an indepth market analysis of international aviation industry

8/9/2019 An Indepth Market Analysis of International Aviation Industry

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AN INDEPTH MARKETAN INDEPTH MARKET

ANALYSIS OFANALYSIS OFINTERNATIONAL AVIATIONINTERNATIONAL AVIATION

INDUSTRYINDUSTRY

SINGAPORE AIRLINES, CATHAY PACIFICSINGAPORE AIRLINES, CATHAY PACIFIC

AND AIR INDIAAND AIR INDIA


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AIR INDIA

Air India - An Overview

One summer day in 1929, later Mr. Nevill Vincent, a

former RAF pilot came to India from Britain on a

brainstorming tour during which he surveyed a number

of possible air routes. He was of immense potential for

aviation in India. It came to pass that he met late Mr.

J.R.D. Tata a young Indian who was the first to get his A-

license in India and that of in the shortest number of

hours.

Mr. Vincent worked out a scheme, secured Mr. Tata's

approval and together they showed it to Mr. Peterson, a

Director of Tatas and Mr. J.R.D Tata's mentor. Sir Dorab

Tata, then Chairman of Tata Sons, pleasantly surprised

all by giving the scheme his okay. So they went ahead

and drew plans for the operation of an air service form

Karachi to Mumbai with one stop at Ahmedabad.


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All that they asked from the Government was a

guarantee for only a year for the sum of Rs. 100000.

This, however, was turned down. The Tata Vincent

combination was naturally disappointed but no

dismayed. A second scheme was prepared. This time

the guarantee asked for was only Rs. 50000 for the first

year, Rs. 25000 for the second year and after that no

guarantee at all. This scheme too was not accepted.

The team tried a third time. This time they offered to

donate an air service to the Government of India with no

strings attached. The Government agreed and thus was

born Tata Airlines which later became Air-India.

On October 15, 1932, a light single-engined Puss Moth

took off from Karachi on its flight to Mumbai (then

known as Bombay) via Ahamedabad. At the controls of

the tiny plane was Mr. Tata, operating the firs schedule

air service in the country. He landed with his precious

load of mail on a grass strip at Juhu. Life was simple

then. There were no runways, no radio facilities in the

aircraft or on the ground. There were no pretty


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hostesses, no aerodrome officers and no airport

buildings. At Mumbai, Mr. Vincent, took over from Mr.

Tata and few the Push Moth to Chennai (the known as

Madras) via Bellary.

In 1933 the first full year of its operations, Tata Airlines

flew 160,000 miles carried 155 passengers and 10.71

tonnes of mail. In the next few years, Tata Airlines

continued to rely for its revenue on the mail contract

with the Government of India for carriage of surcharged

mail, including a considerable quantity of overseas mail

brought to Karachi by the Imperial Airways for

destinations in India. On the Karachi-Chennai route,

frequency was stepped up to twice a week in 1934 and

a year later a weekly service was started between

Mumbai and Trivandrum with stops at Goa and

Cannanore. In 1937, a bi-weekly service was started

between Mumbai and Trivandrum with stops at Goa and

Cannanore and another between Mumbai-Delhi via

Indore, Bhopal and Gwalior. New planes began to

appear in the fleet. In addition to the original Puss Moth


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and Leopard Moth, there were Wacos, DH-86s and

Stinsons Trimotors.

The introduction of the Empire Airmail Scheme in

February 1938 brought the opportunity for further

expansion and renovation of fleet. Tata Airlines received

a ten-year contract under the Scheme with guaranteed

minimum payment for the

The Airline with a heart: With Indians travelling to

newer shores every year. The national carrier has done

its bit there too. In 1996, Air India airlifted 1,11,711

stranded Indians from Amman to Mumbai - by operation

488 flights (in association with Indian airlines) an

operation which lasted 59 days.

This feat has given air India a place in the Guiness Book

of World Records.

Extending the Net work : Further, the airline has

even tied up with various international carriers to give

its passengers the convenience of travelling to just

about anywhere in the world. These alliances include the


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Scandinavian airlines system for direct links between

Copenhagen and New Delhi, blocked seat arrangement

with United Airlines for Washington on its round - the

world services through Delhi. Plus there are agreements

with Kuwait airways for flights between Kuwait and

Thiruvananthapuram, with Air Mauritius for operations

between Mauritius and Mumbai and Austrian airlines for

flights between Vienna and Delhi. Air India has also

entered into a major global with Air France which

enables the airline to code share on Air France services

beyond Paris inter alia Amsterdam, Frankfurt and Zurich.

