Airlines An Oligopoly
What is Oligopoly ! Few number of firms contributing to the entire market share. Products are differentiated in terms of service quality and offerings Entry barriers Firm is a price-setter Strategy dependent on individual rival firm’s behavior
Current Players ! Full Cost Airlines Low Cost Airlines Kingfisher Jet Indian Airlines Low Cost Airlines Air Deccan. Go-Air. Spice. Indigo.
Flight no: LCC Destination: India India's aviation sector has become the fastest-growing in Asia Rise in domestic air capacity whooping 46% . Not a new concept abroad Remarkable jump of 466% -data as per 2005
The Growth Story !
Is it really sustainable in Long run?
YES !Its a cost cutting model to Survive .
“no-frills airlines” Several options to costs. Online Tickets. No FREE meals.
“no-frills airlines” No News papers. Lean and Mean approach to staffing. Optimum utilization of space.
“no-frills airlines” Point to point contact. Higher aircraft Utilization. Lease air crafts to minimize debt to investment ratio.
“no-frills airlines” Use secondary airports. Standardization of aircrafts. NO business class.
Challenges ! Fuel Capital Others
Pricing Strategies Revenue Management . Increased profits Implements peak-load pricing Implements third-degree price discrimination Implements an inventory control system
Current Affairs !
Kingfisher acquiring Air Deccan
The CZARS unite ! Jet – Kingfisher . Almost a Cartel
Hurting Fuel costs.
Flourishing Railways… A cross-price competitor!
So why are we still in business So why are we still in business ? Do we continue Boarding or Do we de-plane ?
Hope u had a nice flight !