Brand Audit on Buddha Air Submitted by

Submitted by:

Amrita Acharya

Kanta Subedi

Kripa Shakya

Nischal K.C.

Prakash Bhusal

Brand Audit on Buddha Air

MBA, TERM 5

Ace Institute of Management

Acknowledgement

This report has been prepared with the view to accomplish the

brand audit of Buddha Air. This kind of work provides us an

opportunity to have practical experience on collecting,

processing, analyzing information and draw some conclusion on a

particular topic.

First and foremost we would like to express our sincere gratitude

to Mr. Sujan Raja Shrestha for giving us this opportunity to

carry on such a useful project.

Our sincere gratitude goes to all the staffs at Buddha Air office

who helped us in giving the information. Also, we would like to

thank all those who cooperated with us to answer some of our

queries without which the project would be incomplete.

A special thanks goes to passengers of different airlines, who

patiently filled the questionnaire.

Finally, we would like to thank all our friends and other

individuals who had supported us directly and indirectly

throughout the project with their valuable suggestions and

guidance.

Executive Summary

After exercise and survey, we have been able to produce this

audit of one of the best airline of the country, Buddha Air.

Through this report, we got a good opportunity to know how the

airline companies such as Buddha, Yeti, Agni has able to create

itself as a brand and what are the basic elements they are

focusing so as to help in creating a strong brand in the market.

The number of respondents who helped us during this research is

30 who shared their valuable information with us. Some of major

findings from this research are:

Passengers preferred Buddha Air in comparison to other

airlines

Buddha Air is also considered as the safest domestic airline

of the country.

Top of the mind brand recall of Buddha Air is high. This

means that whenever, people think of domestic airline

company, Buddha Air is the first name to come up.

The passengers are not satisfied with the service provided

by Buddha Air.

Buddha Air had various promotional programmes and also

provides sponsorship.

The brand’s future looks promising and has a huge potential in

the Nepalese market. What is left to be seen is how it carefully

handles its customer’s sentiments and requirements in the future.

More innovative ways of marketing and improving their service to

the passengers would surely help it even increase its existing

market share.

Table of Contents

CHAPTER ONE

INTRODUCTION

1.1 History of airline industry in Nepal

The airline industry in Nepal started with Nepal

Airlines (formerly known as Royal Nepal Airlines) which is the

flag carrier of Nepal in July, 1958. Indian Airlines ruled the

Nepalese sky prior to this date .Royal Nepal took over the

international schedules in 1960. In the year 1996, the

services were extended to China and Japan. The international

destinations of Nepal Airlines includes cities in various

countries such as Bangkok, Mumbai, Calcutta, Delhi, Dubai,

Frankfurt, Hong Kong, London, Osaka, Shanghai and Singapore.

1.2 Domestic airline industry in Nepal

There are more than 10 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.

The following is the list of domestic airlines operating in

Nepal:

Air Dynasty

Agni Air

http://en.wikipedia.org/wiki/Nepal

Buddha Air

Fishtail Air

Guna Air

Manang Air

Nepal Airlines

Shangri-la Air

Shree Airline

Simrik Airline

Sita Airlines

Tara Air

Yeti Airlines

1.3 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.

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 is 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

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.

1.4 Introduction to company

Buddha Air Pvt. Ltd is a privately operated air travel company

founded on 23 April 1996 and registered as a private limited

company at the Company Registrar Office of the Ministry of

Industry, Government of Nepal, under the Company Act, 2021 BS of

Nepal. The company headquarter is located at Jawalakhel, Lalitpur

while there are two city sales offices in the most convenient

locations within the Kathmandu Valley.

After 12 years of dedicated non-stop service, more than 100,000

flight hours logged in with over 3 million passengers flown to

nine destinations with permanent runways in the country, Buddha

Air today is the largest domestic air travel operator in Nepal

employing more than 500 experienced professionals. The company

has the largest fleet of the world’s best aircrafts amongst all

domestic airliners in operation with four 18 seat Beechcraft-1900

D, three 47 seat ATR-42 and one 72 seat ATR 72-500 flying out to

all the trunk routes with a minimum of 1200 m of permanent

runway. It is the company’s policy to place safety at the highest

priority.

Buddha Air’s safety record and reliability has earned us a host

of awards including the Highest Safety Award given by the

Ministry of Tourism and Civil Aviation of the Government of Nepal

as well as a list of the most esteemed clientele in Nepal

including most United Nations organizations, all major diplomatic

missions, international non government organizations as well as

national level organizations.

