traveling by air had always been like an inspirational factor for the common indians. Air ndash travel even a year back used to be like a distant dream to many of the india rsquo s 200 million middle class community. The industry was always looked down once upon a time with only state owned players enjoying a monopoly.

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In the last couple of year, the indian aviation sector has metamorphosed in a big way. A cluster of new airlines rolling out the warm hospitality of red carpets to the indians, for who air travel was simply an aspiration and a distant dream. These airlines are called the no frills or low cost airlines, the new buzz in the indian aviation sector. As the name suggest, the no frill airlines are the de glamorized version of the conventional or full service airlines. In today rsquo s scenario, venture capital of $10 million or less is enough to launch an airline. Private airlines are known to hire foreign pilots, get expatriates or retired personnel from the air force or psu indian airlines, air india airlines, in senior management positions to run the show. Further, they outsource such functions as ground handling, check in, reservation, aircraft maintenance, catering, training, revenue accounting, it infrastructure, loyalty and program management.

The main hypothesis that the thesis revolves around is whether indians are ready for frequent air travel thereby substituting railways after the introduction of no frill airlines in india. 10,0 words ndash 60 pages in length good use of literature good in depth analysis well written throughout includes questionnaire ideal for business and marketing students 1. Critical review of literature overview of the present scenario of the airline industry in india key players in the civil aviation sector no frills low cost airlines in india business model of no frills low cost airlines vis vis full service airlines in india in the beginning of this century, aviation industry was searching for a new concept of flying. The concept knocked the minds of the airlines people to go for the low cost carriers lcc lccs open a totally new product: no frills, no food, no drinks, less spacious seats, no travel agencies bookings, but for a very low price.

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This low cost revolution has then forced the traditional network full services carriers to respond this phenomenon progressively. Therefore, the competition between lccs and full services airlines has become a significant issue of interest regarding the airlines industry. The concept of a low cost airline was started in the seventies by the american domestic carrier southwest with the sole objective of offering cheap airfares to the consumers.

This created a situation where already established flag ship carriers or legacy airlines to lose a significant amount of the market share to these newly formed low cost airlines, purely because of their ability to charge a lower price over traditional full cost airlines. From the deregulation in the 1970’s till the early 20’s the transformation of the low cost concept in the united states can only be described as a series of innovations, proliferations and consolidations where many other low cost airlines e.g. Pacific southwest, new york air, jet america entered the market of which, some survived the competition and others did not. This also caused some of the major carriers to start their own subsidiaries under the low cost banner in order to regain their lost market share francis, humphreys, ison amp aicken, 2005, p. In europe the low cost concept was originated in the uk and ireland based on the southwest model with the introduction of easyjet and ryanair in 1995. Their success was attributed to the favourable economic framework that encouraged the low cost airline industry. For example, the deregulation allowed airlines of member states to operate domestically within the european union.

Another example is low charges at underused airports which increased the passenger numbers going into those airports and finally, their direct sales approach using the internet and call centres francis et al, 2005, p.87. After the deregulation of the australian domestic market in the early nineties, airlines such as compass airlines and compass mk ii started low cost operations. However they were absorbed into the qantas group as a result of the financial strength qantas had over the low cost airline. The only significant low cost innovation came in the form of virgin blue which still continues to operate today.

In new zealand, although the deregulation movement was implemented in 1984, low cost operations did not start until 1995. However, unlike most other countries it wasn’t in the domestic sector but short haul trans tasman flights, started by kiwi airlines. The response for this by the new zealand flag ship carrier air new zealand, was to create their own subsidiary freedom air to gain a market share in the low cost airline sector. Unfortunately, this creation of freedom air combined with the pressure from qantas drove kiwi airlines out of the market.

However, deregulation within new zealand has meant that new entrants and particularly large airlines with substantial capital are seeing new zealand as an attractive market to enter and are viewing the domestic and trans tasman routes as possible revenue earners francis et al, 2005, p.89. Today, an offshoot of low cost carrier virgin blue operates trans tasman routes under the banner pacific blue. In asia, it was always thought that the tight government control and restrictions implemented will not allow favourable conditions for low cost airlines to prosper. However the rapid demographic and economic progress combined with congested hub airports alongside underutilised airports and the need for governments of those countries to promote tourism and trade outside the capital cities influenced in the bringing the low cost concept to the continent of asia. Seeing the success of some of the european airlines such as easyjet and ryanair, malaysian carrier air asia started low cost domestic operations in 2001 based on the south west model. Other subsidiary airlines such as tiger airways and valuair have also started operations and are still in service today francis et al, 2005, p.90. The above mentioned examples in the low cost airline history share one common feature.

They are either based on or have used a ‘modified’ version of the southwest low cost model of operation. The success of low cost airlines can be attributed to what is called a low cost leadership position strategy adopted by these airlines. According to flouris amp oswald 2006 , the goal of a low cost leader is to contain the costs to the lowest relative to industry rivals and, in essence, to create a sustainable cost advantage over the competition. The original low cost model is designed based on this concept and as outlined in alamdari amp fagan 2005, p.378 , the original south west low cost model consisted of the following: fares. However, as the number of low cost airlines lcas increased over time, more and more of these airlines have deviated or ‘modified’ this model in order to survive in the industry due to competition. The basis of operation of low cost airlines still remain the same, which is to provide the lowest price for the consumers by undercutting the price levels of legacy carriers.

But because there are a number of airlines competing with each other some lcas have modified their strategy in order to try and stand out from their competition. This is when a company tries to offer something unique to make them stand out from the rest of the industry. The philosophy behind this being that if a company can differentiate their product in some dimension that the customers value and at the same time sustain this differentiation they will be an above average performer in the industry. This differentiation strategy is evident in mature markets such as the united states where they seem to have gone for a balance between low cost model and the full service model. According to alamdari amp fagan 2005 almost all the low cost airlines in north america now offer some kind of frequent flyer programme, some have started complementary drinks, in flight entertainment and different class systems as well e.g.