Introduction

On December 17th, 1903, Orville Wright made the world’s first controlled flight in a
power driven airplane. Since then man has not looked back and has progressed leaps
and bounds in the aviation industry. But what exactly is the meaning of the term
aviation? Aviation means ‘Flying in the Air’ or the ‘Art of Flying’.

Since we are concentrating on airlines, let us see the meaning of the terms
“Airlines Industry”.

“The commercial use of aircrafts for the carrying of persons, mail and cargo and the
name generally used in the aviation industry to describe the operations of fortified air
carriers is known as the airlines industry.”

Significance Of Air Transportation

There are two main significances of air transportation, namely:

 Quickest mode of transport – Airways is the most modern, the

quickest and the latest addition to the modes of transport. Because of the
speeds with which aero planes can fly, travel by air of both
passengers and goods has become highly popular.

 Suitability – Air transport is highly appreciated by people who want

to travel in utmost comfort an d /or reach their destination r e a l
f ast. Airways are also suitable for high value light goods, perishable
goods and spontaneous delivery of mails.

History of Civil Aviation Sector

India had its own airline on October 15, 1932. Tata Son’s Ltd – which later
become Air India International – commenced weekly airmail service with a Puss
Moth aircraft between Karachi and Madras via Ahmedabad and Bombay,
covering over 1,300 miles. Later two more airlines – Indian National Airways in 1933 and
Air Services of Indian in 1937 came up.

At the time of independence, the number of air transport companies, which

were operating within and beyond the frontiers of the company, carrying both
air cargo and passengers, was nine. It was reduced to eight, with Orient Airways
shifting to Pakistan. These airlines were: Tata Airlines, Indian National Airways, Air
service of India, Deccan Airways, Ambica Airways, Bharat Airways and Mistry
Airways.

In early 1948, a joint sector company, Air India International Ltd., was
established by the Government of India. Its first flight took off on June 8, 1948 on
the Mumbai (Bombay)-London air route. The joint venture was headed by J.R.D.
Tata, a visionary who had founded the first India airline in 1932 and he had himself
piloted its inaugural flight.

1
 The Government then nationalized the airlines industry in 1953, with
enactment of Air Corporation Act, and assets of nine existing air companies were
transferred to the two new corporations – Air India International and the
Indian Airlines. After 40 years, in 1994 Air Corporation Act was repealed ending the
monopoly of the national air corporations and enabling entry of private
operators.

Today, with new entrants in the airline sector particularly with the modus
oprandi of being low-cost airlines, the airline industry is in for a major shake-up.

The New Policy

The liberalization in civil aviation industry began in 1986 with the
introduction if Air Taxi system to boost development of tourism. Though there
were several restrictions relating to seat capacity, airports, timing and fare, the
scheme was liberalized over a period of time. Even the fare was totally
deregulated, allowing air taxi operators to charge any fare. With Open Sky Policy
many private operators began operation in the domestic sector. Of the total
of 12 .23 million passengers c a r r i e d o n domestic sector, private carriers carried
about 5.7 million passengers.

Changing Pattern of Government Regulations

Civil Aviation sector in India is perhaps the most striking example of the progress made in
the liberalization of the Indian economy, a process that began a decade ago. The
steps taken b y t h e government are as follows:

 Investments Opportunities Foreign Equity – Foreign Equity upto 40% and

NRI investment upto 100% is permitted in domestic air transport services.
Equity from foreign airlines is not permitted directly or indirectly.

 Disinvestment of the Government Equity in airlines – Government of India

decided to disinvest partly its shareholding in both Air India and Indian Airlines, presently
wholly owned companies of the Government. But with general elections round the
corner this issue has been put on the backburner with constant opposition from
various sections of the society.

 Entry-Exit barriers removed – Barriers to entry and exit from this sector
have been removed. Only pre-entry scrutiny to verify financial soundness,
maintenance, security and safety aspects of operations and human resource
development proposals is done. Choice of aircraft type and size left to the operator.

 Private participation in Airports – Foreign equity participation is allowed in

ventures for airports, upto 74% automatic approvals and upto 100% with special
permission. Participation is also open to foreign airport authorities.

 A variety of fiscal incentives has been provided to airport project,

as decided by Government from time to time. They are as follows:
 100% deduction in profits for purposes of Income Tax for first five years.
 30% deduction in profits for Income Tax purposes for next five years.

2
  Full deduction to run for continuous 10 out of 20 fiscal years of
assessee's choice.
 40% of profits from infrastructure also deductible for financial
institutions providing long term finance for airport infrastructure
projects.

 Bilaterals for operation of international air services – The Government

has been more liberal in granting additional entitlements to foreign airlines both
in terms of capacity as well as in terms of points of call. The ex istin g air
services agreement with Un ited Sta te s of America is an extremely liberal
one as it allows any number of US airlines to operate services from/to India.
US airlines are also allowed to decide the size of aircraft and their frequencies.

 Taxes and Tariffs – In order to facilitate acquisition of aircraft

Government of India has reduced tariffs for import of aircraft from 8%
to Nil. Even aircraft taken on lease do not attract customs duties. India
also has a liberal Corporate Tax/Income Tax regime for airlines and
encourages investment by allowance of high depreciation rates.

 Civil Aviation Policy - Having drawn up a successful growth model for

the civil aviation sector, the Government is now engaged in evolving a
comprehensive and integrated new civil aviation policy, some of the major
highlights of which are:
 All players and stakeholders are assured of a level playing field.
 Private participation is encouraged and opportunities are created for
investors to realize adequate returns on their investments.
 Rapid upgradation of airport infrastructure to world class is
encouraged with priority to the busiest airports and those handling
international flights.
 International cooperation in aviation and development in tune with
international trends and best practices, consistent with airspace
sovereignty is promoted.
After four decades of control, Civil Aviation sector has been liberalized with
a view to draw benefits of efficiency, safety and quality in service.

A MOU to enhance air connectivity between India and Singapore has been signed as
a beginning towards more open skies between the two countries. India is keen to
operate passenger flights to Australia and New Zealand through Singapore. The
unresolved issue of ‘fifth freedom’ – that enables the airlines of any two countries to
pick up passengers in each other’s territories for destinations in other nations – will be
taken up later.

Effects of the Reform

Revolutionised by liberalisation, the aviation sector in India has been marked by
fast-paced change in the past few years. From being a service that few could afford,
the sector has now graduated to being a fiercely competitive industry with the

3
presence of a number of private and public airlines and several consumer-oriented
offerings.

All you need to do is walk into any airport to see how many more people today are
flying. Thanks to passenger-friendly fares from Low Cost Carriers (LCCs), even a
middle class family can afford to fly together on a holiday. Since air services are as
much as a part of the infrastructure as roads, the more the number of airlines, the
better it is both people and businesses.

The market was galvanised a couple of years ago by the introduction of lower price
tags which ensured that people could travel at the fraction of the original price of air
travel. It was spurred further by the entry of Air Deccan, India's first budget airline,
which offered hard-to-believe tariffs.

This was the trigger point for the sector to move from having simple economy,
business and first class fares, to multiple slab tariffs such as apex fares, internet
auctions, special discounts, bulk purchases and last day fares. Some of the tariffs
offered are so low that they have brought airline fares neck-to-neck with upper class
railway fares. Little wonder then that the consumer prefers air travel to the railways.

The fare reduction has given the sector a huge boost with domestic and
international traffic growing by 24.2 per cent and 18 per cent, respectively in April-
December, 2005. Private airlines now account for 68.9 per cent of domestic traffic.

The boom in the aviation sector in India can be gauged by the fact that in one year,
the number of people seeking pilot licences has multiplied three times. In April 2005, it
was 300. In April 2006, the number rose to 1045.

In the last financial year, the civil aviation industry has achieved the biggest ever
growth in aircraft movement and passenger traffic. Passenger traffic in the domestic
airports increased by 25 per cent to 59.54 million, while aircraft movement increased
by 14.2 per cent to 730,000.

Aircraft manufacturer Airbus said, “India is one of the world’s most promising
markets and it is predicted that 100 million new urban middle-class consumers will
become potential air travellers by 2010.” Domestic air travel in India is predicted to
grow 20 per cent over the next five years.

4
 Infrastructure
Size
India has 125 airports; of these 11 are designated as international airports. In
2004-05, Indian airports handled 60 million passengers and 1.3 million tonnes of
cargo.Passenger traffic grew at over 22% in 2004-05 over 2003-04; Cargo grew at
21.6%.

Structure
Currently, all 125 airports are owned and operated by the Airports Authority of
India (AAI). The Government aims to attract private investment in aviation
infrastructure
 Privatisation of the Delhi and Mumbai airports is in progress – concessions
have already been awarded. Expected investment of about Rs.15,700 crores
(US $ 3.5 billion)
 New international airports at Bangalore and Hyderabad are being built by
private consortia with a total investment of about Rs.4000 crores (US $ 600
million).

Initiatives
The Committee on Infrastructure has initiated several policy measures that would
ensure time-bound creation of world-class airports in India. A comprehensive civil
aviation policy is on the anvil. An independent Airports Economic Regulatory Authority
Bill for economic regulation is also under consideration. The policy of open skies
introduced some time ago has already provided a powerful spurt in traffic growth that
has exceeded 20% per annum during the past two years.

Greenfield international airports at Bangalore and Hyderabad have been approved

and are currently under construction. These are likely to be commissioned by middle of
2008. Modernisation and expansion of the Delhi and Mumbai airports through PPPs has
been awarded, based on a rigorous and transparent competitive bidding and evaluation
process. Other major airports such as Chennai and Kolkata are also proposed to be
taken up for modernisation through the PPP route. PPP is basically just a different
method of procuring public services and infrastructure by combining the best of the
public and private sectors with an emphasis on value for money and delivering quality
public services.Similarly, to ensure balanced airport development around the country,
a comprehensive plan for the development of other 35 non-metro airports is also under
preparation. These measures are expected to bring a total investment of Rs. 40,000
crore for modernisation of the airport infrastructure.

On the analogy of the highways sector, a Model Concession Agreement is also being
developed for standardising and simplifying the PPP transactions for airports. In

5
addition, proposals for revamping the Airports Authority of India are to be finalised
soon. This would include upgrading of the Air Traffic Control services at the airports.
Issues relating to customs, immigration and security are also being resolved in a
manner that enhances the efficiency of airport usage.

6
 Airline Costs
Labour

If regulations or industry policy provide protection to an industry, the value of

protection may be dissipated in poor productivity and higher-than-normal returns to
labour and capital. Entry limitations and capacity constraints have the potential to
allow airlines to earn above normal returns, which may be appropriated by
shareholders or paid out in higher than normal costs (including wages, salaries and
working conditions).

Given the valuable contribution that aviation and tourism make to national welfare,
it is essential that the aviation market is globally competitive and functions in the most
efficient way. This means that the inputs that the industry depends on, such as labour
and capital, must also be available on an internationally competitive basis.

Fuel Prices
ATF is the major cost for domestic carriers accounting for 30% of the total
operating costs in India, which is much higher than around 10-15% for airlines
worldwide. The exorbitant sales tax on the ATF, which increases the price of ATF, is the
major reason for this higher share in operating cost. The Jet fuel price has increased
by 13.1 % to USD 424.64/ KL in New Delhi during the period May-Aug ’04. The rise in
the first seven months of 2004 stands at 21.5%.

Capital
The relatively capital-intensive nature of the airline industry, combined with the fact
that airlines are generally regarded as being inherently risky investments, means that
access to large, well-functioning capital markets is an important issue for all airlines.
The effects of these restrictions may vary from country to country, but are likely to be
greater for countries with small domestic capital markets.

