airline industry

jigar pobari

Par 100 posts (V.I.P)
AIRLINE SECTOR
India occupies an eminent position in the civil aviation sector with a large fleet of aircrafts. In all, 56 airlines are operating scheduled air services to and through India and 22 foreign airlines are flying over Indian Territory. There are over 450 airports and 1091 registered aircraft in the country. In addition to the three public sector airlines Air India, Indian Airlines, Alliance Air - there are three private operators -Jet Airways, Sahara India Airlines & Air Deccan. There are also 41 non-scheduled air transport operators. Additionally 34 applicants have been granted NOC by the Ministry of Civil Aviation for setting up non-scheduled air transport operation.
Estimates show that the domestic and international passenger traffic in India is projected to grow annually at 12.5% and 7% respectively over the next decade. By the year 2005, Indian airports are likely to handle 60mn international passengers and 300,000 tons of domestic and 1.2mn tons of international cargo.
PEST Analysis: The Indian Airline Industry

Political Factors
In India, one can never over-look the political factors which influence each and every industry existing in the country. Like it or not, the political interference has to be present everywhere. Given below are a few of the political factors with respect to the airline industry:

o The airline industry is very susceptible to changes in the political environment as it has a great bearing on the travel habits of its customers. An unstable political environment causes uncertainty in the minds of the air travellers, regarding travelling to a particular country.
o Overall India’s recent political environment has been largely unstable due to international events & continued tension with Pakistan.
o The recent Gujarat riots & the government’s inability to control the situation have also led to an increase in the instability of the political arena.
o The most significant political event however has been September 11. The events occurring on September had special significance for the airline industry since airplanes were involved. The immediate results were a huge drop in air traffic due to safety & security concerns of the people.
o International airlines are greatly affected by trade relations that their country has with others. Unless governments of the two countries trade with each other, there could be restrictions of flying into particular area leading to a loss of potential air traffic (e.g. Pakistan & India)
o Another aspect is that in countries with high corruption levels like India, bribes have to be paid for every permit & license required. Therefore constant liasoning with the minister & other government official is necessary.

Economic Factors
Business cycles have a wide reaching impact on the airline industry. During recession, airline is considered a luxury & therefore spending on air travel is cut which leads to reduce prices. During prosperity phase people indulge themselves in travel & prices increase.

The loss of income for airlines led to higher operational costs not only due to low demand but also due to higher insurance costs, which increased after the WTC bombing. This prompted the industry to lay off employees, which further fuelled the recession as spending decreased due to the rise in unemployment.

Social Factors
The changing travel habits of people have very wide implications for the airline industry. In a country like India, there are people from varied income groups. The airlines have to recognize these individuals and should serve them accordingly. Air India needs to focus on their clientele which are mostly low income clients & their habits in order to keep them satisfied. The destination, kind of food etc all has to be chosen carefully in accordance with the tastes of their major clientele.
Especially, since India is a land of extremes there are people from various religions and castes and every individual travelling by the airline would expect customization to the greatest possible extent. For e.g. A Jain would be satisfied with the service only if he is served jain food and it should be kept in mind that the customers next to him are also jain or at least vegetarian.
Another good example would be the case of South West Airlines which occupies a solid position in the minds of the US air travelers as a reliable and convenient, fun, low fare, and no frills airline. The major element of its success was the augmented marketing mix which it used very effectively. What South West did was it made the environment inside the plane very consumer friendly. The crew neither has any uniform nor does it serve any lavish foods, which indirectly reduces the costs and makes the consumers feel comfortable.
Technological Factors
The increasing use of the Internet has provided many opportunities to airlines. For e.g. Air Sahara has introduced a service through the internet, wherein the unoccupied seats are auctioned one week prior to the departure.
Air India also provides many internet based services to its customer such as online ticket booking, updated flight information & handling of customer complaints.
USTDA (US trade & development association) is funding a feasibility study and workshops for the Airports Authority of India as part of a long-term effort to promote Indian aviation infrastructure. The Authority is developing modern communication, navigation, surveillance, and air traffic management systems for India's aviation sector that will help the country meet the expected growth and demand for air passenger and cargo service over the next decade.
A proposal for restructuring the existing airports at Delhi, Mumbai, Chennai and Kolkata through long-term lease to make them world class is under consideration. This will help in attracting investments in improving the infrastructure and services at these airports. Setting up of new international airports at Bangalore, Hyderabad and Goa with private sector participation is also envisaged.
A good example of the impact of technology would be that of AAI, wherein with the help of technology it has converted its obsolete and unused hangars into profit centers. AAI is now leasing these hangars to international airlines and is earning huge profits out of it. AAI has also tried to utilize space that was previously wasted installing a lamination machine to laminate the luggage of travelers. This activity earns AAI a lot of revenue.
Segmentation: The Airline Industry
Most airlines use a very traditional segmentation strategy, dividing passengers into business travelers and economy travelers (mostly leisure travelers). The common strategy is to squeeze as much profit as possible from business class passengers who are attracted by superior services and corresponding high prices and, at the same time, to try and fill the rest of the seats and ensure growth by attracting economy class passengers with lower fares.
Business passengers They are crucial for airlines' profitability. With less spare time and more cash in their pockets, they agree to pay a premium price for a premium servce. Today business passengers account for approximately 48% of passengers, and these 48% contribute 66% of airlines' revenue. The premium prices they pay provide wider and more comfortable seats, better choice of meals and seats, luxurious lounges. Airlines can choose from a multitude of premium services to offer to business travelers. Some of these extras range from seats equipped with faxes and telephones, to gambling machines, showers, massage services and suit ironing services in the recently introduced arrival lounges. Business passengers believe it is worth extra money if they can save time and arrive looking fresh for an important meeting. Business passengers will avoid transit flights even if a longer flight could save them money. But amongst other perks, flexible reservation services are probably the most important to them. Reservations for business trips are often made just a couple of days in advance. A no penalty cancellation policy is also very important to business passengers.The best way to reach business travelers is through printed advertising. Business news media, such as "The Economist" or "The Wall Street Journal" are some of the best publications through which airlines can reach business travelers. Many airlines design special promotional programs that target corporate bookers and meeting planners, who are responsible for business trips reservations. Frequent flyer programs are an added bonus for business passengers.
Leisure Travelers They represent a totally different market. The most important consideration for most of them is the price. The lower the airfare, the more people will fly the respective airline. By and large, with the exception of wealthy travelers, this segment will not pay extra for premium services and will agree to change several planes during their trip if this option costs less than a direct flight. Despite lower margins provided by this segment, leisure travelers are very important to an airline's bottom line. Part of the reason is that technological progress in the area of tele-conferencing and increased use of the internet for business communications is expected to reduce the number of business travelers. Thus, airlines are counting on the leisure segment to provide further growth. By improving services and reducing prices for economy class passengers, airlines risk that some business passengers will switch to economy class. On the other hand, if an airline focuses on business class passengers, it risks losing its economy class passengers to another airline. Since business class passengers are not many, a company relying mostly on business travelers will often end up flying half-empty planes, losing the potential revenue generated by lower priced economy seats. On the other hand, few airlines catering solely to economy class passengers can be successful because a low fare carrier must fill the entire plane if it is to generate revenue from its low-margin operations.This kind of segmentation serves airlines well enough when implemented within one company. It would be very difficult for any single airline to target just one of these two segments - business or leisure - successfully.

INTANGIBILITY
Intangible services are difficult to sell because they cannot be produced and displayed ahead of time. They are therefore harder to communicate to prospective customers. It means that services are high in credence qualities whereas goods are high in search qualities.
Marketers of services can reduce these risks by stressing tangible cues that will convey reassurance and quality to the prospective customers. These tangible cues range from the firm's physical facilities to the appearance and demeanor of its staff to the letterhead on its stationery to its logo.
In the airline industry transportation is the core product. Since it is intangible in nature a service company can distinguish itself from its competitors by providing several tangible clues like:
o Food / Beverages
o Newspapers
o Movies
o Music
o Staff uniforms- Air India’s staffs always wears a printed blue sari.
o Logos - Air India's centaur is the logo and maharaja is the mascot.
o Colour and design - Jet airways have blue colour tickets.
o Seats and cushions
o Audio / Video facilities for work or pleasure
o Fax, laptops, etc.
o Baggage retrieval
o Flight bookings

INSEPARABILITY
Many services require customers to participate in creating the service product. In the airline industry, it is very important for the company to consider the customers as a part of the company in order to serve them better. The inseparability of services leads to:
o Customer being co-producer;
o Often customer being co-consumers with other customers and;
o Customer travelling to the point of service production.
All the above three problems are face by the service marketer in the airline industry. So the service marketer has to think of ways in which he can satisfy his consumers in an efficient manner.
In the airline industry, the customer has to be physically present in the service factory. Hence, he is coming in direct contact with the service provider as well as other customers of the airline.

