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Brand Audit Of Buddha Air

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Category: Miscellaneous

Autor: andrey 15 March 2011

Words: 8181 | Pages: 33

Introduction

1.1 Industry Analysis

A brief History of Airline Industry

The story of people's desire to fly effortlessly in the open sky dates back to ancient times. We even have heard stories, epics, and histories depicting the desire to fly liberally in the open sky. This longing led number of people to try to fly with manmade feathers engraved within them, the result of which was nothing but failure. With invent of successful flight in Kitty Hawk, North Carolina by Wright Brothers', the beginning of the aviation industry was marked. But the development of the aviation industry was first stimulated when United States' participated in World War I. In the early years, the public did not embrace airplane travel as an option perceiving that it was too dangerous. In 1927, when Charles Lindbergh successfully completed a solo flight across the Atlantic Ocean, it created massive interest in flying with the general public. This was the instigation point when a variety of air transport holding companies began which included Aviation Corporation. With United States' entry into World War II, commercial fleets and pilots were sent to Europe to participate in the war effort. The war also helped to generate support for research and development of aircraft, which extended beyond the war to commercial aviation.

History of Airline Industry in Nepal

The first airline Nepal Airlines Corporation was formed in July 1958 by the Nepalese government and a flag carrier. Indian Airlines ruled the Nepalese sky prior to this date .Royal Nepal took over the international schedules in 1960. Nepal Airline started its fleet with Douglas DC-3s, which quickly moved onto the turboprop Fokker F-27. By the early 1970s, the airlines had introduced Hawker Siddeley HS-748 turboprops. In 1972, Boeing 727 jet Airlines were introduced after Kathmandu's runway had been extended for medium sized jet operations. The Boeing 727s was gradually replaced by Boeing 757s, which were in use form 1987. In the year 1996, the services were extended to China and Japan after the lease introduction of an A310 Airbus.

• Destinations:

o Domestic routes

o International routes

 Bangkok, Bombay, Calcutta, Delhi, Dubai, Frankfurt, Hong Kong, London, Osaka, Shanghai, Singapore.

• Fleet:

o Boeing 757-200,HS-748,DHC-6 Twin Otter, PC-6 Turbo Porter

• Domestic Airline Industry:

Many new domestic airlines have taken to the skies since the privatization of the airline industry in 1991. All the airlines are based in Kathmandu, and most operate with small STOL (Short Take off & Landing aircraft like Twin Otters).

Profile of Airlines

There are 17 domestic flight carriers operating scheduled flights to almost 44 districts of the Kingdom. Today it is possible to reach to most of the tourist destinations in Nepal, from the remote airfields to major hub cities by air and this facility has greatly enhanced the tourism industry. When the government of Nepal adopted an open sky policy allowing the private airlines to step in the domestic air service front, tourism sector was positively affected.

List of Domestic airlines operating in Nepal

Air Dynasty Agni Air Buddha Air Fishtail Air

Guna Air Impro Air Manang Air Nepal Airlines

NSBS Shangri-la Air Shree Airline Simrik Airline

Sita Airlines Tara Air UN/ VVIP Yeti Airlines

Nature and Scope of the Industry

Nepal is lately affected due to the internal conflict and unstable political situation hence Nepal has not been the destination for businesses to perform healthily i.e. up to their potential. When gazing towards the airlines industry, it shows that private airlines are mushrooming and hence it provides opportunities for the sale of short-hop passenger turboprop aircraft, including both used and new equipments. The preference of the Domestic Nepalese private Airlines has been towards twin- engine aircraft such as Beech aircraft 1900D, Canadian Twin Otter, British Avro and German Dornier. The market for rotary-wing aircraft has also been growing, particularly for tourism related passenger and cargo services. Nepal Airlines Corporation (NAC) has traditionally preferred Boeing Aircraft for its international routes. The financial problems recurring with the airlines created difficulty to purchase any new aircraft. NAC is regularly in the market for wet and dry leases. Several private international airlines have been licensed in Nepal, but NAC is the only one flying internationally, Buddha air being the second to start its international operations in August 2010. Demand for helicopters and major components have raised due to the ongoing security operations against the internal conflicts in our country. The government has embarked on open-sky policy permitting private airlines to operate domestic air services. Private helicopter services are also coming into role in joint venture including one recently incorporated with the name of Dynasty Aviation Pvt. Ltd extending its services with two Ecureuil Helicopters. The Government has made arrangements to split NAC into two separate entities creating Nepal International Airlines to operate in international flights and Nepal Airlines to operate in domestic flights. Nepal is looking for foreign airlines as partners as partners for joint investment in NIA. For new airlines the flight routes and their frequency will have to be negotiated and agreed upon with the Department of Civil Aviation/ Civil Aviation Authority. Lately, Nepal aviation has entrants like Buddha air, Yeti Airlines, Agni Air, Sita Airlines and explicitly ruling Nepalese Domestic Aviation industry.

Industry Analysis of the Aviation Industry in Nepal

Industry analysis deals with those environmental variables that have the capacity to influence the organization at present as well as the performance of other players in the industry. The important players in the industry are market, customers, and competitors. Suppliers and other stakeholders determine the success or failure of the company in the airline industry. These factors are discussed as:

Michael Porter's Five Forces Model of Competitive Analysis

Bargaining Power of Buyers

Bargaining power of suppliers Threat of substitute products or services

Threat of New Entrants (high, medium or low)

New entrants to an industry typically bring to it new capacity, a desire to gain market share, and a substantial resources. They are, therefore, threats to an established company. Buddha Air, as such, is one of the established companies in the domestic airline industry in our country. There are different factors influencing the other companies to enter the market:

• Capital requirements: The capital requirement for a new entrant in aviation industry is huge. There has been a policy that aircrafts cannot be purchased in lease and the new operating airlines have to fully purchase the aircrafts. Therefore it would be difficult for the new comer to enter the scene.

