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Case Study On Air India: Prepared By:-Piyush KR Thakur Rakesh Baidya Saurav Das Thakur MBA (B.U) 2 Sem, Sec B

This document summarizes a case study on Air India and its codesharing agreement with Virgin Atlantic Airways on Delhi-London routes in the late 1990s and early 2000s. It discusses how the agreement was intended to trigger price competition but Air India was reluctant to allow Virgin Atlantic's third weekly flight as planned. While the agreement provided opportunities for both airlines, Virgin Atlantic faced threats of being unable to sustain operations on the route with only two flights per week. The document concludes that customers will benefit from the price competition and improved service quality that results from the competitive dynamics between these airlines.

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Piyush Thakur
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173 views

Case Study On Air India: Prepared By:-Piyush KR Thakur Rakesh Baidya Saurav Das Thakur MBA (B.U) 2 Sem, Sec B

This document summarizes a case study on Air India and its codesharing agreement with Virgin Atlantic Airways on Delhi-London routes in the late 1990s and early 2000s. It discusses how the agreement was intended to trigger price competition but Air India was reluctant to allow Virgin Atlantic's third weekly flight as planned. While the agreement provided opportunities for both airlines, Virgin Atlantic faced threats of being unable to sustain operations on the route with only two flights per week. The document concludes that customers will benefit from the price competition and improved service quality that results from the competitive dynamics between these airlines.

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Piyush Thakur
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© Attribution Non-Commercial (BY-NC)
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Download as PPTX, PDF, TXT or read online on Scribd
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CASE STUDY ON

AIR INDIA

Acharya’s Bangalore B-School’s


10th April 2011

Prepared by:-
Piyush Kr Thakur
Rakesh Baidya
Saurav Das Thakur
MBA (B.U)
2nd sem ,Sec B
INTRODUCTION

A-I being a government regulated body, it fails to understand many


commercial implications, namely, that to operate two flights a week.

we need to create the same infrastructure we require to operate six.

This has led to an increase in Virgin's


overhead costs as the crew keeps waiting
for a week. This is the reason why Virgin
will scarcely be able to pass on the
envisaged benefits to their customers.
INTRODUCTION (Cont..)

In December 1999, India's national carrier , Air India (A-I) signed an


agreement with Virgin Atlantic Airways (VA) by which VA would fly
three flights on the Delhi-London route on a code-sharing basis with A-
I.

This was hailed as a significant development for the ailing A-I. The
code sharing arrangement was expected to trigger off a price war in the
Delhi-London route where British Airways (BA) was a dominant player.
AIR INDIA

A-I was registered as Air India International in 1948. Later in 1962, the word
'International' was dropped and from March 1994, the airline began functioning as
Air-India Limited. In 2000, A-I's network covered 44 destinations.

A-I had a code sharing arrangement


with a number of foreign airlines.
These included Air France, Swiss Air,
Bellview Airlines, Austrian Airlines,
Asiana Airlines, Scandinavian Airlines,
Singapore Airlines, Aeroflot, Air
Mauritius, Kuwait Airways and Emirates.
AGREEMENT

According to the agreement, VA would fly three more flights a week on


this route by 2001. In July 2000, VA started off with two flights a week
on Thursdays and Saturdays from Delhi. It planned to have a third flight
by October 2000. However, till late 2001, VA was still flying two
flights.

A-I did not seem ready to allow VA fly the third flight because A-I too
had a flight from Delhi on Monday, the day VA wanted to fly from
Delhi. Meanwhile, the Government of India (GoI) granted rights to BA
to fly three more flights per week from Kolkata to London.
VIOLATION OF PACT

This was in violation of the bilateral pact signed between Britain and
India according to which BA and A-I were allowed to fly 16 flights a
week to each other's country. BA was already flying 16 flights a week-
seven from Delhi, seven from Mumbai and two from Chennai.
SWOT ANALYSIS
STRENGTH

Every year an estimated 0.3 million passengers traveled from Delhi to


London, which was nearly 40 per cent of the total outbound traffic from
India. The only available direct route codes were held by BA and A-I.
WEAKNESS

Passengers were forced to take circuitous routes offered by airlines like


Emirates and Royal Jordanian which made them wait for hours at distant
airports. Branson's efforts to woo A-I started in 1997.
OPPORTUNITY

In the late 1990s, as part of its disinvestment programme, the GoI decided to
divest 40% stake in A-I and began looking for a strategic partner. The strategic
partner would take up 40% stake with only a 26% cap to foreign airlines. Ever
since it began operations in 1984, VA focused on international routes. After the
airlines maiden flight, from London's Gatwick airport to Newark on the outskirts
of New York, Richard Branson added several lucrative routes to his kitty.

Till 1999, the airline had code-share agreements with Continental Airlines,
Malaysian Airlines, and British Midland. In the late 1990s, Branson was targeting
the lucrative Delhi-London route.
THREAT

In late 2001, VA was severely affected by the downturn in the global


aviation industry. VA was finding it difficult to sustain its operations in
India with only two flights a week. VA had made it clear that unless it
was allowed to increase the frequency to three, its exit from India would
be a distinct possibility.
FINDINGS

Air-India was once famous for its service . It even thaught of competing with different
airlines but finally landed up making Virgin Atlantic the successful competitor. Today A-I
would learn from VA's innovation in hospitality.

VA was the first airline to offer a TV monitor with every seat (in every class). It offered
in-flight beauty therapy including the services of masseurs, ice-cream cones during in-flight
movies and a chauffeured motorcycle service to airports. Also in the offing were email and
Internet services. Upper class passengers were provided laptop power leads with every seat,
and headsets to reduce noise in the cabin.

IT is very clear that once VA startes its operations, it would be an all-out fight to lure
passengers and AI would be the worst sufferer. As VA promised to offer tickets at 15 per
cent less than BA, a Delhi-London VA ticket would be cheaper than A-I's.
SUGGESTIONS & RECOMMENDED

The competitive war between VA , AI & BA will not only bring the competition
among the aviation players but even bring the price war.

Among all ,one will survive who will be able to provide the service at ---cheapest
cost, effective Service that too with-in least time. These feature will not only
bring revenue but increase the market share too.Equal opportunity should be
provided to virgin
Atlanta , Air India & British
airways in the ratio 40:30:30 then it
will give different attractive schemes
for Delhi-London Skies.
BENIFITS TO THE CUSTOMERS

Customers are the one whos benefit should not be eliminated in eithe of the cases whether
it be Air-India, Virgin atlanta or British airways. The customers want their flight to be :-
o Affordable
o Convenient
o With good comfort
o Timely takeoff and Landing.

The Service provider who will be


Efficient in providing the above
facilities will no doubt rule the
industry.
N K
H A
T U
Y O

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