Description
This is a documentation is about company analysis of spicejet.
COMPANY ANALYSIS- SPICEJET History of Aviation in India ? ? ? ? ? ? 1932- Launch of TATA airlines 1948- Air india International 1953- Nationalisation of aircraft Industry 1986- Private sector players permitted as Air Taxi 1994- Private carriers permitted to operate scheduled services 2003- Entry of low cost airline
Aviation industry o The Indian Aviation Industry has been going through a turbulent phase over the past several years facing multiple headwinds – high oil prices and limited pricing power contributed by industry wide over capacity and periods of subdued demand growth. o Over the near term the challenges facing the airline operators are related to high debt burden and liquidity constraints - most operators need significant equity infusion to effect a meaningful improvement in balance sheet. o Improved financial profile would also allow these players to focus on steps to improve long term viability and brand building through differentiated customer service. o Over the long term the operators need to focus on improving cost structure, through rationalization at all levels including mix of fleet and routes, aimed at cost efficiency. o At the industry level, long term viability also requires return of pricing power through better alignment of capacity to the underlying demand growth. o While in the beginning of 2008-09, the sector was impacted by sharp rise in crude oil prices, it was the decline in passenger traffic growth which led to severe underperformance during H2, 2008-09 to H1 2009-10. o The operating environment improved for a brief period in 2010-11 on back of recovery in passenger traffic, industry-wide capacity discipline and relatively stable fuel prices. However, elevated fuel prices over the last three quarters coupled with intense competition and unfavorable foreign exchange environment has again deteriorated the financial performance of airlines. During this period, while the passenger traffic growth has been steady (averaging 14% in 9m 2011-12), intense competition has impacted yields and forced airlines back into losses in an inflated cost base scenario. o To address the concerns surrounding the operating viability of Indian carriers, the Government on its part has recently initiated a series of measures including (a) proposal to allow foreign carriers to make strategic investments (up to 49% stake) in Indian Carriers (b) proposal to allow airlines to directly import ATF (c) lifting the freeze on international expansions of private airlines and
(d) financial assistance to the national carrier. However, these steps alone may not be adequate to address the fundamental problems affecting the industry. o While the domestic airlines have not been able to attract foreign investors (up to 49% FDI is allowed, though foreign airlines are currently not allowed any stake), foreign airlines may be interested in taking strategic stakes due to their deeper business understanding, longer investment horizons and overall longer term commitment towards the global aviation industry. o Healthy passenger traffic growth on account of favorable demographics, rising disposable incomes and low air travel penetration could attract long-term strategic investments in the sector. o However, there are two key challenges: i) aviation economics is currently not favorable in India resulting in weak financial performance of airlines and ii) Internationally, too airlines are going through period of stress which could possibly dissuade their investment plans in newer markets. o Besides, foreign carriers already enjoy significant market share of profitable international routes and have wide access to Indian market through code-sharing arrangements with domestic players. Given these considerations, we believe, foreign airlines are likely to be more cautious in their investment decisions and strategies are likely to be long drawn rather than focused on short-term valuations. o On the proposal to allow import of ATF, we feel that the duty differential between sales tax (averaging around 22-26% for domestic fuel uplifts) being currently paid by airlines on domestic routes and import duty (8.5%-10.0%) is an attractive proposition for airlines. However the challenges in importing, storing and transporting jet fuel will be a considerable roadblock for airlines due to OMCs monopoly on infrastructure at most Indian airports. Aviation Industry PEST Analysis: Conducive Factors Political Economical Social Open Sky Policy has Growth in Indian The importance of allowed Foreign Economy (consumer spent on the travelling players to enter the have capacity to has been understood market afford air travel) has a by the consumers. visible impact on the Air travel: from aviation industry both luxury to necessity premium and low cost fliers Similarly Indian Fliers Income of salaried Increase in travelling got an opportunity to class up 10-12% lifestyle enter the foreign zone Freedom to determine GDP growth of 7-8% Increase in business fare in last 5 years travelling
Technological Growth of ecommerce and eticketing
IT revolution
Online ticketing
FDI: in Airlines In Airports
Nil import tariff on aircraft Oligopoly structure of the market
Growing middle class LCC (Low cost carriers) as mass transport medium
Best price shopping services Safety measures
Aviation Industry PEST analysis: Limiting factors Political Economical Social Bureaucracy Tax tariffs: Lack of skilled 8% import duty manpower 25-33% state sales tax on ATF(Aviation Turbine Fuel) International routes Pricing strategy Customer service after 5 years dependent on individual firm’s behaviour No clear policy for International Safety concerns(9/11 state carriers petroleum prices incident) Terrorism Fear
Technological Night landing facilities
Operation winter/fog
during
Capital intensive technology Video conferencing and telecommunication technology
Five force model 1. Entry barriers: (HIGH) ? High start up cost; capital intensive industry ? Over-crowded low cost airline market. ? Dearth of aviation professionals ? Price wars against new-comers 2. Bargaining power of buyers: (HIGH) ? Price dominated short haul market with little or no product differentiation ? Little or no customer loyalty- price conscious consumers ? Low switching cost 3. Bargaining power of suppliers: (MEDIUM) ? No control over Aviation Turbine Fuel (ATF) prices ? High fuel costs ? Leased Aircrafts ? Specialised Aircrafts and limited number of manufacturers
4. Threats of substitute: (LOW) ? Video conferencing and telecommunication technological innovations ? Super fast trains (Durontos) for short haul flights 5. Rivalry: (HIGH) ? Competitive and over crowded market ? Competition with conventional carriers- with low fares but a higher level of service ? Mergers, acquisitions, alliances (Kingfisher Red acquired Air Decccan, Jet Airways acquired Air Sahara and merger of Air India and Indian Airlines) ? Aggressive pricing strategies SWOT Analysis of the Aviation Industry
STRENGTHS ? Liberal Environment in both domestic and international spheres ? Advance fleet: the growth of aviation industry in the past years has increased to a tremendous extent. ? High quality, comfort and reliable service ? Economic Growth of the country: the growth of about 7-8% has flourished the industry.