• Technical expertise: Any aircraft needs highly skilled manpower that be pilots or the engineers needed for both operations and maintenance. The demand of the skilled manpower in market is more than the supply. In fact, the existing companies are competing amongst themselves to recruit them.

• Government Policy: the airlines industry is controlled by the Civil Aviation that sets norms and regulations for the industry. This creates difficulty for the new entrants in the industry.

Rivalry among existing firms

In most industries, corporations are mutually dependent. A competitive move by one firm can be expected to have a noticeable effect on its competitors and thus may cause retaliation or counter efforts. In case of airline industry, competition is aggressive due to which price reduction or new product introduction is quickly imitated by other participants. The same condition prevails in Nepalese domestic airline industry. In Nepal, sky is in equal share ruled by many rival airlines. This leads to:

• Number of competitors: When an industry involves aggressive number of participants, there is constant watch on each other's move, and make sure that they match the move by an equal performance. In Nepal domestic airlines industry, as mentioned earlier has many players which results in intense competition. Each of these airlines has come up with different schemes and service facilities for the ultimate customers with intensive promotion campaign as well.

• Rate of industry growth: The airlines industry is growing at faster pace, which is causing threat as well as opportunities to the participants. The companies that can recognize these problems and exploit these as opportunities win the game and those companies which fail to do so are back in the line.

• Diversity of rivals: the presence of scores of number of rivals in one way forces the players to come up with diverse ideas to be a challenge and/or hold a strong position in the industry. There is one prevailing example about Yeti Airlines which is coming up with innovative promotions to attract customers. The innovative taglines in the commercials in print ads or TVC creates a sense of security in the minds of passengers unlike other major player Buddha Air. This is a threat to such an established Airline.

Threat of Substitutes

According to Porter "substitute limits the potential returns of an industry by placing a ceiling on the prices firms in the industry can profitably charge." Thus, substitutes may have strong effect on an industry.

The transportation industry has many substitutes in itself; road transport is a main substitute to airlines industry.

Bargaining power of buyers: Buyers affect an industry through their ability to force down prices, bargain for higher quality or more services and thus play competitors against each other. Buyers hold a strong position if:

• Suppliers are plentiful

• Cost of switching suppliers is low.

In Nepalese context, though the number of suppliers is not too many, the cost of switching is very little. Therefore, the number of loyal customers is low.

Bargaining power of suppliers

When the fuel prices increase, the airline company has no choice except increasing the surcharge for tickets issued.

Relative power of other stakeholders

The sixth force i.e. stakeholder groups is another force included in Porter model. These groups include government, local communities, and special interest groups. The importance of these stakeholders varies as per the industries. In the airlines industry, the power of government is relatively higher as government can impose any new rules at any point of time.

Michael Porter's Five Forces

S.No. Michael Porter's Five Forces Scale

1. Threat of new entrants Low

2. Rivalry among existing firm High

3. Threat of substitute service Low

4. Bargaining power of buyers High

5. Bargaining power of suppliers High

6. Bargaining power of stakeholders(Government) High

1.2 Scope of the Research

Introduction to the company

2.1 Buddha Air

Buddha Air is domestic flight operation private company which started from October 1997. The Chairperson of a company is Mr.Surendra Bahadur Basnet and the Managing Director of a company is Mr. Birendra Bahadur Basnet. There are altogether 508 staffs at Buddha Air. After 12 years of dedicated non-stop service, more than 100,000 flight hours logged in with over 3 million passengers flown to twelve destinations with permanent runways in the country, Buddha Air today is the largest domestic air travel operator in Nepal employing nearly 500 experienced professionals. The company has the largest fleet of the most expensive and brand new aircrafts amongst all domestic airliners in operation with five 19 seat Beechcraft-1900 D, three 47 seat ATR-42 and one 70 seat ATR-72, flying out to all the trunk routes with a minimum of 1200 m of permanent runway. It is company policy to only buy brand new aircrafts as passenger safety is placed in the highest priority. In addition we have six buses for ferrying passengers from the terminal to the tarmac, nine vans for the pilots and cabin crew, a jeep and a tractor for maintenance and fifteen motorcycles for marketing purposes.

Buddha Air is the leading domestic air line with the combination of dedicated staff members and state of the art aircrafts. Buddha Air Business operation covers areas like Kathmandu, Bhadrapur, Bhairahawa, Bharatpur, Biratnagar, Dhangadi, Janakpur, Nepalgunj, Simara, Pokhara, Tumlingtar (in future). Buddha Air also caters to Mountain flight and Charter flight.

Vision

Buddha Air will be very efficient domestic carrier that would have the best aircraft and quality standards unheard of in the domestic sector. It will provide the highest level of service to its costumer. It will be a name people will trust.

Mission

Buddha Air has a mission of becoming the domestic market leader in air transportation. This will be attained by:

• Setting industry standards for safety and security

• Providing world class customer service

• Creating an open and participatory work environment which seeks positive changes, rewards, innovation and provides growth, security and opportunity to all employees.

• Providing consistently superior financial returns for shareholders.

Corporate Objective

Buddha Air has incorporated numerous corporate objectives to achieve its mission and vision. The corporate objectives of Buddha Air are as follows:

• To maintain the position of market leader

• To always have an average of 90 percent on time take off of all the scheduled flights.

