Final sumission

CHAPTER-1

RESEARCH METHODOLOGY

1.1 RESEARCH OBJECTIVES

The research carried out during the project had many objectives related to the service
quality of the Indian airline industry. Some of the objectives of the research carried out
are listed below:

• To study the concept of service quality and dimensions governing service quality.
• To study the service quality of different service providers in the Indian aviation
industry.
• To measure the service quality with the help of the service quality dimensions for
the service providers.
• To compare the service quality of different service providers with Kingfisher
airlines and to find the airline service provider with the best service quality.
• To understand the knowledge gap or the gap between the management’s perception
about the customer expectations and the customer expectations.
• To measure the knowledge gap for the service providers of the Indian aviation
industry.

1.2 RESEARCH METHODOLOGY

The research methodology gives an idea about the type of research design, the
sampling techniques, the process of data collection and the instrument used for data
collection. Let us try to understand all the portions in detail.

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1.3 RESEARCH DESIGN

The research design in this project was descriptive research design. A descriptive
research design describes marketing characteristics or functions. Also it is qualitative in
nature. The project carried out involves measuring service quality with the help of service
quality dimensions which are the attributes for that service provider or the brand. Hence
the project includes describing marketing characteristics or functions and thus it is a
descriptive research design.

1.4 DATA COLLECTION

The data collection in this project was through both the primary and secondary
sources. The primary sources include the customers of the service provider who provided
the primary data. Textbooks, journals, internet websites and other magazines provided
the secondary data for the project. Hence both primary and secondary data were collected
during the project.

1.5 QUESTIONNAIRE

The instrument used for the collection of the primary data was a structured
questionnaire. The questionnaire is to be filled up by the customers of an airline service
provider. The questionnaire will have closed ended questions or multiple choice
questions.

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1.6 SAMPLING TECHNIQUE AND SAMPLE SIZE

The sampling technique used in this project was a non-probability sampling. A non-
probability sampling relies on the personal judgment of the researcher rather than chance
to select samples. The sampling technique in a non-probability sampling was that of a
convenience sampling. Convenience sampling attempts to obtain a sample of convenient
samples. The selection of the samples is left primarily to the interviewer. Often the
respondents are selected because they happen to be in the right place at the right time.
The sample size was kept 200 for the project purpose.

1.7 LIMITATIONS

The limitations of the research carried out for the project are as follows:

• Only 4 service providers are taken into consideration while studying the service
quality of the service providers and measuring and comparing them. Hence the
whole industry was not covered.
• Moreover only domestic airline services are taken into consideration because of the
constraint of time and accessibility.
• Sample size was 200. Hence it cannot be generalized to a larger population.

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SERVICES

2.1 WHAT IS A SERVICE?

In economics and marketing, service is the non-material equivalent of a good. It is
claimed to be a process that creates benefits by facilitating a change in customers, a
change in their physical possessions, or a change in their intangible assets. Service
provision has been defined as an economic activity that does not result in ownership, and
this is what differentiates it from providing physical goods.

Service has certain characteristics which differentiates it from products or goods. The
features or characteristics of services are as follows:

Intangibility - Services are intangible in nature and this is the basic feature or
characteristic of a service that differentiates it from the products or physical goods. For
example, a student renders educational services cannot see or feel the knowledge
provided by the instructor or the teacher.

Simultaneity - Services are simultaneously produced and consumed. The production
of the service and the consumption of the service take place at the same time. Hence the
services have a characteristic of simultaneity.

Perishability - Services are also perishable in nature which means that if not sold
then cannot be regained. Hence services cannot be stored. In case of an airplane seats not
taken up would remain empty during the entire flight. The service capacity of this flight
has perished and cannot be recouped. Services cannot be returned or resold.

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Inseparability - The services cannot be separated from the people providing the
services. The service can never be separated from the service provider. Hence services
also have the characteristics of inseparability.

Heterogeneity - Services are heterogeneous because a service is modified for each
client or each situation. The service delivered can never be the same if delivered again.
Hence mass production of services is difficult. Both inputs and outputs to the processes
involved providing services are highly variable, as are the relationships between these
processes, making it difficult to maintain consistent quality.

Labour intensive - Services are labour intensive. Services usually involve
considerable human activity, rather than a precisely determined process. Human resource
management is important. The human factor is often the key success factor in service
industries.

Hence these are the characteristics of services. There are many types of services
available. The services can be classified on a particular appropriate basis. Let us try to
classify the service on the basis of industry and target effects.

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2.2 TYPES OF SERVICES

There are many types of services and to understand them better, they need to be
classified. The services are broadly classified on the following basis:

CLASSIFICATION OF SERVICES BY TARGET EFFECTS

• Services aimed at physical care such as health care, beauty salons, gymnasiums
and restaurants

• Services for intangible assets such as banking, legal consultation, accounting,
brokering, insurance and securities services.

• Services aimed at the mind of the customer such as education, broadcasting,
information, entertainment and amusement.

• Services aimed at physical possessions and tangible assets such as transport,
repair and maintenance, cleaning and janitorial, laundry, gardening and veterinary
services.

CLASSIFICATION OF SERVICES BY INDUSTRY
Services can be classified on the basis of the industry as shown in the table below:

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2.3 TANGIBILITY SPECTRUM

The dichotomy between physical goods and intangible services should not be given
too much credence. These are not discrete categories.

Most business theorists see a continuum with pure service on one terminal point and
pure commodity good on the other terminal point. This continuum is known as a
tangibility spectrum.

For example, a restaurant provides a physical good (the food), but also provides
services in the form of ambience, the setting and clearing of the table, etc. And although
some utilities actually deliver physical goods — like water utilities which actually deliver
water — utilities are usually treated as services. Hence there is a pure service and there is
a pure product on the other side of the tangibility spectrum.

Figure 2.3 shows a tangibility spectrum. In the table we can see that salt is a pure
product whereas teaching is a pure service. The fast food outlets can be considered as a
combination of services and products as food provided is tangible and service provided in
terms of hospitality and service delivery is intangible.

The airline services are not pure services and not pure products. Airline services are
somewhere in the middle of the tangibility spectrum as shown in the figure by fast food
outlets.

From this we can also conclude that services are different from the products and
hence the marketing of services is also different from that of products. Let's try to
understand the marketing mix for services which is different from the traditional
marketing mix of products.

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2.4 EXPANDED MARKETING MIX

All elements within the control of the firm that communicate the firm's capabilities
and image to customers or that influence customer satisfaction with the firm's products
are as follows:

1. Product
2. Price
3. Place
4. Promotion

The above given marketing is given for products and is also known as 4 P's of
marketing. In case of services the marketing mix is extended. Services have 7 P's of
marketing as follows:

1. Product
2. Price
3. Place
4. Promotion
5. People
6. Physical evidence
7. Process

The additional P's of marketing for services have an important role to play. Each of
them has high level of significance in case of services. Lets us try to understand the
expanded marketing mix of services one after the other in detail with suitable examples.

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PEOPLE – The frontline or service-provider employee plays a key role in the services
delivery process since it is this category of employee that executes the service promise to
the customer. The important points about people are as follows:

• People are the visible face of the service provider. They are the only ones who are
seen and heard by the service recipient. For example, the receptionist at the tax
office receives the returns at the counters. We are not allowed to go in any further
or meet with the taxation officers.

• In many cases, they are the only link between the service provider and the customer.

• As frontline employees, who are in touch with the customers, they carry out the
function of marketing of the service to the current and potential customers.

• Customer satisfaction can be brought about these employees. Therefore, their
satisfaction and motivation are of crucial interest to the service provider.

• Only the employee’s promise enables the service provider to make the marketing
promise to the customer. More importantly, the employees deliver this service
promise to the customers. Thus, they are the crucial element around which the
entire performance of the service provider revolves.

Hence from this we can say that the service provider employee is the kingpin in the
services delivery. They are also known as internal customers. If a service organization
takes good care of internal customers then only they can ultimately satisfy the external
customers. Hence we need to pay greater importance to their psychological and mental
make up rather than mere qualifications.

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PHYSICAL EVIDENCE – the physical evidence of a service comes in different forms
and guises. These include the physical aspects of the location of the service delivery such
as the design, functionality, and aesthetics of the place. The air flow, décor, temperature,
etc. create the right atmosphere for the service delivery. The dress, uniform, appearance,
and facial expressions of the frontline employees form a crucial part of this physical
evidence.
DIFFERENT PHYSICAL EVIDENCE IN DIFFERENT SERVICE SETTINGS
There are essentially three types of encounters between the customer and the service
provider. These are:

• The remote encounter: This type of encounter does not bring the two parties face
to face but they may be in touch through letter, e-mail, mail order, delivery
machines such as ATM, etc. Railway reservations through Internet, theatre
booking, enquiries, etc. are some examples of this type of encounters.