WEAKNESSES ? Airport Infrastructure: with fierce competition and growing crowd at the airports, infrastructural facilities need to be improved ? National Carrier i.e Air India is not in a healthy condition: with the recent strike of the pilots and the not-so-good image of Air India in regards of schedule and frequency it is facing a tough time. ? High cost structure: the cost involved in the import of the ATF is very high and increases the cost upto 60% above the international benchmark ? Skilled Resources: Dearth of the number of skilled pilots , technical and management personnel.
OPPORTUNITIES THREATS ? Market Growth: Growth though is ? Middle East Aviation: The carriers of slowing down in India it is still growing the Gulf are aggressively expanding in around 6% and it is the highest in the India, with high frequencies from BRICKS. But still trips per capita is multiple destinations to their hubs, low compared to other developing from where passengers can access countries. This definitely manifests the extensive global networks. scope of the industry further in the ? Terrorism: India has seen frequent country. terrorist activity in recent years. The
?
?
Lower Costs: since the large portion of the population belong to middle class and lower middle category in India pricing has become an important tool for success. Higher Quality
country has shown great resilience in bouncing back after each attack, however inbound international traffic in particular is sensitive to such events
Market Share of Scheduled Domestic Airlines
Air India (Dom) Indigo SpiceJet JetLite Jet Airways Kingfisher Go air
As seen from the chart the nearest competitor to SpiceJet in the LCC category is Indigo. Company Information Founded 2006 Commenced Operations 4th august 2006 Hubs Indira Gandhi International airport (DEHLI) Secondary hubs Chattrapati Shivaji Interrnational Airport Netaji Subhash Chandra Bose International Airport( Kolkata) Focus cities Chennai Kochin Bengaluru Pune Hyderrabad Ahmedabad Fleet size 58(+222 orders) Compnay slogan Go Indigo Parent Company InterGlobe Enterprises Headquarters Gurgaon, Haryana, India
On board services ? Being a low-cost carrier, all of IndiGo's flights have no Business class or First class sections. ? It offers only Economy class seating. Snacks, meals and drinks (even mineral water) are available as a buy-on-board option. ? IndiGo's domestic flights allow only one piece of free check-in baggage per paying passenger, while they might charge for more. ? No in-flight entertainment systems are made available. There is an inflight catalogue, Hello 6E, which provides information about various items which can be bought on board. Pricing: ? ? IndiGo offers a simple fare scheme, such as charging one-way tickets half that of roundtrips. Typically fares increase as the plane fills up, which rewards early reservations. The price policy of IndiGo is usually very dynamic, with discounts and tickets in promotion. Like other carriers, even if the advertised price may be very low, it often does not include charges & taxes. Perhaps as many (or as few) as ten percent of the seats on any flight are offered at the lowest price, and are the first to sell. The prices steadily rise thereafter to a point where they can be comparable to a flight on a full-service carrier
?
Analysis: ? ? The pricing stategy has benn very much similar to that of SpiceJet with discount and rewards. The number of fleets with Indigo is higher than those belonging to SpiceJet. They have entered into the international sphere before spicejet. This directly impacts on the revenue and the profit of the airlines. Due to this the market share of Indigo is slightly higher than that of SpiceJet. Indigo is awarded with the best low cost carrier in India.
? ?