Corporate Strategies

• Route innovation and diversification

• Fleet expansion

• Customer oriented service

• Aggressive marketing

• Market Expansion

• Limited staff growth

Number of International Sector Destinations

1. Bhutan- Paro (from 23 August 2010)

2. China ( proposed)

3. India (from 16 September 2010)

a. Kolkata

b. Lucknow

c. Patna

Number of Domestic Sector Destinations

1. Kathmandu 2. Everest Experience 3. Bhadrapur

4. Bhairahawa 5. Biratnagar 6. Pokhara

7. Nepalgunj 8. Janakpur 9. Simara

10. Bharatpur 11. Dhangadhi 12. Tumlingtar (after the runway is asphalted)

Organizational Structure of Buddha Air

2.2 Positioning

The key to winning and keeping customers is to understand their needs better than their competitors do, and to deliver more values. But solid positions cannot be built on empty promises. Buddha Air has positioned itself as an airline that provides highest quality service, safety and comfort.

Point of Difference (POD)

It differentiates itself in terms of service attributes such as- reliability, safety, promptness, comfort, service etc. looking at the needs of its executive – level customer. Due to its safety records which is not matched by any other competitors makes it different from other existing airlines. With the introduction of ATR 42 and ATR 72, Buddha has been able to increase the level of comfort.

Price

More Same Less

More for more More for the same More for less

More

Benefits Same

Less

As shown in the above diagram, Buddha Air is different in its positioning as it offers more for more value proposition (shaded portion). More for more positioning involves providing the most upscale product or service and charging higher price to cover the higher cost.

2.3 Buddha Air – Brand Equity

Buddha Air Pvt. Ltd. is the largest domestic air travel operator in Nepal established on 10th November 1997 as a Domestic Flight Operator.

A variety of brand elements can be chosen that inherently enhance brand awareness or facilitate the formation of strong, favorable, and unique brand associations. Buddha Air is in the top of mind of the consumers when spelled about any domestic airlines.

The logo is one aspect of a company's commercial brand, and its shapes, colors, fonts, and images usually are different from others in a similar market. The logo of Buddha Air which shows dove symbolizing peace implied as well as by its name i.e. Buddha. The logo is memorable. People can recognize the brand when the picture of two doves is shown; moreover the logo can be easily recalled. The message it wants to portray through its logo is meaningful. Nepal is popular as a birthplace of Buddha and famous in the world as a peaceful country. The name and the logo signify it. The logo and the name has been registered under Nepal's Company Act, hence cannot be misused by others.

The airlines flew its 19 seat Beechcraft-1900 in 12 destinations with a total number of 5 aircraft. Earlier, it focused on flight speed with Beechcraft aircrafts and moved on to ATR's aircrafts focusing on space and comfort. Now, the airlines owns 3, 47 seat ATR-42-320 and 1, 70 seat ATR-72-500. It initiated its international operation recently on August, the instigating destination being Paro in Bhutan. It further plans for expansion in India and China. The company has a policy to buy only brand new aircrafts and the other main reason that the consumers admire this brand is its safety record and reliability. The reasons for preferring Buddha Air among others are:

• Schedule time

 Flight speed

 Comfort

 Less noise

 13 years history of no accidents

Brand Equity of Buddha Air has been developed through combination of its Brand awareness and Brand Image. It has been known as the largest domestic air travel operator. The company has been operating new modern equipment with navigational aid equipment .The first and foremost priority of the airlines has been passenger safety and the best service. The records have been a proof for its timely scheduled flights.

The company has targeted corporate houses as its main target and it has succeeded to attract customers from those segments. It has strong Relation with Business House; most esteemed clientele in Nepal including most United Nations organizations, all major diplomatic missions, international non government organizations as well as national level organizations.

2.4 Associations of Buddha Air Brand image

• Favorability – Buddha Air's main favorability come from its safety record in the last 13 years of operation.

• Strength – Its strength lies in their policy of only buying high quality new aircrafts, its own brand image, motivated and well trained staff.

"As flight safety is our top priority, pilots and engineers are frequently sent abroad for refresher training"

• Uniqueness – Its aircrafts from Beechcraft and ATR are unique in the Domestic Airlines industry of Nepal. People recognize this fact and it is the major reason behind the safety image of Buddha Air.

2.5 Buddha Air Leveraging Secondary Brand Knowledge to Build its Brand Equity

Secondary associations of Buddha Air are as follows:

• Channels of distribution

o Selling Buddha Air tickets through large and established travel agents has added on to the image of Buddha air

• Company of aircrafts

o Beechcraft 1900D manufactured by Raytheon Aircraft (now Hawker Beechcraft), and ATR 42 and ATR 72-500 manufactured by Alenia Aeronotica (France)

• Corporate Sponsorship –

o In 2000 Buddha Air started an agricultural extension program as a pilot project in Morang district

o Buddha Air funded the seed money to start Smallholder Agribusiness Support (SABS)

o Buddha Air donates over Rs. 1.5 million to Dangihat VDC of Morang district every year for health and education from 2010.

o Buddha Air conducted a one day health camp in the Dangihat VDC of Morang for 1200 people.

• Third party sources – awards

o Highest Safety Award given by the Ministry of Tourism and Civil Aviation of the Government of Nepal

o Ministry of Culture, Tourism, and Civil Aviation honored Buddha Air for being the first among private sector airlines in foreign exchange earning during the fiscal year 060/061

o It has also been awarded from various sources such as Pacific Asia Travel Association, United Nations World Tourism Day, 3rd World Aviation, Education and Safety Congress, and Pratt & Whitney, Canada Corporation.

2.6 Marketing Programs to Build Brand Equity of Buddha Air

The marketing strategies used by Buddha Air are as follows:

• Product strategy - Aircrafts

The product for Buddha Air would be their fleet. Buddha Air prides itself in maintaining safety as the highest priority and has always bought brand new aircrafts in line with this policy. At the moment Buddha Air owns a fleet of five just off the factory Beechcraft 1900D, three ATR 42 – 320 (Avions de Transport Régional or Aerei da Trasporto Regionale) and one ATR 72 - 500.

