Defenition

Aviation is the design, development, production, operation, and use of aircraft, especially heavier-than-air aircraft. Aviation is derived from avis, the Latin word for bird.

Aviation Industry (World Wide)

2,000 airlines, 23,000 aircrafts Serving 3,750 airports through a route network of several million kilometers 32 million jobs

India Aviation Industry

Fastest growing aviation industry December, 1912: first domestic route Airports Authority of India(AAI) manages all airport

 Over 450 airports and 1091 aircrafts Directorate General of Civil Aviation (DGCA) controls every aspect. ( granting flying licenses, pilots, certifying aircrafts for flight, etc.)

Indian Airline Sector

Low Cost services were started with an objective to increase their reach to a largely untapped middle class segment. First low cost airline was Air Deccan in 2003 Kingfisher Airlines and Jet Airways converted around half their capacity into low-cost services.

 Govt. carrier Air India Launched Low Cost Services, Air India Express in May 2004. Passenger traffic of 96 million in 2007.

Current Scenario
precipitated the boom in domestic and international passenger carriers. domestic passenger and cargo traffic recorded a growth rate of 44.6% and 8.7%. International passenger and cargo traffic recorded growth rates of 15.8% and 13.8%.

 Top 5 airports of the country handle 70% passengers. All airports handled 90.44 million passengers in 2006. Airlines offer low fares and schedules domestic services.

Some Challenges faced by aviation industry in India

Regional connectivity
One of the Biggest challenges lack of airports

High input costs

ATF prices in India continue far higher than Global rates - US $ 755 in Delhi - US $ 455 in Singapore - US $ 497 in Dubai

 Withholding tax on interest repayments on foreign currency loans for aircraft acquisition. Increase in manpower costs due to shortage of technical personnel.

Declining yields
LCCs and other entrants together now command a market share of around 46% Increasing growth prospects have attracted new Players

Gaps in infrastructure
Airport and Air Traffic Control (ATC) infrastructure is inadequate to support growth. While a start has been made to upgrade the infrastructure, the results will be visible only after 2 - 3 years. Chicago airport handles a take off or landing every 45sec.

Excess Capacity
Several new aircrafts were bought within a short span of time . Aircrafts ordered during good times are being delivered during recession. According to industry experts, around 17% of the current fleet are scheduled for delivery during the next 3 years. Maintaining low levels of fares will be difficult due to excess capacity, especially during the ongoing global slowdown.

Huge Debt Burden

Healthy profits and increasing passenger traffic made airlines raise significant amount of capital from Financial Institutions and Banks The top three airlines are now carrying a cumulative debt burden of approximately $8 billion.

 Incidentally, this is almost equivalent to the losses of $8.5 billion posted by all global carriers. Restructuring this huge amount of leverage will be a challenge as resorting to equity capital, will also be equally difficult during economic slowdown.

Poor Infrastructure
Infrastructure continues to be a major constraint for Indian Airline Industry has been aggravated further due to excess capacity created during good times.

steps are being taken on this front to upgrade major airports in Mumbai, Delhi and Hyderabad, security concerns still remain to be addressed. Attracting investments from private sector will go a long way to develop and maintain the infrastructure

Air craft Noise Emissions

The perception of people -its intensity, its frequency and the length of time they are exposed to it. Aircraft noise, including night noise, is associated with sleep disturbance, long term adverse health effects and learning difficulties.

Shortage of Airport Facilities

There are lot of problem at airports in India. There is no capacity to land two flight at same time.

Conclusion
Indian Airline Industry was one of the fastest growing Airline Industry across the world during the last decade. However, skyrocketing fuel prices, economic slowdown, slashed corporate travel budgets over the last 3 years has forced all Indian Airlines to rethink their business model.

 Excess capacity build-up and poor infrastructure continue to plague the industry which is also experiencing a decline in passenger traffic at the same time.