Not a time for friends!
With rising fuel prices & congestion charges, customer delight may take a back seat...

‘Expect the unexpected’ has become the mantra for the Indian aviation sector in the recent past, and has won them a loyal customer base too. Since the Low Cost Carriers (LCCs) pioneered by Air Deccan began their aerial sojourn, they have revamped the trends in the Indian aviation industry. But with a morose scenario on the profits front, quarter after quarter, critics began to speculate that the LCC revolution seemed to be reaching its terminus, with a wave of consolidation on the cards. And news of Air Deccan selling 26% stake to Kingfisher Airlines for Rs.5.5 billion added fuel to the fire. Well, one may go with the flow and assume that LCCs would soon go down memory lane. So, are we in for a relatively morose scenario for the festive season this year? Nay, say industry insiders, for there are LCCs that seem to know what they are doing, and the sector could well pick up pace. Profi table results for SpiceJet in the quarter ending June 2007 have brought a rare burst of good news for the sector. Moreover, with the behemoths Jet & Kingfisher putting their muscle behind JetLite & Air Deccan respectively, one could expect the ‘no-frills’ festivities to continue.

And all players would want to pitch in, with promotional schemes & greater connectivity. Celebrating the spirit of the season, low cost carrier GoAir has come out with a special offer that permits customers to plan and book their tickets in advance for the season. With tickets priced as low as Rs.225, GoAir sees this festive season starting September as another opportunity after the summer holidays to celebrate with their valued flyers. Air Deccan, on the other hand, has been hiking fares owing to increase in fuel prices, but might in fact throw caution to the wind for the coming period. According to a spokesperson from the company, “Air Deccan has released 1,50,000 tickets at special low fares. These tickets are widely available across all sectors for travel in September this year. We are planning a slew of schemes & special offers, which will encourage our passengers as well as first time fliers...”

SpiceJet is all set to celebrate this fiesta time in its own unique way by extending its connectivity and offering convenience to its patrons, which is typically festival oriented and promising a lot more for its flyers in the coming days. According to Siddhanta Sharma, CEO, SpiceJet Airlines, “During this festive season, we are going to increase our connectivity especially to Kolkata because of the rush during ‘Durga Puja’. There would also be connectivity to places like Port Blair and Southern cities during the season and at the same time we would definitely be coming out with something special near Diwali.”

Amidst all fervour and celebrations, the festival season is an opportunity for travel portals to cash in as well. Arzoo.com, one of India’s well known travel portals inoffered a guaranteed 10% discount on domestic flights of SpiceJet, Indigo, JetLite (erstwhile Sahara) & GoAir on this Raksha Bandhan, along with a 6% discount on international airline bookings to US, Europe & Gulf.

However, if one is expecting a barrage of low fares, there could be reasons to be disappointed, due to a number of factors. Indeed, from the perspective of the overall aviation industry, this festive season from September to December is supposed to be the strongest quarter for the industry to mint the moolah. According to Surbhi Chawla, Aviation Analyst, Angel Trade, “This is the best season in terms of revenues and profitability.” Following the diktat of ‘making hay while the sun shines’; the Indian aviation sector is making optimum use of the current scenario. Adds Surbhi, “There is a rise in demand this season, so these airlines take advantage of the prevailing situation and increase their fares. Promotional campaigns may in off crease but not many would offer discounted tickets.” With the hike in fuel prices and congestion charges, there is a great probability of increment of fares by almost every airline, as they struggle to stay afloat anyhow. Praveen Vetrivel, Aviation Analyst, IBA group affirms, “The promotions are likely to be focused more towards product differentiation and service quality rather than lower fares as the airlines are still trying to move into the black.” In the same regard, leading players like Air Deccan and Jet Airways are bucking the trend, while Kingfisher is still contemplating to increase the prices in the near future. A spokesperson from Kingfisher stated when contacted by B&E, “We don’t have any plans as such for the upcoming festive season this year.” Officials from Jet Airways, were equally reluctant to comment, though JetLite is indeed warming up with a number of route expansions. Air India, which seems quite preoccupied with post-merger issues, also declined to reveal any plans for the festive season. Indeed, there is every indication that the LCC model will continue to be followed, though the customer might sorely miss the ultimate ‘no frill’ bliss in the coming season. Currently, in a bid to successfully ensure maximisation of their top lines and bottom lines, these airlines would be in no mood for customer ‘delight’ as of now, when it is becoming a question of their own survival. So, if you get the impression of a cold shoulder from the industry this season, give them the benefit of doubt for once. They are living in troubled times, after all!

