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Budget Carriers In India The Economist Case Solution

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Nowadays consumers are becoming more price sensitive especially when it comes to travelling, and seeing the current scenario in India, where the population is poor but GDP is rising, it is seen as a lucrative opportunity for airliners to expand into the low cost market. India has many cities as business hubs, and many consumers would be attracted to fly to and fro between these destinations in a matter of hours, given the low price, as opposed to the daunting 18 hours by train or a whole day by car.

Following questions are answered in this case study solution

  1. How attractive is the market for low price airlines?

  2. What does it take to succeed in this sector?

  3. What competitive threats might you face and how would you address them?

Case Analysis for Budget Carriers In India The Economist Case Solution

The Indian government has also made it lucrative for the operation of low cost airlines by reducing taxes on aviation fuel (The Economist, 2014). Similarly, as Africa was previously a no-go zone for airliners, however, now flying as become safer and the number of flyers has doubled over the years. The African government has taken steps in favor of fare reduction for African airlines (The Economist, 2016). Therefore, when taking a bird’s eye view on the global market, with more and more people opting for travelling via air, but being sensitive to the fares, this is a good opportunity for low cost airlines, to first start on shorter routes, and later expanding to longer ones.

2. What does it take to succeed in this sector?

In order to succeed in the low cost airline sector it is important for end to end supply chain to adapt the low cost or cost cutting model. Hence, all suppliers and stakeholders would need to curtail their costs in order to have an overall cost saving impact. It is also important that the airliner outsource its operations such as baggage handling, catering etc. Moreover, it is essential that the airliner recognize and chalk out cheaper routes, inexpensive destinations such as smaller cities, as well as secondary airports that may have lower taxations. This will enable the low cost airliner to gain savings. Moreover, it is pertinent to identify and tap into the correct target market. Where low cost, no frills airline would attract passengers frequenting for business trips, it would not appeal to high end luxury travellers. There is a growing demand for low cost airlines, but the trick would be to adapt a slow and steady expansion plan.

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