INDIAN AVIATION: PRICE WARS & MORE

GROUP-7 DIPANJAN DE EKTA SHARMA AKASH VASHISHTHA MOHIT GUPTA BHANU SINGH KAUSTABH DALAL

Examine the innovative schemes initiated by three airlines in 2002.

JET AIRWAYS
It offered the frequent flyer scheme called Jet privilege scheme under three different levels; JP Blue, JP Silver, JP Gold depending on number of miles flown. J A also tied up with various hotel groups like the Oberoi Hotels and Radisson.

INDIAN AIRLINES
APEX Advanced Purchase Excursion under U can fly campaign. Wings of freedom Offered unlimited travel for 7 days within the domestic network for both economy class and business class Bharat Darshan tour Unlimited travel for passengers throughout India on purchase of tickets worth more than Rs 80000.

 SAHARA AIRLINES
Sixer and Super Sixer schemes It offered a six flight coupon ticket for any six sectors and the main USP was that no advance booking was required. Steal a seat Online bid scheme where base price was Re 1 and was open for passengers flying 25 days later. Bid n Win Intended to make travel exciting, interactive and enjoyable by providing an opportunity to win a wide range of gifts. Wings & Wheels Complementary AC coach services which provided pick up and drop facility for passengers to the airport.

Do you think promotional programs undertaken by Airlines are likely to increase customer base and contribute to corporate viability?
The answer is Yes, provided the company can properly integrate its marketing strategies with overall long term as well as short term objectives This could be justified by the following
Integrating marketing strategies - Air Sahara which allowed 10 % commission to the ticketing brokers but at the same time it should also be noted that these agents do not take undue advantage and hamper the image and position of the Airline in the views of customers.

Providing customer delight - Service standards should be well maintained and should surpass customer expectations so that the company can attract as well as retain the customers as in the case of Jet Airways. Targetting the middle class segment - The promotion is necessary because it is required to attract customers who were travelling by trains due to much lesser fares and the flights were taken with empty seats to destinations.

Is the intense rivalry exhibited through price cutting(by industry participants) undermining their viability in the long run? No we do not think that the price cutting strategy will have an adverse affect on their capability in the long run.
Price discipline - As long as price discipline is maintained

where pricing practices lead to cost recovery and profit margins viability will not be a problem.
Strong passenger traffic growth- With the advent of pricing

and other promotional techniques CAGR has increased from 13% to 19% during 2006-2011

 Rising disposable income - Disposable income of the middle

class has increased considerably which has helped air travel in gaining wider acceptance.

Low penetration level - Air travel penetration in India is less

than half of that in China where people take 0.2 trips per person per year; indicating strong long term growth potential.