And caution bit the dust...
Retailers could even go beyond their means to gain a large share of your wallet this season

At the turn of the century, few would have even imagined this tsunami hitting Indian shores. But with the likes of Reliance Industries and a plethora of others blazing the track with gargantuan expansion plans, the excitement building up in this sector is truly unparalleled, as the scope for growth is tremendous. Comments Raghu Pillai, Chief Executive & President, Reliance Retail, to B&E, “The retail sector is growing faster than India’s GDP growth rate at around 11%. Organised retail will be around $60 billion in the next five to ten years, which will still be only about 15-20% of the total retail space in the country.” The competition is highly intense on two fronts. In the first phase, the hunt is primarily for quality real estate. And while that battle rages on, the players are simultaneously also keen to ensure that they achieve those elusive sales per square foot figures and stay put on the winning side

“A major part of merchandise, sourcing & supply have already being planned by the designers and this year, the various new formats of retail that have come up are expecting a big turnover,” predicts Gibson G. Vedamani, CEO, Retailers Association of India. And as the festive season draws near, the behemoths of organised retail are in the lurch for footfalls, and are expected to fight tooth & nail with the unorganised players to grab the maximum advantage. Even some of the larger incumbents are on the offensive now, realising that their position is under threat. Pantaloon, for instance, has un unveiled some mega plans for the season. During the period from September to November, they will be rolling out 4 Pantaloon stores in 4 new cities and there will be various discount offers to beckon the consumers. Reasons Mayur Toshniwal, Head Operations (North Zone), Pantaloon Retail India Ltd., “During September- October, we have a growth in turnover by 35-40% and you have to be fully loaded with your merchandise, marketing schemes & other promotional activities.” Understanding quite well that the success mantra for marts & departmental stores lies in ‘emotional marketing’ and ‘window dressing’, the marketing teams from Chairman Kishore Biyani’s other ventures have also swung into action.

Ebony Retail is equally bullish on the prospects, based on past experiences. “We will be coming out for the first time with promotional campaigns exclusively for the festival season and there will be free gift s also as I believe these are a must to attract consumers. Last year, we have seen a jump in turnover by 15% in September to November period and this year also we have targeted 20%,” Lalit Kumar, CEO, Ebony Holdings Ltd. In the same league, Reliance Mart, which has just debuted recently, is busy chalking out some of its own promotional plans. “All our stores will definitely have promotional activities and we will be bringing in more and more brands as well. We will also come out with campaigns for various festivals,” affirms Manu Kapoor, spokesperson for Reliance Retail Ltd.

Eye catching promotional activities to cajole consumers are ubiquitous in every festival. But what makes it exclusive this time is the duel between Reliance Mart & RPG’s Spencer to capture the Diwali & Durga Puja markets in north & north east regions respectively. Professes J. H. Mehta, President, Spencer’s Retail Ltd., rather diplomatically to B&E, “There’ll be loads of promotional activities as it’s our first festival in many parts of the north but it’s not targeted for competition; rather it’s for consumers.” Away from the glamour and sheen of the biggies, there are players like Vishal Mega Mart & Ebony whose pasture is tier I and tier II cities. No wonder Vishal Mega Mart is chalking out massive plans to expand its arms in 5 new places by October. “We will be going to other towns also before Diwali & this is the first time we will also be introducing our own label in cosmetics,” promises Ram Chander Aggarwal, MD, Vishal Retail Ltd.

With ‘in house’ or private labels always having higher margins, they have been golden geese for retailers and Vishal has all reasons to make a maiden entry in private cosmetics. But an exception is Shoppers’ Stop, which will launch its offensive. Comments S. Ranganathan, Chief of Operations, Shoppers’ Stop Ltd, “We will be launching more and more brands and this will be festival specific; the timings will be different for Durga Puja and different for Diwali.” Even before Ganesh Chaturthi, this retailer has a target of unleashing 4 new stores and there will be a fl at 30% discount offer, which will be duplicated for Durga Puja in the city of Kolkata.

With the artillery in place, retailers are ready to fire a volley of special formats of retail stores and this fiesta will see a scuffle between these formats. To make things more interesting, Home Town from Biyani’s stable will be offering special home furnishing and interior decoration services this time. “This will be for the first time that Indian consumers will have such off erings under one umbrella and in the festival market there’s a huge demand for home furnishing & furniture,” feels Mahesh J. Shah, CEO, Home Solutions Retail India Ltd. Diwali is the time when Indian consumers are seen fanatically occupied buying white goods, which the Tatas & Ambanis are banking on. Reasons Ajay Baijal, President, Consumer Durables, Reliance Retail Ltd, “You have to give the widest choice and when consumers will be making more than one purchase during the festival, you need to have all types of electronic goods.” Ratan Tata’s consumer durable retailing venture – Chroma is gung ho with expansion plans and by 2008, the total number of Chroma & Westside stores will be close to a 100. So, customers can indeed rest assured regarding a bonanza of sorts this festive season when they go hunting for bargains, as retailers, big & small, will be looking to squeeze their margins to the hilt during this critically important period, to undermine each other. And the fireworks have just begun!!!