Description
This is a ppt on the aviation industry overview, market share of airlines, investment policy.
Strategic management
Industry Overview
? One of the fastest growing Aviation Industry’
? Private Airlines Major Share ? CAGR 18% ? Highly Fragmented Industry ? 454 Airports & 16 Designated International
Airports
Source: CAPA
Market Share of Airlines
Source: Business World July 2010
Investment Policy
? No Foreign Ownership in Airlines
? FDI 100% on Greenfield Airports ? For existing projects, FDI up to 100 per cent is allowed;
while investment up to 74 per cent under the automatic route and beyond 74 per cent under the government route.
PEST Analysis
? Political
Slow development of new airports No secondary airports. Slow Regulatory Clearances Land acquisition problems. Defence Procurement Procedure Rules
? Economic
Strong Economy but Euro zone crisis/ Double Dip Recession. Aviation Fuel Taxes are highest in the world. High Salaries for Expat Pilots, Cabin Crew salaries for LCA same as full service ones. Aviation Highly vulnerable industry. High Debt around $ 13.5billion.
PEST Analysis
? Social
contd
Value conscious traveller Mobile young population. 75% of all passengers travel by low cost airlines.
? Technical
Spare parts manufacturers, component manufacturing companies like Tatas, L&T, HAL etc. Sub vendor and ancillary factories.
Corporate strategy
– SpiceJet and IndiGo – “low-cost” airline model of very competitive fares, a single type of aircraft and a single class of service, point -to-point operations, quick turnarounds, no frills, and internet-based ticketing
Spicejet ? partnership with global leaders-KLM, star navigation, tech log
? partnership with Navitaire
? Joint venture with online retailer
UnderFivePound.com IndiGo? tie-up with Air France ? ordered 100 Airbus A320 Planes
JetairwaysJetlite-uses only 2 types of aircrafts ? all economy class ? fares 15 to 20 percent less than Jet Airways ? 140 seats-175seats ? 6 crew-4 crew & named it as konnect
? Kingfisher airlines-
UB group entered in airlines as it wants to diversify and Vijay Mallya wants to keep Anil Ambani out of airlines
M&A
• Takeover of Sahara by Jet Airways • Kingfisher acquired a controlling stake in Air Deccan • The merger of the two national carriers Indian Airlines and Air India
Alliances
? Benefits ? Cost reduction ? Traveler benefits ? Star alliance (28) - air india in 2011
? Skyteam (13) ? Oneworld (11) -kingfisher airlines in 2011
Business Strategies
Highest growth Aviation market in the world
three core competencies of the group
? Ability to deliver a
unique experience ? Ability to manage scale up ? Ability to tightly manage costs
Business strategy of King fisher
? only large low cost full service airline in India
? Positioned as a budget carrier that offered a single class- "Kingfisher Class'.
? called its airlines as 'Funliners' to emphasize the
fun-filled experience. ? Coined a term GUESTS instead of passengers ? Within the first six months of its launch, KFA managed to corner a 6% market share in the domestic air travel market ? 38%of indigo pilot can fly in low visible conditions
Business strategy of King fisher
• On popular trunk routes of competitors by offering
cheaper tickets with better on board service. • However, many Jet Airways and Indian Airlines passengers are frequent flyer members who would lose frequent flyer miles by opting for travel by Kingfisher on these trunk routes. (business class passenger) • Kingfisher started King Club frequent flyer program
• KFA modified its 'single class' approach and began to offer an upgraded business class service'Kingfisher First‘ (due to competition) • Kingfisher to go for those unexploited or underexploited routes where direct convenient connections are not provided by Jet Airways and
Indian Airlines. • E.g. The day-return connection between Pune and Delhi on the two new aircrafts • Started offering day-return links on bussiness traffic routes where only midday flights are offered by Jet Airways and Indian Airline
Business strategy of Indigo
• IndiGo’s On Time Performance. (nearly94.37%) • Serving the widest range of food and beverage items
amongst any domestic airline in India • Liberty to passengers to pre-assign seats and choose seats with extra legroom • Attractive collection of desirable in-flight merchandise for sale at compelling prices ? offers same-day morning outbound coupled with evening return nonstop service, as well as afternoon services, conveniently connecting business destinations across India.
