Aviation Industry in India

History : Before Independence Public Sector Privatization Open Sky Policy Bilateral Treaties

Players
Air Deccan Air-India Express Air India Air Sahara Go Air Indian Airlines IndiGo Jet Airways Jet Lite SpiceJet Paramount Airways Kingfisher
The Domestic Aviation Market Share
1% 2% 8% 8% 6% 34% Jet airways Indian Air Deccan Air Sahara Kingfisher Spicejet 21% 20% Goair Others

Aviation Industry in India

Characteristics :

Huge Potential Under penetrated market

o Total Passenger Traffic : 50 million o Passenger trips per annum :
India : 0.05 United states : 2.02

Untapped air cargo market

 Medium Term Growth Forecast :

India GDP : 8.6 % per annum

Domestic air travel : 12 % annually

WTTC Travel & Tourism : 8.8 % Over next 10 years

Macro Environment Analysis Main

Factors Political :
Open Sky Policy Deregulations in different spheres Low entry barriers FDI limits : 49 % for airlines
100% for airports

Socio-cultural :
Growing middle class : 1993-1999 : 39.5 m to 56.7 m households 2005 : 300 m 2010 : 400 m (Estimated) Increase in leisure travel by tourists by 15 % in 2005 Foreign tourists in 2006 : 3.2 million Status symbol to travel in plane

 Economical :
Growing middle class income Consistent GDP growth of more than 8% and projected rate in two digits Hike in average salary 14%(highest) in the world Tourism industry growth :8.8 %in 2005

 Technological :
Modernization & Privatization of Airports Modern Technology for efficient handling of aircraft, passenger and cargo. Example : ILS, CAT-3 Developing Greenfield Airports with Private Sector Example : Bangalore Airport Corporation Ltd.

Other Factors :
Demographic and Natural Environment
Changing pattern of consumers Highest percentage people of age group 20-25 Educational environment Shift towards family concept High energy cost

Low Cost Carriers

In the past five years, low-cost airlines have been growing at more than 40 % a year globally

Business Model of Low Cost Carriers

A single Passenger class A single type of airplane reducing training and service cost No frills such as free food/drinks, lounges etc. Emphasis on direct sale of ticket through Internet avoiding fee and commission paid to travel agents. Employees working in multiple roles Unbundling of ancillary charges to make the Headline fare lower

Low Cost Carriers in India

Air Deccan SpiceJet IndiGo Airlines Go Air Jetlite (Formerly known as Air Sahara)

Airline Industry in India : Service Vs Price Graph

S E R VI C E

PRICE

Current Trends : Consolidations All Around

Kingfisher-Air Deccan Deal
o Kingfisher buys out 26 % stake for Rs.550 crore. o They have combined Market share of 33% o They are second biggest player after Jet Sahara deal

Jet airways and Air Sahara merger

o Air Sahara name changed to JetLite

Present Scenario
Scheduled Domestic Operator No. of Aircraft Possessed No. of Non-scheduled Operator No. of Aircraft Possessed No. of Import Permit for Aircraft Granted in 2007 No. of Aircraft Set to be Import in Next Five Year 14 334 65 201 72 496

Future Trends
The projection for Indian Aviation for 2020 is estimated at: o 400 million passengers o Including 180 million domestic passengers o 1,000 aircraft in the civil aviation sector Likely to follow the footholds of International Low Price Carriers e.g. Air Arabia, Southwest Airlines etc. More emphasis will be on Arabian and South-East Asian circuits.

Future Trends : Proposed Addition

Challenges
Constraints :
Infrastructure constraints Shortage of airport facilities Parking bays Air traffic control facilities Takeoff and landing slots. Less than 100 airports having more than one daily service.

ADVANTAGES OF CURRENT SCENARIO OF AVIATION INDUSTRY

The biggest advantage is that its time saving. Passenger get more comfort than any others do mode of transport. Due to the emergency of the LCC (low cost carriers) even common man can now travel by air which was a rare scenario in the earlier days. Development in economy. Improves standard of living. More job opportunity. Improvement in business sector. Improves technology. Opportunity to visit different countries. The aviation industry is one of the fastest growing industry in the world . As earlier it used to take weeks to cross the ocean but now its just a matter of hours.. The growth rate of domestic and international sector has been more than 25% which is highest in he world. As the jobs available in this industry are of high risk the salary paid to the crew is very high as compared to other industry.

DISADVANTAGES

It utilizes a lot of resources to do its thing fuel, rubber, metals, etc. hence it is getting too expensive. It brings air pollution and increase in air traffic. Hijack, bomb threat and emergency landing. As there has been a hike in fuel charges, the airlines have increased their fares . The air tickets will not be affordable to the common man and it would be only for high class society people. No new aircrafts will be purchased . Some airlines had cancelled all flights on routes that are un economic. Airline increased their extra charges such as baggage handling to cover over all increased cost. For crew members Very risky. Limited Flying Cannot choose Destination Shouting from Passenger. Cleaning the Washroom and vomits. Taking care of medical passengers. Handling Drunk Passenger with Abusive behavior. No social life. Fatigue. Jet lag.