FACTORS AFFECTING CONSUMER PREFERENCE OF CHOOSING LOW BUDGET FLIGHTS OVER FULL FARE FLIGHTS IN MUMBAI

MARKET RESEARCH PROJECT ASSIGNMENT

ANKIT DOSHI 18, KUNAL GANDHI 21, ANKIT MAJETHIA 33, ANKEET SHAH 52, SHOBHA SHETTY 52, BIPIN TRIPATHI - 61
3/1/2013

FACTORS AFFECTING CONSUMER PREFERENCE OF CHOOSING LOW BUDGET FLIGHTS OVER FULL FARE FLIGHTS IN MUMBAI

Research Objective
To analyze and study the factors effecting consumer preference of choosing low budget flights over full fare flights.

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Executive Summary

The aim of this report was to investigate the factors that contribute most to the customers preference in selecting Low budget Airlines. The results indicate that there are 7 factors that affect customer preference. These are Cost & Price, In flight Service, Boarding, Flight Crew, Aircraft, Check in Facilities, Easy reservations. Airlines company should focus on these factors which will help them to increase customer Satisfaction & overall growth & profitability of the airlines.

FACTORS AFFECTING CONSUMER PREFERENCE OF CHOOSING LOW BUDGET FLIGHTS OVER FULL FARE FLIGHTS IN MUMBAI

INTRODUCTION
The growth of low Budget Airlines in the India and elsewhere is arguably the single most important factor currently shaping the airline industry. While LBAs accounted for 7% of Indias .domestic passengers in 1990, their geographic scope was fairly limited, and for the most part, LBA service was synonymous with a single carrier, Indian Airlines. In contrast, LBAs collectively accounted for nearly one-quarter of all domestic origin and destination (O&D) passengers during the first half of 2002. And while Indigo is still by far the largest LBA A number of other LCCsnamely GoAir, Jet Airways, Kingfisher and Frontierhave all been growing rapidly. The scope of LBA service, once limited to a handful of cities, now reaches virtually all corners of the country. During the last decade, many global corporations have set up their operational base in India, which has led to an increase in foreign business travel to India. Also, India, being a key leisure destination, travelers from across the world visit India on a year round basis. Increase in the number of foreign tourist arrivals in India, has been an instrumental factor driving growth of the Travel and Tourism sector in India

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FACTORS AFFECTING CONSUMER PREFERENCE OF CHOOSING LOW BUDGET FLIGHTS OVER FULL FARE FLIGHTS IN MUMBAI

INTRODUCTION
Similarly, the growth in domestic output has resulted in an increase in domestic tourist visits by almost three folds during 2000 and 2009. The growth in the travel and tourism sector in India has its direct positive impact on the growth Low Budget Airline sector in India. Growth in tourism will result in an increase in demand for hotel room and also increase in Airlines business. The main drivers for growth are growth in Tourism sector, growth in economy, growth in infrastructure, income growth & growth in Budget Airlines. Lowe Budget Airlines have emerged as number of tourists & business travelers are not willing to pay a high price for luxurious full fare Airlines has decreased while number of inbound tourist who travels has dramatically increased. Comfortable accommodation is not luxury anymore. Low Budget Airlines mainly caters to Middle class of people and few on Business purpose. LBAs offer limited luxury like loading, boarding & few basic amenities. They range between Rs.2 500 to Rs. 4430. This report examines what are the overall factors that contribute strongly towards the customers preference & which one of those factors is highly important & hence should be focused by the Low Budget Airliners.

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FACTORS AFFECTING CONSUMER PREFERENCE OF CHOOSING LOW BUDGET FLIGHTS OVER FULL FARE FLIGHTS IN MUMBAI

KEY NOTES
In India the middle class population are the ones which have their income from Rs 1,00,000 to 5,00,000 and Upper middle class are the those who have their income upto Rs 1,000,000. These are the ones which normally use Low Budget Airlines.

Supply expected to grow at a CAGR of 15% will surpass the

growth in demand which is estimated to grow at a CAGR of 10.3% during 2010-13

SECONDARY DATA ANALYSIS

Our objective was to find out various factors that affect the choice of low budget airlines over full fare airlines in India. After analyzing secondary data we were able to find out answers for following questions: Key trends in the LBA category Three major trends in this industry. Firstly, there is a growth in terms of focus towards mid segment value for money Airlines. This can be witnessed in the large number of domestic acknowledging this space in India. Secondly, consumers are becoming more cost and quality consciousness. Thirdly, there is a considerable increase in discretionary spends towards travel and tourism by Indian consumers.

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FACTORS AFFECTING CONSUMER PREFERENCE OF CHOOSING LOW BUDGET FLIGHTS OVER FULL FARE FLIGHTS IN MUMBAI

SECONDARY DATA ANALYSIS

Security is also an important area for the Airline industry Security and safety are becoming bigger issues for Airlines. The security department is responsible for implementing procedures which aim at protecting the safety and security of passengers, staff, Airline employees and the Airlines. The higher security standards can help in combating a major risk to the Airline security and increase the Airlines profitability. There are several advantages of having better security, for example, it gives great comfort and convenience for travelers as well as to the staff. Efficient security strategy can also lower operating and energy costs. Furthermore, employees do get motivated and (can be more) productive in a secure environment. Key challenges faced by LBA One of the biggest challenges in the Airline industry currently is that it does not have infrastructure status. Also, the tourism ministry is not equipped with executive powers to bring about sweeping changes in the system. The industry also faces a challenge of tough lending norms by Indian banks. Multiplicity of taxes also has a negative impact on the hospitality segment. Apart from these challenges, licensing process is also a major reason for delay in project execution. Lastly, there is poor tourist infrastructure and on-ground support given to tourists.