Beechcraft 1900D (B1900D)

The aircraft is manufactured by the US based Raytheon Aircraft Company (now Hawker Beechcraft). Each Beechcraft cost Buddha Air about US$ 5 million each. Their aircraft have wide seats - similar to those on MD 80 jets. Full pressurization and air conditioning allow instant optimum cabin temperature. The remarkably low noise level helps you relax and concentrate more on the views outside. Full stand-up cabin height and reading lights add to your comfort.

ATR 42-320 and ATR72-500

ATR is a French-Italian aircraft manufacturer formed in 1981 by Aérospatiale of France (now EADS) and Aeritalia (now Alenia Aeronautica) of Italy. Its primary products are the ATR 42 and ATR 72 aircraft.

The ATR 42-320 provides passengers with an on-board comfort and services comparable to the jetliner. It features large overhead bins including a handrail to facilitate passengers and crew movement along the cabin and has more windows than rows of seats for optimized views, individual reading lights and cabin attendant call system along with quiet, comfortable and spacious cabins.

ATR 72-500 represents the latest generation of turboprop aircraft with comfort and performance. The 70-seat ATR 72-500 is known to be the best aircraft with turbo-prop engines. Powered by PW127 engines, also used to power ATR 42-500, the ATR 72-500 provides an outstanding short field performance for an aircraft of this size. The modernized new look passenger cabin, ergonomic leather seats and more quiet than regional jets are the main features that makes it the most comfortable aircraft for regional operations.

• Service Strategy

- Buddha Air provides flights to twelve destinations within Nepal and has its headquarters in Jawalakhel, Lalitpur.

- They have six comfortable buses that transport you from the terminal to the aircraft.

- In case of flight cancellation due to bad weather conditions they provide immediate refund on demand.

- Wheelchairs or portable oxygen cylinders can be arranged for passengers with special needs. In case passengers need emergency medical services they arrange for ambulances upon arrival at the destination.

- Underage children traveling unaccompanied are especially looked after by the airport staff in the terminal and by the flight steward while in the aircraft.

- All flights serve non-alcoholic drinks as well as the latest edition of national dailies and Yatra (the in-flight magazine published by Buddha Air).

- Passengers can log in frequent flyer miles with the Royal Club and earn points. Royal Club offers several benefits to their valued clients.

- They also provide cargo services which are handled by the cargo division.

- Buddha Holidays is their very own travel and tour management company dedicated to their clients, which can assist them in planning and organizing their holiday trip in Nepal and Tibet. Buddha Holidays also offers some exciting tour packages within Nepal and Tibet.

• Pricing strategy

o Competitive Pricing Strategy – Buddha Air is the leader when it comes to pricing and other airlines companies follow Buddha Air's strategies and keep it a little lower than Buddha Air.

• Channel strategy

o Three ways to sell Buddha air tickets:

 Buddha Air offices

 Buddha Air Website and e-SEWA

 Travel Agents

• Communication strategy

o Print Advertisement (Newspapers and Magazines): Buddha Air initiates advertising campaign through various media only when they have to convey any additional changes in their services and introduction of new airlines.

2.7 Dealing with Competition

It would seem a simple task for a company to identify its competitors but the range of company's actual and potential competitors is actually much broader. A company is more likely to be hurt by emerging competitors or new technologies than by current competitors.

The scenario is a bit different in case of Buddha Air. The country market being limited, there are lesser chances for the new entrants to succeed with respect to penetrate as well as to capture the market. Therefore, the company faces lesser threat from these newer companies.

Though there is large number of competitors, the major ones comprise of Yeti Airlines and Agni Air. Furthermore, each of these airlines has its own set of target customers. Buddha Air as such focuses on the executives, whereas the others focus on the middle-class passengers.

Their business strategies differ accordingly. Buddha Air follows the leadership strategy; it is the market leader determining the price and other airlines following its pricing strategy. Buddha Air, having it own segment of customers, does not give much emphasis on the price changes, rather continues to provide better service. As such Buddha seems to be following defensive and other airlines following the offensive strategy to cover a large market share.

2.8 SWOT ANALYSIS

Strengths

• Innovation: Buddha air introduced the first e-ticketing in a move to catch up with the pace of time. In 2002, Buddha air launched its frequent flyer program , the Royal Club , which rewards passengers with mileage points every time to fly which can be redeemed for free tickets, holiday packages or shopping. Buddha Air is the first to introduce this program in the country. All these factors add benefit to the airlines and make it the most appreciable airlines over other airlines.

• Differentiation: Buddha Air always keeps itself up-to-date in the industry and introduce diverse types of strategies with the new era of comfort and luxury, which has helped to dominate in the market for a long time. Innovation on different sectors within airline industry has given them supremacy over other airlines'. As Buddha Air quotes "As flight safety is our top priority, pilots and engineers are frequently sent abroad for refresher training", this airlines places its highest priority on the safety of its flights and that's the reason why they have no record of aviation insurance claim since the airline was launched in 1997. To keep the flights safe, the engineers inspect each aircraft thoroughly everyday as per the Standard Operating Procedure, Nepalese Civil Airworthiness Requirement and the Aircraft Operators Maintenance Manuals. Buddha Air is the only private flight operator in Nepal to install the Aircraft Data Acquisition System (ADAS) device in all its aircrafts in addition to the Cockpit Voice Recorder (CVR) and the Flight Data Recorder (FDR). Innovation on different sectors within airline industry has given them supremacy over other airlines'.

• Brand Image: Buddha Air's Beechcraft and ATRs are unique in Nepalese airlines industry. Its main favorability comes from the record of no accident since its establishment in 1997. The highly recognized comfort focus by the introduction of bigger aircrafts also adds benefit to the company in building its brand image among the customers.

• Youngest Fleet: Buddha Air has maintained the youngest fleet of aircraft of all the major aircrafts.

Weaknesses

• Buddha Air's aircrafts require 1000 meters runway. This limits its access to STOL market (Remote areas) where runways are shorter.

