Low-Cost Airlines in India: Took off with Pride, Landed in Troubles


Code :BSM0048

Year :

Industry : Transportation

Region : India

Teaching Note:Available

Structured Assignment :Available

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Indian Civil Aviation Industry Since its first commercial flight in 1912, the Indian aviation industry has witnessed several changes. The flight flew from Karachi to Delhi under the partnership of Indian State Air Services and Imperial Airways of UK. History marks the actual beginning of Indian aviation in 1932when J.R.D. Tata launched TataAirlines. In 1946, TataAirlines was transformed into a public airline, renamed as Air India for international services. Apart from Air India, in 1947, private domestic airlines - Indian National Airways, Air service of India, Deccan Airways, Ambica Airways, Bharat Airways and Mistry Airways were also operating. In 1953 under Air Corporation Act, all these airlines were nationalised and merged into a state-owned airline - Indian Airlines - for domestic services...

Emergence of LCCs in India LCCs were everything that an Indian passenger could ask for. Initially Air Deccan priced its tickets at INR 500 including INR 200 for taxes. In comparison to FCCs,Air Deccan offered 75% of its seats at 50% lower price. The airline even introduced the concept of 'Dynafares', wherein it gave bigger concessions for passengers who booked tickets 90 days in advance. With R.K. Laxman's (famous Indian cartoonist and novelist) 'common-man' as its brand ambassador, Air Deccan targeted those passengers, who travelled by road and rail paying exorbitant fares...

LCCs in Troubled Times By 2008, the market share of LCCs was shrinking. LCCs blamed FCCs for all the mess in the industry. The competition between LCCs and FCCs resulted in 5%7% of revenue loss for the former. According to Ajay Singh, director SpiceJet, "Clearly, they (full service providers) need a differentiating strategy". Further G.R. Gopinath, managing director, Air Deccan said, "What people have forgotten is the key word in marketing called segmentation. Free market is all about fair competition but if Taj today starts competing with say an Udipi, it's detrimental for both"...

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