CASE STUDY

AIRASIA INDIA: CLASH FOR THE INDIAN

SKIES

Apoorva Sharma
Anoop Kumar Sharma
Adarsh Chhajed
Rahul Gupta
Rushikesh N. C.

Presentation Outline

Evolution of Indian Aviation

News statements
Indian Aviation Industry (overview)
Macro Environmental factors
Porters 5 forces
SWOT Analysis
PEST Analysis

Recent in News
Despite having started at least a decade later than Jet
Airways, IndiGo accounts for the lion's share in the domestic
market
The dogfight to watch in Indian skies will be between three
players (IndiGo, Spice jet and Air Asia)
Indian skies are for LCC who have gained market share
from their fatter FSC cousins and will continue to down so
going forward
There is little to distinguish between LCCs and FSC
economy class products
Indias domestic aviation has shifted to an almost100%
lowfaresmarket
Conditions may support the launch ofnew long haulLCC
based in India, AirAsia may be the first to take advantage
GoAir could become India's first hybrid carrier, making it
more attractive to a potential foreign airline investor

ndian Aviation Industry

Indias domestic traffic up 13.9% year-on-year and
international traffic up 9.0%
IndiGo market share soared to 36.4% by the end of the
financial year, widening the gap between itself and the
second largest carrier,Jet Airways, which had a market
share of 25.4%
Total international traffic to/from India grew at 9.0% in
FY2015, Jets growth rate was around twice that at
20.6%, with the airline accounting forclose to75% of the
incremental international traffic carried on Indian airlines.
New start-ups, which include anFSC(Vistara),
anLCC(AirAsia India) and a regional carrier (Air Costa) all
performed below expectations.

Macro Environmental
factors

INDIAN AVIATION SPREADING ITS

WINGS

ndian Aviation Industry

Players
Government
IndiGo
SpiceJet
GoAir
Fuel Suppliers
Airport authority

Strategy models
LCC
FSC
Hybrid`

Porters Five Forces of

Threat of New Entrants (High)
Industry
-Saturated industry hence there is hardly any space for a new comer
-High cost of entry
-High Operating cost. (Fuel, Taxes, fees, Airport charges)
-High cost of buying & leasing Aircraft.
-Strong existing player

Threat of substitute (Low)

-No perfect substitute for international carriers.
-Domestic airlines can be substituted by cars, buses, trains & video call
service
Bargaining power of supplier (High)
-Aircraft is dominated by Boeing & Airbus.
-Very less number of manufacturers of Boeing & Airbus
-Aviation fuel is a commodity

Porters Five Forces of Industry

Bargaining power of Buyer (High)
-Large No. of players competing for same set of customers.
-Large No. of players provide huge option for buyers
Rivalry (High)
-Many Players
-Intense price competition
-High fixed cost
-Low Marginal cost
-Homogeneous product
-Excess capacity

AirAsia
AirAsia Berhad
Worlds best LCC
Operates 22 countries spanning 100+ destinations

AirAsia India
Got the permit in March 2014
Plan to offer travel at 35% cheaper than competition
Will Achieve Aircraft Utilization Rate of 16 hours & Turnaround time
of 20minutes

SWOT Analysis
Strength
Effective top management
Strong strategy and execution
plan on fuel hedging, buying low
cost airbuses
Strong brand name and joint
venture with TATA, reputed name
in INDIA
Low cost model
Single type fleet

Weakness
Limited human resource
Heavy reliance on IT
Rising fuel cost
Rising labor cost

Opportunities
Low Price
Vast population/Strong Demand
Enormous size and growing
middle class
Can target one million people
traveling by train

Threats
Political & Economical Factor
Regulatory uncertainty of Indian
govt.
Competitor

PEST Analysis
Political

Economical

Open sky policy/ deregulation

(+)
FDI limits(+)
Unstable government policies
(-)

Growing middle class income

(+)
Expected GDP growth (+)
Hike in average income (+)
Growth in tourism 9% (+)
Rising ATF price (-)

Socio cultural

Technological

Growing middle class (+)

Domestic leisure travel (+)
Foreign tourist (+)
Status symbol (+)
Security issue and terrorism
(-)

Modernized airports (+)

Greenfield airports (+)
Online ticket booking (+)
Video conferencing (-)

Can AirAsia replicate the success story

in Indian Skies?

Thank You!

NOW EVERYONE CAN FLY

LCC and FSC

Low Cost Carrier (LCC) is an airline that has low fares and
fewer comforts. e.g. Indigo, SpiceJet and GoAir
Full Service Carrier (FSC) is an airline that offers more
comforts such as in-flight entertainment, checked
baggage, meals, more seat recline and legroom in the
ticket price. e.g. Air India and Jet Airways
Estimated Profitability:

19

Market Share

inancial Performance