Case study: Star Airlines: Has it launched its inagural services with flying colors?

 

Case 2: Star Airlines: Has it launched their inaugural services with flying colors?

1. Prof. Prasad Kulkarni Asst Professor, Department of MBA, Belagavi-590008.

2.  Dr. Joel Gnanapragash, Faculty, Christ University, Bengaluru.

3. Mr. Sujay Inamdar HR Manager, Swami Vivekananda Youth Movement Dharwad

About Star Air

Star Air is a Scheduled Commercial Airline with an aim to connect PAN India. It is the Aviation arm of strategically diversified Sanjay Ghodawat Group (SGG), which is present in several high- value industry segments like Aviation, Agro, Floriculture, Food processing, Energy, Mining, Realty, Consumer Products, Textiles, and Education. Backed by a workforce of over 10,000 employees and state of the art infrastructure, the group is headquartered near Kolhapur, (Maharashtra State) India. Over the past 5 years, the company has become a best in class helicopter operator in India with the impeccable dedication to safety. Star Air is the latest offering of the group. An upcoming Airline with a firm proposal to even connect the unconnected. The airline will provide a very reliable, safe and comfortable travel experience. Truly the group’s ‘Star in the Air’.

Beginning:

The Star Air started its commercial services from January 25, 2019. Initially, this Bengaluru headquartered company began its flights between Hubli and Bengaluru. The company later began the flights between Tirupati and Hubli. Further, on February 5th, 2019, the company announced its flight between Belgaum and Bengaluru.  "What we aim for is to create the right balance between a common man's pocket and the expectations which he holds from an airline," quoted Capt. Simran Singh Tiwana, CEO of Star Air. "In due course time, we aim to provide an all jet engine fleet connecting new city pairs," he added.

Indian Aviation Industry;

The Indian aviation industry will become the third largest aviation industry in the world by 2024.The traffic for air travel likely to reach 421 million by 2020(Table 2 in the appendix). Further, the business and leisure travel business is expected to reach $432 billion and $24.41billion from current $201billion and $11.61 billion (Table 3, Appendix). According to the Airport Authority of India (AAI), the Indian aviation industry has 225 aircraft operating from 50 airports. There are 66 domestic airports, 7 custom airports and 17 international airports in India. Among these airports, 70% of them are managed by AAI and the rest are private airstrips. Further, major airlines operating from these airports include SpiceJet, Jet Airways, Indian Airlines, Indigo and Go air. Added to this, Delhi and Mumbai airports are carrying 110 million passengers every year. In addition to this, Indian domestic and international passenger airlines demand, capacity and utilization have reached 87% and 81% respectively (Table 4, Appendix). Indian passenger traffic has experienced a CAGR of 12.72% over the period (table 5, Appendix). The Indian government is encouraging the Public Private Partnership (PPP) model to expand airports and maintain them. On a policy side, the government of India started open sky policy and national civil aviation policy 2016.

 Fleet Types:

Star Air got certificates for flights in two categories. In the first category, scheduled commuter (small) can have a load factor of 5700 KG. Further, in the second category, the operator is

certified in the scheduled commuter (large) can operate up to 40,000 KG weight. The company currently has two aircraft and details are as under:

Sl. No.	Fleet Type	Seat Capacity	Registration
1	EMB-145	50	VT-GSC
2	EMB-145	50	VT-GSE

The company will be using Rolls- Royce engine AE-3007 in their aircraft. It has agreed to take long term total care service support from the Rolls Royce. “As a rapidly growing airline, it is key that we meet customers’ demands for the best travel experience through providing the best product and service offerings at the right price,” Captain Simran Singh Tiwana, Star Air’s CEO, said.

Ticket Booking

Star Air has adopted different methods for booking. Here, the customer can book seats on the web, through online agents and designated ticket counters. Customers are allowed to make payments using debit cards, credit cards, internet banking, and cash. However, in the case of cash payments, the customer should pay the money in the company designated sales counters at the airports. Added to this, the company never allows multiple cards for booking. Hence, a customer has to use a single card either debit or credit card at the time of booking. Further, the company never allows a customer for booking and holding. Thus, a customer has to pay the amount instantly. Apart from this, the customer gets an electronic ticket once the booking process is over. They can change, modify or cancel the tickets through the company portal. In case of a customer losing a ticket, it can be retrieved at the booking counter by paying $2. In addition to this, the company restricts the change of ticket to some other party from a customer.