Introduction ? SpiceJet is a low cost airline headquartered at Chennai. ? SpiceJet was earlier known as Royal Airways ? It was founded in 2004 and commenced operating on 24th May 2005 with the launch of its first flight Delhi-Ahmedabad-Mumbai. ? After around 6 months, SpiceJet launched a six-day a week service to Jammu and Srinagar in Nov 2005. ? SpiceJet names all its aircrafts after various spices and herbs Cinnamon, Thyme, Oregano, ? Airline has more than 2500 employees working with them currently.
? Its tagline: FLYING FOR EVERYONE Hubs Chennai International Airport Indira Gandhi International Airport (Delhi) Rajiv Gandhi International Airport (Hyderabad) Chhatrapati Shivaji Internaltional Airport (Mumbai) Netaji Subhash Chandra Bose International Airport (Kolkata) ? Bangalore ? Kochi ? Ahmedabad Chennai Flying for everyone Sun Group 2501-5000 47 38 1113 Cr. 101 Cr. VIPPS Centre(North Wing), 2, Commercial Complex, Masjid Moth, Greater Kailash - II New Delhi - 110048 Delhi - India Phone : 55515063/55515064 Fax : 25674336 Email : [email protected] ? ? ? ? ?
Secondary Hubs
Focus cities
Headquarters Company Slogan Parent Company No. of Employees Fleet Size Destinations Revenue Profit Head Office
Registered Office Murasoli Maran Towers, 73, MRC Nagar Main Road, MRC Nagar Chennai (Madras) - 600028 Tamil Nadu - India
Management-SpiceJet Kalanithi Maran: Chairman/Chiarperson Early life
?
Schooling at Don Bosco, Egmore, Chennai.
? ? ?
In Loyola College, Chennai he became the student’s union chairman and led an agitation on the Sri Lankan Tamils issue. Has an MBA from the University of Scranton. Returning to India in 1987, he worked for Kungumam Tamil Magazine owned by his family in the late 1980s.
Business expansion
? ? ? ? ? ? ? ? ? ? ?
In 1990 he started a monthly video (VHS) news magazine in Tamil called Poomaalai which was stopped in 1992 due to piracy. He founded Sun TV on April 14, 1993 with an investment of US $86,000 from a bank loan.[8][9] His net worth reached $10 million by 1995. His net worth reached $100 million by 2000. His net worth reached $10 billion by 2005. By 2010, he was the 17th richest Indian with net worth of US$ 4 Billion .[10] He is the highest paid business man in India.[11] He has won Young Businessman awards from CNBC, ERNST & Young.[12] Prestigious USA based Forbes magazine named him the "Television king of southern India".[13] He was among the few representatives at a roundtable with the visiting then U.S. President Bill Clinton.[14] Sun TV was listed on the Bombay Stock Exchange on April 24, 2006 upon raising $133 million.[15]
Business entities
? ? ? ? ? ? ? ? ? ?
Sun Network - South Indian Television Channels Sun Direct DTH - Direct to Home broadcasting Service. Spicejet - Airlines Suryan FM - Tamil Radio Red FM - MultiLingual Indian Radio Sun Pictures - Tamil Movie Production house Dinakaran - Tamil daily news paper Tamil Murasu - Tamil evening news papers Kunkumam, Muthaaram, Vannathirai, Kunguma Chimizh - Tamil magazines Sun 18 - to distribute its channels through cable, DTH, IPTV, HITS and MMDSk.
REF: Wikipedia
Kavery Kalanithi – Director ? Mrs. Kavery Kalanithi is Non-Executive Director of Spicejet Ltd. ? She holds a Bachelor's Degree in Arts from University of Madras, Chennai. ? She is actively involved in the business and operations of M/s. Sun TV Network Limited including monitoring the viewer feedback with regard to the programming and deciding the content mix on various channels. ? She is also actively involved in philanthropic activities and is on the board of trustees of Sun Foundation, a public charitable organization, supervising day to day functioning of the Sun Foundation. ? Mrs. Kalanithi was appointed as director on the Board of the Company with effect from November 15, 2010. Mrs. Kalanithi is also a director on the Board of Sun TV Network Limited, Kal Radio Limited, South Asia FM Limited, Udaya FM Pvt. Ltd, Kungumam Publications Pvt. Ltd, Kungumam Nithiyagam Pvt. Ltd, Kal Investments (Madras) Pvt. Ltd, Kal Comm Pvt. Ltd, Sun Direct TV Pvt. Ltd, Kal Publications Pvt. Ltd, Kal Media Services Private Limited, Kal Airways Private Limited, Kal Holdings Private Limited, Sun Business Solutions Private Limited. ? She also holds committee memberships in Sun TV Network Limited (Share Transfer and Transmission Committee), South Asia FM Limited (Audit Committee) and Kal Radio Limited (Audit Committee and Remuneration Committee). Mrs. Kavery Kalanithi does not hold any shares in SpiceJet Limited. ? She is the highest paid woman in India. Ref: reuters.com Other Players in the Management: Nicholas Martin Paul J Ravindran S Natrajhen M K Harinarayanan R Ravivenkatesh Director Director Whole Time Director Director Director
Achievements: ? SpiceJet was voted the best low cost airline in South Asia and Central Asia region ? By 2008, it was India’s second largest low cost airline in terms of market share ? Market share increased to 18.6% (jan2012)
STRENGTHS
WEAKNESSES
? ? ? ? ? ?
