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Introduction To Indian Aviation Industry Tourism Essay

Indian Aviation Industry is one of the fastest growing airline industries in the world. The history of Indian Aviation Industry started in December 1912 with its first domestic air route between Karachi and Delhi. It was opened by the Indian Air Services in collaboration with the UK based Imperial Airways as an extension of London-Karachi flight of the Imperial Airways. Tata Sons Ltd., the first Indian airline, started a regular airmail service between Karachi and Madras three years later without any backing from the Indian government.

During the period of independence, 9 air transport companies were carrying both air cargo and passengers in the Indian Territory. In 1948, the Indian Government and Air India set up a joint sector company, Air India International to further strengthen the Aviation Industry of India. As part of nationalization in 1953 of Indian Airlines (IA) brought the domestic civil aviation sector under the purview of Indian Government. Later till the mid 1990’s government-owned airlines dominated Indian aviation industry. When the government adopted the Open-sky policy in 1990 and other liberalization policies the Indian Aviation Indian made underwent a rapid and dramatic transformation.

By the year 2000 several private airlines have entered into the aviation business in succession and many more were about to enter into the arena. Indian aviation industry today is dominated by private airlines and low-cost carriers like Deccan Airlines, GoAir, and SpiceJet, etc. And Indian Airlines, the giant of Indian air travel industry, gradually lost its market share to these private airlines. According to the report of CAPA, these budget carriers are likely to double their market share by 2010 — one of the highest in the world.

 Brief Introduction

Indian Aviation Industry has been one of the fastest-growing aviation industries in the world with private airlines accounting for more than 75 % of the sector of the domestic aviation market. With a compound annual growth rate (CAGR) of 18 % and 454 airports and airstrips in place in the country, of which 16 are designated as international airports, it has been stated that the aviation sector will witness revival by 2011.

In 2009 with increase in traffic movement and increase in revenues by almost US$ 21.4 million, the Airports Authority of India seems set to accrue better margins in 2009-10, as per the latest estimates released by the Ministry of Civil Aviation.

This is being primarily attributed because of the increase in the share of revenue from Delhi International Airport Limited (DIAL) and Mumbai International Airport Limited (MIAL). Passengers carried by Indian domestic airlines from January-February 2010 stood at 8,056,000 as against 6,761,000 in the corresponding period of 2009-a growth of 19.2 %, according to a report released by the Ministry of Civil Aviation.

Today Hyderabad International Airport has been ranked amongst the world’s top five in the annual Airport Service Quality (ASQ) passenger survey along with airports at Seoul, Singapore, Hong Kong and Beijing. This airport in Hyderabad is managed by a public-private joint venture consisting of the GMR Group, Malaysia Airports Holdings Berhad and both the State Government of Andhra Pradesh and the Airports Authority of India (AAI).

The Indian aviation sector can be broadly divided into the following main categories:

Scheduled air transport service includes domestic and international airlines.

Non-scheduled air transport service consists of charter operators and air taxi operators.

Air cargo service, which includes air transportation of cargo and mail.

Scheduled air transport service: It is an air transport service undertaken between two or more places and operated according to a published timetable. It includes:

Domestic airlines, which provide scheduled flights within India and to select international destinations. Air Deccan, Spice Jet, Kingfisher Airline and IndiGo are some of the domestic players in the industry.

International airlines operate from scheduled international air services to and from India.

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Non-scheduled air transport service: It is an air transport service other than the scheduled one and may be on charter basis and/or non-scheduled basis. The operator is not permitted to publish time schedule and issue tickets to passengers.

Air cargo services: It is an air transportation of cargo and mail. It may be on scheduled or non-scheduled basis. These operations are to destinations within India. For operation outside India, the operator has to take specific permission of Directorate General of Civil Aviation demonstrating his capacity for conducting such an operation.


The objective of the aviation industry is to provide better service to their customers. So service is the primary product of the industry.