• The indirect personal encounter: This type of encounter occurs on telephone, on
Internet, etc. The two parties are not in face to face contact but have some means
of instantaneous communication. The examples are after sales service phone
numbers and helplines for credit cards and bank accounts.

• The direct personal encounter: This is the most common encounter for the
services provision. The customer is in face to face contact with the service
provider. The appearances of the employees, uniforms, settings, etc. all contribute
to the perception of the service quality.

Internal and external environment and tangible elements together constitute the
physical evidence of a service.

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PROCESS – This means procedures, mechanism and flow of activities by which a
service is acquired. Process decisions radically affect how a service is delivered to
customers.
For example, at a restaurant the process involves certain steps as following:

1. Providing information with the help of a menu

2. Consulting

3. Order taking

4. Delivering the service as per the order

5. Billing

6. Payment

This is a basic and simple process at a restaurant. There can be many such processes
for different services. A process if changed can change the service delivery and hence can
also change the service quality perceived by the customers. Hence process is supposed to
be designed properly. It is also a very important mix of marketing in services.

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CHAPTER 3

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SERVICE QUALITY

3.1 CONCEPT

Quality is defined as "Degree to which a set of inherent characteristic fulfils
requirements" by ISO 9000.
Quality is also defined as “Fitness for use” by Joseph M. Juran. Fitness in this
definition is defined by the customer.
Quality can also be defined in simple words as “Conformance to Requirements” as
defined by Philip B. Crosby. The difficulty with this is that the requirements may not
fully represent what the customer wants; Crosby treats this as a separate problem.
Quality has particular parameters or dimensions of measurement. The quality of a
product can be measured on the basis of certain parameters or dimensions as follows:

1. Performance
2. Features
3. Reliability
4. Conformance
5. Durability
6. Serviceability
7. Aesthetics
8. Perceived Image, reputation, brand name, etc.

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The dimensions of service quality are different from that of product quality. The
determinants of service quality are as follows:
1. Reliability
2. Assurance
3. Tangibles
4. Empathy
5. Responsiveness

Initially there were 10 dimensions of service quality which were then reduced to only
5 dimensions later. Assurance is a combination of competence, courtesy, credibility and
security. Empathy is a replacement of access, communication and understanding the
customer. Hence the previous model of 10 dimensions is reduced to model of 5
dimensions.

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3.2 SERVICE QUALTIY DIMENSIONS

The service quality dimensions are already listed earlier and now let us try to
understand each and every dimension in detail.

RELIABILITY – DELIVERING ON PROMISES

Reliability is the ability to perform the promised services dependably and accurately.
Normally this may be turned as “No excuses” service delivery. In its broadest sense,
reliability means that the company delivers on its promises – promises about delivery,
service provision, problem resolution and pricing. One company that effectively
communicates and delivers on the reliability dimension is Federal Express (FedEx).
Federal Express a courier service organization has positioned itself as a reliable
organization in terms of handling and delivering the packages.
All firms need to be aware of customer expectations of reliability. Firms that do not
provide the core service that customers think they are buying fail their customers in the
most direct way.

ASSURANCE – INSPIRING TRUST AND CONFIDENCE

Assurance is defined as employees’ knowledge and courtesy and the ability of the
firm and its employees to inspire or convey trust and confidence. This dimension is likely
to be particularly important for services that the customer perceives as involving high risk
and/or about which they feel uncertain about their ability to evaluate outcomes, for
example, banking, insurance, and brokerage, medical and legal service.
Airlines also need to provide an assurance to the customers as flying is considered as
a high risk as compared to railways or road transport. Also ships and cruises have to
provide an assurance to the customers.

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TANGIBILITY – REPRESENTING THE SERVICE PHYSICALLY

Tangibles are defined as the appearance of physical facilities, equipment, personnel,
and communication materials. All of these provide physical representations or images of
the service that customers, particularly new customers, will use to evaluate quality. While
tangibles are often used by service companies to enhance their image, provide continuity,
and signal quality to customers, most companies combine tangibles with another
dimension to create a service quality strategy for the firm.

EMPATHY – TREATING CUSTOMERS AS INDIVIDUALS

Empathy is defined as the caring, individualized attention the firm provides its
customers. Empathy means treating the customers as individuals. The essence of empathy
is conveying, through personalized or customized services, that customers are unique and
special. Customers want to feel understood by and important to firms that provide service
to them. Building relationships is the key factor and helps in building the service quality.

RESPONSIVENESS – BEING WILLING TO HELP

Responsiveness is the willingness to help customers and to provide prompt service. This
dimension emphasizes attentiveness and promptness in dealing with customer requests,
questions, complaints and problems. Responsiveness is communicated to customers by
the length of time they have to wait for assistance, answers to questions, or attention to
problems. Responsiveness also captures the notion of flexibility and ability to customize
the service to customer needs.

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3.3 MOMENTS OF TRUTH

Each and every point where a customer comes in contact with the service
organization is known as a service encounter. These points of contact create an image or
impression in the customers mind about the service provider. This service encounter is
also known as “moment of truth”. Such points of contact thus form moments of truth for
a service provider. This concept was used and formulated by Jan Carlzon who was the
CEO of SAS (Scandinavian Airline Services) during the period 1981-1993.

For example, among the service encounters a hotel customer experiences are checking
in to the hotel, being taken to a room by a bell person, eating a restaurant meal, requesting
a wake-up call, and checking out. In a hospital context, a study of patients revealed that
encounters with nursing staff were more important in predicting satisfaction than were
encounters with meal service or patient discharge personnel. Side from common key
encounters, there are some momentous encounters that like the proverbial “one bad
apple” simply ruin the rest and drive the customer away no matter how many or what
type of encounters have occurred in the past.

The Disney Corporation estimates that each of its amusement park customer experiences
about 74 service encounters and that a negative experience in any one of them can lead to
a negative overall evaluation. Mistakes or problems that occur in early levels of the
service cascade are particularly critical, because a failure at one point results in greater
risk for dissatisfaction at each ensuing level.

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3.4 GAPS MODEL OF SERVICE QUALITY

The service quality has five dimensions as explained earlier. Also the service quality
has a gaps model in which we can understand different types of gaps in the service
quality which can be filled or closed so as to provide a zero defect service. Different
people have developed different model for the gaps in service quality. The most
extensively used and accepted gaps model of service quality is known as SERVQUAL.
SERVQUAL model consists of five gaps in the service quality. One of the five gaps
is customer gap and the other four gaps are service provider gaps. The central focus of the
gaps model is the customer gap, the difference between customer expectations and
perceptions. Hence this gap is also known as Expectations Gap. Firms need to close this
gap – between what customers expect and receive – in order to satisfy the customers and
build long term relationships with them.

The four provider gaps are as follows:
1. Gap 1 – Knowledge Gap
2. Gap 2 – Standards or Design Gap
3. Gap 3 – Delivery Gap
4. Gap 4 – Communications Gap

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CUSTOMER GAP OR EXPECTATIONS GAP

The difference between customer expectations and customer perceptions creates the
customer gap. While customer perceptions are subjective assessments of actual service
experiences, customer expectations are the standards of, or reference points for,
performance against which service experiences are compared. Customers perceive that
they get what they think they will and should. In practice, a customer gap typically exists.
The Gap 5 shown in the following figure of service quality is customer gap or
expectations gap

GAPS MODEL OF SERVICE QUALITY

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KNOWLEDGE GAP – NOT KNOWING WHAT CUSTOMERS EXPECT

This gap is the difference between customer expectations of service and company
understanding of those expectations. Management perceptions about the customer
expectations can be different from the customer expectations. There can be many reasons
behind this gap. Some of them are as follows: Provider may not interact directly with
customers, be unwilling to ask about expectations, or be unprepared to address them.

The key factors leading to this type of gap are as follows:

• Inadequate marketing research orientation
o Insufficient marketing research
o Research not focused on service quality
o Inadequate use of market research

• Lack of upward communication
o Lack of interaction between management and customers
o Insufficient communication between contact employees and managers
o Too many layers between contact personnel and top management

• Insufficient relationship focus
o Lack of market segmentation
o Focus on transactions rather than relationships
o Focus on new customers rather than relationship customers

• Inadequate service recovery
o Inevitable service failures
o Not understanding the importance of service recovery

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STANDARDS/DESIGN GAP – NOT HAVING RIGHT STANDARDS/DESIGN
The difference between company understanding of customer expectations and
development of customer driven service designs and standards is known as the standards
gap or the design gap. Customer driven standards are different from the conventional
performance standards that most services companies establish in that they are based on
pivotal customer requirements that are visible to and measured by customers.
The key factors leading to this type of a gap are as follows:

• Poor service design

o Unsystematic new service development process

o Vague, undefined service designs

o Failure to connect service design to service positioning

• Absence of customer defined standards

o Lack of customer defined standards

o Absence of process for setting service quality goals

o Absence of process management to focus on customer requirements

• Inappropriate physical evidence and servicescape

o Inappropriate tangibles and physical setting

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DELIVERY GAP – NOT DELIVERING TO SERVICE STANDARDS
This type of gap is the difference between the service standards or the service design and
the service delivery. It is the discrepancy between development of customer driven
service standards and actual service performance by company employees. Thus even
when standards accurately reflect customers’ expectations, if the company fails to provide
support for them – if it does not facilitate, encourage and require their achievement –
standards do no good.

