PGDM Marketing (2019-2021)

Consumers, Firms and Markets

Topic- GoAir

Submitted by
Bharat Phulwani (201931014)
Abhinav Gautam (201931002)
Kuldeep Dadhich (201931022)
Shubham Raj (201931044)
Sachin Mehta (201931037)

(Section-E)

Course Instructor
Dr Gajavaelli V S
 Acknowledgement

We would like to express my special thanks of gratitude to our professor

Dr. Gajavelli V S who gave me the golden opportunity to do this
wonderful project on the topic GoAirline company analysis, which also
helped us in doing a lot of research and we came to know about so many
new things and we are really thankful to them.
Secondly we would also like to thank my friends who helped us a lot in
finalizing this project within the limited time frame.
 Contents

 Introduction
 Government regulations
 Costs
 Pricing
 Demand and supply forces
 Effect of industry
 Trend analysis
 S.W.O.T analysis
 Conclusion
 Introduction

GoAir is an Indian low-cost airline based in Mumbai, India, owned by the Indian business
conglomerate Wadia Group and headed by Jehangir Nusli Wadia. In November 2005, GoAir
launched its operations as a low-fare carrier to enter into air travel business and offer airline seats
at a marginal premium to train fares across India.

The airline presently operates over 230 daily flights and more or less 1600 weekly flights
across thirtydestinations – twenty four domestic and half dozen international.

GoAir currently serves at the airports in Ahmedabad, Bagdogra, Bengaluru, Bhubaneswar,

Chandigarh, Chennai, Delhi, Goa, Guwahati, Hyderabad, Jaipur, Jammu, Kochi, Kolkata,
Kannur, Leh, Lucknow, Mumbai, Nagpur, Patna, Port Blair, Pune, Ranchi, Srinagar, Abu Dhabi,
Bangkok, Dubai, Malé, Muscat and Phuket. Through this route network GoAir ensures a smart
value-for-money option for both business and leisure travelers, with a focus on safety and service
factors.
GoAir's distribution network has been well-researched. Following a thorough evaluation of the
ticket availability mediums, GoAir hosts convenient online booking options on its website
www.GoAir.in wherein a passenger or his associate can book GoAir tickets anytime round the
clock, from the comfort of their home. For those passengers who do not have a credit or a debit
card or access to a web networked computer, tickets can be booked from other distribution
mediums including Travel Agents or via GoAir’s Call Centres.

Tickets can even be reserved from GoAir airfield counters.

GoAir is positioned as 'the Smart People's Airline'. Its focus 'Fly Smart' is aimed at offering
passengers a consistent, quality-assured, and time-efficient service through pocket-friendly fares.
The airline uses Airbus A320 aircraft fleet.
GoAir executes its business model on three-tier principle - punctuality, affordability, and
convenience.

The airline has recently partnered with Navitaire, a leading technology provider of automated
aviation and travel-related software solutions, for its Passenger Service System.

By adopting such technology solutions, GoAir has equipped itself with superior process
efficiency, thereby enabling its passengers to save great amount of time.
Adding a milestone to its journey, in October 2016, GoAir passed the International Air Transport
Association's Operational Safety Audit (IOSA) and has launched IPO recently in the end of
August 2019
As for its expansion plan, GoAir has placed an order of 144 Airbus A320 Neo aircraft.

The delivery of a similar has begun and presently has forty seven craft as a part of its fleet.

The Wadia cluster has been within the forefront of company Republic of India for over 250

years.

Today, the cluster is broadly speaking heterogeneous into many growth industries like aviation,

textiles, chemicals, petrochemicals, plantations, foods, electronics, light engineering, health,
laminates, real estate and consultancy.

Wadia Group has record of successfully managing diverse technologies. They have earned a
reputation as a household brand through its businesses like Britannia and Bombay Dyeing.

