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Strategic Analysis of Airline Industry

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Subhasis Ray
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270 views21 pages

Strategic Analysis of Airline Industry

Uploaded by

Subhasis Ray
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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STRATEGIC ANALYSIS OF

AIRLINE INDUSTRY
AGENDA
• Value chain analysis

• SWOT analysis

• Porter's 5 forces

• PESTE analysis
Overview of Airline Industry
• Few number of Firms contributing to majority of the market share

• Products are differentiated upon service quality

• Firm sets the Price

• 40% of India's exports and imports, by value, are carried by air.

• Low Price Carriers introduced recently

• In 2005 Licenses were issued to 19 new carriers

• 5 new carriers were Launched in 2005 with the remaining slated to commence in 2006
Airlines Operating in India
Scheduled Operators Non-Scheduled Operators
Air India Aerial services pvt Ltd
Indian Airlines Sahara India Airlines
Jet Airways Taj Air Ltd
Sahara Airlines Reliance Transport Travels
Deccan Aviation (p) Ltd Raymond Ltd
Kingfisher Airlines Ltd
Spicejet Ltd
Paramount Airways
Go Airlines Pvt Ltd
Three Major Players
1. Their Product / Service lines and core
competencies
2. Their marketing strategies
3. Recent developments.
4. Turnover / profit etc. ( Financial
parameters )
5. Balance sheet analysis .
Market Share of Airlines in India
Airline Industry Value Chain
FIRM
INFRASTRUCTURE
-Financial Policy - Accounting -Regulatory Compliance - Legal - Community Affairs

HUMAN Flight, route and


RESOURCE
Pilot Training Baggage Handling Agent In-flight
yield analyst Safety Training Training Training Training
MANAGEMENT
training
Product
TECHNOLOGY
Computer Reservation System, In-flight System Baggage Tracking
Flight Scheduling System, Yield Management System Development
DEVELOPMENT System
Market Research
Information Technology
PROCUREMENT Communications

•Route Selection •Ticket Counter •Baggage System •Promotion •Lost Baggage Service
•Passenger Service Operations •Flight •Advertising •Complaint Follow-up
System •Gate Operations Connections •Advantage
•Yield Management •Aircraft •Rental Car and Program
System (Pricing) Operations Hotel Reservation •Travel Agent
•Fuel •On-board Service System Programs
•Flight Scheduling •Baggage Handling •Group Sales
•Crew Scheduling •Ticket Offices
•Facilities Planning
•Aircraft Acquisition

INBOUND OPERATIONS OUTBOUND MARKETING SERVICE


LOGISTICS LOGISTICS AND SALES

Michael E. Porter from Competitive Advantage: Creating and Sustaining Superior


Performance, copyright 1985 by Michael E. Porter.
PORTER’S FIVE FORCE

It is a means of identifying the different


stakeholders, or ‘forces’, which affect:

The level of competition in an industry.


The ability of a company to become
powerful in that industry.
Threat of New Entrants

• Company’s Point of view


• Industry Point of view
• Huge Capital Required
• High Maintenance Cost
• Brand Identity.
• Govt. Policy
Supplier’s Bargaining Power

• Aircraft Manufacturers
• Fuel Companies
Buyer’s Bargaining Power
• Travel Agents
• Business Travelers

Threat Of Substitute
• Railway service
• Bus service
• Water Transport
Competitive Rivalry

• Highly Competitive Industry.

• Can work as growth driver for Industry.


SWOT ANALYSIS

Strengths

Differentiation based on Value, service and price

Universal appeal to wide variety of customer

Established and highly recognizable brand image

Innovative features that distinguish the company name

Talented management team

Strong and well-designed organizational culture


Weaknesses

Some under developed channels

Under developed distribution system

Ineffective utilization of alliances and partnerships


Opportunities

Tourism with improvement of economy

Alliances and mergers

Indian market expectation


Threats

Terrorism

Health problems (such as SARS).

Regulation problems for airlines aiming to merge or grow

Improved telecommunications (i.e. Video conferencing)


decreasing business travel
PEST ANALYSIS

Political / legal

Monopolies legislation deregulation

Foreign trade regulations

Government stability

Open sky policy


Economical Factors

Interest rates

Money supply

Inflation

Energy costs
Socio cultural factors

Demographic Factors

Level of disposable income

Social mobility

Level of education
Technological factors
New Discoveries / Developments- e-commerce
Speed of technology transfer
Investment on Research & Development

Ecological factors

Pollution
Global warming
CONCLUSION

Attracting lot of players.


Environment is conducive for growth.
Industry is in its growth stage.
They should continue to differentiate through
service quality.

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