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FACTORS AFFECTING CONSUMER PREFERENCE OF CHOOSING LOW BUDGET FLIGHTS OVER FULL FARE FLIGHTS IN MUMBAI

RESEARCH METHODOLOGY
Sampling Element

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o Random Sampling Sampling Extent/Area o India Sampling Size o 90 Surveys Sampling Technique o Convenience Sampling Sampling Instrument o Online Survey Methods of Data Collection o Questionnaire on Likert Scale, Closed Ended, Dichotomous

o Total 10 Questions

FACTORS AFFECTING CONSUMER PREFERENCE OF CHOOSING LOW BUDGET FLIGHTS OVER FULL FARE FLIGHTS IN MUMBAI

DATA ANALYSIS

Before we take you further to the analysis of the survey & determine the factors effecting Customer Satisfaction in Budget Hotel, lets study a few characters of respondents 1) Reason for travel: Out of the 82 respondents 34 were travelling for Business reasons, 46 were travelling for Personal reasons

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2) Modes of purchase: Out of the 82 respondents 19 purchased directly from airline 52 though airline travel agent/online 14 other ways

FACTORS AFFECTING CONSUMER PREFERENCE OF CHOOSING LOW BUDGET FLIGHTS OVER FULL FARE FLIGHTS IN MUMBAI

DATA ANALYSIS
3) Reason for choosing: Out of the 82 respondents 88 % said cost 15 % said Ease of Booking 25 % said Choice of Flight Times 11% said Choice of destinations

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After we have seen the characteristics of respondents we go to the main part of our survey ie the Data Analysis. We will be doing the Data analysis on the response of 82 respondents to the 10 questions answered on a scale of 1 to 5 ( 1 - Strongly disagree, 2 - Disagree, 3 Neither disagree nor agree, 4 - Agree & 5 - Strongly disagree). The analysis is being carried out using Factor Analysis Methods

FACTORS AFFECTING CONSUMER PREFERENCE OF CHOOSING LOW BUDGET FLIGHTS OVER FULL FARE FLIGHTS IN MUMBAI

FACTOR ANALYSIS

The data is entered in the tabulated format of SPSS with 10 columns indicating the questions & each row indicating the answers from each respondent.( ie 82 rows for 82 respondents). Each value in cell ( ranging from 1 to 5 ) indicates the answer given by respondent on a scale of 1 to 5 ( 1 - Strongly disagree, 2 - Disagree, 3 Neither disagree nor agree, 4 - Agree & 5 - Strongly disagree). This data feed in SPSS software is subjected through Factor Analysis, we request the software package to extract factors with an Eigen Value of 1 or higher. The Method requested here is Principal Matrix.

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FACTORS AFFECTING CONSUMER PREFERENCE OF CHOOSING LOW BUDGET FLIGHTS OVER FULL FARE FLIGHTS IN MUMBAI

FACTOR ANALYSIS

70% of the data is considered and rest is discarded As KMO is greater than 0.6, the sample size is adequate As significance is less than0.05, the correlation between the variables is adequate

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FACTORS AFFECTING CONSUMER PREFERENCE OF CHOOSING LOW BUDGET FLIGHTS OVER FULL FARE FLIGHTS IN MUMBAI

FACTOR ANALYSIS
Two important factors which will affect the preference of customer to fly in a particular airline are:

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Cost and price + In flight service+ Check in = Value for money Boarding + reservation = Convenience

ANALYSIS
61% prefer buying tickets online 63.3% people dont mind travelling odd hours But only 42.5% is ok with travelling more than 5 hours

OUTCOMES
From the Factor analysis India being price sensitive country price plays a very important role in affecting the flying decision Along with price, in flight service and check ins would make it an attractive proposition Convenience is also a crucial driver for decision making

FACTORS AFFECTING CONSUMER PREFERENCE OF CHOOSING LOW BUDGET FLIGHTS OVER FULL FARE FLIGHTS IN MUMBAI

CONCLUSION
Cost is the prime factor for deciding airline services

RECOMMENDATIONS
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It is recommend that budget Airlines should focus on below mentioned factors to maximize Customer Satisfaction: Low Cost Carrier business model is call of the day but there are factors which can ensure consumer preferences Improving in flight services Check ins Flight crew

REFERENCES
DGCA Equity Master Articles from Economic times from Internet Applet-magic.com Institute for Indian Economics. Pie in the Sky: Now Its No Longer So High by Sidhu M

FACTORS AFFECTING CONSUMER PREFERENCE OF CHOOSING LOW BUDGET FLIGHTS OVER FULL FARE FLIGHTS IN MUMBAI

ANNEXURE 1
1. 2. Do you typically fly for business, personal reasons, or some other reason?S Do you typically purchase your plane tickets directly from an airline, through an online travel discount site (e.g., Yatra, travel guru, etc.), or some other way? About how many times do you typically fly each year? What airline companies have you flown with in the past? Are you aware of any Global Issues that Budget Airlines are causing? For what reasons do you use budget airlines? Would you fly on a Budget Airline to a destination more than 5 hours away? What are the factors that matter when you decide to fly? Low budget Airlines are generally available on odd hours. Are you comfortable with it? What is your annual income?

3. 4. 5. 6. 7. 8. 9. 10.

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