Flight attendants Low airfare (Entered with 99Rs. Fare) Offering low everyday spicy fares Fleet of Boeing 737-800 with 189 seats (max. in the industry) Connectivity In flight food
? ? ? ? ? ?
Limited sectors(concentrated only in North-West-South Indian Sector) Airline punctuality Greeting at airport Welcoming of passengers Seats Call center
OPPORTUNITIES ? Fleet expansion
THREATS ? Killer competition-the Indian skies are witnessing a battle for market share
Aim ? To become India’s most preferred low cost airline, by providing the lowest airfares and the highest consumer value to the price sensitive consumers of the country. ? Aims at provoking those who have not experienced flying ? To ensure that flying is not just confined to CEOs and business travelers but affordable to everyone. Customer service ? Personal valet at airport ? Personal and exclusive lounges ? Refreshment and music ? Three course meal ? Baggage assistance ? Award winning web portal Promotional tools ? Word of mouth marketing ? Print ads in newspapers and magazines ? TV commercials ? Internet media initiatives ? Hoardings, railways platforms, airports, shopping malls Cost and value drivers: 1. High seat density: ? Single class 189 seats per flight ? Focus on maximum space utilization for generating more revenue per flight
2. Direct distribution of tickets: ? Sells its ticket via the internet or call centre route ? Bypasses travel commission and global distribution system 3. High Aircraft Utilisation: ? Consistently reporting high aircraft utilization Performance Chart ,Ownership Pattern, Shareholding Pattern and Financial Statements Performance Chart
Index Comparison
Ownership Pattern
http://beta.bseindia.com/corporates/ShareholdingPattern.aspx?scripcd=500285&flag_qtr=1&qtri d=73.00&Flag=New
MARKETING STRATEGY: Marketing Theme & Aim : Marketing Theme & Aim Their marketing theme “Offering low 'everyday spicy fares' and great guest services to price conscious travellers” Their aim To compete with the Indian Railways passengers travelling in air conditioned coaches.
Low Cost Airline : Low Cost Airline SpiceJet marked its entry in service with Rs. 99 fares for the first 99 days, with 9,000 seats available at this rate. It was followed it up with a Rs. 999 promotional scheme on select routes.
Current Fleet & Operations : Current Fleet & Operations 264 daily flights with a fleet of Next Generation Boeing 737s, 737800s and 5 - 737-900ERs (extended range). At present the fleet strength is completely utilised and further route expansion has been ruled out till new aircraft are inducted. New fleets have been ordered.
Adjusting to the Global Meltdown : Adjusting to the Global Meltdown When its full service counterparts like Air India, Jet Airways and Kingfisher Airlines are struggling now, SpiceJet is focussing on its profitability from this consolidation wave. Focus towards enhancing the customer experience. The global slowdown in air travel has impacted leisure segment, and has made SpiceJet accelerate its increasing focus on business passengers.
Reaching out to Business Travellers : Reaching out to Business Travellers Business travellers can collect their boarding passes for a same-day return flight. Introduction of a corporate travel program that means ability to change ticketed flight dates and times without surcharges. While airlines in the US are charging for each check-in piece of baggage, SpiceJet is going the opposite way to woo customers by extending the free "two piece baggage" concept to international connecting passengers.
Focus towards enhancing the Customer Experience : Focus towards enhancing the Customer Experience Complimentary supervision of unaccompanied minors. Hot beverage and combo meals available for sale. Two-bag waiver for
guests connecting on SpiceJet within 24 hours of international travel. Waiver of additional charges on sports kits.
Cue from International Airlines : Cue from International Airlines Taking a cue from Air Asia X, SpiceJet is actively finalising preordered snacks. This eliminates wastage of food and jet fuel which rather surprisingly, costs as much as Rs. 1,000 ($20) per meal. Modelled after Singapore Airline's Boarding Pass privileges programme, SpiceJet has launched its own programme. Passengers can avail special benefits from hotels on presentation of their SpiceJet boarding pass.
Cost Cut Measures : Cost Cut Measures Normally airlines pay professional musicians Rs. 2~5 million ($40K~$100K) to compose the music. But SpiceJet went the in-sourcing route rather than out-sourcing. SpiceJet discovered Moin ,their airport services manager, was also a proficient musician and he composes the music thus reducing cost. "Word of mouth" advertising The excellent customer services help them not spend on advertising, instead relying on word of mouth referrals.
