Air Deccan Slide Pack - Final.pptx

Air Deccan Case study

1. AIR DECCAN CASE STUDY PGPPro Hyderabad Co’2023 Group A Presentation PGID – 92220116 Sumanth Narayana Bhagavatula PGID – 92220070 Asha Pattnayak PGID – 92220055 Nirosha Pinnapreddy PGID – 92220051 Rama Manjusha Gathey PGID – 92220083 Sruthi Keerthi Patel PGID – 92220048 Lalit Prasad Amudalapalli PGID – 92220081 Dilip Kumar PGID – 92220037 Manoj Lakshmipathiraj PGID – 92220005 Deepak Tripathi PGID – 92220086 Srinivasa Srivatsava Lakkaraju

2. AIR DECCAN CASE STUDY ANALYSIS 01 02 03 04 Air Deccan Journey Indian Aviation Industry Air Deccan Overview Air Deccan Ascent 05 06 07 08 Air Deccan – VRIO Framework Air Deccan Failure Indigo Success Factors Solution and Recommendation

3. FUTURE? START 1997 Raised $25K as 1 st Round of investment 2002 Capt. Gopinath got inspired in Phoenix Airport to Launch LCC Model in India Mar 2007 Air Deccan’s destinations increased to 61 in India Aug 2003 May 2007 Air Deccan’s first ATR turboprop aircraft launched Air Deccan opened to IPO to support its growth plans May 2007 Air Deccan gained a 21% market share, making it the largest LCC in India 1996 Founded Deccan Aviation - Helicopter Charter Company Air Deccan Journey IN A GLANCE

4. Industry Aviation Industry SUMMARY Rapidly growing industry 3 rd Fastest in the world Forecasted 25% growth in the next 5 years on average. Expected 400% increase in passengers in next 14 years Growing middle class – Increased Spending Opening of FDI and foreign investment Infrastructure challenges - 25% airports operating Air routes development – few and need investment Government Policies not very conducive currently. Very high capex requirement Needs big load factor for a break even business

5. Air Deccan Overview SUMMARY Innovative Ideas - Significant cost reduction measures. Prior experience as helicopter operator First mover advantage in the LCC market of India. Clear customer segmentation and target strategy. Challenges in Capital raising – Initial funding and later in IPO First hand challenge in the LCC market Threats from other LCC operators & industry consolidation High fuel price, airport infrastructure challenges, delays

6. Air Deccan’s Ascent Strengths VALUE CREATION M ake air travel affordable, reliable and accessible to everybody COST LEADER Innovative and Successfully Implemented several cost reduction measures ECONOMIES OF SCALE Increased Seats per Flight, Achieved a Load factor of 72% by 2007. INNOVATIVE Simplified processes such as Ticket booking, turned meal service to a profitable part of business

7. VRIO Framework – Air Deccan Analysis ORGANIZATION Strong coherent management team, experienced pilots from Air Force, combination of flights, Hire experienced leader from LCC industry. However overall operation cost was high due to organization culture. VALUABLE Made air travel affordable, reliable and accessible to everybody RARE By targeting mid income travellers, they opened up new market for aviation industry. Created flights paths to tier-2 cities which were not present earlier. Started in LLC in India INIMITABLE The model of low-cost operations was not inimitable in the long term.

8. Shortage of qualified flying personnel Unable to train crews fast enough to meet their demands (Rivalry among existing competitors) For the same LCC targeting audience, Railway Tier 2 cost were cheaper. (Threats of Substitute) Consumer Surplus was very high for early booking due to Rs.1 ticket (Pricing model). Competitors able to provide attractive addons at the same price Choosing IPO over Venture Capital Global finance market tension leads to economy griding to halt. (Bargaining power of Buyers) Emerging competitors backed by extremely deep pockets investors (Threats of New entrants) Increase in Fuel price Pilots & avionics engineers were in desperately short supply Operational expenses are higher than the competitors Increase in repairs & maintenance expenses due to Airport Flight Control Infrastructure were not coping well. (Bargaining power of supplier) Air Deccan - Failures Porter’s Five Forces Model

9. Indigo Success Factor USING VRIO FRAMEWORK VALUE RARITY IMITABLE ORGANIZATION Yes No Yes Yes No Yes Yes Yes Yes Yes Yes Yes LOW FARES TAT BRAND FLEET Yes Yes Yes Yes V R I O Economic Implications

10. 01 02 03 04 Improper purchasing approach towards Air Crafts. Build conservative approach considering buying capacity. Choose single Aircraft Configuration Competitive Staffing for Sr. management and renumeration policy for pilots AIRCRAFT MANAGEMENT FUEL EFFICIENCY BUSINESS MODEL & POLICIES PRICING SUCCESS STRATEGIC COHERENCE 05 Delimiting the uneconomical sectors/routes Adopt Fuel efficient technologies in the aircraft Being Agile & adaptable to market conditions Better response to microeconomic situation Pull back the Rs 1 Pricing model Sustainable pricing of flight tickets Solutions and Recommendations Air Deccan