• The mileage card Buddha Air offers is not appropriate with the business clients.

Opportunities

• Technology: The rapidly changing technology always provides opportunities to adopt new technology and implement them to improve customer experience.

• Formation of Alliance: The alliance with international airlines will prove beneficial for Buddha Air as it provides opportunity to work with other friendly airlines and would enable them to reach to other different destinations around the globe.

Threats

• Increase competition: There has been increase in the number of competitor in the domestic airlines in Nepal. These competitors are the cheaper airlines that provide similar kind of services at lower rate which makes the travelers interested in the competitors' facilities as Buddha Air being relatively expensive Airlines.

Research

3.1Methodology

To get the baseline information about the Buddha Air and their current marketing efforts, we visited the Buddha air office at Jawalakhel and spoke to one of the marketing officials there. This gave us information on what the company perceives about themselves.

Then, to know about the customers' perception about Buddha Air and Domestic Airlines in general, we decided to conduct a research at the domestic airport targeting the domestic airlines passengers. First, a focus group discussion was conducted at the airport lounge restaurant where the participants were the passengers who were waiting for their flights. From the focus group discussion, we got the key elements behind the success of domestic airlines and the issues relating to them. The FGD went on for 25 minutes.

After the FGD, a questionnaire was prepared to take another survey of the passengers at the Domestic Airport. This time the passengers waiting at the lounge were given out questionnaires and some were even interviewed. The questionnaire included basic questions about domestic airlines as well as comparative analysis of the various domestic flights. We assumed that the passengers could be biased towards the flight that they were travelling from that day. So the survey was done in three time slots on the same day such that different flight timings could be catered. This gave us the customers' point of view.

To get the point of view of the travel agents, who play a major role in the airlines industry, we interviewed some of the travel agents in a one-to-one manner. This detailed study helped us conduct a brand audit of Buddha Air and gain a good knowledge about Buddha Air's status in the market.

Finally, the secondary information were collected from various organizations, Buddha Air, Yeti Airlines, Agni air, Civil Aviation Department (Babar Mahal), Civil Aviation Department (Sinamangal) and Tribhuwan International Airport (domestic sector).

3.2 Findings of Focus Group Discussion

The focus group discussion conducted in the process of the research concluded below mentioned findings:

When asked about the promotion of any airlines, populace said that word of mouth, television, newspaper; Business Magazines were the best medium for the promotion of any airlines.

Most of the participants agreed that Buddha Air was their first preference over other flights. The main factors for any passengers to choose any airlines were first and foremost the comfort factor; safety, time, fare, service, schemes of the airlines and promotion beings the other factors.

3.3 Market Position in Terms of:

Market Share National Level:

Market share on national level flew from TIA (Tribhuwan International Airport) for the month of May, June, July 2010.

Number of Flights Comparison (Buddha Air)

Total passengers comparison (Buddha Air 1997-2010)

3.4 Commission Package for Travel Agents (Yeti vs. Buddha)

Earlier Buddha Air gave authorized dealership to the travel agents on the basis of six month increasing trend of ticket sales but now it gives on the basis on cash guarantee. Therefore, being a dealer fully depends on the cash guarantee you give for the purchase of ticket. The commission given to the travel agent is less than or equal to 40 percent in the tourist area and 10% in non-tourist area on the basis of ticket sales. It also provides additional incentives to the travel agent depending on their sales volume. The details are shown in the table below:

Net Sales Volume (RS) Incentive %

4,00,001-6,00,000 1

6,00,001-8,00,000 3

8,00,001-10,00,000 5

10,00,001-15,00,000 7

15,00,001-25,00,000 9

25,00,000 & above 10

In case of Yeti Airlines, a travel agent to be a dealer has to sell at least 2000 tickets in one year. The commission of the travel agent in the tourist area is less than or equal to 37% and 5-7% in non-tourist area.

Place Commission (%)

Lukla & Jomsom 15

Biratnagar 20

Chitwan 22-23

Dolpa & Simikot 35

Pokhara 37

3.5 Fare

Analyzing the market position of Buddha Air with its competitors requires a study of the fare charged by the company as compared to that by its competitors.

Comparison of Buddha Air‘s current fare with other airlines

Buddha Yeti

Bravo Apex Yanki Green Special Yellow Normal

Pokhara 1880 2380 2780 1780 2080 2330 2660

Biratnagar 2605 3605 4160 2605 2905 3555 4060

Bhairahawa 2450 3200 3585 2500 2850 3150 3350

Nepalgunj 3540 4540 5335 3540 3740 4490 4835

Bhadrapur 3125 4330 4800 3125 3600 4280 4680

Dhangadi 5175 6880 7560 5225 6080 ------ 7560

Mountain Fight 6815 6800

At current situation, Buddha Air offers three price range tickets to its customers where Bravo is the cheapest fare ticket and Yanki is a normal fare ticket. The lot size of the offer tickets depends totally on the management. Similarly, in case of Yeti Airlines, it offers four price ranges with Green ticket the cheapest fare and Normal ticket with nominal price charge.

From the above table, we can see that Buddha Air has nominal high fare compared to Yeti Airlines with Yanki ticket amounting to Rs.2780 and the normal ticket amounting to Rs. 2660 respectively in Pokhara.

Even in Biratnagar, Buddha Air has nominal high fare compared to Yeti Airlines with Yanki ticket amounting to Rs.4160 and the normal ticket amounting to Rs. 4060 respectively.

Again in Bhairahawa, Buddha Air has slightly high fare compared to Yeti Airlines with Yanki ticket amounting to Rs.3585 and the normal ticket amounting to Rs. 3350 respectively.

In case of Nepalgunj, Buddha Air has high fare compared to Yeti Airlines with Yanki ticket amounting to Rs.5335 and the normal ticket amounting to Rs. 4835 respectively.

