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澳洲论文：低成本航空公司在世界范围内的历史
History Of Low Cost Carriers Worldwide
这个项目主要处理来自世界各地的低成本航空公司，特别注重印度的国内市场,以及他们的商业策略和不同的市场,普遍存在的部分很快就上升到挑战运营效率、收入和利润方面中的一些遗留在空中的服务提供商。
低成本航空公司有一套特殊的功能和商业策略,帮助他们实现高运营效率在如此之低成本的情况下，比如,操作一个飞机模型,仅仅迎合单个类的旅行者,没有赠品,以非常低的周转时间去计划航班,电子票务,使用一个更小的,缺乏经验的人员等等。这些策略已经成为大多数廉价航空公司的规范,因此现在不同运营商设置除了彼此通过提供很多益处,比如常旅客计划等等。
在印度这样价格敏感的市场,尽管航空旅行低渗透低成本的航空公司，提供了巨大的增长潜力,因为它的价格更低。德干航空公司是印度的低成本航空市场的先驱,多年来我们已经看到几个航空公司的出现，像GoAir,靛蓝等,他们都在今天动荡的市场环境下，表现非常好。
一个良好商业模式的重要性不能被更特别地强调去考虑到最近的翠鸟航空(KFA)崩溃。怎样使最大的低成本航空公司刚刚收购这个国家很快就会崩溃,所以这是有争议的。但仔细分析揭示了KFA的商业模式的缺陷。KFA现有业务模式的对立面,就是他们收购了德干航空的模式。同时,靛蓝另一个LCC慢慢地放置在一个印度市场的主导地位,通过精心策划的决定，所以只有印度客机报告盈利在过去的财政年度收入，其收入的特点成为世界上增长最快的航空公司之一。
This Project primarily deals with the Low Cost Carriers from around the world with a special focus on the domestic market in India, their business strategies, the different markets and how this seemingly ubiquitous segment soon rose to challenge some of the legacy air service providers in terms of operational efficiency, revenues and profit margins.
Low Cost Carriers have a special set of features and business strategies that help them achieve high operational efficiencies at such low costs like for instance, operating a single aircraft model, only catering to a single class of travellers, offering no freebies on board, planning flights so as to have very low turnaround times, E- ticketing, using a smaller, less experienced crew and so on. These strategies have become the norm for most LCC; therefore nowadays different carriers are setting themselves apart from each other by offering a bunch of benefits such as frequent flyer programs and so on.
In a price sensitive market like India, despite the low penetration of air travel the LCC segment offers tremendous growth potential, because of its lower prices. Air Deccan was the pioneer in the Indian LCC market, over the years we have seen the emergence of several more carriers like GoAir, IndiGo and so on, who have all performed extremely well in tumultuous market conditions present today.
The importance of a sound business model cannot be stressed more especially considering the recent Kingfisher Airlines (KFA) debacle. How a company that had just acquired the largest LCC in the country could crash so soon is debatable. But a closer analysis reveals the flaws in KFA's business model. KFA's existing business model was the antithesis of Air Deccan's model that they acquired. In the meantime, IndiGo another LCC has slowly but surely placed itself in a commanding position in the Indian market through carefully planned decisions so much so it's the only Indian airliner to report a profit in the last FY also earning the distinction of becoming one of the fastest growing carriers in the world. What KFA did wrong or what IndiGo did right these are the questions that are answered in the conclusion of this paper.
介绍——INTRODUCTION
目的——PURPOSE
The prime purpose of this project was to understand the management strategies employed in the low cost aircraft carrier (LCC) business, as well as to answer some questions related to this industry like; how has the recent economic slowdown affected this industry? Why is it that some companies have fared better than the rest? Are the Indian LCC industry standards different from that in other countries? The recent Kingfisher fiasco will also be scrutinized. How and what could they (Kingfisher) have done differently in terms of business strategies? Are there any heuristics that can be applied to the industry in India in general?
范围——SCOPE
The scope of this project was limited to the LCC operations in India, with some references being drawn from international operators as well. The primary intention was to study the business strategies employed in the industry, moreover an exhaustive study of the entire LCC operations, globally and their business strategies were not feasible in the given time frame.
