Kaizen CRS takes an expanded look into the Aviation Industry.
By Debojit Saha
The aviation industry is defined as the global transportation network that carries goods and passengers by air. While air travel became possible in the early 20th century, the aviation industry now generates billions of dollars in annual revenue. It also provides essential services to numerous other industries, from medicine and national defense to tourism and sports.
In this report, the primary focus is on the commercial flights that carry passengers only. Though aviation as an industry is fairly new, it has made some rapid technological progress over the years as the world opened up to travelers for leisure trips, education, business, adventure, medical tourism, religious travel and so on. If we look at how the number of air passengers have changed globally from 1972 to 2014, we see that over the years more and more people are choosing to fly.
Despite the maturity of the industry in 1972, this year marked the start of necessary innovations that would transport the frequency and availability or air travel. The average industry growth rate for global passengers is around 6% and in 2014 the industry served 21,493 million passengers which is a 102% increase from the year 2002 (a decade ago) when it served 10,656 million passengers.
A similar trend can be observed in Bangladesh as well. Air passengers were very minimal after the Liberation War and the numbers remained negligible until 1972. However, since then there has been a gradual increase in the number of air passengers in Bangladesh as well. Figure 2 explains the trend of air passengers in Bangladesh. In 2014, the aviation industry of Bangladesh served 3.1 million passengers which is 103% increase from 2002 when the total air passengers in Bangladesh was around 1.5 million. The average growth of the industry in Bangladesh is around 5% which is comparable with global industry growth rate. Figure 2 shows that since 1972, the number of air passengers have always increased except for the 2007-2008 period when there was a political crisis in the country. Following that period, the absolute number of passengers is growing and the aviation industry in Bangladesh looks very promising.
The survey aimed to examine a travel destination mix for air passengers in Bangladesh and according to the survey, 33% of air passengers in Bangladesh are domestic travelers and 66% of them travel for international destinations.
The domestic destination preferences are depicted in the following chart:
The purpose of air travel varied among the respondent groups. The most common reasons were tourism, business, travel for job/training, religious activities etc.
The chart on travel purpose explains the reason for the popularity of Chittagong in terms of air travel. Chittagong as a destination caters to wide range of audience from business to service, to sports &tourism and therefore is the most popular spot. Additionally, there is high frequency of flights and airline choices for flying to Chittagong making it a more accessible destination. Additionally, this factor increases the popularity of the city.
Choice of Airlines:
Airline evaluation criteria
Air passengers base their travel choice on a number of factors related to available air routes and flights as well as other elements involved in business or leisure travel choices. In specifically choosing between airlines, passengers balance the trade-off between the following:
– Travel Cost: The combination of airfare and the cost of getting to and from origin and destination airport.
– Travel Time: The total time between origin and destination points including ground access to and from the airports, flight time and airport processing inclusive of any anticipated delays.
– Comfort and convenience: The value of travel time in air is affected by factors such as the class of air service, the type of aircraft, the differential preference between time spent on road, in air craft and airport. In short the cost of travel time is compared with how time is spent on the journey.
– Risk/Reliability: The choices of flights vary depending on the trip comfort level, previous experience of flight cancellation, airport congestion, response to bad weather etc.
– Additional features include ease of booking flight, corporate deals with office, etc.
The weight of the evaluation criteria of airline as deduced from the survey is given below:
Price is the key issue for air passengers, therefore the study tried to gain insight on what are the sources of fund for the air travel and the results are as follow:
Total Number: 200
Brand Switching Characteristic of air passengers:
Air passengers gravitate to the a preferred brand as the survey revealed that 40% of the passengers tend to remain loyal to their preferred choice of airlines but the composition of the remaining 60% of passengers seem to offer promise of grabbing market share for any airline. Around 35% are satisfied with travelling in any airline which means ease of booking and level of brand awareness play a key role in winning these passengers. On the other hand, 21% of passengers are open to different ideas therefore unique deals or packages may entice these travelers’ decision.
Airline Search Pattern
People are gradually relying on their individual search for airline options. Ease of booking through websites and suggestions from tourism/frequent travelers in online communities are becoming the primary sources of information for deciding on an airline. Therefore, if airlines want an increased number of passengers to experience their services, they should engage with the community of frequent travelers. As the survey reflects, word of mouth is growing into the decisive factor for a passenger’s choice of flight.
• Smarter Flight Schedule:Travelling by air for domestic destinations is yet to be popular among air passengers. The most popular domestic destination for air travel is Chittagong and part of it is because there are more flights to that destination. This is also a key factor in generating traffic in the city.
• Encourage passengers to experience flying: To popularize other domestic destinations, airlines may come up with attractive offers to encourage passengers, for example, Syedpur which is a fairly new domestic destinatio is slowly becoming popular among passengers for the an attractive deal of two tickets at the price of one. Thus as more passengers experience the flights, they become accustomed to considering flights as a mode of travel. They also acquire an idea regarding the factors of evaluation criteria of airlines: Travel Cost, Travel Time, Risk & Reliability, Convenience & comfort, Baggage handling, etc.
• Win Heart Share: Even though 40% of air passengers are loyal to a brand, the remaining 60% decide the market share of airlines. It is important that airlines work continuously to improve passenger experience so that they tend to choose their airline over other options.
• Stay in touch of passengers: With the exception of passengers whose travels are financed by their offices, passengers prefer to conduct research on an airline before booking a flight. Therefore engagement with frequent travelers through activation or online presence will increase the chance of an airline being chosen.