In Bhadrapur sector, Buddha Air has slightly high fare compared to Yeti Airlines with Yanki ticket amounting to Rs.4800 and the normal ticket amounting to Rs. 4680 respectively.

Almost at the end of the table in case of Dhangadi, we can see that both the airlines have equal fare which is Yanki ticket amounting to Rs.7560 and the normal ticket amounting to Rs. 7560 of Buddha Air and Yeti Airlines respectively. Even the fare of both the airlines for mountain flight is almost the same for this fiscal year.

3.6 Analysis of Questionnaire responses

The questionnaires were given out to the various passengers waiting at the airport lounge in three time slots to make sure that a wide range of flight passengers could be captured in the research. Due to the flight timings, the passengers could be biased towards the flight by which they were travelling. Thus, getting the opinions of various flights' passengers would be beneficial.

Time slots Interval

A 11:30 – 1:00

B 1:30 – 3:00

C 3:30 – 5:00

A total of 60 people filled the questionnaires, which were classified into groups as follows:

Business people 35

Others 25

Almost 54 % of the respondents were business people. Since, the major category for Buddha Air is business sector; a majority of businessmen population will be beneficial in the research. Some foreigners were also interviewed because tourists are also major customers for domestic flights. As the profit margin from the tourist are higher than any other sector.

**Note: 5 foreigners were directly interviewed instead of using questionnaire as our FGD revealed that interview would be more effective than questionnaire. Most of the foreigners were totally unaware of the domestic airlines industry of Nepal.

• Top of the Mind Flight:

We asked the people about which was the first name that comes to their mind when talking about domestic airlines and this was their top of the mind Flight. Their responses were as follows:

Name of Flight No. of people

Buddha Air 43

Yeti Airlines 8

Agni Air 2

Others 7

From the above chart it can be seen that Buddha Air was the Top of the Mind flight for most of the people i.e. approx. 72% (43 people). After Buddha Air came Yeti Air with approx. 13% (8 people). People also took other names like Necon Air and Cosmic Air. This data reveals that Buddha Air brand image has been strongly positioned.

Buying Behavior:

• The airlines that the respondents were travelling from on that particular day:

Name of Flight No. of people

Buddha Air 32

Yeti Airlines 17

Agni Air 4

Others 7

The maximum people were travelling by Buddha Air and then followed by Yeti Air. This fact shows that even if people wanted to fly through Buddha there were various reason due to which they were not able to fly with Buddha.

• Who bought the ticket for the respondent?

It will be useful to study about who generally buys the ticket to specify the right category of people who the airlines industry have to influence such that they can promote travelling through their particular airlines. It was found that almost 73% (44 people) of the tickets were booked by a male member of the family.

• Where did the respondent buy the ticket?

There are only two options for the people to buy domestic tickets i.e. through the travel agents or from the airlines office itself.

Name of Flight No. of people

Travel Agent 38

Office 22

It was found that 63% (38 people) of the people buy their tickets from travel agents and thus, the incentive for the travel agents to sell Buddha Air tickets should be enhanced. This highlights the role of travel agent in the sales of the tickets.

• Is the ticket discounted?

Answer No. of people

Yes 6

No 54

From the survey it was found that even within the six people who received discounted ticket 4 got the ticket based on their relationship with the travel agent. This shows that the travel agents are using the discount schemes for their personal benefit rather than enhancing the brand of the company.

• How did the respondent buy the ticket?

We asked the respondents as to whether they specify the name of the flight, the time of travel or just take the travel agents advice when booking domestic air tickets. Their responses were as follows:

How No. of People

Specify Name 17

Specify Time 33

Travel Agent's Advice 10

It was found that most of the people first preferred a perfect time of flight whichever flight it might be. Even among the people who considered time 24 were business class and 9 were from household. Among the people who considered Specified company name, 7 were from business class and 11 were from household. Similarly, 4 business class and 5 household people followed the advice of travel agents.

• When did the respondents buy the ticket?

To find out how many days prior to the flying day do people generally buy the ticket we asked the respondents about how many days back they had bought that ticket. Their responses were as follows:

No. of days before which tickets were booked No. of people

(< one week) 35

(> one week) 25

Business Class Household

(< one week) 27 (< one week) 9

(> one week) 8 (> one week) 16

Thus, it was found that most of the people bought the tickets less than one week before the flying day and further, most people here were businessmen. This shows that businessmen generally bought tickets right before their flying day whereas household people generally bought their tickets more than a week before.

• Do passengers look for addition in-flight services?

In-flight services are an important factor for the favorability towards any flight. When asked about the in-flight services of the Domestic Airlines most people were happy with what was being provided by the airlines.

Need in-flight services No. of People

Yes 26

No 34

It was also found that most people who said that they were not happy with the present services appreciated food to be served in flight, and some also said that there should be provisions for old/young care as shown below:

What services No. of People

Food 18

Old / young care 8

Mileage Card:

• Do the respondents have mileage cards?

Answer No. of people

Yes 31

No 29

Out of the people who have the mileage card we checked the category of people who owned the cards as follows:

Category No. of people

Business 24

Leisure 7

Thus it can be seen that businessmen generally get the mileage card and thus, the mileage card services can be used to influence more of businessmen. It was also found that 100% of the people who own the mileage card also use the card for its various services.

• What services of the mileage card were used by the respondents?

To find out those services which are actually value to the customers, the respondents were asked on which services they have actually used. Here, only two options were selected by the respondents i.e. for mileage points and discounts in the hotels. Thus, to enhance the value provided by the mileage card, these two factors are the key to the preference of the mileage card.