• Deficiencies in human resource policies

o Ineffective recruitment

o Poor employee-technology job fit

o Inappropriate evaluation and compensation systems

• Failure to match supply and demand

o Inappropriate customer mix

o Over reliance on price

• Customers not fulfilling roles

o Customer lack knowledge of their responsibilities

o Customers negatively affect each other

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COMMUNICATIONS GAP – PROMISES DON’T MATCH PERFORMANCE
The difference between service delivery and the service provider’s external
communications is known as the communications gap. Promises made by a service
company through its media advertising, sales force, and other communications may
potentially raise customer expectations that serve as the standard against which customers
assess service quality. The discrepancy between actual and promised service therefore has
an adverse effect on the customer gap.

• Lack of integrated services marketing communications

o Not including interactive marketing in communications plan

o Absence of strong internal marketing program

• Ineffective management of customer expectations

o Not adequately educating customers

• Over promising

o Over promising in advertising

o Over promising in personal selling

o Over promising through physical evidence cues

• Inadequate horizontal communications

o Insufficient communication between sales and operations

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CHAPTER 4

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CHAPTER-4

AIRLINE INDUSTRY IN INDIA
4.1 INTRODUCTION

Airlines vary from those with a single airplane carrying mail or cargo, through full-
service international airlines operating many hundreds of airplanes. Airline services can
be categorized as being intercontinental, intracontinental, regional or domestic and may
be operated as scheduled services or charters.

DELAG, Deutsche Luftschiffahrts-Aktiengesellschaft (German: acronym for
"German Airship Transport Corporation") was the world's first airline. It was founded on
November 16, 1909 with government assistance, and operated airships manufactured by
Zeppelin Corporation. Its headquarters were in Frankfurt.

Air India was founded as Tata Airlines in 1932, a division of Tata Sons Ltd. (now
Tata Group) by J. R. D. Tata. On October 15, 1932 the founder, J. R. D. Tata flew a
single engined De Havilland Puss Moth registered VT-and carrying air mail (postal mail
of Imperial Airways) from Karachi's Drigh Road Aerodrome to Bombay's Juhu Airstrip
via Ahmedabad. The aircraft continued to Madras via Bellary piloted by Royal Air Force
pilot Neville Vincent
.
Following the end of World War II, regular commercial service was restored in India
and Tata Airlines became a public limited company on 29 July 1946 under the name Air
India.

The airline was set up under Air Corporations Act, 1953 with an initial capital of
Rs.32 million and started operations on 1 August 1953. It was established after legislation
came into force to nationalize the entire airline industry in India.

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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.

The Open-sky policy came in April 1990. The policy allowed air taxi- operators to
operate flights from any airport, both on a charter and a non charter basis and to decide
their own flight schedules, cargo and passenger fares. The operators were, however,
required to use aircraft with a minimum of 15 seats and conform to the prescribed rules.
In 1990, the private air taxi-operators carried 15,000 passengers. This number increased
to 4.1 lakh in 1992, 29.2 lakh in 1993, 36 lakh in 1994 and 48.9 lakh in 1995.

There has been a revolution in air travel in India in the last decade. Ever since the
government launched its open sky policy and allowed private players to enter the arena
there has been a sea change in the airline industry in India. Air travel has become cheaper
and more affordable and the number of people traveling by air has gone up drastically.
Consequently, Indian Airports too have changed for the better. Airports in India have
become more swanky and passenger friendly.
In the recent past Indian civil aviation sector has grown manifold. The rapid growth
of Indian economy has resulted in a spillover effect on the airline industry in India.
Several new players have entered the industry and many more are about to enter the
arena. The arrival of cheap airline carriers in India has spiced up the whole affair.
Suddenly the air travel is no more the monopoly of the rich and the mighty. Now it has
become a common man’s vehicle and revolutionized the way a common Indian traveler
used to travel. Here is a brief preview of domestic airlines in India. This includes private
airlines as well as low cost airlines in India.

A low-cost carrier or low-cost airline (also known as a no-frills or discount carrier /
airline) is an airline that offers generally low fares in exchange for eliminating many
traditional passenger services. The first successful low-cost carrier was Pacific Southwest

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Airlines in the United States, which pioneered the concept when their first flight took
place on May 6, 1949. Often, this credit has been incorrectly given to Southwest Airlines
which began service in 1971 and has been profitable every year since 1973.

Air Deccan, SpiceJet, GoAir, IndiGo airlines and paramount airways are some of the
low cost carriers in India. Jet airways, Kingfisher airlines and Air Sahara, Air India, and
Indian are not considered as the low cost carriers.

4.2 AIRLINE INDUSTRY IN INDIA–PLAYERS

The airline industry in India has a lot of private players as open-sky policy was given
by government in 1990. After this policy many foreign players entered the airline
industry of India. Also government companies like Air India and Indian airlines were a
part of the airline industry of India. The list of existing players in airline industry is as
follows:

1. Air India
2. Indian
3. Jet airways
4. SpiceJet
5. Air Deccan
6. Kingfisher airlines
7. Air Sahara
8. GoAir
9. IndiGo
10. Paramount airways
11. Jagson Airlines

There are many low cost airlines which are going to enter the industry within a year
or so. The list of those players which are waiting to take a wing in 2009/2010 is as
follows:

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1. Dev airlines
2. Omega Air
3. Mega airways
4. Magic Air
5. Indus
6. East West
7. Premier Star Air
8. MDLR airlines

4.3 AIRLINE INDUSTRY(INDIA)-CURRENT SCENARIO

The airline industry in India today is facing a huge loss. According to an article in
Businessworld Jan’06, for every passenger flying today in India, airlines are losing on an
average roughly $15 i.e. the gap between the revenue and costs; some airlines are losing
than others. At 32 million passengers expected to fly in 2008-09, that works out to $480
million or Rs 2,200 crore. In September 2009, a total of 100,000 seats were available per
day. By December that went to 120,000. Since April 2008, the industry has added 120
aircraft. Airlines are buying planes like they were peanuts and adding capacity at a
frenetic pace. Industry leader Jet Airways has clocked a loss of over Rs 100 crore in the
first half.

That Indian industry suffers from the ‘herd mentality’ is quite evident by the trends in
telecommunications, information technology, BPO…the list is long. Airline has been no
different. Everyone worth his salt has jumped into it at the same time, so there is too
much capacity. Traffic is growing but capacity is growing faster. So to break even,
airlines have to achieve higher load factors than before. That means severe competition
and very low fares. Making matters a lot worse is the obsession with one or two routes.
For example, Delhi-Mumbai has close to 44 flights operating one way

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4.4 MARKET SHARE OF MAJOR PLAYERS(DOMESTIC)

Source www.wikipedia.com

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4.5 OVERVIEW OF MAJOR PLAYERS

4.5.1 INDIAN AIRLINES

Indian Airline is an airline based in Mumbai, India, and focuses primarily on domestic
routes, along with several international services to neighbouring countries in Asia. Indian
Airlines is state-owned, and is administered by the Ministry of Civil Aviation. It is one of
the two flag carriers of India, the other being Air India.

Though the company that owns and operates the airline continues to be named Indian
Airlines Limited, on 7 December 2005, the airline was rebranded as Indian for
advertising purposes as a part of a program to revamp its image in preparation for an
initial public offering (IPO). The airline operates closely with Air India, India's national
carrier. Alliance Air, a fully-owned subsidiary of Indian Airlines, was renamed Air India
Regional.

In 2007, the Government of India announced that Indian Airlines would be merged into
Air India. As part of the merger process, a new company called the National Aviation
Company of India Limited (NACIL) was established, into which both Air India (along
with Air India Express) and Indian Airlines] (along with Alliance Air) will be merged.
Once the merger is complete, the airline - which will be called Air India - will continue to
be headquartered in Mumbai and will have a fleet of over 130 aircraft.