INCONSISTENCY
Different front-line personnel have different abilities. Even the same service provider has good days and bad days or may be less focused at different times of day. Services are performances, often involving the cooperation and skill of several individuals, and are therefore unlikely to be same every time. This potential variability of service quality raises the risk faced by the consumer. The service provider must find ways to reduce the perceived risk due to variability. One method is to design services to be as uniform as possible - by training personnel to follow closely defined procedures, or by automating as many aspects of the services as possible.
E.g.: most airlines include online booking resulting in a standardized procedure & fewer mistakes due to human errors. A second way to deal with perceived risk from variability is to provide satisfaction guarantees or other assurances that the customer will not be stuck with a bad result.Another way of reducing inconsistency in airlines is the standardization of in-flight procedures for example the security instructions given at the beginning of the flight.
INVENTORY
Service businesses cannot normally stockpile their output, because the time bound nature of service delivery makes it impossible to inventory the finished goods. For example, the potential income from an empty seat of an airline flight is lost forever once the flight takes off.
Conversely, when demand for service exceeds supply, the excess business may be lost. If someone cannot get a seat on one flight another carrier gets the business or the trip is cancelled or postponed. The inventory for airline industry is mainly the food and the aircrafts spares and parts. Airlines face the problem of inventory mainly due to irregular demand patterns.
The Services Marketing Triangle
The services marketing triangle shows the three interlinked groups that work together to develop, promote and deliver services. These key players are labeled on the vertex of the triangle shown below.

COMPANY


Internal marketing External marketing “making promises”
“enabling promises”



PROVIDERS CUSTOMERS


INTERACTIVE MARKETING
“Keeping Promises”


Services marketing can be explained with the help of the Service Industry Triangle. There are three entities in the whole transaction process.

CUSTOMERS
Customers refer to the persons who have certain needs, wants and desires. The company makes promises to its customers. In the Airline industry, the customers refer to those persons who feel the need of travelling from one destination to another. The customers are further classified as Individual and Institutional. Institutional customers are those corporates who need their employees and executives to fly very often. Hence they have block bookings (reserved bookings) with the airliners.
COMPANY
The company is the dreamer and the offeror. The company dreams up an idea of service offering which will satisfy the customers’ expectation. The company is established with the basic objective of providing the specific transport service. Thus the airline industry with players like Indian airlines, jet airways, Sahara airways etc came into being.
PROVIDERS
These are finally the persons (staff) who interact with the customer. They are the ones who carry out the final transaction. This interface of the customer with the company is through the customer’s interaction with the employees of the company. In order to keep its promises, the company enables its employees to through setting up facilities to deliver the promises that is by setting up ticket and enquiry counters. Hence the company aims at offering its providers with the required infrastructure and training to optimize the quality of the transaction. For eg: Yearly employee training programs and performance appraisals done by Sahara airlines.

The strategic points where the provider and the customer interact are:
 Enquiry of the services, flight timings, routes etc.;
 Purchasing tickets, either from the airlines or from the travel agencies;
 Checking in;
 During boarding;
 On board crew;
 During disembarkation.

In a triangle, all three sides are essential to complete the whole. For services all three marketing activities represented by the sides of the triangle are critical to success; without one of the sides in place, the triangle or the total marketing effort cannot be optimally supported.
The 7 P’s of Marketing Mix
Product Mix
Getting the product right is the single most important activity of marketing. If the product isn't what the market wants, no amount of price adjustment or brilliant promotion will encourage consumers to buy it. The airline product is quite a complex one since it comprises of a service of incorporating the temporary user of airline seat and certain tangible products such as free flight bags or a free bottle of duty free spirit to encourage booking.

The airline product includes of two types of services:
1. on the ground services,
2. In-flight services.
The on-the-ground services include a convenient airport with car parking facilities, duty free' -shopping quick and efficient checking of baggage, efficient service at reservation counter, transport to the airport, etc.

The service provided inside is intangible and is highly variable. The airhostesses are trained to provide polite, warm and courteous service. The courteous service that the representatives at the baggage counter, reservation counter provide goes a long way in developing customer loyalty. The travel agents of the airlines also need to be efficient and polite.

Differentiating the Product
It is important to recognize that what the consumers are demanding are not products, or features of products but the benefits they offer. Producing added benefits thus helps the marketer to distinguish one product from another. Good design or style of service can form the basis of differentiation. This enables the company to create a personality for its service. The design and decor of the aircraft provides opportunities to personalize their product as well as periodically to update them when differentiation under IATA regulations was virtually excluded, nonetheless, certain airlines were able to develop distinct personalities. Eagle Airlines created an entirely new market between New I York and Bermuda, for e.g. by developing an image of a friendly airline distinctive from other airline serving the route. A similar style was evident in Richard Branson's Virgin Airways.

Price Mix
Price plays as much a tool of marketing as promotion plays a critical role in the marketing mix. The concept of 'fair price' is paramount. Buyers judge whether a product is fairly priced by seeing whether it represents value for money.

Pricing Strategies
Premium Pricing:
The airlines may set prices above the market price either to reflect the image of quality or the unique status of the product. The product features are not shared by its competitors or the company itself may enjoy a strong reputation that the 'brand image' alone is sufficient to merit a premium price.¬
Value for Money Pricing:
The intention here is to charge the average price for the product and emphasize that it represents excellent value for money at this price. This enables the airline to achieve good levels of profit on the basis of established reputation.
Cheap Value Pricing:
The objective here is to undercut the competition and price is used to trigger the purchase immediately. Unit profits are low, but overall profits are achieved. Air India and Indian Airlines have slashed their prices to meet the competition of private airlines so that they can consolidate their position in the market.

Airlines usually practice differential pricing. There are three classes: The First Class, The Executive or Business Class and The Economy Class. Fares for each class are different since the facilities provided and the comfort and luxury level is different in each class. Seasonal fares are also fixed, fares rise during the peak holiday times.

Low-cost Pricing:
With the advent of the low-cost airlines in the Indian aviation industry, a different low-cost flying concept has come up. Since these low-cost airlines are trying to woo the customers by providing air travel in exceptionally low prices, a price-band kind of pricing has to be designed.
In low-pricing strategies, the airlines provide very low prices for the flight tickets. Also, they prices are made cheaper by booking the tickets long before the flight date.

APEX Fares:
In this scheme, people are given very cheap rates only if tickets are booked atleast before the specified time period. But the draw-back here is that if the booking is cancelled, a substantial amount of money is not returned.
Place Mix
Understanding what, where, why, when, and how the target market buy, is the first step in designing the marketing channel. The marketer must understand the service output levels desired by the target market and types and levels of services that the people want and expect when they purchase the service.

The airline industry has adopted different distribution channels for marketing their services to their target audience. On the ground there are many ticket counters with computerized 24-hour reservation systems. They have many specially designed check-in counters for club and premiere passengers.

There are two principal methods of booking seats on an airline.
• The first is the group of traditional method such as the phone, fax, and email. Corporates or vacationers generally approach travel agents who book the tickets form the airline & take the commission from them.
• The second & increasingly popular method of reservation is the online booking method. Here the customer fills in his details online & he receives an instant booking of his ticket. His payment is generally through credit card. Although not as popular in India, this booking system has achieved much success in the developed countries that travel agents are losing their jobs.

An example of how distribution is carried out:

The place mix of airlines consists of mainly the distribution channels. The number of destinations that an airline flies to can also contribute to its place mix.

Distribution channels
The Four methods of distribution are as following:
A] Consolidation: The direct sale of tickets from airport to the passenger on the airline desk.
B] Tour Operator/ Travel Agent: Customers approach travel agents or tour operators who book the tickets from the airline and take commission. E.g. SOTC
C] Affiliated with companies: As the name defines, airlines gets affiliated with companies who carry all its trips with a same airline who in turn gives special discounts or offers in return.
D] Direct through home leased system, e.g. phone, fax, email and also online e-booking.