The survey revealed that all the mileage card holder used cards for gaining mileage points whereas only 8 respondents used the card for dual benefit ( mileage point, discounts in hotel and restaurants)

Again, among the people who used the discounts in hotels, their category of travel was classified as follows:

Category No. of people

Business 6

leisure 2

Thus, it can be seen that mostly business people use the mileage card for hotel discounts so the alliances should be made with business hotels of the country.

• Yeti air vs. Buddha air

Mileage Card

Both Only Yeti Only Buddha

8 14 9

From the survey, 14 people had the benefit cards of Yeti, 9 people had the benefit cards of Buddha followed by 8 peole having beneit cards of both the airlines. Further to analyze the effectiveness of Buddha Air cards, 8 respondents were asked to rate their benefit cards. We found out that 63% (5 people) preferred Yeti Airlines benefit card compared to 37% (3 people) preferred Buddha Air.

Benefit Card Analysis Buddha Vs Yeti

Reward Points

Sector Yeti Airlines Buddha Air

KTM-SIF 960 960

KTM-BHR 1160 1160

KTM-JKR 1400 1400

KTM-PKR 1500 1500

KTM-BHW 2000 2000

KTM-BIR 2400 2400

KTM-BDP 2500 2500

KTM-KEP 3700 3700

KTM-MTN 4000 4000

KTM-DHI 6000 6000

The above table reveals that the benefit points extended by two airlines are not different incase of reward points. Hence, the preferences of the Yeti airlines benefit card is due to other reason rather than the mileage point. Yeti Airlines provides the discount schemes with the hotels such as Ambassador Hotel, Club Himalaya, Radisson Hotel, Soaltee Crown Plaza suitable for the business clients unlike the alliances of Buddha Air. Hence it shows that Buddha Air is back in the line in case of the alliances with the hotels but not the reward points it extends.

• Have the respondents seen the promotions of any flight:

No. of people

Yes 25

No 35

This shows that most people have not seen the promotions of airlines. Thus, the promotional efforts have not been efficient.

• Which media is effective to promote airlines?

From the survey it was found that print media was the most favored followed by audio and video.

Media No. of people

Print 43

Audio 5

Video 12

• Do the respondents get influenced by the promotions if they see them:

It was found that almost 90% people said that promotions would make a difference in their opinion. The information communicated by promotions would help form an opinion in their minds.

• Which airlines promotion have you noticed the most:

Companies No. of Respondents

Only Yeti 3

Only Buddha 2

Only Agni 0

Yeti & Buddha 16

All three 4

From the above table we can see that the promotion conducted by Yeti airlines has been noticed the most compared to the other airlines. To verify this we went through the print media ( Kantipur, Kathmandu Post, Himalayan Times, Boss, ECS, New Business Age, Nepal & Himal) for various month starting from June 2010 to August 2010. The total number of ads for Yeti Airlines was 22; for Buddha was 12 and 2 ads were shown for Agni Air. The ads also revealed that Yeti airlines used English advertisement even in Nepali magazines and newspaper whereas Buddha and Agni Air used Nepali languages for Nepali newspapers and magazines.

• Which airlines promotion you found most effective?

Companies No. of Respondents

Yeti 15

Buddha 10

Agni 0

From the respondents we found that yeti airlines were persuasive and effective compared to the other airlines. Even the taglines used by Yeti Air &quot;We fly, With you&quot; and their social awareness concept such of &quot;Go Green&quot; was more effective. Furthermore, through our analysis and discussion with the company representative of Buddha revealed that advertisement was initiated only when they had to inform customers about the new airlines, new destination and added service. In addition Yeti Airlines along with the above mentioned factor also initiated advertisement to enhance its brand.

• Buddha Air has not had any accidents for 13 years. Does this information help you form a positive opinion about the Buddha Air?

80% (48 people) of the respondent agreed that this particular information would help them form a positive opinion about Buddha Air. But only 55% (33 people) of the people knew about this fact. Hence, Buddha Air should be more proactive in its communication and promotion strategy to raise the level of awareness of this key information to increase its market share.

• Showing the respondents photos of domestic air lines without their trademarks and colors.

75% (45 people) of the people recognized the logo of Buddha Air because they related Buddha with peace and dove being the sign of peace. This further signifies the strong level of resonance customer have with Buddha Air.

Findings from Travel agent:

The interview with the travel agents led us to some facts:

60% of customers prefer low cost airlines and 40% specified name of the airlines. Most of the people who specified name chose Buddha Air.

Travel agent looked for incentives, credit facility from any airlines in order to sell the tickets of those airlines. Travel agents also made sure that the pilot associated with the airlines are skillful, experienced and well trained.

• Ranking airlines in terms of safety, comfort, service, time, promotion, fare and schemes.

In case of Time Rating

Buddha Air 3.8

Yeti Airlines 3.6

Agni Air 3.3

In case of Safety Rating

Buddha Air 4.8

Yeti Airlines 4

Agni Air 1.6

In case of Fare Rating

Buddha Air 2.7

Yeti Airlines 3.65

Agni Air 3.9

In case of Service Rating

Buddha Air 3.5

Yeti Airlines 4.2

Agni Air 3.8

In case of Schemes Rating

Buddha Air 4.1

Yeti Airlines 4.3

Agni Air 3.5

In case of Comfort Rating

Buddha Air 4

Yeti Airlines 3.7

Agni Air 3.7

In case of Promotion Rating

Buddha Air 4.2

Yeti Airlines 4.4

Agni Air 3

(Rating scale from 1 -5, where 1 indicated leased preferred and 5 being most preferred)

For Safety, Comfort and Time Buddha Air enjoyed the top rank in comparison to other two competing airlines. Whereas for Schemes and Promotion Buddha was behind Yeti Airlines and for Service and Fare Buddha was ranked at the bottom among three. 

4. Factor Determining the Brand Strength of Buddha Air

Hypothesis

Ho: Brand Image of Buddha air is not determined by Safety, Scheme, Service, Comfort, Pricing/Fare, Promotion and Time/Schedule.

