An

Project Report
On
An effect of Consumer Buying Behaviour from
Demonetization in Airlines Industry
Research Methodology-II
Submitted to: Prof. Dhruv Brahmbhatt
Submitted by:
1. Kashish Shah- P1643
2. Mansi Shah- P1644
3. Parth Shah-P1645
4. Ravi Shah-P1646
5. Rutul Shah-P1647
Submission Date:

N.R. Institute of Business Management

(PGDM Programme)

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Acknowledgement:
We take this opportunity to express our profound gratitude and deep regards to
our mentor- Prof. Dhruv Brahmbhatt for his exemplary guidance, monitoring
and constant encouragement throughout the course of this project. The
blessings, help and guidance given by him time to time shall carry us a long
way in the journey of life on which we are about to embark.
We also take this opportunity to express a deep sense of gratitude to N.R.
Institute of Business Management for giving us this opportunity to do this
project and providing us with the information and guidance, which helped us in
completing this task through various stages.
Lastly, we thank our group members and friends for their constant
encouragement and help without which this project would not be possible.

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Introduction of Indian Airline Industry:

Aviation in India refers to the aviation industry of India. It can broadly be
divided into military and civil aviation. According to the International Air
Transport Association (IATA), India is the fastest-growing aviation market.
Bangalore is the aviation manufacturing hub in India and constitutes of about
65% of the share of manufacturing.
Indias civil aviation industry is on a high-growth trajectory. India aims to
become the third-largest aviation market by 2020 and the largest by 2030.
The Civil Aviation industry has ushered in a new era of expansion, driven by
factors such as low-cost carriers (LCCs), modern airports, Foreign Direct
Investment (FDI) in domestic airlines, advanced information technology (IT)
interventions and growing emphasis on regional connectivity. India is the ninthlargest civil aviation market in the world, with a market size of around US$ 16
billion. India is expected to become the third largest aviation market by 2020.
During January-August 2016, domestic air passenger traffic rose 23.14 per cent
to 64.47 million from 52.36 million during the same period in 2015. Passenger
traffic during FY 2015-16 increased at a rate of 21.3 per cent to 85.57 million
from 70.54 million in the FY 2014-15.
In July 2016, total aircraft movements at all Indian airports stood at 168,400,
which was 14.3 per cent higher than July 2015. International aircraft
movements increased by 8.2 per cent to 32,830 in July 2016 from 30,330 in July
2015. Domestic aircraft movements increased by 15.8 per cent to 135,570 in
July 2016 from 117,050 in July 2015.
Indian domestic air traffic is expected to cross 100 million passengers by
FY2017, compared to 81 million passengers in 2015, as per Centre for Asia
Pacific Aviation (CAPA).
India is among the five fastest-growing aviation markets globally with 275
million new passengers. The airlines operating in India are projected to record a
collective operating profit of Rs 8,100 crore (US$ 1.29 billion) in fiscal year
2016, according to Crisil Ltd.

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Introduction of Demonetization in India:

On 8 November 2016, the Government of India announced

the demonetization of all 500 (US$7.40) and 1,000 (US$15) banknotes of
the Mahatma Gandhi Series on the recommendation of the Reserve Bank of
India (RBI). The government claimed that the action would curtail the shadow
economy and crack down on the use of illicit and counterfeit cash to fund illegal
activity and terrorism. The sudden nature of the announcementand the
prolonged cash shortages in the weeks that followedcreated significant
disruption throughout the economy, threatening economic output. The move
was heavily criticized as poorly planned and unfair, and was met with protests,
litigation, and strikes.
Prime Minister of India Narendra Modi announced the demonetization in an
unscheduled live televised address at 20:00 Indian Standard Time (IST) on 8
November. In the announcement, Modi declared that use of all 500 and 1,000
banknotes of the Mahatma Gandhi Series would be invalid past midnight, and
announced the issuance of new 500 and 2,000 banknotes of the Mahatma
Gandhi New Series in exchange for the old banknotes.