7
Operating Costs
The regulatory system affects where, how and when airlines can fly. Thus it affects
airlines’ ability to operate efficient networks and their revenue. To the extent that
airlines cannot use the least cost combinations of aircraft types to carry passengers
and freight, the costs of operating existing networks are higher than they otherwise
might be (technical inefficiency). Further, they may be prevented from flying the
optimum sized and configured network (allocative inefficiency). Thus, costs may be
reduced as airlines are able to operate the right aircraft at the right frequencies on an
existing route.

Airlines, by changing the design of a network and increasing its size, may also be
able to decrease costs through economies of scale and scope.

Ownership and control

As airlines strive for greater efficiencies, they consider the benefits of consolidation.
However, the normal commercial process of acquisition and/or merger is not available
due to restrictions contained in bilateral agreements that are designed to ensure that
ownership and control of airlines remain with nationals of the countries where they are
based.

Growth through merger or acquisition enables airlines to achieve economies scale

and scope by consolidating airline functions. The merger of two airlines, for example,
may allow them to consolidate their ground handling, maintenance, information
technology and various managerial functions.

Airline Acquisition/Leasing Cost

Taking aircraft on lease is one of the preferred modes among the Indian carriers.
However, this has suddenly become costlier affair due to changes proposed in Union
Budget 2004-05. The budget proposes withdrawal of tax exemption granted to acquire
aircraft or an aircraft engine on lease prospectively. This has resulted in imposition of
withholding tax of 42% on leasing of aircraft. Impediment of this kind at a juncture

8
when almost all, Indian carriers are firming up their expansion plans especially through
leasing of aircraft is a setback.

All carriers barring Jet Airways will feel the heat of the sudden withdrawal of exemption
for taking aircraft for lease as they have significant plan to expand the fleet capacity by
leasing route. This includes both state carriers like Air India (AI), Indian Airlines (IA),
Alliance Air and private carriers like Air Sahara, Air Deccan. As Jet Airways that has
predominantly prefers owning aircraft rather than going for leasing.

As tax exemptions are not be available for lease agreements after April 1, 2005 the
Indian carriers who have plans to take aircraft on lease have to sign agreement either
on or before the expiry date or they will have to bear additional cost burden. As leasing
route is the most preferred one for a new entrant, the Budget initiatives will prove be a
heavy deterrent as they will escalate the effective lease rental cost by almost 42%.

9
Air India
 Founded – August 1946
 Commenced operations – June 8, 1948.
 Ownership – Central Government.
 USP – India's national flag carrier.
 Network – 47 destinations – 13 in India and 34 abroad.
 International Network – Toronto, New York, Newark, Chicago, Los
Angeles, Birmingham, London, Paris, Amsterdam, Frankfurt, Moscow, Vienna,
Zurich, Nairobi, Dar-Es-Salem, Mauritius, Kuala Lumpur, Sri Lanka, Singapore,
Jakarta, Bangkok, Hong Kong, Dhaka, Shanghai, Osaka, Seoul, Tokyo, Kuwait,
Dammam, Riyadh, Doha, Jeddah, Dubai, Bahrain.
 Staff Strength – 15,884 employees.
 Annual Turnover – Rs 7435 crores (approx. £953mn).
 Hubs – Mumbai, New Delhi.
 Consumer Traffic – 4.86 million passengers annually.
 Frequent Flier Program – Flying Returns (India, UK-US-Canada, Gulf & Far-East &
South East Asia Programme)
 Fleet Overview:

Current Future
Aircraft Type Total
In service Stored On Order
Airbus A300B4 0
Airbus A310-300 19 19
Boeing 747 15 2 17
- Boeing 747-200 2 2
- Boeing 747-300 2 2
- Boeing 747-400 13 13
Boeing 777-200 4 4
38 2 0
Total 40
40 0

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Airbus 310

Business Economy
No. of
20 181
Seats
Configuration 2X2X2 2X4X2
No. of Zones 1 3
Seat Pitch (inches) 47" 31"-33"
Seat Width Between armrest (inches) 19.25" 17.32"-17.4"
Seat Recline (inches) 7.5" 6.2"
Upright Position (degree) 190 150
Seat Total Recline (degree) 1270 1260

Statistics:
Current Fleet Size (Owned/Dry Leased) 6/7/1
Maximum Take-off Weight 153 tons
Wing Span 144 ft
Overall Length 153.1 ft
Overall Height 51.8 ft
Cabin Width 17 ft
Wing Area 2,350 sq ft
Average Cruise Speed 0.8 mach
Maximum Operating Altitude 41,100 ft
Maximum Fuel Capacity 48.3 tons

11
Maximum Thrust 53.500 lbs
No of Engines 2
Model CF-80C2A2
Range With Full Payload

NON-USA Routes
Passengers + Baggage 19.7 tons
Cargo 6.9 tons
Capacity Payload 26.6 tons

12
Air India Express

 Founded – May 2004

 Commenced operations – April 28 2005
 Ownership – Central Government.
 USP – 25% lower fares than Air India and will operate on a zero-commission
basis.
 Network – 14 destinations – 6 in India and 8 abroad.
 International Network – Kuala Lumpur, Singapore, Muscat, Salalah,
Abu Dhabi, Dubai, Al Ain, Sharjah
 Staff Strength – N/A.
 Annual Turnover – N/A
 Hubs – Trivandrum & Cochin.
 Consumer Traffic – N/A.
 Frequent Flier Program – N/A
 Fleet Overview:

Current Future
Aircraft Type Total
In service Stored On Order
Boeing 737-800 3 3
3 0 0
Total 3
3 0

13
Indian Airlines

 Commenced Operations – 1953

 Ownership – Central Government.
 USP – One of the largest regional airline systems in Asia.
 Network – 75 destinations - 59 within India and 16 abroad.
 International Network – Kuwait, Oman, UAE, Qatar and Bahrain in
West Asia, Thailand, Singapore, Yangon and Malaysia in South East Asia
and Pakistan, Nepal, Bangladesh, Myanmar, Sri Lanka and Maldives in the
South Asian sub-continent.
 Staff Strength – 18562 employees.
 Annual Turnover – Over Rs.4000 crores - US$ 1 billion approx. (together with its
subsidiary Alliance Air).
 Hubs – Delhi, Mumbai, Calcutta and Chennai.
 Consumer Traffic – 7.5 million passengers annually (including its subsidiary
Alliance Air).
 Frequent Flier Program – Silver Edge Club & Golden Edge Club
 Fleet Overview:

Current Future
Aircraft Type Total
In service Stored On Order
Airbus A300 3 4 7
- Airbus A300B2 4 4
- Airbus A300B4 3 3
Airbus A320-200 47 1 48
Boeing 737-200 11 11
64 9 0
Total 73
73 0

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15
Air Sahara

 Commenced Operations - December 3, 1993 (1st private sector airlines)

 Ownership – Part of the multi-crore Sahara India Pariwar.
 USP – 1st airline company in the private sector. High level of punctuality (limited
amount of delays in flights).
 Network – 28 destinations – 24 within India and 4 abroad.
 International network – Flights to Chicago, Colombo, Kathmandu,
London and Singapore (Hong Kong, Bangkok and Kuala Lumpur are the
proposed destinations to which Air Sahara is seeking approval from
authorities).
 Staff Strength – 4200 employees approximately
 Annual Turnover – Undisclosed.
 Hubs – Delhi.
 Consumer Traffic – 1.8 million passengers annually.
 Frequent Flier Programme – Cosmos (Executive, Silver & Gold).
 Fleet Overview:

Current Future
Aircraft Type Total
In service Stored On Order
Boeing 737 20 2 22
- Boeing 737-300 4 4
- Boeing 737-400 4 4
- Boeing 737-700 9 9
- Boeing 737-800 3 2 5
Canadair CRJ-200 7 7
27 0 2
Total 29
27 2

16
17
Jet Airways
 Founded – May 1974
 Commenced operations – May 5, 1991
 Ownership – Naresh Goyal founded Jetair Pvt. Ltd. with the objective of providing
Sales and Marketing representation to foreign airlines in India.
 USP – Acclaimed by frequent travelers as the most preferred carrier offering the
highest quality of comfort, courtesy and standards of in flight and ground service
and reliability of operations.
 Network – 49 destinations – 44 in India and 5 abroad.
 International Network – Colombo, Kathmandu, Singapore, Kuala Lumpur
and London (Heathrow).
 Staff Strength – 18562 employees.
 Annual Turnover – Rs. 500 crore - £58m approx.
 Hubs – Mumbai, New Delhi.
 Consumer Traffic – 8.6 million passengers annually.
 Frequent Flier Program – Jet Privilege (JP Blue, JP Silver, JP Gold & JP Platinum)
 Fleet Overview:

Current Future
Aircraft Type Total
In service Stored On Order
Airbus A320-200 0
Airbus A330-200 2 2
Airbus A340-300 3 3
ATR ATR-72 8 8
Boeing 737 41 41
- Boeing 737-300 0
- Boeing 737-400 6 6
- Boeing 737-500 0
- Boeing 737-700 13 13
- Boeing 737-800 20 20
- Boeing 737-900 2 2
52 0 2
Total 54
52 2

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Biggest deal in the Indian civil aviation history was announced on Thursday with Jet
Airways taking over Air Sahara for nearly $500 million (about Rs. 2,300 crore) in an-all
cash deal, executed on late Wednesday night.

Announcing the deal through a joint statement, Jet Airways Chairman Naresh Goyal
and Sahara group Chairman and Managing Worker Subrata Roy said they were
"pleased to announce the execution of a share purchase agreement for acquisition by
Jet Airways India Limited of the entire capital of Sahara Airlines Limited subject to
regulatory approvals.''

Sahara confirms that workers will not lose their jobs and cadres

Sahara India confirms that workers shall not lose their jobs and cadres and
the gross emoluments will be unaffected. Upon closure of the transaction,
based on the requirements and performance, Jet Airways shall absorb
suitable employees,'' according to the statement

Sahara group Chairman Subrata Roy, in an internal communication to Air Sahara employees,
numbering about 4,400, assured them full job protection. "If the employees find it difficult to
work under the new management, the Sahara India Pariwar, in a true family spirit, shall be
responsive to any of their genuine difficulties and would take all steps to mitigate their
difficulties,'' Mr. Roy said.

19
Air Deccan
 Founded – 1995
 Commenced operations – 2003
 Ownership – Division of Deccan Aviation Ltd (primarily a helicopter company)
 USP – India’s first low cost carrier. The largest network provider in India
connecting 52 destinations daily with 260 flights.
 Network – 57 destinations in India.
 Staff Strength – 2410 employees.
 Annual Turnover – Rs. 400 crores. - £51.2m. approx.
 Hubs – Bangalore & Chennai.
 Consumer Traffic – 1.4 million passengers annually.
 Frequent Flier Program – N/A
 Fleet Overview:

Current Future
Aircraft Type Total
In service Stored On Order
Airbus A320-200 9 4 13
ATR ATR-42 6 2 8
- ATR ATR-42 5 5
- ATR ATR-72 1 2 3
15 0 6
Total 21
15 6

Deccan scrip soars on reverse merger talk

20
Merger could make Deccan the largest domestic airline
Deccan Aviation, the company that owns budget carrier Simplifly Deccan, shot up
23.3 per cent on the Bombay Stock Exchange (BSE) in a falling market on
expectations that UB Group chairman Vijay Mallya may be mulling a reverse merger
of Kingfisher Airlines with Deccan Aviation to enable him to fly abroad.

