By: VIPRA BABBAR RAHUL AHUJA Sandeep Soni Monika Singh Priyanka Choudhary Nitish Sharma Ankita Jain

Nikita Khemani

GOOD MORNING To ONE AND ALL PRESENT HERE

I Pilot RAHUL with Co pilot VIPRA & Crew members- Sandeep, Ankita, Nikita, Priyanka, Monika, Nitish.

Welcome to our own airlines of section D Please tighten your Seal Belts We are going to begin our Journey

OLIGOPOLY
What is oligopoly? Oligopoly is a form of market where there is domination of a limited number of suppliers and sellers .

Collusive Oligopoly
In the study of economics and market competition, collusion takes place within an industry when rival companies cooperate for their mutual benefit. Collusion most often takes place within the market structure of oligopoly, where the decision of a few firms to collude can significantly impact the market as a whole.

Types of Collusive Oligopoly

Cartels- their aim is to maximize the joint profits and aiming at the sharing of the market.
Price leadership- one firm sets the price and other follows it because it is beneficial for them or they prefer to avoid uncertainty.

Non Collusive Oligopoly

The market assumes a certain pattern of reaction of competitors in each period and the firm assumes that the initial assumptions holds .
They does not take past consideration.

Factors Affecting Oligopoly

The common assumption of the theory is that firms in an oligopoly are looking to protect and maintain their market share and that rival firms are unlikely to match anothers price increase but may match a price fall. I.e. rival firms within an oligopoly react asymmetrically to a change in the price of another firm.

 The kinked demand curve model predicts periods of relative price stability under an oligopoly with businesses focusing on nonprice competition as a means of reinforcing their market position and increasing their supernormal profits. Short-lived price wars between rival firms can still happen under the kinked demand curve model. During a price war, firms in the market are seeking to snatch a short term advantage and win over some extra market share.

INDIA IS ONE OF YHE FASTEST GROWING AVIATION MARKET IN INDIA

Indian Aviation traffic has grown at a CAGR(Compound Annual Growth Rate) of ~ 20% over the last 6 years (2.3 times GDP growth) Various leading agencies have forecasted growth to continue over the next 15-20 years Airbus & Boeing predict that India will be the highest growth market in the world over the next 20 years, ahead of China Centre for Asia Pacific Aviation ( CAPA) expects domestic traffic to expand at 14.8% CAGR through 2020

Market Share Of Airlines

Market Share Sales
14% 26.3%
Jet Airways 1st Qtr kingfisher 2nd Qtr

6%
16%

19.1%
18.6%

Indigo 3rd Qtr SpiceJet 4th Qtr Go Air Others

ss
Market Share in 2011 is 26.3% Overall growth rate is 21% Average inflight service provided Loosing domestic market share Weak brand promotion Sometimes some delays are there Its a high price or average airlines Market Share in 2011 is 19.1% Overall growth rate is 13% Personal inflight service at every seat More of domestic market share Strong brand promotion Mostly flights are on time Its a high price airlines Market Share in 2011 is 18.6% Overall growth rate is 9% Average or low inflight service Gaining local market share Average brand promotion Reliable & on time services Being a low cost airlines provides maximum satisfaction

THE 1st COST Is BUMS ON SEATS

Aviation Business is a four-letter word CASK, or the cost per available seat kilometre. It helps to have more bums on seats, but the critical thing is to have the lowest possible seat cost per possible bum. CASK is a metric that measures what it costs to fly every seat for each km of distance. Indigo and SpiceJet are the industry champs in CASK Indigo, for instance, has a CASK of between Rs 2.30-2.40 while the number for Jet Airways is around Rs 3.60.

THE 2nd COST Is TO CONTROL ITS DEBT

Indigo & Spice Jet has Controlled its debt. It takes aircraft only on lease. Even if they buy them, the aircraft are resold to financiers and leased back. The strategy has helped the airline to keep its debt levels to minimum, avoiding debt burden. Debt brought Jet Airways down Jets Senior Vice-President (Finance) Mahalingam Shivkumar agreed that debt exceeded its airline assets. He said: We have a debt of about Rs 13,400 crore, out of which Rs 9,000 crore is our acquired aircraft. Against that, we have an asset worth Rs 9,000 crore and we have a balance of Rs 4,000 crore.

THE 3rd COST Is FUEL

Due to increasing price of fuel, Indigo & Spice Jet have seen an immense increase in sales (36-56%). Its not because it is able to drive better bargains with the oil companies. Aviation fuel costs the same for everybody. So what makes the difference? Aircraft age. Keep your aircraft fleet young, and you get fuel savings Spice Jet has six-year sale and leaseback agreements for most of its planes. The lessor takes the planes back after this and the airline can induct a brand new one in its place. The average age of fleets, as indicated by aviation website www.airfleets.net - Indigo- 2.6 years - Kingfisher- 5.6 years - Jet Airways-5.8 years

THE 4th COST Is AIRCRAFT MAINTAINANCE

Globally, airlines have to maintain and service airlines to strict safety standards. This is why airlines with a diverse mix of aircraft tend to have higher costs, because they need separate staff to maintain Boeings or Airbuses. The low-cost carriers (LCCs) have cannily focused on having only one basic aircraft (or sometimes two, with the second one connecting the smaller towns)

THE 5th COST Is COST OF IDLING

Aircrafts have to fly more bums more often and for longer This means airlines which keep their aircraft flying for longer hours get better revenues. The figure to watch here is the aircraft utilisation rate the time the aircraft spends in the air in a 24-hour cycle. Indigo tries to keep the idle time between two journeys to 30 minutes and manages an aircraft utilisation rate of 11.5 hours a day. Kingfisher & Jet Airways- 8-9 hours a day

Recommendations for Jet Airways

Concentrate domestic market.
The flights are frequently delayed, so they should try to be on time.

More of advertisements.

Recommendations for Kingfisher

Reduce prices of business class to get competitive advantage. Should try to connect that part of country which are untouched and have potential to get business.