数据收集法——DATA COLLECTION METHOD
The primary source of information was data from some sources in the aviation industry. The chronologically collated files contained all the information about the companies, their financial transactions, balance sheets and revenue data. Apart from this, some discussions were held with a Senior Manager of the Airport in Chennai. The Senior Manager gave an overview of each area in the airport and how LCC were different from premium carriers and the general trends noticed in an airport with respect to patronage of LCC and so on.
The secondary sources of information were obtained from various papers on the same area of research. Journals and research papers were used to analyze the current level of research in the area. Websites were used for fundamental understanding of various terminologies and jargon used in the LCC industry.
项目计划大纲——PROJECT OUTLINE
The project focusses on the Low cost carrier services currently plying in India. The major focus of the study would be on their business strategies, and how the LCC business caught on in India. This is of importance as the airline industry in India is on a complete downward swing due to the global economic crisis, in spite of this some LCC in India have managed a turn around and gone on to make healthy profits. At the same time some other carriers have failed miserably in the quest to aggressively expand. A critical analysis of the entire KINGFISHER fiasco would be done and the results and recommendations of the study would help different LCC services to better understand the Indian airline industry.
局限性——LIMITATIONS
The study was conducted on a very small group of LCC (those in India) and most of the results, discussions and analysis are based on my view point of the current scenario in India and as a person who doesn't travel a lot by air they may not be perfect and may or may not be applicable to all LCC, in fact the recommendations given may only be applicable to the consideration set. It is in order to offset this limitation that I have incorporated a couple of international LCC and their business strategies into this report.
文献调查——LITERATURE SURVEY
2.1 关于业务——2.1 ABOUT THE BUSINESS
Any airline service that has in general a lower cost or fares and fewer comforts when compared to any regular airline service maybe referred to as a Low Cost Carrier. It is important that this service not be mixed up with local flights that ply for short duration and therefore do not offer a lot of on on-board services. As expected this strategy of lowering the cost of the airfare is going to take a chunk out of their revenue and to make up for the same they almost always charge extra for standard features like food on-board, priority boarding, carrying of extra baggage and also for choosing desired seats on the flight. This will be discussed in detail during the course of the paper. These are some of the characteristics that set LCC apart from the rest of the airline industry.
At a time when flying was a mode of transport reserved for the rich and famous (1950 - 1975), few companies (notably Southwest Airline) started selling cheaper tickets at unimaginably low fares, they managed to do this by cutting costs and running a more efficient business model. This led to the advent of the budget or low cost carrier model. The business model adopted by Southwest airline has since become the empirical model for the entire LCC industry. For several years different LCC around the world have stuck to the tried and tested model of Southwest airlines. In recent times, due to rising costs and increased competition in the airline industry, small amendments have been made to the Southwest airlines business model in order that the other LCC survive the industry.
The airline deregulation act passed in 1978 by the government of the United States marked the advent of the LCC business. This act allowed new players into the market as well as giving them the power to set their own prices. It is important to note that 60 - 65% of the cost for airlines come from external factors this means a lot of the cost can't really be controlled. A generic break up of this cost would be 40% for fuel, 12 - 15% cost of maintenance and another 12 - 15% as the cost of ownership. The LCC business players therefore need to cut costs in some other avenue and they found the source in in air services.
低成本航空公司历史——HISTORY OF LOW COST CARRIERS - WORLDWIDE
The low cost airline concept was started by the American domestic carrier, SOUTHWEST Airlines in the early 1970's. Their sole objective was to offer air travel at a cheaper cost to the end users. At that point in time air travel was considered a mode of transport for the elite few, so when Southwest announced these slashed prices, it caused the well-established legacy carriers to lose a significant amount of market share to Southwest airlines, purely because of their ability to charge a lower price over traditional full cost airlines.#p#分页标题#e#
北美洲——NORTH AMERICA
The deregulation of the American aviation sector in the 1970's till the early 2000's led to drastic changes the low cost concept in the United States. The transformations were so enormous that they can only be described as a series of proliferations, innovations and consolidations. Several LCC entered into the market (e.g. Pacific Southwest, New York Air, Jet America) some of them did not survive while some other flourished. The success of the LCC led to some of the legacy carriers starting their own low cost subsidiaries in order to regain their lost market share.
