1. PRESENTED BY : Harshit Saboo Pooja Shakaala Pankhuri Singhal Mayuri Munot Krati Saluja Krupal Khatri Ishita Saxena Lavendra Dadhich DOMESTIC AIRLINES IN INDIA LEVERAGING PRICE 1

2. INTRODUCTION 2 The case let examines the pricing wars resorted to by Indian airline companies to counter the competition and sustain in the marketplace. It discusses the APEX fare schemes launched by various domestic airlines. The case let talks about some of the innovative promotional schemes that were launched by these companies. ISSUES: Pricing strategies in Indian airlines industry Sales promotion in airlines Competition as a key consideration for designing marketing strategy 3. ABOUT THE CASE STUDY 3 PRICING WARS IA announced 3-15% cut in fares in June 2002. Next day JA reduced prices by Rs 635 for economy class APEX fares scheme Saharas Strategy INDIAN AIRLINES Schemes Wings Of Freedom Bharat Darshan 4. ABOUT THE CASE STUDY 4 SAHARAS Various Schemes Wings & Wheels scheme in March 2002. Sixer Offer scheme during July August. Steal a Seat online bid scheme in August 2002. Steal Buys scheme 5. MONOPOLY 5 Up to 1990 Indian Airlines. Single service provider and many users of service. Service provider had low elasticity with no close substitute. 6. OLIGOPOLY 7 The period after 1990, Monopoly ended An industry dominated by a small number of large firms Firms provide either identical or differentiated services The industry has significant barriers to entry with respect to capital and regulations 7. CHARACTERISTIC OF OLIGOPOLY 8 Few firms each large enough to influence market price. Products may be differentiated or homogeneous. The behavior of each firm depends on the behavior of the others. Entry barriers exit. 8. 9 Kinked Demand Curve in Oligopoly: A kinked demand curve is said to occur when there is a sudden change in the slope of the demand curve; this gives rise to a kink, that is, sharp corner in the demand curve. We would get such a curve in an Oligopoly, when it is assumed that the rivals will lower their prices when the oligopolist lowers his own price but that rivals will not raise their prices when the oligopolist raises his price. 9. Kinked Demand Curve and Price Rigidity D Price change unmatched Price change matched d d D K Quantity 10 10. Examples of Oligopoly Tennis Balls: Wilson, Penn, Dunlop and Spalding. Cars: GM, Ford, Daimler Chrysler Cereal: Quaker, Ralston Food, Kellogg, Post and General Mills. Grocery stores 11 11. ADVANTAGES OF OLIGOPOLY 12 Large firms having strong hold over the market are able to make huge profits as there are few players in the market. In oligopoly, many times, products of two different competitive companies are derived out of one large firm. Therefore, whichever company makes the profit, it finally ends up as a profit of the parent firm. Since companies in an oligopolistic market have full control over it, they are capable of deciding prices as per their choice. Though this practice is illegal, it works in favor of these businesses. 12. 13 For customers, oligopoly is advantageous because they can easily make price comparisons among the few players existing in the market. Easy price comparison forces companies to set their prices competitively which is a positive point for customers. High profits generated by the companies can be used for innovation and development of new products and processes. 13. DISADVANTAGES OF OLIGOPOLY 14 Setting of prices may be advantageous for the firms, but if done unrealistically, it may prove to be a great disadvantage for consumers. Firms cannot take independent decisions and always have to consider the views of other dominant players in the market. Small businesses in an oligopolistic market fail to establish themselves as a brand because most of the market is captured by larger firms. With the presence of little competition, dominant companies may not think of improving their products. 14. Apex is ADVANCE PURCHASE EXCURSION FARE. It is a non- cancellable return fare offered at a h Apex IS ADVANCE PURCHASE EXCURSION FARE. It is a non-cancellable return fare offered at a heavy discount on the conditions: Tickets are purchased at least 21 days in advance Minimum gap between departures range from one to six weeks. Maximum gap between departures is 12 to 24 weeks. There are no stop overseavy discount on the conditions: Tickets are purchased at least 21 days in advance Minimum gap between departures range from one to six weeks. Maximum gap between departures is 12 to 24 weeks. There are no stopovers 15 APEX 15. EFFECTS OF APEX Lead to increase in number of customers. Loss of airline companies minimized as with the increase of passengers the aircraft ran to their full capacity. It brought a veritable boom in tourism sector. It was able to lure the middle class people who preferred to travel by trains 16 16. DIFFERENT SCHEMES UNDER APEX YOU CAN FLY(INDIAN AIRLINES) WINGS OF FREEDOM(INDIAN AIRLINES) BHARAT DARSHAN(JET AIRWAYS) EVERYONE CAN FLY(JET AIRWAYS) WINGS &WHEELS(AIR SAHARA) SIXER AND SUPER SIXER(SAHARA) STEAL A SEAT &STEAL BUYS(SAHARA) 17 17. AIR SAHARA First airlines to start up with innovative price models than APEX Model. Sixer and Super Sixer Schemes in 2002 Six refers to the six zones for 25k.These schemes offered more to the customers than their competitors. Square Drive Scheme ( Family Pack) 4k-2.5k Steal a Seat - Bidding process started from Base price Re 1/- 18 18. CHANGES AFTER IMPLEMENTATION OF APEX 19 19. 20 Discount to regular customers Charging less for busy routes Reduce charges for cancellation of tickets Having flexible airlines timings Concession for senior citizens STRATERGIES TO ENHANCE MARKET SHARE AND INCREASE USER 20. 21 Pick up and drop up facilities. Making mission as well as setting the vision. Comparing with the competitors and planning accordingly. Make a survey and then frame the policies. Increase flight connectivity . 21. Environmental factors influencing pricing decisions in the airline industry 22 Air traffic Flying carriers Global fuel prices Taxes and market players 22. CONCLUSION 23 Remarkable growth in recent years in Indian Aviation Industry. 23. 24 Future of Indian Aviation Industry. 24. INFRASTRUCTURE CONSTRAINTS 25 Shortage of airport facilities, parking bays, air traffic control facilities and take-offs and landing slots Continued growth may be hampered Liberalize rules and regulations by the government for the new entrants. Reduction in prices and Lease Rentals. 25. REFRENCES 26 26. THANK YOU 27