Aviation Sector – An Analysis

A Presentation by

Divya (26012)

Jagadheswari (26014)

RB Pravin (26027)

Diwakar Elango (26075)

Nithila Damodaran (26095)

Varun Deepak (26116)

Sector Analysis
 About the Sector

The sector deals with the transport of passenger and

cargo from one
place to another, using the aerial route

Size
About 75 million passengers
$5.6 Billion
Growth
Around 15% Growth in last 10 years
Growth in 2009: 0.7%
Vision 2020 statement predicts handling 280 million
customers by 2020
Then… NOW…
Classification of the Indian Aviation Industry
 Strengths Weakness

Underpenetrated market
Growing tourism
Untapped Air Cargo Market
Rising Income levels
Infrastructure constraints

Opportunities Threats

Shortage of Trained Pilots

Expecting Investments
Shortage of Airports
Expected Market Share
High Prices
 Reasons for Boom in Aviation Sector

Foreign Equity Allowed

Low Entry Barriers

Reasons

Attraction of foreign shores

Rising income levels and demographic profile

Untapped potential of Indian tourism

Glamour of the Airlines

Top Players
Players of our sector
Market Share of the industry
TOP 3 PLAYERS
PLAYER 1
Marketing Strategies of Kingfisher
Player 2
Ambush Marketing
Kingfisher Vs Jet
Player 3
 Challenges faced by the industry

Employee Shortage

Regional Connectivity
Challenges

Rising fuel prices

Declining yields

Gaps in infrastructure

Trunk routes

High Input Costs

CRM Process
CRM Architecture
KEY SUCCESS FACTORS
• PEOPLE
– High caliber staff
– Effective training programmes
– Customer focused problem solving strategies
– Continuous improvement objectives
• SERVICE/PRODUCT PROMOTIONS
– Aircraft type , seating space
– Class of service offerings
– Booking ease
– Effective programmes to create loyalty and
repeat business.
• ROUTE SYSTEM
– Efficient route system based on customer
demand
– Maximizing aircraft utilization.
• REVENUE /COST CONTROL (yield
management)
– Competitive and innovative pricing schemes
– Fuel and other materials procurement
– Maintenance costs
– Price hedging during volatile periods.
– Code sharing
• FINANCIAL MANAGEMENT
– Net unit revenue is the profitability
= total revenue - total cost
total seats flown
– Managing foreign exchange and taxes.
 KEY PERFORMANCE
• INDICATORS
Financial KPIs:
– Revenues – Cash Inflows the airlines enjoys in a
particular year
– Expenses – Cash Outflows the organization has to
bear for various direct and indirect spending
– ROIC (Return on Invested Capital)
– EBIT (Earnings Before Interests & Taxes)
– Operating profit
– Cash flow
– Outstanding debt
– Level of working capital
– Market value against asset value
– RASK (Revenue Per Available Seat-Kilometre)
• Customer KPIs:
– Types of cuisine offered – The no. of types of
meal offered to cater to a large and broad
range of passengers
– Baggage rates  - Charges customers would
have to pay for the standard quantity of
baggage allowed and the amount to be paid if
it surpasses the stated quantity
– Response time for queries
– Cancelled flights
– Missed connections
– Yield
– Load factor
– Spill
• Flight Operation KPIs:
– Flights – Number of flights in a particular year
– Passengers – Number of passengers carried in all
the flights in a year
– Available Flying Time
– Aircraft utilization
– Percentage of Flights Departures Delayed > 15
minutes
– Average Minutes Delay for Delayed Flights / All
Flights
– Percentage of Flights Delayed Due to Technical /
Commercial reasons
– Incidence of maintenance schedule changes
– Crew productivity and cost
– Average turnaround time
– Average block hours per day
– Amount of lost baggage on connecting flights
– Crews per aircraft
– Daily Pilot Utilization
• Service KPIs:
– Passenger Seats Occupied – Percentage of
seats occupied by passengers in a particular
flight
– Freight and Mail – Indicates the commercial
load of the Airlines
– No. of partners in supply-chain
– No. of accidents
– Number of PAX
– Number of transfer PAX
– Number of Frequent Flyers
 Recent trends in the Airline
industry
•The 2008-2009 period - bad time for airlines. Many
airlines took bankruptcy protection in 2008, several
specialty and business-class-only airlines ceased
operations. Even Government-controlled airlines
went bankrupt

•During this time, many airlines cut routes and

reduced the total number of seats available, partly
by removing older, fuel inefficient aircraft from
service, resulting in, more efficient operating
condition for 2010

•2010, the industry seems to have recovered. IATA

projected a global airline industry net profit of $2.5
billion for 2010, after a net loss of $9.9 billion in
•Discount Airlines Compete with Legacy Airlines -
Dozens of new discount airlines have been launched
in emerging nations in the past few years, some of
them with great success.

•Advanced new aircraft will bring significant changes

in the global airline industry. E.g. Boeing’s 787

•Private Jet Rentals Continue in the Form of

Fractional Share Ownership

•Emirates has carved out a place for itself as a major

long-haul airline, with routes spanning the entire
world and a major hub in the Middle East

•International Airlines Try to Lure Passengers with In-

flight Perks
Thank
You