History

The airline is set up under the Air Corporations Act, 1953 with an initial capital of Rs. 32
million and started operations on 1 August 1953. It was established after legislation came
into force to nationalise the entire airline industry in India. Two new national airlines
were to be formed along the same lines as happened in the United Kingdom with British
Overseas Airways Corporation (BOAC) and British European Airways (BEA). Air India

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took over international routes and Indian Airlines Corporation (IAC) took over the
domestic and regional routes.

Seven former freedom domestic airlines, Deccan Airways, Airways India, Bharat
Airways, Himalayan Aviation, Kalinga Airlines, Indian National Airways and Air
Services of India, were merged to form the new domestic national carrier. Indian Airlines
Corporation inherited a fleet of 99 aircraft including 74 Douglas DC-3 Dakotas, 12
Vickers Vikings, 3 Douglas DC-4s and various smaller types from the seven airlines that
made it up.

Vickers Viscounts were introduced in 1957 with Fokker F27 Friendships being delivered
from 1961. The 1960s also saw Hawker Siddeley HS 748s, manufactured in India by
Hindustan Aeronautics Limited, join the fleet.

The jet age began for IAC with the introduction of the pure-jet Sud Aviation Caravelle
airliner in 1964, followed by Boeing 737-200s in the early 1970s. April 1976 saw the first
three Airbus A300 wide-body jets being introduced. The regional airline, Vayudoot,
which had been established in 1981, was later reintegrated.

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Old orange logo of Indian Airlines until the mid-2000s

By 1990, Airbus A320-200s were introduced. The economic liberalisation process
initiated by the Government of India in the early 1990s ended Indian Airlines' dominance
of India's domestic air transport industry. Indian Airlines faced tough competition from
Jet Airways, Air Sahara (now Jet Lite), East-West Airlines, Skyline NEPC, and
ModiLuft. As of 2005, Indian Airlines was the second largest airline in India after Jet
Airways while Air Sahara controlled 17% of the Indian aviation industry.

East-West Airlines, Skyline NEPC and ModiLuft discontinued flight operations but the
entry of several low-cost airlines in India, such as Air Deccan, SpiceJet, IndiGo
(Interglobe Enterprise) and others like Kingfisher Airlines continue to give competition in
its market, forcing Indian to cut down air-fares. However, as of 2006, Indian Airlines was
still a profit making airline.

Indian Airlines Limited is wholly owned by the Government of India through a holding
company and has 19,300 employees as of March 2007 Its annual turn-over, together with
that of its subsidiary Alliance Air, is well over Rs.4000 crores (around US$ 1 billion).
Together with its subsidiary, Alliance Air, Indian Airlines carries a total of over 7.5
million passengers annually.

In December 2007, Air India was invited to join the Star Alliance. Since Indian Airlines
is in the midst of merging with Air India, it too will effectively be a member.

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4.5.2 INDIGO

INTRODUCTION

IndiGo is a private domestic low-cost airline based in Gurgaon, Haryana, India. It
operates domestic services linking 20 destinations. Its main base is Delhi's Indira Gandhi
International Airport. It was awarded the title of ‘Best Domestic Low Cost Carrier’ in
India for 2008.

5.3.2History

IndiGo Air is owned by an Indian named Mr Rahul Bhatia. The airline commenced
operations on 4 August 2006 with a service from Delhi to Imphal via Guwahati. The
airline is owned by InterGlobe Enterprises. It took delivery of its first Airbus A320
aircraft on 28 July 2006 and received six aircraft during 2006. Nine more aircraft were
delivered in 2007 taking the total to 15. Former US Airways Executive Vice-President,
Marketing and Planning Bruce Ashby joined IndiGo as their Chief Executive Officer.
The airline has also acquired 3 parking spots in Indira Gandhi International Airport and
Chhatrapati Shivaji International Airport.

IndiGo placed an order for 100 Airbus A320 family aircraft during the 2005 Paris Air
Show. The total order was worth US $6 billion, one of the highest by any domestic carrier
during the show. The carrier has set a target of serving approximately 30 Indian cities by
2010 with a fleet size of 40 A320 aircraft. The airline will receive all 100 A320 family
aircraft by 2016. The Indian Government has approved the airline's aircraft import plan
"in principle".

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4.5.3 JET AIRWAYS

INTRODUCTION

Jet Airways is an airline based in Mumbai, India. It is India's second largest airline after
Air India and the market leader in domestic sector. It operates over 400 daily flights to 80
destinations worldwide.

In July 2008, Which? magazine ranked Jet Airways as the world's best long-haul airline
after Singapore Airlines.In a poll conducted by SmartTravelAsia.com in September 2008,
it was voted as the world's seventh best airline overall. Jet Airways has also won a survey
award for the quality of its catering from Which? magazine. Jet Airways also operates
two low-cost airlines, namely JetLite (formerly Air Sahara) and Jet Airways Konnect.

History

Jet Airways was incorporated as an air taxi operator on 1 April 1992. It started Indian
commercial airline operations on 5 May 1993 with a fleet of four leased Boeing 737-300
aircraft. In January 1994, a change in the law enabled Jet Airways to apply for scheduled
airline status, which was granted on 4 January 1995. It began international operations to
Sri Lanka in March 2004. While the company is listed on the Bombay Stock Exchange,
80% of its stock is controlled by Naresh Goyal (through his ownership of Jet’s parent
company, Tailwinds, and has 10,017 employees (at March 2007)

Jet Airways Airbus A340-300E at London Heathrow Airport in 2005 with the 1993-2007
liveryNaresh Goyal, who already owned Jetair (Private) Limited, which provided sales
and marketing for foreign airlines in India, set up Jet Airways as a full-service scheduled
airline to compete against state-owned Indian Airlines. Indian Airlines had enjoyed a
monopoly in the domestic market between 1953, when all major Indian air transport
providers were nationalised under the Air Corporations Act (1953), and January 1994,

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when the Air Corporations Act was repealed, following which Jet Airways received
scheduled airline status.
Jet Airways Boeing 777-300ER at San Francisco International Airport in the airline's new
livery introduced in 2007Jet Airways and Air Sahara were the only private airlines to
survive the Indian business downturn of the early 1990s. In January 2006, Jet Airways
announced that it would buy Air Sahara for US$500 million in an all-cash deal, making it
the biggest takeover in Indian aviation history. The resulting airline would have been the
country's largest] but the deal fell through in June 2006.

On 12 April 2007, Jet Airways agreed to buy out Air Sahara for 14.5 billion rupees
(US$340 million). Air Sahara was renamed JetLite, and was marketed between a low-cost
carrier and a full service airline. In August 2008, Jet Airways announced its plans to
completely integrate JetLite into Jet Airways.

In October 2008, Jet Airways laid off 1900 of its employees, resulting in the largest lay-
off in the history of Indian aviation. However, later, the employees have been asked to
return to work. Civil Aviation Minister Praful Patel said that the management reviewed
its decision after he analyzed the decision with them.[9][10]

In October 2008, Jet Airways and rival Kingfisher Airlines announced an alliance which
primarily includes an agreement on code-sharing on both domestic and international
flights, joint fuel management to reduce expenses, common ground handling, joint
utilization of crew and sharing of similar frequent flier programs.[11]

On 8 May 2009, Jet Airways launched another low-cost airline, Jet Airways Konnect.
The new airline uses spare aircraft from Jet Airways' routes that were discontinued due to
low passenger load factors. It also uses the same operator code as Jet Airways. The
decision to launch a new brand instead of expanding the JetLite network was taken
considering the regulatory delays involved in transferring aircraft from Jet Airways to
JetLite, as the two have different operator codes.[12]

Starting 8 September 2009, several Jet Airways pilots went on a simulated strike by
reporting sick and failing to turn up for duty. The stated reason for the pilots' action is that

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the pilots "are protesting against the dismissal of two senior pilots last month by the
airline." [13] On 9 September 2009, the airline had to cancel over 160 domestic flights due
to this reason.[14]. The five-day strike by pilots ended on 13 September 2009. It led to a
cancellation of 800 flights where more than 400 of the company's pilots called in sick.
According to Indian media reports, the strike cost the airline some $8m (£4.79m) a day.[15]

Services

Cabin classes

With the arrival of its new Boeing 777-300ER and Airbus A330-200 aircraft, Jet Airways
has introduced a new cabin with upgraded seats in all classes. The Boeing 777-300ER
aircraft has three classes of service: First, Première (Business), and Economy. The Airbus
A330-200 aircraft have two classes: Première and Economy. All Airbus A330-200 and
Boeing 777-300ER aircraft have this feature. Boeing 737 aircraft are configured
differently. Jet Airways has a three-star rated Business and First Class, and is in the top
twenty-five business classes reviewed by Skytrax. Economy class has been reviewed as a
three-star product by Skytrax.Jet Airways First Class Suite on board a Boeing
777-300ER.

