TERM PAPER 1
COMPARTIVE ANALYSIS OF INDIAN LOW COST CARRIERS 1
INTRODUCTION: 3
Topics 3
List of LCCs in India 4
Marco environmental factors that affect the airline industry: 6
Strategies followed by IndiGo 7
Strategies by spice jet 7
Market share of airlines: 8
INTRODUCTION:
Low cost airlines Firstly, low cost airlines are the airlines which offer cheap flights, cheap fares. Some times by low cost carrier’s flights and these low fares they may not even reach their BEP. Indian aviation market is conquered by the low cost carriers. And India is the second largest populated country in the world and with the most of India is of middle class people and increase of the middle class population
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It is the third largest airline in India (after IndiGo and Jet Airways) in domestic market share, and operates a fleet of Airbus and Boeing aircrafts. Operating various domestic and international routes in India and over various international routes. Air India has Delhi and Mumbai airports as its HUB airports.
Air Asia: Air Asia India ltd. Is an Indo-Malaysian Low cost carrier it’s a joint venture of Air Asia and Tata group India. Air Asia is the first foreign airline to set up a subsidiary India.
Air Asia will operate with world’s lowest unit cost 1.25rps (2.0¢ US) /available seat kilometer and a passenger break-even load factor of 52%. Air Asia currently operates 8 destinations in India with being Bangalore as HUB airport. And Air Asia totally uses A320-200 fleet.
Go Air Go Air commenced its operations in 2005. It is the fifth largest airline in India in market share. It operates domestic passenger services to 22 cities all over India With over 140 routes daily. Go Air has been growing, but the growth rate of the airline has been slow. Due to some tough competition in market of the LCCs. And Go Air serves 22 cities all over India with Mumbai airport as the HUB airport. And Go Air uses only A320-200
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The chart shows us that the indigo is occupying the market leader position in the industry and then follows by the jet airways Jet airways and Jetlite combination starts second in the share of markets. Air India has 19.5 percent of market share. Spice jet with 17.3 percent and Air coast and Air Asia with1.1 and 0.7 percent in the overall market share.
Conclusion:
Indigo is the leading LCC in the Indian market. It has captured more market then jet airways that occupy the 2nd market in LCC market share.
These LCCs have become a threat to the full service carriers all these LCCs together created a market that a full service carrier cannot enter into Indian domestic market if it enters cannot exist for long.
In my view that DGCA should frame more additional rules to their LCCs that there should a minimum to the routes and rates these LCCs should also have a standards in their pricing.
By following cost leader ship that is by maintaining total revenue (TR) more than total costs (TC) by covering its total fixed costs in short span of time and had got in the profit gaining airline amongst the LCC in the industry.
The competition between Air Canada, a traditional carrier, and West Jet, low cost carrier is rigorous in Canadian airline industry. Though Air Canada is Canada’s domestic and international airline and has dominant hold in the Canadian market, West jet is giving the airline tough competition with its effective price point, profitable routes with greater focus on domestic market. The rivalry competition is moderate to
Airlines are constantly under pressure, due to unprecedented schedules, competition and flight planning. Everything must be on time to make a dollar at the end of the day, and American Airlines is no different. Since 1934, American Airlines has been owned by the AMR Corporation and headquarter in Dallas, Texas. The airlines competes with all airlines throughout North America, the Caribbean, Latin America, Europe, and the Pacific (NTSB, 1999).
OPERATIONS MANAGEMENT CASE STUDY AMERICAN CONNECTOR COMPANY Submitted to: Professor Jishnu Hazra Submitted by: GROUP 2 (SECTION B) Itee Aggarwal 1411095 Preetam Das 1411117 Siddharth Nayak 1411129 Abhishek Singh 1411072 Ashish Pawar 1411084 Nakul Sehgal 1411106 INTRODUCTION American Connector Corporation (ACC) is a supplier of electrical connectors based out of Sunnyvale, California since 1961. ACC relied on its ability to produce high quality customized products for its users. In USA, 1991 had seen sales fall by 3.9% over the last year and the industry was seeing a decline since 1987. ACC was struggling with increasing costs and deteriorating quality In line with the industry trends.
Hong Kong Dragon Air is Hong Kong-based international airline, belonging to of the Cathay Pacific Group. The airline was established in 1985, and operates a fleet of narrow-body A320s and A321s, which were both powered by V2500 engines manufactured by International Aero Engines AG (“IAE”) for both passenger and cargo service to destinations to destinations across the Asia-Pacific region, and China. Their vision is to be the World’s best regional airline serving China and beyond. Their missions; places emphasis on safety and operational excellence with customer focus. The airline seeks to embrace innovation by implementing ideas that improve their business.
The company will require developing plans that will see them increase their presence in both the domestic and international market. However, the company must first prioritize on increasing their presence in the domestic market. That plans that will involve frequent flights to all the major cities in the U.S.A. Currently, the company has six major focus cities; New York JKF, Fort Lauderdale, Los Angeles, Orlando, and San Juan. While these cities continue to be profitable to the company (CAPA Center for Aviation, 2015), they should consider increasing their access to other cities as well. Frequent and extensive flights in the San Diego and the San Francisco Bay Area will enable the company to capitalize on the business and tourist travels.
