Indian Civil Aviation

Industry Analysis
Presented by : Group 5

1)
2)
3)
4)
5)

Ankit Dungriyal
Anup Mohapatra
Karthik Raj
Piyush Kumar
S. Jayashree

Industry Overview

Indian Aviation Industry (2015-16)

Current Indian Population:

1.34 Billion

Annual Airline Passengers

223.61 million

Airlines traffic growth (2015-16)

20.3%

Airlines operating (from India)

21

Number of aircrafts

476

Number of airports

125

Market Share and Market Size

Industry Growth

Healthy Growth of Passenger Traffic

Witnessing a growth of 17.62 per cent over the previous
year, total passenger traffic stood at a 223.6 million in FY16,
which was recorded at 190.1 million in FY15 in India.
Growth in passenger traffic has been strong since the new
millennium, especially with rising incomes and low-cost
aviation; during FY06-16, passenger traffic grew at a CAGR
of 11.8 per cent in the country.

Growth Drivers
Indias working
population

Travel & tourism

Robust
Demand

Increasing
Investments

Indias middle income class

Business & leisure travel

Opportunitie
s in MRO

Policy
Support

Porters Five Forces Analysis

Govt.
Regulat
ions
and
Actions

Bargain
ing
Power
of
Supplie
rs

Industr
y
Compli
ments

Rivalry
Among
Competit
ors
Barriers
to Entry
/ Threat
of New
Entrant

Threat
of
Substit
utes
Bargain
ing
Power
of
Buyers

Increasing

Number of suppliers >>>> Small

Availability of substitute products for the industry >> Few

Switching cost to other suppliers >> High

Suppliers threat of forward integration >> High

Industrys threat of backward integration >> Low

Contribution to quality of industrys final product >> Medium

Contribution to cost of industrys final product >> High

Industrys importance to supplier >> High

Profitability

Determinants of Bargaining Power of Suppliers are as follows :

Suppliers Power

Bargaining Power of Suppliers :

HIGH

Decreasing

Rivalry Among Competitors : HIGH

No. of competitors >>>> Small

Industry growth rate >> Fast

Product Differentiation >> Low

Switching cost for switching to other competitors >> Low

Excess capacity in the industry >> High

Barriers to exit >> High

Assets specialization assets cannot be used in other industries >> High

Cost of exit >> High

As in the airline industry, firms are competing aggressively, hence high rivalry is limiting the
profitability.

Profitability

Increasing

Rivalry

Determinants of Competitive Rivalry are as follows :

Decreasing

Bargaining Power of Buyers : HIGH

Number of buyers share of top four buyers >>>> Small

Availability of substitutes >> Many

Switching cost for switching to other competitors >> Low

Buyers threat of backward integration >> Low

Industrys threat of forward integration >> High

Contribution to quality of buyers final product >> High

Contribution to cost of buyers final product >> High

Buyers profitability >> High

Profitability

Increasing

Buyers Power

Determinants of Bargaining Power of Buyers are as follows :

Decreasing

Barriers to Entry : Medium

High

Product differentiation creating price premiums >> Low

Brand identity requiring brand building by entrant >> Low

Switching cost for switching to other competitors >> Low

Access to channels of distribution >> Limited

Capital requirement >> Large

Access to technology >> Restricted

Access to raw material >> Restricted

Government protection against entry >> Low

High

Profitability

Barriers to Entry

Determinants of Barriers to Entry are as follows :

Economies of scale >>>> Small

Threat of Substitutes : Medium

Switching cost for switching to substitute products >> Low

Substitutes price-value equation >> Better

Profitability of the producers of substitutes >> Medium

Profitability

Determinants of Barriers to Entry are as follows :

Availability of close substitutes >>>> High

Threat of Substitutes

Increasing

Decreasing

Industry Compliments

Government Regulations and

Actions

Increased FDI inflows in domestic airlines

Focus on regional connectivity
Modern airports infrastructure
Domestic 'open-skies policy
Reduction of taxes on ATF (Air Turbine Fuel)
Government has been supportive over the years .

Overall Industry Attractiveness

Bargaining
Power of
Buyers : HIGH

Bargaining
Power of
Suppliers :
HIGH

Rivalry Among
Competitors :
HIGH

Barriers to
Entry : Medium

Airline Industry is NOT Attractive

Threat Of
Substitutes :
LOW

Generic Strategy

Broad
Narrow

Competitive Scope

Competitive Advantage
High Cost
Low Cost

Broad Cost Leader

Broad Differentiator

Focused Cost
Leader

Focused
Differentiator

Potters Generic Strategies

PESTLE Analysis
Political

Economic

Indias political
Tension with
Pakistan,
Governments
inability to
control issues

Highoperating
costs, Fuel cost

High corruption
levels

Very high fixed

cost

September 11thsafety and

security
concerns

Cancellationfee
s/checked bag
cost

Less people
traveling due to
expense

Social
People from
varied income
groups have to
be catered
Destination,
kinds of food
served have to
be chosen
carefully
Customer
service
friendliness of
flight attendant
and pilot

Technological
Buying tickets
online/cancel
online
Business
changes
(usingSkypeins
tead of
traveling, etc)
Modern
Communication,
Navigation,Sur
veillanceandAi
r
TrafficManagem
ent Systems

Legal
FDI Regulations
5/20 Restriction,
Open Sky Policy
Stringent Tax
Regulations.

Environmental
Aviation
emissions and
Local air quality
at airports
Aircraft noise
Affect of
aviation on
climate change

Opportunities and Future (Need

Editing)

The Indian civil aviation industry is on a high growth path. India has a vision of
becoming the third largest aviation market by 2020 and the largest by 2030.
India would need to broaden the base of domestic flyers. Air connectivity in Tier 2/3
cities needs to be developed.
Indian aerospace manufacturing segment needs radical reforms to emerge as the
central pillar of the government's 'Make in India' drive.
Consider going for open skies, 100% FDI in airlines and a final decision on the
contentious 5/20 Rule.
We should collaborate with global players, innovate and then go one step ahead of
them in certain critical technologies, over the next 20 years.

Conclusion

Thank You