First Class

First class is available on all Boeing 777-300ER aircraft. All seats convert to a fully-flat
bed, similar to Singapore Airlines first class seat but much smaller. It was the twenty-
second airline in the world to have private suites All seats in First have a 21-inch
widescreen LCD monitor with audio-video on-demand systems (AVOD), in seat power
supply, and USB ports etc. Jet Airways is the first Indian airline to offer fully-enclosed
suites on its aircraft; each suite has a closable door, making for a private compartment.
Skytrax consumer airline reviewers recently rated Jet Airways First Class as being 14th
best in the world.

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Première

Première (Business Class) on the Airbus A330-200 and Boeing 777-300ER international
fleet has a fully-flat bed with AVOD entertainment. Seats are configured in a herringbone
pattern (1-2-1 on the Boeing 777-300ER, and 1-1-1 on the Airbus A330-200), with each
seat offering direct access to the aisle. Première seats on the A330-200s leased from ILFC
are configured differently in a 2-2-2 non-herringbone pattern. Each Première Seat has a
15.4-inch flat screen LCD TV with AVOD. USB ports and in-seat laptop power are
provided.

On the short-haul/domestic Boeing 737-700/800, all new aircraft are equipped with
AVOD. All seats are standard recliner business-class seats with a few newer aircraft with
electronic recline and massager.

Economy Class

Economy class on Jet's Airbus A330-200, Boeing 737-700/800 and Boeing 777-300ER
aircraft has 32-inch seat pitch. Seats on the Boeing 777-300ER/Airbus A330-200 have a
"hammock-style" net footrest. The cabin is configured in 3-3-3 abreast on the Boeing
777-300ER, 2-4-2 on the Airbus A330-200, and 3-3 in the Boeing 737. Each Economy
seat on the 777-300ER/A330-200 has a personal 10.6-inch touch screen LCD TV with
AVOD.
Some recently acquired Boeing 737-700/800 aircraft also feature Personal LCD screens
with AVOD.

All three classes feature Mood lighting on the Airbus A330-200 and Boeing 777-300ER,
with light schemes corresponding to the time of day and flight position.

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4.5.4 SPICE JET
INTRODUCTION

SpiceJet is a low-cost airline based in Delhi, India. It began service in May 2005 and by
2008, it was India's second-largest low-cost airline in terms of market share.

SpiceJet was voted as the best low-cost airline in South Asia and Central Asia region by
Skytrax in 2007. Rising fuel costs and increasing competition resulted in SpiceJet posting
a loss in the first quarter of 2008-09. In August 2008, SpiceJet announced plans to raise
US$100 million through foreign investment.

History

SpiceJet was earlier known as jadoo airlines , a reincarnation of ModiLuft. It is promoted
by Ajay Singh and the Kansagra family.

SpiceJet marked its entry in service with Rs. 99 fares for the first 99 days, with 9,000
seats available at this rate.

This deal was followed it up with a Rs. 999 promotional scheme on select routes. Their
marketing theme "offering low 'everyday spicy fares' and great guest services to price
conscious travelers. Their aim is to compete with the Indian Railways passengers
travelling in air conditioned coaches.

On 15 July 2008 Billionaire Wilbur Ross suggested he would invest $80 million (about
Rs 345 crore) in the low cost airline. The board of directors of SpiceJet accepted an offer
in-principle from the US-based PE firm that would make available about Rs 345 crore to
SpiceJet, a joint statement issued by SpiceJet and WL Ross & Co.

Spicejet names their airlines as the Modi family owns the group which is called the Spice
Group and also have GSM mobile services in India called Spice Telecom

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4.6 Fiscal Issues in Aviation Industry

Airlines are an important part of the Indian economy. Apart from contributing
considerably to the national exchequer and providing significant employment
opportunities, a whole host of industry sectors – from tourism to hospitality.

The high operating-cost environment in India, coupled with the competitive nature of the
Airline business, has resulted in a continued strain on the health of the airlines in India.

Fiscal Issues:

• Rationalizing ATF Prices to International
Benchmarks
• Withholding tax on leased aircraft
• Fringe Benefit Tax
• Service Tax
• Sales Tax
• Cenvat Credit on ATF
• Hedging of Aviation Turbine Fuel (ATF)

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ATF

Fuel currently accounts for close to 40% of the total operating costs for airlines in India.
The estimated annual fuel bill for the industry is around USD 1.7 billion, based on
September 2006 rates. There is also a tremendous wastage of fuel in the air & at the
tarmac, due to traffic congestion in Delhi and Mumbai that the airlines have to bear.

Current ATF prices in India (Dec 2009)

Domestic Flights Rs. 39,000 / kilolitre

Following the dismantling of the ‘Administered Price Mechanism’ (APM) effective April
1, 2001, the prices of ATF in India are based on the “International Import Parity Prices”,
and directly linked to the benchmark of Platt’s publication of FOB Arabian Gulf ATF
prices (AG); and do not relate to the actual cost of producing ATF in India. ATF prices
for domestic operations also include Freight charges from Gulf to India, Customs Duty of
10%, domestic transportation and other charges, Excise Duty of 8.16% (including cess).

Even though the ATF supplied at Indian airports (both for domestic and international
operations) is not imported into India but is the product of crude refined in Indian
refineries from imported crude, the 10% Customs Duty is taken into account in fixing .

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Withholding tax on leased aircraft

Section 10(15A) of IT Act of 1961 provides exemption from payment of withholding tax
on lease rental incomes on aircraft and engines earned by a non-resident Lessor from an
Indian company, subject to respective agreements being approved by the Indian
Government. This exemption is currently valid only for lease agreements which have
been signed prior to 31 March, 2007. The non-availability of this exemption subsequent
to March 2007 will significantly increase fleet acquisition costs of Indian carriers,
particularly in a market where demand for aircraft is greater than supply.

The aircraft leasing finance companies have a gross up clause in their agreements
whereby the WHT is paid not by the lessor (lease company), but by the lessee (Indian
Airline). The vast majority of countries too, impose no withholding tax on lease rentals.
The few countries that do impose a WHT, have allowed planning and structural
alternatives to minimize the taxes, such as leasing the aircraft through our existing foreign
subsidiaries. Previously, Australia and Japan had withholding tax laws, but those.

The leasing route is an established industry practice for airlines globally. Major
international leasing companies indicate that the vast majority of countries do not impose
withholding taxes on lease rentals payable. In all cases, the lessors require the leasing
companies to assume the liabilities for any withholding taxes imposed as also of all
indirect taxes applicable such as value added and property taxes. All aircraft and engine
lease agreements thus inevitably contain clauses that require the lessee to gross-up the
payments.

The non-availability of this exemption will significantly increase the fleet acquisition
costs of Indian carriers, particularly in a market where demand for aircrafts is greater than
the supply.

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Fringe Benefit Tax

This tax has also been made applicable on

• free / concessional passages granted to airline
executives and family
• expenses for crew
• hotel accommodation provided to passengers due to
delays & cancellations; and
• expenses on catering and inflight entertainment.

None of these items can be considered as ‘fringe benefits’. There is thus a need to remove
these from the coverage of FBT.

Service Tax

F& J Class tickets: This tax is not global practice, and therefore puts Indian carriers’
potential as International network carriers in jeopardy as it increases the total amount a
passenger connecting through India must pay as compared to connections via any other
point.

Service tax on landing, airport & air navigation fees: India has imposed a 10.2% service
tax fee on landing, airport and air navigation fees. This greatly reduces the
competitiveness of India's air transport sector.

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Sales Tax

There is a disparity in the fuel sales tax between Turbo Props and Regional Jets (less than
100 seaters). While Turbo Props enjoy substantially lower sales tax concessions,
Regional Jets which are also deployed on the same routes are charged higher sales tax for
their fuel needs. This is not helpful for the promotion and good health of India’s Regional
Carriers.

Sales Tax / VAT are payable on all supplies meant for international voyages irrespective
of the jurisdiction of its consumption. There is a need for extending the same benefit to
the airlines – as in the case of exporters where they are exempt from payment of any
Excise Duty / Sales Tax on their inputs – on all its procurements dedicated for its
international operations.

Cenvat Credit on ATF

Non-allowance of credit to the airlines on ATF is against the fundamental principle of the
CENVAT provisions – resulting in the cascading effect of taxes.

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Hedging of Aviation Turbine Fuel (ATF)

De-regulation of Commodity Hedging is proceeding on a slow path. Domestic airlines
have to procure ATF only through domestic refineries at International Prices. Since they
are not physically importing the commodity, the airlines are not permitted to hedge the
commodity.

In a upward moving oil regime, the airlines have no option but to see their input costs
explode and whenever possible, pass on the same to passengers. A similar situation was
faced by local refiners on hedging their refinery margins where the Government and RBI
came out with a notification permitting national oil companies to hedge their refinery
margins without having physical import/exports. At a time when there are concerns of
crude continuing to be floored at USD 50-55 with no apparent ceiling in sight.

