Maximum demand is during winter & summer breaks. The preferred destinations are Goa, Kerala & South India during winter break. HP & Kashmir , North East in summer break .
SUPPLIER SIDE
Indigo
is the most preferred airlines by customers. Impact of government policies is very high. The market for corporate customers is relatively price inelastic. Timing & cost are the most important factors while booking the air tickets.
PRICE
ATF
prices in India are higher than the global market. The ATF price accounts for almost 75% of the operational expenses. The industrys operational cost component is dominated by the cost of the ATF. It has been recently hiked by 7.6%.
CONGESTION
Presently
capacity limitations are there at many airports like Delhi , Mumbai, Hyderabad, Bengaluru airports as they are Indias biggest and busiest airports. It is estimated that if a flight hang around in the sky for an additional half an hour due to delay in allocation of landing slot, it can consume between 25 to 30 percent extra fuel thereby increasing the operational cost of the airline
airport charges payable at the International airports are higher than those payable at the airports nominated as Domestic airports for domestic flights. As an outcome, the domestic airlines in India are incurring additional costs at the international designated airports without benefiting any additional facilities.
SUBSTITUTES AVAILABILITY
The
Indian Railways took few measures to compete with LCC and to retain and improve its position and passenger base namely, Faster trains between short to medium distances Improving connectivity & maintaining on-time schedules Introducing entertainment amenities Providing a reliable e-ticketing facility and Improving the overall quality of services offered
Conclusion.
Though at present, Aviation sector is facing crisis but as per our survey we found that its only for short run. In India only 3% of population use airways as mode of transportation. So the potential of penetration is very high. Price of air ticket ,age of customers are important determinant of demand. Income of consumers also has an significant correlation with demand.
Our survey brings out the various challenges faced by the aviation Industry. The regression model we developed will help the airline companies to determine the demand in future. It establishes a relationship between demand and its determinants. The study also brings out the existing trends in the industry like preferred locations, relative price inelasticity of corporate customers. This would help the companies to develop better business strategies.