‘’

The Deccan stock has flared up on rumours that the reverse merger ratio could be in
favour of Deccan,’’ said an analyst with a broking house in Mumbai who did not wish
to be identified. ‘’Someone has taken a call on the stock and the spurt is not
necessarily based on fundamentals,’’ said the analyst.

A merger ratio in favour of Deccan, based on shareholding, looks difficult: Mallya

controls a bigger stake in Kingfisher Airlines through UB Holdings, the fully-owned
arm of United Breweries in which he controls 74 per cent, while UB Holdings enjoys
46 per cent of Deccan Aviation after the open offer.

But aviation experts said that Deccan can get a favourable ratio as it carries more
people, has more aircraft and larger operations and market share (15.7 per cent
versus Kingfisher’s 12.7 per cent). Besides, Mallya has said that Deccan will break-
even faster than Kingfisher despite its higher losses.

‘’Since Mallya has a sizeable share in both the companies, he can play around with
the numbers. To stay listed, they will have to retain 25 per cent stake with the
people. This could favour the share ratio in Deccan’s favour,’’ said an industry expert
who has been tracking the airline since its inception.

‘’Mallya would want to bring in some major investors in the merged entity,’’ added

21
the industry expert. Jet Airways enjoys a share price of close to Rs 800 on a paid-up
capital of around Rs 90 crore.

‘’The merged entity of Kingfisher-Deccan will have a paid-up value of more than Rs
200 crore; so the market feels the valuation should be around Rs 350-400,’’ said a
former CFO of an airline.

The UB Group has denied rumours of a merger. ‘’We are not thinking of any legal
issues, but just examining how we can explore operational synergies,’’ said Ravi
Nedugandi, CFO, UB Group. ‘’We are looking at how to profitably integrate route
networks, engineering and operations of the two airlines,’’ he added.

But sources close to the group say the mandate to Accenture is to explore all
ways and means by which the two airlines can explore the synergies and reap
the benefits. So, a merger is not ruled out.

Mallya’s predicament is that he will start taking deliveries of wide-bodied

planes from June 2007. They are being configured to Kingfisher’s
specifications and he doesn’t have a choice but to use Deccan to fly them
abroad.

Unless, of course, the government relaxes the eligibility criteria for airlines to
start flying abroad from five years to three years.

Mallya could simply use Deccan to fly abroad, without going for a merger. But
he needs the merger to attract investors and money for sustaining his growth
plans.

22
Spice Jet

 Commenced operations – May 2005

 Ownership – Royal Holdings Services Ltd
 USP – Practical yet stylish.
 Network – 12 destinations in India.
 Staff Strength – 700 employees.
 Annual Turnover – Rs 4.3 crores. - $10m. approx.(Q3 result)
 Hubs – Mumbai, Delhi.
 Consumer Traffic –
 Frequent Flier Program – N/A
 Fleet Overview:

Current Future
Aircraft Type Total
In service Stored On Order
Boeing 737-800 4 4
4 0 0
Total 4
4 0

Fleet

SpiceJet has chosen a single aircraft type fleet which allows for
greater efficiency in maintenance, and supports the low-cost
structure.

And when it came to selecting this single aircraft fleet SpiceJet

has opted for new generation Boeing 737-800s. These 189
seater aircraft will allow for safe, comfortable and efficient
flying and are ideally suited for short to medium haul flights in
Indian conditions.

23
Technical info and pictures of Boeing 737-800

737-800
Single class
189 Seats
configuration
Engines CFM56-7B24
(maximum thrust) (24,200 lbs)
Maximum Fuel Capacity 26,020 Litres
Maximum Takeoff
70,987 kgs
Weight
Maximum Range 3,060 nautical miles (5425 km)
Typical Cruise Speed 0.785 Mach
(at 35,000 feet) (850 kmph)
Basic Dimensions
Wing Span 112 ft 7 in (34.3 m)
Overall Length 129 ft 6 in (39.5 m)
Tail Height 41 ft 2 in (12.5 m)
Interior Cabin Width 11 ft 7 in (3.53 m)

24
Kingfisher Airlines

 Commenced operations – 9 May 2005

 Ownership – United Beverages Group under the leadership of Vijay
Mallya.
 USP – In-flight personalised entertainment on every seat with five video
channels and 10 radio channels.
 Network – 17 destinations in India.
 Staff Strength – 1500 employees approximately.
 Annual Turnover – N/A.
 Hubs – Bangalore.
 Consumer Traffic – 2 million passengers annually.
 Frequent Flier Program – King Club (King Red, King Silver & King Gold)
 Fleet Overview:

Current Future
Aircraft Type Total
In service Stored On Order
Airbus A319-100 2 2 4
Airbus A320-200 7 1 8
9 0 3
Total 12
9 3

25
Go Air
 Founded – October 2005
 Commenced operations – 4th November 2005
 Ownership – Wadia Group (the owners of Bombay Dyeing and Britannia Industries
Ltd).
 USP – A low cost carrier.
 Network – 13 destinations in India.
 Staff Strength – N/A.
 Annual Turnover – N/A.
 Hubs – Mumbai.
 Consumer Traffic – 0.5 million passengers annually (projected).
 Frequent Flier Program – N/A
 Fleet Overview:

Current Future
Aircraft Type Total
In service Stored On Order
Airbus A320-200 3 10 14
3 0 10
Total 14
3 10

Mdlr airlines
MDLR Airlines offers the spacious, adaptable cabin of the unique accommodation
with most reliable Four Jet Engine Aircraft.

26
 VT-MDL VT-MDM VT-MDN
Technical Info
3
AVRO RJ 70
Seat Capacity 70
Seats in Club Class 6
Seats in Economy Class 64
Wing span 26.34 m (86ft 5 in)
Gross wing area 77.3 m² (832 ft²)
Overall length 26.16 m (85ft 10 in)
Overall height 8.61 m (28ft 3 in)
Passenger cabin
Length 15.42 m (50ft 7 in)
Headroom 2.07 m (6ft 9.5 in)
Internal diameter 3.42 m (11ft 3 in)
Floor width 3.24 m (10ft 8 in)

27
Other Players.
 Paramount Airways – Paramount started operations in October 2005. It
currently flies to four destinations in India. The airline has called itself
‘Premium Service Schedule Airline’ offering competitive fares.

 Jagson Airlines – Jagson Airlines Ltd one of the pioneers in the field of Air
Taxi operations. It was the first private airline in response to the open sky policy
in 1991, and started its operations in 1992. For its expansion plans (see fleet
details below) it will be investing some Rs15bn (£192.3mn), and likely to offer
between 20-40 percent equity to a foreign partner.

 IndiGo - Plans to start operating in February 2006. It is perhaps the most

eagerly awaited newcomer – after announcing a 100 Airbus deal at the Paris Air
Show 2005. For Rolls Royce, as IndiGo chooses V2500 engines, the Airbus deal
is worth $600m. The proposed fleet is a mix of A-319, A-320, and A-321. It does
intend to be a low-cost airline, and compete with Air Deccan. IndiGo is based in
Gurgaon (Delhi). CEO is Bruce Ashbyon, and MD is Mr Rahul Bhartia. Promoters:
Mr Rakesh Gangwal and Interglobe Enterprises Ltd. The MD has been quoted by
the media that its initial capital outlay will be $80m and by 2008 $250m. He also
said that generally 85 percent of cost of aircraft acquisition is financed through
debt or loans from FIIs, whilst 15 percent comes as equity from operators.

 Air One has put off its launch and it is rumoured that the company has already
collapsed.

 East West

 Magic Air

 Indus Air

 Pioneer

 Star Air

 In first of its type, the Kerala State Government sent a proposal to the Centre
requesting permission to set-up an airline to fly between the State and the Gulf
region.

 Air Frankfinn – Also, it was reported that the Mumbai-based Frankfinn Institute
of Air Hostess Training is planning to start a low-cost airline Air Frankfinn.
They expect to launch this airline in 2009, with two Boeing and four smaller
aircraft.

28
Marketing Strategies –
A Comparative Analysis
v
Check in facilities
 Tele check-In - If you have a
confirmed seat and plan to travel with
hand baggage only, you can tele check-in
for the next day too and report at the
Tele check-in counter atleast 30 minutes
prior to the flight departure.(only for J
Class & FFP Members ). This facility is
available in the 6 metros - Delhi,
Mumbai, Kolkata, Chennai, Bangalore &
Hyderabad. Please note these facilities
are available for domestic flights only.
 City Check-In – Now you can check-
in at the Indian Airlines city booking
office for not just the same day flights
but also for the next day. If you are
traveling with hand baggage only, please
report atleast 30 minutes prior to the
departure at the Airport check-in
counter. If you have check-in baggage,
regular reporting time is applied. This
facility is available in the 6 metros -
Delhi, Mumbai, Kolkata and Chennai.
Please note these facilities are available
for Domestic flights only.
 Return Check-In – Now you can
return check-in if your flight is on the
same day or the next. Collect your return
boarding card from the originating
station and report to the airport just 30
minutes before departure if you're
travelling with hand baggage only. Valid
for flights between the 6 metros - Delhi,
29
 Reservations – Reservations can be
made on all major Computerised
Reservations Systems (CRS). Twenty-
four hour reservations facility at Mumbai,
Delhi, Kolkata, Chennai and Bangalore.
Jet Airways’ electronic ticketing service
offered on www.jetairways.com enables
passengers to book tickets to any
destination on the airline’s route network
through the Internet. Jet Airways has set
up call centres for International and
Domestic flights & services that operate
on a 24X7 basis.
 City Check-In – Facility available for
passengers traveling on their domestic
network with hand baggage only at
Mumbai, Delhi, Kolkata, Chennai,
Bangalore and Indore. Passengers can
check-in and collect their boarding pass
at the city office at least two hours
before the flight time and report at the
airport 30 minutes before departure.
 Same Day Return Check-in – Same
day return flight check-in facility
available throughout the network at
stations/cities connected by same day
return flights provided both stations are
connected online by the Departure
Control System. Both boarding cards are
handed over to passengers at the point
of origin, thereby eliminating a second
check-in and therefore, a shorter waiting
Mumbai, Calcutta, Chennai, Bangalore &
Hyderabad
 Through Check-In – You can board
your connecting onward flight without
having to check-in again, even if it's upto
24 hours later. Your baggage will also be
through checked-in. Valid for flights/
connections from all domestic stations
except Kochi, Agatti and Gaya Minimum
connecting time 45 minutes.
30
time at the airport on the return flight.
Such passengers would need to report at
the airport for the return flight only 30
minutes before scheduled departure.
 Tele-Check-In – Jet Airways stations
have tele-check-in facilities for Premiere,
Club Premiere passengers as well as Jet
Privilege Blue Plus, Gold, Silver and
Platinum Card members. Platinum and
Gold Card members can tele-check-in 48
hours in advance. Silver and Blue Plus
Card members can tele-check-in 24
hours in advance. Passengers may tele-
check in upto one hour prior to departure
and must arrive at the airport check- in
counter at least 30 minutes prior to
departure.
However, Blue Plus members are
required to report 45 minutes prior to
departure. All passengers for
International flights will need to tele-
check-in upto four hours prior to
departure. All are required to report 45
minutes prior to departure.
 Web Check-in: Jet Airways’ online
facility for Web Check-in is currently
available for passengers holding a
confirmed and valid E-ticket, anytime
between 48 hours and 60 minutes prior
to their flight departure, in 29 of
the airline’s destinations across India. E-
tickets can be issued through Travel
Agents, Jet Airways portal, Jet Airways
airport and city offices. With this, Jet
Airways has introduced yet
another pioneering initiative that allows
customers not only to select their
preferred seat but also to print
their boarding pass for their same day
return flight on www.jetairways.com.
 Kiosk Check-in: Kiosk Check-in is
available for domestic flights and can be
completed at Jet Airways’ kiosks located
at the airport. When a customer uses
kiosk check-in, the system performs a
name check, verifies the PNR, enables
passengers to select their preferred seats
and print their boarding passes using the
 printer integrated with the kiosk. Kiosk
Check-in enables passengers carrying
only to proceed directly for security
check and thus experience a hassle-free
check-in. Currently, Kiosk check-in
facility is available at the Mumbai, Delhi
and Bangalore airports.
 Same day return tele- Check in: Jet
Airways’ Premiere, Club Premiere
passengers as well as Jet Privilege Blue
Plus, Gold, Silver and Platinum Card
members can Tele- check-in for their
same day return journey at the
originating station. Passengers availing of
this facility have to report at the airports
30 minutes prior to departure. However,
Blue Plus members are required to report
45 minutes prior to departure. This
facility is available only when both the
outbound and inbound sectors are on Jet
Airways.
 Seat Request: Premiere and Club
Premiere passengers are requested to
indicate their seat preference at the time
of reservation. Advance Seat Reservation
Facility to Economy Class passengers is
available for their international
flights between India and London
Singapore & Kuala Lumpur. This can be
done at the time of making a
booking.
 Airport Lounges: Premiere, Club
Premiere passengers and Jet Privilege
members have the facility of waiting at
airport lounges in certain airports.
Passengers are offered complimentary
beverages and snacks in these lounges.
 Facilities for the Physically
Challenged: Physically challenged
passengers can make a request while
booking their flight and an attendant with
wheelchair will be arranged.
 Check-In Facilities for Overseas
Passengers – To assist
overseas passengers,
Jet Airways have check-in counters at the
Chhatrapati Shivaji International Airport,