An urgent re-look at the present oil/petro products hedging regulations is needed.
Domestic airlines should be permitted to hedge their ATF price risk. Many global airlines
have used fuel hedging for effective risk management for themselves.

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CHAPTER 5

Page | 49

CHAPTER-5

KINGFISHER AIRLINES

Kingfisher Airlines Limited is a major Indian airline. Kingfisher operates more than 400
flights a day and has a network of 80 destinations, with regional and long-haul
international services.[1]. Kingfisher Airlines, through one of its holding companies
United Breweries Group, has a 50 percent stake in low-cost carrier Kingfisher Red.

Kingfisher Airlines is one of six airlines in the world to have a five-star rating from
Skytrax, along with Asiana Airlines, Malaysia Airlines, Qatar Airways, Singapore
Airlines and Cathay Pacific Airways. In May 2009, Kingfisher Airlines carried more than
a million passengers, giving it the highest market share among airlines in India.

Kingfisher has its registered office in the UB Tower in Bangalore and its head office in
the Kingfisher House in Mumbai.

5.1History:
Kingfisher Airlines registered office at the UB Group Towers in Bangalore, India

The airline started operations on 9 May 2005, following the dry lease of four new Airbus
A320-200 aircraft.[7] Its first flight was from Mumbai to Delhi. At the launch of the
airline, Dr. Mallya said that he is "committed to achieving our ambition of making
Kingfisher Airlines India's largest private airline both in capacity and market share by
2010."

Kingfisher was the first Indian airline to have in-flight entertainment (IFE) systems on
every seat even on domestic flights. All passengers were given a "welcome kit"
consisting goodies such as a pen, facial tissue and headphones to use with the IFE system.

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On 14 July 2008, Kingfisher unveiled its first ever Wide-body aircraft, a Airbus
A330-200 (registered VT-VJL) at the 46th Farnborough Airshow held in July 2008.

On 3 September 2008, Kingfisher started its international operations by connecting
Bangalore with London. On 15 September 2009 the London service was withdrawn.

On 23 February 2010 Kingfisher announced that it would be joining the Oneworld airline
alliance by 2011 subject to regulatory approval

5.2 Cabin classes:

Domestic

Kingfisher First

The domestic Kingfisher First seats have a 48 inch seat pitch and a 125 degree seat
recline. There are laptop and mobile phone chargers on every seat. Passengers can avail
of the latest international newspapers and magazines. There is also a steam ironing
service on board Kingfisher First cabins. Every seat is equipped with a personalized IFE
system with AVOD which offers a wide range of Hollywood and Bollywood movies,
English and Hindi TV programmes, 16 live TV channels and 10 channels of Kingfisher
Radio. Passengers also get BOSE noise cancellation headphones.

Domestic Kingfisher First is only available on selected Airbus A320 family aircraft.

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Kingfisher Class

The domestic Kingfisher Class has 32-34 inch seat pitch with footrests. Every seat is
equipped with personal IFE systems with AVOD on-board the Airbus A320 family
aircraft. As in Kingfisher First, passengers can access the latest movies, English and
Hindi TV programmes, live TV and Kingfisher Radio.

On-board the ATR 72-500s there are 17 colour LCD drop-down screens mounted along
with loudspeakers for audio in the cabin overhead, a head-end unit to handle CDs and
DVDs, and a crew control panel. The screens measure 12.7 cm by 9.3 cm, weigh 0.2 kg
each and are spaced every two or three seat rows along both sides of the cabin.Economy
class meal on-board a Kingfisher Airlines domestic flight

Kingfisher Red

After Kingfisher Airlines acquired Air Deccan, its name was changed to Simplifly
Deccan and subsequently to Kingfisher Red. Kingfisher Red is Kingfisher Airline's low-
cost class on domestic routes. Passengers are given complimentary in-flight meals and
bottled water. A special edition of Cini Blitz magazine is the only reading material
provided.

Kingfisher Airlines is the first airline in India to extend its King Club frequent flyer
program to its low-cost carrier as well. Passengers can earn King Miles even when they
fly Kingfisher Red, which they can redeem for free tickets to travel on Kingfisher
Airlines or partner airlines.

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International

Kingfisher First

The international Kingfisher First has full flat-bed seats with a 180 degree recline, with a
seat pitch of 78 inches, and a seat width of 20-24.54 inches.[15] Passengers are given
Merino wool blankets, a Salvatore Ferragamo toiletry kit, a pyjama to change into, five-
course meals and alcoholic beverages. Also available are in-seat massagers, chargers and
USB connectors.

Every Kingfisher First seat has a 17 inch widescreen personal television with AVOD
touchscreen controls and offers 357 hours of programming content spread over 36
channels, including Hollywood and Bollywood movies along with 16 channels of live
TV, so passengers can watch their favorite TV programmes live. There is also a
collection of interactive games, a jukebox with customisable playlists and Kingfisher
Radio. Passengers are given BOSE noise cancellation headphones.

The service on board the Kingfisher First cabins includes a social area comprising a full-
fledged bar staffed with a bartender, a break-out seating area just nearby fitted with two
couches and bar stools, a full-fledged chef on board the aircraft and any-time dining. A
turn-down service includes the conversion of the seat into a fully-flat bed and an air-
hostess making the bed when the passenger is ready to sleep.

Both Kingfisher First and Kingfisher classes feature mood lighting on the Airbus
A330-200 with light schemes corresponding to the time of day and flight position.

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Kingfisher Class

The international Kingfisher Class seats offer a seat pitch of 34 inches, a seat width of
18 inches and a seat recline of 25 degrees (6 inches). Passengers get full length
modacrylic blankets, full size pillows and business class meals. There are in-seat chargers
and USB connectors.

Each Kingfisher Class seat has a 10.6 inch widescreen personal television with AVOD
touchscreen controls. The IFE is similar to that of the international Kingfisher First class.

In-flight entertainment

Kingfisher's IFE system is the Thales TopSeries i3000/i4000 on-board the Airbus A320
family aircraft, and Thales TopSeries i5000 on-board the Airbus A330 family aircraft
provided by the France-based Thales Group.[16]

Kingfisher Lounge

Kingfisher Lounges are offered to Kingfisher First passengers, along with King Club
Silver and King Club Gold members. Lounges are located in:

India

• Bangalore
• Chennai
• Delhi
• Hyderabad
• Mumbai

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King Club

The Frequent-flyer program of Kingfisher Airlines is called the King Club in which
members earn King Miles everytime they fly with Kingfisher or its partner airlines,
hotels, car rental, finance and lifestyle businesses. There are four levels in the scheme:
King Club Base, Red, Silver and Gold levels. Members can redeem points for over a
number of schemes. Gold and Silver members enjoy access to the Kingfisher Lounge,
priority check-in, excess baggage allowance, bonus miles, and 2 Kingfisher First upgrade
vouchers for Gold membership.

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Chapter 6

Page | 56

Findings and analysis

Q. How Often Do You Fly?

This question gave an idea about the frequency of traveling through airlines for a
particular respondent. This question gives an idea whether the respondents have a past
experience or are new to the services or are frequent users of airline services. 20% of the
respondents used the airline service once a year which is the lowest in the category.
12.5% of the respondents used the airlines for traveling once in every 6 months. 15% of
the respondents used the airlines for traveling once in a month. 52.5% of the respondents
used the airline services frequently.

FREQUENCY OF TRAVELING THROUGH AIRLINES

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DEMOGRAPHICS OF THE RESPONDENTS

The questions related to the demographics of the respondents are explained in this
section. The questions were related to the age, gender, occupation and income. All the
important factors of demographics are covered in these characteristics. The demographics
of the respondents are shown in the following charts which give us an idea about the
customer profile or the respondents’ profile.

Age group of Respondents:
14% of respondents fall between the age group of 0-18 years, 26% of respondent’s falls
between the age of 18-23 years, 30% of respondent’s falls between the age group of
31-45 years, 20% of respondents falls between the age group of 45-60 years, 10% of
respondents falls between the age group above 60 years.

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GENDER:

INCOME

Income level of people varies from 0-2 lakhs to 10 lakhs and above where maximum
respondents falls between the income level of 2-5 lakhs where as there are almost equal
number of respondents from 0-2 lakhs , 5-10 lakhs and 10 lakhs and above.
The remaining questions in the questionnaire were related to the service quality
dimensions which are taken together for a single service provider. Then the total service
quality of all the Service providers is compared. Also the service quality dimensions are
found for individual service providers.
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As there were certain constraints in carrying out the project only 4 service providers were
taken into consideration for calculating the service quality. The service providers taken
into consideration during the project are as follows:

1. SpiceJet

2. Jet Airways

3. Indian Airlines

4. Kingfisher Airlines

For all the service providers mentioned above every service dimension was calculated
and a total score for service quality is measured. This total score of all the service
providers is compared and then the service provider with the best service quality is found.
Now the data for the service providers for the service quality dimensions are analyzed
and the results are given in the next section. The section gives the details about the
service quality dimensions in individual service provider. Then a comparison of the total
score of service quality is carried out for all the service providers which are explained in
the later portion of the analysis.

