Domestic Airlines in India : Leveraging Price

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Airlines HistoryAir India

• Started by JRD Tata on 15th Oct 1932 Jet Airways

• Incorporated on 1st April 1992 as Private Company

Sahara Airlines

• Began operations on 3rd Dec 1993 with 1 aircraft

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About The Case Study PRICING WARS• IA announced 3-15% cut in fares in June 2002.• Next day JA reduced prices by Rs 635 for economy class• APEX fares scheme• Sahara’s Strategy

INDIAN AIRLINES Schemes• ‘Wings Of Freedom’• ‘Bharat Darshan’

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About The Case Study

SAHARAS Various Schemes

• Wings & Wheels scheme in March 2002.• ‘Sixer’ Offer scheme during July –August.• ‘Steal a Seat’ online bid scheme in August 2002.• Steal Buys scheme

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Monopoly

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• Up to 1990 Indian Airlines.

• IA and AI retained monopoly over Civil Aviation.

• Single service provider and many users of service.

• Service provider had low elasticity with no close substitute.

• The firm faces the market demand curve for its product.

Oligopoly

• The period after 1990, Monopoly ended

• An industry dominated by a small number of large firms

• Firms provide either identical or differentiated services

• The industry has significant barriers to entry with respect to capital and regulations 

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Factors Affecting Cost

• Labor

• Fuel Price

• Capital

• Ownership & Control

• Airline Acquisition/Leasing Cost

• Operating Costs

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Conclusion• Remarkable growth in recent years in

Indian aviation industry

• Bright future of Aviation industry in India

• Infrastructure Constraint

• Liberalise rules & regulations governing civil aviation

• Reduction in prices and lease rentals.

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Thank You !

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