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Effect of legal environment in Indian Aviation Industry

What is the effect of legal environment in Indian Aviation Industry: The airline industry is widely impacted by regulations and restrictions related to laws and common business practices

Broadly classified in to :

  • 1. Internal – Within the organization. Can be controlled by decisions.
  • 2. External – Outside the organization  Cannot be controlled.

Current Trends:

Just few months ago, India’s aviation industry painted a rosy picture. Widely acknowledged as the world’s fastest growing aviation market, Indian skies were dotted with 670 planes in service, over 900 on order with both major manufacturers, airports were seeing a nearly 20 per cent year-on-year growth in passenger traffic, and international travel was also flourishing.

That was October 2018. May 2019 has brought with it a very different, desolate picture. One of India’s largest airlines (Jet Airways) has gone under, air fares have risen across the board, passenger traffic growth has plateaued at a mere 0.14 per cent, and dozens of new Airbus A320neo and Boeing 737 MAX aircraft have had to be grounded due to worldwide technical issues.

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Hence poor operations lead to decline of Jet Airways

  • IndiGo, flying one in every two passengers in India now

IndiGo has its own constraints, which it has to tackle to gain the most out of this situation. They are already clocking 49.9 percent domestic market share as of now. But IndiGo made good use of the opportunity in the past few months regardless. As per the results of the airline and the comments of the CEO Ronojoy Dutta, the airline saw fares go up in February and March due to the misery of Jet Airways, but they expect this to be a temporary blip on their radar.

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  • SpiceJet, in the right place at the right time

SpiceJet, which came close to its own demise back in 2014, was the best placed to capture this opportunity due to a combination of many factors. A new requirement created on the go might have helped them turn this adversity into opportunity.

  • Vistara, get set to shine

Vistara, which positions itself as a premium carrier, but was not able to grow out of Mumbai, which is one of India’s biggest markets for flying, also was able to take benefit of the fall of Jet Airways to grow. As Jet Airways passed into oblivion, the corporate travellers who want to fly a full-service airline shifted to Vistara. The dream of Vistara to be a pan-Indian carrier, rather than a Delhi-focussed carrier may be coming true, given they have also received 110 slots from the Jet Airways slot pool.

Jet Airways situation has set up a three-way battle between these three airlines. IndiGo is motivated by ruling the skies, while SpiceJet wants to be able to challenge IndiGo’s lead. For Vistara, however, it is about being the credible option for the Full-Service traveller.

Expected Changes:

The company has been hit by the twin factors of cost and revenue. Rising fuel price and an impact on the exchange rates are the cost impacts, For the quarter ended June, IndiGo’s fuel expenses alone rose 54% year-on-year. Globally crude oil prices have risen sharply, touching the highest levels since 2014 in June. At the same time, the rupee fell to a lifetime low of Rs69.01 against the US dollar in June. The company said its earnings had been impacted by expansion in investments.

“We added capacity into new routes and destinations domestically and also continued to connect international destinations to various cities in India,” Rahul Bhatia, co-founder and interim CEO, said in a statement.

On July 29, the aviation ministry informed parliament that IndiGo had cancelled 1,824 flights between January and May this year due to safety concerns arising out of faulty engines. These cancellations had affected about 100,000 passengers. This is likely to have added to the pressure on its April-June quarter earnings.

There is still a dilemma as to what is going to be the fate of Indian Aviation Industry in the next years to come there can be possibilities that Spice Jet can catch up in the race, though legal environment has played a vital role in the changes the Aviation Industry is going through.

Rise of Indi- Go in this Quarter

Indigo is an Indian budget airline company. It is the fastest growing and also the largest airline in India. Indigo airlines aims to become number one leader in the low cost airline industry in India, offering the best service and ensuring highest standards of quality at low cost to the customer.

Service marketing mix

A selection of services developed to offer customers a choice within a particular range. The elements of a service marketing mix are called 7P’s: the 4P’s of marketing mix (product, price, place, and promotion) plus 3P’s of services (people, process, physical awareness).

7P’s of Indigo Airlines

Product

Indigo airlines provides two types of product services they are

  • On ground services
  • In-flight services

Core product: The core product of indigo airlines is that they provide low-cost passenger air transportation for the middle class and lower-middle-class customers so that they can also experience flight journey.