The logo- The Centaur: A corporate identity is the

visual image a company projects to its various public. It

helps in achieving a cohesive and consistent image of

the company worldwide.

The reputation of the company is symbolised to a large

extent by us name and visual imagery. It gives its

customers a clear idea of what they can expect in terms

of product service price. Suppliers, competitors,


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journalists, members of government etc. are also

powerfully influenced by it. The power of the symbol to

influence people can never be under estimated for

symbols have power to play upon the emotions,

memories, sensitiveness. At Air India, they believe that

this visual image must be simple , lucid, and most

important, it most be an honest representation of ideas.

After the formation of Air India international in 1948, the

management immediately began casting about for a

symbol that would denote speed and also have universal

appeal therefore the Centaur was selected as Air -

Indias logo.

As of now, Air India is not in a good financial condition

therefore at present their mission states nothing except

that they want to be privatised and be a disinvested

company.

Their target audience as of now are mainly the

government officials and the 1st and business class

travellers.


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DISINVESTMENT OF AIR INDIA

Like every other Indian industry. AIR INDIA too is

suffering from losses audit the new economic policy

whole it could have played a much constructive role. It

is quite a story rate for the institution, which constantly

made in fit till 1993-94 has gone into marketing losses

for a prolonged period of last 7 years. That promot the

govt. of India to decontrol in its management. Though

the current government's policy as such "government is

not meant to business". In that way it is to be done

sooner or later.

But we have to look into the core reason behind this.

Like other seek India industry it has a whooping staff

strength. 76% of the gross income goes into paying its

staffs. While the foreign player like Cathay Pacific pays

only 14% to its employees as salary package. A few

statistics below will show the sagging story.

It has 78 offices outside India which are operated by

foreign nationals.


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Air-India actually flies to 32 out of those 78

destinations.

It has a total staff complement of 17.690 to fly and

manage only 24 aircraft. The help of almost 700

staffs. In case of other market player the number is

something around 200-250 staffs.

The only good news in the last seven years in that Air-

India has made a net profit for the 1st half of this

financial year. Through it has to go and disinvestment

will be made. Government has already asked for bidders

to take it. A few prominent names are roaming around

as bidder SIA (Singapore International Airlines). Tata,

Reliance group were interested to buy it. But the sorry

take of Indian Polities has made the turmoil again and

for the time being the disvinestment process holds up.

But the government is determined to complete the

process in this financial year and probably winter

session of parliament will enable it is doing so.

MARKETING STRATEGIES - AIR- INDIA


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Captive traffic : Travel by government officials,

PSUS and just about anybody funded by the

government e.g. universities is compulsory by Air

India . This is the basic income of Air India.

Buy Key Decision Makers : Air India provides a

jumbo 747 or Airbus A310 to the President, Prime

Minister and VPs and their entourage, specially

outfitted as a flying hotel for their overseas trips. An

identical standby aircraft is also provided. In the whole

planet, only the President of the US gets similar

luxury. This lavish perk is a major reason why Air -

India gets away with a lot of subsidies.

Officials lower in the hierarchy: Like ministers,

secretaries etc. get upgradations in class of travel and

various facilities like car and hotel stay. Full use is

made of the Centaur hotels which belong to Air -India.

Buy Opinion Makers : Similar perks are extended to

media persons. Many of them are given passes for


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domestic travel. Air Indias domestic network covers

all the major cities.

Frequent Flyer Programme : Air India and Indian

Airlines have a joint frequent flyer programme.

Recently, Air France has also been added. Essentially,

travel on domestic routes is worth a 5% discount and

international travel is worth 10%.


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Heavy Discounts: Since there are in built

disincentives to travel by Air India, they resort to

heavy discounts to keep the show going e.g. take a

free companion in first and business class. This is an

effective discount of 50% but given to the Traveller,

not the organization that pays for the travel. Similar

discounts are given in economy class.

The 4Ps are as follows:


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PRODUCT DEVELOPMENT

The Maharaja club and the executive club launched

during February 1993.

Frequent flyer programme was introduced, under

which frequent travellers on Air India and Indian

airlines can accumulate mileage points as per pre-

determined. The accrued mileage points can be

converted into free awards tickets.