31

In-flight Facilities
 To provide an unpolluted environment,
smoking has been prohibited on all
flights.
 Meals and beverages are provided on
all flights depending upon the scheduled
time of departure and arrival, as well as
the duration of the flight.
 “Access" Suggestion Cards are placed
on board to solicit valuable suggestions
and comments from our passengers in
our efforts to improve services.
 In addition to the variety of
newspapers, our in-flight magazine
Swagat is kept on board for in-flight
reading pleasure.
 Magazines are placed on board for
Executive Class passengers.
 Cabin Crew Training – Indian
Airlines gains strength from
experienced and well-trained cabin crew,
whose skills are honed on a regular basis
at the Cabin Crew Training School
(CCTS) in Hyderabad. The CCTS is
equipped to provide technical training
including Safety and Emergency
procedures, aircraft type specific training,
Crew Resource Management modules,
programmes on personal grooming, voice
and announcements, etc. The CCTS
Mumbai.
 Through Check-in – Passengers
departing on Jet Airways services and
connecting onto international flights can
now be through checked-in to their final
destinations. This means that their
luggage is through labelled and boarding
passes issued for their onward
international flights. This facility is also
available for passengers arriving on
incoming international flights. Jet
Airways passengers flying to any
destination within India and connecting
to another flight of the airline can avail
the Through Check-in facility to their final
destination within India.
Jet Airways passengers are warmly greeted
on board
by our multinational crew offering welcome dr
inks, fresh juices and refresher towels.
Pillows and blankets are available on request
on all flights.
A wide choice of newspapers and magazines
are offered. The monthly Inflight magazine
Jetwings is placed in each seat pocket for
your pleasurable reading. Club Premiere
passengers may request for exclusive
stationery.
Jet Airways offers customers exemplary
inflight services in Premiere, Club Premiere
and Economy classes on all sectors. A choice
of vegetarian or non-vegetarian snacks and
hot meals are offered in Premiere, Club
Premiere and Economy class. All meals are
its cooked in pure vegetable oil. We also offer a
variety of special meals to cater to your
every need. Passengers can request for a
special meal to be catered onboard 24 hours
prior to their flight with our reservations
department. During flight, the Crew will take
special care of unaccompanied minors. A
special giveaway ‘Jetkids’ is offered to
Children for their recreation.
For our International Operations, we have
multinational Cabin Crew to cater to our
32
conducts courses for external agencies as
well. Recently, courses were conducted
for personnel from government security
agencies, like the CISF. Flight attendants
training courses for external candidates
are also undertaken. Anyone interested
in these programmed can find out more
by contacting CCTS.
 Meals – Indian Airlines offers a wide
variety in its in-flight meal menus, with a
multi-cuisine approach to cater to the
predilections of the range of passengers
on its network stretching across the
Indian sub-continent and into the Middle-
East and South-East Asia. Reputed hotel
chains, like the Taj Group and
Ambassador, provide most of our flight
catering. Cabin services are continuously
under review with innovations and
improvements as our aim. Apart from
normal Vegetarian and Non-Vegetarian
Meals, Indian Airlines also provides
Special Meals such as Jain Meal, Diet
Meal, Child Meal etc.
 Swagat Magazine – Indian Airlines
gains strength from its experienced and
well-trained cabin crew, whose skills are
honed on a regular basis at the Cabin
Crew Training School (CCTS) in
Hyderabad.
33
valued customers. A wide-choice of in-flight
entertainment, gourmet meal service using
elegant cutlery, exquisite French Wines and
Swiss Chocolates, and the finest assortment
of coffee and tea. Passengers can choose
from signature Continental, Oriental and
Indian menus which will be served on
request.
Choice of Australian wines and liquor,
comfortable seating, in-flight audio-video,
brewed coffee are all available in the
Economy class.
Our Inflight Entertainment offers personalised
audio video facility in Premiere, Club
Premiere while our Economy cabin provide
overhead LCD screens and choice of audio.
Jetwings International, a bi-monthly
magazine is placed in each seat pocket of all
our international flights.
Jet Airways flights are non-smoking flights.
In accordance with the Government of India’s
regulations, consumption of alcohol is not
permitted on Jet Airways’ domestic flights.
Safety instructions and Emergency
procedures are explained by the Cabin Crew
on each flight in Hindi and English. Safety
Briefing cards are placed in each seat pocket
for additional details.
On our International flights Safety
instructions and Emergency procedures are
demonstrated by the use of safety video on
each of these flights in Hindi and English.
Safety Briefing cards are placed in each seat
pocket for additional details.
Safety Instruction Manuals in Braille are
placed on all Jet Airways’ flights for visually
impaired passengers.
Jet Airways Cabin Crew is trained to a very
high standard of Safety and First Aid by
Instructors with International experience.
A first-aid kit is available with the cabin crew.
Passengers are requested to refrain from
using electronic devices during take-off and
landing. Cellular phones must always be in
‘Power Off’ mode from the time of boarding
the aircraft till disembarkation.
Frequent Flier Program
Silver Edge Club
Privileges:
As a member of our Silver Edge Club, you
can now look forward to a host of special
benefits, offers and privileges. To begin with:
 Personalised Membership card –
The first thing you will receive along with
your membership is a Special Kit,
containing a personalised 'Silver Edge
Club Membership Card', one Upgrade
Voucher and a special 'Silver Edge Club'
Baggage Tag, an announcement of your
privileged status.
 Bonus Mileage Points on Flying
Returns Membership – 10% extra
mileage point bonus can be earned over
and above normal accruals (depending
on class of travel) on Indian Airlines or
Alliance Air flights on domestic or SAARC
sectors.
 Additional Baggage – You now get
the freedom to carry an additional 10 kgs
of extra baggage on Airbus-300, Airbus-
320 and Boeing-737 aircraft on domestic
sectors over and above the Flying
Returns member normal limit. No excess
baggage is however, allowed on ATR-42,
Dornier aircraft and on international
sectors.
 Exclusive Offers – A stream of
exclusive offers in partnership with
premium product and service brands
chosen from select categories of apparel,
accessories, consumer electronics,
entertainment etc at attractive prices.
 Priority confirmation – Priority
confirmation from the wait list.
Immediate family members (spouse and
children) can enjoy the same privilege
when they travel with you.
 Upgrades – You or your companion
enjoy the exclusive privilege of
upgradation to Executive Class. We
provide you one upgrade voucher with
the Silver Edge Club kit.
 Guaranteed seat reservation – If
34
5 Membership Levels – In addition to the
base JP Blue tier the Jet Privilege programme
offers the JP Blue Plus tier. This tier is
introduced for our JP Blue members who are on
the fast track to an upgrade; they can start
enjoying the facility of Tele Check-in as soon as
they complete 10 Jet Airways flights or 15,000
Status JPMiles (ie. JPMiles earned on Jet
Airways flights) in a six-month period. The
programme also has three elite tiers JP Silver,
JP Gold and the excusive JP Platinum - specially
created for our most frequent flyers.
 The Dynamic Tier Review (DTR)
System - A world first! – To make the
tier upgrades and retention easier for our
JP Members, Jet Privilege has developed
a multi-criteria based tier assessment
system. This innovative, award-winning
system, which is referred to as the DTR
System, is totally unique to Jet Airways
and has no precedent anywhere in the
world. With this system, we will be able
to provide members with quicker tier
upgrades as well as more opportunities
to retain their tier status.
 13-Quarter validity of JPMiles –
The Jet Privilege programme offers you
yet another benefit. Your JPMiles are now
valid for 13 quarters including the
quarter they were earned in. Moreover,
your JPMiles will only lapse on a quarterly
basis (at the end of the 13th quarter)
and not on an annual basis, as it was in
the earlier system. Hence only the
JPMiles earned in that quarter will expire,
and not the entire JPMiles earned in
that year. The validity cannot be
extended beyond 13 quarters, and
JPMiles that are not redeemed before
expiry, will lapse.
 Personalised Web Access – Jet
Privilege members can login using their
JP Number and Password to access and
manage their Jet Privilege account,
anytime, anywhere through the website
 reservation for a seat in Business Class www.jetairways.com. With online access
cannot be confirmed immediately, you to your Jet Privilege Account you can:
will be offered an option of a guaranteed  Update your personal details
seat in Economy Class on the same  Manage your e-mail
flight, for booking made 24 hours in preferences
advance.  Check your JPMiles or
 Miscellaneous – Special Promotions Qualification status
and Monthly Mileage Statements.  Check your mileage expiry
details
 View your Frequent Flyer
Golden Edge Club Activities and Statement Details
Privileges:  View detailed information on
As a member of our Golden Edge Club, you the Jet Privilege Programme and
can now look forward to a host of special Partners
benefits, offers and privileges. To begin with:  Update missing JPMiles in your
 Personalised Membership Card – account
The first thing you will receive along with  Purchase JPMiles
your membership is a Special Kit,  Request for Redemptions on Jet
containing a personalised 'Golden Edge
Airways or Partner Airlines
Club Membership Card', two Upgrade
 Get customised offers, based
Vouchers and a special 'Golden Edge
on your preferences
Club' Baggage Tag, an announcement of
 Check exclusive offers and
your privileged status.
promotions on Jet Privilege and JP
 Bonus Mileage Points on Flying
Programme Partners
Returns Membership – 25% extra
 Calculate Mileage you would
mileage point bonus can be earned over
accrue on or redeem for different
and above normal accruals (depending
routes
on class of travel) on Indian Airlines and
 Request for information from
Alliance Air flights on domestic and
the Jet Privilege Service Centre
SAARC sectors.
 Provide feedback to the Jet
 Additional Baggage – You get the
Privilege Service Centre
freedom to carry an additional 20 kgs of
 Purchase Jet Airways tickets at
extra baggage on Airbus-300, Airbus-320
special fares exclusively for
and Boeing-737 aircraft. However, no
JPMembers
excess baggage is allowed on ATR-42
 Membership Tier Bonus – JP
and Dornier-228 aircraft.
members earn Bonus JPMiles on all
 Personalised Check–In – At the
eligible flights, based on their elite
time of check - in, at domestic terminals
membership tier.
of major airports (Delhi, Mumbai,
Tier JP Silver JP Gold JP Platinum
Kolkata, Chennai, Bangalore and
Tier bonus 10% 20% 30%
Hyderabad) we have set up a dedicated
Tier Bonus is not available when using
check - in counter especially for you.
Programme Partners. Bonus JPMiles do
Your Golden Edge Club Membership Card
not count towards evaluation for tier
puts you upfront, where you belong.
upgrade/retention.
 Priority confirmation – Priority
 Tele Check-in facility – All JP
confirmation from the wait list.
members (except JP Blue) who hold
Immediate family members (spouse and
confirmed reservations on Jet Airways
children) can enjoy the same privilege
flights can call their local reservation