Promotion Mix
The formulation of an ideal promotion mix is essential to inform sense and persuade the users. In the Indian perspective, we need more creative efforts because the potential users in a majority of the cases don’t prefer to use air services. The business magnets, executives, politicians, actors, high spending tourists etc are some of the users of the air services. The users appears to be more conscious, aware of their rights and in a majority of the cases are found to be sophisticated and therefore the promotional efforts have to be creative. Many airlines are facing financial crunch, it is pertinent that they make optimum use of different components of promotions
• Advertising:
Airlines need creative advertisements to promote their business. In the view of rising cost of inputs and the increasing impact of worldwide economic depression on the airlines, advertisements should be budget optimistic vis-à-vis optimal. The telecast media and print media are important for promoting the air business.
The airlines have to make sure that whatever strategic decision they make to promote the businesses are in a position to establish an edge over competitor’s promotional measures. Also the airlines should keep in mind the quality and the nature of the target markets and the level of expectations.
It is also essential that while advertising airlines should also keep in mind the image of our country, the scenic beauty, tourist attractions, rich cultural heritages or which would attract number of tourists. While advertising it is impact generating that one should select an opportune moment of flight is an attractive scene of take off, and so on. Airlines can also use broadcast media. The domestic flights should use radios because due to increasing access to FM.
• Publicity:
Publicity is an important component of promotion mix. It is a process of persuasive communication. It is very instrumental in sensitizing the persuasion process provided the media people, public relations officers provide their help. Strengthening the PR activities is essential to promote airlines business. The PRO, Receptionist, Travel agents, Media people are very important people in publicizing the business. The marketing professionals can seek the cooperation of media people by organizing dinners, meetings, get together, press conference etc, also giving them small gifts and motivating them to publish news items which are in favour of airlines.
• Sales promotion:
The sales promotion measures are meant for both the related sources channelising and using the business, such as the travel agents, tour operators and all of them who process the services and the passengers and business houses who use the services.
The travel agents contribute a lot to the promotion of airlines business and therefore the need to think of them in their favour on their priority basis. In addition the tour operators, the frontline staff also must be given priority. Hence they should be offer some incentives this will motivate them to promote the product. The user also deserves incentives.
The incentives may be in the form of concessional services, a small gift etc.
E.g. EMIs, which allows customers to pay in installments.

• Word of mouth

‘Customer Loyalty Ladder’
This happens to be an important constituent of the promotion mix in which the promoters act as a hidden sales force. The satisfied groups of users, opinion leaders narrate outstanding merits or salient features of services used by them.
If you travel by Air India and are satisfied with the services offered by them then it is natural that you will share your experiences with your friend’s relatives, they trust in you and therefore the stimulation process is on. The moment your friends and relatives get an opportunity to travel they find Air India their first choice.
Ads may be ineffective, publicity may also be ineffective but word of mouth can never be ineffective
People Mix
In the service industry, service personnel come in direct contact with their customers in the course of production and consumption of the services.
Because people provide most services, the selection, training, and motivation of employees can make a huge difference in attaining customer satisfaction. Ideally, employees should exhibit competence, caring attitude, responsiveness, initiative, problem solving ability, and goodwill. Many service organizations trust their people enough to empower their front-line personnel to resolve customer problems.
The airhostess in any airline come in contact with the customers in the process of providing the service, while the cock-pit crew are employees who contribute to the service product but do not come in direct contact with the customers.

The physical presence and the percentage of time the customer is present reflect the customer contact and extent of contact respectively. Services with high contact are more difficult to control and manage because of the degree of variability in the quality, demand and nature of service.
The service contact personnel in the airline industry is an airhostess who is expected to possess a pleasing personality with polite service handling. While on the other hand the cock pit crew, being categorized as a low contact personnel, require to possess high analytical and technical attributes. In the airline industry, there is also the ancillary service personnel, the travel agent who helps to create the service exchange but is not a part of the service.

While delivering services, airlines ensure that the service is delivered as promised and this is often totally with in the control of the front-line staff. This ensures some amount of reliability. This in turn affects the degree of responsiveness sought from customers. The quality of service that the front-lone staff provides is highly depended on his/her ability to communicate their credibility. Airlines deliver caring and individualized attention to customers through their airhostesses. Empathy implies that these personnel will listen, adapt, and be flexible in delivering what individual customers need. Also the appearance of an employee are important aspects as it forms the tangible dimensions of quality along with other factors like service quality, decor etc.
To start off, airlines hire the right personnel with essential requirements. They recruit the right people and develop, and train them to deliver quality service. These employees are provided with effective and sufficient support systems and are motivated in a manner, they stick to the organization. They are more treated as customers, rather than employees.
Process Mix
The process of airline service lays emphasis on the involvement of channels, front line staff, travel agency offices, offices of the tour operators or so form where the services flow & reach to the ultimate users.
The process begins at the time of reservation goes on to the confirmation of seats. For e.g.: Computer reservation system of Indian Airlines enables any reservation request from anywhere in the world to be auctioned in minutes. The reservation facility is accessible through all-major computerized reservation system of the world.
By giving details of where to book and how to book airlines help in providing quality services to the customers. They also offer concession, by not charging any cancellation charges and also giving them the option to make a change in the reservation status if he requests so on the presentation of ticket, all these facilities go a long way in increasing passenger convenience.
Then facilities at the airport, the baggage handling, flight information, etc. also helps in delivering quality service and making travel a pleasure.
In the aircraft the meal service, in-flight entertainment, reading material, in-flight amenities, etc. help the customers, the travelers to have an enjoyable and convenient travel.
All these procedures form a part of the total process designed to deliver quality service. Airlines are making every effort to constantly redefine service procedures to enhance service satisfaction levels.

Physical Evidence
Physical Evidence refers to the environment in which the service is delivered and where the service industry and customer interact. The aircraft by itself, the seating configuration meant to be comfortable and spacious, and the in-flight food provide physical evidence to the airline service.

The Boeing Company and The Airbus Industry are the best commercial aircraft makers and almost all airline industries make use of one of these airlines. The seating is such that it is comfortable and there is enough leg space
The in-flight food is another, important aspect, a wide selection of meals is offered to the passengers. Passengers are requested to indicate their reference at the time of reservation itself. Delta Airlines has introduced new sleeper seats with electric controls for reclining lumbar support, leg rest extension, expanded seat back height for a more insulated environment etc. thus providing highly comfortable seating.

Booking offices, ticket counters, etc. must be spacious and well designed with good looks. Further the air crafts must be given good exteriors and must be maintained wel1.
The aircraft must have elegant interiors and must be incorporated with all basic facilities. The aircrafts must have well designed seats with more leg room especially in the business class.
Domestic lounges are enhanced with good interiors and basic amenities which will make it an ideal place to conduct business, entertain or relax.
The jet logo prominently displayed on each of its aircrafts, is used a cue to trigger of a reminder of the customer’s experience at Jet & also of all the values that jet airways stands for.
The physical evidence would also include the other facilities in the aircraft. Some of the bigger aircrafts have more than the usual facilities on board. These sort of tangible clues act as identification marks for the airline & help the customer to evaluate on airline from another.
Quality Dimensions: RATER Analysis
Customers don’t assess the quality of service on one dimension only, they use multiple parameters to judge the quality of the service that they are being offered. These characteristics which people consider vary from person to person, industry to industry. Even depend upon the product on offer.

Because of the intangibility and multifaceted nature of many services, it may be harder to evaluate the quality of a service than a good. Because the customers are often involved in the service production a distinction needs to be drawn between the process of service delivery and the actual output of the service. The most extensive research into service quality is strongly user oriented.

Services are broadly classified into 10 dimensions namely:
 Tangibility
 Reliability
 Responsiveness
 Competence
 Courtesy
 Credibility
 Security
 Access
 Communication
 Understanding the customer

Since most of these dimensions are overlapping they were pooled down to five dimensions as given below:
 Reliability
 Assurance
 Tangibles
 Empathy
 Responsiveness

When we look at these dimensions with respect to the airline industry we find that the following service qualities are expected by the customer.

• Reliability – flights to promised destinations depart and Arrive on schedule
• Assurance – trusted name, good safety record, Competent employees
• Tangibles – aircraft, ticketing counters, baggage area, uniforms
• Empathy – understanding of special individual needs, anticipates customer needs
• Responsiveness - prompt and speedy system for ticketing, in- flight, baggage handling

RELIABILITY –
Ability to perform the promised service dependably and accurately.
This would basically be that company delivers to the customer what is promised & the customers basically like to deal with companies that can fulfill their promises.
When we look at the airline industry we can see the following things the customer would expect certain basic facilities like: some functional infrastructure provided to him, the flight leaving & taking off on time, the luggage reaching safely.