The Maharaja Club and the executive club was

extended. Members were given certain privileges

including use of lounges, priority check-in additional

baggage allowance, upgradation on space available

basis, provision of Limousine car etc.

Treats on Me: This unique 24 hours on the

House scheme has been introduced in collaboration

with Centaur group of hotels for overseas passengers

travelling on Air India to India.


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Premium offer for premium passengers: To

strengthen carriage of high yield, passengers who

travelled on Air India in First /Executive class were

offered free transportation an Indian Air Lines

specified sectors in economy class.

In addition, they were also offered 24 hours

complementary stay at ITDC hotels, including

breakfast and special discounts on room rates for

extension to stay beyond 24 hours.

In 1998 - The company operated both passenger and

freighter services to 42 destinations. The following

new services were.

- 2 weekly service on Madras/Dhahran/ Madras sector.

- 1 weekly service on Madras/ Kuwait/ London/Kuwait/

Madras sector.

- 2 weekly service in Bombay /Trivandrum/ Singapore.


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In 1999 - The company had commenced service to

Manchester and Amsterdam. The company operates

passengers and freighter services to 44 destinations.

Direct services commenced between Bangalore/

Dubai/ Muscat and Madras/Hyderabad/Jeddah.

The new destinations introduced during the year were

Zurich ad Chicago.

2000 - At present the company operates to a total of

48 destinations.

1998 - More direct and non-step services, Multi and

Telecheck - in, Interactive computerised flight

information system.

Code share arrangements with United Airlines and

Scandinavian airlines systems.

Air India has achieved an all time high system wide on

time performance. In February 1998, by operating

75% flights on schedule and witness 75 minutes of the

scheduled departure time on a relaxed scale of 30


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minutes beyond scheduled departure time , 86% flight

left on time.

Air India also introduced twice weekly services from

India to Seoul - land of the morning calm.

Air India introduced a new flight to Singapore on

Thursday in addition to the 3 weekly flights which

operate every Wednesday , Friday, Sunday.


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Route network - as on July 2000.

UK - London, Manchester

Europe - Paris, Frankfurt, Rome, Moscow.

Asia Pacific - Tokyo, Osaka, Bangkok, Hong Kong,

Kualalaumpur, Singapore, Jakarta.

Gulf middle East - Doha , Abudhabi, Bahrain , Jeddah

Kuwait, Muscat, Riyadh, Dhahran and Dubai.

USA and Canada - New York Chicago.

Africa - Nairobi and Dar-es-Salaam

Air India also operates code share services to Geneva,

Zurich, Amsterdam, Copenhagen and Vienna in Europe,

Washington in the USA, Mauritius and Lagos in Africa

and services from Kozhikode in India.

Services on ground and board

In order to enhance passenger comfort on the ground,

Airport Lounges for the 1st and executive class


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passengers at selected airports are being upgraded with

new interior decor and other standard facilities.

New airport lounges were commissioned at Hong Kong

and London. Furnished in elegant contemporary Indian

style these lounges have features like business centre

with for and telephone services and upgradation of

lounges in departure/transit areas at Bombay airport

has commenced.

Facilities on board are being improved and a

programme for upgradation of the executive calls on

the A310 aircraft has commenced it is proposed to fit

new ergonomically designed seats with individual seat

TV Monitor with six channels of video programming.

Improvements made for providing wider seats on

A310 Executive Class.

South Indian food, language and music on board Gulf

flights.

Trolley service on board.


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Free beverages in economy class.

To give its passenger the very best the international

skies can offer, Air India has constantly upgrades its

inflates services - such as-

- The skypphone

- Air-shows

- State -of-the art inflight entertainment system.

- In - arm personal television monitors.

- Reconfigured interior for more space.

- Rollers massagers are now being provided on board

Air - India flight for the comfort of the 1st and executive

class passengers.


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PRICING STRATEGIES/PROMOTIONAL

STRATEGIES

As already known air travel is a fluctuating industry. The

prices are not stable, hence Air India follows the market

forces of supply and demand to fix it prices. Since the

past 4 years Air-India in suffering a large number of

losses but they still believe that they can grow and

survive and maintain its position as a national carrier in

the industry. For the purpose, Air India is doing the

following.