35
when they travel with you.
 Upgrades – You or your nominee
enjoy the exclusive privilege of
upgradation to Executive Class. We
provide you two upgrade vouchers with
the Golden Edge Club kit.
 Guaranteed seat reservation – If
reservation for a seat in Business Class
cannot be confirmed immediately, you
will be offered an option of a guaranteed
seat in Economy Class on the same
flight, for booking made 24 hours in
advance.
 Miscellaneous – Special Promotions
and Monthly Mileage Statements
36
office to Tele Check-in. However, the cut-
off time differs for Domestic and
International flights on Jet Airways.
 Web Check-in – This innovative
service allows you to select your
preferred seat and also print your
boarding pass, online at
www.jetairways.com. This facility is
available to passengers holding
confirmed and valid e-tickets when
travelling out of select airports within
India only. When travelling in Club
Première, you can Web Check-in 48
hours to 1 hour prior to your flight
departure. And if you are traveling in
Economy class, you can Web Check-in
depending on your JP tier, as shown
below:
JP Tier Web Check-in Timings
Platinum & 48 hours to 1 hour prior to
Gold flight departure
Silver & Blue 24 hours to 1 hour prior to
Plus flight departure
12 hours to 1 hour prior to
Blue
flight departure
 Complimentary Upgrade Vouchers
– When traveling on an economy class
booking, JP members can enjoy a
complimentary upgrade to Club
Première/PREMIERE by using an upgrade
voucher. These vouchers are sent by Jet
Privilege to its members from time to
time, depending on their tier status, use
of the Jet Airways Citibank Gold Card or
as a special offer. The number
of vouchers required for an upgrade per
flight, is now based on the "Travelled
Distance" concept, which is determined
at the rate of 1 voucher for every 2000
flown miles, with a minimum of 1
voucher per boarding pass. The travelled
distance is equal to the number of base
JPMiles earned for that flight on a full
fare economy class ticket. Therefore, the
number of vouchers needed for an
upgrade is now directly proportional to
the distance of the flight.
 Flight Distance Number of Vouchers
(In JPMiles) needed for Upgrade
1 – 2000 1
2001 – 4000 2
4001 – 6000 3
6001 + 4
 No blackout periods for Jet
Awards –There are no Blackout periods
applicable for JP Awards on Jet Airways
flights. All award bookings will however
be subject to capacity and
class control. For Award bookings on our
Programme Partner airlines, blackouts
may apply from time to time and if
applicable at the time of your request the
same will be communicated to you by the
JP Service Centre.

 Lounge Access –
 Lounge access at select airports in
India – Members of the elite JP Silver,
JP Gold, JP Platinum tiers and Jet
Airways Citibank Gold Credit Card
holders have access to Lounges at
Bangalore, Kolkata, Chennai, Delhi,
Jaipur, Mumbai and Hyderabad
airports, irrespective of their class of
travel. JP Platinum members can take
along two guests travelling on the
same Jet Airways, JP Gold member
can take along one guest travelling on
the same Jet Airways flight.
 Lounge access on International
Sectors – JP Gold and JP Platinum
members travelling on Jet Airways
can access lounges (members only)
at airports outside India. Lounge
access will be offered only at the
departure airport where available. For
JP members transiting via our
international destinations, the lounge
access at the international airports
will be offered if the onward travel
is on a Jet Airways flight only.
 Additional Baggage Allowance on
Jet Airways – On Jet Airways flights, as
a JP Platinum, JP Gold or JP Silver
member, you enjoy an additional

37
 baggage allowance, over and above the
normal baggage allowance.
Additional Baggage
Tier
Allowance
JP Platinum 35 kilos
JP Gold 20 kilos
JP Silver 10 kilos
Jet Airways Citibank Gold Credit Card
holders get an additional 15 kilos baggage
allowance when travelling on Jet Airways
flights within India only. Jet Airways
Citibank Gold Credit Card holders who are
also JP Platinum, JP Gold or JP Silver
members will receive only the higher of
the two excess baggage allowances and
not a cumulative total. Additional baggage
allowance is not available on flights
operating the ATR aircraft due to loading
regulations.
 Priority tagging of baggage – We
understand that with a busy travel
schedule, you may not always have the
time to wait until your baggage arrives.
That's why we offer our JP Platinum and
JP Gold members Priority Baggage Tags
for their baggage on our domestic as well
as international flights. A Priority
Baggage Tag ensures that your baggage
is among the first to arrive on the
conveyer belt.
 Guaranteed reservation up to 24
hours before departure – We
understand that as a frequent traveller,
you may have to fly at short notice.
Therefore, we now offer JP Gold and JP
Platinum members a guaranteed
reservation* in Economy class. To use
this privilege, you need to hold a full-fare
Economy class ticket. Request for
confirmation must be made at least 24
hours before flight departure.
 Check-in at Club Première &
PREMIERE counters – JP Platinum, JP
Gold and JP Silver members can check-in
at the PREMIERE / Club Première
counters, even when travelling Economy
class. Jet Airways Citibank Gold Credit

38
 Cardholders can avail of this facility at
airports in India. JP Platinum and JP Gold
members and PREMIERE passengers can
also check-in at the exclusive Park
Avenue counter at London, Heathrow.
 Cancellation fees waived on
published fares – This benefit is
exclusively for our JP Platinum members.
All cancellation fees on revenue published
fare tickets are waived off (Night Fares
and non-refundable tickets not included).
However, No Show and Gate No Show
charges are not included in this waiver.
 Priority Standby – When you’re
travelling on a waitlisted ticket, as a JP
member you can rest easy because,
when accepting waitlisted passengers for
a flight at the time of counter closure for
a flight, JP Platinum, JP Gold and JP
Silver members will be given the highest
priority status in the order of their tier
status, as per the applicable check-in
procedures.
 Dedicated customer Service
Centre – The Jet Privilege Service
Centre is open from Monday to Friday
between 9:00 a.m to 9:00 p.m. IST and
on Saturdays between 9:00 a.m. to 5:30
p.m. IST (except on public holidays). JP
members residing in the UK can call our
UK Toll Free number 08 000 265
626 from Monday to Friday
between 9:00 a.m. to 5:30 p.m. GMT
and on Saturdays between 9:00 a.m. to
1:30 p.m. GMT.

39
Frequent Flier Program – Credit Card tie up
American Express
 Enjoy 15% discount on Economy
and 10% on Business Class tickets –
Pay 15% less on full fare Economy Class
tickets and 10% less on Business Class
tickets - every time, on any domestic or
International Indian Airlines sector.
 Discounts On Easy Fares & Super
Savers – Get a 5% discount on Easy
Fares & Super Saver tickets purchased
through the IA-AMEX card
 Get one free upgrade voucher –
Get 1 free upgrade voucher to Business
Class the moment you get your Card,
and with every subsequent annual
renewal.
 Get free tickets – Get a free 2
coupon return ticket on economy class
for any domestic or international sector
on IA network after completing travel on
tickets worth Rs. 75,000 charged through
the IA-AMEX card.
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40
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41
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42
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43
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45
Unique Service Characteristics
Commonly known as the 4I’s of Services, it is very important to look into this
aspect and check their relationship with the service industry.

Intangibility
Intangible services are difficult to sell because they cannot be produced and
displayed ahead of time. They are therefore harder to communicate to prospective customers.
It means that services are high in credence qualities whereas goods are high in search
qualities.

Marketers of services can reduce these risks by stressing on tangible cues that
will convey reassurance and quality to the prospective customers. These tangible
cues range from the firm's physical facilities to the appearance and demeanor of its
staff, from the letterhead to the logo of the company.

In the airline i n d u s t r y transportation is the core product. Since it is intangible in

nature a service company can distinguish itself from its competitors by providing
several tangible cues like:

 Food / Beverages

 Newspapers

 Movies

 Music

 Staff uniforms - For example, Air India’s f e m a l e staff wears a printed

blue sari.

 Seats and cushions

 Audio / Video facilities for work or pleasure

 Fax, laptops, etc.

 Baggage retrieval

 Flight bookings

Inseparability
Many services require customers to participate in creating the service
product. In the airline industry, it is very important for the company to consider the
customers as a part of the company in order to serve them better. The inseparability
of services leads to:

46
  Customer being co-producer;

 Often customer being co-consumers with other customers and;

 Customers travelling to the point of service production.

All the above 3 problems are faced by the service marketer in the airline industry.
So the service marketer has to think of ways in which he can satisfy his consumers
in an efficient manner.

In the airline industry, the customer has to be physically present in the service
factory. Hence, he is coming in direct contact with the service provider as well as
other customers of the airline.

Inconsistency
Inconsistency refers to the variability in the service. Service variability leads to
difficulty in projecting a consistent image and developing a strong brand. As it is
difficult to standardize and to blueprint the service process, there is inconsistency in
service quality.

Different front-line personnel have different abilities. Even the same service provider
has good days and bad days or maybe less focused at different times of day. Services
are performances, often involving the cooperation and skill of several individuals, and are
therefore unlikely to be same every time. This potential variability of service quality raises
the risk faced by the consumer.

The service provider must find ways to reduce the perceived risk due to
variability. One method is to design services to be as uniform as possible - By
training personnel to follow closely defined procedures, or by automating as many
aspects of the services as possible.

For example – Most airlines include online booking resulting in a standardized

procedure & fewer mistakes due to human errors.
A second way to deal with perceived risk from variability is to provide guarantees
& other assurances that the customer will not be stuck with a bad result.

Another way of reducing inconsistency in airlines is the standardization of in-flight

procedures for example the security instructions given at the beginning of the flight.

Inventory
Service businesses cannot normally stockpile their output, because the time
bound nature of service delivery makes it impossible to use the finished goods as
inventory.

For example – The potential income from an empty seat of an airline flight is
lost forever once the flight takes off.

Conversely, when demand for service exceeds supply, the excess business may be
lost.

47
48
 For example – If some one cannot get as eat on one flight another carrier
gets the business or the trip is cancelled or postponed.

The inventory for airline industry is mainly the food and the aircrafts spares and
p a r t s . Airlines face the problem of i n v e n to r y m ainly due t o irregular demand
patterns.