Cancellation and refund:

 

Star air had a clear cancellation and refund policy on a ticket. If the customer has paid the booking amount through the cash, the booking counter will refund it with cash. Similarly, debit card and credit card account bookings will get their refunds to the mode of payments.

Check-in facility:

Star air allows the customer to have check in facility before the airline departure. This customer can do it before 12 hours of the departure. This will help the customer to have fewer hassles in the journey cycle.

Meals in the airline;

The customer of star Air is allowed to have the meals booked during their journey. To avail this facility, a customer has to book the seat 8 hours before the departure.

Seat selection:

Star Air believes in operating in the regional connectivity scheme and it anticipates 90% of future services will be in this route. Further, it allows the customer to select the seats through their portal. This facility a customer can avail by paying the extra fee.

Problems of Star Air:

1. Not having the slot in bigger Airports: Star Air currently does not have a slot in the bigger Airports like Mumbai which is affecting its growth prospects. “We are trying to get some slots in bigger airports. We are trying to get at least one slot in Mumbai," Tiwana said. 

2. Rising pilot salaries in the industry: The captains of aircraft in India are getting on average 8 lakh rupees per month. Further, a pilot in the early stage of the career gets Rs 1 lakh per month. Added to this, UDAN(Udega Aam Nagarik) scheme has allowed many other small players in the low-cost airline segment resulting in the exodus of airline employees to competitors(Money control,2019),(max itch,2019). Apart from this, the majority of pilots operating in the Indian airlines are expats and there is dearth need of talented Indian pilots (Telegraph, 2019) 

3. Price variation: The company offered its initial tickets from Hubli to Tirupati at Rs 1299. However, Star –Air recently added a convenience fee for booking online. The fee sometimes touched the 15% of the ticket value which customers didn’t take easily. Some of these passengers instead went directly to the airport office of the Star Air and booked via cash payment mode (Facebook, 2019). Apart from these airlines, companies in India halved their operation to forego their losses. This resulted in the hike in the price of a few airlines for a certain route. This brought the dilemma to the Star –Air, should the company go with the existing price or increase the price in the existing routes.

4. Rescheduling cost: Star Air has asked customers to pay Rs 2000 towards rescheduling that is exuberant in the route they are currently operating. This has increased the churn rate for the company (Star Air, 2019). 

5. Increase in the fuel cost: Airlines are struggling to adjust the changes in the fuel prices. The fuel cost is roughly 45% of airline cost. Further, the government of India charges 11% import duty on air fuel. Added to this, the government increases the fuel price whenever the crude price globally and never decreases whenever the crude market experiences the fall in the prices (Civil services, 2019). The new entrant like StarAir is struggling to maintain the operation cost due to its increase in the fuel cost (max itch, 2019). 

6. Airport cost: Indian government charges higher airport charges. These are even higher for international airports compared to domestic airports. In fact, the airport cost in India is the highest in Asia. (Civil services, 2019). 

7. Aircraft rentals: Many of the Indian airline companies are getting the aircraft on a rental basis. Amongst these, a few have ordered heavily for the requirement of aircraft. If the order executed sooner, these companies will add routes and slash prices to gain the market share and result in t further bleeding of capital(telegraph,2019),(Max, itch2019)

8. External and internal environment and their implication on finance: Most of the airlines in India are struggling with heavy debt in their balance sheet. For instance, Jet airways alone have Rs 8000 crore debt. (Heavy debt, 2019). This had consequences on the company by ending up with lesser profitability. Further, the company requires huge capital to expand its network to fight fiercely in this fragmented industry (Max itch, 2019). Added to these wounds, the rupee has depreciated in the international market complicating the issues further for Star- air (Livemint, 2018) 

9. Intensive rivalry: The rivalry in the industry has peaked after the entry of a plethora of airlines under the UDAN scheme. Many luxury airlines have reduced the price of tickets by 15-20 %.( Civil Services, 2019). 

