AVIATION SECTOR

• Presented by:

• Anirudh Agarwal(11)
• Minali Dhanvij(43)
• Maitreyee Lawande(38)
• Sonali Bibekar
• Khyati Parmar(33)
• Harshul Savla(32)
• Chetan Thakur
• Jubil Jain (31)
• Mangesh Gaikwad
• Sunil Singh
 Agenda
• Introduction
• Indian Aviation Market by share
• Financial Performance of the players
• Post Recession Recovery
• Government Policies
• Investment Policies
• Current Issues
• Issues faced by NACIL
• Innovations
Introduction – Aviation Industry in India

• CAGR of 18%
• 454 airports and airstrips; 16 international
• Private airlines account for 75% of market
share
• 69 foreign airlines from 49 countries fly into
India
• Passenger traffic in January-June 2010 is 25.71
crores
Indian Aviation Market by Share

4
 Basic Cost Structure of Airlines

This is the basic cost structure as % of total cost.

Financial Performance of the Various
Aviation Companies
1

Sales in 09-10
Net Loss after tax in
0 09-10
S J C n
NA Ki
-

-1

6
 Reasons for Loss

• Intense competition
• Rising cost of fuel
• Rising cost of other expenses
 Post Recession Recovery
• Sales have increased this year

• Net loss this year has seen reduction.

• 21.86% growth in passenger traffic in January-

June 2010 compared to last year.
 Cargo Transport

• Dominant companies
– NACIL: Operations in 13 Indian cities
– Deccan 360: Operations in 47 Indian cities

9
 Government Policies
• Increase in Foreign Direct Investments
• Permission to private carriers to operate
globally.
• Amendment of various provisions of Aircraft
Rules
• Approval of fleet expansion
• Restructuring of major airports.

10
 Investment policy
• FDI up to 100% under automatic route for green
field projects

• 100% tax exemption for airport projects for a

period of 10 years

• 74% FDI allowed in cargo and non-scheduled

airlines

• Airport Economic Regulatory authority to be set

up
Proposed Investments for the year 2010

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 Current Issues: Swine Flu, Terrorism

• Frisking passengers, taking proactive action is

the way ahead
• Process should be swift wasting minimum
time.
• Healthy interaction with intelligence agencies
to prevent a major disaster.
 Issues in the Development of Projects

• Airport project deployed in Mumbai on the

grounds of environment clearance

• Problems already arising in the new airport

terminal relating to congestion

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 Susceptibility to weather conditions

• Eruption of Eyjafjallajokull on 14th April, 2010

in Ireland
• Disruption of air traffic around Central and
Northern Europe for the next ten days
• 20 European countries close airspace
• Thousands of passengers stranded
• International air industry loss – $24.3 million

Source: International Civil Aviation Organisation

 High Debt Burden of Air India
Crores Rs
2009-10 2008-09 2007-08
Loss 5400 5548 2226
Lease Rental 760 811 717

• 80% of Losses in 2009-10 comprise of

a) Interest Payment
b) Lease Rental
c) Depreciation

•Debt Burden of 18,000 Crores

•Working Capital loan of 16,000 Crores
•Soft Loans and Deep Discount Bonds.
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* Economic times 30 July2010
th
 Leveraging in Capital Intensive Industry

• Paid up Capital of Air India is Rs. 1,450 million

•Debt Equity Ratio of 10x
•High Dependence on government for equity infusion
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* Annual Report 2008-09
 Plans to turnaround performance
• NACIL was formed on March 2007 , through a
merger of IA and AI
• Route Rationalization
• Hubs : domestic and international
• FSC and LCC – Air India Express
• Volume Discounting
• SBU – engineering, security, ground handling, MRO
and Cargo
• SPV - Privatised
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 Innovations

• Lighter, composite materials

• Aerodynamic designs

• Greater reduction in emissions

• Development of sustainable bio-fuels

• Airbus, Boeing working with airlines, Engine Original

Equipment Manufacturers(OEMs)
 Future Prospects
• Each By 2020, Indian airports are estimated to
handle:
1. 100 million passengers
2. Including 60 million domestic passengers
3. Cargo in the range of 3.4 million tonnes per
annum

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