Case on Air Deccan
Case Study
Strategic management
Evaluation II
AIR DECCAN: REVOLUTIONISING THE INDIAN SKIES
Air Travel in India
For decades, air travel in India was meant for the most elite and powerful in society. An overwhelming majority of travellers who could not afford the prohibitive air travel fares, preferred to journey on trains and buses.
The revolutionizing effects of liberalization swept India with dynamic changes in the aviation sector. From being a service that few could afford, the sector has now graduated to being a fiercely competitive industry with the presence of a number of private and public airlines and several consumer-oriented offerings. In ten years of competition in the aviation sector, private airlines have changed the rules of the game, and they now account for more than 60 % of the domestic aviation market.
More and more middle class families in India now prefer air travel to the more traditional travel by train. In 2003, 10 million Indians travelled by air domestically. In 2004, 25 million took to the skies within India and 6 million Indians travelled abroad.
The Centre for Asia Pacific Aviation estimates that the domestic Indian market will add 5 million passengers every year for the next five years, growing to 45 million passengers by 2010.
Today, the relationship of domestic to international travel stands at 40:60 whereas in 1994 it stood at only 25:75. But taking into account a growing middle class with increased and increasing purchasing power, there are 200-210 million potential spenders. The Indian population grows at a rate of 8% per year.
Around 100 million travellers every day on state-owned Indian Railways, If air travel bites into even a small percentage of this huge pie, that’s still clearly a tremendous growth opportunity.
The entry of budget airlines like Air Deccan, the introduction of cheap airfares by other domestic carriers, combined with rising incomes and consumption of the middle class as also their growing
Strategic management
Evaluation II
AIR DECCAN: REVOLUTIONISING THE INDIAN SKIES
Air Travel in India
For decades, air travel in India was meant for the most elite and powerful in society. An overwhelming majority of travellers who could not afford the prohibitive air travel fares, preferred to journey on trains and buses.
The revolutionizing effects of liberalization swept India with dynamic changes in the aviation sector. From being a service that few could afford, the sector has now graduated to being a fiercely competitive industry with the presence of a number of private and public airlines and several consumer-oriented offerings. In ten years of competition in the aviation sector, private airlines have changed the rules of the game, and they now account for more than 60 % of the domestic aviation market.
More and more middle class families in India now prefer air travel to the more traditional travel by train. In 2003, 10 million Indians travelled by air domestically. In 2004, 25 million took to the skies within India and 6 million Indians travelled abroad.
The Centre for Asia Pacific Aviation estimates that the domestic Indian market will add 5 million passengers every year for the next five years, growing to 45 million passengers by 2010.
Today, the relationship of domestic to international travel stands at 40:60 whereas in 1994 it stood at only 25:75. But taking into account a growing middle class with increased and increasing purchasing power, there are 200-210 million potential spenders. The Indian population grows at a rate of 8% per year.
Around 100 million travellers every day on state-owned Indian Railways, If air travel bites into even a small percentage of this huge pie, that’s still clearly a tremendous growth opportunity.
The entry of budget airlines like Air Deccan, the introduction of cheap airfares by other domestic carriers, combined with rising incomes and consumption of the middle class as also their growing