10. High maintenance cost: The maintenance of the aircraft is very important to the safety of passengers and the longevity of airlines. However, airlines in India are facing challenges of higher taxes for aircraft maintenance.Thus, a few of these airlines are getting maintenance of aircraft done from China and other countries (Telegraph, 2019)

References:

 

1. After Bandipur, m., Manjhi may join NDA, r., & Aero India: Air crash, f. (2019). Star Air to use Rolls Royce engines. Deccan Herald. Retrieved 25 February 2019, from https://www.deccanherald.com/national/star-air-use-rolls-royce-719856.html

2. Business News, Shares and Stock Markets News Live - Latest IPO, Mutual Funds, Budget, Income Tax and Finance News. (2019). https://www.livemint.com. Retrieved 25 February 2019, from https://www.livemint.com/ 

3. Star Air. (2019). Starair.in. Retrieved 21 February 2019, from https://starair.in/Home/companyoverview

4. Star  Air  -  A  new  Airline  by  Sanjay  Ghodawat  Group  is  all  set  to   Takeoff.  (2019). Udayavani - ಉದಯ ಾå. Retrieved 21 February 2019, from https://www.udayavani.com/english/news/business/302994/star-air-new-airline-sanjay- ghodawat-group-all-set-takeoff 

5. Star Air to begin flights from January 25. (2019). The Economic Times. Retrieved 22 February  2019,                                                                   from https://economictimes.indiatimes.com/industry/transportation/airlines-/-aviation/star-air- to-begin-flights-from-january-25/articleshow/67522282.cms 

6. Mid-air crises: Why Indian aviation sector's problems go far beyond the Boeing 737 Max itch. (2019). Businesstoday.in. Retrieved 27 March 2019, from https://www.businesstoday.in/sectors/aviation/boeing-737-max-issue-fuel-prices-loads-of- debt-factors-affecting-indian-aviation-industry/story/328425.html 

7. Opinion | The Indian aviation sector’s many problems. (2018). https://www.livemint.com. Retrieved 27 March 2019, from https://www.livemint.com/Opinion/63uRs1nOypm4GVPUBXFbYJ/The-Indian-aviation- sectors-many-problems.html 

8. Life of an Indian pilot: Extra hours, high EMIs and a fat salary that's often delayed. (2019). Moneycontrol. Retrieved 28 March 2019, from https://www.moneycontrol.com/news/business/companies/life-of-an-indian-pilot-extra- hours-high-emis-and-a-fat-salary-thats-often-delayed-3549891.html

9. Heavy debt of Indian airlines a problem: IATA Chief. (2019). The Economic Times. Retrieved 28 March 2019, from https://economictimes.indiatimes.com/industry/transportation/airlines-/-  aviation/heavy-debt-of-indian-airlines-a-problem-iata-  chief/articleshow/67581273.cms?from=mdr

10. Problems in Indian Aviation industry. (2019). Civilserviceindia.com. Retrieved 28 March 2019, from https://www.civilserviceindia.com/current-affairs/articles/problems-in-indian-aviation- industry.html

11.   Why the Indian aviation industry is nosediving. (2019). Telegraphindia.com. Retrieved 28 March 2019, from https://www.telegraphindia.com/business/why-the-aviation-industry-is-in- nosedive/cid/1676400 

12. STAR    AIR.    (2019). Facebook.com.   Retrieved     3    April     2019,    from https://www.facebook.com/OfficialStarAir.

 Appendix

 Table 1: Manage Booking

(Source: Company website)

 Table 2: Air Passenger traffic in India

 

(Source: World Travel and Tourism Council, Airport Authority of India

Table 3: Business and Leisure travel in India

 

(Source: World Travel and Tourism Council, Airport Authority of India)

 

Table 4: domestic and international passenger airlines demand, capacity and utilization.

(Source: Directorate General of Civil Aviation, Aranca Research)

 Table 5: Indian passenger airline growth

(Source: India Brand Equity Foundation)

Table 6: Fare rules in Star Air

 

