INDIAN AVIATION INDUSTRY

WINGS

Presented By:
Sheetal Kumbhare
Ayush Gupta
 Aviation 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
$5.6billion

Growth
Around 15% growth in last 10 years.
Growth in 2009 : 0.7%
Vision 2020 statement predicts handling 280 million customers by
2020
From then to now……….
1953: NATIONALISATION OF AIRCRAFT
INDUSTRY
Assets of 9 existing companies
transferred to two entities in the
aviation sector controlled by the
Government in
 Indian Airlines, primarily serving
domestic sectors
 Air India, primarily serving the
international sectors
IMPLICATIONS
 Aviation became a preferred mode of
transport for elite class
 Restricted Growth of Aviation
Industry
1986: Private Sector Players permitted as
Air taxi operators. Jet, Air Sahara, etc
started service.
1994: Private Carriers permitted to operate
scheduled services. Six operators granted
license, however only Jet and Air Sahara
able to service.
2003: Entry of low cost carriers. Air
Deccan, Spice Jet, Go Air, Indigo.
IMPLICATIONS
 Aviation is now affordable with check
fares and discount schemes.
 Various Operators with different business
model.
 Huge growth foreseen in Aviation
Players in Aviation Industry
The players in aviation industry can be
categorized in three groups:
 Public players : Indian Airlines

 Private players : Jet Airways, Kingfisher

Airlines, Spice Jet, Air Deccan

 Start up players : Omega Air, Magic Air,

Premier Star Air & MDLR Airlines.
Major Players (Market Share)
Top 3 Players
Kingfisher

Dr. Vijay Mallya is the Chairman and CEO of

Kingfisher Airlines.
Kingfisher launched its airline services in May
2005.
STRENGHTS:
 Strong Brand value & Reputation in the minds
of
customers.
 Quality of the service.
 First airline to have new fleet of airbuses.

WEAKNESSESS:
 High Ticket prices.
OPPORTUNITIES:
 The expanding tourism Industry.
Untapped Air cargo market
 Under penetrated Domestic Market

THREATS:
Competitors.
 Fuel Price Hike.
 Economic Slowdown/Recessions.
MARKETING STRATEGIES

Kingfisher Airlines is the first carrier in the

country to offer live in-flight entertainment.
Kingfisher Airlines Ltd & Dish TV have
joined hands to provide live in-flight
entertainment on Kingfisher aircraft .
The service would enable airline’s customers to
book air travel ticket after securing ‘ngpay’
application on their GPRS-enabled mobile
handsets.
 On the promotional
front, Kingfisher has
signed up the latest diva
of Bollywood
Ms.Deepika Padukone
as the Brand
Ambassador
Jet Airways
Naresh Goyal is the founder & chairman
Started Indian commercial airline operations in
May 1993.
In April 2007, they acquired Air Sahara.
Jet Airways is an airline based in Mumbai. It is
India's third largest airline after Air India and
Kingfisher Airlines . It operates over 400 daily
flights to 64 destinations worldwide. Jet Airways is
widely regarded as India's biggest and best
airline. It's a privately owned, full service airline
that commenced operating in mid 1993. It's now
captured almost 23% of the market, and has
bases in Delhi, Mumbai, Pune, Kolkata,
Hyderabad, Chennai, and Bangalore.
Jet Airways has won many awards for quality
service. In particular, the airline is known for its
outstanding in-flight service, food, punctuality,
and baggage handling. Staff are extremely
efficient and courteous, and will go out of their
way to ensure that you're comfortable and well
Kingfisher vs. Jet Airways
Kingfisher Jet
Airline
Kingfisher is the latest • Jet airways is a
Airline in India. experienced Airline in
 Overall loss in June India.
2009 of $500 ml. • Jet airways had a
Kingfisher acquired slight profit in the 1st
46% quarter of 2009.
in Air Deccan • Jet acquired Air
Sahara
Jet Airways- Marketing
Strategies
 Jet Airways has partnered with
UTV to launch the online contest
'Cannes Calling', wherein
winners will get a chance to
attend
the Cannes Film Festival 2009
along with a companion.
Jet is trying to highlight its
product superiority.
Air India
Air India is state-owned, and administered as part of
the National Aviation Company of India Limited -
which was created in 2007 to facilitate Air India's
merger with Indian Airlines. Air India is the 16th
largest airline in Asia,[4] serving 25 destinations
worldwide, and, with its affiliated carriers, serves
over 100 cities.
Financial Crisis
Around 2006-07, the airlines began showing
signs of financial distress. The combined
losses for Air India and Indian Airlines in 2006-
07 was Rs 771 crores. After the merger of the
airlines, this went up to Rs 7200 crores by
March 2009.[20] This was followed by
restructuring plans which are still in progress.
[21]
. In July 2009, SBI Capital Markets Ltd was
appointed to prepare a road map for the
recovery of the airline.[22] The carrier cancelled
the purchase of six Boeing 777-300ER in July
2009 [23] and sold three Airbus A300 and one
Boeing 747-300M in March 2009 for $ 18.75
million to survive the financial crunch[24].
Strengths
1. Strong brand name
2. Oldest Airline
3. Monopoly in certain international routes
4. Government backup
5. Rights to travel 96 destinations.
6. Established infrastructure
7. It has prime parking space/slots.
Weaknesses.
Poor HR Strategies
 High Competition, Loss of market share
 High cost , poor cost control
 Inefficient usage of resources
 Bad Reputation, Poor Services
 Poor Aircraft maintenance
 Highest manpower ratio to aircraft
 Low feet size
 Poor reservation services
 Corruption in company
Macro Fundamentals that will drive
Aviation Growth…….
India has a population of 1.1 billion with an estimated middle
Market Size class of 300 million.