H1: Brand Image of Buddha air is determined by Safety, Service, Comfort, Pricing/Fare, Promotion and Time/Schedule.

Where Ho: µ ≤ 2.5

Analysis and Finding

We have analyzed the data collected through uses of t-test (0.05), Mean and Correlation.

Test on hypothesis by t-test

Variable Sample Mean Calculated Value Degree of freedom Tabulated t value Remarks on Ho

Safety 4.8 31.525 59 1.2 Reject

Service 3.5 14.457 59 1.2 Reject

Comfort 4.0 33.351 59 1.2 Reject

Pricing/Fare 2.7 16.677 59 1.2 Reject

Promotion 4.2 33.087 59 1.2 Reject

Schemes 4.1 32.06 59 1.2 Reject

Time /Schedule 3.8 31.078 59 1.2 Reject

Brand Image 4.1 19.277 59 1.2 Reject

The mean of Brand Image of Buddha Air is around 4, which signifies the strength of Buddha's brand image. Through our FGD we found that the Brand Imaged is depended of factors such as Safety, Service, Comfort, Pricing/Fare, Promotion and Time/Schedule. Through the average mean that we have calculated we can see that all these factors have impact on the Brand, as the Ho is rejected hence the H1 is accepted. Furthermore safety is highly valued be the customer as it has the highest mean i.e. 4.8. All this signifies that if Buddha Air wants to further strengthen its brand then Buddha should take steps towards maintaining their safety records and make sure that its record of safety is effectively conveyed to its consumers.

Correlation Analysis

Through the correlation analysis it was found out that two factor Safety and Comfort were significantly correlated at the significance level 0.05. Correlation between Safety and Brand was at 0.415 whereas correlation between Comfort and Comfort was 0.336. Both of them signify that Brand of Buddha Air can be improved by maintaining their safety records and effectively conveying this record to its consumers and through providing high class of service.

Even within Safety and Comfort we can see that the level of correlation in Safety is higher than Comfort. Which signifies that brand of Buddha is more dependent on Safety than on Comfort.

Correlation Table

Safety Comfort

Brand Image 0.415 0.336

Regression Analysis

Through the regression analysis the Beta coefficient of Safety was found to be 0.358. From this we can relay that if we Buddha want to strengthen its brand image by 1 unit then the Safety should be increased by 2.79 units (1/0.358). This supports the analysis conducted through the correlation analysis.

Safety

Brand Image 0.358 (Beta)

Recommendations

5.1 Recommendation Based on Analysis

Promotions

• The promotions of Buddha Air should be done outside the International Airport by placing Hoarding Boards because the tourists who come to Nepal can be notified about the quality of Buddha air flights. Since most of the tourists also travel to other domestic locations it will be beneficial to attract them.

• Hoarding boards should also be placed at the domestic waiting lounge so that the people who are regular travelers can be notified about Buddha air.

• Buddha air should continue advertising in the print media but they should also come up with a video ad because they also have a strong impact on people.

• In the advertisements, Buddha air should promote the fact that they have not had any accidents for 13 years because that information makes the difference in people's opinion about the flight.

Buying behavior:

• It is found that generally the male members of the family buy the air tickets. Thus, the advertisements should be designed in a way that they influence the male population.

• It is also found that most people buy tickets from the travel agents. Thus, the incentive of the travel agents should be enhanced so that they push Buddha air tickets.

• In the print ads, it is found that only the contact information of Buddha air office is given. They should also include the contact information of their authorized travel agents so that they have a bigger incentive to sell the tickets.

• To increase the occupancy rate which is currently around 85%, Buddha Air should offer schemes that if a consumer buys ticket one week before the travelling date from the Buddha Air office itself will get a discounted ticket. This will even decrease the manipulation that takes place in the travel agency of providing discounted tickets only to their relatives.

Mileage card:

• Since mileage cards are mostly used by business men the services should be matched to the needs of the business men.

• Comparing the services of Yeti Air and Buddha air, it is found that Yeti Air has alliances with most of the 5 star hotels of Nepal whereas Buddha air has only a few. This may be one reason that yeti air mileage card is more successful. Thus, Buddha Air should try to make alliances with more 5 star hotels.

Services:

• In case of long route flights, Buddha Air should serve tea/ coffee and snacks to the passengers.

• If the flight is delayed over an hour, then Buddha Air should provide refreshments to the passengers to make up for the inconvenience caused by the delay.

5.2 General Recommendation

In addition to the above mentioned recommendation:

• We would like to recommend Buddha Air to paint its airplanes with the Visit Nepal Tourism Year 2011 logo as its secondary associations to enhance its brand.

• The number of tourists planning to visit Nepal has been increasing and is highest in the peak season. But the airline companies of Nepal are not in position to cater the needs of the increasing tourists mainly due to the lack of routes. Therefore, Buddha Air is recommended to make alliance with Indian Airlines so that the tourists are brought till Delhi by means of the alliance airline company and brought to Nepal via Buddha Air.

• We recommend that Buddha Air to increase its brand awareness and build a strong position in the consumer mindset should place its booth inside the waiting hall.

• Buddha Air should arrange refreshment such as newspaper, magazines, vending machine that would provide tea, coffee, and cold drink in case of delay in flights over an hour.

• If Buddha wants to further expand itself domestically with its present fleet of airlines it may not be possible. So, we would recommend Buddha to add on newer aircrafts which could even travel to stall routes and shorter runways. Here, Buddha to extend its brand further can used the multi branding strategy which has already been followed by Yeti Airlines by introduction of Tara Air.

• The magazine published by Buddha Air i.e. Yatra should be published in Nepali language as well.

• Lastly, Buddha Air should make the customer service form available both in Nepali and English languages so that it can be understood by the Nepalese mass and distribute it during the flight time.

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