What Ails Indian Aviation Industry

I am studying/ following the happenings in the Indian Aviation sector for a long time now and I am confused with the strategies adopted by most of the players. When I look at all the companies in the sector, it is very difficult to understand the strategy for most of the companies.

Broadly, a company needs to have one of the 3 core strategies - Cost Leadership, Product Differentiation, & Market Segmentation. Based on the core strategy adopted by a company, it can further fine tune its strategy for different markets but the core strategy has to remain consistent.

In India, except for few players, most of the players are not clear about the strategy. That's the reason its very difficult for them to position itself in the market. For eg. Jet Airways (Full Service Carrier) also has Jet Lite (No Frills Carrier), Kingfisher (Full Service Carrier) also has Kingfisher Red (No Frills Carrier). This kind of strategy will not work as customer gets confused with the positioning of the carrier. Moreover, aviation is a cash guzzling industry and it is very difficult for a company to invest in 2 types of services - full service & no frills at the same time.

Another problem which I anticipate by adopting a dual strategy is the focus of the top leadership. The kind of mindset which is required of the top leadership for the 2 strategies mentioned above i.e. full service (product differentiation) & no frills (cost leadership) is diametrically opposite. In one, you need top leadership to add value to the customer, pamper the customer, provide the ultimate in service whereas in other strategy, it is all about minimizing cost, do away with all the frills etc. I believe that it is very difficult for top leadership to focus on both the strategies simultaneously. For this very reason, I strongly believe that it was a wrong move on part of Kingfisher to acquire Air Deccan as the acquisition was inconsistent with Kingfisher's strategy of product differentiation. I believe that few companies which got their strategy right are Indigo & Spicejet. 


Thirdly, in a dual strategy, employees are expected to perform 2 diametrically opposite roles simultaneously - that is of focus on customer service (product differentiation) and focus on cost (cost leadership). It is very difficult for employees to switch roles to perform both the tasks together as the mindset and the orientation required for the two roles are totally opposite. In such a scenario, the employee is confused and unable to perform either of the tasks with complete precision.

If you take a look at international carriers also, you will find that all the successful ones are those who got their strategy right - be it South West Airlines, Jet Blue Airways, Singapore Airlines, Air Asia, Emirates Airlines etc. The top of the mind recall for a consumer for South West, Jet Blue & Air Asia is of Low Cost, No Frills whereas it is all about Customer Delight & Customer Thrill for Singapore Airlines & Emirates.

Looking at above, the ailing Indian Carriers have to get their act together and focus on getting their strategies right if they want to have a turnaround.