Cost control
? Lightest seat in india only 12.8kg
? Started using paint overall weight reduces by 50 Kg ? First customer for the select1 V2500 engine which helps to
cut fuel burn around by 2% ? To reduce cost of inventory holding tie up with Air France ? Has 100 workers per aircraft while other have 115 to 130 ? Centralized Operational system
For on time
? Trained crew to deplane passenger in 6 minutes and
unload the baggage in 10 minutes ? It achieves turnaround time of 20 to 25 minutes (industry avg. time is much more than 30 minutes) ? On an avg. aircraft travels 12 hours a day (competitors 8 to 10 hours)
? Avoid check-in lines with the use of Q-busters.
Additionally, IndiGo today is the only Indian airline with a ‘boarding ramp’ ? IndiGo Q- Busters, a handheld machine which instantly hands over the boarding pass to passengers thereby minimizing the hassle of long queues ? Check in through the self operated kiosks installed at the new terminal for added convenience ? Increase in check in counters from six to eight along with one counter for Excess Baggage Ticket (EBT)
Spicejet Airlines
? Follows Classical Low-Cost Airline Model ? Curved Winglet Design ? Expanded inner Aircraft Room ? Online Travel Insurance – TATA AIG ? Maintenance – KLM ? Technology – World Leaders ? Aircraft – 17 hours. ? Climb slowly… Maintain Ideal Altitude..…Descent
Early
Jet Airways – Jet Lite
? Less Variety of Aircrafts
? Removed all Business Class seats ? No Food, Lounge Services ? Lighter Aircrafts ? 4 cabin crew instead of 6 ? Re-negotiated all contracts
International Strategies
? Spicejet
? Indigo ? Jet Airways – 23 Destinations ? Kingfisher – 8 Destinations
Airline Industry Value Chain
FIRM INFRASTRUCTURE HUMAN RESOURCE MANAGEMENT TECHNOLOGY DEVELOPMENT
-Financial Policy - Accounting -Regulatory Compliance - Legal - Community Affairs Flight, route and yield analyst training Pilot Training Safety Training Baggage Handling Training Agent Training Product Development Market Research In-flight Training Baggage Tracking System
Computer Reservation System, In-flight System Flight Scheduling System, Yield Management System Information Technology Communications
•Route Selection •Passenger Service System •Yield Management System (Pricing) •Fuel •Flight Scheduling •Crew Scheduling •Facilities Planning •Aircraft Acquisition •Ticket Counter Operations •Gate Operations •Aircraft Operations •On-board Service •Baggage Handling •Ticket Offices •Baggage System •Flight Connections •Rental Car and Hotel Reservation System
PROCUREMENT
•Promotion •Advertising •Advantage Program •Travel Agent Programs •Group Sales
•Lost Baggage Service •Complaint Follow-up
INBOUND LOGISTICS
OPERATIONS
OUTBOUND LOGISTICS
MARKETING AND SALES
SERVICE
Value Chain Comparative Analysis
Jet
Route Selection On time performance (Departure) Crew Scheduling 65 74.9%
KF
70 86.5%
NACIL Indigo
60 76.2% 22 86.2%
Airlines
61 96% 200 Per Aircraft 9.4/10 99% 0.6% 6 years 105
Onboard Service
128 121 135 125 Per Aircraft Per Aircraft Per Aircraft Per Aircraft 8.3/10 7.7/10 4.3/10 5.6/10 82.5% 0.6% 3.8 Years 66 63.8% 3.7% 18.5 Years 143 68% 1.9% 2.4 Years 28
Punctuality of flight 69.6% (Arrival) Cancellation of flight 2.8% Average fleet age 4.99 years 90
Number of Aircraft
Kingfisher 1st Valuable Costly to Imitate Rare in-flight entertainment, laptop and mobile phone chargers on every seat Service
class Service in-flight entertainment, laptop and mobile phone chargers on every seat
Red Low cost
Unsubstitutable
Indigo Valuable Costly to Imitate low cost, clean aircraft
Spicejet lowest costs , High seat density
Rare
on-time performance , lightest passenger seats,
significant investments in IT, lowcost support system for reservations and revenue management
Curved winglet design - reduces noise and improves fuel economy by 2-3 per cent
Unsubsti tutable
Special engine(Select1 V2500) - saves fuel by 2%
Jetlite
Valuable
Costly to Imitate Rare Unsubstitutable
Low Cost Service
4 cabin crews instead of six
BCG Model
Company L/F Growth
Jet Airways
F
9%
8% 4% 6% 5%
Kingfisher Airlines F Nacil Airlines Indigo Spice Jet F L L
Go Airways
F
6%
1%
Paramount Airline F
doc_206436455.ppt
This is a ppt on the aviation industry overview, market share of airlines, investment policy.