******
doc_156840060.docx
This is a documentation is about company analysis of spicejet.
COMPANY ANALYSIS- SPICEJET History of Aviation in India ? ? ? ? ? ? 1932- Launch of TATA airlines 1948- Air india International 1953- Nationalisation of aircraft Industry 1986- Private sector players permitted as Air Taxi 1994- Private carriers permitted to operate scheduled services 2003- Entry of low cost airline
Aviation industry o The Indian Aviation Industry has been going through a turbulent phase over the past several years facing multiple headwinds – high oil prices and limited pricing power contributed by industry wide over capacity and periods of subdued demand growth. o Over the near term the challenges facing the airline operators are related to high debt burden and liquidity constraints - most operators need significant equity infusion to effect a meaningful improvement in balance sheet. o Improved financial profile would also allow these players to focus on steps to improve long term viability and brand building through differentiated customer service. o Over the long term the operators need to focus on improving cost structure, through rationalization at all levels including mix of fleet and routes, aimed at cost efficiency. o At the industry level, long term viability also requires return of pricing power through better alignment of capacity to the underlying demand growth. o While in the beginning of 2008-09, the sector was impacted by sharp rise in crude oil prices, it was the decline in passenger traffic growth which led to severe underperformance during H2, 2008-09 to H1 2009-10. o The operating environment improved for a brief period in 2010-11 on back of recovery in passenger traffic, industry-wide capacity discipline and relatively stable fuel prices. However, elevated fuel prices over the last three quarters coupled with intense competition and unfavorable foreign exchange environment has again deteriorated the financial performance of airlines. During this period, while the passenger traffic growth has been steady (averaging 14% in 9m 2011-12), intense competition has impacted yields and forced airlines back into losses in an inflated cost base scenario. o To address the concerns surrounding the operating viability of Indian carriers, the Government on its part has recently initiated a series of measures including (a) proposal to allow foreign carriers to make strategic investments (up to 49% stake) in Indian Carriers (b) proposal to allow airlines to directly import ATF (c) lifting the freeze on international expansions of private airlines and
(d) financial assistance to the national carrier. However, these steps alone may not be adequate to address the fundamental problems affecting the industry. o While the domestic airlines have not been able to attract foreign investors (up to 49% FDI is allowed, though foreign airlines are currently not allowed any stake), foreign airlines may be interested in taking strategic stakes due to their deeper business understanding, longer investment horizons and overall longer term commitment towards the global aviation industry. o Healthy passenger traffic growth on account of favorable demographics, rising disposable incomes and low air travel penetration could attract long-term strategic investments in the sector. o However, there are two key challenges: i) aviation economics is currently not favorable in India resulting in weak financial performance of airlines and ii) Internationally, too airlines are going through period of stress which could possibly dissuade their investment plans in newer markets. o Besides, foreign carriers already enjoy significant market share of profitable international routes and have wide access to Indian market through code-sharing arrangements with domestic players. Given these considerations, we believe, foreign airlines are likely to be more cautious in their investment decisions and strategies are likely to be long drawn rather than focused on short-term valuations. o On the proposal to allow import of ATF, we feel that the duty differential between sales tax (averaging around 22-26% for domestic fuel uplifts) being currently paid by airlines on domestic routes and import duty (8.5%-10.0%) is an attractive proposition for airlines. However the challenges in importing, storing and transporting jet fuel will be a considerable roadblock for airlines due to OMCs monopoly on infrastructure at most Indian airports. Aviation Industry PEST Analysis: Conducive Factors Political Economical Social Open Sky Policy has Growth in Indian The importance of allowed Foreign Economy (consumer spent on the travelling players to enter the have capacity to has been understood market afford air travel) has a by the consumers. visible impact on the Air travel: from aviation industry both luxury to necessity premium and low cost fliers Similarly Indian Fliers Income of salaried Increase in travelling got an opportunity to class up 10-12% lifestyle enter the foreign zone Freedom to determine GDP growth of 7-8% Increase in business fare in last 5 years travelling
Technological Growth of ecommerce and eticketing
IT revolution
Online ticketing
FDI: in Airlines In Airports
Nil import tariff on aircraft Oligopoly structure of the market
Growing middle class LCC (Low cost carriers) as mass transport medium
Best price shopping services Safety measures
Aviation Industry PEST analysis: Limiting factors Political Economical Social Bureaucracy Tax tariffs: Lack of skilled 8% import duty manpower 25-33% state sales tax on ATF(Aviation Turbine Fuel) International routes Pricing strategy Customer service after 5 years dependent on individual firm’s behaviour No clear policy for International Safety concerns(9/11 state carriers petroleum prices incident) Terrorism Fear
Technological Night landing facilities
Operation winter/fog
during
Capital intensive technology Video conferencing and telecommunication technology
Five force model 1. Entry barriers: (HIGH) ? High start up cost; capital intensive industry ? Over-crowded low cost airline market. ? Dearth of aviation professionals ? Price wars against new-comers 2. Bargaining power of buyers: (HIGH) ? Price dominated short haul market with little or no product differentiation ? Little or no customer loyalty- price conscious consumers ? Low switching cost 3. Bargaining power of suppliers: (MEDIUM) ? No control over Aviation Turbine Fuel (ATF) prices ? High fuel costs ? Leased Aircrafts ? Specialised Aircrafts and limited number of manufacturers
4. Threats of substitute: (LOW) ? Video conferencing and telecommunication technological innovations ? Super fast trains (Durontos) for short haul flights 5. Rivalry: (HIGH) ? Competitive and over crowded market ? Competition with conventional carriers- with low fares but a higher level of service ? Mergers, acquisitions, alliances (Kingfisher Red acquired Air Decccan, Jet Airways acquired Air Sahara and merger of Air India and Indian Airlines) ? Aggressive pricing strategies SWOT Analysis of the Aviation Industry
STRENGTHS ? Liberal Environment in both domestic and international spheres ? Advance fleet: the growth of aviation industry in the past years has increased to a tremendous extent. ? High quality, comfort and reliable service ? Economic Growth of the country: the growth of about 7-8% has flourished the industry.