欧洲——EUROPE
Ryanair and EasyJet introduced the low cost concept to Europe in 1995. It originated in the UK and Ireland based purely on the southwest model that had successfully been in operation for close to 25 years. The favourable economic framework greatly encouraged the low cost airline industry and as a direct result of this these airlines did exceedingly well. The framework allowed for these low cost carriers to work from under used airports at lower fares as well as to operate within the European Union as domestic airlines. They also pioneered different sales approaches like the direct sales approach that made use of call centres and the internet.
澳大利亚/ 新西兰——AUSTRALIA/ NEW ZEALAND
Even the Australian government de-regularized air traffic in the early 1990's there are no significantly large LCC in Australia because just when a few LCC (Compass Airlines and compass Mk II) were coming up they were taken over or rather absorbed by Qantas, because of their superior financial strength, by doing so they saved their market share and effectively killed the LCC market. The only LCC operating successfully out of Australia now is Virgin Blue.
Deregulation of the Airways in New Zealand occurred in 1984, but low cost operations did not start until 1995. One unique feature of the LCC in New Zealand is that unlike other countries they did not start of on domestic routes but rather on short haul trans-Tasman flights that were started by Kiwi Airlines. In response to this the primary carrier Air New Zealand started their own LC service Freedom Air, The combined pressure from Freedom Air and Qantas pushed Kiwi Airlines out of business. This route however remains highly lucrative and several airlines that have substantial capital are eyeing the Trans-Tasman route as potential revenue earners.
亚洲——ASIA
It was always considered that the governments in Asia would exercise tight control and restrict airlines from functioning smoothly. The rapid economic as well as demographic progress, exacerbated by the congested airport hubs and underutilized outer airports, the need to promote trade and tourism outside capital cities all played a major part in bringing the concept of low cost carriers to Asia. Following in the footsteps of some of Europe's premier LCC, companies like AirAsia, Tiger Airways, and ValuAir all started operation in Asia and they are all still in service today.
概述——低成本航空公司的策略——AN OVERVIEW - LOW COST CARRIER STRATEGIES
The entire LCC concept is based on a very simple idea. They do not focus on passenger segregation; on the contrary they use seats that are placed very close to each other, which in turn create more capacity. While buying the ticket, the passenger pays only for the seat on a LCC, all the other services on board come at a price. There are even a few short distance flights in Europe by RYANAIR another LCC that charges the passengers for using the toilet on board. All the low cost carriers in general make their target audience the leisure traveller and not business passengers. Another commonly used strategy is differential pricing, seats are almost always sold on a first come, first serve basis and as the no of seats on particular routes keep filling up the prices automatically starts moving upwards.
Another important aspect of the low cost airline industry is its heavy dependence on advertisements and public relations. In Europe, there was tremendous publicity from the media for RYANAIRS announcement that its seats cost as little as 1 penny, a similar scene was noticed in India at the time when LCC were entering into the market, tickets were then offered sans tax at Rs. 1 - 500.
An important feature that allows for such low pricing is COST CUTTING. This is where LCC excel. Several different LCC airlines have developed ingenious and innovative methods of cost cutting. Some of them are briefly explained below.
Single model of aircraft: Though this may at first seem insignificant, over time the cost saving due to this move is tremendous. The use of a single model of aircraft drastically reduces maintenance costs. The need for highly qualified engineers who are up to date in the latest types of airline technology (which in turn means higher employee pay packages) is also not compulsory. To further increase the benefits, these aircrafts are either bought or leashed in bulk volumes.
Operate from secondary airports: This is a common phenomenon for LCC around the world. The low cost carriers usually land and take off from secondary airports that are near to cities. This greatly reduces the charges that they need to pay to the airport authorities as well as considerably reducing turnaround times at the airports. This also means they do not need to wait overnight at foreign destination, leading in turn to overtime pay to their employees.