This project will accomplish to provide better the service quality to the passengers. These Flying services of the Indian airlines are divided into three stages-(pre-fight, in-fight, Post-fight services) and I found that the passengers of the Indian airlines has satisfied with service quality of Indian airlines. The aim of the company to provide the better services quality to passengers and the management in particular is very much responsible for this. Through passengers of the airlines the management is getting proper information about the services which are providing at pre-fight, in-fight, post-fight. And to find out the areas where the company needs to improve to service quality of the airlines.

From this study, Indian airlines have come to know about the passengers has satisfied with services.

From this study the passenger perceptions of service quality of airlines.

To assess the level of satisfaction of passengers on exiting passengers facilities provided by airlines.

To provide an effective marketing scheme to passengers.

This information is a good guide to management as it brings out the strengths of the company and the areas where the company needs to improve the service quality.


The concept of services quality its importance has grown in recent years for years for two main reasons. Firstly, we are starting to understand the total concept of service more and are now better able to define what is meant by quality of service. Secondly, researchers are determining ways that service quality can actually be quantified or measured.

Measuring service quality gives marketers a tangible tool to use when developing strategies for marketing services.

The concept of Quality is very important to marketers because quality drives the development of all marketing strategies. This means that quality must also be a major focus of all marketing strategies for service.

The service quality can be measured on the following five dimensions:

Reliability:   The ability to perform the promised service dependably and accurately.

Tangibles:     The appearance of physical facilities, equipment, personnel and communication materials.

Responsive- :  The willingness to help passengers and provide promptness service.

Assurance:  The knowledge and courtesy of employees and their ability to convey trust and confidence.

Empathy   :  The caring, individualized attention provided to the passenger.


Effective services marketing is a complex undertaking involving many different skills and tasks. Executives of services organizations have long been confused about how to complicated topic in an organized manner. This text was designed around one approach: viewing service in a structured, integrated way called service quality model.

The gaps model position the key concepts, strategies and decisions in services marketing in a manner that begins with the passenger and builds the organization’s tasks around what is needed to close the gap between passenger expectation and perceptions.

The central focus of the gaps model is the passenger gap, the difference between passenger expectation and perceptions. Firms need to close this gap-between what passengers expect and receive-in order to satisfy their passenger and build long-term relationships with them. To close this all-important passenger gap, the model suggests that four other gaps-the provider gaps-need to be closed.

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The following four provider gaps, shown below the horizontal line in fig. are the underlying causes behind the passenger gap:

Gap 1: Between management perception and passenger’s expect

Gap 2: Between Passenger-driven service design and standards and Company perceptions of passenger expectation

Gap 3: Between service delivery and external communications

Gap 4: Between perceived service and expected service

Gap5: Between Service delivery and Passenger-driven service design and standards.


Passenger expectations are beliefs about service delivery that function as standards or reference points against which is judged. Because passenger compare their perceptions of performance with these reference points when evaluating service quality, thorough knowledge about passenger expectations is critical to service marketers. Knowing what passenger expects is the first and possibly most critical step in delivering quality service. Being wrong about what passenger want can mean losing a passenger’s business when another company hits the target exactly. Being wrong can also mean expending money, time, and other resources on things that don’t count to the passenger. Being wrong can even mean not surviving in a fiercely competitive market.

Among the aspect of expectation that need to be explored and understood for successful services marketing are the following:

What types of expectation standards do passengers hold about services?

What factors most influence the formation of these expectations?

What role do these factors play in changing expectations?

How can a service company meet or exceed passenger expectations?

Objectives are to:

Recognize that passengers hold different types of expectation for service performance.

The sources of passenger expectations of service, including those that are controllable and uncontrollable by marketers.

Acknowledge that the types and sources of expectations are similar for end passengers and business passengers, for pure service and product-related service, for experienced passengers and inexperienced passengers.

Delineate the most important current issues surrounding passenger expectations.


