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Airlines

Industry Summary

  • Currently the fourth largest air passenger market, India is expected to overtake UK as number three by 2024
  • As of 2020, there were 128 airports in the country, GoI has been working towards increasing the number of airports by 190-200 by 2024.
  • Due to the pandemic, there was a reduction in 60% in domestic and 80% international traffic in the country.
  • The industry is currently losing 70-95 Cr per day due to fall in air transport since March 2020.
  • Rakesh Jhunjhunwala plans to launch ultra-low-cost airline called Akasa Air with 70 aircraft.

Value Chain

Step 1

Inbound

aircraft lease, fuel supplier

Step 2

Operations

Inflight service providers, on ground staff, baggage handlers

Step 3

Marketing

frequent flyers programs, add on services

Step 4

Customer service

lost baggage, rescheduling of flights

Cost Drivers

  • FC: aircraft leases, airport gate leases, IT/admin costs, salaried employees (i.e., pilots)
  • VC: fuel, food and beverage, ground crew/hourly employees
  • Raw material costs and commodity prices
  • Advertisement & sales promotions
  • Distribution expenses

Revenue Drivers

  • Volume Growth
  • Brand Value
  • Distribution reach, penetration and availability
  • Repeat purchase and customer loyalty
  • Value proposition meeting customer preferences

Growth Drivers

  • Increased per capita consumption
  • Population Growth
  • GDP Growth
  • Reduction in costs of travelling via air
  • Per capita Income Growth
  • Large customer segment in rural areas and BOP customers
  • Favorable demographics
  • Implementation of GST

Key Customers

  • Leisure: highly price sensitive
  • Business: not price sensitive, hard to reach
  • Individual consumers
  • Corporates
  • Travel web sites

Key Players

  • Indigo (ML)
  • SpiceJet
  • Air Asia
  • Vistara
  • Air India
  • Goair

Channels

  • Online Travel site/aggregators
  • Own websites
  • Telephones
  • OTC