Domestic Airlines Case Analysis

There are mainly two kinds of customers for domestic airlines - price sensitive and time sensitive. Keeping these customer segments in mind, below are the key success factors on which the domestic civil aviation industry currently competes.

Low Prices - Domestic passengers are quite sensitive to price changes, and rarely select an airline based on loyalty. At any given day, most passengers are prone to book the lowest costing flight within their budget, so it is imperative to keep the airfares, and the costs low. The biggest cost for any airline is aircraft, which can be reduced by leasing instead of owning aircrafts. Operating as many daily flights as possible per aircraft also ensures that fixed and variable costs of aircrafts are recovered. The additional revenue generated ensures profitability, which can be passed on to customers through low prices, further increasing competitive advantage.

High Service Quality - The time sensitive customer is also very keen on the services provided by airlines.

Spicejet executes a “ “two pronged fleet strategy” by which focus is given on rationalization as one prong and constant renewal of the fleet as the second prong. This strategy helps in optimization of the flight network and evolve the operation to volatile demand while dealing with existing constraints of the infrastructure. Spice Jets operates a total of 35 narrow body 737 boeing aircrafts and 20 Q400 bombardier variant aircrafts. All 34 737 aircrafts are on operating lease. 13 Q400 bombardier are on finance lease while remaining 7 are on dry operating lease. In addition, Spicejet operates 1 aircraft on wet lease. Q400 bombardier with 78 seats enables spicejet to connect niche routes while the conventional narrow body 737s operate on more standard routes, usually between metros. Addition of Q400 provides an added capability and flexibility to test and develop more regional routes of new