Let us first try to measure the knowledge gap of all the service providers and then we can
measure the dimensions of service quality and compare the overall service quality of all
the service providers.

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KNOWLEDGE GAP
This was the only gap which could have been calculated in the project as far as the gaps
in service quality are concerned. The knowledge gap is the gap between the
management’s perceptions about the customers’ expectations and the customers’
expectations. Given below is a chart which gives an idea about the knowledge gap
existing in all the service providers taken into consideration.

KNOWLEDGE GAP FOR ALL SERVICE PROVIDERS

From this chart we can conclude the following:

• Kingfisher has the least gap and hence it understands the customers’
expectations very well. It is the best service provider in terms of
understanding the customers’ expectations.

• Indian Airlines has the highest gap and hence it does not understand the
customers’ expectations as compared to other service providers. Jet airways
are the next best to Spice Jet in terms of knowledge gap.

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Service Quality Dimensions
• To measure the Service Quality dimensions we have kept several parameters in
the Questionnaire in which the respondents have to tick on likert scale ranging
from excellent to bad. Then by measuring the mean of all parameters we found
out the score of the Service Quality Dimension.

• For Tangibility the parameters are Seat comfort, Cleanliness of cabin, Cleanliness
of toilets, Newspapers/magazines, pillows/blankets, Quality of entertainment,
Quality of beverages, handling of luggage, appearance and clothing of cabin crew.

• For Responsiveness the parameters are punctuality of timing, politeness/courtesy,
friendliness and language skills of cabin crew

• For Reliability parameters are Staff provides service without making fumbles,
responds quickly to problems, response happens at promised time.

• For Assurance parameters are Cabin crew’s safety drill, courtesy of staff,
efficiency of check-in staff, and service efficiency of cabin crew.

• For Empathy parameters are individual attention to customers, flight timings
convenient to customers, long term relationship with customers.

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Service Quality Dimensions
1) Tangibility

T ang iblity
3.5
3
2.5
2
1.5
1
0.5
0
S pic ejet J et Indian A ilines K ingfis her

• Analyzing the tangibility factor of each of the airlines it is very clear from the
above graph that tangibility of kingfisher airlines compared to rest of the airlines
is definitely high.

• Kingfisher airlines is having such a significant increase in response towards
tangibility compared with the other flights is due to many factors that are playing
important role for such a shift in the above graph.

• Comparing Tangibles such as seat comfort, Cleanliness of cabin, Cleanliness of
toilets and many other factors such as availability of newspapers and magazines,
Pillows and blankets etc. plays an most important role in shifting peoples response
more towards kingfisher compared with other airlines.

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• Though Indian airlines is public sector undertaking airlines but then also as far as
the question of tangibility is concern it was rated as second most preferable after
kingfisher. Only the difference in response of kingfisher and Indian airlines was
that there was comparatively less seat comfort in Indian airlines compared to
kingfisher airlines.

• Now talking about jet and spice jet they both were rated at lowest level by the
respondents and comparing these two airlines there was almost equal grading to
both of the airlines as far as tangibility is concern.

• So from above graph it is clear that kingfisher has got more preference and
positive response of people on tangibility criteria.

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2) Responsiveness

R es pons ivenes s
3

2.5

2

1.5

1

0.5

0

• Now comparing Responsiveness of the above airlines, it was remarkable that
kingfisher has majority of people rating it highest also in the factor of
responsiveness followed by Indian airlines.

• As kingfisher is five star rated airlines it is obvious thing that staff of kingfisher
will be more responsive towards the facilities to be provided on time and also
problems to be solve at time. But position of Indian airlines in minds of people
holds second place in responsiveness criteria is remarkable.

• Factors included in Responsiveness, such as friendliness, language skills, waiting
time to check in and courtesy of check in staff played very important role for
shifting the above graph in favor of kingfisher.

Page | 65

both of the airlines as far as responsiveness is concern.

Page | 66

3) Assurance

A s s uranc e
3

2.5

2

1.5

1

0.5

0

• Analyzing the assurance factor, of each of the airlines it is very clear from the
above graph that assurance of kingfisher airlines compared to rest of the airlines is
definitely high.

• Kingfisher airlines is having such a significant increase in response towards
assurance compared with the other flights is due to many factors that are playing
important role for such a shift in the above graph.

• Comparing assurance factors such as seat politeness/courteous, service efficiency,
efficiency of check in staff and safety of cabin crew drill plays an most important
role in shifting peoples response more towards kingfisher compared with other
airlines.

Page | 67

• In case of assurance Indian airlines was rated as second most preferable after
kingfisher. Only the difference in response of kingfisher and Indian airlines was
that there was comparatively less service efficiency and efficiency of check in
staff in Indian airlines compared to kingfisher airlines.

both of the airlines as far as assurance is concern.

• So from above graph it is clear that kingfisher has got more preference and
positive response of people on assurance criteria.

Page | 68

4) Reliability

R eliablity
3
2.5
2
1.5
1
0.5
0

• While comparing reliability of all the above mentioned airlines the result was
same as it was in the case of tangibility, assurance and responsiveness. It was
kingfisher which was as most reliable airlines by most of the people from the
sample.

• Reliability of kingfisher compared with other three airlines is very high and
comparing the other three airlines that is Spice jet, Jet airways and Indian Airlines
its almost same in all the three airlines.

Page | 69

• Reliability factors such as Service without fumbles, Quick response towards
problem and Response towards problem in promised time plays very important
role in gauging reliability factor of any of the airlines and kingfisher is able to
provide the above mention services to the expectation of people this the reason of
highest Reliability level of kingfisher by the respondents.

• From the above graph it can be clearly interpreted that kingfisher compared with
other three airlines is more reliable.

Page | 70

5) Empathy

E mpathy
3

2.5

2

1.5

1

0.5

0

• Empathy also seems to be in the favor of kingfisher, from the above graph it can
be clearly interpreted that Empathy of kingfisher airlines compared to other
airlines is defiantly very high followed by spice jet.

• Empathy factors such as Individual attention, Convenience of flight timings and
Long term relations affects response of the people up to an extent. Kingfisher is
having highest level of empathy level in the minds of the people.

Page | 71

• This time instead of Indian Airlines, Spice jet is following Kingfisher in this
criteria so it can be interpreted that Empathy of spice jet is more then tangibility,
reliability, assurance and responsiveness of itself.

• An Indian airline is having lowest Empathy after Jet airway which is having
second lowest Empathy level

Page | 72

Service providers

1) Spice Jet

The scores of the service quality dimensions of spice jet are given in the chart below.
Here we have kept 1 as excellent and 5 as poor , Service quality dimension which shows
lower rating in graph means its better than one showing higher rating in graph.

GRAPH FOR SERVQUAL DIMENSIONS FOR INDIAN AIRLINES

Page | 73

• The scores in the above chart conclude the following.

• Empathy has the lowest score in all the service quality dimensions so its better
than rest of service quality dimensions. This shows that employees i.e. people
are contributing more in the service quality.

• Tangibility and responsiveness are having the high scores and hence the physical
evidence is not good.

• Moreover they are not much reliable in services and lack assurance as well.

• This shows that the service provider is not able to provide reliable services or
not able to inspire trust and confidence for the service.

Page | 74

2) JET AIRWAYS

The scores of the service quality dimensions for Jet Airways are given below in the form
of a chart. Here we have kept 1 as excellent and 5 as poor , Service quality dimension
which shows lower rating in graph means its better than one showing higher rating in
graph. The chart can easily give idea about the conclusions.

GRAPH FOR SERVQUAL DIMENSIONS FOR JET AIRWAYS

Page | 75

• The scores in the above chart conclude the following:

• The service quality dimension of Tangibility has the highest contribution in the
overall service quality.

• Reliability and Empathy dimensions are close to each other in terms of the
score.

• Hence these 2 service quality dimensions are contributing equally in the overall
service quality in case of Jet Airways.

• This shows that physical evidence and other tangibles and intangibles are all
contributing in an equal manner to achieve the overall service quality.

• Responsiveness of the people is not up to the mark which staff must be given
more training to serve to customers efficiently.