49
 The Goods – Services
Continuum
The airline industry is a sector where the goods that are being sold could
be either classified as the traveling service rendered by the airline company or
the actual purchase of the aircraft.

When we consider the purchase of an aircraft, we must understand that

only large corporate houses could afford that and that too for its top
executives only (McDowell’s owns a small plane). Here the plane is the core product
but only the sale of the plane by the manufacturer does not completely
fulfill the desire of the customer, hence the manufacturer (BOEING) has
to extend a few services to attract more sales to corporate as well as airlines.
For example, free servicing, or may be a maintenance contract with the plane is
required.

Even in case of airline companies where travel is their core product, they
have to render additional benefits or services to the passengers to increase
the number of sale of tickets.

Pure Goods Goods related Service Related Pure Services

Hence, in marketing terms there could not be any pure goods or pure services.
Without either of them the other wouldn’t be effective. So in order to increase sales
and grab a larger market share, every good must be supported by a service and vice
versa.

In the above diagram there are 4 parts related to sale: purely goods,
goods related to services, services related to goods and purely services. But in each
case a loophole could be identified if considered in isolation. Hence for a service
marketer to be very accurate with the sales figures and forecasts, he must
concentrate on the second and third type, i.e. goods related services and services
related goods as according to the business they are into, i.e. if the company
is into manufacturing of planes they must consider the second option and if
they are an airline company, they must opt for the third for maximum
benefits.

50
 The Flower of Service
The core service of an airline is the service of transport. The supplementary
services are classified into eight clusters & each one is analyzed with respect to the
airline industry:

Information
This aspect of supplementary service is common for every person that needs
information about the organization. In case of airline industry, up to date information
regarding flight schedules, ticket fares, information about promotion schemes etc
available to customers.

Customers can avail of this information literally at their fingertips today with every
airline starting its own website which gives complete details to the customer & also
entertains queries.

It also includes providing information to employees regarding new policies affecting

the airline & equipping them with enough information, which the customers might
demand. Extensive training is provided to in-flight attendants regarding handling
customer queries, knowledge about the airplane itself, knowledge about cuisine etc.

Consultation
This aspect of supplementary services can be customized according to the needs of
the customer. It is more in the case of people processing and high personnel-contact
services.

Airlines are moving more actively into the role of consultant today. They are doing
away with the travel agents & designing & selling packaged tours to consumers
directly.

In this aspect they often act as consultants to the customer, by giving him advice &
suggestions regarding the type of plan he can choose, the benefits he will get the
mode of travel he should choose etc.

Another aspect to consultation at airlines is when the customer approaches the

airline regarding traveling to particular destination, the airline gives him a variety of
choices of routes that he can take.

In some cases airline may also design special menus & benefits in consultation with
its frequent fliers by keeping in constant touch with them & asking them for suggestion
as to what they want in their airline which will make their experience more
comfortable.

Order taking

51
 The order taking procedure is essentially the booking procedure of the airlines. The
important aspect to be noted here is that the procedure is smooth, easily understood &
fast. Reservation of airline tickets is now easy and reliable since it is fully
computerized. There are 24 hours reservations. Passengers can specify their seat
preferences at the time of reservation.

Most airlines use the telephone, fax, and email methods of booking. The emphasis
here is on fast booking & at the same time getting the required information form the
customer. This is done by establishing a standard reservation procedure & format thus
reducing the risk of inconsistent service delivery. The online booking system also
facilitates better order taking & processing.

The scheduling aspect assumes importance as reservations on the wrong flight to

the wrong place are likely to be unpopular.

Hospitality & Caretaking

With the increased competition today in the airline industry & the increasing
similarity of services offered by each airline, hospitality has emerged as a key-
differentiating factor between one airline & the other.

The hospitality aspect of an airline is tested right form the time of the reservation
(courtesy of the booking official) to the airline’s desk at the airport to the actual in-
flight travel (the attitude of the flight attendants) to the post flight help extended.

Safekeeping
In airlines the safekeeping issue is that of safeguarding the customer’s baggage.
Baggage allowances are offered about 30 kegs of check-in baggage is allowed.
Passengers carrying international tickets are given further allowance of around an
added 3Okgs Priority baggage delivery is offered to members. The customers entrust
his baggage to the airline & it is the airline’s responsibility to keep it in a proper
condition.

Children and infants usually travel along with their parents and guardian. In case of
unaccompanied minors, customer service staff renders all assistance like checking in
and escorting up to the aircraft and handing over to the senior-most cabin attendant
on board the flight. He is looked after on board the flight right up to the point flight
reaches the destination and he is received by his guardian.

Exceptions
Special requests – airline very often receive special requests form customers with
regards to meal preferences, special amenities for elderly people or children., medical
needs etc. these needs have to considered & acceded to wherever possible

Handling of customer suggestions / complaints – every airline today has a customer

service center which entertains customer suggestions & complaints. On the flight,

52
customers are often asked for their opinion regarding service equality. Many corporate
frequent travelers are consulted when the airline decides to make any new change.

Billing & payment

The billing procedure in airlines is simple. The options available to the customer are
plenty including credit card & travelers Cheques. Airlines use the open account
system with their corporate clients. Frequent fliers are also given special payment
privileges.

53
Quality Dimensions: RATER
Analysis
Customers don’t assess the quality of service on one dimension only, they
use multiple parameters to judge the quality of the service that they are being
offered. These characteristics which people consider vary from person to person,
industry to industry. Even depends upon the product on offer.

In the early 1970’s the strategy adopted generally by the service

provides was: Work faster and more efficiently to reduce the costs. During the
1980’s and the early 1990’s: Improving the quality aspect rose as a major priority.
This requires efforts to improve customer’s satisfaction by creating better
service processes and outcomes. We are now seeing a growing emphasis on
linking the two strategies in order to create better value for customers and the firm.

Because of the intangibility and multifaceted nature of many services, it may be

harder to evaluate the quality of a service than a good. Because the customers are
often involved in the service production a distinction needs to be drawn between the
process of service delivery and the actual output of the service. The most extensive
research into service quality is strongly user oriented.

Services are broadly classified into 10 dimensions namely:

 Tangibility

 Reliability

 Responsiveness

 Competence

 Courtesy

 Credibility

 Security

 Access

 Communication

 Understanding the customer

Since most of these dimensions are overlapping they were pooled down to five
dimensions as given below:

 Reliability

 Assurance

54
 Tangibles

 Empathy

 Responsiveness

When we look at these dimensions with respect to the airline industry we find
that the following service qualities are expected by the customer

 Reliability – flights to promised destinations depart and arrive on schedule

 Assurance – trusted name, good safety record, Competent employees

 Tangibles – aircraft, ticketing counters, baggage area, uniforms

 Empathy – understanding of special individual needs, anticipates customer needs

 Responsiveness – prompt and speedy system for ticketing, in- flight, baggage
handling

Reliability
Ability to perform the promised service dependably and accurately.

This would basically be that company delivers to the customer what is promised
& the customers basically like to deal with companies that can fulfill their
promises.

When we look at the airline industry we can see the following things the
customer would expect certain basic facilities like: some functional
infrastructure provided to him, the flight leaving & taking off on time, the
luggage reaching safely.

Assurance
Employees’ knowledge and courtesy and their ability to inspire trust and
confidence

Assurance relates to knowledge and accuracy of employees and their ability to

convey trust and confidence. This dimension is of great significance for services
where a customer perceives high risk and is not sure of the outcomes. The
employees should have a positive morale & should be motivated if they
have to promote the firm & create a sense of assurance in the flyer’s mind.

Jet Airways is considered to be the more customer friendly of the domestic

airlines. Besides this, after the September 11 crisis, there was a lot of skepticism in
the fliers & to instill a little confidence in the consumer’s mind, the
government paid greater emphasis on security in the aviation policy. This was
a l l so that people would f e e l s a f e n e x t t i m e they t r a v e l e d by a i r .

`They would appoint a committee and look into the recommendations provided
by them to better the security arrangements in the airplanes & airports.

55
Tangibles
Appearance of physical facilities, equipment, personnel and written
materials

Tangible features would be those physical features, which can be seen by the
customer. These would be the physical proofs, which would help the customer to
judge the quality of service. The customers evaluate the quality of these services on
the basis of the tangibles provided by the service providers. The marketers of
services emphasize on tangiblising the intangibles.

Incase of the airline it’d be the aircraft that the airline uses, how old they are, and
the kind of facilities that are provided inside the aircraft or in the waiting area. The
technology used for baggage handling, the coaches used to transport the customer to
the aircraft; all of these speak leaps & bounds about the service provider. The kind of
skilled staff that they, and the uniform that the staff wears.

The tangibles would also include the infrastructural facilities present at the
airports. This is where we find most of the Indian airports lacking. They have no
proper arrangements to handle the customers.

When we look at the aircraft fleet that is a very important tangible feature, and we
find that Indian Airlines has a really ancient fleet of aircraft’s which doesn’t make it
extremely safe as older planes are more prone to damage. Whereas, Jet Airways has
the youngest fleet in the business.

Empathy
Caring, Individualized attention given to customers

Empathy basically is when the employees of the organization make the customer
feel at home, at ease, making him feel wanted. The customers are mostly offered the
same service from most of the airlines. The easiest way for an airline to maintain and
grow its client base is to be empathetic towards their customers, to understand their
specific needs and to cater to them & they should make each customer feel like he is
a unique asset to the company. This can be done by maybe addressing the clients by
their first names, keeping a track of their usual flying routes, their preferences in
flight, & giving him his favorite seat each time he travels.

Customers like to be treated properly for the money that the pay, the airline
should therefore try and maximize the benefit to its customers.

Air India in April invested 15 crores in the first class segment to give it a face-lift
and started providing full-recline seats since they give minimum fatigue on long trips
(exceeding 8 hours of flying).

56
Responsiveness
Willingness to help customers and provide prompt service.

Responsiveness is willingness to help the customers and provide prompt service.

The degree of responsiveness shows the level of commitment that the people of the
company have towards their work. It is very necessary for the company to
concentrate on prompt & the right kind of responsiveness to the needs of the
customer.

Incase, a certain passenger doesn’t like a meal served on the plane, the
cabin crew should be in a position to offer him an alternative meal, as his
perception or opinion of the airline company would mainly depend upon whether
his complaint was addressed to and taken care of.

Care should be taken that prompt response and top quality service is provided to
satisfy all of the customer’s needs.

57
 Low Cost Airlines Vs. Indian
Railways:
Heating Competition, Melting Price
The continuing fare tussle between the Railways and the Low-cost airlines has
changed the contemporary scenario for the Indian traveler. A ticket on India's low-cost
carrier (LLC) has made flying, once confined to the rich and elite, an affordable reality
for the hordes of Indians travelling across the country.

It has taken some time for the low-cost airline industry to carve a niche for
themselves, but the wallet-friendly LLC’s are here to stay.

When Air Deccan introduced airfares almost equaling the AC II-tier train fares, the
response from the leading domestic airlines like Indian Airlines, Jet Airways and Sahara
Airlines was immediate. Slashed rates and Advanced Purchase schemes (Apex) swiftly
began to take shape, resulting up to 30 to 40 per cent slashed fares for apex fares
compared with the original prices.

Barely a year after Air Deccan took off came the launch of Vijay Mallya's Kingfisher
Airlines, followed by SpiceJet and GoAir. Today the number of LLC's has multiplied
from three to a dozen in a matter of months. Since the entry barriers are low, players
such as Paramount, IndiGO (Interglobe), Yamuna Air or Kerala Airways, have already
filed flight plans.

