TRAVEL INDUSTRY

 The travel industry caters to

recreational, leisure and business
travelers.

 According to the World Tourism
Organization, the travel industry
generated revenues of US$856
billion in 2007.
Forms of Travel

 Ship travel:
 Short trips (ferries) and leisure cruises.
 Popular destinations for sea travel are the
Caribbean and North America.
 
 Air travel:
 Most popular form of international travel,
due to its speed and coverage.
 Some of the busiest airports of the world
are Los Angeles International Airport
(the US), Heathrow Airport (the UK) and
Frankfurt International Airport
(Germany).
 
 Forms of Travel
 Rail travel: The popular forms of rail travel
include inter-city trains, rapid transit
(metro rail) and high speed long distance
trains. Rail travel is generally restricted
to domestic territory. However, it is
permitted across some countries in
Europe. Countries with the largest rail
travel density are China, India, Japan and
Russia.
 
 Road travel: It is the most popular form of
travel and includes various modes such
as personal automobiles, buses and
AVIATION INDUSTRY
Aviation Industry…..

T h e se cto r d e a ls w ith th e
tra n sp o rt o f p a sse n g e r a n d
ca rg o fro m o n e p la ce to
a n o th e r, u sin g th e sch e d u le d
a e ria lro u te .
Aviation sector…..

The Airline industry came into existence during the

17th centuries

Size :
About 75 million Passengers
$5.6billion

Air travel remains a large and growing industry. It

facilitates economic growth, world trade,
international investment and tourism and is
therefore central to the globalization taking place
in many other industries
Categories
 International - 130+ seat planes that
have the ability to take passengers
just about anywhere in the world.
Companies in this category typically
have annual revenue of $1 billion or
more.

 National - Usually these airlines seat
100-150 people and have revenues
between $100 million and $1 billion.

 Regional - Companies with revenues less
than $100 million that focus on short-
haul flights.

Factors affecting the industry
 Weather -  Weather is variable and unpredictable.
Extreme heat, cold, fog and snow can shut down
airports and cancel flights, which costs an airline
money.

 Fuel Cost - According to the Air Transportation
Association (ATA), fuel is an airline's second largest
expense. Fuel makes up a significant portion of an
airline's total costs, although efficiency among
different carriers can vary widely. Short haul airlines
typically get lower fuel efficiency because take-offs
and landings consume high amounts of jet fuel.


 Labor - According to the ATA, labor is the an airline's
No.1 cost; airlines must pay pilots, flight attendants,
baggage handlers, dispatchers, customer service and
others.

Demand Drivers

 Ticket prices
 
 Passenger income levels
 
 Access to and suitability of other
modes of transportation

Supply Drivers

 competition
 
 Government regulation
 
 Cost of resources (fuel, labor,
maintenance, technology)

Product Mix

 Giving a Feel For The “Product” Inside a

Service Wrapper .

 The airline product includes of two types
of services:
 1. On the Ground Services.
 2. In-Flight Services.


 Price Mix
T h e a via tio n in d u stry d e rive s its re ve n u e s fro m re g u la r
ticke t fe e s a n d fre ig h t ch a rg e s.

P re m iu m p ricin g : - U se a h ig h p rice w h e re th e re is a
u n iq u e n e ss a b o u t th e p ro d u ct o r se rvice . S u ch h ig h p rice s
a re ch a rg e fo r lu xu rie s
C h e a p - v a lu e p ricin g : - T h is a p p ro a ch is u se d w h e re
exte rn a lfa cto rs su ch a s re ce ssio n o r in cre a se d co m p e titio n
fo rce co m p a n ie s to p ro vid e 'va lu e 'p ro d u cts a n d se rvice s to
re ta in sa le s
 Place mix
Online 24 - hour reservation Systems .

Tour Operator

Travel Agent
 Promotion Mix
dvertising - keep in mind the image of the co
tourist attraction , cultural heritage

Publicity - Travel agent , PRO , media people

les promotion - Tour operators , frontline staff

 People Mix

Reliability

Caring Attitude

Goodwill
 Process mix
Reservation .
Flight Information .
Facilities at The Airport .
Baggage Handling .
Meal Service .
Flight Entertainment .
Deliver Quality Service
 PHYSICAL EVIDENCE
On the ground :

Booking offices or ticket counters.

Paperwork. In - flight :
Tickets. Aircraft, Seating Configuratio
•
Good Inner-exteriors.