50% of the population is <25 years old. Therefore, the size of the
Demographics economically active segment will continue to grow for a number of
decades (unlike the developed countries and even China).

Average GDP growth of 6% p.a. sustained since 1991 and

Economic accelerating thereon. The first quarter of FY06/07 registered 9%
Growth growth, and the last Budget has established a target of 10%.

India has an increasingly open economy, with strong growth in

Trade & international trade, healthy foreign exchange reserves and
Investment increasing foreign direct investment.
Rise of the middle class…..
A socio-economic revolution is underway as the consumer profile
becomes increasingly middle class……
Change in travel preferences will continue
to drive growth……
CAPA Indian Domestic Market Forecast:
Business vs Leisure/VFR
SWOT analysis & Comparison
STRENGHTHS: WEAKNESSESS:
 Liberal Environment • Airport Infrastructure
 Modern Fleet • Airways Infrastructure
• National Carrier
 High Quality
• Deep Pockets
 Economic Growth
• High Cost Structure
 Growing Tourism • Skilled Resources
OPPORTUNITIES THREATS
 Market Growth • Middle East Aviation
 Geographic Location Terrorism
 Lower Costs and
 Higher Quality
Importance of CRM
 Global passengers to rise by 5 billion in 2010 and more than 9 billion by
2025
 Passenger traffic in Africa forecasted to increase by at- least 7% and Asia –
Pac by 6.8% a year, respectively, by 2010
 Asia will be the world’s largest aviation market by 2025
 40% of satisfied customers switch suppliers without hesitation
 65% to 85% of customers who choose a new supplier claim to be satisfied
and very satisfied with former supplier
 85% of customers claim to be satisfied, yet willing to switch to other
suppliers
 In the 12 months before Feb 07, there was a 49.6% increase in the number
of passenger complaints
 New government initiatives to develop
India’s potential as the world’s fastest
growing aviation market……

Changing regulation policies

The government is planning to raise the foreign direct investment (FDI) limit to 74% for non-
scheduled airline operations, helicopter services and regional airlines using small aircraft. The
current FDI ceiling for airline services is 49%.

Increased privatization of airports

In 1997 the Government of India published a policy document to open up existing airports to
domestic and foreign private investors in order to meet the significant costs involved in
developing India’s airports to keep pace with the growth in air traffic. In Sep 2003, Govt leased
out Delhi and Mumbai airports to the private sector as part of its extensive modernisation and
growth plan for the sector.
 CONTINUED………
Growing Infrastructure developments

Mumbai Airport - Planned investment of US$1.6 billion by 2020, of which

US$1.3 bn will take place by 2014
 
Delhi Airport - Planned investment of US$764 million by 2014 and USD$.7
billion by 2020

Kolkata Airport - Modernisation will be led by the Airports Authority of

India. Total project cost is estimated at US$360 million.
 

Hyderabad & Bengaluru Airports - Total investment of US$1.1 billion

dollars. Both airports have commenced commercial operations in April
2008.
Growing Infrastructure developments

35Non-Metro Airports - Development of 35 non-metro airports will proceed

at an estimated cost of US $ 1.2 billion. City side development will require
a further US$350 million, with the modernisation process to be completed
by 2009.

North East Region - Development of following airports :

• Pakyong Airport, Gangtok, Sikkim
• Cheithu Airport, Kohima, Nagaland
• Itanagar

Other Greenfield Airports –

• Mopa, Goa
• Navi Mumbai. Planning Commission discussing 3rd Mumbai Airport.
• Chakan/Rajguru, Pune, Maharashtra; Halwara, Punjab
• Kannur, Kerala.
• Hassan & Gulbaraga, Karnataka.
 EXPECTATIONS OF THE INDUSTRY FROM
GOVERNMENT…
The Indian aviation sector’s double-digit growth has been the fastest in the world. But
the airlines have not made much out of the profitless growth, with most players
stepped deep in red.

The industry’s wish list includes :

Lowering taxes on aviation turbine fuel (ATF) which is 35% of the

operating cost of airlines. As per international standards, it is 10-15% of
the operating cost.
Reduction in landing charges – In India low cost carriers (LCC) pay the
same as full service airlines. As per international standards, it is lower for
LCCs.
Extending exemption of withdrawal tax on lease rentals of aircraft

Relaxing fringe benefit tax (FBT)

Removing service taxes on first and business-class travellers.

.

The growth opportunity in Indian

Aviation…..
“Centre for Asia Pacific Aviation projects domestic traffic in India will grow
25-30% p.a., and international by 15% p.a. until 2010”

 India’s airports handled

million domestic passenge
In 2006/07, posting growth
almost 40% year-on-year,
over 25 million internation
passengers, up approx 15%

 Growth is underpinned b
economic expansion, incre
capacity and price stimula
resulting from increased
competition.
 OUTLOOK INDIA 2020……

 The growth of India’s aviation sector has the potential to absorb up to

US$120 billion of investment by 2020.

 However, we must close the gap between the demand for aviation
services and the ability of our aviation system to meet that demand.

 India must prepare a blueprint for the expansion of system capacity

whilst maintaining safety, security and the environment.

 India must develop a roadmap for infrastructure development beyond

2010.
 Job in Aviation
The boom in the aviation sector is likely to generate nearly
2.5 lakh jobs by the year 2014.

The study says that the civil aviation sector is also set to
become a Rs 55,000-crore industry by the same time.

The industry is expected to add 130 airliners to its current fleet of 270 airliners,
which would, in turn, increase manpower demand