Rules	RCS Fare (Inclusive of GST)	Non RCS Fare (Inclusive of GST)	Any other Fare (Inclusive of GST)
Checked in Baggage	Nil 15 Kg Free	Nil 15 Kg Free	Nil 15 Kg Free
Excess Baggage Allowance	A fee of INR 300/- per Kg will be charged at the airport Check-in Counter for every extra Kg beyond the limit of 15 Kg baggage allowance or as per the policy will be applicable.	A fee of INR 300/- per Kg will be charged at the airport Check-in Counter for every extra Kg beyond the limit of 15 Kg baggage allowance or as per the policy will be applicable.	A fee of INR 300/- per Kg will be charged at the airport Check-in Counter for every extra Kg beyond the limit of 15 Kg baggage allowance or as per the policy will be applicable.
Hand Baggage	One Bag up to 7 Kg	One Bag up to 7 Kg	One Bag up to 7 Kg
Change Fee	INR 2000/- per person per sector Plus fare difference prevailing on the changed date of travel	INR 2000/- per person per sector Plus fare difference	INR 2000/- per person per sector Plus fare difference
Cancellation Fee	INR 2500/- per person per sector	INR 2500/- per person per sector	INR 2500/- per person per sector
Change / Cancellation time limit	2 Hrs before the departure of the flight	2 Hrs before the departure of the flight	2 Hrs before the departure of the flight
Seats Selection	Chargeable	Chargeable	Chargeable
Snacks / Meal	Chargeable	Chargeable	Chargeable
UNM	INR 1500	INR 1500	INR 1500

(Source: Company website)

Social marketing in India

 

Social marketing

Definition

“ Social marketing is the application of marketing principles to enable individual and collective ideas and actions in the pursuit of effective , efficient, equatable, fair and sustained social transformation” - Saunders, Barrington and Sridharan( 2015)

Objectives of Social marketing

• Creating a good social environment

• Influence individuals and communities to have a favorable image about the society.

• To market sustainable and efficient products that facilitate social change.

• Promoting socio- cultural and structural changes pertaining to social issues.

Stakeholders involved in the social marketing

• NGO’s

• State Government

• Central Government

• Corporations

• Co-operatives

• Communities.

Importance of social marketing

1. Creating awareness about social issues through creativity and innovation.

2. It develops creative ideas of reaching people.

3. It brings public private  partnership.

4. It influences public policy and public funding.

Difference Between Social Marketing, Societal marketing and Social Media marketing

Areas of social marketing

8P’s Social Marketing

• Product: Behavior change

( Physical products: Condoms), ( Services: Medical examination), (Practices: Breast Feeding), and (intangible ideas( environmental change).

• Price: Cost

( Monetary- Nominal Not low and Not high)

( Non Monetary:Time and services)

• Place: Location( Transit officers and Direct selling)

• Promotion: Campaign( Personal: Social Media;Non Personal: TV, Newspaper, Radio)

• Policy: Intent of influence policy

• Publics: Target audience, policy makers, and media publics.

• Partnerships: PPP/PPPP/Community-Government

• Pursestrings: Fundings.

8C’s of Social Marketing

Difference Between Social marketing, Societal Marketing( cause related) , and Social Media marketing

Supply Chain: Sourcing

Supply chain Management Notes Unit III

Supply Chain Management Unit II notes

 

supply chain management unit 1 notes

https://docs.google.com/presentation/d/1nSSwdtrrGyL1ufvXy72eRnQ0Yusv-kF6Edzv52hBXKw/edit?usp=drivesdk

Mobile marketing In India- Definition, Types, Process, Policies and advantages.

 

Mobile Marketing

Introduction

India will have  65crore internet users in 2020.  70% of this population i.e. 51 crore people are using  mobile phones for their internet. Among these 43 crore customers uses 4G telecom services.Added to this, mobile data consumption in India has seen 133% growth year on year. However, the internet speed in 4G is a major concern. With the 9 MBPS India’s 4G mobile data speed is the lowest in the world. Though, internet speed is a bottleneck, YouTube video consumption has gone up by 400% and taking the total number of India’s video content consumers tally to 25 crores. Uniquely to the preceding numbers 22 crore people watch videos in their local language. Out of this 22 crore people 88% of them respond to advertisements on this local video content.  Another notable thing in the India mobile marketing is 28% of all web queries are voice based and the Jio smartphone made it possible to scale up. 