Air India announced a Companion Free scheme from

India to Japan. On purchasing a 1st class or executive

calls international ticket a passenger is entitled to a free

to all destinations concept New York , London, Chicago-

15% charge.

Air India offered special domestic fares for the holidays.

The concession was available to Indian nationals

employed with government,. PSUs and nationalised

Banks


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Frequent flyer programme - Flying returns - jointly

by Air India - and Indian airlines.

Fly on business - fly free for pleasure. The business trips

abroad as within India . Air India gives the customers

many opportunities to earn mileage points, which can

be redeemed for free tickets on domestics and

international sectors. Adding up the points. The

customer can fly with his whole family free on a holiday.

The free tickets can be transferred to any person of

customers choice - friend family or business partners.

French Connection - with the air India - Indian airlines -

Air France frequent flyer programme tie up the

customer can earn and redeem mileage points for

his/her travel on Air France sectors too.

(AOMPs) Add on mileage points : Air India has a tie

up with welcome group hotels. Through the tie up

customers earns AOMPs each time he/she stay or dine

at participating welcome group hotels.


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As an American express card members customer earn

AOMPs. With the AOMPs - customer earn free takes

faster.

The Maharaja Club: It was launched and members

were giving personal and special services through out

the network.

On the occasion of the 50th anniversary of Indias

independence. Air India decided to honour - Paramvir

Chakra and Mahavir Chakra awardings, Freedom

fighters, Children awarded for Bravery - to economy

class free tickets for travel on Air India sectors.

Passengers in transit as Singapore with a minimum of 5

hours car avail of the free Singapore tours. There are 2

hours of 2 hours duration each. Tour A - 15 minutes stop

at a temple and 15 minutes stop at a housing estate.

Tour B - 20 minutes Bump Boat ride subject to weather.

Passengers traveling to Singapore can also take

advantage of the Singapore shopping and food festival.


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Advertising - There is separate ad agency named

Publicity in Bombay handling Air Indias account.

It uses all kinds of media, print and electronic, mailers to

promote its product.

There is a separate public relation agency both in

Bombay and in Delhi named public relation cell and

tourism for the purpose of maintaining good relation

with its customers.


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PLACE

Accessibility of tickets

Almost all travell agents provide the customers with as

Air India ticket.

Air India and Indian airlines have jointly introduced the

computerised reservation system for travel agents

which enables customers to make bookings on airlines,.

hotels etc. as well as offer travell related facilities to the

agent of the customers. This service enhances

passengers convenience. Air India on the internet

consists of actual on time information relation to

reservation.


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AIR INDIA PERFORMANCE

Like other international airlines operating out of India.

Air India had made to huge rupee - profits, in the after -

math of devaluation. Such projects had enabled it to

claim that it was successful and well run airline.

But the truth is considerably more complex. According

to the civil aviation ministry - concentration on the short

term benefits had kept the airline profitable but with a

shrinking market shares. The figures tell their own story.

in 1981 - Air India controlled a capacity of 29% of all

airline seats out of India - a market share of 33%. By

1994- capacity reduced to 26% - But air Indias market

shared shrunk to a mere 22%.

One of air Indias problem is that not only does it have

too many bosses but that they dont stay for very long.

It was not only that passengers preferred to travel by

other airlines it was also that air India chose to operate

to fewer places.


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Air Indias Declining network - places where it has

stopped flying.

Damaacua, Dusseldorf, Karachi, Brussels, Hague, Zurich,

Entebbe, Nadl, Belrut, Melbourne, Accra, Addis Ababa,

Birmingham, Lusaka, Aden, Montreal, Cairo, Mauritius,

Perth, Sanas, Harare, Lagos, Seychelles, Amsterdam,

Baghdad, Sydney, Tashkent, Teheran,. Dhaka.

Air India had what was probably the oldest , smallest

fleet in the world of any airline owned by a major

country 26 aircrafts -average age of 17 years.

Rates of growth of Indias tourism was twice the rate

of growth of air Indias capacity. The reference to

bilateral-airlines can only fly between countries with

the approval of their respective government.

Therefore India only allows foreign airlines to fly into

our airports if Air India is allowed to fly to theirs.

The travel trade claims that air India restricts bilateral

because of its own lack of ambition - air India only


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wart to restrict capacity so that they can show a high

load factor.

