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Guided by Prof. Kazi

Semester V
Service Sector Management
Submitted By:

Roll No.



Mustafa Rangwala


Mustafa Attar


Mustafa Ranapurwala


Murtaza Udaipurwala


Mufaddal Khamgaonwala


Murtaza Rupawala

Overview of the Economy

Gross domestic product (GDP) is the market value of all officially
recognized final goods and services produced within a country in a
year, or over a given period of time. GDP per capita is often used as an
indicator of a countrys material standard of living. GDP per capita is
not a measure of personal income. Under economic theory, GDP per
capita exactly equals gross domestic income (GDI) per capita.
However, due to differences in measurement, there is usually a
statistical discrepancy between the two figures.

INR 147 billion directly contributed through the output of the aviation
sector (airlines, airports and
Ground services, aerospace);
INR 107 billion indirectly contributed through the aviation sectors
supply chain; and
INR 77 billion contributed through the spending by the employees of
the aviation sector and its
Supply chain.
In addition there are INR 582 billion in catalytic benefits through
tourism, which raises the overall

Contribution to INR 912 billion or 1.5% of GDP.

Money supply:
In economics, the money supply or money stock, is the total amount
of monetary assets available in an economy at a specific time. There
are several ways to define "money," but standard measures usually
include currency in circulation and demand deposits. It is easy to
confuse the amount of spending money in the economy with the
amount of money in the economy.

Inflation :
The annualized inflation rate in India is 8.9% as of June 2012, as per
the Indian Ministry of Statistics and Programme Implementation. This
represents a modest reduction from the previous annual figure of 9.6%
for June 2011. Inflation rates in India are usually quoted as changes in
the Wholesale Price Index, for all commodities.
(10.8%); Machinery and Machine Tools (8.9%); Textiles (7.3%) and
Transport, Equipment and Parts (5.2%).
How inflation affects the common man?
If you are having to increasingly pay more for your groceries at your
neighbourhood Kirana store or a swanky department store, chances are
that you have been hit by inflation.

Purchasing power of the rupee falls -- a Rs.50 note, which you could
use to buy a kilogram of rice, will now fetch only half a kilogram.
2) Commodity wholesaler dealers, such as rice dealers at mandis, may
try and hoard essential commodities like food grains on hopes of
reaping profits when prices increase further on dwindling supplies.
3) Fixed income groups will be hit the hardest because their salaries
will not be revised to include the cost of living even as prices of items
4) Household as well as national savings drop because there is less
money to save now as people use a greater part of their disposable
income to pay for daily-use commodities.

The better news:

A higher rate of inflation can make repaying loans easier because they
can end up paying back less money if the interest rate is lower than the
rate of inflation.

Exchange rate :
Price for which currency of country can be exchanged for






rate. Factors that influence exchange rate include (1) interest rates,

(2) inflation rate, (3) trade balance, (4) political stability, (5) internal







the conduct of leaders and administrators, (7) general state of economy,






In finance, an exchange rate (also known as a foreign-exchange

rate, forex rate, FX rate or Agio) between two currencies is the rate
at which one currency will be exchanged for another. It is also regarded
as the value of one countrys currency in terms of another currency. For
example, an interbank exchange rate of 91 Japanese yen (JPY, ) to
the United States dollar (US$) means that 91 will be exchanged for
each US$1 or that US$1 will be exchanged for each 91
Balance of Payment (Bop) of a country is defined as the record of all
economic transactions between the residents of a country and the rest
of the world in a particular period (over a quarter of a year or more
commonly over a year).
Trade buying and selling of goods and services
Exports a credit entry
Imports a debit entry
Trade balance the sum of Exports and Imports
Factor income repayments and dividends from loans and investments
Factor earnings a credit entry
Factor payments a debit entry

