The New 'Indian' Airlines


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Case Details:

Case Code : MKTG123
Case Length : 19 Pages
Period : 2002 - 2005
Pub Date : 2006
Teaching Note :Not Available
Organization : Indian Airlines Ltd.
Industry : Airline
Countries : India

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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A Mere Cosmetic Change? Contd...

The makeover of the existing aircraft and the arrival of new fleet of aircraft were expected to be completed over a period of 16-18 months beginning from 2006. The re-branding was to be comprehensive - covering features in-flight and on the ground too.

The aircraft seats, crew uniforms, crockery as well as customer contact points would bear evidence of the new brand 'Indian' and its new logo. Until the liberalization of the airline industry in the early 1990s, IA enjoyed a monopoly in India's domestic air transport. After liberalization, many private air carriers entered the Indian domestic airline industry and began gaining more and more market share. IA's bureaucratic management style caused it additional problems. The airline began making losses in 1989-90, but recovered to post profits from 1997-98. However, in 2000-01, IA again slipped into the red.8 By the early 2000s, there was new competition in the form of low cost carriers.

By this time, IA was just one of the players in the industry. Battered by the competition from low cost carriers, full service airline companies like IA started looking for new ways to attract passengers. During the early 2000s, IA undertook various measures to enhance its position in the industry. For instance, IA embarked on an ambitious fleet replacement program to replace its aging fleet.

To improve the quality of the services being offered, the company conducted training programs for its cabin crew, upgraded the quality of food being offered on board, etc. When faced with competition from low cost carriers, IA reacted by cutting its fares and offering a variety of promotional schemes.

IA became profitable in 2003-04 after posting losses for three years. The re-branding exercise of IA was another move to counter the competition. According to analysts and industry observers, re-branding alone will not help IA beat the competition. Opined R Krishnan, an aviation analyst, "The new name and brand looks expressive, the colour looks impressive.

Overall, the makeover is good. Still, it is only cosmetic. Inside-the-flight and on-ground service levels, punctuality, stability of schedules should improve significantly."9 In the words of Kapil Kaul (Kaul), CEO, Center for Asia Pacific Aviation (CAPA),10 Indian Subcontinent and Middle East, "The airline needs to restructure itself to face competition...

Excerpts >>


8] http://indiabudget.nic.in/es2001-02/chapt2002/chap99.pdf.

9] "Indian Airlines takes off on a new journey," www.deccanherald.com, December 26, 2005.

10] CAPA is a specialist consultancy group focused on aviation industry in the Asia Pacific region.

 

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