THAT FLYING PHOENIX

IIPM set to beat economic slowdown

Air fares are being slashed left, right and centre. Low-cost air travellers are again picking up where they left off. LCCs are back in vogue. ‘Small’ fares reign, for now...

“Indian Low Cost Carriers (LCCs) would soon cease to exist!” experts had declared just a few months ago. Such presumptuous predictions were in tune with the then turbulent aviation sector, reeling under the impact of higher ATF costs (which forms 40% of the operating costs for carriers) and galloping inflation that deterred low-cost travellers from flying and prompting them to choose the services of the Railways instead. A slump in consumer sentiment fuelled the de-growth cycle for LCCs.

But proving all doomsayers wrong, the tide has now reversed and no-frills airlines are rising from the ashes like the proverbial phoenix! Falling inflation, a steep fall in ATF prices–by approximately 55% since August 2008, improving infrastructure, et al are giving wings to the once-dying ambitions of players like Indigo, SpiceJet and GoAir, KingfisherRed and JetLite. Says Aditya Ghosh, CEO, Indigo Airlines, “At IndiGo it has been our commitment to provide them with best in class affordable air travel at all times.” Changing market dynamics are encouraging no-frills aviation players to go back to their earlier ambitious expansion mode. Many have restored flights to destinantions that had gone off their route map, others are even adding new routes, and still others like (JetLite and Kingfisher Red) even adding facilities to revive the previously-declining demand. “As oil prices decline, LCCs will once again be able to offer fares that will be low enough to stimulate market growth,” explains Binit Somaia, Regional Director, Centre for Asia Pacific Aviation.

What’s more, despite the ‘red’ splashed across their balance sheets, major player like SpiceJet, IndiGo and GoAir are planning a further 10% cut in their fares to lure more customers. “Lately, there has been a reduction in ATF prices and we want to pass that benefit to the passengers immediately in the form of this latest fare scheme,” says Ghosh. A decline in inflation levels is an added benefit for the LCCs as their target audience has enough in their pocket to come back to low fare air travel. “The recession has also given a setback, but things look positive. We promise a double-fold growth in the segment soon,” says an optimistic M. Madhavan Nambiar, Secretary, Civil Aviation. Further, as airport infrastructure improves, LCCs will also be able to improve their asset utilisation capabilities by reducing turnaround time and increasing efficiency.

But the most important demand stimulant for LCCs remains the Indian travellers facination for the skies. “Only 2% Indians fly in a year. The untapped potential therefore is huge,” adds Somaia. Moreover, in a price sensitive market such as India, with more first time flyers joining the market each year, there will always be a strong market for airlines that offer low fares. The winning 3E mantra forever remains: Exceptional Customer Service, Extreme Operational Efficiency and Effectual Price Discrimination. Who knows, what direction oil prices will take tommorrow, but for now, it’s ambition reloaded for LCCs...

Ratan Lal Bhagat

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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THAT’S HOW YOU DESCRIBE THE JOY OF THINKING ‘NANO’

NO OTHER EXAMPLE CAN JUSTIFY THE MIGHT OF BRAND TATA MOTORS THAN THE MAN HIMSELF. HE HAS BEEN THERE ALL ALONG AND STILL GOING STRONG

When pundits write paeans over how entrepreneurs must dream ‘big’; this man was contrarian. He dreamt ‘small’, shared his dreams with the nation and the year 2008 saw him make aggressive efforts to realise that ‘Nano’ dream. Yes! Ratan Tata’s pet project - Nano - installed the perfect halo over brand Tata Motors in 2008. Mamta Banerjee and the Singur controversy may have taken some of that sheen away, but the subsequent acquisition of European marquee brands Jaguar and Land Rover (JLR) brought the halo right back on the brand’s forehead. And while we could have given all credit to CEO Ravi Kant; yet it is undeniable that both Nano and the JLR initiative were personally handled by Ratan Tata himself, thereby making him our chosen brain that fuelled brand Tata Motors this year.

The Rs.1 lakh car, as it’s known, is expected to hit the market in 2009 and will undercut Maruti 800 in both pricing and practicality. Who could have thought that a truck maker would challenge the dominance of the small car maestro, Suzuki! With 62 years of truck making heritage, Tata Motors is today India’s largest and world’s seventh largest H&MCV manufacturer, holding over 65% market share. Considering that this is the company’s primary métier, Tatas are in a position to take the market pretty much anywhere they want. But this is where perception and rationale find themselves on a collision course! When the Indica compact did come in the year 1998, analysts were skeptical. They argued that a truck manufacturer will never be competent enough to fight it out in the excessively competitive small car market. Armed with modern technology and years of small car making experience, the competition was just not ruthless, it was smart! Ratan Tata was, however, convinced that his car was innovative enough to outsmart any established player irrespective of the latter’s brand. What Tata has is the unparalleled ‘brand equity’ of the group. “Tata has always been a major brand since it is present in almost all automotive segments. It started with the trucks, then entered SUVs and now cars,” says Auto Expert Murad Ali Baig.

Ratan Tata’s bag of tricks is overtly dependent on innovation and astute market reading. He knows that for an upwardly mobile customer (wanting a ‘sensible’ car), operational cost is a major influencing factor. Consumers are susceptible to oil prices volatility, which hugely impacts their buying decisions. Ratan Tata understood this and reinvented the small car marketing model, making Tata Motors an instant hit! Moreover, Tata has made the well-heeled competition rethink its strategy and with the launch of ‘new’ Indica in 2008, it has perhaps taken the game forward! And if the JLR acquisition is any thing to go by, Tata Motors has arrived on the global scene as well! But what indeed makes this automotive brand different is the legendary ‘Tata Group’ stamp and of course Ratan Tata himself, the smart old man who actually knows what really sells...

Karan Mehrishi

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
1500-plus IIPM students placed across the country with 44 bagging international offers
IIPM set to beat economic slowdown
IIPM Admission Detail
IIPM Programme :- SUPERIOR COURSE CONTENTS
IIPM INTERNATIONAL - NEW DELHI, GURGAON & NOIDA
IIPM - Admission Procedure
IIPM, GURGAON
IIPM : EXECUTIVE EDUCATION
Why Study Abroad When IIPM Gives You 3 global Advantages!