Overview of Airline Industry

Indian Aviation Industry is one of the fastest growing airline industries
in the world. The history of Indian Aviation Industry started in
December 1912 with its first domestic air route between Karachi and
Delhi. It was opened by the Indian Air Services in collaboration with
the UK based Imperial Airways as an extension of London-Karachi
flight of the Imperial Airways. Tata Sons Ltd., the first Indian airline,
started a regular airmail service between Karachi and Madras three
years later without any backing from the Indian government.
During 19991-1992, Modiluft, East West and Damania went bankrupt.
Air Sahara and Jet Airways survived along with government own
Indian Airlines because they had the capability to bear losses.
Globalization and privatization had a major impact on aviation
industry. Indian aviation industry was deregulated by the government
in 1990s.By the year 2000 several private airlines have entered into the
aviation business in succession and many more were about to enter into
the arena. Indian aviation industry today is dominated by private
airlines and low-cost carriers like Deccan Airlines, GoAir, and
SpiceJet, etc. And Indian Airlines, the giant of Indian air travel
industry, gradually lost its market share to these private airlines.

Brief Introduction
Indian Aviation Industry has been one of the fastest-growing aviation
industries in the world with private airlines accounting for more than
75 % of the sector of the domestic aviation market. With a compound
annual growth rate (CAGR) of 18 % and 454 airports and airstrips in
place in the country, of which 16 are designated as international
airports, it has been stated that the aviation sector will witness revival
by 2011.
Today Hyderabad International Airport has been ranked amongst the
world's top five in the annual Airport Service Quality (ASQ) passenger
survey along with airports at Seoul, Singapore, Hong Kong and
Beijing. This airport in Hyderabad is managed by a public-private joint
venture consisting of the GMR Group, Malaysia Airports Holdings
Berhad and both the State Government of Andhra Pradesh and the
Airports Authority of India (AAI).
The Indian aviation sector can be broadly divided into the following
main categories:
Scheduled air transport service includes domestic and international
Non-scheduled air transport service consists of charter operators and
air taxi operators.
Air cargo service, which includes air transportation of cargo and mail.

Scheduled air transport service: It is an air transport service

undertaken between two or more places and operated according to a
published timetable. It includes:
Domestic airlines, which provide scheduled flights within India and to
select international destinations. Air Deccan, Spice Jet, Kingfisher
Airline and IndiGo are some of the domestic players in the industry.
International airlines operate from scheduled international air services
to and from India.
Non-scheduled air transport service: It is an air transport service
other than the scheduled one and may be on charter basis and/or nonscheduled basis. The operator is not permitted to publish time schedule
and issue tickets to passengers.
Air cargo services: It is an air transportation of cargo and mail. It may
be on scheduled or non-scheduled basis. These operations are to
destinations within India. For operation outside India, the operator has
to take specific permission of Directorate General of Civil Aviation
demonstrating his capacity for conducting such an operation.
Size of the Industry
India is one of the fastest growing aviation markets in the world. A total
of 127 airports in the country, which include 13 international airports,
7 custom airports, 80 domestic airports and 28 civil enclaves are
managed by The Airport Authority of India (AAI). There are about 450
airports and 1091 registered aircrafts in India today.

Top Leading Companies

Players in Indian aviation industry can be classified into three groups:
Public players
Private players
Start-up players
There are three public players: Air India, Indian Airlines and Alliance
Air. The private players include Jet Airways, Air Sahara, Paramount
airways, Go Air Airlines, Kingfisher Airlines, Spice Jet, Air Deccan
and many more. The start-up players is those which are planning to
enter into the markets. Some of them are Omega Air, Magic Air,
Premier Star Air and MDLR Airlines.

Employment opportunities
Today India Aviation Industry requires approximately 7,500-8,000
pilots and an equal number or more air cabin crew by 2010. Heavy pay
packages are awaiting pilots with a commercial pilot license (CPL). An
amateur pilot can start his career with a salary of Rs 2.5-3 lakh a month
with a commercial airline. With the sudden increase in the number of
airlines, pilots are in great demand.

Latest developments

Toward modernization of non-metro airports the Airports Authority of

India (AAI) is planning to spend over US$ 1.02 billion in 2010. There
are even plans of the city-side development of 24 airports, including
airports at Ahmedabad and Amritsar. There are even additionally, 11
new Greenfield airports which are in pipeline which have been
identified to reduce passenger load on existing airports.
The government has formed National Aviation Company Ltd (NACIL)
by merging national carriers Air India and Indian Airlines into a single
entity. The blue print was prepared by the civil aviation ministry to
convert Delhi airport into an international hub for passenger airlines
and has been done so recently.