At present, there is decent number of players compared to the one man army scenario prior to 1990’s. They are as follows:

I. Air India

The history of Air India is the History of Indian Aviation. It is one of the oldest and the largest airline of India. Air-India was founded by J.R.D. Tata in July 1912 as Tata Airlines. Founded as a small, private, domestic carrier in 1932, Air-India is now owned by government. It operates only on International routes and has negligible presence in the domestic traffic.

II. Indian Airlines

Indian and Air India were born with nationalization of Air Transport in 1953 by way of Air Corporation Act, 1953. Indian Airlines emerged as a merger of 8 domestic carriers. It caters mainly to domestic routes and in some nearest nations.

The two national carriers have enjoyed sole monopoly in the air transport segment over a long period of time as private carriers were debarred from entering the segment under the Air Corporation Act, 1953. The private players like Jet, Sahara and others were made to enter the segment only after the New Economic Policy, 1991 came into existence. Another major turning point has come in the history of the Air Industry when Air India was granted permission from the GOI (Government of India) to merge with Indian Airlines, the two national carriers of India. This Mega Merger marked the first marriage in the Indian skies which was followed by other mergers. The name of the new airline remained Air India, since it is known worldwide.

III. Jet Airways

In May 1974 Jet air (Private) Limited was founded. In 1991, as part of the ongoing diversification programme of his business activities, Naresh Goyal (founder of Jet Airways) took advantage of the opening of the Indian economy and the enunciation of the Open Skies Policy by the GOI, to set up the company for the operation of scheduled air services on domestic sectors in India. It started its International Operations in the year 2004 and carries more than 7 million passengers per annum. In May 2007, Jet Airways took 100% stake in Air Sahara.

IV. Air Sahara

Like Jet, Sahara also began its operations in the year 1993 after the domestic Air Market was opened by the GOI in 1990’s. It is owned by the diversified Sahara India Parivar group. Now Air Sahara is being taken over by Jet Airways and it is being renamed as “Jet Lite”. Jet has intensions of converting Air Sahara in sync with LCC model to reach every segment of air travelers.

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V. Air Deccan

India’s first budget carrier arrived in the Air Industry in the year 2003. It is headed by Captain Gopinath, Air Deccan redefined the accessibility to the Indian Skies with new model and concept in the aviation sector. It injected competitive spirits into the system and gave common man wings by reducing airfares which matched the first Class Railway Fares. The third wedding in skies was marked when Vijay Mallya of Kingfisher Airlines picked up 26 % stake in Air Deccan.

Air Deccan is the Nano of the Airline sector; what Tata – Nano plans to do to the automobile industry (converting two wheelers into four wheelers) Air Deccan has done to Aviation industry (shifting people from rail travel to travel by air). Presently, there is a new segment of travelers; the leisure customers. Yet another segment is introduced and that is the first time travelers.

Air Deccan introduced the concept of dynamic pricing which means selling at a higher price during high season (tourist season) and selling cheap during the off-seasons. Therefore, everyday the price would change depending upon the kind of competition and also the load factor. Also it introduced various schemes and programmers.

VI. Kingfisher

The King Fisher initiated its operations in May, 2005. It is a major Indian luxury airline operating an extensive network to 34 destinations, with plans for regional and long-haul international services. Kingfisher Airlines, through one of its holding company UB holdings Ltd has acquired 26% stake in the budget airline Air Deccan.

VII. GoAir

GoAir is an Indian low-cost airline based in Mumbai. It was established in June 2004, the airline started its operations in October 2005 with a fleet of 20 leased Airbus A320 aircraft.

VIII. Indigo

IndiGo Airlines commenced its operations in 2006 and went on to swiftly establish itself as one of the premier budget airlines in the country. IndiGo Airways soon added IndiGo flights and destinations to its network. The unimpeachable services and timely performances of IndiGo flights added to the popularity of the airline.

IX. SpiceJet

SpiceJet, a rebirth of ModiLuft marked its entry in service by offering fares priced at Rs.99 for the first 99 days since its inception in 2005. The carrier is giving tough competition to Railways.