ASSURANCE –
Employees’ knowledge and courtesy and their ability to inspire trust and confidence
Assurance relates to knowledge and accuracy of employees and their ability to convey trust and confidence. This dimension is of great significance for services where a customer perceives high risk and is not sure of the outcomes. The employees should have a positive morale & should be motivated if they have to promote the firm & create a sense of assurance in the flyer’s mind.
Jet Airways is generally considered the more customer friendly of the domestic airlines. The staff there is nicer to old people or little kids who might be travelling. Though Jet has a very young staff, so some of the members could possibly not match the kind of experience the Indian Airlines crew has. Suppose some senior citizen is travelling alone in an aircraft for the first time the crew should see to it that he is given proper instructions & is comfortably settled in his seat.
Besides this, after the September 11 crisis, there was a lot of scepticism in the fliers & to instill a little confidence in the consumer’s mind, the government paid greater emphasis on security in the aviation policy. This was all so that people would feel safe next time they traveled by air. `They would appoint a committee and look into the recommendations provided by them to better the security arrangements in the airplanes & airports.

TANGIBLES –
Appearance of physical facilities, equipment, personnel and written materials
Tangible features would be those physical features, which can be seen by the customer. These would be the physical proofs, which would help the customer to judge the quality of service. The customers evaluate the quality of these services on the basis of the tangibles provided by the service providers. The marketers of services emphasize on tangiblising the intangibles.
Incase of the airline it’d be the aircraft that the airline uses, how old they are, and the kind of facilities that are provided inside the aircraft or in the waiting area. The technology used for baggage handling. The coaches used to transport the customer to the aircraft, all of these speak leaps & bounds about the service provider. The kind of skilled staff that they have the uniform that the staff wears.The tangibles would also include the infrastructural facilities present at the airports. This is where we find most of the Indian airports lacking. They have no proper arrangements to handle the customers.
When we look at the aircraft fleet that is a very important tangible feature, and we find that Indian Airlines has a really ancient fleet of aircraft’s which doesn’t make it extremely safe as older planes are more prone to damage. Whereas, Jet Airways has the youngest fleet in the business.

Empathy –
Caring, Individualized attention given to customers
Empathy basically is when the employees of the organisation make the customer feel at home, at ease, making him feel wanted. The customers are mostly offered the same service from most of the airlines. The easiest way for an airline the maintain and grow it’s client base is to be empathetic towards their customers, to understand their specific needs and to cater to them & they should make each customer feel like he is a unique asset to the company & like their single most important client. Addressing the clients by their first names, keeping a track of their usual flying routes, their preferences in flight & catering to all of those, maybe giving him his favorite seat each time he travels.

Responsiveness –
Willingness to help customers and provide prompt service.
Responsiveness is willingness to help the customers and provide prompt service The degree of responsiveness shows the level of commitment that the people of the company have towards their work. It is very necessary for the company to concentrate on prompt & the right kind of responsiveness to the needs of the customer.
Incase, a certain passenger doesn’t like a certain meal served on the plane, the cabin crew should be in a position to offer him an alternative meal in little time, as his perception or opinion of the airline company would mainly depend upon whether he goes satisfied on this complaint or not. Care should be taken that prompt response and top quality service is provided to satisfy all of the customer’s needs.

SERVICE ENCOUNTER

The interaction between the customer and service provider in the airline industry means that the employee often represents the company to the airline travelers (customers). Especially in the airline industry the service encounter plays a significant role because here the customer comes in direct contact with the employees of the airline company and spends a lot of time in the service factory (the aircraft). Hence the issue of staff presentation is a major tangible factor in the airline industry. This in turn influences the satisfaction level of the customer.
The airline company’s organizational structure and culture dictates the extent to which responsibility for staff recruitment, training and motivation is shared between marketing operations and human resources. For service marketers in this industry, the core of service element is the interaction between those providing services and the customer is known as service encounter.
CRITICAL INCIDENTS

Critical incidents are specific encounters between customers and service employees that are especially satisfying or dissatisfying for one or both parties. In the airline industry critical incidents are very important as they help the company evaluate and measure satisfaction level of the customers. The critical incident technique is a methodology for collecting and categorizing such incidents in service encounters.

SERVICE GAP
A service firm may win by delivering consistently higher quality service than competitors and exceeding customer’s expectations. These expectations are formed by their past experiences, word of mouth and advertisement. After receiving the service customers compare the perceived service with the expected service. If the perceived service falls below the expected service customers lose interest in the provider. If the perceived service meets or exceeds the expectations they are apt to use the provider again. The model shown identifies 5 gaps that cause unsuccessful delivery in the airline industry.

a. Gap between consumer expectation and management perception: Management does not always perceive correctly what customers want. In the airline industry, the company might perceive its target customers to be ambience driven and not price driven but in reality it might turn out to be the other way.
b. Gap between management perception and service quality specification: Management might correctly perceive the customers wants but not set a specified performance standards. A company like Air India who thoroughly understands what its customers want but due to external factors like lack of resources and the fact that it is a government run organization due to which there is a lot of political interference restricting the company from performing at its best.
c. Gap between service-quality specifications and service delivery: The personnel might be poorly trained or incapable or unwilling to meet the standards. Or they may be held to conflicting standards such as taking time to listen to customers and serving them fast. This had happened in the case of Air India during the SARS outbreak where the pilots refused to fly on the last moment after the flights had been declared scheduled.
d. Gap between service delivery and external communications: Consumer expectations are affected by statements made by company representatives and ads. Air India boasts in its hoarding advertisements about the companion of the customer flying free i.e. buy 1 and get 1 free but it is only applicable for 1st class passengers which is no where mentioned and there are many such examples or campaigns that can be mentioned about.
e. Gap between perceived service and expected service: This gap occurs when the consumer misperceives the service quality. This is a combination of one or more of the previous gaps and provides a clear indication of the degree of which service quality exists in the service organizations.

Service Recovery
When the company fails to stand for its promises made to the customer on the basis they build expectation, it’s to be said that there is service failure. When the service failure occurs, there can be again severe ramification. Customer is considered to be the bread and butter, hence retaining them is the biggest challenge, and however service failure acts as an obstacle to it. In such failures,
1) The customer wants what they were promised.
2) Customer wants personal attention
3) Customer wants a decent apology
4) Customers want that they should not be made to feel that they are the cause of the problem. (Though in many cases they are responsible for nuisance)

There are again five steps involved in order to deal with service failure. They are mentioned as below
1st step: acknowledgement and apology for the fact.
2nd step: listening to the customers.
3rd step: avoid defending the company and offer a rational explanation.
4th step: offer some extra benefits
5th step: have a proper follow up and make sure no mistakes this time, so that he can easily forget about the service failure and is retained.
(Example covered while presentation)
A customer expects 3 shorts of fairness in case of service recovery. They are mentioned as below.
1. Interaction fairness: - when there is service failure, first the company is supposed to acknowledge the customer. Due to this the customer might turn erate, but he still expects fairness and courtesy in the language and tone used by the addresser
2. Procedure fairness: - to know in detail about the incidence of service failure or to avail the compensation. There should be simplicity in procedure, which is involved. Service failure and complexity in procedure both together might result in a disaster as far as customer is concern.
3. Outcome fairness: - now when the company realizes that there is service failure they should end up compensating, arranging for some alternative mode of transporting or complies with the customer condition. The outcome should be taken by considering the customer, his needs and the company’s policy.
Complain Handling
Handling complaints is a big challenge for every company today. Before understanding how to handle, let us see what are the factors, which can result in customer’s complaints


The Fish-Bone diagram for the Airline Industry

There are ten steps involved in handling complaints effectively. They are mentioned below.

1) The frontline employee handling complaints should stay calm under any circumstances.
2) Let the customer get the story off their chest- do not interrupt, this will only cause irritation. In this case listening skills comes into picture.
3) Avoid admitting any liability at this stage. The officer just need to show concern like, “I’m sorry for the inconvenience, let me see what I can do”. Give attention to the customer, make him feel important.
4) Get facts by using question and try to find out the real and whole story behind it.
5) After listening and collecting data, just identify appropriate action considering company’s policy and customer’s expectation.
6) Take action if you have authority or involve manager or concerned person.
7) If corrective action cannot be taken immediately, tell the customer. It’s better to give bad news rather giving false news.
8) Record the action to be taken and inform anyone else in the organization involved.
9) Look into the matter, provide a proper follow-up.
 
Airline industry is all ups side down. There are myriads of trumps and tribulations. lately, Spice Jet has to face huge loss but, they recovered and they are now reeling towards success. Airlines industry is the fastest growing sector and it it inevitable. The stock market too have shown the incredulous and heavy leap in airline industry.
 
