Indian Aviation Industry

1. INDIAN AVIATION INDUSTRY -
SUCCESS AND FAILURES
Submitted By:
PRACHI GOYAL (73)
PRANJAL NAPHADE (79)
PLABAN MOHAPATRA (72
PRAGATI NATHANI (75)
PRAGYA GARG (77)
REHAN AHMAD (80)
PRANAV BOKADE (74)
PRITANSHU ACHARYA (76
RAJKUMAR P (78)

2. EMERGENCE OF AVIATION
INDUSTRY
 First airmail service
 First international flight
 First private airline
 Construction of airports
 India’s Civil Helicopter Services

4. Brief Introduction
 Indian aviation industry is one of the fastest growing
industries in the world.
 Private airlines account for more than 75% sector of
domestic aviation market.
 Compound annual growth rate of 18%.
 Hyderabad international airport is among the top five
airports for airport support quality.
 Indian Aviation Industry is service quality driven

5. Categories of Indian Aviation Industry
 Scheduled air transport service
 Non-scheduled air transport service
 Air cargo service

6. CURRENT SCENARIO
AVIATION INDUSTRY

7. 7
FACTS AND FIGURES
 9th Largest civil aviation market
 Fastest growing domestic air market
 86 scheduled international airlines (5 Indian carriers,
81 foreign carriers)
 RPF (domestic) rose by 18.7%
 Combined profits $122mn (2015-16)
 Contribution to GDP $72bn

8. 8
FACTS AND FIGURES
 464 Airports and airstrips (125 AAI)
 Domestic airlines carried 243mn passengers (FY 18)
 Passenger traffic growth increased by 16%
 Foreign Tourist arrival growth increased by 15.60%
 Total Freight Traffic 2.40 MMT

9. MAJOR PLAYERS AND MARKET
SHARE
9

10. Growths and Developments
in Airline Industry

11. Initiatives towards the Growth and
Development of Airlines:
 Formation of National Aviation Company Ltd (NACIL)
 Modernization of non-metro airports with Airports Authority of India
(AAI)
 Using Open Sky policy
 Regional Connectivity Scheme (RCS) has been launched as UDAN.

12. Factors contributing to the Growth Rate:
 Higher household incomes
 Strong economic growth
 Entry of low cost carriers (LCC)
 Increased FDI inflows in domestic airlines
 Increased tourist inflow

13.  Surging cargo movement
 Cutting edge information technology (IT)
interventions
 Focus on regional connectivity
 Modern airports
 Sustained business growth and
 Supporting Government policies

15. Modernization of Airports:
 Development & modernization of 35 non-metro airports.
 Terminal buildings at 13 airports & airside development at 19 airports
Policy on Merchant Airports:
 Allows 100 % FDI for airport infrastructure development.
Foreign Equity Participation in Air Transport
Services:
 Approval of Domestic Air Transport Policy.
 Provides foreign equity participation up-to 49%.
 For NRIs up-to 100% in domestic air transport services.

16. Growth in MRO Segment:
 Initiation of business avenue in maintenance, repair and
overhaul (MRO).
 Provides major, minor maintenance & repairs of aircraft.
 Boeing & Airbus have announced plans for MRO facilities in
India.
 India’s current MRO market is estimated around $700-900
million.
 Boeing forecasts to grow at a 9% CAGR.
 Boeing has to reach $1.2 billion by 2020.

17.  India’s aviation market is expected to third largest in the
world by 2025.
 Identification infrastructure expansion needs for catering
rising air passenger traffic.
 Indian Aviation with advent of low-cost airlines.
 Investment of US$ 1.83 billion for airport infrastructure
development & aviation navigation services by 2026.
 Expecting growth in both commercial and cargo sectors.