Point to Point Model: Most LCC airlines operate on a point to point model this is said to greatly improve aircraft utilization as well as reduce waiting times. Besides it also negates the need to pay dues to multiple airports.
Single Class Configurations: Most LCC airlines only have a single class of service (Economy). They do not focus on the business class as it is not often that they are going to be servicing business travellers, besides this also greatly reduces the need for a larger crew on board. Even in spite of this change, the low cost carriers employ a far smaller crew when compared to regular aircrafts.
No inflight services and Ancillary Revenues: This is another important aspect of their business model; it also defines the Low cost carrier business model. There are none of the on board services like free food/water/snacks as on regular flights. Almost every service on board needs to be paid for and bought. This also in turn turns out to be a great source of ancillary revenue. All food and services sold on board are a source of revenue.
Use of a Less Senior Crew: The use of a less senior crew greatly reduces cost of operations as experienced pilots and pursers command incredible pay packages. They do not go over a certain limit when it comes to employee pay packages so when pilots gain more experience they invariably leave and move to greener pastures.
Use of E-Ticketing: Another notably Omni-present feature across LCC around the world is the online ticketing model. It is generally considered that the costs associated with buying a ticket at a physical counter costs around 4.5$ where as an e-ticket purchased online only costs 1.5$. This again created room for the LCC to reduce costs. There are statistics that show that the distribution costs of tickets alone account for around 17% of the total operating cost of an airline.
Fuel Price: Another important cost cutting strategy of Low cost carrier's world over is to buy fuel in large quantities when the prices are low thereby resulting in significant savings as and when the prices fluctuate. This is done by an experienced person who can read the fuel price index and estimate how it will move over the next few days. Even small increase of decrease in fuel prices could mean millions of dollars in savings or loss.
Given below is a business model that is employed at EasyJet a LCC having operations in Europe. From the above diagram it is clear how business models are designed in the Low Cost Carrier business and what are their priorities.
低成本航空业务中的普通商业模式——A business model commonly employed in the LCC Business
批评——CRITICISM
Some of the pricing policies of low cost carriers have come under heavy criticism by different government agencies and other regulators. These low cost carriers often show zero flight charges in their adverts, which actually is the price without including the tax or airport fees, this is in many cases misleading to the end consumers who are in the end forced to pay a whole load of ancillary fees which absurd as it may sound includes Credit card usage fees, airport check-in fees, luggage check-in fees and so on and so forth.
当前趋势——CURRENT TRENDS
The benchmark business model for all LCC around the world since time immemorial has been the model initially employed by South West Airlines. Over the years as the market moved from one that is very thinly populated to one that offers so much choice and variety, a lot of the strategies employed initially became obsolete or unviable. Therefore different carriers around the world had to make changes and modifications in order to better adapt their business model to the environment that they operated in. The basis of the operation remained the same "in effect offering a lower cost alternative to the legacy carriers" but as the competition heated up it became of paramount importance to differentiate the service offerings of the different low cost carriers in order to command a more loyal customer base. As a result of this, some of the changes that were implemented would be the offering of complimentary services and frequent flyer programs. This ensured that these particular airlines enjoyed revenues above the industry average.#p#分页标题#e#
Given below is a snapshot of how the Indian aviation was segmented over the last decade, the domination of the LCC business in India is more evident than ever.
The Indian airline industry that was dominated by regular FSC's a decade ago, was first shaken with the entry of Air Deccan, a LCC into the Indian market. Its tremendous success led to multiple players quickly entering the market. The market soon became dominated by Low Cost Airlines. The Indian aviation industry has over the past several years been witness to several headwinds, some of them being, industry wide over capacity leading to pricing power reductions, high oil prices and the demand growth remaining subdued and so on.