India’s domestic aviation market expansion has been the strongest in the world – tripling in the past five years, according to IATA’s report.

India is currently the ninth largest aviation market in the world, according to a RNCOS report “Indian Aerospace Industry Analysis”. The Government’s open sky policy has attracted many foreign players to enter the market and the industry is growing in terms of both players and the number of aircrafts. Given the strong market fundamentals, it is expected that the civil aviation market will register a compound annual growth rate (CAGR) of more than 16 per cent during 2010-2013.

India’s domestic air traffic grew at a rate, which is the second highest after Brazil, according to global figures for June 2011, compiled by IATA. The country’s domestic traffic grew by 14 percent in the same period as against Brazil’s 15.1 percent.

Indian airlines reported a continuous growth trend and a strong domestic passenger growth rate of 22.3 percent in July 2011. Passenger traffic has grown at 18 per cent year on year (y-o-y) basis and the year2010 closed at 90 million passengers both domestic and international. India is the fastest growing aviation market and expected to be within 4-5 big aviation markets by 2020 and 3rd in terms of domestic market after US and China.

In July 2011, airlines in India handled 5 million domestic passengers, according to data released by the DGCA on September 12, 2011, marking the 11th consecutive month of double-digit growth. India’s domestic market has witnessed passenger growth for 26 consecutive months now. In July 2011, India’s airlines handled 1.3 million international passengers, an increase of 8.5 per cent y-o-y, according to DGCA.

Passengers carried by domestic airlines during Jan-Aug 2011 were 39.63 million as against 33.41 million during the corresponding period of previous year thereby registering a growth of 18.6 per cent, according to data released by DGCA.

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India is expected to cross the 450 million mark of domestic passengers by 2020. During the last two decades from a fleet of only about 100, the scheduled operators now have reached 435 aircrafts connecting the nation and the world.

Private carriers are anticipated to post a combined profit of US$ 350-US$ 400 million for the fiscal years2011-12, as reported by CAPA India, in its 2011-12 – Aviation Industry outlook. Domestic capacity is also projected to grow by 12-14 per cent for the assessment period.

Market share of key players in the Indian aviation sector

Name of the players

Market Share

Kingfisher Airlines and Kingfisher Red (previously Air Deccan)

28 %

Jet Airways and JetLite (previously Air Sahara)

25 %

Air India and Indian (previously Indian Airlines)

16 %


14 %


12 %


3 %


Distribution is the process of making a product or service available for use or consumption by a consumer or business user, using direct means, or using indirect means with intermediaries.

Airline Reservation System is one of the intermediaries of the distribution channel in the aviation industry. An airline reservation system is part of the so-called passenger service systems (PSS), which are applications supporting the direct contact with the passenger.

Airline reservations systems contain airline schedules, fare tariffs, passenger reservations and ticket records. An airline’s direct distribution works within their own reservation system, as well as pushing out information to the GDS. A second type of direct distribution channel is consumers who use the internet or mobile applications to make their own reservations. Travel agencies and other indirect distribution channels access the same GDS as those accessed by the airlines’ reservation systems, and all messaging is transmitted by a standardized messaging system that functions on two types of messaging that transmit on SITA’s HLN [high level network]. These message types are called Type B [TTY] for remarks-like communications and Type A [EDIFACT] for secured information. Message construction standards are set by IATA and ICAO, are global, and apply to more than air transportation. Since airline reservation systems are business critical applications, and their functionally quite complex, the operation of an in-house airline reservation system is relatively expensive.

Prior to deregulation, airlines owned their own reservation systems with travel agents subscribing to them. Today, the GDS are run by independent companies with airlines and travel agencies as major subscribers.

As of February 2009, there are only three major GDS providers in the market space: Amadeus, Travel port (the merged World span and Galileo systems), Sabre and Shares. There is one major Regional GDS, Abacus, serving the Asian marketplace and a number of regional players serving single countries, including Travel sky (China), Infini and Axess (both Japan) and Topas (South Korea).