Strategic management
Industry Overview
? One of the fastest growing Aviation Industry’
? Private Airlines Major Share ? CAGR 18% ? Highly Fragmented Industry ? 454 Airports & 16 Designated International
Airports
Source: CAPA
Market Share of Airlines
Source: Business World July 2010
Investment Policy
? No Foreign Ownership in Airlines
? FDI 100% on Greenfield Airports ? For existing projects, FDI up to 100 per cent is allowed;
while investment up to 74 per cent under the automatic route and beyond 74 per cent under the government route.
PEST Analysis
? Political
Slow development of new airports No secondary airports. Slow Regulatory Clearances Land acquisition problems. Defence Procurement Procedure Rules
? Economic
Strong Economy but Euro zone crisis/ Double Dip Recession. Aviation Fuel Taxes are highest in the world. High Salaries for Expat Pilots, Cabin Crew salaries for LCA same as full service ones. Aviation Highly vulnerable industry. High Debt around $ 13.5billion.
PEST Analysis
? Social
contd
Value conscious traveller Mobile young population. 75% of all passengers travel by low cost airlines.
? Technical
Spare parts manufacturers, component manufacturing companies like Tatas, L&T, HAL etc. Sub vendor and ancillary factories.
Corporate strategy
– SpiceJet and IndiGo – “low-cost” airline model of very competitive fares, a single type of aircraft and a single class of service, point -to-point operations, quick turnarounds, no frills, and internet-based ticketing
Spicejet ? partnership with global leaders-KLM, star navigation, tech log
? partnership with Navitaire
? Joint venture with online retailer
UnderFivePound.com IndiGo? tie-up with Air France ? ordered 100 Airbus A320 Planes
JetairwaysJetlite-uses only 2 types of aircrafts ? all economy class ? fares 15 to 20 percent less than Jet Airways ? 140 seats-175seats ? 6 crew-4 crew & named it as konnect
? Kingfisher airlines-
UB group entered in airlines as it wants to diversify and Vijay Mallya wants to keep Anil Ambani out of airlines
M&A
• Takeover of Sahara by Jet Airways • Kingfisher acquired a controlling stake in Air Deccan • The merger of the two national carriers Indian Airlines and Air India
Alliances
? Benefits ? Cost reduction ? Traveler benefits ? Star alliance (28) - air india in 2011
? Skyteam (13) ? Oneworld (11) -kingfisher airlines in 2011
Business Strategies
Highest growth Aviation market in the world
three core competencies of the group
? Ability to deliver a
unique experience ? Ability to manage scale up ? Ability to tightly manage costs
Business strategy of King fisher
? only large low cost full service airline in India
? Positioned as a budget carrier that offered a single class- "Kingfisher Class'.
? called its airlines as 'Funliners' to emphasize the
fun-filled experience. ? Coined a term GUESTS instead of passengers ? Within the first six months of its launch, KFA managed to corner a 6% market share in the domestic air travel market ? 38%of indigo pilot can fly in low visible conditions
Business strategy of King fisher
• On popular trunk routes of competitors by offering
cheaper tickets with better on board service. • However, many Jet Airways and Indian Airlines passengers are frequent flyer members who would lose frequent flyer miles by opting for travel by Kingfisher on these trunk routes. (business class passenger) • Kingfisher started King Club frequent flyer program
• KFA modified its 'single class' approach and began to offer an upgraded business class service'Kingfisher First‘ (due to competition) • Kingfisher to go for those unexploited or underexploited routes where direct convenient connections are not provided by Jet Airways and
Indian Airlines. • E.g. The day-return connection between Pune and Delhi on the two new aircrafts • Started offering day-return links on bussiness traffic routes where only midday flights are offered by Jet Airways and Indian Airline
Business strategy of Indigo
• IndiGo’s On Time Performance. (nearly94.37%) • Serving the widest range of food and beverage items
amongst any domestic airline in India • Liberty to passengers to pre-assign seats and choose seats with extra legroom • Attractive collection of desirable in-flight merchandise for sale at compelling prices ? offers same-day morning outbound coupled with evening return nonstop service, as well as afternoon services, conveniently connecting business destinations across India.