印度的低成本航空公司的增长——Growth of Low Cost Airlines in India
All these trends have made the industry debt ridden and in critical need for an equity infusion. The last few years have been especially hard on the industry, the very sharp rise in oil prices and the sudden drop in passengers travelling by air due to the economic slowdown hit the industry hard. There was some respite during 2010-2011 on the back of some discipline enforced by the industry as well as some increase in passenger air traffic. But this was soon followed by more economic turmoil and fluctuating oil prices this again led to drop in the industry revenue returns. The Indian market is not exactly the most investor friendly, foreign direct investments are not allowed and even internally not more than a 49% stake can be acquired. This coupled with the fact that most foreign companies enjoy a sizable share of the Indian profits thanks to code sharing agreements with Indian companies have made it very hard for the struggling Indian companies to get any infusion of much needed equity. The exit of Kingfisher from the LCC market as well as the cancellation of its license brings up a very significant question that needs to be answered, How viable are the LCC in the long term?
Another important factor is the very low penetration of the airline industry in India. It is currently lower than China where people on an average make only 0.2 trips every year. In stark contrast, a person in the United States makes 2 trips every year by air what this means for the Indian aviation industry is a tremendous growth potential. Just to put things in perspective, it is interesting to note that 11000 is the number of commercial jets, planes and other carriers in the USA whereas in India it is a meagre 444, that too including all the Indian service providers together.
研究方法论——RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the research problem. It may also be assumed as a science of study, how research needs to be done in a scientific manner.? The methods adopted in collecting the data analysis and interpretation of data.
项目类型——TYPE OF PROJECT
Research design is the basic frame work which provides guidelines for whole research methodology. Research can be classified into;
描述和分析——Descriptive vs. Analytical
应用和基本——Applied vs. Fundamental
定量和定性——Quantitative vs. Qualitative
概念和经验——Conceptual vs. Empirical
The choice of research design depends on the depth and extent of data required the cost and benefits of the research the urgency of the work and time available for completing it. For this study, we would be using as qualitative method of analysis with some inputs from various other types of Research like descriptive and so on. Due to the lack of time it was not possible to conduct an in depth survey regarding this issue. But the proceeds from an interview with a senior manager working at the Airport have been included into the study.
Most of the data presented in this project is based off secondary data; it is a fairly well established industry at least around the world and a rapidly growing industry in India. There was not much scope for exploratory Research and because of this I have taken up the task of analysing the current scenario in the low cost carrier business in India and analysing how and why some companies perform the way that they do. The revenues of the different low cost carriers, FDI in the airline industry, why did Kingfisher crash out are all some of the analysis that would be done based on the secondary data collected.
数据分析和介绍——DATA ANALYSIS AND INTEPRETATION
A lot of literature collection has been done, and based on this several new learning's regarding the low cost carrier business have been acquired. Armed with this information from here on in the project will attempt to dissect and analyse the Low cost carrier industry in India, the major players, their strengths and weaknesses as well as the rise and fall of KINGFISHER airlines.
Airlines in India - Market Share - 2003
This is a snap shot of the Indian Airlines industry in 2003. As it is clearly visible there are only a few players and the regular legacy airlines account for more than 90% of the market share. This was also the time when LCC were making their initial foray into the Indian market. As it is seen from the 1% market share held by Air Deccan the first LCC in the Indian market. Once the initial step was done there was no stopping the low cost carriers they entered into the market slowly, one by one till they held a lion's share of the Indian airline industry.
Airlines in India - Market Share - 2009
Above is a snapshot of the same industry in 2009. It is obvious from the current market share analysis that the LCC have made inroads into the Indian market and have started capturing the bigger piece of the pie. At this point of time, the low cost carriers accounted for 40% of the market share in India. The high end Luxury airliner "Kingfisher" also took a huge share of the market from the legacy airliners in India thanks to their vision of introducing Indians to the art of flying in Luxury. This was also the time of consolidation; several of the small players in the market were being usurped by the larger players (KINGFISHER took over AIR DECCAN) leading to industry wide changes. This was also the time of recession where in several of the leading airlines were reporting very high losses due to the wide fluctuations in the cost of fuel. There was also a sharp decline in the YoY growth of air passengers in India, with the economic crisis a lot of people were not choosing to travel by air and this combined with the fuel price hike spelt doom for the revenues of the Indian airline industry.