Buddha Air prides itself in maintaining an absolutely clean and

transparent financial accounting which is one of the reasons why

the company has gained the trust of some of Nepal’s major banks

as well as international institutions like the International

Finance Corporation/World Bank (IFC/WB), General Insurance of

India. Starting with an authorized capital of NRS 70 million the

company cleared its loan of NRS 71 million within 6 years of

establishment. On 27 September 2004, the Ministry of Culture,

Tourism, and Civil Aviation honored Buddha Air for being the

first among private sector airlines in foreign exchange earnings

during the fiscal year 060/061. The company’s good governance

practices earned the confidence of the International Finance

Corporation/World Bank who provided a loan of USD 10 million for

the purchase of the latest addition in Buddha Air’s fleet, the

ATR 42.

Buddha Air places great emphasis on safety and as well as

operating new modern equipment , each aircraft is fully equipped

with navigational aid equipment and flights are only operated in

airports with asphalt runway of not less than 4000 feet length.

The maintenance and engineering department has a fully trained

work force including 45 cockpit crew, 5 flight operation

officers, 18 qualified engineers and 31 technicians. We maintain

an inventory of aircraft and engine spares replacing any part

that doesn’t pass our tests regardless of whether it is new or

old with absolutely new parts. Buddha Air has also successfully

completed a Cooperative Development of Operational Safety and

Continuing Airworthiness Project – South Asia audit as a an

ardent follower of the manufacturers and industry standard in the

performance of our flight operations maintenance and safety &

procedures. Buddha Air has renewed its aviation insurance for the

12th consecutive year with zero claims, something no other

airliner in Nepal has done.

CHAPTER TWO

COMPETITORS ANALYSIS2.1 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.

2.2 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.

CHAPTER THREE

RESEARCH METHODOLOGY

We conducted both qualitative and quantitative research and we

used inferential analysis statistical tool to analyze the

results.

We went to the head office of Buddha Air at Jawalakhel, Lalitpur

and conducted the informal focus group discussion with the staffs

at the Buddha Air to get information

Then, we went to Tribhuwan International Airport in domestic

flight sector to fill the questionnaires. We chose 30 samples for

the survey regarding the brand audit of the Buddha Air.

CHAPTER FOUR

FINDINGS AND DISCUSSIONS

4.1 Findings of Focused Group Discussion (FGD)

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 30 minutes.

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.

4.2 Brand Associations of Buddha Air

• 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 & quotes. As flight safety is our top

priority, pilots and engineers are frequently sent abroad for

refresher training& quotes;

• 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.

4.3 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(1 accident recently)

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.

4.4 Brand Image

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:

Brand Recall

AirlinesNo of

RespondentsPercentage

Buddha 21 70%Yeti 4 13%Agni 2 7%Others 3 10%Total 30 100%

4.5 Buddha Air Leveraging Primary Brand Knowledge to Build its

Brand Equity

The criteria that we selected for evaluating the domestics

airlines are time, safety, fare, service, comfort and Promotions.

Time:

Out of total 30 respondents, 37% responded with Buddha Air; 33%

responded with Yeti and 30% responded with Agni in terms of

timely flight. Thus, Buddha Air’s flights are on time.

Safety:



safety. Thus, the safer airlines was Buddha.

Fare:



ticket price. Thus, Buddha Air was perceived relatively

satisfactory in comparison to other airlines.

Service:



service. Thus, the passengers were not satisfied with the service

provided by Buddha Air.

Comfort:



comfort. Thus, respondents considered Buddha Air as comfortable

airlines.

Promotion:



promotion. Thus, passengers found both Buddha and Yeti Air as

visible airlines in terms of promotion.

4.6 Promotional programmes:

More specifically, promotion is the element in an organization’s

marketing mix that serves to inform, persuade, and remind the

market of a product and or the organization selling it, in hopes

of influencing the recipient’s feelings, belief, or behavior. The

other forms of marketing mix activities of product planning,

pricing, and distributing are performed mainly within a business

or between a business and the members of its distribution

channels. However, through its promotional activities, a firm

communicates directly with potential customers. Promotion serves

three essential roles –it informs, persuades, and reminds

prospective customers about a company and its projects. The most

useful product or service will be a failure if no one knows it is

available.

Promotional strategies are mainly handled by the marketing

department of an organization. As part of the function, marketing

department designs promotional programs on the basis of allocated

budget for the fiscal year. It comprises of personal selling,

advertising, sales promotion, public relations and publicity.