AIRLINE SECTOR
India occupies an eminent position in the civil aviation sector with a large fleet of aircrafts. In all, 56 airlines are operating scheduled air services to and through India and 22 foreign airlines are flying over Indian Territory. There are over 450 airports and 1091 registered aircraft in the country. In addition to the three public sector airlines Air India, Indian Airlines, Alliance Air - there are three private operators -Jet Airways, Sahara India Airlines & Air Deccan. There are also 41 non-scheduled air transport operators. Additionally 34 applicants have been granted NOC by the Ministry of Civil Aviation for setting up non-scheduled air transport operation.
Estimates show that the domestic and international passenger traffic in India is projected to grow annually at 12.5% and 7% respectively over the next decade. By the year 2005, Indian airports are likely to handle 60mn international passengers and 300,000 tons of domestic and 1.2mn tons of international cargo.
PEST Analysis: The Indian Airline Industry

Political Factors
In India, one can never over-look the political factors which influence each and every industry existing in the country. Like it or not, the political interference has to be present everywhere. Given below are a few of the political factors with respect to the airline industry:

o The airline industry is very susceptible to changes in the political environment as it has a great bearing on the travel habits of its customers. An unstable political environment causes uncertainty in the minds of the air travellers, regarding travelling to a particular country.
o Overall India’s recent political environment has been largely unstable due to international events & continued tension with Pakistan.
o The recent Gujarat riots & the government’s inability to control the situation have also led to an increase in the instability of the political arena.
o The most significant political event however has been September 11. The events occurring on September had special significance for the airline industry since airplanes were involved. The immediate results were a huge drop in air traffic due to safety & security concerns of the people.
o International airlines are greatly affected by trade relations that their country has with others. Unless governments of the two countries trade with each other, there could be restrictions of flying into particular area leading to a loss of potential air traffic (e.g. Pakistan & India)
o Another aspect is that in countries with high corruption levels like India, bribes have to be paid for every permit & license required. Therefore constant liasoning with the minister & other government official is necessary.

Economic Factors
Business cycles have a wide reaching impact on the airline industry. During recession, airline is considered a luxury & therefore spending on air travel is cut which leads to reduce prices. During prosperity phase people indulge themselves in travel & prices increase.

The loss of income for airlines led to higher operational costs not only due to low demand but also due to higher insurance costs, which increased after the WTC bombing. This prompted the industry to lay off employees, which further fuelled the recession as spending decreased due to the rise in unemployment.

Social Factors
The changing travel habits of people have very wide implications for the airline industry. In a country like India, there are people from varied income groups. The airlines have to recognize these individuals and should serve them accordingly. Air India needs to focus on their clientele which are mostly low income clients & their habits in order to keep them satisfied. The destination, kind of food etc all has to be chosen carefully in accordance with the tastes of their major clientele.
Especially, since India is a land of extremes there are people from various religions and castes and every individual travelling by the airline would expect customization to the greatest possible extent. For e.g. A Jain would be satisfied with the service only if he is served jain food and it should be kept in mind that the customers next to him are also jain or at least vegetarian.
Another good example would be the case of South West Airlines which occupies a solid position in the minds of the US air travelers as a reliable and convenient, fun, low fare, and no frills airline. The major element of its success was the augmented marketing mix which it used very effectively. What South West did was it made the environment inside the plane very consumer friendly. The crew neither has any uniform nor does it serve any lavish foods, which indirectly reduces the costs and makes the consumers feel comfortable.
Technological Factors
The increasing use of the Internet has provided many opportunities to airlines. For e.g. Air Sahara has introduced a service through the internet, wherein the unoccupied seats are auctioned one week prior to the departure.
Air India also provides many internet based services to its customer such as online ticket booking, updated flight information & handling of customer complaints.
USTDA (US trade & development association) is funding a feasibility study and workshops for the Airports Authority of India as part of a long-term effort to promote Indian aviation infrastructure. The Authority is developing modern communication, navigation, surveillance, and air traffic management systems for India's aviation sector that will help the country meet the expected growth and demand for air passenger and cargo service over the next decade.
A proposal for restructuring the existing airports at Delhi, Mumbai, Chennai and Kolkata through long-term lease to make them world class is under consideration. This will help in attracting investments in improving the infrastructure and services at these airports. Setting up of new international airports at Bangalore, Hyderabad and Goa with private sector participation is also envisaged.
A good example of the impact of technology would be that of AAI, wherein with the help of technology it has converted its obsolete and unused hangars into profit centers. AAI is now leasing these hangars to international airlines and is earning huge profits out of it. AAI has also tried to utilize space that was previously wasted installing a lamination machine to laminate the luggage of travelers. This activity earns AAI a lot of revenue.
Segmentation: The Airline Industry
Most airlines use a very traditional segmentation strategy, dividing passengers into business travelers and economy travelers (mostly leisure travelers). The common strategy is to squeeze as much profit as possible from business class passengers who are attracted by superior services and corresponding high prices and, at the same time, to try and fill the rest of the seats and ensure growth by attracting economy class passengers with lower fares.
Business passengers They are crucial for airlines' profitability. With less spare time and more cash in their pockets, they agree to pay a premium price for a premium servce. Today business passengers account for approximately 48% of passengers, and these 48% contribute 66% of airlines' revenue. The premium prices they pay provide wider and more comfortable seats, better choice of meals and seats, luxurious lounges. Airlines can choose from a multitude of premium services to offer to business travelers. Some of these extras range from seats equipped with faxes and telephones, to gambling machines, showers, massage services and suit ironing services in the recently introduced arrival lounges. Business passengers believe it is worth extra money if they can save time and arrive looking fresh for an important meeting. Business passengers will avoid transit flights even if a longer flight could save them money. But amongst other perks, flexible reservation services are probably the most important to them. Reservations for business trips are often made just a couple of days in advance. A no penalty cancellation policy is also very important to business passengers.The best way to reach business travelers is through printed advertising. Business news media, such as "The Economist" or "The Wall Street Journal" are some of the best publications through which airlines can reach business travelers. Many airlines design special promotional programs that target corporate bookers and meeting planners, who are responsible for business trips reservations. Frequent flyer programs are an added bonus for business passengers.
Leisure Travelers They represent a totally different market. The most important consideration for most of them is the price. The lower the airfare, the more people will fly the respective airline. By and large, with the exception of wealthy travelers, this segment will not pay extra for premium services and will agree to change several planes during their trip if this option costs less than a direct flight. Despite lower margins provided by this segment, leisure travelers are very important to an airline's bottom line. Part of the reason is that technological progress in the area of tele-conferencing and increased use of the internet for business communications is expected to reduce the number of business travelers. Thus, airlines are counting on the leisure segment to provide further growth. By improving services and reducing prices for economy class passengers, airlines risk that some business passengers will switch to economy class. On the other hand, if an airline focuses on business class passengers, it risks losing its economy class passengers to another airline. Since business class passengers are not many, a company relying mostly on business travelers will often end up flying half-empty planes, losing the potential revenue generated by lower priced economy seats. On the other hand, few airlines catering solely to economy class passengers can be successful because a low fare carrier must fill the entire plane if it is to generate revenue from its low-margin operations.This kind of segmentation serves airlines well enough when implemented within one company. It would be very difficult for any single airline to target just one of these two segments - business or leisure - successfully.

INTANGIBILITY
Intangible services are difficult to sell because they cannot be produced and displayed ahead of time. They are therefore harder to communicate to prospective customers. It means that services are high in credence qualities whereas goods are high in search qualities.
Marketers of services can reduce these risks by stressing tangible cues that will convey reassurance and quality to the prospective customers. These tangible cues range from the firm's physical facilities to the appearance and demeanor of its staff to the letterhead on its stationery to its logo.
In the airline industry transportation is the core product. Since it is intangible in nature a service company can distinguish itself from its competitors by providing several tangible clues like:
o Food / Beverages
o Newspapers
o Movies
o Music
o Staff uniforms- Air India’s staffs always wears a printed blue sari.
o Logos - Air India's centaur is the logo and maharaja is the mascot.
o Colour and design - Jet airways have blue colour tickets.
o Seats and cushions
o Audio / Video facilities for work or pleasure
o Fax, laptops, etc.
o Baggage retrieval
o Flight bookings

INSEPARABILITY
Many services require customers to participate in creating the service product. In the airline industry, it is very important for the company to consider the customers as a part of the company in order to serve them better. The inseparability of services leads to:
o Customer being co-producer;
o Often customer being co-consumers with other customers and;
o Customer travelling to the point of service production.
All the above three problems are face by the service marketer in the airline industry. So the service marketer has to think of ways in which he can satisfy his consumers in an efficient manner.
In the airline industry, the customer has to be physically present in the service factory. Hence, he is coming in direct contact with the service provider as well as other customers of the airline.

