Aviation Project

AVIATION
AVIATION
ITM Business School

Global Leadership Centre
Masters In International Business
Navi Mumbai
DEPARTURE-29AUGUST2006
DEPARTURE
29/08/2207 Ganesh Kumar 1
Pilot Crew
Mr. Ganesh Kumar (9)
Mr. Gyanesh Thakur (46)
Ms. Pushpinder Kaur Bhullar(38)
Mr. Saurabh Sharma (28)
Mr. Shishir Paliwal(51)
Air one “Empower Every Indian To Fly”

Table of contents
 Introduction
 Global overview
 Current/future status
 India aviation industry
 Company description
 Strategy, Target, Positioning
 Product
 SWOT
 Market analysis
 Competitors
 Environment analysis
 Consumer behaviour
 organization

AVIATION CONSISTS?
The aviation industry can be broadly
classified into military aviation and
civil aviation.
The term 'civil aviation' covers all
aviation related activities except for
those undertaken by the military
and the government.
The airlines segment can be broadly
classified into international airlines
and domestic airlines.
Cont.
An airline with one or both terminals
in the territory of a country, other
than the country in which it is
registered, is classified as an
International airline.
Domestic airlines refers to those
airlines whose flights fly only within
the domestic boundaries of a
particular country.
THERE ARE 36 BILLION REASONS FOR CHANGE IN THIS
INDUSTRY.
AIRLINES HAVE CHANGED RADICALLY.
WE ARE MAKING SOME PROGRESS WITH
STAKEHOLDERS.
CHANGE REMAINS CRITICAL.
GREATER EFFICIENCY AND THE FREEDOM TO DO
BUSINESS ON A LEVEL PLAYING FIELD ARE ESSENTIAL.
Mr Giovanni Bisignani
Director General & CEO -
29/08/2207 Ganesh Kumar
IATA 7
IATA Global Press Briefing
CURRENT STATE OF INDUSTRY
Current State of Industry
 In 2005, the air transport industry marked its fourth
consecutive year of financial aggregate loss, bringing
total post-9/11 industry losses to over US$36 billion
since 2001.
 The principal cause of the loss in 2005 was the
industry's US$61 billion fuel bill, US$17 billion more than
in 2004.
 And the situation is getting worse.
 This overwhelmed the success of considerable cost-
cutting initiatives in other

29/08/2207
areas.
Ganesh Kumar 8
OUTLOOK 2005+
Outlook 2005 +
Outlook 2005 +
 ASIA AND CENTRAL EUROPE ~
GREATEST REVENUE POTENTIAL
 International scheduled passenger traffic

in 2005 increased 15.3% over 2004
levels, and cargo traffic rose 13.4%
 Traffic growth in 2004 was exceptional

for two reasons:
one-off rebound from the adverse
affects in 2003 of the SARS epidemic
and the war in Iraq on air traffic levels.
Cont.
2004 ~ strongest world economic
growth in 3 decades.
 Economic environment less favorable in
next 2 years.
 Strongest potential lies where
liberalization is taking place
Economic liberalization continue to
boost growth in China
Increasing trade integration of central
European countries within the EU will
lead to expansion in central Europe.
NEED OF THE HOUR- CUT COSTS
6% annually Industry growth for 2004-2008 period.
Regulatory burdens + high price of oil to contend

with.
Significant improvement their non-fuel unit cost

performances - down 3% in 2004 and 2.5% in 2003.
It is therefore more critical than ever that air transport

becomes a low-cost industry.
Deregulating India’s Civil
Aviation
 Prior to 1991, aviation, much like other major sectors of the
Indian economy, was nationalized and heavily regulated
 In 1953, the Air Corporation Act, 1953, changed the
landscape of the airline industry in India.
 It was in 1994 that the Air Corporation Act was repealed
and thus this allowed private
operators to operate in the
domestic airline and aviation

29/08/2207 industry
Ganesh Kumar 13
ABOUT AIR ONE
• The AIR ONE airline is a low cost airline with
four Boeing 737 planes at an investment of
$300million.
• AIR ONE believes in dedication to the highest

quality of Customer Service delivered with a
sense of warmth, friendliness, individual pride,
and Company Spirit with returns to the
shareholders.
AIR ONE PRINCIPLES
 Simple product — which means no free meals,
economy seating, online reservations, no
frequent flier programmes
 Positioning — targeting business and price-

conscious passengers
 Low operating costs.