Inventory management

An airline’s inventory contains all flights with their available seats. The inventory of an airline is generally divided into service classes (e.g. first, business or economy class) and up to 26 booking classes, for which different prices and booking conditions apply.

Inventory data is imported and maintained through a schedule distribution system over standardized interfaces. One of the core functions of the inventory management is the inventory control. Inventory control steers how many seats are available in the different booking classes, by opening and closing individual booking classes for sale. In combination with the fares and booking conditions stored in the Fare Quote System the price for each sold seat is determined.

In most cases inventory control has a real time interface to an airline’s Yield management system to support a permanent optimization of the offered booking classes in response to changes in demand or pricing strategies of a competitor.

Availability display and reservation (PNR)

Users access an airline’s inventory through an availability display. It contains all offered flights for a particular city-pair with their available seats in the different booking classes. This display contains flights which are operated by the airline itself as well as code share flights which are operated in co-operation with another airline. If the city pair is not one on which the airline offers service it may display a connection using its own flights or display the flights of other airlines.

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The availability of seats of other airlines is updated through standard industry interfaces. Depending on the type of co-operation it supports access to the last seat (last seat availability) in real-time. Reservations for individual passengers or groups are stored in a so-called passenger name record (PNR). Among other data, the PNR contains personal information such as name, contact information or special services requests (SSRs) e.g. for a vegetarian meal, as well as the flights (segments) and issued tickets. Some reservation systems also allow storing customer data in profiles to avoid data re-entry each time a new reservation is made for a known passenger. In addition most systems have interfaces to CRM systems or customer loyalty applications (aka frequent traveler systems).

Before a flight departs the so-called passenger name list (PNL) is handed over to the departure control system that is used to check-in passengers and baggage. Reservation data such as the number of booked passengers and special service requests is also transferred to flight operations systems, crew management and catering systems. Once a flight has departed the reservation system is updated with a list of the checked-in passengers (e.g. passengers who had a reservation but did not check in (no shows) and passengers who checked in, but didn’t have a reservation (go shows)). Finally data needed for revenue accounting and reporting is handed over to administrative systems.

Fare quote and ticketing

The Fares data store contains fare tariffs, rule sets, routing maps, class of service tables, and some tax information that construct the price – “the fare”. Rules like booking conditions (e.g. minimum stay, advance purchase, etc.) are tailored differently between different city pairs or zones, and assigned a class of service corresponding to its appropriate inventory bucket. Inventory control can also be manipulated manually through the availability feeds, dynamically controlling how many seats are offered for a particular price by opening and closing particular classes.

The role of the ticketing complex is to issue and store electronic ticket records and the very small number of paper tickets that are still issued. Miscellaneous charges order (MCO) is still a paper document; IATA has working groups defining the replacement document the electronic multipurpose document (EMD) as at 2010. The electronic ticket information is stored in a database containing the data that historically was printed on a paper ticket including items such as the ticket number, the fare and tax components of the ticket price or exchange rate information. In the past airlines issued paper tickets; since 2008 IATA has been supporting a resolution to move to 100% electronic ticketing. So far, the industry has not been able to comply due to various technological and international limitations. The industry is at 98% electronic ticket issuance today although electronic processing for MCOs was not available in time for the IATA mandate.


India is set to experience a transformational growth profile.

The challenges are becoming much greater as the size of the industry increases.

2000‐2010: Indian aviation had to cope with an additional 84m pax,at times, this truly stretched the system;

2010‐2020: Indian aviation may have to handle an incremental 300‐320m pax;

In absolute terms the challenge ahead will dwarf recent history.

Long term planning in line with a clear vision is imperative. We require imagination, strong commitment, a clear and robust regulatory framework and capital.

Is Indian aviation ready to meet this challenge?

How do we create the appropriate framework for the long term?

What kind of regulation do we want -government as regulator or independent regulator?

Independent regulation requires that government does not have stakes in airlines/airports.

