Business Case Studies, Leadership Case Study, Tata Group,Ratan Tata

Code :BSM0048

Year : 2009

Industry : Transportation

Region : India

Teaching Note:Available

Structured Assignment :Available

Abstract: The primary objective of the case study is to analyse the sustainability of Low-Cost Carrier (LCC) model in Indian aviation industry. This case would enable a discussion on the factors that are critical for the successful functioning of LCCs; the factors that have led the Indian LCCs into trouble; and the sustainability of LCCs in the long run. Since 2003, when Air Deccan entered with its LCC model, Indian aviation was revolutionised. While with the increase in demand, opportunities increased, so did the threats with the increase in competition. In a span of 2 years, the industry witnessed 25% annual growth and the entry of four new players. It was estimated that by 2010, air passengers would increase to 50 million. However, instead of doing well, by 2007 Indian LCCs were bleeding. In 2007, Air Deccan merged with Kingfisher Airlines while, GoAir moved out of the LCC model, adding business class in its aircraft. With SpiceJet and IndiGo remaining as the only LCCs in India, the case delves into the reasons behind the failure of LCCs in India and enables an interesting discussion on what needs to be done to make the LCC model successful, given the potential demand.