AIR ONE MISSION
 The mission of Air one is dedication to the highest quality of
Customer Service delivered with a sense of warmth, friendliness,
individual pride, and Company Spirit with returns to the
shareholders.
 To Our Employees
We are committed to provide our Employees a stable work
environment with equal opportunity for learning and personal
growth. Creativity and innovation are encouraged for
improving the effectiveness of Air one. Above all, Employees
will be provided the same concern, respect, and caring attitude
within the organization that they are expected to share
externally with every Air one Customer.
AIR ONE GOALS
 Financial goals
 To have a public stock offering by the year

2010
 To obtain a return on equity at least between
15-20%
 To be among the top three aviation companies
in market revenue in nearly four years
AIR ONE GOALS
Non financial goals
 Customer satisfaction to the maximum

 To come up with new services from time to
time
 To be among the top three domestic airline
company in market share by 2011

AIR ONE PLANE
 Boeing 737. To fly only one airplane model. Thus, pilots and
mechanics need to be trained on only one kind of airplane.
Having a single airplane model in a fleet also lowers
inventory, record keeping and maintenance costs, and it
minimizes the number of technical manuals, tools and spare
parts. Also, fleet management is greatly simplified.
 Weigh less than the A320 and therefore require lower engine
thrust, less fuel, have lower engine maintenance costs, lower
navigation and landing fees.
AIR ONE PLANE
Ease of maintenance, the airplane sits low to the

ground, allowing maintenance crews to easily
perform routine maintenance on the engines.

AIR ONE PLANE
 Good reliability, because the airplane can be turned around at the
gate so quickly, airline can get back on schedule if it falls behind
for any myriad of reasons. This allows our airline to deliver
passenger satisfaction as defined by the customers themselves:
getting them where they want to go, when they want to go, at
a good value. Giving passengers more departure time choices and
airline the opportunities for more revenue.
 Good flexibility, the 737 comes in four different sizes in the 100-
to 200-seat market. The interiors are flexible, too. Optional flex
seating, capability of changing a row of seats from five-abreast
business-class seating to six-abreast tourist-class seating in less
than one minute. A moveable cabin divider also allows
configuration changes between flights.
 On a typical route, 737 cash operating costs are nearly 4

percent less than its closest competitor, the A320 series, in
part due to its superior structural efficiency.

AIR ONE STRATEGIES
 A single passenger class. Targeting business
and price-conscious passengers.
 Shorthaul and point-to-point approach
 No assigned seats, pay the crews best in

industry, and use of less congested airports

AIR ONE STRATEGIES
 Employees working in multiple roles, for instance flight
attendants also cleaning the aircraft or working as gate agents
(limiting personnel costs)
 Removing seat-back pockets to reduce weight and cleaning
expense
 Charging passengers for practically every amenity they might
consume. There are no free peanuts or beverages
 Using that traffic as a marketing tool for related services; each
time a passenger books a rental car or a hotel room, our airline
will earn a percentage of the sale.

AIR ONE STRATEGIES
Promotion Strategy
 Promotion will be through outdoor advertising, radio
and print media.
 Employing public relation firm for both consumer
and financial purposes.
 Combined amount budgeted for advertising and
public relations will be held under 15% of sales.
 Tie up with Creamoza Coffee.

AIR ONE STRATEGIES
 Distribution Strategy
 Developing our own website containing the

information about the company along with facilities
of online reservation and payment.
 Hotels and Restaurants.
 Agencies giving cars on rent.
 Travel insurance agencies.

Breakdown of cost saving
Passenger services costs
Full cost short
Aircraft related costs haul airline
Commission
Low cost airline
Station costs
Advertising and promotions costs
Sales and reservations costs
Airport and ANS charges
Aircraft fuel and oil
Cabin crew
Flight crew
Other operating costs
0 5 10 15 20 25
Turning our planes into media and entertainment Cost (Rs)
plays, offering advertisers the opportunity

29/08/2207 Ganesh Kumar
to repaint the exteriors 26
of our planes, effectively turning them into giant billboards.

