descriptive ananlysis of air deccan analysisis

1. CASE STUDY ON BRAND MANEGEMENT
SOURAV PANDA
08DM047
AIR DECCAN
Implementing the Low –cost Model in India
Background
As aviation industry was increasing at fast rate there was strong competition between
various players.
Air Deccan introduced the concept of low cost air carrier and was initially quite
successful in implementing it. The target customer of Air Deccan was generally
unsatisfied customer of Indian Airlines who did not put much emphasis on service but
were price conscious. The service attracted frequent air travellers.
The case has the following issues:
» Studying the structure of the Indian civil aviation industry.
» Developing an understanding on the operations of low cost carriers in India.
» Examining the viability of low cost business model in the Indian aviation industry.
» Understanding the target market and the promotional strategy of a low cost airline in
India and draw a comparison with that of full service airline.
» Studying the challenges that a low-cost airline company might face in the Indian
context.
ANALYSIS:
Air Deccan's business model was inspired by the globally successful low cost model
pioneered by the US-based Southwest Airlines in the 1970s.The challenges that the
company has to face are now only beginning. In the initial stages of the company, many
of the established players (Indian Airlines, Jet Airways and Sahara) would have
trivialized the company and not expected it to reach the level it has reached now.
Suddenly, the company has appeared as a big dot on the radar screen of these well-
established players. The existing paradigm is that running an airline requires large
funding. Unlike air services, Air Deccan did not provide any food on board. However, it
sold snacks and water bottles on its flights for a price. Serving and consumption of
alcohol were not permitted.

2. The company felt that for short distance domestic flights, most passengers did not want
food. It was felt that there was huge growth potential for Low Cos Airlines in India due
to the country's huge 200 mn middle income group population. They have done this
through a clever combination of innovation and outsourcing. More importantly, from a
strategic perspective, it gives powerful evidence to how technology can be a key factor in
changing the industry dynamics, even in what were once considered fairly stable or
conservative industries.
Despite a middle class population of over 150 million, only three to four million of them
used air transport. A key reason for the low volume of air travel was primarily the steep
airfares. The perception is that air travel is essentially for the rich class, who can afford to
pay a high price for the convenience of air travel
Low-Cost Airlines (LCA) usually operate on a 3-pronged policy of low operational costs,
appropriate positioning and no-frills services to harness only those customers who value
cheap fares. Low operating costs are ensured through cost containment on all aspects of
the airline's operation such as by contracting non-core activities, lower airport fees,
shorter time on the ground through quick turnarounds, simple boarding processes, higher
percentage of on-line sales of tickets thus, reducing commission payable to travel agents,
more number of seats on the aircraft by optimally utilizing space on the aircraft,
elimination of business class section on the flight, and ensuring that the flights run to full
capacities. Unlike legacy airlines, low-cost airlines do not use the traditional hub and
spoke model. They offer no inter-line arrangements for seamless passenger transition or
baggage handling from one airline to another. Innovations to achieve tight operational
cost control through many innovative practices.
• Most of the tickets sold to passengers are through the Internet.
• A policy of 'Pay and fly' as against the 'Fly and pay' policy followed by the legacy
airlines ensures that there are no cash flow problems.
• A lower turnaround time of 15 minutes from landing to take-off of an aircraft
ensures that Air Deccan aircraft are air-borne for a much longer time each day. In
contrast, legacy airlines have turnaround times of 30 to 50 minutes. This
translates into higher frequency of flights, more flying time per day of the aircraft
and consequently more passengers flown per day by each aircraft.
• Through its Internet based system, Air Deccan can dynamically track load factors
and adjust fares on an on-line basis.
The advertisement “everyone can fly” Air Deccan positioned itself as low cost carrier. It
has taken good control of every parameters that there target customers need.
Competitions from other players were there but Air Deccan had made a strong foothold
in aviation industry.
CONCLUSION: Air Deccan was successful in starting a low cost carrier and was able
to carry forward the initiative that it has undertaken. The current scenario is something
different as Air Deccan was overtaken by Kingfisher.