Swot and Porter Analysis of Spice Jet

SWOT ANALYSIS OF SPICE JET At present it has a market share of 6%. This indicates huge potential of growth compared to other low cost airlines in India. STRENGTH OF SPICEJET

Entered with Rs. 99 fares for first 99 days. ³offering low low everyday spicy fares´ Compete with Indian Railway AC Segment Fleet of 6 Boeing 737-800 with 189 Seats. WEAKNESS OF SPICEJET

A fixed-cost perishable product Limited sectors (Concentrated at only North-West-South North-West-South Indian Sector) Small Load Efficiency compared to Air Deccan OPPORTUNITIES OF SPICEJET

Future Fleet Expansion will increase its Market Share. Attractive fares and up to date Quality service will generate a huge customer customer base bas e comprising frequent flyers. Huge Market Potential Available infrastructure is under-utilized. THREATS OF SPICEJET

High Attrition Rate Killer competition± The Indian skies are witnessing a bloody battle for  market shares. A much anticipated fare war has broken out across Indian skies. Oil price fluctuations± Oil price hikes spare no airline. Aviation turbine fuel (ATF) cost and other operational costs (all government controlled) ar e the same for all air lines, whether it is a low cost airline or not.

MICHAEL PORTER¶S FIVE FORCES

THREAT OF NEW ENTRANTS Huge capital requirement: Capitalization of minimum Rs.30Cr without which it is not allowed to takeoff Expected retaliation: market is concentrated in the hands of a few players thus any new player would to face stiff competition Legislation or government action: along with the equity restrictions for floating an airline they also compel the airlines to operate on

uneconomical routes Inadequate airport infrastructure: difficult for the existing airlines to function smoothly and thus deters new ones Shortage of pilots and high fuel costs Exit barriers POWER OF BUYERS

General Indian traveler is extremely valu e conscious. Growing awareness has increased expectations for punctuality, safety and service. Minimal switching cost and alternatives available.   No differentiation among the players in the same segment e.g. the differences between Air  Deccan and Spice Jet is minimal. Transparent Web based comparisons in fare structures are available which increases the power of the customer to choose the best deal. Role of  intermediaries like travel agents diminishing POWER OF SUPPLIERS

Only two major critical suppliers: aircraft suppliers enjoy in a duopoly and fiercely control their market shares Acute shortage of pilots which makes the industry dependent on them Forward integration: airlines also face a threat of forward integration as the suppliers have or  know about most or the technical aspects of the industry Airbus and Boeing have two radically diverse views on the future needs of civil aviation and this is reflected in their new  product developments. Boeing has focused on medium capacity long haul aircraft (expecting that demand will grow for smaller aircraft that can fly more frequently offering a wide choice of departures in flight schedules). Airbus has made huge investments in the A380 which is its new large capacity-long range super jumbo (expecting that demand will grow for larger more fuel efficient and luxurious aircraft that can accommodate more people per flight) High fuel costs-Fuel accounts for nearly 35% of the total cost and the cost of fuel is increasing rapidly posing a threat to t he profits of companies. AVAILABILITY OF SUBSTITUTES

Product for product substitution- Consumers have various options in terms of airlines to choose from. They may also switch to other modes of transport such as road and rail. Substitution for need- With the advent of technology options such as video conferencing and conference calls reduces the need to travel thus the option of substitution of need in present  but it is marginal as it is not possible to totally do away with traveling. POWER OF COMPETITORS

Intense Competition amongst low cost airlines and the full service airlines. Apex fares and  promotional schemes offered by all the full service carriers, offering prices at lower or similar  to the low cost ticket fares are a tremendous competitive force. Entry of additional players

Mergers and acquisitions take place here too which increases competitive rivalry between airlines Low level of differentiation between the services offered by the different airlines increases the risk of switching High fixed costs and input constraints also add to the competitive pressures in the industry