COMPETITIVE STRATEGIES IMPLEMENTED BY LOW COST CARRIERS IN INDIA INTRODUCTION India is the second most populous country in the world and world’s largest liberal democracy

COMPETITIVE STRATEGIES
IMPLEMENTED BY LOW
COST CARRIERS IN INDIA

INTRODUCTION
India is the second most populous country in the world and world’s largest liberal democracy. A country that
has traditionally endured economic challenges has become world’s second-fastest growing nation, behind
China and has transformed itself into a true economic powerhouse, resulting in rising income for the
estimated 400 million people in its middle class.
With the civil aviation sector witnessing “considerable progress”, India has become the world’s third largest
domestic aviation market in terms of the number of tickets sold, according to the Economic Survey. In 2016-
17, annual growth in domestic passenger departures was 23.5 per cent as compared to 3.3 per cent in the US
and 10.7 per cent in China.” In the current fiscal till September, domestic airlines carried 57.5 million
passengers, a growth rate of 16 percent over the year-ago period.
It’s not a coincidence that India’s Aviation sector has made such a turnaround. A number of factors,
specifically liberalization and deregulation, have significantly contributed to the country’s transformation.
‘From being a service that few could afford, the sector has now graduated to being a fiercely competitive
industry with the presence of a number of private and public airlines and several consumer-oriented
offerings.’

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REVIEW OF LITERATURE
This study attempts to examine, in the light of the competitive strategies adopted by the low-cost model
based on cost-leadership and product differentiation that have been deployed by low-cost carriers (LCC) in
India. . In addition, this paper attempts to review how the new regulatory roadmap has transformed the
supply of domestic air services in the Indian Aviation industry.
Many surveys were conducted in the past to investigate the acceptance of LCCs in India. In addition, it
assessed the sensitivity of passengers to a change in fare and which factors or attributes would encourage
them to distinguish between LCCs. The study finds that there is immense growth potential for LCCs in India
on account of low fares leading passengers to convert from rail to air traffic. However, infrastructural
bottlenecks leading to delays and cancellations are hindering the mindset of current or potential passengers.
Hence, creating value by attaining customer satisfaction and differentiation in product or services offered is
the most effective way for LCCs to gain market share and, with time, be able to sustain it.

PROBLEM STATEMENT
This research looks at the viability of the low-cost carrier in India by first making an environmental
scanning and internal analysis of factors that encompass the Indian aviation industry. Coupled with reports
from major newspapers, articles from the internet as well as interviews with travellers, it melds the strategic
positioning that LCCs should take in order to have an edge over the major air carriers and reason how they
should sustain their competitive advantage in such a vulnerable competitive industry. In addition, interview
data gives a practical analysis of the travel preference of the general public thus giving an indication of the
acceptance of these LCCs in India and suggest the necessary changes, if any, required for improvement.

NEED FOR THE RESEARCH
The India aviation sector is one of the fastest growing in the world. Given this thriving market, this study
seeks to question what competitive strategies low-cost carriers (LCC) can implement to gain an advantage
and sustain passenger loyalty. It also seeks to assess the level of differentiation strategies adopted by LCCs
in account to competition. It is hypothesized that a differentiated strategy is favourable to gain a sustainable
competitive advantage in this market. In addition, the outlook for LCCs has a large catchment in the upper
fraction of 18 million passengers that patronize the Indian Railways daily. That this study is relevant may be
determined by the immense growth potential of the ICAI, provided that it gathers enough depth through
development of infrastructure in the coming years.
This research looks at the viability of the low-cost carrier in India by first making an environmental
scanning and internal analysis of factors that encompass the Indian aviation industry. Coupled with reports
from major newspapers, articles from the internet as well as interviews with travellers, it melds the strategic
positioning that LCCs should take in order to have an edge over the major air carriers and reason how they
should sustain their competitive advantage in such a vulnerable competitive industry. In addition, interview
data gives a practical analysis of the travel preference of the general public thus giving an indication of the
acceptance of these LCCs in India and suggest the necessary changes, if any, required for improvement.
Finally, a critique view of the LCC sector in India will be discussed, recommending the key changes that
carriers must embark onto, to remain competitive and sustain passenger growth.
However, due to its vulnerability to the ever-changing external environment, it is recommended that the
analysis may only be valid for the next three years.

OBJECTIVES
The main objectives of the research are
? To identify and analyse the core concepts of the low-cost model from available literature.
? To examine the competitive situation in the Indian Airline Industry followed by an environmental
scan to scrutinize the current concern faced by LCCs in addition to heightened competition.
? To apply core concepts to the current players of the LCC sector and highlight their strategic
objectives & future potential of competitive advantage.
? Evaluate the survey responses to identify the perception of passengers and travel agents in regard to
LCCs

RESEARCH METHODOLOGY
In the research both primary and secondary data to be used for collection of data. The primary data consists
mainly of inputs derived from answers to two types of questionnaires provided by LCC airline travellers and
travel agents.

SOURCES OF DATA
The primary data will be gathered through distribution of questionnaire of LCC airline travellers and travel
agents. The secondary data will be collected through various magazines, journals, scholarly articles, research
papers and various authentic websites of various service industries.

SAMPLING
The sample of LCC airline travellers will be obtained from those who alighted from flights terminating at
Domestic airport. This will be done through distributing the questionnaire samples to the travellers.

EXPECTED OUTCOME OF THE STUDY
The study will primarily focus on the demand-side of the market, namely the practices of the LCC entrants
in this respect and sought to corroborate the validity of these practices using primary data. The findings of
this study are necessarily of a preliminary nature, partly on account of the recent emergence of the LCC
segment and partly on account of the small number of currently operational players. This study attempts to
examine, in the light of the competitive strategies adopted by the low-cost model based on cost-leadership
and product differentiation that have been deployed by low-cost carriers (LCC) in India.

BIBLIOGRAPHY
Articles
Borenstein, S. (1989), ‘Hubs and High Fares: Dominance and Market Power in the U.S. Airline
Industry,’ RAND Journal of Economics, 20, 344’365
Business India Intelligence (2005), ‘Reach for the Skies’, Economist
Intelligence Unit, p.01
Dey S. (2005), ‘Cancellations Cost on Low-Cost Airlines’, The Economic Times

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