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 Impacts of Demonetization in India:

1) Black Money:
Black money stored in the form of Rs 500 and Rs 1000 notes will be
taken out of our system. As predicted by ICICI Securities Primary
Dealership the government's plan to scrap 500 and 1,000 notes will
uncover up to 4.6 lakh crore in black money.
2) Terror Funding:
Fake Indian Currency Notes (FICN) network will be dismantled by the
demonetization measures. Taking out 500 and 1000 rupee notes out of
circulation will have a lasting impact on the syndicates producing FICN's,
thus affecting the funding of terror networks in Jammu and Kashmir,
North-eastern states and Naxalite hit states.
3) Real estate may see significant course correction:
The demonetization decision is expected to have far reaching effects on
real estate. Resale transactions in the real estate sector often have a
significant cash component as it reduces incidence of capital gains tax.
Black money was responsible for sharp appreciation of properties in
metros; real estate prices may now see a sharp drop.

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4) Political parties in crisis ahead of polls:

With nearly five state elections in 2017, demonetization has stunned
political parties. Especially, in large states like Punjab and Uttar Pradesh,
cash donations are a huge part of "election management. In one stroke,
big parties will find themselves hamstrung as cash hoards are often
undeclared money. Parties will have to completely rejig campaign
strategies in light of expected cash crunch.
5) Moving towards digital payments:

Demonetization will likely result in people adopting virtual wallets such

as Paytm, Ola Money etc. This behavioral change could be a game
changer for India.

Demonetization effect on airline industry:

Demonetization impacts aviation sector, flight ticket sales dip 10% It is
primarily domestic ticketing that is hit as international travel plans are firmed up
way ahead in advance.
To cope with reduction in airline bookings after the government's recent
decision to demonetize higher denomination currency notes, several domestic
passenger carriers have announced special discounted fares.
According to Sharat Dhall, Chief Operating Officer (B2C) of Yatra.com,
Airlines have reported a short term drop in ticket sales post the demonetization
announced by the government last week, and this could be an attempt to
catalyse demand and bring travelers back to the market."
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Low cost carrier (LCC) AirAsia India announced -- "end-of-year Big Sale" from
November 14-20 for its domestic, as well as, international network.
According to the LCC, passengers will be able to explore domestic destinations
with fares starting as low as Rs 999 and international destinations from Rs 3,399
for the travel period May 1, 2017, to February 6, 2018.
As per Manmeet Ahluwalia, Marketing Head, Expedia in India, the sale will help
airline passengers book their travel last minute for this winter, new year as well
as help those planning their vacation for next summer.

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Literature Review:
According to Kotler and Keller (2012), It is worth noting that consumer buying
behavior is studied as a part of the marketing and its main objective it to learn
the way how the individuals, groups or organizations choose, buy use and
dispose the goods and the factors such as their previous experience, taste, price
and branding on which the consumers base their purchasing decisions.
According to Deutsche Bank (2016), Demonetization will impact on auto,
steel, real estate and non-banking companies but PSU banks will gain the most
as liquidity will increase through deposits.
According to Rohit Poddar, MD, Poddar Housing and Development, this
segment could face a big impact in terms of pricing. A large cash component is
the norm in the luxury housing segment, as many buyers insist on using
cash. But with the government clampdown, sales in this segment are likely to
dip, leading to price cuts. Some developers have already slashed prices.

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According to SpiceJet spokesman Ajay Jasra, Overall airline industry sales are
down by up to 10%. Small agents used to have customers paying in cash and
that channel is impacted. Airport counter sales are also back to normal after
tickets sold there in exchange for high denomination notes were made noncancellable and non-refundable.
According to Yatra president Sharat Dhall, In the first day or two after
demonetization, bookings were down. Now things are again picking up. Slowly
everyone will have to come online and the online business will grow.

Bibliography:
http://www.ibef.org/industry/indian-aviation.aspx
http://economictimes.indiatimes.com/markets/stocks/news/demonetisation-andits-side-effects/articleshow/55678393.cms
http://www.moneycontrol.com/news/business/check-out-how-demonetisationimpacts-various-sectors_7990101.html
http://economictimes.indiatimes.com/industry/transportation/airlines-/aviation/demonetisation-takes-on-aviation-sector-flight-ticket-sales-dip10/articleshow/55429507.cms
http://economictimes.indiatimes.com/wealth/real-estate/why-property-is-likelyto-be-cheaper-after-demonetisation/articleshow/55511521.cms
http://www.dnaindia.com/money/report-demonetization-effect-govt-extendsparking-fee-waiver-at-airports-till-november-28-2275993

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