Modernization of Airports
Airports Authority of India (AAI) manages the development and
modernization of all 35 non-metro airports in the country
simultaneously and work is due to be completed by the year end of
2010. Wholly owned subsidiaries of AAI are being created for
betterment of these airports. According to the AAI there are work
orders for terminal buildings at 13 airports, and for airside
development, including runway, taxiway, apron, fire station, control
tower and isolation bay, at 19 airports.

Growth in MRO Segment

Indian Aviation with the advent of low-cost airlines & ever-increasing
passenger traffic there is a fleet expansion. There is an Initiation of the
whole new business avenue for global aircraft companies in
maintenance, repair and overhaul (MRO). This MRO facility provides
major and minor maintenance,
Factors Responsible for Growth of Airline sector :
Political Environment
There are several limitations in aviation infrastructure in India for
instance parking bays, gates to board passengers, landing slots etc. are
in short supply. This often leads to massive delays, cancellation and
major losses in revenue for many LCCs. For upgraded infrastructure
facilities, Indias civil aviation minister Praful Patel said on 15
February 2006 that Indian government defer decision on privatization
of International Airport in Delhi and Mumbai.
Economic Environment
In Indian economy, there is a robust growth of 8.9 per cent GDP, in
first quarter of the current year. The aviation industry is at boom, where
growth ranged between 30-50 per cent. The growth in aviation has been
possible because of liberal policies in civil aviation, robust growth in
tourism and exports. Few years back domestic market was dominated
by three domestic carriers they were Indian Airlines (government
owned), Jet Airways and Air Sahara (private players). But now there

are 14 which include new players like Jagson, Air Deccan, Spice Jet,
Go Air, Magic Air etc
Social Environment
In India, before 1990s, traveling by air was considered expensive and
luxury mode of transportation. After deregulation in aviation industry
several new airlines come up and there was a drastic reduction in fares
which was a spur for Indians to opt for air travel. Indias first low cost
carrier Air Deccan began with Rs 500 per ticket offer. It was neck to
neck competition with Indian railways. Soon Spicejet gave a counter
offer of Rs 99 per ticket. Since then prices for airline ticket kept on
reducing as a promotion strategy. People traveling on trains by first or
second class AC, till now, shifted their attention to airlines. It improved
their lifestyle.

Technological Environment
Airports Authority of India in collaboration with Indian Space
Research Organization (ISRO) is developing a new satellite-based
navigation called Gagan. The project is likely to be operational by
2008. Only three countries including the United States has similar
Satellite-based system. It is one of the latest technology in the world.
It will enhance safety of flights.
Overview of the company

How it was started?

The airline was set up under the Air Corporations Act, 1953 with an
initial capital of Rs. 32 million and started operations on 1 August 1953.
It was established after legislation came into force to nationalise the
entire airline industry in India. Two new national airlines were to be
formed along the same lines as happened in the United Kingdom with
British Overseas Airways Corporation (BOAC) and British European

Airways (BEA). Air India took over international routes and Indian
Airlines Corporation (IAC) took over the domestic and regional routes.
Eight pre-Independence domestic airlines, Deccan Airways, Airways
India, Bharat Airways, Himalayan Aviation, Kalinga Airlines, Indian
National Airways and Air Services of India and the Domestic wing of
Air India, were merged to form the new domestic national carrier
Indian Airlines Corporation. International operations of Air India Ltd.
was taken over by the newly formed Air India International. Indian
Airlines Corporation inherited a fleet of 99 aircraft including 74
Douglas DC-3 Dakotas, 12 Vickers Vikings, 3 Douglas DC-4s and
various smaller types from the seven airlines that made it up.

What were the reasons for its decline?

How did it jumped back?

