Joining the Eu

Low Operating Costs

Low cost airlines have a very lean organization structure and operating costs are kept to thebare minimum with low wages (as crew/staff requirements are low and generally freshers arepreferred), low airport fees, low costs for maintenance and cockpit training (as these aretypically outsourced). There is no requirement for standby crews due to a homogeneousaircraft fleet. Low cost carriers aim at achieving high resource productivity. This is generallyachieved due to short ground waits (as turnaround times are kept minimal due to simpleboarding processes, no air freight, no hub services and short cleaning times). Selling costs arealso minimized as high percentage (if not 100%) of ticket sales is generated online,eliminating the margins that would otherwise need to be passed on as commissions to travelagents.

ENVIRONMENTAL SCAN

A brief analysis of the Environment in which the Indian airline industry operates is presentedbelow:

Demographic Factors

India has one of the world’s youngest populations. More importantly, this population ischaracterized by a large, fast growing middle class, thus forming a huge section of aspirant airtravelers. Growing education levels have also developed a very large network of Professionals.These form the business traveler segment of the population which is critical to the airlineindustry.

Economic Factors

Purchasing power levels are rising amongst the middle and upper

AirAsia is a Malaysian airline company that has secured itself as Asian leading low cost carrier. Due to the success of AirAsia in the low segment segments; it has started to face fierce completion from other low cost carriers and full-service carriers interested in encroaching into its profit. Faced by the increased competition