INCONSISTENCY
Different front-line personnel have different abilities. Even the same service provider has good days and bad days or may be less focused at different times of day. Services are performances, often involving the cooperation and skill of several individuals, and are therefore unlikely to be same every time. This potential variability of service quality raises the risk faced by the consumer. The service provider must find ways to reduce the perceived risk due to variability. One method is to design services to be as uniform as possible - by training personnel to follow closely defined procedures, or by automating as many aspects of the services as possible.
E.g.: most airlines include online booking resulting in a standardized procedure & fewer mistakes due to human errors. A second way to deal with perceived risk from variability is to provide satisfaction guarantees or other assurances that the customer will not be stuck with a bad result.Another way of reducing inconsistency in airlines is the standardization of in-flight procedures for example the security instructions given at the beginning of the flight.
INVENTORY
Service businesses cannot normally stockpile their output, because the time bound nature of service delivery makes it impossible to inventory the finished goods. For example, the potential income from an empty seat of an airline flight is lost forever once the flight takes off.
Conversely, when demand for service exceeds supply, the excess business may be lost. If someone cannot get a seat on one flight another carrier gets the business or the trip is cancelled or postponed. The inventory for airline industry is mainly the food and the aircrafts spares and parts. Airlines face the problem of inventory mainly due to irregular demand patterns.
The Services Marketing Triangle
The services marketing triangle shows the three interlinked groups that work together to develop, promote and deliver services. These key players are labeled on the vertex of the triangle shown below.

COMPANY


Internal marketing External marketing “making promises”
“enabling promises”



PROVIDERS CUSTOMERS


INTERACTIVE MARKETING
“Keeping Promises”


Services marketing can be explained with the help of the Service Industry Triangle. There are three entities in the whole transaction process.

CUSTOMERS
Customers refer to the persons who have certain needs, wants and desires. The company makes promises to its customers. In the Airline industry, the customers refer to those persons who feel the need of travelling from one destination to another. The customers are further classified as Individual and Institutional. Institutional customers are those corporates who need their employees and executives to fly very often. Hence they have block bookings (reserved bookings) with the airliners.
COMPANY
The company is the dreamer and the offeror. The company dreams up an idea of service offering which will satisfy the customers’ expectation. The company is established with the basic objective of providing the specific transport service. Thus the airline industry with players like Indian airlines, jet airways, Sahara airways etc came into being.
PROVIDERS
These are finally the persons (staff) who interact with the customer. They are the ones who carry out the final transaction. This interface of the customer with the company is through the customer’s interaction with the employees of the company. In order to keep its promises, the company enables its employees to through setting up facilities to deliver the promises that is by setting up ticket and enquiry counters. Hence the company aims at offering its providers with the required infrastructure and training to optimize the quality of the transaction. For eg: Yearly employee training programs and performance appraisals done by Sahara airlines.

The strategic points where the provider and the customer interact are:
 Enquiry of the services, flight timings, routes etc.;
 Purchasing tickets, either from the airlines or from the travel agencies;
 Checking in;
 During boarding;
 On board crew;
 During disembarkation.

In a triangle, all three sides are essential to complete the whole. For services all three marketing activities represented by the sides of the triangle are critical to success; without one of the sides in place, the triangle or the total marketing effort cannot be optimally supported.
The 7 P’s of Marketing Mix
Product Mix
Getting the product right is the single most important activity of marketing. If the product isn't what the market wants, no amount of price adjustment or brilliant promotion will encourage consumers to buy it. The airline product is quite a complex one since it comprises of a service of incorporating the temporary user of airline seat and certain tangible products such as free flight bags or a free bottle of duty free spirit to encourage booking.

The airline product includes of two types of services:
1. on the ground services,
2. In-flight services.
The on-the-ground services include a convenient airport with car parking facilities, duty free' -shopping quick and efficient checking of baggage, efficient service at reservation counter, transport to the airport, etc.

The service provided inside is intangible and is highly variable. The airhostesses are trained to provide polite, warm and courteous service. The courteous service that the representatives at the baggage counter, reservation counter provide goes a long way in developing customer loyalty. The travel agents of the airlines also need to be efficient and polite.

Differentiating the Product
It is important to recognize that what the consumers are demanding are not products, or features of products but the benefits they offer. Producing added benefits thus helps the marketer to distinguish one product from another. Good design or style of service can form the basis of differentiation. This enables the company to create a personality for its service. The design and decor of the aircraft provides opportunities to personalize their product as well as periodically to update them when differentiation under IATA regulations was virtually excluded, nonetheless, certain airlines were able to develop distinct personalities. Eagle Airlines created an entirely new market between New I York and Bermuda, for e.g. by developing an image of a friendly airline distinctive from other airline serving the route. A similar style was evident in Richard Branson's Virgin Airways.

Price Mix
Price plays as much a tool of marketing as promotion plays a critical role in the marketing mix. The concept of 'fair price' is paramount. Buyers judge whether a product is fairly priced by seeing whether it represents value for money.

Pricing Strategies
Premium Pricing:
The airlines may set prices above the market price either to reflect the image of quality or the unique status of the product. The product features are not shared by its competitors or the company itself may enjoy a strong reputation that the 'brand image' alone is sufficient to merit a premium price.¬
Value for Money Pricing:
The intention here is to charge the average price for the product and emphasize that it represents excellent value for money at this price. This enables the airline to achieve good levels of profit on the basis of established reputation.
Cheap Value Pricing:
The objective here is to undercut the competition and price is used to trigger the purchase immediately. Unit profits are low, but overall profits are achieved. Air India and Indian Airlines have slashed their prices to meet the competition of private airlines so that they can consolidate their position in the market.

Airlines usually practice differential pricing. There are three classes: The First Class, The Executive or Business Class and The Economy Class. Fares for each class are different since the facilities provided and the comfort and luxury level is different in each class. Seasonal fares are also fixed, fares rise during the peak holiday times.

Low-cost Pricing:
With the advent of the low-cost airlines in the Indian aviation industry, a different low-cost flying concept has come up. Since these low-cost airlines are trying to woo the customers by providing air travel in exceptionally low prices, a price-band kind of pricing has to be designed.
In low-pricing strategies, the airlines provide very low prices for the flight tickets. Also, they prices are made cheaper by booking the tickets long before the flight date.

APEX Fares:
In this scheme, people are given very cheap rates only if tickets are booked atleast before the specified time period. But the draw-back here is that if the booking is cancelled, a substantial amount of money is not returned.
Place Mix
Understanding what, where, why, when, and how the target market buy, is the first step in designing the marketing channel. The marketer must understand the service output levels desired by the target market and types and levels of services that the people want and expect when they purchase the service.

The airline industry has adopted different distribution channels for marketing their services to their target audience. On the ground there are many ticket counters with computerized 24-hour reservation systems. They have many specially designed check-in counters for club and premiere passengers.

There are two principal methods of booking seats on an airline.
• The first is the group of traditional method such as the phone, fax, and email. Corporates or vacationers generally approach travel agents who book the tickets form the airline & take the commission from them.
• The second & increasingly popular method of reservation is the online booking method. Here the customer fills in his details online & he receives an instant booking of his ticket. His payment is generally through credit card. Although not as popular in India, this booking system has achieved much success in the developed countries that travel agents are losing their jobs.

An example of how distribution is carried out:

The place mix of airlines consists of mainly the distribution channels. The number of destinations that an airline flies to can also contribute to its place mix.

Distribution channels
The Four methods of distribution are as following:
A] Consolidation: The direct sale of tickets from airport to the passenger on the airline desk.
B] Tour Operator/ Travel Agent: Customers approach travel agents or tour operators who book the tickets from the airline and take commission. E.g. SOTC
C] Affiliated with companies: As the name defines, airlines gets affiliated with companies who carry all its trips with a same airline who in turn gives special discounts or offers in return.
D] Direct through home leased system, e.g. phone, fax, email and also online e-booking.