WEAKNESSES ? Airport Infrastructure: with fierce competition and growing crowd at the airports, infrastructural facilities need to be improved ? National Carrier i.e Air India is not in a healthy condition: with the recent strike of the pilots and the not-so-good image of Air India in regards of schedule and frequency it is facing a tough time. ? High cost structure: the cost involved in the import of the ATF is very high and increases the cost upto 60% above the international benchmark ? Skilled Resources: Dearth of the number of skilled pilots , technical and management personnel.
OPPORTUNITIES THREATS ? Market Growth: Growth though is ? Middle East Aviation: The carriers of slowing down in India it is still growing the Gulf are aggressively expanding in around 6% and it is the highest in the India, with high frequencies from BRICKS. But still trips per capita is multiple destinations to their hubs, low compared to other developing from where passengers can access countries. This definitely manifests the extensive global networks. scope of the industry further in the ? Terrorism: India has seen frequent country. terrorist activity in recent years. The
?
?
Lower Costs: since the large portion of the population belong to middle class and lower middle category in India pricing has become an important tool for success. Higher Quality
country has shown great resilience in bouncing back after each attack, however inbound international traffic in particular is sensitive to such events
Market Share of Scheduled Domestic Airlines
Air India (Dom) Indigo SpiceJet JetLite Jet Airways Kingfisher Go air
As seen from the chart the nearest competitor to SpiceJet in the LCC category is Indigo. Company Information Founded 2006 Commenced Operations 4th august 2006 Hubs Indira Gandhi International airport (DEHLI) Secondary hubs Chattrapati Shivaji Interrnational Airport Netaji Subhash Chandra Bose International Airport( Kolkata) Focus cities Chennai Kochin Bengaluru Pune Hyderrabad Ahmedabad Fleet size 58(+222 orders) Compnay slogan Go Indigo Parent Company InterGlobe Enterprises Headquarters Gurgaon, Haryana, India
On board services ? Being a low-cost carrier, all of IndiGo's flights have no Business class or First class sections. ? It offers only Economy class seating. Snacks, meals and drinks (even mineral water) are available as a buy-on-board option. ? IndiGo's domestic flights allow only one piece of free check-in baggage per paying passenger, while they might charge for more. ? No in-flight entertainment systems are made available. There is an inflight catalogue, Hello 6E, which provides information about various items which can be bought on board. Pricing: ? ? IndiGo offers a simple fare scheme, such as charging one-way tickets half that of roundtrips. Typically fares increase as the plane fills up, which rewards early reservations. The price policy of IndiGo is usually very dynamic, with discounts and tickets in promotion. Like other carriers, even if the advertised price may be very low, it often does not include charges & taxes. Perhaps as many (or as few) as ten percent of the seats on any flight are offered at the lowest price, and are the first to sell. The prices steadily rise thereafter to a point where they can be comparable to a flight on a full-service carrier
?
Analysis: ? ? The pricing stategy has benn very much similar to that of SpiceJet with discount and rewards. The number of fleets with Indigo is higher than those belonging to SpiceJet. They have entered into the international sphere before spicejet. This directly impacts on the revenue and the profit of the airlines. Due to this the market share of Indigo is slightly higher than that of SpiceJet. Indigo is awarded with the best low cost carrier in India.
? ?