Ambience.
•

•
INDIAN AVIATION INDUSTRY
From then to now……….
1953: NATIONALISATION OF AIRCRAFT
INDUSTRY
Assets of 9 existing companies
transferred to two entities in the
aviation sector controlled by the
Government in
ØIndian Airlines, primarily serving
domestic sectors
ØAir India, primarily serving the
international sectors
IMPLICATIONS
ØAviation became a preferred mode of
transport for elite class
ØRestricted Growth of Aviation
Industry
ØHigh Cost structure
ØUnderdevelopment of infrastructure
1986: Private Sector Players permitted
as Air taxi operators.
Jet, Air Sahara, etc started service.
1994: Private Carriers permitted to
operate scheduled services. Six
operators granted license, however
only Jet and Air Sahara able to
service.
2003: Entry of low cost carriers. Air
Deccan, Spice Jet, Go Air, Indigo.
IMPLICATIONS
ØAviation is now affordable with check
fares and discount schemes.
ØVarious Operators with different
business model.
ØHuge growth foreseen in Aviation
Players in Aviation Industry
 The players in aviation industry can be
categorized in three groups:
Ø Public players : Indian Airlines
Ø
Ø Private players : Jet Airways, Kingfisher
Airlines, Spice Jet, Air Deccan
Ø
Ø Start up players : Omega Air, Magic Air,
Premier Star Air & MDLR Airlines.
Major Players (Market Share)
Top 3 Players
Kingfisher

 Dr. Vijay Mallya is the Chairman and CEO

of Kingfisher Airlines.
 Kingfisher launched its airline services in
May 2005.
 STRENGHTS:
 Strong Brand value & Reputation in the minds of
customers.
 Quality of the service.
 First airline. to have new fleet of airbuses.


 WEAKNESSESS: High Ticket prices.


 OPPORTUNITIES:
 The expanding tourism Industry.
 Untapped Air cargo market
 Under penetrated Domestic Market


 THREATS:
 Competitors.
 Fuel Price Hike.
 Economic Slowdown/Recessions
MARKETING STRATEGIES
 Kingfisher Airlines is the first carrier in the
country to offer live in-flight
entertainment.

 Kingfisher Airlines Ltd & Dish TV have
joined hands to provide live in-flight
entertainment on Kingfisher aircraft .

 The service would enable airline’s
customers to book air travel ticket after
securing ‘ngpay’ application on their
GPRS-enabled mobile handsets.
 Jet Airways

 Naresh Goyal is the founder & chairman

 Started Indian commercial airline
operations in May 1993.
 In April 2007, they acquired Air
Sahara.
 Jet Airways is an airline based in Mumbai. It is India's
third largest airline after Air India and Kingfisher
Airlines . It operates over 400 daily flights to 64
destinations worldwide. Jet Airways is widely
regarded as India's biggest and best airline. It's a
privately owned, full service airline that commenced
operating in mid 1993. It's now captured almost
23% of the market, and has bases in Delhi, Mumbai,
Pune, Kolkata, Hyderabad, Chennai, and Bangalore.

 Jet Airways has won many awards for quality
service. In particular, the airline is known for its
outstanding in-flight service, food, punctuality, and
baggage handling. Staff are extremely efficient and
courteous, and will go out of their way to ensure
that you're comfortable and well looked after.

 Jet Airways operates on a code share basis with
Kingfisher Airlines.
Kingfisher vs. Jet Airways
 Kingfisher Jet Airline

 Kingfisher is the  Je t a irw a ys is a

latest exp e rie n ce d A irlin e
Airline in India. in In d ia .
 Overall loss in June  Je t a irw a ys h a d a
slig h t p ro fit in th e
2009 of $500 ml.
1 st q u a rte r o f
 Kingfisher acquired 2009.
46%  Je t a cq u ire d A ir
in Air Deccan S a h a ra

 Jet Airways- Marketing
Strategies

 Jet Airways has partnered

with
UTV to launch the online

contest 'Cannes Calling',

wherein
winners will get a chance to

attend
the Cannes Film Festival 2009

along with a companion.


Air India

Air India is state-owned, and administered as part



of the
National Aviation Company of India Limited -
which was created in 2007 to facilitate Air
India's merger with Indian Airlines. Air India is
the 16th largest airline in Asia,[4] serving 25
destinations worldwide, and, with its affiliated
carriers, serves over 100 cities.
Financial Crisis


 Around 2006-07, the airlines began

showing signs of financial distress. The
combined losses for Air India and Indian
Airlines in 2006-07 was Rs 771 crores.
After the merger of the airlines, this went
up to Rs 7200 crores by March 2009.

 This was followed by restructuring plans
which are still in progress. In July 2009,
SBI Capital Markets Ltd was appointed to
prepare a road map for the recovery of
the airline.

 The carrier cancelled the purchase of six
Boeing 777-300ER in July 2009 and sold
three Airbus A300 and one
Strengths
1. Strong brand name

2. Oldest Airline

3. Monopoly in certain international

routes
4. Government backup

5. Rights to travel 96 destinations.

6. Established infrastructure

7. It has prime parking space/slots.


 Weaknesses.
Poor HR Strategies
High Competition, Loss of market share
High cost , poor cost control
Inefficient usage of resources
Bad Reputation, Poor Services
Poor Aircraft maintenance
Highest manpower ratio to aircraft
fleet size
Poor reservation services
Corruption in company

 Macro Fundamentals that will drive
Aviation Growth…….

India has a population of 1.1 billion with an estimated middle

Market Size class of 300 million.