Promotion Mix
The formulation of an ideal promotion mix is essential to inform sense and persuade the users. In the Indian perspective, we need more creative efforts because the potential users in a majority of the cases don’t prefer to use air services. The business magnets, executives, politicians, actors, high spending tourists etc are some of the users of the air services. The users appears to be more conscious, aware of their rights and in a majority of the cases are found to be sophisticated and therefore the promotional efforts have to be creative. Many airlines are facing financial crunch, it is pertinent that they make optimum use of different components of promotions
• Advertising:
Airlines need creative advertisements to promote their business. In the view of rising cost of inputs and the increasing impact of worldwide economic depression on the airlines, advertisements should be budget optimistic vis-à-vis optimal. The telecast media and print media are important for promoting the air business.
The airlines have to make sure that whatever strategic decision they make to promote the businesses are in a position to establish an edge over competitor’s promotional measures. Also the airlines should keep in mind the quality and the nature of the target markets and the level of expectations.
It is also essential that while advertising airlines should also keep in mind the image of our country, the scenic beauty, tourist attractions, rich cultural heritages or which would attract number of tourists. While advertising it is impact generating that one should select an opportune moment of flight is an attractive scene of take off, and so on. Airlines can also use broadcast media. The domestic flights should use radios because due to increasing access to FM.
• Publicity:
Publicity is an important component of promotion mix. It is a process of persuasive communication. It is very instrumental in sensitizing the persuasion process provided the media people, public relations officers provide their help. Strengthening the PR activities is essential to promote airlines business. The PRO, Receptionist, Travel agents, Media people are very important people in publicizing the business. The marketing professionals can seek the cooperation of media people by organizing dinners, meetings, get together, press conference etc, also giving them small gifts and motivating them to publish news items which are in favour of airlines.
• Sales promotion:
The sales promotion measures are meant for both the related sources channelising and using the business, such as the travel agents, tour operators and all of them who process the services and the passengers and business houses who use the services.
The travel agents contribute a lot to the promotion of airlines business and therefore the need to think of them in their favour on their priority basis. In addition the tour operators, the frontline staff also must be given priority. Hence they should be offer some incentives this will motivate them to promote the product. The user also deserves incentives.
The incentives may be in the form of concessional services, a small gift etc.
E.g. EMIs, which allows customers to pay in installments.

• Word of mouth

‘Customer Loyalty Ladder’
This happens to be an important constituent of the promotion mix in which the promoters act as a hidden sales force. The satisfied groups of users, opinion leaders narrate outstanding merits or salient features of services used by them.
If you travel by Air India and are satisfied with the services offered by them then it is natural that you will share your experiences with your friend’s relatives, they trust in you and therefore the stimulation process is on. The moment your friends and relatives get an opportunity to travel they find Air India their first choice.
Ads may be ineffective, publicity may also be ineffective but word of mouth can never be ineffective
People Mix
In the service industry, service personnel come in direct contact with their customers in the course of production and consumption of the services.
Because people provide most services, the selection, training, and motivation of employees can make a huge difference in attaining customer satisfaction. Ideally, employees should exhibit competence, caring attitude, responsiveness, initiative, problem solving ability, and goodwill. Many service organizations trust their people enough to empower their front-line personnel to resolve customer problems.
The airhostess in any airline come in contact with the customers in the process of providing the service, while the cock-pit crew are employees who contribute to the service product but do not come in direct contact with the customers.

The physical presence and the percentage of time the customer is present reflect the customer contact and extent of contact respectively. Services with high contact are more difficult to control and manage because of the degree of variability in the quality, demand and nature of service.
The service contact personnel in the airline industry is an airhostess who is expected to possess a pleasing personality with polite service handling. While on the other hand the cock pit crew, being categorized as a low contact personnel, require to possess high analytical and technical attributes. In the airline industry, there is also the ancillary service personnel, the travel agent who helps to create the service exchange but is not a part of the service.

While delivering services, airlines ensure that the service is delivered as promised and this is often totally with in the control of the front-line staff. This ensures some amount of reliability. This in turn affects the degree of responsiveness sought from customers. The quality of service that the front-lone staff provides is highly depended on his/her ability to communicate their credibility. Airlines deliver caring and individualized attention to customers through their airhostesses. Empathy implies that these personnel will listen, adapt, and be flexible in delivering what individual customers need. Also the appearance of an employee are important aspects as it forms the tangible dimensions of quality along with other factors like service quality, decor etc.
To start off, airlines hire the right personnel with essential requirements. They recruit the right people and develop, and train them to deliver quality service. These employees are provided with effective and sufficient support systems and are motivated in a manner, they stick to the organization. They are more treated as customers, rather than employees.
Process Mix
The process of airline service lays emphasis on the involvement of channels, front line staff, travel agency offices, offices of the tour operators or so form where the services flow & reach to the ultimate users.
The process begins at the time of reservation goes on to the confirmation of seats. For e.g.: Computer reservation system of Indian Airlines enables any reservation request from anywhere in the world to be auctioned in minutes. The reservation facility is accessible through all-major computerized reservation system of the world.
By giving details of where to book and how to book airlines help in providing quality services to the customers. They also offer concession, by not charging any cancellation charges and also giving them the option to make a change in the reservation status if he requests so on the presentation of ticket, all these facilities go a long way in increasing passenger convenience.
Then facilities at the airport, the baggage handling, flight information, etc. also helps in delivering quality service and making travel a pleasure.
In the aircraft the meal service, in-flight entertainment, reading material, in-flight amenities, etc. help the customers, the travelers to have an enjoyable and convenient travel.
All these procedures form a part of the total process designed to deliver quality service. Airlines are making every effort to constantly redefine service procedures to enhance service satisfaction levels.

Physical Evidence
Physical Evidence refers to the environment in which the service is delivered and where the service industry and customer interact. The aircraft by itself, the seating configuration meant to be comfortable and spacious, and the in-flight food provide physical evidence to the airline service.

The Boeing Company and The Airbus Industry are the best commercial aircraft makers and almost all airline industries make use of one of these airlines. The seating is such that it is comfortable and there is enough leg space
The in-flight food is another, important aspect, a wide selection of meals is offered to the passengers. Passengers are requested to indicate their reference at the time of reservation itself. Delta Airlines has introduced new sleeper seats with electric controls for reclining lumbar support, leg rest extension, expanded seat back height for a more insulated environment etc. thus providing highly comfortable seating.

Booking offices, ticket counters, etc. must be spacious and well designed with good looks. Further the air crafts must be given good exteriors and must be maintained wel1.
The aircraft must have elegant interiors and must be incorporated with all basic facilities. The aircrafts must have well designed seats with more leg room especially in the business class.
Domestic lounges are enhanced with good interiors and basic amenities which will make it an ideal place to conduct business, entertain or relax.
The jet logo prominently displayed on each of its aircrafts, is used a cue to trigger of a reminder of the customer’s experience at Jet & also of all the values that jet airways stands for.
The physical evidence would also include the other facilities in the aircraft. Some of the bigger aircrafts have more than the usual facilities on board. These sort of tangible clues act as identification marks for the airline & help the customer to evaluate on airline from another.
Quality Dimensions: RATER Analysis
Customers don’t assess the quality of service on one dimension only, they use multiple parameters to judge the quality of the service that they are being offered. These characteristics which people consider vary from person to person, industry to industry. Even depend upon the product on offer.

Because of the intangibility and multifaceted nature of many services, it may be harder to evaluate the quality of a service than a good. Because the customers are often involved in the service production a distinction needs to be drawn between the process of service delivery and the actual output of the service. The most extensive research into service quality is strongly user oriented.

Services are broadly classified into 10 dimensions namely:
 Tangibility
 Reliability
 Responsiveness
 Competence
 Courtesy
 Credibility
 Security
 Access
 Communication
 Understanding the customer

Since most of these dimensions are overlapping they were pooled down to five dimensions as given below:
 Reliability
 Assurance
 Tangibles
 Empathy
 Responsiveness

When we look at these dimensions with respect to the airline industry we find that the following service qualities are expected by the customer.

• Reliability – flights to promised destinations depart and Arrive on schedule
• Assurance – trusted name, good safety record, Competent employees
• Tangibles – aircraft, ticketing counters, baggage area, uniforms
• Empathy – understanding of special individual needs, anticipates customer needs
• Responsiveness - prompt and speedy system for ticketing, in- flight, baggage handling

RELIABILITY –
Ability to perform the promised service dependably and accurately.
This would basically be that company delivers to the customer what is promised & the customers basically like to deal with companies that can fulfill their promises.
When we look at the airline industry we can see the following things the customer would expect certain basic facilities like: some functional infrastructure provided to him, the flight leaving & taking off on time, the luggage reaching safely.