Introduction ? SpiceJet is a low cost airline headquartered at Chennai. ? SpiceJet was earlier known as Royal Airways ? It was founded in 2004 and commenced operating on 24th May 2005 with the launch of its first flight Delhi-Ahmedabad-Mumbai. ? After around 6 months, SpiceJet launched a six-day a week service to Jammu and Srinagar in Nov 2005. ? SpiceJet names all its aircrafts after various spices and herbs Cinnamon, Thyme, Oregano, ? Airline has more than 2500 employees working with them currently.
? Its tagline: FLYING FOR EVERYONE Hubs Chennai International Airport Indira Gandhi International Airport (Delhi) Rajiv Gandhi International Airport (Hyderabad) Chhatrapati Shivaji Internaltional Airport (Mumbai) Netaji Subhash Chandra Bose International Airport (Kolkata) ? Bangalore ? Kochi ? Ahmedabad Chennai Flying for everyone Sun Group 2501-5000 47 38 1113 Cr. 101 Cr. VIPPS Centre(North Wing), 2, Commercial Complex, Masjid Moth, Greater Kailash - II New Delhi - 110048 Delhi - India Phone : 55515063/55515064 Fax : 25674336 Email : [email protected] ? ? ? ? ?
Secondary Hubs
Focus cities
Headquarters Company Slogan Parent Company No. of Employees Fleet Size Destinations Revenue Profit Head Office
Registered Office Murasoli Maran Towers, 73, MRC Nagar Main Road, MRC Nagar Chennai (Madras) - 600028 Tamil Nadu - India
Management-SpiceJet Kalanithi Maran: Chairman/Chiarperson Early life
?
Schooling at Don Bosco, Egmore, Chennai.
? ? ?
In Loyola College, Chennai he became the student’s union chairman and led an agitation on the Sri Lankan Tamils issue. Has an MBA from the University of Scranton. Returning to India in 1987, he worked for Kungumam Tamil Magazine owned by his family in the late 1980s.
Business expansion
? ? ? ? ? ? ? ? ? ? ?
In 1990 he started a monthly video (VHS) news magazine in Tamil called Poomaalai which was stopped in 1992 due to piracy. He founded Sun TV on April 14, 1993 with an investment of US $86,000 from a bank loan.[8][9] His net worth reached $10 million by 1995. His net worth reached $100 million by 2000. His net worth reached $10 billion by 2005. By 2010, he was the 17th richest Indian with net worth of US$ 4 Billion .[10] He is the highest paid business man in India.[11] He has won Young Businessman awards from CNBC, ERNST & Young.[12] Prestigious USA based Forbes magazine named him the "Television king of southern India".[13] He was among the few representatives at a roundtable with the visiting then U.S. President Bill Clinton.[14] Sun TV was listed on the Bombay Stock Exchange on April 24, 2006 upon raising $133 million.[15]
Business entities
? ? ? ? ? ? ? ? ? ?
Sun Network - South Indian Television Channels Sun Direct DTH - Direct to Home broadcasting Service. Spicejet - Airlines Suryan FM - Tamil Radio Red FM - MultiLingual Indian Radio Sun Pictures - Tamil Movie Production house Dinakaran - Tamil daily news paper Tamil Murasu - Tamil evening news papers Kunkumam, Muthaaram, Vannathirai, Kunguma Chimizh - Tamil magazines Sun 18 - to distribute its channels through cable, DTH, IPTV, HITS and MMDSk.
REF: Wikipedia
Kavery Kalanithi – Director ? Mrs. Kavery Kalanithi is Non-Executive Director of Spicejet Ltd. ? She holds a Bachelor's Degree in Arts from University of Madras, Chennai. ? She is actively involved in the business and operations of M/s. Sun TV Network Limited including monitoring the viewer feedback with regard to the programming and deciding the content mix on various channels. ? She is also actively involved in philanthropic activities and is on the board of trustees of Sun Foundation, a public charitable organization, supervising day to day functioning of the Sun Foundation. ? Mrs. Kalanithi was appointed as director on the Board of the Company with effect from November 15, 2010. Mrs. Kalanithi is also a director on the Board of Sun TV Network Limited, Kal Radio Limited, South Asia FM Limited, Udaya FM Pvt. Ltd, Kungumam Publications Pvt. Ltd, Kungumam Nithiyagam Pvt. Ltd, Kal Investments (Madras) Pvt. Ltd, Kal Comm Pvt. Ltd, Sun Direct TV Pvt. Ltd, Kal Publications Pvt. Ltd, Kal Media Services Private Limited, Kal Airways Private Limited, Kal Holdings Private Limited, Sun Business Solutions Private Limited. ? She also holds committee memberships in Sun TV Network Limited (Share Transfer and Transmission Committee), South Asia FM Limited (Audit Committee) and Kal Radio Limited (Audit Committee and Remuneration Committee). Mrs. Kavery Kalanithi does not hold any shares in SpiceJet Limited. ? She is the highest paid woman in India. Ref: reuters.com Other Players in the Management: Nicholas Martin Paul J Ravindran S Natrajhen M K Harinarayanan R Ravivenkatesh Director Director Whole Time Director Director Director
Achievements: ? SpiceJet was voted the best low cost airline in South Asia and Central Asia region ? By 2008, it was India’s second largest low cost airline in terms of market share ? Market share increased to 18.6% (jan2012)
STRENGTHS
WEAKNESSES