Supplementary product: Along with the core product they also offer a supplementary product which includes check-in, food onboard, connecting flight while traveling where the service is not available, Complementary gifts along with the travel, In-flight entertainment such as music, movies games and frequent flier programs.

Augmented product: A commodity that has both primary physical attributes and the non-physical attributes which are added to increase the product’s value. The augmented product is:

  • Online booking
  • Variety of meal options
  • Mobile ticketing

Price

Price is one of the major marketing mixes for any industry. Indigo airlines succeeded because of the cheap fares which opened the gates for the middle-income group. They have an advantage when travelers are comparing prices. This makes it one of the most chosen airline services in India because of its quality services as well. The control department plays a major role in maintaining the cost of the company. With a decrease in prices and an increase in the number of passengers every day, Indigo faces tough competition from SpiceJet and Air India. There are also constant discounts that keep customers coming back.

Place

Indigo airlines have round the clock online booking so that they can avoid the difficulty for customers in going to a booking counter and wait. They also have tie up with various travels and tours operators. There are about 29 current Indigo destinations. The airline ensures that its core strategies are maintained. The core strategies include keeping the airline the most affordable airline in India and keeping flying a pleasant experience. With its fleet of 78 aircrafts and as many as 508 flights daily, it operates 29 domestic and international destinations while its competitor SpiceJet as 306 flights daily to 35 Indian and 6 International destinations. Thus, the strategy is to provide more capacity on fewer routes than thinly spread itself over many destinations.

Promotion

No airline has worked harder at capturing the local market better than IndiGo Airlines. The airline relies on its cost and availability to promote its brand across the market. Their investments in advertisements are low because it affects the cost. The airline has adopted a strategy of connecting flights to other destinations from one destination such that customers will not have to book another airline to arrive to their destination. For instance, it has connected four flights from Ranchi to Delhi, Mumbai, Patna and Bangalore and plans are underway for it to add Kolkata and Raipur. Although not a direct marketing strategy, this strategy has seen it gain more customer base because customers would want to cut costs by using just one aircraft to reach their destination. Other promotion methods used by Indigo aircraft include media vehicles like billboards, print media advertising and advertising on travel portals.

Process

The process is related to service delivery to the customers for the best policy .The management policy should be transparent as possible to attain the loyalty of the customers. The process mix of indigo airlines involve the reservation system, how effectively the flight information is provided to the customers, the facilities provided in the airport, baggage handling facility , in flight service and check in process.

People

The people involved in the business directly and indirectly are very important for indigo airlines as they are providing a lot of information. Travel agents are providing direct business to the airlines so a proper channel is made to identify the strength of travel agents in a particular area. Employees of a firm are its best resource as the human capital increases production and optimum utilization of people with high customer services skills should be hired to impress the client. The customer is given first-hand information as to what is the schedule for their flights in case of any delays or complexities.

Physical awareness

On ground handling system teamed with in flight experience creates value delivery to the customer

Market Analysis:

C`s of Analysis

  • Customer: Target customers were middle class who wanted and alternative for train travel.(Need and Factor driving consumption)
  • Context: External factors like Bad debt and Employee satisfaction in Jet Airways effected the customer behaviour.
  • Company: An analysis of Business model to maximize earnings and to have a competitive advantage over its rivals was carried out. Which included cutting down on fuel and labour by buying fuel efficient planes and getting prime slots for operations with low fare charges.
  • Competitors; Analysis on arch rivals like Spice and Vistara was carried out and plans were devised to hit their operation.

Data Trends: Growth Rate In Quarter Oil Prices and Stock Trends

Conclusion Statement:

  • The quarter has seen growth from Indi-Go due to:
  • Void created by Jet Airways Legal Environment Changes.
  • Managing and handling its Prime objective of Customer satisfaction.
  • Though the market is turbulent it was aware about its Companies business practices and laws and handled it well.
  • They need to constantly changes their market strategies to meet demand and control the market to come out as Market Leaders.

Annexures:

  • Int. Journal of Engineering Research and Management Technology .
  • Communicating in a Crisis and the Role of a Business Leader: The Case of Jet Airways Payal Mehra, Assistant Professor, Indian Institute of Management, Lucknow.

 

Cite this page

Effect of legal environment in Indian Aviation Industry. (2019, Nov 28). Retrieved from http://studymoose.com/aditya-singh-pgfb1905-apoorva-dhawan-pgfb1914harshit-gautam-example-essay

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