Is the industry ready for complete deregulation as in the UK/EU?

Do we want rapid or gradual change?

After reaching agreement on these issues, the roadmap for regulation must be documented.

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CAPA believes that India has a clean‐sheet opportunity to create an effective new frame work, that supports industry viability and is focused on security, safety, skills and sustainability.

Key Success Factors for the Next Decade

1. National Agenda: A long term, structured national plan (as part of a broader transportation plan) with an appropriate policy framework is necessary to attract capital.

2. Regulator: A modern, unified, professional regulator, with enhanced expertise.

3. PSUs: Air India and the AAI need to be gradually privatized, while corporatization of air navigation services is essential.

4. HR & Training: World class education & training infrastructure is essential for safe and efficient aviation.

5. Safety: Implementation of safety systems and culture which are comprehensive, enforced and collaborative.

6. Liberalisation: Market access should be liberalized but there must be a level playing field for Indian operators.

7. Taxation: A less punitive fiscal regime -particularly sales tax on fuel -which recognizes that airlines must be viable, is imperative.

8. Investment: Private sector capital should be encouraged in airport development.

9. Profile: Enhanced profile and recognition of aviation within government. And state governments must be educated on the role that aviation plays economic competitiveness

10. Vision: Ministry to concentrate on policy and providing strategic leadership.



Air travel has grown in the past decade. Travel grew strongly for both Leisure and business purposes. India will have nearly 800 to 1000 airplanes by2023, it was estimated by Airbus. In spite of growth between 30 to 50 per cent in Indian aviation industry, losses of approximately 2200 core is estimated for the current year.

During 1991-1992, Modiluft, East West and Damania went bankrupt. Air Sahara and Jet Airways survived along with government own Indian Airlines because they had the capability to bear losses. Globalization and privatization had a major impact on aviation industry. Indian aviation industry was deregulated by the government in 1990s. As a result now 14 airlines are operating today in Indian sky. Now, collaboration with international organization and foreign direct investment are welcome to improve infrastructure and technology. Today people who cannot afford high prices of Full Service Carriers (FSC) can travel by Low Cost Carriers (LCC) or budget airlines. Air Deccan was India’s first LCC started in 2003. It flies to several metro and non-metro destinations. All airlines have three major fixed costs i.e. fuel costs, financing or aircraft lease and labour cost. But LCC costs are 10 to 15per cent lower than FSC. This is because of three reasons. Firstly, saving on distribution cost as passenger’s book tickets on the internet. Secondly, no frills are offered on board. Thirdly, to accommodate additional seats, catering and cabin crew space in these aircraft has been used. So these aircraft have 40 seats more than the FSC.


PEST analysis of any industry sector investigates the important factors that are affecting the industry and influencing the companies operating in that sector. PEST is an acronym for political, economic, social and technological analysis. Political factors include government policies relating to the industry, tax policies, laws and regulations, trade restrictions and tariffs etc. The economic factors relate to changes in the wider economy such as economic growth, interest rates, exchange rates and inflation rate, etc. Social factors often look at the cultural aspects and include health consciousness, population growth rate, age distribution, changes in tastes and buying patterns, etc. The technological factors relate to the application of new inventions and ideas such as R&D activity, automation, technology incentives and the rate of technological change. The PEST Analysis is a perfect tool for managers and policy makers; helping them in analyzing the forces that are driving their industry and how these factors will influence their businesses and the whole industry in general. Our product also presents a brief profile of the industry comprising of current market, competition in it and future prospects of that sector.

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In India, one can never over-look the political factors which influence each and every industry existing in the country. Like it or not, the political interference has to be present everywhere. Given below are a few of the political factors with respect to the airline industry:

1. The airline industry is very susceptible to changes in the political environment as it has a great bearing on the travel habits of its customers. An unstable political environment causes uncertainty in the minds of the air travelers, regarding traveling to a particular country.

2. Overall India’s recent political environment has been largely unstable due to international events & continued tension with Pakistan.

3. The govern

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