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Flight attendants Low airfare (Entered with 99Rs. Fare) Offering low everyday spicy fares Fleet of Boeing 737-800 with 189 seats (max. in the industry) Connectivity In flight food
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Limited sectors(concentrated only in North-West-South Indian Sector) Airline punctuality Greeting at airport Welcoming of passengers Seats Call center
OPPORTUNITIES ? Fleet expansion
THREATS ? Killer competition-the Indian skies are witnessing a battle for market share
Aim ? To become India’s most preferred low cost airline, by providing the lowest airfares and the highest consumer value to the price sensitive consumers of the country. ? Aims at provoking those who have not experienced flying ? To ensure that flying is not just confined to CEOs and business travelers but affordable to everyone. Customer service ? Personal valet at airport ? Personal and exclusive lounges ? Refreshment and music ? Three course meal ? Baggage assistance ? Award winning web portal Promotional tools ? Word of mouth marketing ? Print ads in newspapers and magazines ? TV commercials ? Internet media initiatives ? Hoardings, railways platforms, airports, shopping malls Cost and value drivers: 1. High seat density: ? Single class 189 seats per flight ? Focus on maximum space utilization for generating more revenue per flight
2. Direct distribution of tickets: ? Sells its ticket via the internet or call centre route ? Bypasses travel commission and global distribution system 3. High Aircraft Utilisation: ? Consistently reporting high aircraft utilization Performance Chart ,Ownership Pattern, Shareholding Pattern and Financial Statements Performance Chart
Index Comparison
Ownership Pattern
http://beta.bseindia.com/corporates/ShareholdingPattern.aspx?scripcd=500285&flag_qtr=1&qtri d=73.00&Flag=New
MARKETING STRATEGY: Marketing Theme & Aim : Marketing Theme & Aim Their marketing theme “Offering low 'everyday spicy fares' and great guest services to price conscious travellers” Their aim To compete with the Indian Railways passengers travelling in air conditioned coaches.
Low Cost Airline : Low Cost Airline SpiceJet marked its entry in service with Rs. 99 fares for the first 99 days, with 9,000 seats available at this rate. It was followed it up with a Rs. 999 promotional scheme on select routes.
Current Fleet & Operations : Current Fleet & Operations 264 daily flights with a fleet of Next Generation Boeing 737s, 737800s and 5 - 737-900ERs (extended range). At present the fleet strength is completely utilised and further route expansion has been ruled out till new aircraft are inducted. New fleets have been ordered.
Adjusting to the Global Meltdown : Adjusting to the Global Meltdown When its full service counterparts like Air India, Jet Airways and Kingfisher Airlines are struggling now, SpiceJet is focussing on its profitability from this consolidation wave. Focus towards enhancing the customer experience. The global slowdown in air travel has impacted leisure segment, and has made SpiceJet accelerate its increasing focus on business passengers.
Reaching out to Business Travellers : Reaching out to Business Travellers Business travellers can collect their boarding passes for a same-day return flight. Introduction of a corporate travel program that means ability to change ticketed flight dates and times without surcharges. While airlines in the US are charging for each check-in piece of baggage, SpiceJet is going the opposite way to woo customers by extending the free "two piece baggage" concept to international connecting passengers.
Focus towards enhancing the Customer Experience : Focus towards enhancing the Customer Experience Complimentary supervision of unaccompanied minors. Hot beverage and combo meals available for sale. Two-bag waiver for
guests connecting on SpiceJet within 24 hours of international travel. Waiver of additional charges on sports kits.
Cue from International Airlines : Cue from International Airlines Taking a cue from Air Asia X, SpiceJet is actively finalising preordered snacks. This eliminates wastage of food and jet fuel which rather surprisingly, costs as much as Rs. 1,000 ($20) per meal. Modelled after Singapore Airline's Boarding Pass privileges programme, SpiceJet has launched its own programme. Passengers can avail special benefits from hotels on presentation of their SpiceJet boarding pass.
Cost Cut Measures : Cost Cut Measures Normally airlines pay professional musicians Rs. 2~5 million ($40K~$100K) to compose the music. But SpiceJet went the in-sourcing route rather than out-sourcing. SpiceJet discovered Moin ,their airport services manager, was also a proficient musician and he composes the music thus reducing cost. "Word of mouth" advertising The excellent customer services help them not spend on advertising, instead relying on word of mouth referrals.
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