As the air gets turbulent

These may be the three most dynamic sectors in the Indian economy as they seem to flood the news every day- retail and ecommerce websites, mobile telephony and airlines. Each day there is either the rise or fall of a new marketing tactic and sales promotions to drive revenues. I already tried to establish a symbiotic relation all the three are having where mobiles and telephone networks are driving people to the internet, online retail is building the aspiration for products and airlines are making overnight deliveries and satisfaction a possibility. In the last few weeks, the skies have turned murky and the airline industry is likely to face turbulent air. 

Spice Jet was showing signs of running on low cash reserves for a long time. In fact when they launched some astonishing discounts for flight bookings beyond six months from the day of flying; I sensed they were trying to stay afloat by selling a future beyond their reach. And so it happened one day that almost 1800 flights of December were grounded and fuel was now on cash and carry. As for the passengers, well you invested too far ahead on promises to fly on a carrier whose daily operating loss even while flying was in excess of 3 Cr.

This won’t be the first time this is happening with Spice Jet which saw a similar fate in its earlier avatar of ModiLuft, which ironically had also ran out of funds. So from a full service carrier that started off in 1993, Spice Jet turned into a Low Cost Carrier in 2004. Ina typical LCC style, Spice Jet always had its parking slots away from the terminal gates with flights at wee houses in the morning or late night and the buy off the cart catering service. A positive which I definitely noted was the aircrafts were always clean, young by age and more often than not; on time as well.

So how does the 2^nd largest LCC and one of the longest serving airline enter the whirl of failures? In my opinion, almost every airline in India has been suffering similar losses in a mad rush to woo customers by bare minimum fares and discounts which in most cases barely seem to cover fuel and airport charges. Spice Jet in its initial years was fighting Air Deccan on a price war of Rs 99 tickets (which after the taxes and surcharges used to come up to Rs 2300), but as far as buyer psychology was concerned, it scored heavy. All flights going full was a record that Spice Jet had in its initial years. The leadership was maintained until Indigo burst out on the scene and its offering of low cost and timely arrivals and departure made a big dent on the markets.

I had a sniff at the possible financial position last year when tickets at a cheap rate and more than 6 months beyond the flight date were being sold; a clear indication that cash flows were fast eroding and survival games have begun. The last reports have now indicated a possible government intervention to boost the airline off its blocks again. But lack of financial profitability has been the truth even with Jet Airways; which after the collapse of Kingfisher is rebuilding itself as a full service carrier and earn back its customers from the LCC’s. Adding to the mix is Air Asia’s entry into the LCC market, but its limited destinations at present makes its market position tough to decide. It now remains to see how the much awaited Vistara which is scheduled to fly from the next month will perform and affect the market.

A matter of debate may be, but one thing is happening for sure; the Indian skies are seeing turbulence and it might be only the financially fittest and consumer selected one’s which will survive the wind fall which is likely over the next few months. 

No more Chicken 'n Egg: the rise of mass consumerism in India

It is not s scenario uncommon in India. We don't buy  fancy cars coz the roads are not the ones meant for them. Brands don't want shops in malls with no footfalls and we can't buy brands in our small towns. Some parts of the country have no flights or very few one's with expensive tickets, so we don't prefer to travel. We all might have had these thoughts and the solution we bring in is: Let's do it after someone else improves things for us. But I guess this cycle of 'someone else' has been broken by some sectors. 

There are possibly three things currently in India that rank high in terms of share of voice in news media- e-commerce, mobile handset devices and airlines. While their individual contributions towards boosting the Indian economy might be an interesting point of study; what they are doing in a big way is improving of accessibility of products and services to the far corners of India.

Some definite trends which are emerging though is a rise in mass consumerism across, larger spread in terms of variety and market penetration for businesses which ally with either of these three. What make it further interesting is the fact that e-commerce, mobile devices and airlines are somewhat related symbiotically in each other’s growth.

The airline industry is actually not at its peak; but there definitely frantic activity in the sector over the last 3 months. The first was the fact that Air Asia started operations in the Indian domestic sector from June. The LCC has certainly caused some waves in the segment where Spice Jet and IndiGo started offering heavy discounts. Some more knee jerk action: Tata-Singapore Airline launch a full service brand Vistara and Jet Airways is looking to dump its low cost Jet Konnect and concentrate on being full service again.

Recent news suggested that Air Asia within its first month incurred a loss of Rs. 26 Cr. within its first 18 days. Though the airline is hopeful it will break even by the year end with more operations on the charts; the plan here is to build more connections. So as of now the score is 1-0 in favour is the Indian competition; but how did this happen? Pretty simple, as against 10 years back, most of the tickets today are booked online through ticketing and travel portals instead of travel agents or directly through airlines. The TG that can fly has made booking portals their choice of purchase point and possibly been the earliest and most popular form of e-commerce so far. In turn, it has increased competition and better connectivity across the country for men and materials to move.

The reason is simple; portals offer a wider choice, have a larger database than any single airline has and it has a larger reach and quicker reaction towards announcing discounted fares. Sure I would have loved to see some numbers here; but take this as an example- large size travel agents like Akbar travels offer online ticketing facility. Want more; I always associated Balmer Laurie as the lubricant and grease company who also were CNF agents at ports- they have started an online ticketing portal. So I guess a safe assumption can be made here- airline ticketing has shifted online as more people are having access to internet.

But what has transformed internet in India has been the faster penetration of mobile phone networks across the country. While the network quality is still debatable, it has eliminated the formidable Indian Postal services to a very high extent. And what has definitely changed the internet access mode to mobile devices is the easy access, availability and affordable mobile handsets. The launch of the Firefox based i-Ball handset at Rs 1999 is pretty remarkable as it will further improve on the smart phone device perpetration in the country. It is not uncommon to see that for a lot of people around, the first phone is a smart phone with an internet enabled connection. 

The penetration of these internet enabled mobile devices is boosting internet led transaction as compared to computers largely due to their affordability. The vast array of apps and services on mobiles is surely the driving force. This aspect is being taken seriously by e-commerce sites with launching apps for online shopping, trading and classifieds. What’s more is the number of special offers and discounts offered by Makemytrip, Flipkart, SnapDeal, Amazon exclusive for customers who use their mobile app. Even on standard product offers, there are additional benefits like next day delivery, zero freight charges and additional discounts over and above the standard pricing. The move is definitely aimed at a greater shift to mobile apps which the sites are seeking.

But another angle of the mobile- e-commerce relation is how the e-retail portals are making full use of the internet capabilities to mutually boost their business. With no requirement for a physical presence, mobile companies are now forming exclusive alliances with e-retail companies and creating a shop-in-shop environment in the virtual space.

The first move was when Flipkart and Motorola launched the Moto-G series exclusively through the portal and with no shop retails. Next, Flipkart associated with Xiaomi in the same way and the lot on sale was pre-booked in 5 minutes. Flipkart now has an exclusive push for budget smart phones; a move I believe is to convert the remaining part of the smart phone transition. Today SnapDeal is going in for a similar arrangement with i-Ball for its phones. In fact, they taking things a step further through an exclusive partnership with Tata Value Homes in selling real estate.

In togetherness, this is how the cycle has broken- Thanks to mobile enabled internet physical presence and distance is no longer a hindrance to access the best products and services from any part of India. Goods can now travel rapidly and to your door step due to better connectivity. And the very phones to enable the access are available through the internet at an affordable price. The biggest beneficiary- the end consumer; the result- mass consumerism across India.