Government Regulations
Regulations:
The industry is ruled with the aid of the provisions of Aircraft Act. According to the ‘5/20 rule,’
all airways in India want five years of home flying enjoy and at least 20 planes in its fleet with
the intention to fly overseas. The concept to check or scrap the 5/20 rule had come up all through
the tenure of former aviation minister Ajith Singh and around the identical time while Tata
Group evinced interest in investing in airline sector.
Regulations requiring hand bags tags to be stamped by means of security employees in any
respect airports turned into added from 1992. Between 15–21 December 2016, the CISF
conducted every week-lengthy trial at 6 airports for the duration of which all domestic
passengers could be exempted from the stamping requirement .Civil aviation safety regulator
Bureau of Civil Aviation Security (BCAS) announced on 23 February 2017, that stamping
luggage tags was no longer required at seven airports – Delhi, Mumbai, Kolkata, Bengaluru,
Hyderabad, Ahmedabad and Cochin .The Ministry of Civil Aviation intends to progressively
remove the requirement from all airports.
National Civil Aviation Policy 2016:
The Government of India launched the National Civil Aviation Policy on 15 June 2016. The
NCAP 2016 covers the extensive policy regions, which includes Regional connectivity, Safety,
Air Transport Operations, five/20 Requirement for International Operations, Bilateral site
visitors rights, Fiscal Support, Maintenance, Repair and Overhaul, Air-shipment, Aeronautical
'Make in India'. The vast key capabilities of the NCAP are:
• VGF for operation underneath Regional Connectivity Scheme (RCS).
• Revival of un-served or below-served routes under RCS.
• Introduction of a new Category 'Schedule Commuter Operator' below Commercial Air
Transport Operations.
• Rationalization of Category-I routes beneath Route Dispersal Guidelines (RDGs) on the
premise of standards given in NCAP 2016.
• The requirement of 5 years and 20 aircraft for worldwide operation has been changed to 0
years and 20 aircraft or 20% of the full ability (in phrases of common quantity of seats on all
departure prepare) whichever is higher for home operations.
• Liberalization of home code percentage points in India in the framework of ASA.

Costs
In July 2016, GoAir signed a memorandum of understanding with Airbus for 72 Airbus
A320neo's aircraft valued at $7.7 billion, potentially taking the total number of orders to 144.

Apart from this, GoAir also incurs repair cost and the major chunk of expense come from:

 Stores consumed – 2,399.99Cr

 Selling and administration – 1084.374Cr( average for past 5 years)
 Employee cost – 239.32Cr (average for past 5 years)
 Carried forward loses – 562.2Cr (average for past 5 years
 Depreciation – 8.95Cr (average for past 5 years

Apart from this, Working capital i.e. the capital required for day to day operations is 2Cr which
is calculated by current assets – current liabilities.

Pricing
A domestic flight has about 10 different ticket price points per plane. First or business class
tickets are the most expensive with economy seats at the low end. Here are six factors that affect
the price you pay:
1. When you buy: The most expensive fares in business and economy class are typically
purchased at the last minute by business travelers, and last-minute fares are almost always very
pricy.
Leisure or vacation fares square measure typically cheaper as a result
of they’re sometimes purchased well before.

2. Competition: Fares to smaller cities with less airline competition square

measure usually costlier than fares to massive cities with hub airports serving many
alternative carriers.

3. Distance: sometimes, the farther you fly, the more you’ll pay.

4. Demand: Airlines know when people want to fly such as the summer months and major
holidays, so they raise prices during this time knowing people will pay.
5. Seat supply: Airlines have become extremely efficient in calculating when and where a person
wants to fly year-round, so all seats are filled.
6. Fuel: High jet fuel prices can mean expensive surcharges added to ticket prices.
Other fare variables

There square measure alternative fare variables that have an effect on your price tag worth.

Advance purchase: you have to purchase well in advance for cheaper rates, any later than that
and you’ll usually see a significant price-hike.

Minimum keep: Some airlines need a minimum stay or a Sabbatum night stay-over to urge the

most effective deal.

Cheaper times to fly: Sometimes, the best deals require you to fly during unpopular times-of-day
such as at dawn, during meal times or overnight flights.
Connecting flights vs. non-stops: A connecting flight can be a lot cheaper than a n"art-36">The
price difference could more than make up for the inconvenience.

Demand-Supply forces
The airline business has invariably exhibited cyclicality as a result of travelers' demand is
sensitive to the performance of the macro economy nevertheless airlines should predict this
demand accurately owing to the interval needed to accumulate craft. once airlines over predict
demand, which might happen for any variety of reasons, they suffer losses. the most elements of
demand for airline services area unit business travelers, tourism, freight transport, and mail
transport. Flight schedules tend to be the crucial competitive problems for business
travelers, whereas tourists and private travel is far additional value sensitive. Freight and mail
services account for concerning 15 August 1945 of airlines total overall
revenue, whereas international freight and mail is nearer to tierce of airlines' international
revenue. Airline services modify access to alternative product, like vacations,
business conferences, or foreign-sourced product. so the demand for airline services is
closely joined to the demand for these alternative product.
Supply of airline business is influenced by the amount of aircrafts, frequency, accessibility of
routes, variety of air ports

Effect of industry
Three very little words. usually that's all it takes to form one’s heart beat quicker. “Liberty,
equality, fraternity” captured the revolution. “I love you” underpins many
another productive relationship. “Life, liberty, happiness” square measure at the guts of the
Independence. for several economists, those 3 magic words square measure “supply, demand,
price.”

