Friday, April 18, 2014

Sales & Distribution System in a Low Cost Airline

Being LCNF, it becomes very important for Air Deccan to explore newer and economical ways of distributing its inventory of airline seats across the target market at a lower cost than its competitors. Distribution cost is one of the most important controllable costs in any airlines cost structure. Air Deccan hence has gone beyond traditional indirect travel agent based distribution channels to alternate direct marketing channels such as E-ticketing, reservation call center and airport sales for passengers and direct sales to corporate and bulk users such as travel agencies. By keeping travel agents to a minimum Air Deccan has been able to shave off costs significantly.

Air Deccan tickets can be booked through
  • Website –
  • 24 / 7 all India call centre (39008888).
  • Air Deccan Airport and city counters
  • Travel agents across India
  • Reliance web stores across 104 cities in India
  • Club HP petrol pumps in 6 states in India
  • SMS

Air Deccan utilizes InterGlobe Technologies (IGT) proprietary airline distribution system cum CRS which covers the following aspects of the distribution chain:
  • E-Ticketing via and
  • Reservation engine which enables online transaction with online customers, corporate, call centers agents, etc and Air Deccan’s city and airport offices.
  • Flight Schedules
  • Fares
  • Payment Gateway
  • DCS1 and documentation production

Figure 1 Marketing and Distribution Channels Used by Air Deccan

Target market segments

Air Deccan targets three market segments, which it refers to as follows:
  • Leisure travelers,
  • Business travelers
  • Corporate travelers

Leisure travelers.
Leisure travelers for Air Deccan include people on holiday or traveling to visit friends and relatives, their native regions or for a religious pilgrimage. Leisure travel includes advance-planned travel, generally as part of a longer break which means tickets are generally booked well in advance. As the leisure traveler comes nearer to the day of travel, he/she is willing to spend proportionately more which fits in perfectly with Air Deccan’s bucket pricing method.

Air Deccan offers a ticket package called Value Flier, which provides multiple tickets useable over time by up to four members of the same immediate family, which is targeted at the ‘Leisure’ traveler. The airline is also in the process of developing leisure packages with bundled hotel offerings.

Business travelers.
Air Deccan uses the term business travelers to refer to travelers working for small and medium enterprises, who engage in business travel at their own cost (as part owners in their business) or who are otherwise highly cost and time-conscious due to the size of the business, and are used to traveling in, for example, air-conditioned classes on trains. Business travelers tend to form a sizable chunk of passengers on trunk routes such as Delhi- Mumbai, Bangalore – Mumbai, etc.

Corporate travelers.
Air Deccan uses the term corporate travelers to refer to travelers working for large corporations. Corporate travel constitutes a large expense for many companies because their employees generally have little incentive to control their travel costs. Thus Air Deccan offers corporate packages to institutions which are mutually beneficial to both the parties.

Advantages of CRS to Air Deccan
The CRS used by Air Deccan enables it to:

  • Reach the target market
  • Monitor yield management by providing online updated flight booking status
  • Eliminate geographical boundaries
  • Reduce collection costs and eliminate many administration costs associated with ticket sales
  • Help ensure prepayment, which improves cash flow and reduces working capital
  • Avoid over- or under-bookings by using only one CRS
  • Sell tickets at all hours, round the year
  • Save on paper costs by using “e-tickets”
  • Simplify its operations and boarding process
  • Provide through the call centre a reasonably accessible, internet-based ticket purchase option for customers who do not have direct internet access themselves.

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