SWOT ANALYSIS
Factors Strenghts Weakness
Management Experience Small size
Marketing Operating in Metro No national distribution
Offering Unique, high quality, low price Cost covering
HR Small, good workforce Attrition
R&D Continuing effort to ensure Fund scarcity

quality
Economic Consumer income is growing Brand image
Competitvenes Distinctive service and features New to the industry

s
SWOT ANALYSIS
 Opportunities
 Huge potential to capture market

 Growth rate of the industry is the highest
 FDI which will in turn can help us in growing rapidly
 Changing Consumer Preferences
 Mergers and acquisitions

SWOT ANALYSIS
 Threats
 Existing competitors
 Unstable Government Policies
 Changing dynamics of the industry
 Upcoming new airlines
 Further rise in oil prices in the international market
 International terrorist

MARKET ANALYSIS
Market share of passenger traffic in major cities
1. Mumbai 26%
2. Delhi 17%
3. Chennai 7.5%
4. Kolkata 8%
5. Bangalore 8%
……………….
66.5%
DIRECT COMPETITORS
Air Deccan
Go air
Spice jet
Alliance air
(add some more name)

INDIRECT COMPETITORS
Railways
Road transport
Ship transport

ENVIORNMENTAL ANALYSIS
 Government policies
 Technological Environment
 Economic factors
 Competitive Environment
 Social cultural

CONSUMER BEHAVIOUR
 Reaction- Will need sometime for winning
the trust of the potential costumers
 Expectations- Deliver what we have

promised for

ORGANIZATION
Board of Directors
President and CEO
Dire. Operator, V.C (Marketing.),
Dire. Finance & admin.,
Director sale

Differentiation
 Maintaining costumer data base.
 Boeingspecialized engineers for

maintenance so that security is upgraded.
 Direct plight at Non-Metro airport.

“ As deregulation and privatization of the Indian Civil
Aviation and Airline Industry occurs, Air One is
prepared to meet the demands of the consumer and
deliver their expectations
while sustaining growth? ”

THANK YOU

Aviation Project

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AVIATION

ITM Business School

Mr. Gyanesh Thakur (46)

Ms. Pushpinder Kaur Bhullar(38)

Mr. Saurabh Sharma (28)

Mr. Shishir Paliwal(51)

Air one “Empower Every Indian To Fly”

29/08/2207 Ganesh Kumar 3

AIRLINES HAVE CHANGED RADICALLY.

WE ARE MAKING SOME PROGRESS WITH

CHANGE REMAINS CRITICAL.

GREATER EFFICIENCY AND THE FREEDOM TO DO

BUSINESS ON A LEVEL PLAYING FIELD ARE ESSENTIAL.

consecutive year of financial aggregate loss, bringing

total post-9/11 industry losses to over US$36 billion

 The principal cause of the loss in 2005 was the

industry's US$61 billion fuel bill, US$17 billion more than

 And the situation is getting worse.

 This overwhelmed the success of considerable cost-

cutting initiatives in other

 International scheduled passenger traffic

 Traffic growth in 2004 was exceptional

Regulatory burdens + high price of oil to contend

Significant improvement their non-fuel unit cost

It is therefore more critical than ever that air transport

and thus this allowed private

operators to operate in the

domestic airline and aviation

• AIR ONE believes in dedication to the highest

 Positioning — targeting business and price-

 Low operating costs.

29/08/2207 Ganesh Kumar 15

 To have a public stock offering by the year

 Customer satisfaction to the maximum

29/08/2207 Ganesh Kumar 18

Ease of maintenance, the airplane sits low to the

29/08/2207 Ganesh Kumar 20

 On a typical route, 737 cash operating costs are nearly 4

29/08/2207 Ganesh Kumar 21

 Shorthaul and point-to-point approach

 No assigned seats, pay the crews best in

29/08/2207 Ganesh Kumar 22

29/08/2207 Ganesh Kumar 23

29/08/2207 Ganesh Kumar 24

 Developing our own website containing the

29/08/2207 Ganesh Kumar 25

plays, offering advertisers the opportunity

of our planes, effectively turning them into giant billboards.

Marketing Operating in Metro No national distribution

Offering Unique, high quality, low price Cost covering

HR Small, good workforce Attrition

R&D Continuing effort to ensure Fund scarcity

Competitvenes Distinctive service and features New to the industry

 Huge potential to capture market

29/08/2207 Ganesh Kumar 28

29/08/2207 Ganesh Kumar 29

29/08/2207 Ganesh Kumar 31

29/08/2207 Ganesh Kumar 32

29/08/2207 Ganesh Kumar 33

 Expectations- Deliver what we have

29/08/2207 Ganesh Kumar 34

29/08/2207 Ganesh Kumar 35

 Tie up with Creamoza Coffee.

 Boeingspecialized engineers for