Cost control
? Lightest seat in india only 12.8kg
? Started using paint overall weight reduces by 50 Kg ? First customer for the select1 V2500 engine which helps to
cut fuel burn around by 2% ? To reduce cost of inventory holding tie up with Air France ? Has 100 workers per aircraft while other have 115 to 130 ? Centralized Operational system
For on time
? Trained crew to deplane passenger in 6 minutes and
unload the baggage in 10 minutes ? It achieves turnaround time of 20 to 25 minutes (industry avg. time is much more than 30 minutes) ? On an avg. aircraft travels 12 hours a day (competitors 8 to 10 hours)
? Avoid check-in lines with the use of Q-busters.
Additionally, IndiGo today is the only Indian airline with a ‘boarding ramp’ ? IndiGo Q- Busters, a handheld machine which instantly hands over the boarding pass to passengers thereby minimizing the hassle of long queues ? Check in through the self operated kiosks installed at the new terminal for added convenience ? Increase in check in counters from six to eight along with one counter for Excess Baggage Ticket (EBT)
Spicejet Airlines
? Follows Classical Low-Cost Airline Model ? Curved Winglet Design ? Expanded inner Aircraft Room ? Online Travel Insurance – TATA AIG ? Maintenance – KLM ? Technology – World Leaders ? Aircraft – 17 hours. ? Climb slowly… Maintain Ideal Altitude..…Descent
Early
Jet Airways – Jet Lite
? Less Variety of Aircrafts
? Removed all Business Class seats ? No Food, Lounge Services ? Lighter Aircrafts ? 4 cabin crew instead of 6 ? Re-negotiated all contracts
International Strategies
? Spicejet
? Indigo ? Jet Airways – 23 Destinations ? Kingfisher – 8 Destinations
Airline Industry Value Chain
FIRM INFRASTRUCTURE HUMAN RESOURCE MANAGEMENT TECHNOLOGY DEVELOPMENT
-Financial Policy - Accounting -Regulatory Compliance - Legal - Community Affairs Flight, route and yield analyst training Pilot Training Safety Training Baggage Handling Training Agent Training Product Development Market Research In-flight Training Baggage Tracking System
Computer Reservation System, In-flight System Flight Scheduling System, Yield Management System Information Technology Communications
•Route Selection •Passenger Service System •Yield Management System (Pricing) •Fuel •Flight Scheduling •Crew Scheduling •Facilities Planning •Aircraft Acquisition •Ticket Counter Operations •Gate Operations •Aircraft Operations •On-board Service •Baggage Handling •Ticket Offices •Baggage System •Flight Connections •Rental Car and Hotel Reservation System
PROCUREMENT
•Promotion •Advertising •Advantage Program •Travel Agent Programs •Group Sales
•Lost Baggage Service •Complaint Follow-up
INBOUND LOGISTICS
OPERATIONS
OUTBOUND LOGISTICS
MARKETING AND SALES
SERVICE
Value Chain Comparative Analysis
Jet
Route Selection On time performance (Departure) Crew Scheduling 65 74.9%
KF
70 86.5%
NACIL Indigo
60 76.2% 22 86.2%
Airlines
61 96% 200 Per Aircraft 9.4/10 99% 0.6% 6 years 105
Onboard Service
128 121 135 125 Per Aircraft Per Aircraft Per Aircraft Per Aircraft 8.3/10 7.7/10 4.3/10 5.6/10 82.5% 0.6% 3.8 Years 66 63.8% 3.7% 18.5 Years 143 68% 1.9% 2.4 Years 28
Punctuality of flight 69.6% (Arrival) Cancellation of flight 2.8% Average fleet age 4.99 years 90
Number of Aircraft
Kingfisher 1st Valuable Costly to Imitate Rare in-flight entertainment, laptop and mobile phone chargers on every seat Service
class Service in-flight entertainment, laptop and mobile phone chargers on every seat
Red Low cost
Unsubstitutable
Indigo Valuable Costly to Imitate low cost, clean aircraft
Spicejet lowest costs , High seat density
Rare
on-time performance , lightest passenger seats,
significant investments in IT, lowcost support system for reservations and revenue management
Curved winglet design - reduces noise and improves fuel economy by 2-3 per cent
Unsubsti tutable
Special engine(Select1 V2500) - saves fuel by 2%
Jetlite
Valuable
Costly to Imitate Rare Unsubstitutable
Low Cost Service
4 cabin crews instead of six
BCG Model
Company L/F Growth
Jet Airways
F
9%
8% 4% 6% 5%
Kingfisher Airlines F Nacil Airlines Indigo Spice Jet F L L
Go Airways
F
6%
1%
Paramount Airline F
doc_206436455.ppt