It is not as if the signs were not there :-

Depleting funds, Falling traffic, Ageing fleet, Sagging

image - with each passing day it seem Air India is flying

closer towards bankruptcy. It needs to get privatised -

disinvestment appears the only option and that is their

mission as for now.

One of the reason of its down fall is the excess staff - it

has 3500 additional employees.

Another major factor - Wishy-washy manner of deciding

on Routes and schedules . Air India offer begins a

service on lye to withdraw it after some time. e.g.

Amsterdam was added to its schedule last year but was

terminated without notice soon after.

Of all the routes Air India flights - only India - Gulf, India

- US, India - Japan, are profitable. Flights to UK,.

Germany, France, East Africa and Canada air the regular

loser makers are reason for this has been Air Indias


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inability to attract passengers in the high yield business

class.

In fact the cutting prices and frequency flyer programme

have only compounded Air Indias losses. When Air India

slashed its fair prices from 28,000 to 18, 000 Mumbai -

London - Mumbai last year it sparked a discount war

among the international airlines. The end result -

Passengers deserted the air line in favour of Singapore

Airlines which came up with the more innovative offer.

In addition - most of Air Indias destination are not

serviced due to the lack of aircraft. Air India simply does

not have the fleet capacity nor all they functionally up to

the mark.

Air India is the only airline in which the 1st and business

class gets full before the economy class - still Air India is

suffering losses. But they still believe that they can grow

and survive by having products stability, product

upgradations, maintaining Industrial peace, high level

on time performance, upward revision of fares, route


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4.4 SWOT ANALYSIS

SINGAPORE AIRLINES

Strengths

Major network

Vast Variety of services provided

First rank in the world international airlines-Passenger

carried.

A dedicated workforce/employees ownership in the

company.

Promotional strategies frequent flier program

airlines.

Safety and security

Internet facilities for booking of tickets

Innovative

World cargo

Weaknesses

Not much of advertising done.


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Its fleet - average age is 10.2 years where as Cathay

Pacific is 6 years (Youngest fleet).

Opportunities

It has the ability to become one of the worlds largest

airlines is passenger carried.

If it becomes a littlle more cost complete it can be the

best airlines.

To come up with more offers schemes discounts

motivate the customers to fly frequently.

Threats

The largest threat to SIA is Cathay Pacific there is

absolutely a neck to neck competition, between the 2

airlines.

Economy plays a Vital role in the growth of the air

travel industry. This point is beyond the centre of the

airline company but islet it is sugared as a threat to its

success.


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Last but not the least consumer preferences. It

once the consumer preferences is charged

disfavoring Singapore Airlines it is not easily to

reaching thus her preference.

Following terrorist attacks in US, SIA's traffic has

declined or services to the United States.


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CATHAY PACIFIC

AIR INDIA

Strength

Whatever its financial position is Air India is still

regarded as the National carrier.

Productivity linked service scheme to motivate

employees.

Promotional strategies companion free schemes.

Joint operation with Indian airlines so that clients can

earn and burn miles on each other.

Business and the 1st class gets filled up first before the

Economy class.

Weakness

Extra staff

Fewer destinations covered

Fleet size 28


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Average age of fleet over 12 years

Not included in the list of the worlds leading 10

international airlines.

Financial crises

Cash crunch no money for advertising.

Lack of publicity.

Delay and Disruption of flights.

Opportunities

Air India has the potential to grow and survive, if it

becomes a private company. It will be able to secure its

position which it had in the market at one time . Air

India market share was dropped down to 22% from

49% over the last 20 30 years and the reason for this

downfall is mainly Air Indias own fault If it corrects

the faults made, It can secure the same position it had

but at first, there is no other option left but to become a

disinvested company.


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Threats

The main threat to Air India is Indian Airlines it is taking

all Air Indias traffic to its newly introduced Gulf routes

which was Air Indias milch cow.


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4.5 COMPARATIVE ANALYSIS

The comparative analysis of the 3 international airlines

is done under the following heads.

Birth

Singapore Airlines : October 1972

Cathay Pacific : 24th September 1946

Air India : 29th July 1946

Destination

Singapore Airlines As on 31st march 2001 covers 40

countries.

Cathay Pacific As on 31st March 2001 covers 48

countries.

Air India As on 31st March 2001 - covers 48

destinations.