Continuing a steady progress, LLC's are slowly eating into the aviation market
share, capturing almost one third of the total market.

However the dip in market share does not necessarily mean a drop in the number
of passengers or revenues for the mainstream airlines, as the size of the air travel
segment has also been swelling. In the market driven by the LLCs- with about half of
the passengers being first-time air travelers, there's a bigger pie for everyone.

But the biggest loser so far has been Indian Airlines. Even with its trendy make
over called Indian, it has been left with a market share of only 23.88 per cent while the
potential Jet-Sahara combine controls 45 per cent. As a result it is now exploring the
possibility of floating a subsidiary for low-cost operations by merging Air-India Express,
the low-fare arm of A-I with Alliance Air, the decade-old wholly-owned subsidiary of
IA servicing tier II cities. This could mean that India would have it’s first-ever LLC,
having both domestic and international operations. However this fairy tale of low cost
airline advent is still in its initial stages.

In Europe, North America and Australasia, most successful low cost airlines have
operated primarily in domestic or unrestricted international markets. The LLC’s in India
on the other hand, have to operate in a highly regulated environment. This is likely to

58
get compounded with the surge in aviation fuel prices over the past year and the
plummeting infrastructure with congestion in airports, lack of landing facilities and
parking slots, and increasing staff costs driven by internal competition.

These non-frill LLC’s are characterized by few on-board services and elimination of
catering. But for the Indian travelers accustomed to travelling in the crowded trains for
long hours, the aggressive tariff structure by the LCC’s, costing nominally higher than
the AC II-tier by train is becoming a popular alternative. With the LCC’s now targeting
the middle-class travelers, the Indian skies are slowly but surely opening up to the one
billion plus Indian population

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 The Servqual Model
This model shows the salient activities of a service organization that influence the
perception of quality. In addition, the model shows the interactions between these
activities and identifies the links between the key activities, which are pertinent to the
delivery of a satisfactory level of service quality. The links are considered as gaps or
discrepancies, the gap representing a significant hurdle to achieving a satisfactory level
of service quality.

Customer expectation-management perception gap (Customer expectation-

management perceptions of consumer expectations):-this gap exists because there is
a lack of proper customer focus. The mere presence of a marketing department does
not automatically guarantee customer focus. It requires appropriate management
processes, market analysis tools & attributed.
Service quality specification gap (management perceptions of consumer
expectations – service quality specifications) - Managers will set specifications based
on what they believe the consumer requires. This may not necessarily be true. This
represents inability on the part of the management to translate consumer expectation
into service quality specifications.

Service delivery gap (service quality specifications & the service actually
delivered):-this is particularly true for services in which the delivery system relies
heavily on the people. The gap between the perceived service & service delivery is
because of lack of sufficient support for frontline staff, process problems, or frontline
staff performance variability.

External communication gap (service delivery intentions – what is communicated

about the service to customers):- this gap results from inadequate communication by
the service provider. A service organization must ensure that its marketing and
promotion materials accurately describe he service offering and the way it will be
delivered.

Expected service – perceived service gap (actual performance – customer

perception of the service):- it is the difference between what the customer actually
received what and what he expected to receive.

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 Factors influencing Service
Sector
Product
It includes the core product along with the additional benefits,
‘Supplements’ (value added services) that bundle up together with the
product

Sales activity
By sales activity we mean the message that the company sends out
through its advertising and promotion campaigns. Sales activity also includes the
way in which the company monitors its sales intermediaries and the attitude
that it projects towards its customers.

After Sales Service

After sales service forms a very important part in customer satisfaction towards

61
the company. The company has to be very efficient in complaint handling, should
seek a time-to-time feedback on its services from its customers and act
promptly if there are any flaws. The company should also inform the customer
about new offers and schemes as and when they come into existence.

Culture
Culture forms a significant part of customer satisfaction. If the
customer can relate to a particular culture projected by the company, then his level
of satisfaction would be far higher than if the company projects a hostile environment
to the customer’s perception. Basically company culture comprises of all intrinsic
values and beliefs as well as tangible and intangible symbols that it uses to instill
these values into employee behavior at all times.

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 Service Encounter
The interaction between the customer and service provider in the airline
industry means that the employee often represents the company to the airline
travelers (customers). Especially in the airline industry the service encounter
plays a significant role because here the customer comes in direct contact with
the employees of the airline company and spends a lot of time in the service factory
(the aircraft). Hence the issue of staff presentation is a major tangible factor
in the airline industry. This in turn influences the satisfaction level of the
customer.

The airline company’s organizational structure and culture dictates the extent to
which responsibility for staff recruitment, training and motivation is shared b e t w e e n
m a r k e t i n g op er atio n s an d human r e s o u r c e s . For service marketers in this
industry, the core of service element is the interaction between those
providing services and the customer is known as service encounter.

The airline sector is considered under the high contact services as the customer is in
continuous direct contact with the companies personnel.

Moments Of Truth
A moment of truth exists when a customer comes into contact with the
organization. At every point of contact, he experiences the service and makes an
evaluation about it being good or bad. That is the moment, which creates
satisfaction, is dissatisfaction. That is a moment when a problem may occur. If a
problem doesn’t occur and the problem passes off as expected, there is no dissatisfaction.
That is also the moment when the experience could be very different than
from what was expected, resulting in a perception of intense delight and the
expression of ‘wow’. That is the defining moment of reality.

Jan Carlzon, president of Scandinavian Airlines, is credited with originating the

concept of moments of truth. Carlzon took over as president when the airline
had lost 30 million dollars in the two previous years. In his single- minded focus
for becoming the best airline of the frequent business traveler in Europe, he
determined that the first 15-second encounter between a passenger (Customer) and
his front-line people (employees) set the tone or image of the entire company in the
mind of that customer. Thus, each encounter with a customer is a moment of truth.

Carlzon carefully reviewed every step of the customer contact process, and
identified 5 critical times when the airline interacted with the customer. He
called these 5 points of contact "the Moments of Truth," and they work for any
business.

For airlines, they are:

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 Making a reservation

 Getting tickets

 Boarding

 Flying

 Retrieving baggage

Critical Incidents
Critical incidents are specific encounters between customers and service
employees that are especially satisfying or dissatisfying for one or both parties.
In the airline industry critical incidents are very important as they help the
company evaluate and measure satisfaction level of the customers. The
critical incident technique is a methodology for collecting and categorizing such
incidents in service encounters.

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 PEST Analysis: The Indian Airline
Industry
A PEST analysis is an analysis of the external macro-environment that affects all
firms. P.E.S.T. is an acronym for the Political, Economic, Social, and Technological
factors of the external macro-environment. Such external factors usually are beyond
the firm's control and sometimes present themselves as threats. For this reason, some
say that "pest" is an appropriate term for these factors. Let us look at the PEST
analysis of the Indian aviation sector:

Political Factors
In India, one can never over-look the political factors which influence each and
every industry existing in the country. Like it or not, the political interference has to be
present everywhere. Given below are a few of the political factors with respect to the
airline industry:

 The airline industry is very susceptible to changes in the political environment as

it has a great bearing on the travel habits of its customers. An unstable political
environment causes uncertainty in the minds of the air travelers, regarding
traveling to a particular country.

 Overall India’s recent political environment has been largely unstable due to
international events & continued tension with Pakistan.

 The recent Gujarat riots & the government’s inability to control the situation
have also led to an increase in the instability of the political arena.

 The most significant political event however has been September 11. The events
occurring on September had special significance for the airline industry since
airplanes were involved. The immediate results were a huge drop in air traffic
due to safety & security concerns of the people.

 International airlines are greatly affected by trade relations that their country
has with others. Unless governments of the two countries trade with each other,
there could be restrictions of flying into particular area leading to a loss of
potential air traffic (e.g. Pakistan & India)

 Another aspect is that in countries with high corruption levels like India, bribes
have to be paid for every permit & license required. Therefore constant liasoning
with the minister & other government official is necessary.

The state owned airlines suffer the maximum from this problem. These airlines have
to make several special considerations with respect to selection of routes, free seats to
ministers, etc which a privately owned airline need not do. The state owned airlines
also suffers from archaic laws applying only to them such as the retirement age of the

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pursers & hostesses, the labour regulations which make the management less flexible
in taking decision due to the presence of a strong union, & the heavy control
&interference of the government. This affects the quality of the service delivery &
therefore these airlines shave to think of innovative service marketing ideas to
circumvent their problems & compete with the private operators.

Economic Factors
Business cycles have a wide reaching impact on the airline industry. During
recession, airline is considered a luxury & therefore spending on air travel is cut which
leads to reduce prices. During prosperity phase people indulge themselves in travel &
prices increase.

After the September 11 incidents, the world economy plunged into global recession
due to the depressed sentiment of consumers. In India, even a company like Citibank
was forced to cut costs to increase profits for which even the top level managers were
given first class railway tickets instead of plane tickets.

The loss of income for airlines led to higher operational costs not only due to low
demand but also due to higher insurance costs, which increased after the WTC
bombing. This prompted the industry to lay off employees, which further fuelled the
recession as spending decreased due to the rise in unemployment.

Even the SARS outbreak in the Far East was a major cause for slump in the airline
industry. Even the Indian carriers like Air India was deeply affected as many flights
were cancelled due to internal (employee relations) as well as external problems,
which has been discussed later.

Social Factors
The changing travel habits of people have very wide implications for the airline
industry. In a country like India, there are people from varied income groups. The
airlines have to recognize these individuals and should serve them accordingly. Air
India needs to focus on their clientele which are mostly low income clients & their
habits in order to keep them satisfied. The destination, kind of food etc all has to be
chosen carefully in accordance with the tastes of their major clientele.

Especially, since India is a land of extremes there are people from various religions
and castes and every individual traveling by the airline would expect customization to
the greatest possible extent. For e.g. A Jain would be satisfied with the service only if
he is served Jain food and it should be kept in mind that the customers next to him are
also Jain or at least vegetarian.

Another good example would be the case of South West Airlines which occupies a
solid position in the minds of the US air travelers as a reliable and convenient, fun, low
fare, and no frills airline. The major element of its success was the augmented
marketing mix which it used very effectively. What South West did was it made the
environment inside the plane very consumer friendly. The crew neither has any

66
uniform nor does it serve any lavish foods, which indirectly reduces the costs and
makes the consumers feel comfortable.

Technological Factors
The increasing use of the Internet has provided many opportunities to airlines. For
e.g. Air Sahara has introduced a service through the internet, wherein the unoccupied
seats are auctioned one week prior to the departure.

Air India also provides many internet based services to its customer such as online
ticket booking, updated flight information & handling of customer complaints.

USTDA (US trade & development association) is funding a feasibility study and
workshops for the Airports Authority of India as part of a long-term effort to promote
Indian aviation infrastructure. The Authority is developing modern communication,
navigation, surveillance, and air traffic management systems for India's aviation sector
that will help the country meet the expected growth and demand for air passenger and
cargo service over the next decade.

A proposal for restructuring the existing airports at Delhi, Mumbai, Chennai and
Kolkata through long-term lease to make them world class is under consideration. This
will help in attracting investments in improving the infrastructure and services at these
airports. Setting up of new international airports at Bangalore, Hyderabad and Goa
with private sector participation is also envisaged.

A good example of the impact of technology would be that of AAI, wherein with the
help of technology it has converted its obsolete and unused hangars into profit
centers. AAI is now leasing these hangars to international airlines and is earning huge
profits out of it. AAI has also tried to utilize space that was previously wasted installing
a lamination machine to laminate the luggage of travelers. This activity earns AAI a lot
of revenue.