In any market dealings between a vender and a emptor, the worth of the great or service is

set by provide and demand during a market. provide and demand square
measure successively determined by technology and also the conditions underneath which
individuals operate. At one extreme, the market may be inhabited by an oversized range of just
about identical sellers and consumers (for example, the marketplace for Biro pens). At the
opposite extreme, there can be only 1 vender and one emptor (as would be the case if i need to
barter my table for your quilt).
markets defined by additional competition, with additional players, additional dynamic entry and
exit, and additional intense contention for purchasers tend to deliver higher market outcomes
these outcomes embody lower costs and higher access to services for customers, together
with alternativebusinesses that place confidence in these product as inputs for his or her own
enterprises
yet it's necessary to make sure that domestic production is internationally competitive, and can,
therefore, generate inflated exports, exchange, jobs and industrial growth
competition authorities have a vital role to play
in watching and grappling behaviours like market dominance and anti-competitive practices
the state will influence competition through numerous forms: regulation, state possession and
privatisation, valuecontrols or subsidisation, and alternative policy mechanisms like import
protection or industrial policy

Trend Analysis: Based on future

endeavors
Current Trends in the Aviation Industry:

1)The need for Customer Relationship Management:

A number of leading global airlines have taken off on their 'social' flight and some are indulging
in novel ways to engage with customers to build lasting relationships with them. Yes, it does
mean stepping out of the corporate comfort zone and engaging real-time with the customer, but
that's a feat airline will have to achieve if they want to enhance brand equity and get a mind share
of today's customer.
While some airlines have taken a lead in engaging with customers on social media and social
media management, others are still wetting their feet. Among the recent innovative airline social
media campaigns and initiatives are Virgin Atlantic's (VA) 'Looking for Linda', an interactive
contest that got customers hooked with its unique concept; KLM's 'Meet & Seat' service where
fliers can select seats alongside fellow passengers based on mutual interests in their social media
profiles; and British Airways' Facebook application called 'Perfect Days' that encourages
travellers to share a travel wish list and itinerary via a Facebook.
2) Increased use of technology:
The increased use of technology has made it a necessity for the airline companies to cope up
with the same. To do this airline companies have integrated themselves, well with the
technologies of today. The increased use of E-mails, Messages, Facebook Posts , Applications,
Youtube and other online advertisements etc. is a great example of the same.
GoAir plans to start international operations from October 2016.

 The Mumbai-based service introduced its inaugural worldwide flights from New Delhi and

Mumbai to Phuket (Thailand) starting October eleven, and to Male in Maldives from October
sixteen.
The airline has shortlisted other destinations that it'll add to its worldwide charts.

Talking to BusinessLine, GoAir CEO Cornelis Vrieswijk said the airline is in discussions to buy

huge-body plane to fly lengthy distances. Currently, budget airlines inclusive of IndiGo offer

most effective brief- haul international connections as long-haul flights require bigger planes,

that are usually now not appropriate for home flying, thus limiting their usage.

Vrieswijk, but, did no longer specify what aircraft or what routes the airline is thinking about for

lengthy-haul flying.

"We would be looking at the under-served markets like Phuket," Vrieswijk said.

S.W.O.T Analysis

1) Strength:
1. Strong backing by the Promoters
2. LCC segment is ever growing in India
3. Has nearly 1000 flights per week
4. Covers all the major Indian cities
5. Good branding and marketing in India

2)Weakness:

1. Market share is very less as compared to leading players.

2. It has entered into the Indian market later than competition andalso has lesser destinations.

3)Opportunity:

1. Middle Class taking to the skies.

2. More destinations for the customers to choose from.

3. Global operations can also be a value addition.

4) Threat:

1. Plenty of new LCCs to compete with who already have taken

the lead.

2. Rising Labour costs.

3. Rising Fuel Costs.

 Conclusion

So by the analysis of GoAir we can conclude that Go Airlines strives to

maintain and enhance passenger’s perception of its services, and in

doing so, consistently endeavor to improve the Quality and Reliability of

its operations.

The mission of Goair is to provide Safe, Secure and Efficient

transportation at all times with attention to essential details that lead to

creating a unique service differentiation and further strengthening and

maintaining our position in the market.

Therefore, the company strives to maintain the same standard and the

future of the airline seems bright as it is moving towards profitability.

 References

https://www.ukessays.com/essays/economics/factors-that-cause-effects-

on-the-airline-industry-economics-essay.php

https://brainmass.com/economics/cost-benefit-analysis/demand-supply-

analysis-for-airline-industry-116233

https://www.goair.in/about-us/

https://en.wikipedia.org/wiki/GoAir

https://www.capitaline.com/SiteFrame.aspx?id=1

https://www.investopedia.com/terms/t/trendanalysis.asp