18. SUCCESS FACTORS OF
AVIATION INDUSTRY

19. 1. MARKETING STRATEGY
 HRD Initiatives
 Increased Utilization of Aircraft
 Increased International Operations
 Creation of Profit Centres
 FDI

20. 2. INVESTMENT IN TECHNOLOGY
 Reacting immediately to price war
 Friendly online booking facility
 Ensuring fleet reliability and safety monitoring

21. 3. MARKETING INITIATIVES
 Product Improvement
 Touchdown Boards
 Cargo Handling
 Reservation Facilities

22. 4. Other Factors
 High Calibre Staff
 Training programs
 Service Product/Promotions
 Route System
 Revenue/Cost Control
 Financial Management
 Strategic Groups

23. Achievements
 In Sep 2018,Jharusugada Airport in Odisha and
Pakyong Airport in Sikkim were inaugurated.
 In Dec 2018, Kannur International Airport was
inaugurated in Kerala

24. A SUCCESS STORY

25.  Founded in 2006 by Rahul Bhatia
 Owned by Inter Globe Enterprise.
 Operates in 41 destination
 Market share - 39.7%
 Fleet size - 167, ordered- 437
 Competitors - Air India, Spice Jet, Go Air, Vistara.

26. What Worked?
 Low cost airline, offers only economy class, 180
passengers per aircraft
 Quickest turn around time
 Down payments and discounts on new orders
 Sales and lease back financial model
 Cutting down all the extra costs

29. FAILURES OF AVIATION
INDUSTRY

30. 1. ATF tax
At present the tax imposed is 35-40% which hampers the
profitability of companies.
2. RUPEE DEPRICIATION
Indian airlines make losses as companies have to pay higher
fuel prices.

31. 3.Non-availability of proper aircraft
After the recommendation by the consultant to buy induct A320
aircraft to reduce maintenance cost, it took three years.
4. Loss making international operations:
An audit says that most of such routes burn a hole in the
airline’s pocket as it fails to recover the cost.

32. 5. Domination of few companies
Indigo and SpiceJet have dominated domestic market
6. Boing 737 max
Its lead to decrease in availability of airplanes which lead
to increase in fare prices saw a hike.

33. 7. Reckless competition
Between companies like SpiceJet, Indigo, Air go
has forced companies to decrease air prices.
8. Aviation worldwide is famously
crisis-prone.

34. CASE STUDY FOR JET
AIRWAYS

35. 1. MERGER
 Merging Sahara Airlines with Jet Airways
 Merging can be called as mistake
 Acquired for $500 million

36. 2. REBRANDING SAHARA
 Biggest reason for failure of JetLite
 Rebranded Sahara Airways as JetLite
 Customers out of Jet’s hand

37. 3. MISMANAGEMENT
 No hiring of any professionals.
 Many bad financial decisions.
 Only one management team for all operations

38. 4. FULL SERVICE AIRLINE
 Not an easy task in India
 Strong financial support and customer relationship
 Focus on middle class people
 Prices as low as possible

39. 5. DROWNING IN DEBTS
 Down and out
 Giving many perks to employees
 Disbursed more than having is always amiss

40. CASE STUDY FOR
KINGFISHER AIRLINES

41. 1. MAINTENANCE, LANDING and
NAVIGATION COST
Landing & Navigation
Expense Kingfisher Airlines
Year 2012 2011
Revenue 5,82,400 6,49,560
Landing & Navigation
Expense 63,231 65,689
% 10.86% 10.11%

42. 2. HIGH OVERHEAD COST
Employee Cost
vs. Revenue Kingfisher Airlines
FY2012 FY2011
Total Revenue 5,82,401 6,49,560
Employee Cost 66,950 67,600
% 11.50% 10.41%

43. 3. HIGH COST of VAS

44. 4. WEAKNESS
 High maintenance cost at ground and airline
 High ticket price
 Tough competition from Indian as well as
international players
 Heavy debts

45. 5. THREAT
 Rising Fuel Costs
 Rising Labour Costs
 Other low cost airlines providing better services
 Government initiative in railways with fast running
trains
 Economic slowdown

46. FUTURE OUTLOOK
Hinterland opportunity
Biofuels

47. Regional connectivity scheme
Investment in technology

48. Other
Factors
Robotic
canines
Oil pipelines
to airport
ATF under
GST
Policy
support for
global
connectivity
Integrated
travel
offerings
Autonomous
flight

49. THANK YOU