Today there is so much competition around the local market and

international market that has forced companies to adopt efficient

and effective promotional strategies. Because of massive

competition, the product and services are similar and

homogeneous. So, with the help of promotional activities, the

consumers can be attracted resulting high volume of sales.

Buddha Air started its operations with just one brand new Beech

1900D aircraft worth US$ 5 million since October 1997. At present

it is operating with four brand new Beech 1900Dsand two

Beech1900C. In a market where other airlines are operating

aircraft 10 years or older aircraft, Buddha airline is the only

domestic airlines to operate brand new pressurized aircraft. It

has been operating service in ten different sectors in the

country.

Buddha airline has established its own Airline Management

Information System. It is the first company in Nepal to go

paperless and totally into computer software system. This has

provided a major edge regarding prompt decision making.

Buddha airline is named as marketing company. It applies both

push and pulls strategy. For the promotion of the company, it

participates and works jointly with the world class travel agency

of the country and outside the country. It helps foreigner to get

the opportunities to know about the BA and thus it is able to

attract such customer. BA does not believe in short term

promotion thus it has not such any promotional campaign. It

advertises about its service in various Medias like newspapers,

journals and through its own broachers. More over for promotion

it gives the information about mountain flight in various

languages like English, Francis, Espanol, Deutsch, Italia no,

Japanese and Thai so that people from different country can

easily understand. The most effective promotional campaign of the

company is Royal club.

Royal club is the frequent flyer program of Buddha air and

totally free. The program rewards passengers with mileage points

every time they fly BA. The more they fly the more miles they

will accumulate. Once they gather enough miles they will be

promoted to Platinum status where they have the option of many

benefits, they can fly free to qualifying destination, even go on

holidays to exclusive resorts and Hotels, or even go for

shopping.

In India:

Budhha air participated in a three-day Border Promotion Sales

Mission in India organised by Nepal

Tourism Board in Lucknow on 10 May, in Kanpur on 11 May and in

Varanasi on 13 May. Travel partners and journalists attended the

program. The events were covered by most of the newpapers. From

Buddha Air, Uddav Subedi, Lucknow Station and Bibash Thapa,

Officer-Marketing, represented the airline in the events. During

the events, the travel partners in these three cities were keen

to promote Nepal as a tourist destination.Buddha Air is planning

to operate direct flights between Kathmandu and Varanasi in the

near future. Hence the airline disseminated information regarding

the operations among the travel partners and journalists.

Partnership between the Alliance Française in Kathmandu and

Buddha Air

On the last April 24 has been signed a sponsorship between Buddha

Air and the Alliance Française in Kathmandu, by Mr. Birendra

Basnet, General Manager of Buddha Air, and Mr. Keshav Raj Jha,

President of the Alliance Française, in the presence of His

Excellency Gilles-Henri Garault, French Ambassador to Nepal.

This sponsorship is mainly about an annual financial support of

Buddha Air to the Alliance, which gives in return its image and

notoriety for the promotion of the company towards French and

French speaking networks of Nepal.

4.7 CBBE MODEL

4.8 Buddha Air Leveraging Secondary Brand Knowledge to Build its

Brand Equity

Secondary associations of Buddha Air are as follows:

Channels of distribution

Selling Buddha Air tickets through large and established

travel agents has added on to the image of Buddha air

Company of aircrafts

Beechcraft 1900D manufactured by Raytheon Aircraft (now

Hawker Beechcraft), and ATR 42 and ATR 72-500 manufactured

by Alenia Aeronotica (France)

Corporate Sponsorship –

In 2000 Buddha Air started an agricultural extension program

as a pilot project in Morang district

Buddha Air funded the seed money to start Smallholder

Agribusiness Support (SABS)

Buddha Air donates over Rs. 1.5 million to Dangihat VDC of

Morang district every year for health and education from

2010.

Buddha Air conducted a one day health camp in the Dangihat

VDC of Morang for 1200 people.

Third party sources – award

Highest Safety Award given by the Ministry of Tourism and

Civil Aviation of the Government of Nepal

Ministry of Culture, Tourism, and Civil Aviation honored

Buddha Air for being the first among private sector airlines

in foreign exchange earnings during the fiscal year 060/061

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.

CONCLUSIONS AND RECOMMENDATIONS

• 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.

ANNEXURE

Questionnaire:

Brand Audit on Buddha Air Submitted by

Documents

Transcript of Brand Audit on Buddha Air Submitted by