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Interesting Stories

Opinions on Air Deccan's low cost-no frills leadership

Sunday, October 15, 2006

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Air Deccan, the hugely popular low-cost, no-frills flight service in India has been the subject of many a joke in recent times, mainly because of it simply being a low-cost, no-frills service. Jokes have been cast as to this being simply a Bus that flies. A contest in my college invited opinions from students on why this is so, and if they endorse the jokes cast, and what is to be done. The following are the top entries.

Entry1
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Yup I have travelled by Air deccan.. its service levels are poor compared to other domestic airlines. but pal what do u expect ? its A LOW COST AIRLINE . Period.
The above has been exxagerated exponentially.. ofcourse ..

Its basic group dynamics.. each group of friends has one so called "butt of all jokes" who is the nerd/ the loser.. who is the source of time pass and enterntainment to the others.. mainly the studs..

so is the case in industry.. each industry has a company tagged as a "loser".. mainly by the market leaders through underhand ways.. also by the common people... who can and want to travel by something this is not so inclusive.. say a kingfisher airline or jet..

Suggestions to improve:
Silence the critics by actions.. if AIr Deccan/ or any loser has to survive/ thrive, it will have to create its niche.. and be good ( if not great at it).. and then shout from the roof top of how good it is. in what its set out to be..

air deccan (has been targeted particularly as against spice jet/go air) coz it was the first low cost airline which tried to challenge the other big 3.. and it had its teething problems.. so the big 3 jumped on it.. and ensured that air deccan is positioned in the minds of the people as " a bus that flies".. so clearly wiped of any significant market overlap by air deccan..

next.. the people who used to fly by the big 3.. u hv to understand their psyce.. as soon as there was this low cost.. their "status" as someone who " flew and had tags ontheir travel bags" was threatned.. so their reaction to it ??..
" FLYING BY AIR DECAAN ?? HUH.. its NOT FLYING AT ALL>.. its LIKE BEST BUS .. Flying is only when u fly by KF or IA or Jet"..

eg. new competition in hair care segment. .. initially ridiculed parachute as the sticky messing oil which only the nerds put.. and succeeded to a large extent for a while..
what did parachute do ? hit back and shout from roof top..

Entry2
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1. I have not used Air Deccan. But I think this is not a true picture of Air Deccan. If at all, it only is true to an extent of 10%.

2. The major thing that led to this image is Air Deccan's initial performance. Many of its aircrafts have had problems while landing. In its quest to reduce costs, Air Deccan had recruited engineers at low wages compared to other airlines. This leads to high attrition rates. For example, all Air Deccan engineers resigned and joined another airline with very short notice. Air Deccan had problems operating flights on time during the crisis.

3. The major issue facing the company is cash flow. It should sign proposals for additional debts, as it has done in the past. It should not compromise on the quality of engineers with it. Other factors are fuel prices and airport infrastrusture. Fuel costs accounts for nearly 40% of its cost. It should outsource most of its administrative and accounting operations to reduce costs. It should put more pressure on the government to come out with new policies towards airport infrastucture because it is the only airline which, if it crosses the current rough patch, can give a threat to the extablished airlines in India in the near future.

Entry3
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I fly Air Deccan and seriously I think against popular belief this would actually work towards enhancing Airdeccan's image. Any flier reading this would rate this as an overly exagerated piece..while actually thinking why not Airdeccan and not why AirDeccan. This doesnt represent even the bullock cart service in India. All fliers would recognise that some basic safety stipulations have to be followed by any airline and would recognise such piece as a gimmick and start thinking of flying in it...Its strategyof low cost and paid service has created a revolution in the industry and nothing needs to be done to improve their service...

Entry4
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lets look at the consumer satisfaction and value of money index. if we take one of the measure to be evalute them, it could could be ratio of perceived value to actual value of money,

we reach the figure of 1, Value for Money = (Perceived value of money / Actual Value of Money).

clearly other airlines in the same sector, Spicejet, GoAir etc. provide a better ratio at 1.5 while similar ratio for Kingfisher will be 2.

thus what is expressed in joke is highly indicative of Air Deccan.

The current image of Air Deccan is due to 2 problems:

1. Spreading too thin and opening flights in various sectors without getting the existent sectors break-even.

hence Air Deccan should concerntrate on limited segments, not overuse or over commit limited capacity, and once the current sectors are profitable it should move into other sectors. this will give better focus and resource utilization to Air Deccan.


2. Selling flight tickets at single digit price. this strategy though good for awareness and penetration severly detoriates the brand. the customer expectation from the airlines and its service is low before he enters the airport. hence even if customer gets odinary service he perceives it to be a poor service.

In conclusion, Air Deccan has reached a high level of awareness and penetration. It should get away from foolish brand building exercise like selling tickets regularly at low prices. Concerntrate on limited segments andonce these are profitable should venture into newer segments.
posted by Anand, 1:15 PM

2 Comments:

Nice to see thoughts from b-schoolers. Keep 'em brainstorms comin. Best wishes - AJ
commented by Anonymous Anonymous, 10:37 PM  
Thanks Anurag..keep checking back :)
commented by Blogger Anand, 12:19 AM  

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