Indian Aviation: Price Wars & More

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Case Details:

Case Code : MKTG029
Case Length : 12 Pages
Period : 2002
Pub Date : 2002
Teaching Note : Available
Organization : Indian Airlines, Jet Airways, Sahara Airlines
Industry : Airlines
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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'Everyone Can Fly' Through 'Steal A Seat' Contd...

They could bid for their destination online at a leading portal, www.indiatimes.com, or through phone, fax or e-mail. The 'Steal a Seat' scheme followed the already popular 'Sixer', 'Bid 'n' Win' marketing campaigns of the carrier.

As a result of these aggressive marketing strategies, fares continued to decline on a daily basis as compared to the 10% increase per annum in the past and sales increased. Airline companies seemed to be happy as it was much better to earn lesser revenues than fly planes with empty seats. However, some industry observers felt that companies took this decision out of desperation to increase the stagnating air-travel revenues. It was also being felt that they were nothing but short-term gimmicks as the companies would not be able to financially sustain these for long. Moreover, it would be irrational to expect travelers (especially those from the business class) to plan their travel 21 days in advance.

Background: The Indian Aviation Industry

The history of Indian aviation industry's dates back to the early 1930s, when one of the leading Indian business houses, the Tatas set up the Tata Airlines. There was limited activity in the field over the next two decades despite eight more private companies entering the fray.

In 1953, the Air Corporations Act 1953 came into force and all the assets of the then existing nine airline companies were transferred to two corporations - Indian Airlines Corp. (IA) and Air India International (Air India).

While Air India offered international air services, IA offered domestic services. The Air Corporations Act 1953 prohibited any person or company to operate any scheduled air transport services from, to or across India.

Therefore, two corporations enjoyed a monopoly status in the scheduled air transport services market. In 1962, Air India International was renamed Air India Ltd.

In 1986, private airlines were allowed to operate chartered and non-scheduled services under an ‘Air Taxi'scheme. The scheme was introduced to boost tourism and augment domestic air services. The carriers were however, not allowed to publish time schedules or issue tickets to passengers...

Excerpts >>