Fleet


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The average age of Singapore Airlines fleet is 10 years

while that of Cathay pacific is only 6 years and Air India

to the oldest. It around 17-20 years. The Cathay Pacific

fleet is the youngest out of the 3 airlines.

Target audience

The main largess audience for Singapore Airlines is

business class, and the first class, its basically the high

frequent traveller.

Cathay Pacific it is the high income group traffic

passengers i.e. government officials, Diplomats United

nations corporations MNC's etc.

And for Air India is just the government officials and the

1st and business class travellers.

Service: as for Singapore Airlines there is a whole

range of services provided to the customer from ground

to air. It includes extra ordinary services from at the air

its board from the lunge desk to the hotshower on the

board according.


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Cathay Pacific is not behind, it stands equal to

Singapore Airlines when it comes to services provided to

customers both on ground and an board. With a

difference of Indianising their product and making the

Indian passengers comfortable by having Indian

attendants serving and taking care of them and as well

as providing a wide variety of Indian meals. Air India is

not lagging behind. Its doing its best by improving their

product. They have come up by providing personnel

Television to their customer which was there in

Singapore Airlines and Cathay Pacific.

Pricing Strategies

All airlines work on the market forces of supply and

demand. During high season the cost increases and

during off session it reduces. Its prices. Their main

pricing strategy is to be high competitive. They follow a

policy of follow the other for e.g., when Air India

slashed its prices from Rs. 28,000 to Rs. 18,000 on the

Mumbai London Mumbai sector in July 1998. The end


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result Cathay Pacific came up with a more innovative

office. Price is a very sensitive issue and airline being a

very fluctuating industry it is very difficult to quite the

airlines prices to its various destination because they

keep on changing depending on the season, on the

demand, on consumer preferences and what the

competitors are offering. There are frequent changes in

prices which lasts for a very short period.

Distribution

Singapore Airlines: All flight bookings can be done by

the airlines own reservation system.

All travel agents

Through sophisticated inter time computerized

reservation system.

E-Ticketing

Internet.


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Cathay Pacific

Own reservation system

Internet

All travel agents

AIR INDIA

All travel agents

Air India and Indian airlines joint copmputrised

reservation system. In air India booking of ticket

cannot be done on the net. It just consist of actual on

time information to reservation.

Both SIA and Cathay Pacific have a modernised system

of getting the bookings done. Air India is on its way to

modernisation.

PROMOTION

All the 3 airlines is heavily into promoting their product.

They have come up with new offers. Discount offer,


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package holidays, Hotels car facilities provided etc. to

seasonal offer satisfy their customers .

All the 3 airlines have a frequent flyer programme for

giving customers, benefits from travelling through the

particular airline. It has joined with other airlines to give

maximum satisfaction to its frequent clients.

Cathay Pacific's - The Marco Polo Club is an executive

club for recognising retaining and communication its

frequent travell members. They are awarded with extra

ordinary services, enchanted travel, discounts on

tickets.

Singapore Airlines does not have a club but as a

frequent flyer programme. As a KrisFlyer Member, you'll

earn miles each time you fly with SIA. Air India has a

Maharaja club which provides its members with more

personalized and special services. Air India has come up

with the comparison free scheme.

Advertising all the 3 companies are not much into

advertising. Earlier Air India was heavily into advertising


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but now due to as financial conclusion it has stopped

advertising. We hardly see any advertisements of

Singapore Airlines, Cathay Pacific or Air India in TV or in

Newspaper magazines.

This doesnt mean that the 3 companies are not into

advertising they do but on irregular intervals.


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LIMITATIONS

The study that has been undertaken faced some

hurdles. Those were limitations towards the effective

completion of the project. Some of the problems faced

are mentioned below:

The responses of the officials were not always free

from bias because of some compulsions and busy

schedules did not help the matters.

The availability of the officials were always a cause of

concern for getting relevant information.

As regards the time factor, it was quite sufficient for

completion of the project report but not quite so when

the question of seeking interviews came

Cost factor is always a cause of limitations creeping

into the project

Had to combine pricing strategies with promotional

strategies, since the exact prices of the airlines at one


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CONCLUSION AND RECOMMENDATION

CONCLUSION

The conclusions that can be drawn from the above study

are:

The healthy competition among the airlines has set

new trends in the quality of service.

