Q1: What, in your reckoning are the set of pitfalls that Shaamraat Airlines should avoid, that fullservice

airlines in India and abroad, have committed in the past? Alternately, state, with reasons,
what SA should not do.?
[A]. The set of class responses suggest that there may be a set of groupthink elements operating.
The groupthink elements do not pass critical inspection. Not all answers show all the groupthink
elements listed below, but a significant proportion does show one or more:
-

That, a full-service airline should never take part in a price war

o Jet Airways does so, occasionally, usually with good effect
That Business-class passengers are not price-sensitive
o They are, indeed. Just that the range for sensitivity is in higher bands. Further, their
willingness to pay appear to be higher since business class travel lets them avoid
getting into to close a proximity to the cattle class travelers1. For others,
particularly those flying on company expense, it is a matter of status, job perk,
entitlement, whatever.
That, a set of products / services must be provided, stuff that low-cost airlines do not
provide, to justify the extra money charged (say, for comparable economy class travel)
o It is quite unlikely that Economy Class customers will be glad to receive overpriced
gifts of questionable utility, as compensation for shelling out more in a full-service
airline.
o It must be realized that full-service airlines charge more because they are providing
a costlier service bundle2: for instance, providing connecting flights entail that the
later flight may have to wait for the incoming flight3; involve additional work in
locating and transferring baggage; may involve scheduling one of the two flights at a
disadvantageous time etc. Travel Agents are not merely an added and avoidable
cost: for business travelers they provide a range of necessary services. Without
travel agents there are fewer avenues by which an airline may get to access business
travelers, particularly business-class travelers4.
That, a new full-service Airline can benefit primarily by operating in densely travelled routes,
where passengers are easy to find.
o This smacks of betting on conventional logic, which, as we discussed in class, can
rarely get an underdog to a position of significance5.
o An alternate set of class answers recommend betting on finding less dense routes (in
terms of existing services, particularly coverage by full service airline), connecting
hitherto unconnected cities, tier B/C/D cities etc. These show a bit of second order
thinking. However the positions need to be strengthened by also stating what
additional enablers are needed to make such recourse profitable; whether it is just

Not my personal position. I am merely paraphrasing the sentiment expressed by a public personality; it
appeared in the press, a little while back.
2
Not just the free meals on board!
3
Waiting == more expenditure to the airline. If a connecting flight is missed, airline incurs cost in arranging a
suitable alternative
4
Very few non-cattle-class folks would bother to run web transactions on their own (unlike, say, students and
moderate-salaried people)
5
Prof. Porter would disapprove as well, and advice finding other, different position configuration.

oversight that existing airlines are not doing that already, or whether the pathdependent commitments of existing players handicap them from taking up serving
such routes, etc.
In framing an answer, mere mention of some terms like core competency, core product shall
suffice to describe how Shamraat can build a winning position.
o No, they do not suffice. The class discussion may be recalled- that Prof. Prahalad
establishes just how a core competence (say in Microelectronics or in Power trains)
can lead to core products in multiple industries, creating longevity for the
competence-bearing firm. Similar arguments are expected that helps a reader
understand where the rubber hits the road, in the context of SA.

[B]. A listing of pitfalls that SA needs to avoid just qualifies an answer to be merely an answer. A
better answer would display knowledge of the course material by pointing to the specific instances
(KingFisher, AirIndia, Jet ) etc. where lessons were learnt, identifying pitfalls. An even superior
answer would also mention why the pitfall was a pitfall in the first place, and how it may continue to
be a pitfall for a new-entrant like Shamraat as well. Here are a couple of attempts from me:
[I]. A new-entrant FS Airline like Shamraat should avoid temptations that dilute its full-service
position, for instance acquisition of an existing Low Cost Airline6, merely to broaden its portfolio (as
in the case of Jet acquiring Sahara) or to circumvent regulatory hurdles to its immediate future plans
(as in KingFisher acquiring Air Deccan to get around the 5-year minimum service requirement for
obtaining permission for International operations) etc.. Otherwise, there is a danger that extra
services that are justified only in the Full Service mode, for instance providing connecting flights,
automatic baggage transfer to connecting flights, booking by commission agents, may have to be
extended to the low cost mode, jacking up costs (as happened when United Airlines tried to imitate
SouthWest by a low cost offering).
[II]. A new-entrant FS Airline like Shamraat should avoid attempting to build its brand by frivolous
activities, say concerning novelties in in-flight entertainment a la KingFisher, that add questionable
value. The most important potential action areas constitute (a) Time involved - from the passenger
home/office departure point to his/her final point of coming to rest (again home / office), (b) the
lack of Space in aircrafts, engendering a range of discomforts, (c) the journey stress and (d) anything
that can support operations in a significant way, that rivals have not put in place yet7. In looking to
offer a unique value proposition, SA should look to making a difference in these areas, perhaps in
above rank order. A necessary enabler would be in the form of SA taking reasonable care of its own
employees, so that the latter feel energized to support the firms objectives.

6
7

say SpiceJet, which looks like facing closure or sell-off as on date

And, works similar to the way Walmarts early warehouses invalidated viability of warehouses in the vicinity

Q2: What all innovation would you put in place in Shaamraat Airlines so that customers can readily
differentiate it from the service-bundle offered by the low-cost airlines (so as to be willing to pay
more to travel on Shaamraat)?
The idea was to give free reign to imagination, in the process throwing up interesting positions. I am
happy to report that quite a few striking suggestions were proposed by the class. Here are a few,
with my editing:
(a). Transparent design of the asile (and possibly the asile roof), so that there is less contention for
window seats
(b). Allow a make your own meal option to select passengers, who troop to the tiny shelf area at
the back of the airline (or the area at the front, right behind the cockpit, where provisions are kept),
and prepare their own meal.
(c). Charge the regular prices for a full-service economy ticket, but hold lucky draws , winners of
which may travel at a nominal price (say Rs. 1500-2000) between destination pairs (where the FS
airline has empty seats anyway), within a certain interval of time.
(d). Tie up with tourism companies to provide exclusive bulk deals.
(d). Increased baggage allowance according to loyalty / FF scores. Alternately allow use of un-used
baggage limit from previous travel.
(e). Upgrade to Business Class based on lucky draw (if the flight is having vacant seat), again, as a
function of loyalty/ FF scores.
(f). Give free tickets to celebrities (in the initial stages) to create a buzz.
(g). Codeshare with other FS airlines to provide broader reach8.
In above, note that (c), (d), (e) constitute alternate forms of price competition; but the competition
is not publicly visible, since the deals are exclusive. Hence it is unlikely to hurt the industry.
My general comment is as follows: Given that quite a few things can be imagined, it will ultimately
boil down to two key determinants,- (i) Which of the dimensions concerning Time, Space, Stress,
unique operations are being addressed and (ii) how does the innovation chosen count as making
bets defying conventional logic, involving irreversible commitments (funding for which can be found)
that lead to capabilities that cannot be copied in a short time and requiring the seizing of an
opportune moment somewhat far out in time, for realization of benefits. A schedule connecting/
providing transfer between under-served and densely served airports could qualify. An additional
business of MRO serving many industry players (e.g. Prof. Prahalads Japanese examples / Samsung),
would qualify as well. I am sure the class can think of other approaches.
8

Internationally it is done. I see no reason why it ought not to be done domestically!