India is currently the ninth largest civil aviation markets in the world. It is projected to be the third largest aviation market by the year 2020. Using Michael Porter's five forces model to the industry, discuss: (ii)

Using Michael Porter's Five Forces Model, the competitive rivalry among current players in the Indian civil aviation market is intense due to several factors: Cut-throat Fares and Price Wars: The airline industry operates in a highly competitive market characterized by aggressive pricing strategies and frequent price wars. Airlines constantly engage in fare reductions and promotional offers to attract and retain customers, leading to lower and lower margins across the industry. Ancillary Services and Customer Luring: Competitors resort to offering a raft of ancillary services (e.g., in-flight entertainment, meal options, baggage allowances) and loyalty programs (frequent flyer miles, exclusive lounges) to differentiate themselves and lure customers. This adds to operational costs while putting pressure on pricing. Multiple Airlines Competing: The presence of numerous domestic and international airlines vying for market share intensifies competition. Each airline strives to outpace others with lucrative offers related to ticket pricing, loyalty programs, and other perks. High Exit Barriers: Existing players face high exit barriers, primarily due to the specialized nature of their assets (aircraft, infrastructure) which have little or no alternative uses. This means airlines are often compelled to continue operating even during periods of low profitability, further intensifying competition as they fight for survival. Focus on Customer Service: Customer service is a key differentiator in the aviation industry. There is intense competition among various players to excel in this aspect. Airlines invest heavily in personnel training (etiquette, punctuality, problem-solving, motivation, team-building) to enhance the customer experience, which is a significant operational cost. Perishable Product (Seats): An unsold seat on a flight represents lost revenue that cannot be recovered. This creates immense pressure on airlines to fill every seat, often leading to last-minute price reductions and aggressive marketing. Slow Industry Growth (at times): While the Indian market is growing, global or regional slowdowns can lead to overcapacity, intensifying the fight for a limited pool of passengers. In conclusion, the Indian civil aviation sector is characterized by fierce competitive rivalry, driven by pricing pressures, service differentiation, high fixed costs, and significant exit barriers.