Case Analysis of Airline Industry in India

Topics: Airline, Low-cost carrier, Chhatrapati Shivaji International Airport Pages: 9 (3141 words) Published: January 20, 2013
Aviation Industry plays an important role in the economic growth of anation. It not only promotes international trade but also provides an effective and fastest means of transportation across the globe. Today, in the world of globalization and cut throat competition the value of time has become more precious. The history of Indian Aviation industry lies back in the year 1912.The first domestic flight was taken between Delhi and Karachi by the Indian State Air Services. Tata Airlines started with an air mail service in the year 1912.It was renamed as Air India in 1946. There were few players at the time of independence including Tata Airlines, Indian National Airways, Deccan Airways .In 1953 ,the government nationalized the airlines via the Air Corporations Act 1953.Two separate entities came into existence Indian Airlines which was the merger of the already existing domestic Airlines and Air India International. In the year 1986, private players were granted permission to work as air taxi operators which included Air Sahara, Jet Airways, Damania Airways, East West Airlines, Modiluft and NEPC Airways. In 1995, government granted scheduled career status to six private air taxi operators. But all the players could not survive and by 2003 Jet Airways and Air Sahara continued. Air Deccan entered the market in 2003.Air Deccan gave India its first Low Cost Carrier (LCC).Later on, other players also entered the market including Kingfisher, Paramount, GoAir, and Indigo. The year 2007 was the year of merger and acquisitions –the Jet-Sahara deal, the Kingfisher-Deccan deal, Indian-Air India. Full service airlines were forced to drop fares as well though their minimum fares tended to be still higher than those offered by the “low-cost” carriers. These low fares attracted leisure travelers to fly by air. The overall growth rate of the market was about three times faster than the growth in business travelers. The proportion of business travelers on full-service carriers such as Jet Airways came down to about two-thirds.


The present study aims to identify the most important factors responsible for the performance of both public as well as in private low cost airlines, to compare and contrast on the basis of collected data and to suggest some adequate measures of improvement. The three major airlines making waves, for different reasons, in the Indian airlines industry are Air India, Kingfisher and Indigo. So in this paper we try to compare and analyse the reasons behind their successes and failures. We will be comparing the above mentioned airlines on the basis of their business models, scope for expansion, management practices and current operations. We try to compare and analyse the reasons behind their successes and failures.

Indigo is the exception to the rule in the Indian Airline industry as of today,being the only profitable Airline in the financial year ending March 2012. Despite having entered the market in 2006,Indigo has rapidly climbed up the ladder to become the second largest domestic carrier. Its market share increased from 5% in the first quarter of 2007 to 10.3% in first quarter of 2008 to 15.4% in December 2008 to a whopping 27.6% in September 2012. This growth rate of Indigo is expected to continue as the Airline increases its capacity on the domestic as well as international front.In addition,it also has massive fleet orders in the pipeline to sutain future growth. IndiGo currently has 51 A320s in its fleet, with more than four times that number of aircraft on firm order with Airbus. All the planes have exactly the same configurations, having the same engines, same number of seats in one class configuration. Load factors have also been strong throughout with an average load factor of 86.3% in June 2012 when the Industry’s average was 75%. Following are some of the strategies the airline has adopted which enable it to scale to the top in a span of 6 years: 1. Low cost,single...
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