Qatar Airways Qatar Airways are its aggressive growth plan backed by the state that includes the construction and development of the new Doha international airport, which will include the world's largest aircrafts' hangers to be used for maintenance of Qatar Airways. Singapore Airlines Success factors of Singapore Airlines are: young and efficient fleets, educated staff, top ranked travel gateway and its low cost airlines known as "Tiger Airways", plus it's a membership of star alliance airline networks American Airlines Success factors of American Airlines are: largest airline in the world in terms of the total passengers transported, highest number of aircrafts, first to launch the loyalty program "frequent flyers". PEST Analysis Political factors The airline industry is affected by political situations, namely wars and terrorism.
9. Environments Like any other Industry, the airline industry is also affected by changes in its external environment. King III (2009) highlights that leaders are not supposed to compromise the natural environment and the livelihood of future generations. Environmental Factors can also have a significant role to play in an airline industry; like in the case of Prof. McPherson we observe the bad weather reducing his time by 1 hour and thirty minutes. In light of the environmental factors that affect the airline industry this Study will focus on the traditional Political, Economic, Social, Technological, Environmental, and Legal Analysis, often referred to as the PESTEL Analysis.
Social Growing competition and capacity amongst airlines, lower air fares and more relaxed travel restrictions in many regions have made international travel a viable option for an increasing number of people coming to
Delta airline was expanding its business into low-cost airline segment by launching new independent subsidiary by the name of Song. Song’s primary business model was to target women and the segment of business class people. In effect to reduce the cost, Song management decided to fly high load factor on the drag of 900 miles. Moreover, the company increased the number of
The material management process can help jetBlue Airlines to provide the same services as before but at a lower cost level. As their objective is to hold on to their previous service quality but introduce new elements which will enable them to provide services to the middle income population, they have to employ new sets of strategic decisions to achieve the desired goal. The method jetBlue must use is to find a way to reduce the maintenance cost they bear for the airplane’s maintenance, crew training and salary, fuel consumption by the aircrafts. The objectives jetBlue Airlines give in their 2013 annual reports to make the implementation of cost control, improving revenue and reducing their debt and thus lowering their financial risks. So the cost control objective can be easily achieved by careful implementation of material management process of the organization.
> Founded in 1941 and based in Pasay City, The Philippine Airlines is the country 's ultimate flag carrier and oldest airlines. The monopolization of the airline occurred in 1995 when Lucio Tan, an affluent Chinese-Filipino businessman purchased the airline and became its chairman and CEO. . Global competition in the industry > Threat to new entrants: In spite of the low switching costs and the absence of proprietary goods and services, generally speaking, there is a low threat to new entrants in the airline industry. The huge amount of capital make reprisals against new entrants through a price drop.
1.0 Introduction to Strategic Management Strategic management practices the formation; achievement and reaching the major objectives executed by the management of the company, by considering the capital and a task of the internal and external environments in which the company wishes to compete. 1.1 Introduction to Singapore Airlines Singapore Airlines (SIA) is established in year 1972 with remarkable performance among its competitors in the industry throughout its 35-year-long history till date (Heracleous & Wirtz, 2009). According to Singapore Airlines (2014), SIA is one of the youngest aircraft fleets worldwide to destinations crossing a network of more six continents, with its iconic Singapore Girl providing excellent standard of service to customers. Throughout the years of operations, SIA has an impressive ever-growing list of industry 's leading innovations such as offering free headsets along with a choice of meals and drinks in Economy Class in the 1970s, followed by introducing satellite based in-flight telephones in year 1991, involving an ample panel of renowned chefs, the International Culinary Panel, to provide lush in-flight meals in year 1998, developing audio and video on demand (AVOD) capabilities on KrisWorld in year 2001, and lastly flying the airbus of A380 from Singapore to Sydney on 25 October 2007 (Singapore Airlines, 2014).
For instance, with the global financial crisis and later the Eurozone crisis, the number of travellers has significantly reduced due to economic hardships. This has affected the profit levels of the airline as well as slowed down its growth prospects. The airline also faces intense competition from other low cost airlines forcing it to extensively invest in product differentiation to counter the competition. This is an expensive
The other giants in the game, the Volkswagen Group (11%), PSA (3%), Nissan (8%) and Hyundai (9%) as well as General Motors (11%) and Ford (8%) in the U.S. all contribute significant market shares to the world total, the reasons these players always come out on top are several. 1. Manufacturing & Exploitation
Until today, this incident is still affecting Malaysia Airlines in different aspects. Especially, on their corporate image, reputation and finance. Not only Malaysia Airlines, but the image and reputation of our country are also being affected because Malaysia Airlines have strong bonding with the government and they as a representative role stood out to speak for Malaysia Airlines. Malaysia government had given a very bad impression to others on their crisis management and crisis communications. Experts criticized their crisis management by saying “crisis in managing crisis” and “make a crisis worst” due to their failure in crisis communications.