Page | 76

3) Indian Airlines

The scores of the service quality dimensions for Indian Airlines are given below in the
form of a chart. Here we have kept 1 as excellent and 5 as poor , Service quality
dimension which shows lower rating in graph means its better than one showing higher
rating in graph. The chart can easily give idea about the conclusions.

GRAPH FOR SERVQUAL DIMENSIONS FOR KINGFISHER AIRLINES

Page | 77

• The scores in the above chart conclude the following:

• Empathy as a service quality dimension is the Poor. Hence it means that the staff
does not provide individual attention to customers.

• Also the dimensions assurance and reliability are good are almost equal and
they contribute equally to the overall service quality.

• As the tangibility is poor so the physical evidence of the service provider is not
upto mark.

Page | 78

4) Kingfisher Airlines

The scores of the service quality dimensions for Kingfisher Airlines are given below in
the form of a chart. . Here we have kept 1 as excellent and 5 as poor , Service quality
dimension which shows lower rating in graph means its better than one showing higher
rating in graph. The chart can easily give idea about the conclusions.

GRAPH FOR SERVQUAL DIMENSIONS FOR SPICEJET
The scores in the chart above conclude the following:

• Responsibility scores the poor in all the other dimensions of service quality.

• The tangibility is excellent which means the physical evidence of the service
provider is also good. Quality of entertainment provided by kingfisher is the
best.
• Empathy score is also not too good as compared to other service quality
dimensions. Assurance and Reliability are good which means staff assures
customers about their safety and service provider is very reliable

Page | 79

Punctuality of Flights

• Now talking about punctuality of flight timings it can be clearly interpreted from
graph that Kingfisher is highest number of rating from the respondents towards
excellent side, it is Indian airlines and the Spice jet who are having minimum
number of responses in their favor.

• Considering the fair side of performance is concern it is Jet airways which tops
the chart from its responses being maximum on fair side.

• Considering poor and bad performance then it is very clear from the graph that
punctuality of Indian Airlines and Spice Jet is not up to the mark as expected of
the travelers so they both have strong point to be think up on regarding its
punctuality

Page | 80

Seat comfort

• As far as seat comfort is concern it can be clearly interpreted from graph that
Kingfisher is highest number of rating from the respondents towards excellent
side, it is Indian airlines and the Spice jet who are having minimum number of
responses in their favor.


seat comfort of Indian Airlines is not up to the mark as expected of the travelers
so Indian Airlines have strong point to be think up on regarding its seat comfort.

Page | 81

Quality of beverages

• Quality of beverages plays most important role in deciding satisfaction level of
travelers and beverages is only important factor that indicates strong tangibility of
any of air line service provider.

• It can be clearly interpreted from the above graph that kingfisher is having highest
responses as excellent followed by Spice Jet.

• Indian Airline and Jet Airways is having most of the responses as poor and bad so
there is strong point to be think upon for these both airlines.

Page | 82

Quality of Entertainment

• As far as quality of entertainment is concern it can be clearly interpreted from
graph that Kingfisher is highest number of rating from the respondents towards
excellent side, it is Indian airlines and the Spice jet who are having minimum
number of responses in their favor.


quality of entertainment of Indian Airlines and Spice Jet is not up to the mark as
expected of the travelers so Indian Airlines have strong point to be think up on
regarding its quality of entertainment.

Page | 83

Cross Tabulations:
By which airlines do you travel the most Vs If price reduced then ready to
switchover Cross tabulation

By which airlines do you travel the most * If price reduced then ready to switch over Cross
tabulation
Count
If price reduced then ready to switchover
Probably Probably
Yes Yes Maybe No No Total
By which airlines do Spice jet 20 15 8 5 2 50
you travel the most Jet airways 15 21 8 2 4 50
Indian 18 14 11 5 2 50
Airlines
Total 53 50 27 12 8 150

• From the above graph it can be clearly interpreted that people are having strong
preference towards kingfisher but not able to travel in kingfisher due to its high
ticket prices compared to other airlines in domestic as well as in international.

Page | 84

• In the above graph it is shown that around 80% of Spice Jet user are ready to
switch themselves to Kingfisher, If Kingfisher reduces its prices in comparison
with rest of the players in the industry.

• Now considering Jet Airways it also has most of the responses towards “yes” and
“probably yes” options so it can be interpreted that Jet also has its target audience
loyal to kingfisher but attracted to price factor of Jet Airways.

• Now Indian Airlines has around 76% of people who are ready to shift themselves
to Kingfisher if Kingfisher reduces its price up to an extent so its is remarkable
thing that even public sector Airlines is not able to give stiff fight to Kingfisher as
far as preferences of people are concern.

• The respondents who are not ready to shift from there Airline service providers
are minimum and can be counted on figures. So it is clear that Kingfisher has
strong preference and loyalty of people.

Page | 85

How often do you fly Vs Service provider maintains long term relationship Cross
tabulation

Count
Service provider maintains long term relationship
Strongly Strongly
Agree Agree Neutral Dis Agree Disagree Total
How often do Once in a year 2 10 11 8 9 40
you fly Once in 60 9 4 7 5 25
months
Once in a month 4 16 0 1 9 30
Frequently 39 44 6 7 9 105
Total 45 79 21 23 32 200

• When asked respondents about maintenance of relationships from the side of
Airline service provider it was expected and obvious that most of the respondents

Page | 86

who were the frequent traveler of particular Airline service provider responded
positively.

• Respondents who travel once in a month also had positive view point towards
maintenance of relationship by the service providers as they can be also counted
under the head of frequent traveler.

• Respondents who were not the frequent flyers that is they travel once in six
months or once in a year they responded negatively towards the question asked to
them, from them around 85% of people responded as disagree and strongly
disagree.

• So it can be clearly interpreted that frequent flayers enjoys more privilege on side
of service provider compared no flayer who is not a frequent flayer.

Page | 87

HYPOTHESIS
H0: There is no association between Age and people ready to shift to Kingfisher airlines
if Kingfisher reduces its rates.
H1: There is association between Age and people ready shift to Kingfisher airlines if
Kingfisher reduces its rates.

If price reduced then ready to switchover * age group Cross tabulation
Count
Age group
0-18 18-30 31-45 45-60 60 and above Total
If price reduced then Yes 12 27 10 0 5 54
ready to switchover Probably Yes 0 15 25 5 0 45
Maybe 6 0 10 5 0 21
Probably No 0 0 0 15 0 15
No 0 0 0 5 10 15
Total 18 42 45 30 15 150

Chi-Square Tests
Asymp. Sig.
Value df (2-sided)
Pearson Chi-Square 184.281a 16 .000
Likelihood Ratio 178.571 16 .000
Linear-by-Linear 59.309 1 .000
Association
N of Valid Cases 150

• From above output of SPSS window we can see that Significance value of
pearson chi-Square is 0.000 which is less than 0.05 ,this means that H0 is rejected
and H1 is accepted because pearsons Chi-square significance value is less than
0.05. It means shift to kingfisher is dependent on age group

Page | 88

.

• From the above graph we can see that people from age group between 0-18 and
18-30 have replied yes or probably yes when asked that are they ready to shift to
kingfisher airlines if it reduces its rates.They said they are ready to shift to
kingfisher airlines.

• People between age group 31-45 said probably yes or may which means they may
or may not shift to kingfisher airlines.

• People between age group 45-60 and 60 & above said NO which means they are
not ready to shift to kingfisher , they are loyal to their respectiver airlines.

Page | 89

HYPOTHESIS
H0: There is no association between Gender and people ready shift to Kingfisher airlines
if Kingfisher reduces its rates.
H1: There is association between Gender and people ready shift to Kingfisher airlines if
Kingfisher reduces its rates.

If price reduced then ready to switchover * Gender Cross
tabulation
Count
Chi-Square Tests
Gender
Value dfAsymp. Sig.
Male Female Total
(2-sided)
If price reduced then Yes a 48 6 54
Pearson Chi-Square 49.257 Yes 34
4 .00011
ready to switchover Probably 45
Likelihood Ratio 54.354 4 12
Maybe .0009 21
Linear-by-Linear Probably 1
36.627 No 0 .00015 15
Association No 6 9 15
TotalValid Cases
N of 150 100 50 150

• From above output of SPSS window we can see that Significance value of
pearson chi-Square is 0.000 which is less than 0.05 ,this means that H0 is rejected
and H1 is accepted because pearsons Chi-square significance value is less than
0.05. It means shift to kingfisher is dependant on Gender.

Page | 90

• From the above graph we can see that most males have replied yes or probably
yes when asked that are they ready to shift to kingfisher airlines if it reduces its
rates.They said they are ready to shift to kingfisher airlines.

• There were only few male swho said NO, which means only few are not ready to
shift.

• Females have given uniform answers, the graph for females is almost equal for all
categories, which means females may shift or may not shift.

Page | 91

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