Proposed Privatization, expansion and merger (2000-2007)
In 2000-01, there were attempts to re-privatize Air India to improve
services, but in 2001 Singapore Airlines pulled out of the bidding

Operating Revenues

Operating Profit(Loss)







process and the global economy slumped. With the fall of the BJP-led
NDA government in 2004, these attempts were shelved. In 2000, Air
India introduced services to Shanghai and to its third U.S. gateway at
Newark Liberty International Airport in Newark, New Jersey. In May
2004, Air India launched a wholly owned low cost airline called AirIndia Express. Air India Express connecting cities in India with the
Middle East, Southeast Asia, and the Indian subcontinent. In 2004 Air
India launched flights to its fourth US gateway at Los Angeles
International Airport in Los Angeles (which has since been terminated)
and expanded its international routes to include flights from
Ahmedabad, Amritsar, Bangalore, and Hyderabad. On 1 December
2009, Air India introduced services to its fifth U.S. gateway at
Washington Dulles International Airport in Washington, D.C.,
accessed via a stopover at JFK Airport in New York City.
Until 2007, Air India and Indian Airlines operated as two completely
different airlines, though completely owned by the government of
India. Air India mainly operated on International long-haul routes while

Indian Airlines operated on domestic and international short-haul

routes. Both airlines had different fleet expansion and retirement plans.
In 2007, the government decided to bring both the airlines, including
Air India Express and Indian Airlines' low cost subsidiary Alliance Air
under the control one body.
National Aviation Company of India Limited

The Government of India announced that Air India would be merged

with Indian Airlines. As part of the merger process, a new company
called the National Aviation Company of India Limited (NACIL), now
called Air India Limited was established as the holding company for
Air India and its subsidiaries. In February 2011, the merger came into

Around 20062007, the airlines began showing signs of financial

distress. The combined losses for Air India and Indian Airlines in
200607 were INR7.7 billion (US$130 million). After the merger of
the airlines, it went up to INR72 billion (US$1.2 billion) by March

Segmentation, Targeting & Positioning Strategy

A. Segmentation
Corporate Travellers
Corporate Travellers are travellers who uses air lines as a mode of
travelling the most of all other travellers. Most of corporate travellers
are Marketing Managers and Sales Managers who travel for business
increment and promotion daily, weekly or monthly as per their work
and tasks. So Air India has been focusing and are concentrating on this
segment specially.

Independent Business Travellers

These are Businessman who travel national and international tours for
business development and expansion and to build relationship & here
air lines come in to picture for accommodating such travellers a
comfortable means of travel and business trips. Air India also keep on
fetching such customers to generate more profits. This segment also
includes professionals and free lancers.

Holiday Travellers
Such travellers travels in holiday seasons like Eid, Diwali, Christmas,
Summer Vacations. Air India focus on such customers only in a
specific time of the year. They attract such customers via Discounts,
Offers & Schemes.
Pilgrimage Travellers
These travellers are belonging to different communities of the world
who travel to the holy places recognize by their religion. Such travellers
go national and international and travellers keeps on changing because
such pilgrimage trips are a compulsion once in lifetime. Here Air India
launches tour packages for travellers who wish to go for pilgrims.
Emergence Travelers
These are travellers who due to some urgent work or due to any
uncertainty needs to reach a specific place as soon and as fast as
possible. For such kind of travellers a number of seats are kept reserved
by Air India in every flight. Such travellers are not common and dont
keep on coming back every time there are new travellers. The number
of people are less and hence the reserved seats kept are very low for
this market segment.

Travellers Visiting Relatives & Friends

These are general travellers who travel to visit relatives @ their native
place or friends staying far away. Such travellers are served by Air

India a normal ticket and services and discounts are usually not offered
Goods Transportation (Export Via Air)
Not only humans but also air lines pick and drop goods from one
destination to other at national and international level. Such transport
are attracted by Air India with special schemes and logistics portals.
B. Targeting By Air India
Tourism Agencies
Air India has a type with such agencies in order to sell their services.
They offer special discounts, bonus points and extra benefits to
agencies for selling their services via tourism agencies all over India
and abroad. These agencies are a major target in order to capture vast
customer segments
Online Ticket Sellers
These are sellers who specialize in selling tickets online via internet.
They dont only extend their services to ultimate customers but online
selling widen their limitations of selling to sell to small ticket booking

Ticket Booking Agents

These are agents who book tickets for travelers to earn brokerage they
act like middleman between customers and companies. These agents

are also targeted by Air India in order to access sales. Air India does
this by providing such agents a high commission rates on sales of each
ticket and also some extra points which are redeemable.