 Definition

According to Wikipedia

“ Mobile marketing is a multichannel online marketing technique focused at reaching a specific audience on their smartphones , feature phones, tablets and other devices through websites, emails, SMS, MMS, social media or mobile applications”

 Types of Mobile Marketing

• MMS Marketing
• Push Notifications
• APP based  Marketing
• In game Mobile Marketing
• Bluetooth Marketing
• Proximity Systems
• Location Based Services
• Ring less Voicemails
• Mobile email marketing
• Mobile social Media Marketing
• M-Commerce.
• Mobile Advertising
• SMS Marketing

 

 Mobile Marketing Process

Information Search

1. Industry mobile marketing strategies
2. Research information on mobile marketing
3. Comparative study.

Consumer Profiling

1. Customer background( Age, Income, Gender, Location, and occupation)
2. Job Description
3. Goals
4. Preferred content
5. Customer role in the buying process.
6. Matching customer profile and mobile channels
7. Tone, style, and delivery strategies liked by customers.
8. Devices customers are using.
9. Hobbies and aspirations.
10. Customer purchase history.
11. Customer life cycle( passive awareness, Active researchers, trigger to buy, feedback, relationship orientation,  and customer advocacy)

Goal Formulations

1. Brand Building
2. New customer acquisitions
3. Relationship Building.

Key performance Indicators (KPIs)

Customer engagement

1. Number of people downloading applications(APP)
2. How frequently customers are using mobile phones.
3. How long customers are using mobile phones.
4. Do they participate in loyalty programs of companies?
5. Do they complete companies ‘ surveys?

Contact, user, and sales automation

1. Number of mobile users  for the content.
2. Contacts
3. How much does the company spend to acquire new mobile customers?
4. Higher conversion rates.
5. Customer Lifetime value of mobile users.
6. How to enable mobile app purchases?

Service quality

1. Retention rate
2. Lower rate of personal content

Mobile Marketing Policy

1. Safeguarding the consumer privacy
2. Original content and blocking spamming
3. Clarity on target audience before the mobile marketing process.
4. Content validation before marketing
5. Clear and communicable Key performance Indicators(KPIs)

Mobile Marketing Advantages

1. Customers can access the mobile marketing content, anywhere, anytime and anytime.
2. Modern mobile applications (APPS) have customer thumbs up due to their ease of use.
3. Mobile marketing allows companies to personalize advertisements.
4. Mobile marketing companies can access social pages of consumers.
5. Modern mobiles work as mini computers.
6. Mobile marketing is cheaper and has maximum reach.

 

Services Marketing notes

Introduction to Services marketing

Services are intangible products produced and consumed simultaneously in a short period Infosys, an Indian technology company offers Information Technology solution to ANZ Grindlays Bank those are intangible in nature. Here, a customer ANZ cannot touch the product but can perform banking tasks using software. Infosys offers Consulting Services, Cloud Solutions, enterprise resource planning software, block chain technology, and other services. These Solutions may have a software product, website, software manual, and a report in the tangible format, but clients like ANZ do not see coding testing and executing part of the solution. Apart from this, business meetings follow-up calls and annual maintenance are series of actions and performances in an intangible format executed on a particular time and place.

Services Marketing characteristics. 

Intangibility

Services are employee actions and performances based on company procedures and are not a physical goods. Thus one cannot touch, feel, see or inventoried like goods. For example Apollo hospitals performance actions like medical examination, diagnosis, treatment, and surgery on patients that cannot be seen or touched. In many situations, patients don’t know how surgery has been done. Due to this characteristic of Intangibility, managers find it difficult to forecast and execute the demand. For example Taj Vivanta, Panaji, Goa, experiences huge demand in March, April, and May. Conversely the demand goes down in July. Yet, Taj Vivanta, has similar number of rooms to book throughout the year. 

Further Services cannot be patented; Hence these are copied easily by competitors. Services cannot be easily demonstrated like goods.  Though, Metro rail carries passengers from one destination to another it cannot show how exactly a rail was driven. So this is quality measurement is another hurdle for marketers and consumers. A customer finds it difficult to assess the service quality of restaurants like Saravanan's,V asudeva adigas, and Adyars. In addition to these Services marketers has a hurdle of deciding about what to include in advertising and other marketing communications. Indian Institute of Management Bangalore can communicate about courses but cannot advertise the pricing. The unit of service cost is complex and difficult to determine. Lakme saloons have different beauty solutions at different price points. This difference leads to the evolution of price quality relationships that vary from customers to customers.