Airlines in India - Market Share - 2012
This is a snapshot of the Indian aviation industry (passenger) in 2012. As you can see there are several drastic changes to the breakup from the 2009 model, most notable being the shocking decline of Kingfisher. Despite this the Low cost carrier segment has expertly moved in to capture a larger share of the Indian market now accounting for almost 75% of the Indian market. The reason for this not being obvious from the pie diagram is because the shares of Air India and Jet Airways include their respective LCC services.
The Indian GDP is said to have grown by 5.3% in the last quarter of 2012, this is said to be the worst performance of the economy in the last 9 months. Several reasons can be attributed to this, high inflation, high interest rates and policy paralysis from the governments side. FY 2012 was a good year in terms of passenger traffic as far as the Indian aviation industry was considered but in terms of profitability there was a huge drop. According to a statistic, the loss for the entire industry in FY 2012 was 2 billion US$ whereas it was only 4 billion US$ for the period FY 2008 - 2011. According to data published by CAPA (Centre for Asia Pacific Aviation) the entire debt for the Indian airlines industry is currently pegged at around 15 Billion US$. LCC witnessed a steady growth while Kingfisher witnessed steady erosion. IndiGo moved to the second spot in the domestic market and Spice Jet moved into third place. It is interesting to note that in a year where companies fell in the aviation sector, IndiGo managed to book profits. This is thanks to the fact that despite all the doom and gloom, they managed to take top honours in multiple categories such as employee per aircraft, on time performance, flight and passenger cancellation data as well as the passenger load factor.This was a look at the losses at the end of the second quarter of 2012. There was always a robust growth in the Q3 of every financial year because of the festive season and IndiGo has managed to turn it around in this period.Kingfisher does not make it to the list as the license for them has been cancelled effective October 2012. What did Kingfisher do that led to their meteoric fall from grace? For starters, Kingfishers woes started with the fateful decision to take over Air Deccan which was one of the premier low cost carriers in the country. The problem was that their business models couldn't be more different. Kingfisher worked in the luxury segment, with focus on the higher section of society where as Air Deccan catered to the cost conscious traveller. The paradigm shift in the thought process that was required to accompany this merger of two completely different companies was not completely brought forward by Kingfisher when they introduced Kingfisher RED their low cost carrier. There was always no clarity and clear differentiator between the business strategies for these two contrasting services.#p#分页标题#e#
There are several reason why Kingfisher failed whereas IndiGo continues to blossom as one of the fastest growing low cost carriers in the world in spite of the fact that they were both low cost carriers. The difference lies in the stark contrast of their business models.
The last two years have been a real disaster when it comes to the Indian airlines industry and that is mainly attributed to the steep rise in crude oil prices. It fluctuated from around 88$ per barrel to 115$ per barrel that is a rise of around 25%. This was further not helped by the steady depreciation of the rupee against the dollar. It is interesting to note that more than 70% of an Indian airline's payments need to be made in dollars and therefore their financial problems were exacerbated by these problems. During this period, Kingfisher incurred losses worth Rs. 732 crore and Jet Airways incurred losses in excess of Rs. 836 crore. Now the question arises if that was the case then why is it that Kingfisher is now out of business while Jet airways continues to dominate the industry in terms of market share. The answer is pretty simple actually, firstly; there is one important factor that needs to be considered while we are discussing Kingfisher. Ever since its inception in 2005 as one of the premier carriers in the country, Kingfisher has never once reported a year with profits. Kingfisher's financial record stands in stark contrast to its service record; it is one of only 7 carriers in the world to have a 5 star rating from Skytrax, an UK based aviation consultancy firm. In the end I think it is safe to say that Kingfisher was a victim of its own Business model which mainly focussed on the upper echelons of society, it was precisely this sector of society that was badly hit by the recession of 2008 - 2009 and it never recovered.