C. Positioning By Air India

Their Own Website
Air India has its own website through which it does marketing and sales
of its services. The website link is the link to fly to
your destination. They provide information of portals, ongoing
schemes and discounts, extra benefits on membership and special
holiday and festive discounts.
They promote their air lines via as it is a famous online
portal to book tickets online via internet because it is famous listing
services on it and selling decreases cost of physical booking counters,
widen the area of sales and promotion and earn higher profits. This has
got huge sales generation for Air India.

Google Ad words
The very famous concept and used for online advertising and
promotion of goods and services. It also redirects to a specified link on
click as well as people not clicking can at least see the ads. Air India

has done positioning via Google Ad words and this has brought to their
website a huge traffic.
Ads Included In Tourism Packages
They include their ads in packages and catalog of tourism agencies by
influencing them by giving them higher commissions and incentives.
Such ads drags notice of customers and tune their mind to use travel
service of Air India which again maximize their sales.
Via Newspapers & Subscriptions
They give ads in newspapers in order to aware customers about their
services and ongoing offers and schemes. This is a good way of
positioning Air India in market as newspaper is read by all classes of
Other Sources
They also promote selling of tickets and services given by them via
ticket bookings agents, magazines and different ad portals. They also
keep on switching to new positioning sources regularly to drive a mass

Information Technology

Services Offered By air India through I.T. Department:-

1. Online booking
Online booking is a convenient way of booking your travel over the
Benefits of Online Booking: Book a flight and pay online for your travel.
Request for a, special meal or service.
Redeem your frequent flyer miles online.
Check Flight status.
View the Schedule/timetable.
Also while booking online AI offers special fares for self, as well as
companion fares.

2. Web Check In:This is a facility through which passengers having confirmed booking
in an AI operated flights could check-in for the flight through AI web
site. Currently web check in is not available for travel from Bahrain,
Dhaka, Dubai, Muscat, Melbourne, Milan, Rome and Sydney.
Benefits of Web Check In:-

Seat of my choice
Saves time & Also Airport can be reached a little later, than
expected boarding timings

3. Mobile Check In:This is a facility through which passengers having confirmed booking
in Air India flights could check-in for the flight through their Mobile
phone by accessing URL
Benefits Of Mobile Check In:
Convenience of Passengers
Simply having a web enabled Mobile Phone to avail this facility

Marketing Mix
The marketing mix refers to the set of actions, or tactics, that a company
uses to promote its brand or product in the market.
All the elements of the marketing mix influence each other. They make
up the business plan for a company and handled right, can give it great
a) Product:
A product is seen as an item that satisfies what a consumer demands.
It is a tangible good or an intangible service. Tangible products are
those that have an independent physical existence. Typical examples
of mass-produced, tangible objects are the motor car and the
disposable razor. A less obvious but ubiquitous mass-produced
service is a computer operating system. The air transport service.
The airline product includes of two types of services:

On the Ground Services.

In-Flight Services.

b) Pricing:
Variety of structured price bands categorized on the basis of the
various combinations of routes (Short/long distances and number of
halts etc.) and categories (i.e. Business class, Economy class).
Premium Pricing, Value for Money Pricing, Cheap Pricing, LowCost Pricing etc.

c) Promotions:
Point of purchases i.e. ticketing counters at traveling agencies,
online options (E.g. Membership promotions, couple tickets, Tourist
packages for agencies and various other individual and corporate
offers). Airlines Advertisement Needs to Keep in Mind the Image of
Country, The Scenic Beauty, Tourist Attractions, Rich Cultural
Heritages or Which Would Attract Number of Tourists.

d) Place:
Ticketing counters delivering services.
Online 24 hour reservation system
Tour Operator / Travel Agent
Affiliated with company

e) People:
A team of skilled & professionally trained pilots, ground staff, flight
attendants, freight movers and packers, security personnel,
management decision makers and most importantly, customers.

f) Process:
To avail of the air service, there is online or manual booking of
tickets followed by confirmation at security desks on arrival at the
airport at least 2 hrs before the scheduled commencement of the

g) Physical Evidence
h) On the ground:
Booking offices or ticket counters.
Brand Logo.
Good Inner-exteriors.
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