ASSURANCE –
Employees’ knowledge and courtesy and their ability to inspire trust and confidence
Assurance relates to knowledge and accuracy of employees and their ability to convey trust and confidence. This dimension is of great significance for services where a customer perceives high risk and is not sure of the outcomes. The employees should have a positive morale & should be motivated if they have to promote the firm & create a sense of assurance in the flyer’s mind.
Jet Airways is generally considered the more customer friendly of the domestic airlines. The staff there is nicer to old people or little kids who might be travelling. Though Jet has a very young staff, so some of the members could possibly not match the kind of experience the Indian Airlines crew has. Suppose some senior citizen is travelling alone in an aircraft for the first time the crew should see to it that he is given proper instructions & is comfortably settled in his seat.
Besides this, after the September 11 crisis, there was a lot of scepticism in the fliers & to instill a little confidence in the consumer’s mind, the government paid greater emphasis on security in the aviation policy. This was all so that people would feel safe next time they traveled by air. `They would appoint a committee and look into the recommendations provided by them to better the security arrangements in the airplanes & airports.

TANGIBLES –
Appearance of physical facilities, equipment, personnel and written materials
Tangible features would be those physical features, which can be seen by the customer. These would be the physical proofs, which would help the customer to judge the quality of service. The customers evaluate the quality of these services on the basis of the tangibles provided by the service providers. The marketers of services emphasize on tangiblising the intangibles.
Incase of the airline it’d be the aircraft that the airline uses, how old they are, and the kind of facilities that are provided inside the aircraft or in the waiting area. The technology used for baggage handling. The coaches used to transport the customer to the aircraft, all of these speak leaps & bounds about the service provider. The kind of skilled staff that they have the uniform that the staff wears.The tangibles would also include the infrastructural facilities present at the airports. This is where we find most of the Indian airports lacking. They have no proper arrangements to handle the customers.
When we look at the aircraft fleet that is a very important tangible feature, and we find that Indian Airlines has a really ancient fleet of aircraft’s which doesn’t make it extremely safe as older planes are more prone to damage. Whereas, Jet Airways has the youngest fleet in the business.

Empathy –
Caring, Individualized attention given to customers
Empathy basically is when the employees of the organisation make the customer feel at home, at ease, making him feel wanted. The customers are mostly offered the same service from most of the airlines. The easiest way for an airline the maintain and grow it’s client base is to be empathetic towards their customers, to understand their specific needs and to cater to them & they should make each customer feel like he is a unique asset to the company & like their single most important client. Addressing the clients by their first names, keeping a track of their usual flying routes, their preferences in flight & catering to all of those, maybe giving him his favorite seat each time he travels.

Responsiveness –
Willingness to help customers and provide prompt service.
Responsiveness is willingness to help the customers and provide prompt service The degree of responsiveness shows the level of commitment that the people of the company have towards their work. It is very necessary for the company to concentrate on prompt & the right kind of responsiveness to the needs of the customer.
Incase, a certain passenger doesn’t like a certain meal served on the plane, the cabin crew should be in a position to offer him an alternative meal in little time, as his perception or opinion of the airline company would mainly depend upon whether he goes satisfied on this complaint or not. Care should be taken that prompt response and top quality service is provided to satisfy all of the customer’s needs.

SERVICE ENCOUNTER

The interaction between the customer and service provider in the airline industry means that the employee often represents the company to the airline travelers (customers). Especially in the airline industry the service encounter plays a significant role because here the customer comes in direct contact with the employees of the airline company and spends a lot of time in the service factory (the aircraft). Hence the issue of staff presentation is a major tangible factor in the airline industry. This in turn influences the satisfaction level of the customer.
The airline company’s organizational structure and culture dictates the extent to which responsibility for staff recruitment, training and motivation is shared between marketing operations and human resources. For service marketers in this industry, the core of service element is the interaction between those providing services and the customer is known as service encounter.
CRITICAL INCIDENTS

Critical incidents are specific encounters between customers and service employees that are especially satisfying or dissatisfying for one or both parties. In the airline industry critical incidents are very important as they help the company evaluate and measure satisfaction level of the customers. The critical incident technique is a methodology for collecting and categorizing such incidents in service encounters.

SERVICE GAP
A service firm may win by delivering consistently higher quality service than competitors and exceeding customer’s expectations. These expectations are formed by their past experiences, word of mouth and advertisement. After receiving the service customers compare the perceived service with the expected service. If the perceived service falls below the expected service customers lose interest in the provider. If the perceived service meets or exceeds the expectations they are apt to use the provider again. The model shown identifies 5 gaps that cause unsuccessful delivery in the airline industry.

a. Gap between consumer expectation and management perception: Management does not always perceive correctly what customers want. In the airline industry, the company might perceive its target customers to be ambience driven and not price driven but in reality it might turn out to be the other way.
b. Gap between management perception and service quality specification: Management might correctly perceive the customers wants but not set a specified performance standards. A company like Air India who thoroughly understands what its customers want but due to external factors like lack of resources and the fact that it is a government run organization due to which there is a lot of political interference restricting the company from performing at its best.
c. Gap between service-quality specifications and service delivery: The personnel might be poorly trained or incapable or unwilling to meet the standards. Or they may be held to conflicting standards such as taking time to listen to customers and serving them fast. This had happened in the case of Air India during the SARS outbreak where the pilots refused to fly on the last moment after the flights had been declared scheduled.
d. Gap between service delivery and external communications: Consumer expectations are affected by statements made by company representatives and ads. Air India boasts in its hoarding advertisements about the companion of the customer flying free i.e. buy 1 and get 1 free but it is only applicable for 1st class passengers which is no where mentioned and there are many such examples or campaigns that can be mentioned about.
e. Gap between perceived service and expected service: This gap occurs when the consumer misperceives the service quality. This is a combination of one or more of the previous gaps and provides a clear indication of the degree of which service quality exists in the service organizations.

Service Recovery
When the company fails to stand for its promises made to the customer on the basis they build expectation, it’s to be said that there is service failure. When the service failure occurs, there can be again severe ramification. Customer is considered to be the bread and butter, hence retaining them is the biggest challenge, and however service failure acts as an obstacle to it. In such failures,
1) The customer wants what they were promised.
2) Customer wants personal attention
3) Customer wants a decent apology
4) Customers want that they should not be made to feel that they are the cause of the problem. (Though in many cases they are responsible for nuisance)

There are again five steps involved in order to deal with service failure. They are mentioned as below
1st step: acknowledgement and apology for the fact.
2nd step: listening to the customers.
3rd step: avoid defending the company and offer a rational explanation.
4th step: offer some extra benefits
5th step: have a proper follow up and make sure no mistakes this time, so that he can easily forget about the service failure and is retained.
(Example covered while presentation)
A customer expects 3 shorts of fairness in case of service recovery. They are mentioned as below.
1. Interaction fairness: - when there is service failure, first the company is supposed to acknowledge the customer. Due to this the customer might turn erate, but he still expects fairness and courtesy in the language and tone used by the addresser
2. Procedure fairness: - to know in detail about the incidence of service failure or to avail the compensation. There should be simplicity in procedure, which is involved. Service failure and complexity in procedure both together might result in a disaster as far as customer is concern.
3. Outcome fairness: - now when the company realizes that there is service failure they should end up compensating, arranging for some alternative mode of transporting or complies with the customer condition. The outcome should be taken by considering the customer, his needs and the company’s policy.
Complain Handling
Handling complaints is a big challenge for every company today. Before understanding how to handle, let us see what are the factors, which can result in customer’s complaints


The Fish-Bone diagram for the Airline Industry

There are ten steps involved in handling complaints effectively. They are mentioned below.

1) The frontline employee handling complaints should stay calm under any circumstances.
2) Let the customer get the story off their chest- do not interrupt, this will only cause irritation. In this case listening skills comes into picture.
3) Avoid admitting any liability at this stage. The officer just need to show concern like, “I’m sorry for the inconvenience, let me see what I can do”. Give attention to the customer, make him feel important.
4) Get facts by using question and try to find out the real and whole story behind it.
5) After listening and collecting data, just identify appropriate action considering company’s policy and customer’s expectation.
6) Take action if you have authority or involve manager or concerned person.
7) If corrective action cannot be taken immediately, tell the customer. It’s better to give bad news rather giving false news.
8) Record the action to be taken and inform anyone else in the organization involved.
9) Look into the matter, provide a proper follow-up.

Hey jogar, very good topic and nice article! I am also uploading a document where you will find some important information on Airline industry of India. The main issues of airline industry are airport capacity, route structures, technology.
 

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