A in depth review of the fallacies of Kingfisher under Mr Vijay Mallya, make it very clear why Kingfisher is where it is now. Kingfisher began its services in India as a full service air carrier offering a single class configuration. But even before they had settled down with that model and start booking profits they got back to the drawing board and began tinkering with the model. Now they suddenly had shifted their focus to the luxury segment. The model was along the lines of the premier luxury air carriers around the world, definitely not something that was cut out for the sensitive Indian market. As explained already they even managed to bad a 5 star rating from a renowned air service consultancy for on board services. It was around this time that Kingfisher started pondering a takeover of Air Deccan, which was at the time one of the premier low cost air carriers in the country. Any premier expert in aviation would have advised against this merger at that point of time especially because the business models of both these airlines were as different as chalk and cheese. But against all odds, Mr Mallya went ahead and bought Air Deccan based on his gut feeling. This merger opened quite a few doors for KFA. It allowed KFA to operate in a new sector the LCC segment as Kingfisher RED. The merger with Air Deccan also meant Mr Mallya had a lot more jets (around 70) in the sky under his control, besides this the acquiring of Air Deccan also meant KFA had more than 5 years of aviation experience and therefore could now ply to international destinations. This led to a new business model, which catered to 3 segments, Kingfisher First, Kingfisher Premium and Kingfisher Red. 2008 - 2009 despite the recession being at its peak got a few accolades to Mr Mallya owing to the increased market share that KFA now enjoyed. Despite this KFA never did once post any profits, and with recession at its peak Mr Mallya was forced to shut down Kingfisher Red because as is always the case in the Indian sub-continent where there are two services from the same brand and one service is cheaper than the other people flock to the cheaper alternative. To add fuel to the pyre, KFA which was a nascent service provider was maintaining more than 5 different models of Jets all this also led to high over heads. At some point along the way for KFA, the no show with respect to profits, erroneous merger and acquisitions, the global financial crisis and an unstable business model: all roads led to one destination, "A big crash" and that is exactly what happened with KFA. Defaults with employee salaries, non-payment of dues and other cash flow issues all led to the inevitable, Employee strikes, flight cancellations and eventually the cancellation of their license to fly.
IndiGo Airlines
Kingfisher Airlines
IndiGo had a very clear business model in mind. (A no-nonsense one at that) Single class config. No frills, quick turnaround times.
One of the prime reasons for KFA's demise would be the lack of a clear business model; KFA often changed their business model. To top it off the business models were all blind adaptations of successful international airlines. There was no localization or adaptation of the model in line with the region where they operated.
They did not buy aircrafts but leashed most of their jets. They marketed punctuality as their USP which is sign of a robust business model.
KFA initially bought most of their aircrafts, to make matters worse for a nascent organization in a highly challenging industry taking on 3 different classes of jets is not a very good decision. Kingfisher's primary USPwas luxury which is not as endearing as say punctuality.
They had a completely qualified CEO, 18 months before the airlines even started operations. There were no sudden bursts of growth with IndiGo they took baby steps within the industry and slowly worked their way up the industry, which ensured a very strong base for operations.
The total lack of technical expertise with regards to the airline industry and its workings. Despite having 3 different classes of services, Mr Mallya insisted on handling all the affairs related to the company by himself. Another major differentiator would be the fact that unlike IndiGo, KFA burst onto the market, they reached the top spot through mergers and acquisitions and calamitous business decisions. So they effectively built a huge empire upon an unsecure base.
They have always had a knack for getting deals done in a way that is favourable to them. For instance their latest deal to acquire 220 orders of the A320 family is one of the largest in the history of aviation and in the process IndiGo has also managed to make things lucrative.
Given above is a small snapshot of the variations in the business models of the most successful and the least successful airline service in India. There was a point where Mr Mallya asked for the governments help to pull KFA out of the drain, but the government refused as it is not fair to give away the public's hard earned money to a person who doesn't give much back to society. Thus, it also becomes clear that the failure of Kingfisher was a direct result of a completely flawed business model that was employed and being completely ill equipped to meet the needs and requirements of the ever so complicated global airline sector.
