AVIATION INDUSTRY

ByCHARUTA JAGTAP KARNIKA JALVI YADNESH KENE SAYALI SHAH

Introduction
The first commercial flight in India took-off in 1911. Tata Services became Tata Airlines and then Air-India and spread its wings as Air-India International. When the American Tenth Air Force in India disposed of its planes at throwaway prices, 11 domestic airlines sprang up

 In 1953, the government nationalized the airlines, merged them, and created Indian Airlines. The Indian Aviation Industry has been going through a chaotic phase for several years with high oil prices, limited pricing power and periods of subdued demand growth.

Developments in Indian Aviation Industry

Companies & Brands

SWOT Analysis
Strengths Modern Fleet Economic Growth Safety record Low cost carriers Weaknessess High "spoilage" rate Low ROI Poor Infrastructure Accumulated lossess

Opportunities Market growth Ideal geographic location Lower costs & higher quality Tie ups with other carriers to increase passenger

Threats Global economic downturn Rising fuel prices Terrorism Government policies

Five Forces
New Entrants

Power of Suppliers

Sector Rivalry

Power of Buyers

Treat of substitutes

Positive & Negative points of the sector

The Indian aviation sector is likely to see clear skies ahead in the years to come. Passenger traffic is projected to grow at a CAGR of over 15 per cent in the next 5 years. The Vision 2020 statement announced by the Ministry of Civil Aviation, envisages creating infrastructure to handle 280 million passengers by 2020.

 Investment opportunities of US$ 110 billion envisaged up to 2020 with US$ 80 billion in new aircraft and US$ 30 billion in development of airport infrastructure. Associated areas such as maintenance repair and overhaul (MRO) and training offer high investment potential.

 The industry is unable to retain talented employees. To provide regional connectivity is one of the biggest challenges facing the aviation sector in India. As fuel prices have risen, the inverse relationship between fuel prices and airline stock prices has been established. The input costs are also very high

FDI In Aviation Industry

Contribution to Indian GDP

The aviation sector contributes INR 330 billion (0.5%) to Indian GDP The aviation sector supports 1.7 million jobs in India. High productivity jobs Contribution to public finances

Government subsidies
Airports and air traffic control infrastructure are built and operated by tax-exempt government entities with below-market capital costs Air traffic control and other services to airlines are provided by the government. Airlines have a statutory exemption from Federal anti-trust law to allow them to participate in IATA "traffic conferences" to fix standard "industry fares".

 Government funding for military aircraft subsidizes production and operation of civilian aircraft Airlines are paid all the time, even when their aircraft aren't being used, for agreeing to make their planes available on demand to the government.

Problems faced by Co. in overseas market

Shortage of trained Employee Rising fuel prices Declining yields Gaps in infrastructure High input costs

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