Heterogeneity:

Services are performed by people. Therefore, services performed by different people are not the same. Even the same person's service performance on different days varies.  Further, a customer who avail services may have different perceptions and satisfactions. These characteristics exhibit services heterogeneity.  For example ,  Kesari travels may provide two different packages to two different customers on the same day depending upon a customer's affordability and acceptability. Keasri travel desk executives may provide maximum offers to customers in the morning when they are fresh to work. However, same executives may offer less packages to customers in the late evening when they are tired. These variations in services  based on people's  time and the organization pose a big challenge for maintaining the service quality. Apart from this, other customers at a service location also influence customers' purchase. A few customers like crowded service outlets and a few do not. Added to this, employees behaviour also determines customers purchasing. In addition to this, if a service is given by the third party, it increases the service heterogeneity. For instance, Airtel customer queries are answered by IBM executives who are not part of the organization. However, customers think that they have called Airtel executives.

Simultaneous production and consumption

 The major distinguishing feature between goods and services is goods are produced first and sold later. Whereas services are sold in the beginning and production takes place later. To illustrate, Hero motocorp produces the two-wheelers at Kolar plant in Karnataka, dispatched to Bengaluru, sold over months and used by customers over the years. But OYO has to sell its rooms first and customer experience the stay and dining later. Here, customers of OYO is a part of the production and consumption by asking room boy for facility adjustments or modifications.  Customers can ask for sugarless tea or spicy dishes with a dining staff. A notable thing in this entire process is a customer interacts with the service employees regularly in a production and consumption process. Therefore, a customer may be happy or happy with the room service. In a travel industry company like VRL do not allocate seats next to the female passenger to any strange male passenger. If seats are not reserved like that a female customer may not experience the service properly. This services characteristics of simultaneous production and consumption often makes service providers take the role as a part of the product. Shahrukh Khan, a film actor from India, actively takes part in the production and marketing of his red chillies entertainment products. 

As service production consumption is simultaneous, scaling it to the masses is a daunting task. More than that, customers’ satisfaction depends on employee services and his interactions with the firm in real time. A customer who walks into State Bank of India will be either happy or unhappy after his interaction with a clerk or cashier.  Due to this feature of production and consumption simultaneously, a few companies are decentralizing their operations to localize services. McDonald's restaurants in the different countries have adopted local sourcing; It reduces the cost of importing and also provides local Cuisine. McDonald India, do not sell beef burgers due to religious sentiments but sell veg burgers in a large quantity. Another problem of production consumption simultaneously is irritated customers.  As they are part of a production and consumption process, they expressed their happiness or unhappiness on the process itself. Wonderla and excel amusement parks must have secure yet fun facilities in their premises otherwise customers express their opinion on the location also on social media. 

Perishability 

Services cannot be stored, saved or returned or resold. A journey in Indian railways by a customer cannot be stored or saved. Here, customers would experience a service in a given time. If a customer is unhappy about the train facility in the journey, can he return it? No, because they are perishable in nature. Today with Advent of mobile phones and internet-based movie technologies, movie theatres in India are facing occupancy rate issues. One cannot inventory the seats of a particular show. Hence, PVR should make proper demand forecasting for the capacity utilization. Services cannot be returned or resold. Flipkart in their first Bill Billion Day Sale did not anticipate technology problems. Customers on that day could not buy anything. Later, Flipkart had apologized in the public for the service failure.

Services marketing mix

People

Employees of the organization who are part of a service delivery influence buyer behavior. They create awareness about services. Reliance Trends executives provide new arrival information to customers 

Employees grooming and their behaviors have a direct impact on  customers satisfaction. Hence,air hostesses in the Indian Indigo Airlines  should be wearing company uniforms and have a cordial relationship with customers while serving in an airline industry. 

In certain services like education and career counseling, service providers themselves act as a service. The success of an education institution solely depends on teachers. However, in certain services like house maintenance plumber has a relatively less significance in the service delivery though they are very critical for the organizational performance. In a few services, customers' timely information or requirements have a significant role in the service delivery. If requirements are not specified or information not given when required it affects the service quality. For example, a customer books an apartment with a Godrej property without specifying his requirements in the beginning has to accept later whatever the property built by the Godrej. A customer who goes to the indica saloon should tell about a haircut style in the beginning. Otherwise, he cannot modify it later. Social media has allowed customers to share their opinions and recommendations to other colleagues or customers.  When The War like a situation has broken up between India and China many have asked  the customers and colleagues and friends to boycott the China mobile applications like Tick Tock and sharechat.