Industry Analysis Case Study

India's No-frills Airlines: No-profit Airlines?

OR

Abstract:
Although the private sector laid the foundation of India's aviation industry with the setting up of Tata Air Lines in 1932, for a substantial period (1953-1994) the aviation industry had been highly regulated with abysmal government participation. However, subsequent deregulation of the industry in 1994 witnessed the entrance of private players. The Indian aviation industry evolved further with the entry of the No-frills or low-cost airlines in 2003 with the advent of Air Deccan. Other low-cost competitors too joined the fray, not only taking competition to a new level but also expanding the market as a whole. But certain domestic policies like higher aviation fuel charges and airport charges were hindering the low-cost airlines from reducing prices or increasing profits. It remains to be seen as to how the Indian low-cost carriers would take on the challenge.

Pedagogical Objectives:

• To discuss how the introduction of revolutionary business concepts in an industry affect the business prospects of traditional players
• To discuss the business and revenue model of low-cost airlines
• To discuss the business and revenue model of low-cost airlines
• To discuss the challenges the Indian low-cost airlines face and debate on the possible solutions.

Keywords : Low cost airlines; No frills airlines; Indian aviation industry; Air Deccan; Business model of low cost carriers; Point-to-point; Industry Analysis Case Study; Hub-and-spoke; Full-service airlines; Business design for low cost airlines; Cost structures; Internet-based distribution