50% of the population is <25 years old. Therefore, the size of the
Demographics economically active segment will continue to grow for a number of
decades (unlike the developed countries and even China).

Average GDP growth of 6% p.a. sustained since 1991 and

Economic accelerating thereon. The first quarter of FY06/07 registered 9%
Growth growth, and the last Budget has established a target of 10%.

India has an increasingly open economy, with strong growth in

Trade & international trade, healthy foreign exchange reserves and
Investment increasing foreign direct investment.
Rise of the middle class…..

A socio-economic revolution is underway as the consumer

profile becomes increasingly middle class……
 SWOT analysis & Comparison
 STRENGHTHS: W EA K N ESSESS:
 Liberal Environment A irp o rt

In fra stru ctu re
 Modern Fleet  A irw a ys
 High Quality In fra stru ctu re
 Economic Growth  N a tio n a lC a rrie r
 D e e p Po cke ts
 Growing Tourism  H ig h C o st S tru ctu re
  S kille d R e so u rce s
 OPPORTUNITIES TH R EATS
 Market Growth  M id d le E a st A via tio n
Terrorism
 Geographic
Location
 Lower Costs and
 Higher Quality
New government initiatives to develop India’s
potential as the world’s fastest growing aviation
market……

Changing regulation policies

The government is planning to raise the foreign direct investment (FDI) limit to 74% for non-
scheduled airline operations, helicopter services and regional airlines using small aircraft.
The current FDI ceiling for airline services is 49%.

Increased privatization of airports

In 1997 the Government of India published a policy document to open up existing airports to
domestic and foreign private investors in order to meet the significant costs involved in
developing India’s airports to keep pace with the growth in air traffic. In Sep 2003, Govt
leased out Delhi and Mumbai airports to the private sector as part of its extensive
modernisation and growth plan for the sector.
CONTINUED………

Growing Infrastructure developments

Mumbai Airport - Planned investment of US$1.6 billion by 2020, of which

US$1.3 bn will take place by 2014
 

Delhi Airport - Planned investment of US$764 million by 2014 and USD$.7

billion by 2020

Kolkata Airport - Modernisation will be led by the Airports Authority

of India. Total project cost is estimated at US$360 million.
 

Hyderabad & Bengaluru Airports - Total investment of US$1.1 billion

dollars. Both airports have commenced commercial operations in April
2008.
Growing Infrastructure developments

35Non-Metro Airports - Development of 35 non-metro airports will

proceed at an estimated cost of US $ 1.2 billion. City side development
will require a further US$350 million, with the modernisation process
to be completed by 2009.

North East Region - Development of following airports :

Pakyong Airport, Gangtok, Sikkim
Cheithu Airport, Kohima, Nagaland
Itanagar

Other Greenfield Airports –

Mopa, Goa
Navi Mumbai. Planning Commission discussing 3rd Mumbai Airport.
Chakan/Rajguru, Pune, Maharashtra; Halwara, Punjab
Kannur, Kerala.
Hassan & Gulbaraga, Karnataka.
EXPECTATIONS OF THE INDUSTRY FROM
GOVERNMENT…

The Indian aviation sector’s double-digit growth has been the fastest in
the world. But the airlines have not made much out of the profitless
growth, with most players stepped deep in red.
The industry’s wish list
includes :
Lowering taxes on aviation turbine fuel (ATF) which is 35% of the
operating cost of airlines. As per international standards, it is 10-
15% of the operating cost.
Reduction in landing charges – In India low cost carriers (LCC) pay the
same as full service airlines. As per international standards, it is
lower for LCCs.
Extending exemption of withdrawal tax on lease rentals of aircraft

Relaxing fringe benefit tax (FBT)

Removing service taxes on first and business-class travellers.

.

The growth opportunity in Indian Aviation…..

“Centre for Asia Pacific Aviation projects domestic traffic in

India will grow 25-30% p.a., and international by 15% p.a. until
2010”

ØIndia’s airports handled 7

million domestic passenger
In 2006/07, posting growth
almost 40% year-on-year, an
over 25 million internatio
passengers, up approx 15%.
ØGrowth is underpinned by
economic expansion, increas
capacity and price stimula
resulting from increased
competition.
OUTLOOK INDIA 2020……

ØThe growth of India’s aviation sector has the potential to

absorb up to US$120 billion of investment by 2020.
Ø
ØHowever, we must close the gap between the demand for aviation
services and the ability of our aviation system to meet that
demand.
Ø
ØIndia must prepare a blueprint for the expansion of system
capacity whilst maintaining safety, security and the environment.
Ø
ØIndia must develop a roadmap for infrastructure development
beyond 2010.
Job in Aviation

The boom in the aviation sector is likely to generate nearly

2.5 lakh jobs by the year 2014.

The study says that the civil aviation sector is also set to
become a Rs 55,000-crore industry by the same time.

The industry is expected to add 130 airliners to its current fleet of 270
airliners, which would, in turn, increase manpower demand