The Kingfisher fiasco has had far reaching implications on the Indian aviation industry. With the absence of KFA from the market all the competing carriers scrambled to increase prices and the prices for domestic tickets on some routes, specifically those serviced earlier by KFA have seen a spike of up to 60%.
When a large player such as Kingfisher exits the market it is a clear path for some new start up to enter and take up some of the market share up on offer but even that is being held up as now aircraft lenders don't want to lend jets to Indian carriers anymore thanks to some baffling actions of the Indian Aviation Ministry. Kingfisher had a share of its jets leashed from foreign companies that are in the aircraft leashing industry and now that Kingfisher has been grounded since October 2013, the lessors want to take back possession of their aircrafts which is being denied by the Indian Government. In some cases as explained by the lessors the Indian Aviation Ministry is asking for a payment of Rs. 1 Crore to allow the original owners of the aircraft to remove them from the country. This is a big blow for the Indian image in the global market with some of the new entrants such as Air Pegasus who wanted to start operations being the ones hit the most. Now, these leashing agencies want an upfront payment of 24 months' worth of rent in order to leash aircrafts to Indian carriers while some other agencies have outright denied leashing aircrafts to India because of the governments bad publicity with respect to the KFA fiasco.
印度航空业的外国直接投资——FDI IN THE INDIAN AVIATION INDUSTRY
The civil aviation ministry has pushed a bill that allows a foreign carrier to invest up to 49% in a domestic airline and this has been passed by the parliament. This proposal and its subsequent passing, has been a milestone in the Indian aviation industry and will provide a much needed breather to the domestic carrier industry that is currently reeling under mounting losses and rising debt burdens. It also would help introduce some of the global best practices to the Indian industry. From the foreign investors point of view it not only gives them exclusive access to one of the fastest growing airline markets in the world it also allows several players to make India their hub in connecting US/Europe with the rest of Asia. The acquiring of low cost airlines could prove lucrative in a price sensitive environment like India. For the consumers this would allow for a few benefits that include increased flexibility when one travels internationally as well as domestically using the same airlines. Overall, this move will help increase available options, increase competition and reduce the fares.#p#分页标题#e#
低成本航空产业的未来趋势——POSSIBLE FUTURE TRENDS OF THE LCC INDUSTRY
Given below are a set of possible outcomes considering how the industry is currently progressing.
The larger airlines around the world would start to dominate the markets everywhere through mergers and acquisitions. A major reason for this being that the rising cost and lower efficiencies will make it harder for smaller players to survive. This would lead to fewer players with extensive market reach. While, in order to survive smaller players might need to look for niche markets and services.
Short haul trips to hubs may be franchised by the big players to partners and feeder services. The reason for this being that short haul flight would fast become economically unviable for full service carriers.
Business travellers in the near future might be willing to pay for long haul business flights but the short haul complete service business class might soon be phased out due to a lack of patronage.
Advance in technology (Video Conferencing) would greatly reduce the need for business men to travel.
Long distance leisure trips might wane, while shorter trips might see an upsurge.
These are just some possibilities, that I am hypothesising based on all the data that has been collected and reviewed.
结论——CONCLUSIONS
There are several possibilities as to how the LCC industry would progress from here on in. But from the information gathered and analysed through the course of this study, it is clear that only the companies that manage to maintain strong values, a focussed approach to a goal and an efficient business model are going to survive in this industry of cut throat competition. It is obvious from the observation of KFA and IndiGo that discipline is the buzz word, and companies that take small calculated steps are going to come out on top.
There are several business strategies that are native to the LCC business and companies that intend to work in this business need to follow some of these basic strategies as these have been modified over years of experience and therefore blatant non-compliance to some of these strategies are eventually going to lead to the companies downfall. As was the case with KFA, they tried to offer almost all services of a regular air service on a LCC service and this is simply not feasible in this industry eventually leading to cash flow problems and there on in to the cancellation of their license to fly.
Another important learning from this study is that heuristics may always be available but they are of no use if they are not adapted to be used in the particular region. Each area or country has some indigenous traits linked to the people of that area and it is of absolute importance for the companies to understand this and adapt their business plans to best suit their location of operations.
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