Passengers travelling in internal and airlines generally

go for the onboard and inflight services provided by

the airlines through price being a very sensitive issue

The slowdown in the economy for the past 12 months

affected traffic flows and freight traffic system wide.

Non-essential expenditure will be deferred, slowed

down or cancelled. Retrenchment cannot be ruled

out, but other cost - reducing measures will be

pursued first, before retrenchments are considered.

Staff recruitment will be frozen until there is a

improve in the worldwide economy.


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Like other seek India industry, it has a whooping staff

strength. 76% of the gross income goes into paying

its staffs. While the foreign players like Cathay Pacific

pays only 14% to its employees as salary package.

The only good news in the last seven years is that Air-

India has made a net profit for the 1st half of this

financial year. Though it has to go and disinvestment

will be made. Government had already asked for

bidders to take it. A few prominent names are

roaming around as bidder SIA (Singapore

International Airlines). Tata, Reliance group were

interested to buy it. Probably winter session of

parliament will enable it in doing so.


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RECOMMENDATION

As far as SIA and Cathay Pacific are concerned there

are certain things that I recommend.

Firstly - as both of them are amongst the 10 worlds

largest airlines - indicates that they are successful

airlines but their are few points that I think that they

should do to become the first amongst leading airlines

of the world.

Be a little more innovative in providing services on

board -let say

Video games - both adults and children find them

interesting.

A separate kid centre - where there are nursery rhymes

played, there are different types of toys etc.

A more young crew - young people are liked by almost

all generations.


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If license given - may be a casino where there are slot

mechanical, roulette etc.

A gift package for every traveler especially for children.

Little more of publicity.

Be a little more lenient on miles earned - eligible for a

free or discounted ticket

In this way creats all more motivated to travel by the

airline

For Air India the recommendation are as follows -

Air traffic of India is estimated at 9 percent increase per

annum in the coming years. Either the National carrier

would have to provide additional seat capacity to

existing and new destinations. Therefore the National

carrier should draw an action plan to tap the countrys

rightful market share by adopting perspective plan for

the next 5 years and another perspective plan up to the

year 2010 AD.


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Air India Ltd., presently has probably the oldest and

smallest fleet in the world owned by a major country, 26

aircrafts with an average age of 17 years. During the

period 1981 to 1994 Air India has discontinued its flights

to several destinations. At the same time government

has allowed Indian Airlines Ltd., to fly 25 of its aircrafts

on the short and medium haul international routes. The

international air seat capacity according to the action

plan on Tourism, 1996 (minus outbout traffic increase) is

projected to increase from 5.3 million to at least 10

million and the domestic air seat capacity is estimated

to increase from 10 million to 18 million by the year

1998-99 and this is definitely indicative on the market

demand. it is therefore necessary that the central

objective of AI Ltd., should be aimed at matching the

efficiency of private airlines in the immediate future to

become the Maharaja of Preference in the future:

As international traffic rights are determined by

bilateral agreements, the national carrier should


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utilise its traffic rights and tap the high demand

routes;

Strategy be adopted to identify appropriate aircraft for

purchase or lease in the short run;

An action plan be adopted for attracting at least ethnic

traffic by ensuring timely landing / departure of flights

and improving inflight passenger services;

A fleet expansion plan should be implemented for

meeting the demands of growing traffic and increase

the market share as India is one of the major countries

in the world.

The marketing and customer friendly strategies

adopted by the other major airlines such as Singapore,

British Airways, KLM, Royal Dutch Airlines etc., should

be studies closely to market AI as a distinct Airline.

Airlines are adopting strategic alliances of Hub and

Spoke, frequent flier programmes common ticketing


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arrangements, advertising etc. to influence the

customers.

The experience reported by passengers is of delay and

disruption of the flights besides unhelpful behaviour of

the staff which call for intensive training and public

relation orientation programmes for the staff.

Streaming of systems and procedures is required to

promote efficiency. The experience of travel agencies

in relation to reservation and response need

improvement also.

In the immediate future the pressure by international

airlines to promote additional flights to and for India

indicates the traffic potential of the market. the

emerging business opportunities between India and

Japan, South Korea, Hong Kong and Taiwan calls for

introduction of direct flights to these destinations to

save the time and inconvenience to travellers. The

traffic is also increasing to Europe an the US besides

the increase in the number of air charters from 225 in


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an indepth market analysis of international aviation industry

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