These technological changes in the environment have an impact on Air India as

well. Better airport infrastructure, means better handling of airplanes, which can help
reduce maintenance cost. It also facilitates more flights to such destinations.

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 Zone Of Tolerance
The nature of services makes consistent delivery difficult across
employees of the same company and even by the same employee from one day to another.
The extent to which customers are willing to accept this variation is called the
“zo ne o f tolerance”. It can in cre a se or decrea se for individual customers
depending on factors such as competition, price or service attributes.

In the airline in du str y , the cu stom er e xp e cts a m i n i m u m le v e l of service

below which he is dissatisfied with the service provided by the airline company. This
includes easy availability of tickets, quick information about rescheduling of fights or
any other immediate changes made, clean aircrafts, hygienic food, safe keeping of
baggage and adequate safety measures (oxygen masks, parachutes) in case of an
emergency.
Many a t i m e s a c u s t o m e r de sires a p a r t i c u l a r le ve l of service f o r complete
satisfaction especially in those cases where he/she pays a high premium fo r it .

This i n c lu d e s on t i m e se r v ice , c u s t o m i z e d f oo d s e r v i c e , additional

supplementary tangibles such as teddy bears for children, shaving kits for men etc.,
on-board auction (conducted by Air Sahara) to keep the customer interested, transport
service from the airport to the final destination of the customer etc.

This gap between the desired and the minimum level of service is known as ‘the
zone of tolerance’. When a customer pays a high premium i.e. first class passenger,
he definitely expects the best service possible and in such a case the zone of
tolerance flows from top to bottom. In this case the zone of tolerance will be at a
higher par than that of an economic class traveler.

If the service delivered is below the minimum level of expectation then the
customer will be dissatisfied and he is likely to move to other air carriers for his
traveling needs and may even spread a bad word of mouth. On the other h a nd if t h e
d e l i v e r e d se r vice su rp asse s the zone of to le r a n ce , th e customer will be
delighted and will praise the company for the same.

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 Service Recovery
When the company fails to stand for its promises made to the customer on the
basis they build expectation, it’s to be said that there is service failure. When th e
se rvice f ailu r e o ccur s, there ca n b e a g a i n s e v e r e r a m i f i c a t i o n . Customer is
considered to be the bread and butter, hence retaining them is the biggest challenge,
and however service failure acts as an obstacle to it. In such failures,

 The customer wants what they were promised.

 Customer wants personal attention

 Customer wants a decent apology

 Customers want that they should not be made to feel that they are the
cause of the problem. (Though in many cases they are responsible for
nuisance)

There are again five steps involved in order to deal with service failure. They are
mentioned as below:

1st step: acknowledgement and apology for the fact.

2nd step: listening to the customers.

3rd step: avoid defending the company and offer a rational explanation.

4the step: offer some extra benefits

5the step: have a proper follow up and make sure no mistakes this time, so that
he can easily forget about the service failure and is retained.

A customer expects 3 shorts of fairness in case of service recovery. They are mentioned
as below.

 Interaction fairness: - when there is service failure, first the company is

supposed to acknowledge the customer. Due to this the customer might turn irate, but he
still expects fairness and courtesy in the language and tone used by the addresser.

 Procedure fairness: - to know in detail about the incidence of service failure or

to avail the compensation. There should be simplicity in procedure, which
is involved. Service failure and complexity in procedure both together might result in
a disaster as far as customer is concern.

 Outcome fairness: - now when the company realizes that there is service
failure they should end up compensating, arranging for some alternative mode of
transporting or complies with the customer condition. The outcome should be taken
by considering the customer, his needs and the company’s policy.

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 Complaint Handling
Handling complaints is a big challenge for every company today. Before
understanding how to handle, let us see what are the factors, which can result in customer’s
complaints

The Fish-Bone diagram for the Airline Industry

The best airlines cannot have 100% security as far as complaints are concerned. Whatever
the airlines do, the customer who feels that they are not treated properly are going to complain.
In dealing such situation, it is important to know how to diffuse them and
turn them into positive experience for all involved. People complain because
they have received service below tolerance zone. In airlines generally complaints are regarding
weight penalties, no attention from the front office, no guidance by the crew
member on the flight, flight delay, bad quality of food and so on. If these complaints are
not resolved to the satisfaction of the customer there can be serious ramifications. In particularly,
the customer is likely to convey about the bad service to other people. But if the things are
done well, there also positive ramifications. It has been observed that those customers who
have had problems and proper solution are provided, are the most loyal customers
of the company. Employees play a vital role in handling these complaints.

There are nine steps involved in handling complaints

effectively. They are mentioned below.
 The frontline employee handling complaints should stay calm under any
circumstances.
 Let the customer get the story off their chest- do not interrupt, this will only
cause irritation. In this case listening skills comes into picture.
 Avoid admitting any liability at this stage. The officer just need to show
concern like, “I’m sorry for the inconvenience, let me see what I can do”. Give
attention to the customer, make him feel important.
 Get facts by using question and try to find out the real and whole story
behind it.
 After listening and collecting data, just identify appropriate action considering
company’s policy and customer’s expectation.
 Take action if you have authority or involve manager or concerned person.
 If corrective action cannot be taken immediately, tell the customer. It’s better
to give bad news rather giving false news.
 Record the a c t i o n t o b e taken and inform a n y o n e else i n the
organization involved.
 Look into the matter, provide a proper follow-up.

These nine approaches if followed effectively, complaints can be handled properly

and possibly a customer can be retained.

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 Security & Safety
Measures
Undertaken by Airlines
Security regulations are framed by the Bureau of Civil Aviation Security and are
required to be implemented by all operators. The manpower for the execution of these
regulations is drawn from the State Police.

While the passengers may face some inconvenience during security checks, it is in
their best interest.

Some of the security procedures are listed below:

 The passenger’s ticket is checked at the time of entering the terminal building.

 At major airports, the checked baggage is passed through X-ray machines and a
'security checked' sticker affixed before entering the check-in area.

 Passengers are checked through personal frisking, and doorframe metal

detectors and hand held metal detectors.

 The cabin baggage is either checked through X-ray machines or physically

examined.

 Security personnel put a security stamp on boarding passes and cabin baggage
labels.

 In case of a 'Red-Alert', a secondary security check is also carried out near the
stepladder before embarkation.
 Checked baggage has to be personally identified by the passengers before it is
loaded on the aircraft. Wherever the boarding is through aerobridges, passenger
and baggage reconciliation is done through an internal matching system instead
of physical baggage identification.

 Ten percent of the checked baggage/cabin baggage is usually physically checked

at random.

 If the passengers wish to come back from the security hold area after the
completion of security check, they have to get a fresh boarding pass in place of
the old boarding pass from check-in counters. They also have to undergo the
security check again. This facility is available only in extreme emergency.

 Passengers in transit have to remain on board during the ground halt of the
aircraft.

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To ensure complete safety of the passengers, the service provider requests the
passengers to keep the following in mind:

 The passengers should not accept any packet or baggage from any person.

 The passengers should not leave their baggage unattended with the airport
area. It will be considered as a suspicious object and may be removed by the
airport security staff.

 If the passengers are carrying firearms and cartridges, they should declare
them. Concealment is an offence under Aircraft Act and Rules.

 Battery cells/dry cells carried in the cabin baggage or in any electrical or

electronic item are liable to be removed and the airline may not be in a position
to deliver the same at destination. They should be carried in the checked
baggage.

 Articles, which are not permitted in the cabin due to security reasons, will be
taken charge of by security personnel and will be loaded in the baggage hold
after applying a 'Limited Release Baggage Label'.

As an added security measure, certain goods are not allowed to be carried in the
baggage. These goods are listed under the Dangerous Goods Regulations and they are
as follows:

 Explosives, ammunition and fireworks

 Compressed gases

 Flammable solids and liquids

 Oxidizing substances, organic peroxides

 Toxic, poisonous and infectious substances

 Radioactive material

 Corrosives

 Other miscellaneous articles such as,

 Mercury,

 Magnetized materials,

 Offensive or irritating materials,

 Briefcase, attaché case with installed alarm device or incorporative lithium

batteries and/or pyrotechnic material.

In addition to the above dangerous goods, carrying knives, scissors, sharp edged
implements, firearms, ammunition, toy replicas are prohibited in the passenger cabin

Safety inside the aircraft

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 Cabin Baggage – Experience has shown that excess cabin baggage is a safety
hazard and can increase accidents in-flight. It can impede quick and safe
evacuation in an emergency. Overloading the overhead bins can cause luggage
to fall out, and increase the possibility of injury. The comfort of passengers is
also compromised when the cabin is cluttered with unstowed cabin baggage. To
ensure the passengers' safety and comfort, all passengers are encouraged to
observe the Indian Government's regulations permitting ONE piece of cabin
baggage per adult passenger.

 Use of Mobile Phones – Mobile phones are important business tools for
passengers. However, it is important for them to know that when used in the
aircraft - even when the aircraft is on the ground - a mobile phone can interfere
with the instrumentation in the cockpit, and adversely affect the safety of the
flight. Even if the passengers are not actively using their mobile phone, it is still
making a low level transmission when the power is on, which impacts the
sophisticated systems on board. Government regulations require passengers to
keep their mobile phone in the 'power off' mode while they are on the aircraft.
They should switch it on only after they have disembarked from the aircraft.

 Smoking – As a separate precautionary measure, all toilets are fitted with

smoke detectors. The Government of India prohibits smoking on all domestic
flights.

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 Case Study
The 3 morning flights scheduled to leave Mumbai for Delhi at 6.30, 8.00 & 8.45
a.m. were delayed due to fog in Delhi. The first 2 were rescheduled over 9.15 a.m. in
the hope that by then the weather would improve. At 8.30 the passengers were asked
to proceed for security check & await departure call. An announcement at 8.50 a.m.
requested the passengers on the second flight who were waiting in the lounge on the
ground level to board the aircraft. Those who were booked for the first flight, waiting
on the first floor lounge heard this announcement. Anticipating a similar announcement
for them, they moved gradually to the gate. The movement of the staff through the
aerobridge & to the telephones gave the impression that something was wrong. But
the gate did not open. At about 9.15 a.m. one of the staff was asked the reasons for
delay. He replied rudely that they would be boarding within five minutes. The
passengers were getting restive. When the same answer was given by another
assistant, the passengers got infuriated. They also felt that the staff was not doing
their duty & that the delay was avoidable. Within another 5 minutes they were asked
to board the aircraft. When all were seated, the pilot announced that that the weather
in Delhi was still bad, & that the next report was expected 30 minutes after &
breakfast would be served on board. From he airhostess, the passengers came to know
that the passengers of the second flight were also boarding. This incident could have
been communicated periodically. The announcement about the boarding the second
flight was misleading. The traffic assistants perhaps themselves did not know the real
situation when they had said 5 minutes. This situation further aggravated by further
delay due to late arrival of a politician who was also traveling to Delhi. The parting
greetings were given to the passengers “Hope you enjoyed the Flight” just before
landing at Delhi. As if this was not enough, the passengers had to wait for 1 more hour
for luggage clearance.

 Which were the critical interactions & which were not?

 Did all the airline staff & the passengers exhibit technical & interactive
skills?

 What were the reasons for delay at both the airports?

 What steps could have been taken to rectify the situation as a service
recovery strategy?

 What kind of an image did the partying remarks convey to the

passenger? If you were the passenger, how would you perceive the
quality of services rendered by the airline?

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